Bill
SD 422
Massachusetts may invest up to 10% of the Commonwealth Stabilization Fund in Bitcoin/digital assets and hold them in a new Commonwealth Bitcoin Strategic Reserve with strict custod
Status and timetable
- Introduced: February 27, 2025
- Legislative actions: Referred to the Senate/House Revenue committee on 2025-02-27; House concurred (status indicates the House has concurred with the Senate version)
- Purpose: Create a Commonwealth-managed reserve fund to hold and manage Bitcoin and other digital assets, with authority to invest a portion of state funds under defined safeguards.
What the bill would do (Purpose and scope)
- Establish a new Commonwealth Bitcoin Strategic Reserve fund, to be administered by the State Treasurer.
- Define key terms related to Bitcoin and other digital assets to set governance and operational standards.
- Allow the Treasurer to invest unexpended, unencumbered, or uncommitted funds in Bitcoin or digital assets via the new reserve, subject to annual limits and safeguards.
- Enable potential lending of Bitcoin/digital assets if such lending does not increase the Commonwealth’s financial risk, with regulations to be promulgated.
Key provisions and changes (substantive content)
- Definitions (Section 72):
- Bitcoin: The decentralized digital currency launched in 2009, including related exchange-traded products regulated by the SEC.
- Digital Asset: Broad category including Bitcoin, stablecoins, NFTs, and other digital-only assets.
- Exchange-traded Product (ETP): SEC/CFTC/Division-approved instrument traded on a U.S. regulated exchange, deriving value from a pool of assets.
- Private Key: Cryptographic key used to sign blockchain transactions.
- Qualified Custodian: State-chartered or federally regulated entity capable of custody of Bitcoin/digital assets for an approved ETP.
- Secure Custody Solution: A multicomponent custody system meeting specific security, governance, auditing, disaster recovery, and logging requirements.
- Creation of Commonwealth Bitcoin Strategic Reserve (b): Establishment of a separate fund administered by the State Treasurer.
- Investment authority (c–d):
- The Treasurer may invest funds from the reserve in Bitcoin/digital assets with money from the Commonwealth Stabilization Fund (as allocated by the legislature).
- Annual investment cap: Investments in Bitcoin/digital assets may not exceed 10% of the total amount deposited in the Commonwealth Stabilization Fund for that fiscal year.
- Authority to deposit seized digital assets into the fund.
- Holding and custody (e):
- Assets acquired for the fund shall be held directly by the Treasurer.
- Holdings must be protected via a secure custody solution, either by a qualified custodian or in the form of an ETF issued by a registered investment company.
- Lending (f):
- If lending Bitcoin/digital assets does not increase financial risk to the Commonwealth, the Treasurer may lend assets to generate additional returns, with regulations to be promulgated.
Who would be affected
- Commonwealth of Massachusetts (State Treasury and the General Fund)
- The State Treasurer (administration, custody, and regulatory compliance)
- Qualified custodians and investment firms managing digital assets or related ETFs
- Legislative bodies responsible for setting the annual funding level of the Commonwealth Stabilization Fund (to determine the 10% ceiling)
Procedural and timeline notes
- The bill builds on Chapter 29 of the General Laws, inserting a new Section 72 after Section 71.
- The 10% investment cap is tied to the annual size of the Commonwealth Stabilization Fund as allocated by the Legislature.
- Regulatory framework for lending and custody would be established by the Treasurer through promulgated regulations.
Potential impact and considerations
- Policy aim: Diversify state assets and explore structured exposure to digital assets within a defined risk framework.
- Risk management: The bill imposes strict custody, governance, auditing, and disaster recovery criteria; the 10% cap helps limit exposure to market volatility.
- Regulatory overlays: The investment and custody approach would intersect with SEC/CFTC/Banking regulations and require ongoing compliance and risk oversight.
- Fiscal implications: Potential returns from digital-asset investments could augment state resources if prudent outcomes are achieved; however, volatility and liquidity risk remain considerations.
Note: This summary reflects the bill text as introduced, focusing on substantive provisions and their potential effects. If enacted, further implementing regulations and fiscal analyses would clarify operational details and risk management.
Compiled from official sources — confirm details with the bill’s official record.
Sign in to ask a question.
