South Dakota Reopens the Debate Over Bitcoin as a State Asset
South Dakota revives a bill that would allow the state to invest up to 10% of revenues in Bitcoin under strict custody rules.
A proposal to allow South Dakota to invest public funds in Bitcoin has returned to the state legislature, reviving a debate that has quietly gained momentum across parts of the United States. Representative Logan Manhart has reintroduced House Bill 1155, a measure that would permit the State Investment Council to allocate a portion of state revenues to Bitcoin under tightly defined custody and governance rules.
The bill, which was first floated last year and later put on hold, would authorize the council to devote up to 10% of state revenues to Bitcoin as part of its broader investment strategy. Manhart has framed the proposal as an effort to promote what he calls “strong money” in support of a “strong state,” positioning Bitcoin as a long-term hedge rather than a speculative trade.
While the core premise remains unchanged from the earlier version, the revised bill places far greater emphasis on security, custody and oversight. Any Bitcoin acquired by the state would need to be held either directly by the State Investment Council using a secure custody solution or through a qualified custodian acting on its behalf. As an alternative, the bill allows exposure via a regulated investment company offering a Bitcoin-linked exchange-traded product.
The custody requirements outlined in HB 1155 are unusually prescriptive. Private keys would have to be stored in hardware-secured, encrypted environments and used exclusively through end-to-end encrypted channels. Control of those keys would rest solely with the State Investment Council, with access governed by password-less authentication systems tied to government-issued devices.
To reduce operational and security risks, the proposal also requires key hardware to be distributed across at least two geographically distinct, secure data centers. A multi-party governance structure would be mandatory, with all user actions tracked and recorded as part of the transaction authorization process. Custody providers would need to maintain a disaster recovery plan and conduct frequent code audits and penetration tests.
If passed and signed into law, the bill would formally add Bitcoin to the list of assets the State Investment Council is permitted to hold, alongside more conventional instruments such as government bonds and exchange-traded funds. South Dakota would then join a small but growing group of U.S. states experimenting with formal crypto-related legislation. As of January 2026, states including Texas, Arizona and New Hampshire have enacted measures allowing the storage of confiscated crypto assets or limited Bitcoin investments.
The renewed push at the state level comes as federal efforts to establish a U.S. Bitcoin reserve remain entangled in legal and administrative hurdles. Earlier this month, West Virginia State Senator Chris Rose introduced legislation known as the Inflation Protection Act, which would allow the state treasury to invest in precious metals, certain digital assets and stablecoins under defined conditions. Under that proposal, only digital assets with a market valuation exceeding $750 billion in the prior year would qualify, a threshold that currently leaves Bitcoin as the sole candidate.
At the federal level, momentum has been slower. Although President Donald Trump signed an executive order in March 2025 establishing a Strategic Bitcoin Reserve and a Digital Asset Stockpile, implementation has been delayed. According to White House Crypto Council Director Patrick Witt, complex legal provisions and the absence of explicit authority for direct Bitcoin purchases have limited progress.
Against that backdrop, South Dakota’s proposal highlights a broader shift in how state governments are approaching Bitcoin. Rather than waiting for federal clarity, some legislatures are testing narrowly scoped frameworks that treat Bitcoin as a strategic asset, while attempting to address volatility and security concerns through strict governance. Whether HB 1155 advances this time remains uncertain, but its return signals that the conversation around public Bitcoin reserves is far from over.
