South Dakota Introduces Bill That Would Allow the State to Invest Public Funds in Bitcoin
- South Dakota introduces a bill that allows the state to invest public funds in Bitcoin under defined limits rules.
- Lawmakers revive the Bitcoin debate after a similar proposal stalled during the 2025 legislative session review.
- The bill sets custody and oversight rules for Bitcoin exposure through direct holdings or regulated products approval.
The state of South Dakota in the US has proposed a bill which would enable the state to use public funds in Bitcoin. The proposal revives debate on digital assets in state-controlled portfolios.
Lawmakers now reassess how Bitcoin fits long-term investment planning. The bill returns after a similar effort stalled last year. This time, supporters aim to keep the focus narrow and regulated.
South Dakota Reopens Bitcoin Investment Debate
On January 27, South Dakota lawmakers were presented with House Bill 1155. The bill suggests modest exposure of the state-managed investment funds to Bitcoin. Representative Logan Manhart introduced the legislation during the current session. He previously introduced a similar measure in 2025, House Bill 1202.
The prior suggestion, however, was thrown out by committee. Regulatory uncertainty and volatility at the time were mentioned by lawmakers. Regardless of those concerns, the interest in Bitcoin policy did not subside. Therefore, the new bill revives the discussion under the same legislative framework.
The proposal places South Dakota among states reviewing Bitcoin for public finance. Meanwhile, several states continue to test digital asset strategies. Lawmakers weigh diversification benefits against market risks. The bill remains at an early stage.
Scope of the Proposed Bitcoin Allocation
House Bill 1155 would amend South Dakota’s investment code. The amendment would allow Bitcoin allocations within state-managed funds. The State Investment Council would oversee any decision. The bill sets a maximum allocation of 10%.
Estimates place the state investment pool between $16 and $17 billion. As a result, full allocation authority could reach billions. However, the bill does not require immediate investment. Instead, it allows optional exposure under council discretion.
The proposal permits Bitcoin exposure through direct holdings or exchange traded products. This flexibility allows risk-based decision making. At the same time, allocation limits restrict excessive exposure. Therefore, the bill balances access with control.
Custody Standards and Regulatory Oversight
The bill outlines strict custody requirements for direct Bitcoin holdings. Qualified custodians must include federally or state chartered banks. Trust companies may also provide custody services. These standards aim to protect public assets.
Exchange traded products must meet regulatory approval standards. Oversight may come from the SEC or the CFTC. South Dakota’s Division of Banking may also approve products. As a result, the bill aligns Bitcoin exposure with existing regulations.
Lawmakers raised similar safeguards during earlier debates. They focused on security and valuation clarity. The new bill maintains those guardrails. Therefore, it reflects continuity rather than expansion. Additionally, Michigan also introduced a bill allowing state funds to invest up to 10% in approved digital assets last year.
The bill will now be discussed in committee by the South Dakota lawmakers. The next steps will be based on fiscal and legal analysis. The debate centers on diversification and risk discipline. The outcome may shape how states approach Bitcoin in public investment policy.
