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Dennis Porter, CEO of Satoshi Action Fund, announced on social media that the firm has publicly released its Strategic Bitcoin Reserve Policy Model, which is now available for download.
It is reported that the “Bitcoin Bill” passed by the Pennsylvania House of Representatives on October 25th was drafted by the Bitcoin advocacy group Satoshi Action Fund, which marked the latest effort to help lawmakers understand the details of blockchain technology and Bitcoin.
BREAKING: We have officially ‘open sourced’ our Strategic Bitcoin Reserve’ model policy. https://t.co/dPebIGNmzE pic.twitter.com/G7tgRLwoTW
— Dennis Porter (@Dennis_Porter_) November 17, 2024
Key Features of the Policy Model
The Bitcoin Strategic Reserve Policy Model(available here) is designed to help states incorporate Bitcoin into their reserves responsibly and securely. Some of its key features are:
- Inflation Mitigation: Recognizing Bitcoin as a hedge against inflation, the model highlights its rising value and acceptance among sovereign nations and major financial institutions like BlackRock and Fidelity.
- Investment Flexibility: State treasurers are authorized to allocate up to 10% of certain public funds, including general and stabilization funds, to Bitcoin investments.
- Secure Custody Requirements: Strict guidelines ensure digital assets are held through secure custody solutions or qualified custodians, minimizing risks and enforcing robust governance structures.
- Legislative Intent: The policy emphasizes protecting state funds against inflation while enhancing economic security and maintaining flexibility to adapt to emerging financial opportunities.
The model also addresses operational aspects, such as the use of Bitcoin in tax payments and provisions for state retirement funds to invest in exchange-traded products backed by digital assets. The draft also outlines definitions for ETP, Bitcoin, Secure Custody Solution, Digital Asset a, Private Key.
As per the draft, the State Treasurer is authorized to invest up to 10% of public funds from the State General Fund, Budget Stabilization Reserve Fund, State Investment Fund, or other legislatively approved funds in Bitcoin. Policy Director at Satoshi Action Fund, Eric Peterson noted, “States have different funds so this is up to lawmakers to make judgment decisions.”
According to the Policy model, acquired digital assets must be securely held either directly by the state using a Secure Custody Solution, through a Qualified Custodian, or as exchange-traded products from registered investment companies. Additionally, the Treasurer may loan digital assets to generate returns, provided it does not increase financial risk, after established rules.
Section 5 of the draft concludes, “All taxes or fees paid to the state in Bitcoin shall be transferred to the state’s general fund. The states general fund shall reimburse whatever fund the qualifying digital asset was designated to with United States currency.”
With this policy model in place, Satoshi Action Fund aims to help the integration of Bitcoin into public finance systems across the United States especially as discussion around establishing a Bitcoin National Reserve gain momentum under Trump administration.