At the intersection of cryptocurrency and traditional finance, a new legislative proposal is sparking widespread discussion. Drafted by the Bitcoin advocacy group Satoshi Action Fund, the 2025 Bitcoin Strategic Reserve Act aims to integrate Bitcoin as a strategic reserve asset within the fiscal systems of U.S. states. This unprecedented initiative represents a bold step toward combating inflation and bolstering financial resilience amid growing global economic uncertainties.

1. Bitcoin: The New “Gold” for State Governments?

With the rise of the Trump administration, Aiying previously provided an in-depth analysis of the U.S. Bitcoin Strategic Reserve Act, which outlined plans to acquire 200,000 Bitcoin annually, reaching a total of 1 million within five years. This concept has come closer to reality with the introduction of the 2025 Bitcoin Strategic Reserve Act, which seeks to empower state financial officers to incorporate Bitcoin into fiscal reserves to counter inflation-driven asset devaluation.

Aiying also reflected on America’s history of major strategic acquisitions, such as the purchase of Manhattan, the Louisiana Purchase, and the 19th-century acquisitions of California and Alaska. These deals, initially considered risky, ultimately brought the U.S. trillions of dollars in returns and significantly bolstered its economic and strategic position.

A similar logic applies to the potential acquisition of Bitcoin today. As a forward-looking strategic asset, Bitcoin shares key characteristics with historically critical resources: scarcity and long-term appreciation potential. In the past, the U.S. expanded its territory, economic base, and strategic security through land and resource purchases. Now, Bitcoin, as a strategic asset of the digital age, shares similar characteristics with traditional resources like gold and oil. By acquiring Bitcoin and incorporating it into state fiscal reserves, the United States can build upon its historic successes, extending its financial dominance into the new era of the digital economy.

In the first section of the 2025 Bitcoin Strategic Reserve Act, lawmakers explicitly acknowledge that inflation has severely eroded the purchasing power of state finances and pension funds, undermining the economic well-being of residents. While state governments cannot control federal monetary policy or macroeconomic conditions, they bear the responsibility of safeguarding their fiscal health. Bitcoin, as an inflation-resistant asset, has therefore become a key consideration.

Data shows that Bitcoin’s market capitalization has surged over the past 16 years, now exceeding $1 trillion—an undeniable testament to its potential as a hedge against inflation.

2. Resilience and Innovation: The Intent Behind the New Legislation

The proposed bill outlines plans for state governments to incorporate Bitcoin and other digital assets into their fiscal investment portfolios as a means to combat inflation and navigate economic uncertainties. The core objectives of the legislation are:

• Protect state finances from inflation-induced asset devaluation.
• Flexible Investment Policies: Adapt swiftly to market changes and enhance returns.
• Align investment strategies with the goal of strengthening the state’s economic stability and financial resilience.

Flexibility is a central theme of the bill. In an increasingly complex and fast-changing global economy, traditional investment models often prove too rigid. The inclusion of Bitcoin and other digital assets introduces greater diversification, enabling state governments to better manage market risks.

3. Secure Custody: Safeguarding Digital Assets

The draft legislation imposes strict security requirements for the holding and management of digital assets. Specifically, Bitcoin custody can be handled in three ways: direct holding by state treasuries, through qualified custodians, or via exchange-traded products (ETPs).

To ensure security, the bill introduces a “Secure Custody Solution,” mandating exclusive government control over private keys stored in encrypted environments. Measures such as geographically dispersed data centers and multi-party governance structures aim to guarantee asset safety, alleviating public concerns about digital asset security. Key provisions of the “Secure Custody Solution” include:

• Exclusive Control of Private Keys: Private keys must remain under the sole control of government entities and accessible only in end-to-end encrypted environments.
• Geographically Dispersed Data Centers: Hardware storing private keys must be maintained in at least two geographically separate secure data centers to mitigate single-point failure risks.
• Multi-Party Governance: All transactions must be authorized through a multi-party governance structure, ensuring rigorous oversight and accountability.
• Disaster Recovery Mechanisms: Custody providers must implement robust disaster recovery protocols, ensuring state governments retain access to and control over assets in case of service disruptions.
• Regular Code Audits: Custodial solutions must undergo regular code audits and penetration testing by external firms, with any vulnerabilities addressed promptly.

4. Bitcoin Taxation: A New Funding Source for Public Services?

Section 5 of the bill addresses the use of Bitcoin for tax and fee payments. Under the proposal, tax payments made in Bitcoin would be deposited into the state’s general fund, with the equivalent amount in dollars credited to the designated digital asset account. This arrangement ensures fiscal flexibility while significantly increasing Bitcoin’s acceptance at the state level.

The process for Bitcoin-based tax payments is as follows:

1. Tax Payment: Taxpayers can pay taxes and fees using Bitcoin, which is first deposited into the state’s general fund account.
2. Fund Conversion: The general fund transfers an equivalent dollar amount to the designated digital asset account, ensuring financial balance.
3. Transparent Management: Blockchain technology ensures that Bitcoin payment flows are transparent, reducing risks of corruption and misuse.

Additionally, the bill permits state pension funds to invest in registered digital asset exchange-traded products, further diversifying investment opportunities. These measures suggest that Bitcoin could evolve beyond an inflation hedge to become a vital funding source for public services, gradually integrating into everyday life.

5. Behind the Legislation: An Experiment in Financial Innovation

The 2025 Bitcoin Strategic Reserve Act is undeniably a groundbreaking initiative and a reflection of the push to modernize financial systems. With Pennsylvania’s recent passage of the “Bitcoin Rights” Act, the introduction of this strategic reserve proposal feels both logical and momentous. As a staunch advocate for Bitcoin, the Satoshi Action Fund aims to expand Bitcoin’s application through legislation, offering policymakers a blockchain-centric perspective and helping them seize opportunities in the digital era.

To address the risks associated with Bitcoin’s high volatility, the draft includes several risk control measures:

• Investment Cap: State treasuries are limited to allocating no more than 10% of relevant fund assets to Bitcoin, preventing overreliance on a single asset.
• Asset Lending: State treasuries may lend Bitcoin to generate additional income, provided such actions adhere to guidelines set by fiscal officers and avoid increasing financial risk.
• Diversified Investment Strategies: States are encouraged to continue investing in traditional financial assets alongside Bitcoin to maintain overall portfolio stability.

Whether this ambitious proposal gains widespread acceptance and implementation will depend on discussions and evaluations by state governments and the public. However, the approach is undeniably thought-provoking. In essence, the 2025 Bitcoin Strategic Reserve Act represents a bold vision to integrate Bitcoin into state fiscal systems, enhancing the resilience and flexibility of public funds. Behind this legislation lies both an urgent drive for financial modernization and a cautious approach to managing emerging risks. Will this experiment succeed and pave the way for a new paradigm in government investments and financial innovation? Only time will tell. Aiying FundInsight remains committed to supporting both Web3 and traditional financial institutions, ensuring they navigate this unprecedented wave of transformation with confidence and stability.

Read the whole draft here: Satoshi Action Fund - Strategic Reserve Act

Disclaimer：

1. This article is reprinted from [AiYing Compliance],, All copyrights belong to the original author [IS FundInsight]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.