US President Trump held a cryptocurrency summit at the White House earlier this month and announced details of the Bit reserve strategy. Although the federal government's move appears to be supporting Bit, it only plans to use the current limited amount of Bit in the US as a reserve, and does not plan to increase purchases, which caused a slight market decline at the time. However, Trump has promised that the Bit reserve will be mainly held and not sold, with a positive outlook for the future.
In addition to the federal government system, local governments in the US are also keeping up with this Bit craze, even more aggressively than expected. Currently, 24 states are discussing Bit state reserve-related plans, and the bills in these states are constantly being improved. Today, North Carolina passed the Bit reserve bill SB327, which authorizes the North Carolina state government to invest up to 10% of its public reserve funds annually to purchase Bit reserves, and also stipulates some more detailed reserve regulations, leading industry insiders to believe that this bill may become a model for "regular investment in Bit" in US states.
Bill Content
The North Carolina Senate has mainly proposed two bills, HB92 and SB327. According to the bill content, Bit can only be preserved through cold storage, and the related assets cannot be entrusted to custodians or stored in hot wallets. The asset sale condition is set to "only in times of severe financial crisis", indicating that the Bit reserve in North Carolina is a "value-type" reserve that is basically only bought and not sold. The security regulations will also introduce the highest industry standards, and do not allow custodians and market makers to have any operating space.
Currently, the fund size in North Carolina reaches $9.5 billion. If the bill is passed, the state finance department will be able to convert/purchase nearly $1 billion worth of Bit assets, and according to the definition of the bill, the annual returns of the fund can also be reinvested in Bit, equivalent to a one-time massive Bit buying opportunity.
Will US States Start Buying Bit?
However, it must be said that the fact that many states have proposed Bit bills does not mean that there will definitely be potential buyers in the future. First, although there are nearly 24 states that have legislators pushing for Bit bills, the momentum in each state is actually very scattered, and it is necessary to see the support of the local legislature for the bills. Currently, only Utah has passed the bill, and Arizona has brought the bill to the legislature for a vote. Finally, the state governors need to sign the bills, and the legislative process may still take a long time.
Secondly, having a Bit reserve bill does not mean agreeing to buy Bit. For example, the Bit reserve bill already passed in Utah has deleted the clause of "converting 5% of assets to Bit", which can be seen as just opening the option for local governments to "be able to buy", but whether the state governments dare to buy or not, and whether buying Bit will be obstructed by Democratic Party members on the state government's budget, forming a new point of confrontation between the two parties, is still unknown. Therefore, the fact that the two parties agree to open the "option" should not be seen as the state governments will definitely buy Bit.
Extended Reading: Utah Passes Bit Bill, but the Most Important Clause "5% Asset Buy BTC" is Deleted, Where is the Next Hope?
The third point is that local governments around the world have not yet had successful experience in managing Bit assets. Before confirming the security, local governments may not dare to invest even if they have the option, due to security issues. Therefore, the provisions in the North Carolina bill, such as the encryption industry terminology "cold wallet storage", can be said to be a very important part, which means that the security and industry standards of cryptocurrencies have entered the legislative process of each state, which can be said to be a milestone.
However, even if this standard has entered the bill, the key is whether trust in technology can be established. In the future, whether this standard can be spread to the bills of other states, and even make most legislators (including the Democratic Party) believe that cryptocurrencies are safe and reliable assets, this may be the main focus of the promotion of local Bit reserves in the US.
