The proposed South Carolina bill allows state treasurers to invest 10% of state funds

Yesterday, Rep. Jordan Pace reintroduced the Strategic Digital Asset Reserve Bill H. 4256 to enter the South Carolina House.

The focus of the bill includes the fact that it enables the state treasurer to invest 10% of the state’s management, including digital assets, including Bitcoin, and that the state’s strategic digital asset reserves can include up to one million bitcoins.

The bill also states that the reason for such reserves is that “inflation erodes the purchasing power of assets held in state funds” and that “Bitcoin (dispersed digital assets) and other digital assets provide unique properties that can act as a hedge against inflation and economic volatility.”

The bill does not specify whether state officials should hold private keys to their accumulated bitcoin and other digital assets, although it enables state treasurers to develop policies and agreements to protect assets held in reserves, including the use of cold storage or the use of third parties to maintain Assets Condody’s contract. National Treasurer can also use third parties to assist in the creation, maintenance and management of reserves.

Under the bill, the state treasurer will be responsible for preparing a biennial report that includes the total amount of digital assets held in the reserve, the dollar value of those assets, and transactions and expenses related to the reserve since the last report. In addition, the state finance supervisor will be required to issue a certificate of reserve certificate, which includes the public address of digital assets held in the reserve on the official state website, allowing citizens to independently review and verify the holdings of the reserve fund.

Finally, the bill provides for audits of strategic digital asset reserves, which include checking the security quality of custody solutions; assessing compliance with local, state and federal laws; and assessments of internal controls to mitigate cyberattacks and mismanagement.

Under the Act, independent audits should be conducted annually and submitted to the relevant oversight committee. Within 90 days of issuing the report, any recommendations arising from the independent audit must be addressed and the Oversight Committee must also be provided with a follow-up report detailing the corrective action.