In the first part of the draft, lawmakers specifically pointed out that Inflation has seriously eroded the purchasing power of the state's finances and retirement funds, affecting the economic well-being of residents. Although the state government cannot control the federal money supply and macroeconomic policies, they have a responsibility to protect the state's financial health.

Article Author: AY FundInsight

At the intersection of Cryptocurrency and TradFi worlds, a new legislative proposal is sparking widespread discussion. This draft bill, titled "2025 BTC Strategic Reserve Act", is drafted by BTC advocacy group Satoshi Action Fund and aims to incorporate BTC as a strategic reserve tool into the fiscal systems of various states in the United States. This is not only an unprecedented attempt, but also a bold step taken to combat Inflation and enhance financial resilience in the backdrop of increasing global economic uncertainties.

BTC: The new 'gold' of the state government?

With Trump's presidency, Aiying's previous article introduced in detail the 'American BTC Strategic Reserve Act': purchasing 200,000 BTC per year, reaching 1 million within five years, getting closer to reality, and even proposing the '2025 BTC Strategic Reserve Act', aiming to authorize state financial officials to include BTC in the financial reserve to hedge against asset depreciation caused by inflation.

Of course, Aiying reviews many strategic acquisitions in American history, such as the Manhattan acquisition, the Louisiana Purchase, and the purchases of California and Alaska in the 19th century, which brought trillions of dollars in returns to the United States. These acquisitions initially seemed risky, but were ultimately proven to be significant contributions to the American economy and strategic position.

The same logic can be applied to the potential purchase of Bitcoin today. As a forward-looking strategic asset, Bitcoin has scarcity and long-term appreciation potential similar to those important resources in history. In history, the United States expanded its territory, economic foundation, and strategic security through the purchase of land and resources. Today, Bitcoin, as a strategic asset of the digital age, has similar characteristics to traditional resources such as gold and oil. By purchasing Bitcoin and incorporating it into state financial reserves, the United States can continue the successful experience of achieving great achievements in history and expand its financial dominance to the new era of the digital economy.

In the first part of the "2025 BTC Strategic Reserve Act," lawmakers explicitly pointed out that Inflation has severely eroded the purchasing power of the state's finances and retirement funds, affecting the economic well-being of residents. Although the state government cannot control the federal money supply and macroeconomic policies, they have a responsibility to protect the state's financial health. Therefore, BTC, as an anti-inflation asset, has been put on the agenda. Data shows that BTC's Market Cap has skyrocketed in the past 16 years, now exceeding 1 trillion dollars, undoubtedly demonstrating its potential in resisting inflation.

2. Flexibility and Innovation: What is the Intention of the New Legislation?

In the draft, the state government plans to legislate to allow BTC and other digital assets to be included in the state treasury's investment portfolio as a means of dealing with inflation and economic uncertainty. The core objective of the legislation is:

Protect the purchasing power of state finances and prevent assets from depreciating due to inflation.

By adopting flexible investment policies, we can quickly respond to market changes and enhance returns.

Ensure that the investment strategy aligns with the goals of enhancing state economic security and financial resilience.

The bill emphasizes flexibility. In the context of an increasingly complex and rapidly changing global economy, traditional investment models often appear too rigid, while the introduction of digital assets such as BTC provides more diverse options for investment portfolios, enabling state governments to better respond to market risks.

3. Secure Custody: Measures to safeguard digital assets

In the holding and management of digital assets, the draft proposes strict requirements for security. Specifically, the custody of BTC includes three methods: direct state finance holding, holding by qualified custodians, or holding through registered exchange traded products (ETP). At the same time, to ensure the security of digital assets, the draft proposes a "secure custody solution" - requiring the Private Key to be controlled only by the government, stored in an encryption environment, and ensuring the security of assets through geographically dispersed data centers and longer governance structures. This is aimed at eliminating public doubts about the security of digital assets and ensuring the safety and stability of digital assets in custody and management.

Specifically, the 'Secure Custody Solution' includes the following measures:

Private Key proprietary control: encryptionPrivate Key must be controlled by government entities and can only be accessed in an end-to-end encryption environment.

Geographically dispersed data centers: The hardware devices of the Private Key must be stored in at least two geographically dispersed secure data centers to prevent the risks of a single location failure.

Longer governance structure: authorization for each transaction must go through the longer governance structure to ensure that all transactions undergo strict approval and recording.

Disaster Recovery Mechanism: The escrow service provider must have a sound disaster recovery mechanism to ensure that the state government can still access and manage assets when the provider is unable to perform its duties.

Regular Code Audits: Custodial solutions must undergo regular code audits and penetration testing by auditing companies, and any vulnerabilities discovered must be promptly repaired.

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

Part five of the bill relates to the payment of taxes and fees. Under the draft, taxes and fees paid in Bitcoin will be transferred to the state's general fund, and the state fund will compensate the corresponding digital asset account in USD. This arrangement not only ensures the flexible use of funds, but also signifies a significant increase in the acceptance of BTC at the state level.

Specifically, the process of BTC paying taxes is as follows:

Tax Payment: Taxpayers can pay taxes with BTC, which will first be deposited into the state's general fund account.

Fund conversion: The general fund of the state will compensate the specified digital asset account with an equivalent amount in US dollars to ensure financial balance.

Transparent management: Through blockchain technology, the income and expenditure process of Bitcoin (BTC) is made public and transparent, reducing the risks of corruption and misuse of funds.

In addition, the draft also allows state pension funds to invest in registered digital asset exchange products, further enriching investment channels. These measures indicate that Bitcoin is not only a tool against inflation, but may also become part of the source of public service funds, gradually integrating into people's daily lives.

Behind the Legislation: An Experiment in Financial Innovation

The '2025 BTC Strategic Reserve Act' is undoubtedly an unprecedented attempt and a microcosm of the modernization of the financial system. With the passage of the 'BTC Rights' Act in Pennsylvania, the introduction of this strategic reserve act appears logical and has profound significance. As an advocate of BTC, the Satoshi Action Fund attempts to promote the application of BTC in a wider range of fields through such legislation, providing legislators with a perspective to understand blockchain technology and helping them seize the opportunities of the digital era in the policy-making process.

Of course, in order to deal with these risks of BTCFluctuation, the draft proposes some risk control measures:

Investment limit: The state's investment ratio in Bitcoin shall not exceed 10% of the total amount of the relevant funds to prevent over-reliance on a single asset.

Asset lending: Without increasing financial risk, the state finance can obtain additional income by borrowing BTC, but must follow the rules set by state finance officials.

Diversified investment strategy: Encourage state governments to continue investing in other TradFi assets while introducing Bitcoin to ensure the stability of the overall investment portfolio.

For this proposal, whether it can be widely accepted and implemented in the end still depends on the discussions and evaluations of various state governments and the public. But it cannot be denied that the train of thought is quite worth learning from.

In short, the '2025 BTC Strategic Reserve Act' is full of ambition, attempting to enhance the resilience and flexibility of public funds by incorporating the emerging digital asset BTC into the state's fiscal system. Behind the legislation, there is both an urgent need to promote financial modernization and a cautious prevention of emerging risks. Whether this experiment can succeed and provide a new paradigm for future government investment and financial innovation remains to be seen. Aiying FundInsight will continue to support Web3 and traditional Financial Institutions, helping them navigate this unprecedented transformation and innovation with stability.

Draft link: