A new proposal in the Midwest is pushing Bitcoin out of the political sidelines and straight into state-level treasury discussions, as lawmakers debate whether the asset belongs alongside bonds and public funds.
Instead of treating Bitcoin as a speculative experiment, legislators in South Dakota are exploring its role as a long-term financial hedge. A newly introduced bill would give the state’s Investment Council permission to allocate part of its reserves into Bitcoin, effectively laying the groundwork for a state-level Bitcoin reserve.
Key Takeaways
South Dakota is considering adding Bitcoin to its state investment reserves.
Any Bitcoin allocation would be capped at 10% of available funds.
The proposal emphasizes strict custody, security, and institutional controls.
The idea comes from Logan Manhart, who argues that digital scarcity and decentralization could offer protection similar to hard assets in an era of fiscal uncertainty. The proposal sets a clear boundary: no more than 10% of available state funds could be deployed into Bitcoin, ensuring that exposure remains controlled rather than dominant.
Bitcoin joins the institutional conversation
If approved, Bitcoin would sit within the same investment framework as traditional instruments such as government securities and exchange-traded products. Rather than forcing direct ownership, the bill allows flexibility – the state could hold Bitcoin directly, rely on regulated custodians, or gain exposure through exchange-traded vehicles.
This approach mirrors a broader institutional trend where public entities are no longer debating whether Bitcoin exists, but how it should be handled responsibly within existing financial systems.
Security first, speculation second
One of the most distinctive elements of the proposal is its emphasis on operational security. Any direct Bitcoin holdings would remain under the exclusive control of the State Investment Council, with private keys protected through hardware-based encryption. Those keys would be split across multiple secure locations, reducing single-point-of-failure risks.
On top of that, the bill outlines strict governance measures: multi-party authorization for transactions, disaster recovery planning, regular penetration testing, and ongoing audits. The message is clear – if Bitcoin is treated as public money, it must meet institutional-grade security standards.
National momentum shapes local decisions
South Dakota’s move doesn’t exist in isolation. At the federal level, discussions around a Strategic Bitcoin Reserve continue, with advisers to President Donald Trump confirming that digital assets remain part of the administration’s long-term financial strategy.
Several states have already taken concrete steps. Texas publicly disclosed a Bitcoin purchase last year, signaling that state treasuries are increasingly willing to experiment beyond fiat-only reserves.
What comes next
The bill, known as House Bill 1155, still faces committee scrutiny before it can advance further. But regardless of its final outcome, the proposal highlights a growing shift in public finance: Bitcoin is no longer just a market instrument. For some policymakers, it is becoming a candidate for reserve status, debated not on hype, but on custody, limits, and long-term risk management.
