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Tennessee lawmakers will re-examine a proposal to establish a state Bitcoin reserve when the Senate Finance, Ways, and Means Committee convenes on SB 2639 next Tuesday, April 21.
The “Tennessee Strategic Bitcoin Reserve Act” intends for the state to hold Bitcoin as part of its asset reserves, positioning Tennessee as a frontrunner in cryptocurrency policy.
The Senate bill, championed by Sen. Kerry Roberts, has successfully passed the Senate Commerce and Labor Committee and now proceeds to the influential Finance committee, which supervises fiscal and expenditure measures. Its counterpart in the House, HB 1695 from Rep. Jody Barrett, has reached an impasse in the Finance, Ways, and Means Subcommittee after being scheduled after the budget and subsequently postponed this week, a move that halts its progression unless leadership reinstates it.
The legislation would empower the State Treasurer to invest a limited portion of designated state funds in BTC. The bill’s rationale highlights inflation as a primary concern. Legislators assert within the bill that escalating prices diminish the real value of assets held in the general fund, the revenue fluctuation reserve, and other state fiscal pools.
Bitcoin is characterized in the statute as a decentralized digital asset with a finite supply and worldwide liquidity. The bill posits that a prudent investor could employ such an asset to enhance long-term, inflation-adjusted returns.
“This is about responsible stewardship of public finances,” Barrett stated. He drew parallels between bitcoin and gold, describing it as a safeguard against inflation.
U.S. State efforts to pass Bitcoin reserve legislation
Tennessee is part of a growing movement among U.S. states considering Bitcoin-related legislation, with legislators in South Dakota and Kansas introducing bills that would permit the allocation of public funds to BTC or their inclusion in a strategic Bitcoin and digital assets reserve.
Concurrently, states such as Rhode Island and Florida have revisited or reintroduced statutes aimed at examining BTC, facilitating its adoption, or potentially incorporating it into state balance sheets under specific regulatory frameworks.
10% of Tennessee’s general fund into bitcoin
Under the current proposition, the Treasurer would be authorized to allocate resources from the general fund, the revenue fluctuation reserve, or other state funds approved by the legislature. Bitcoin exposure would be restricted to a maximum of 10% of each applicable fund at the moment of acquisition.
Annual acquisitions would be capped at 5% per fiscal year until the overall limit is attained. The bill permits passive appreciation in value to increase holdings beyond the limit without mandating divestment.
The statute confines investments exclusively to BTC. It prohibits allocations to any other cryptocurrencies or digital assets. Bitcoin could be held directly by the state, via a certified custodian, or through an exchange-traded instrument exclusively linked to BTC.
The bill establishes stringent custody protocols. A “secure custody solution” must safeguard private keys within encrypted hardware stored offline across a minimum of two distinct locations. Access would necessitate encrypted conduits and multi-party consent.
Transparency is also a fundamental aspect of the proposition. Biennially, the Treasurer would be obligated to issue a public report. This document would enumerate the quantity of bitcoin held, its monetary value at the time of purchase and at the conclusion of the reporting period, along with a summary of all transactions.
It would further incorporate a cryptographic verification mechanism enabling third parties to validate on-chain balances. Summaries of security evaluations would be accessible upon request.
The bill also empowers the Treasurer to establish a framework for accepting bitcoin for taxes, fees, or other state dues. Participation in this program would be voluntary. Any bitcoin received would be channeled to the general fund and accounted for at its prevailing market value. State agencies would receive reimbursements in U.S. dollars.
According to the portal: bitcoinmagazine.com