Millions of Americans may soon find out they’re crypto investors when their states leap into the markets even before the feds figure out what to do.
Updated Feb 4, 2025, 1:39 a.m. UTCPublished Feb 4, 2025, 2:00 p.m. UTC
Almost half of the state governments in the U.S. are either on a path toward putting some of their money into crypto or already have, and much of a suddenly booming interest in tying their financial futures to the digital-assets markets has come after U.S. President Donald Trump showed support for a national stockpile of digit assets.
In the surge of crypto legislative or financial efforts at the state level, 21 states are investing or looking into investing — generally in the industry’s leading token, bitcoin (BTC), and sometimes also in less volatile stablecoins that are designed to match the value of the U.S. dollar, according to a CoinDesk analysis. With states such as Arizona, Pennsylvania, Utah and Texas already digging into legislation to open public funds to buy cryptocurrencies, such initiatives may outpace the effort in Congress targeting a so-called Strategic Bitcoin R
Sixteen state legislatures are looking at bills to either establish digital assets stockpiles or to allow their state retirement funds to be partially invested in crypto, most of them introduced in recent weeks. Officials in another three states are engaged in serious discussions about joining in, and the money managers for two states — Michigan and Wisconsin — have already dipped parts of their public employees’ retirement portfolios into crypto exchange-traded funds (ETFs).
If the states begin pouring portions of their public funds into bitcoin and other digital assets, it would potentially lock down billions of dollars of the tokens for extended periods, boosting the value of the assets still openly circulating. Another effect: The states are potentially setting up millions of people to have personal stakes in the health of the crypto sector — whether they want to or not.
In several of the proposals, governments are looking to follow in the footsteps of Michigan and Wisconsin in pushing parts of their retirement funds and state pension investments into digital assets. Retired school teachers, law enforcement officers and other public employees will watch some of their financial security become dependent on the fluctuations of the crypto markets.
Other pieces of legislation would instruct state treasurers to spend as much as 10% of their public funds on a strategic reserve, with some specifying that qualifying digital assets must have at least a $500 billion market cap, leaving only bitcoin currently meeting the mark.
Arizona and Utah are building a lead after getting their efforts passed by legislative committees, but other states weighing some version of a crypto bill also include Illinois, Indiana, Kansas, Massachusetts, Missouri, Montana, New Hampshire, North Dakota, Ohio, Oklahoma, South Dakota and Wyoming. Others, such as Alabama, Florida and Kentucky are considering proposals from state officials or on the verge of pursuing legislation. The states interested in digital assets reserves are predominantly Republican-majority in their politics, and the reasons the lawmakers say they’re backing the bills include investment diversity and embracing technological innovation.
The amount put away by the states could eventually be overshadowed by the U.S. government’s own reserve, if that effort comes to pass. President Trump, in his wider executive order on U.S. crypto policy, called for his administration to “evaluate the potential creation and maintenance of a national digital asset stockpile.” The order suggested it may be built from government seizures of crypto in criminal cases.
The idea had initially been pitched by Senator Cynthia Lummis, the Wyoming Republican who devotes much of her political bandwidth to supporting crypto and was named as the first chair of the Senate Banking Committee’s digital assets subcommittee. Her bill to set up a U.S. reserve calls for the country to obtain about $20 billion worth of the tokens in the first year and to get another 200,000 in each of the next four years, until the U.S. is eventually holding a million bitcoin.
While Lummis’ pitch has called it a “Strategic Bitcoin Reserve,” it’s not — like the petroleum reserve — designed for deployment when economic conditions warrant it. It’s structured more as a long-term investment, requiring the U.S. to hold the assets for at least 20 years.
That would be almost 5% of the eventual, finite supply of global bitcoin going untouched for at least two decades. Combined with whatever the states seek to stockpile, U.S. governments would secure a significant percentage of the asset, in addition to the towering reserves held by the U.S. ETF issuers such as BlackRock and Grayscale and corporate investors led by MicroStrategy.
The states’ interest in bitcoin potentially lands Satoshi Nakamoto’s ultimate exercise of financial outsiders firmly in the realm of the insiders, adding the asset to the core functions of government. The Bitcoin white paper meant to establish a system of transactions outside of the need of financial-firm intermediaries or government oversight.
States setting up bitcoin funds managed in part by new laws could become some of the most stable of the industry’s institutional investors. And naming bitcoin as a “strategic reserve” puts the digital tokens on par with gold and oil as economic mainstays, despite the very different nature of cryptocurrencies and their practical weaknesses as an inflation hedge.
From the perspective of their citizens or public employees, states that grab crypto stakes will come away with two potential outcomes: Millions of people will enjoy more comfortable and well-funded retirements or public services; or millions of people will watch a crypto crash eat into the safety net they’re counting on.
It could be “disastrous for tens of millions of retirees if government officials gambled with state pension funds to buy bitcoin or crypto,” said Dennis Kelleher, CEO of Better Markets, a Washington-based advocacy group that’s critical of the dangers of digital assets.
He called the idea of a government bitcoin stockpile “a brazen attempt by a handful of crypto billionaires and their political allies to take money out of Main Street taxpayers’ pockets to create artificial demand for a highly volatile product that suffers from boom-bust cycles, is full of fraudulent trading and pricing in unregulated markets, and has no socially legitimate use, but is loved by criminals.”
Wagers on the prediction site Polymarket have put the odds of one of the states beginning to set aside bitcoin reserves before the end of this month at 11%, and the chances of the U.S. setting up such a reserve this year at the national level are at 45%.
It may already be a trend that governments around the world can’t ignore.
“We anticipate more nation-states, central banks, sovereign wealth funds, and government treasuries will look to establish strategic positions in bitcoin,” Fidelity Digital Assets researchers predicted in a look-ahead report for 2025. “Facing challenges such as debilitating inflation, currency debasement, and increasingly crushing fiscal deficits, not making any bitcoin allocation could become more of a risk to nations than making one.”
Jesse Hamilton
Jesse Hamilton is CoinDesk’s deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.
