Kentucky has become the latest U.S. state to push for a Bitcoin reserve, joining a growing list of states exploring digital asset adoption at the government level. On February 6, Kentucky State Representative Theodore Joseph Roberts introduced KY HB376, a bill that, if passed, would allow the state to allocate up to 10% of its excess reserves into digital assets, including Bitcoin.
Bill Details and Eligibility Criteria for Kentucky’s Bill
The bill proposes that the State Investment Commission be authorized to invest excess state funds into digital assets. Although it does not specify Bitcoin explicitly, the bill outlines criteria for eligible cryptocurrencies, limiting them to assets other than stablecoins with a market capitalization of over $750 billion, averaged over the previous calendar year. Currently, Bitcoin is the only cryptocurrency that meets this requirement, with a market capitalization of approximately $1.9 trillion. Ether, the second-largest cryptocurrency, falls short with a market cap of $330 billion and would need significant growth to qualify.
Kentucky follows in the footsteps of 15 other states, including Arizona, Alabama, Florida, Massachusetts, Missouri, New Hampshire, North Dakota, South Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, Kansas, and Wyoming, in proposing legislation related to Bitcoin reserves. This growing trend signals increasing recognition of Bitcoin as a potential state-held asset.
Potential Federal Implications and Challenges
According to blockchain expert and author Anndy Lian, Kentucky’s move could set the stage for a broader federal discussion on Bitcoin’s role in public reserves. “If Kentucky moves forward, it creates a roadmap for others to follow.”
However, the bill also raises regulatory concerns. If Bitcoin is included in public reserves, it could force federal agencies such as the SEC and the Federal Reserve to determine its classification—whether as a commodity, security, or a new asset class entirely. Lian also cautioned about potential governance issues, noting that Bitcoin’s volatility could pose risks for taxpayers.
Institutional Interest and Adoption Hurdles
Despite concerns over price fluctuations, Lian believes Kentucky’s bill represents a strong endorsement of Bitcoin’s legitimacy. “It could drive institutional interest through the roof, pushing other states and even countries to consider similar moves,” he said. However, he emphasized that successful adoption would require Kentucky to implement strong custody solutions, cybersecurity frameworks, and an exit strategy in case of market downturns.
Kentucky’s proposal comes just a week after Illinois introduced its own Bitcoin reserve bill, which suggested a minimum BTC holding period of five years. As more states explore Bitcoin reserves, the push for digital asset integration at the state level could further influence national policy discussions on cryptocurrency adoption and regulation.
