South Dakota bill would let the state invest up to 10% in Bitcoin

South Dakota is taking another run at the Bitcoin reserve idea, and this time the fine print reads like a security policy you would hand to an auditor.

House Bill 1155, introduced by Republican Rep. Logan Manhart, would update the states public investment rules to add Bitcoin as an eligible investment. The measure cleared its first procedural step on Jan. 27 and was sent to the House Commerce and Energy Committee, where it will have to survive the early gatekeeping that tripped up similar efforts last year. 

The bill sets a hard cap, limiting the State Investment Council to investing no more than 10% of state money made available for investment in Bitcoin. The bill also spells out three paths to get exposure. The council could hold Bitcoin directly, it could use a qualified custodian such as a bank or trust company authorized to custody digital assets, or it could buy an exchange-traded product issued by a registered investment company. 

Where the proposal gets unusually specific is custody. If the state holds Bitcoin directly, the private key must remain exclusively under the Investment Councils control, kept in encrypted hardware, stored across at least two geographically separate secure data centers, and governed by multi-party approval for transactions. The bill even calls for regular code audits and penetration testing, plus a disaster-recovery plan that preserves access if a provider fails. HB 1155 also defines what counts as Bitcoin, down to the genesis block on Jan. 3, 2009 and the proof-of-work chain recognized by independent nodes as having the greatest cumulative work.

South Dakota is not alone. A growing number of states have floated similar reserve concepts, pitching Bitcoin as a hedge or a long-term diversifier, even as critics point to volatility and the politics of putting public money into a speculative asset.