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SB 2639

Public Funds and Financing - As introduced, enacts the "Tennessee Strategic Bitcoin Reserve Act." - Amends TCA Title 9, Chapter 4.

114th Regular Session (2025-2026) Introduced by Kerry Roberts

Tennessee may invest up to 10% of certain funds in bitcoin with strict custody, reporting, and oversight, and may accept bitcoin for state payments on a voluntary basis.

Placed on Senate Finance, Ways, and Means Committee calendar for 4/21/2026
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WeVote Research Nonpartisan
Bill Summary · SB 2639

Summary of Bill: Tennessee Strategic Bitcoin Reserve Act (SB 2639 / HB 1695)

Jurisdiction: Tennessee | Session: 114 | Status: Introduced; referred to committees

Purpose and intent
- Enacts the Tennessee Strategic Bitcoin Reserve Act. The primary intent is to authorize the state treasurer to allocate a limited portion of eligible state funds to bitcoin, with robust safeguards for custody, security, and reporting.
- The bill frames bitcoin as a decentralized digital commodity with limited supply and 24/7 liquidity, suggesting diversification of long-horizon public portfolios to improve risk-adjusted, inflation-adjusted returns.

Key provisions and changes
1. Definitions and standards (9-4-1603)
- Bitcoin: decentralized cryptocurrency created by a peer-to-peer network, first mined in 2009, secured by a proof-of-work blockchain.
- Cryptocurrency, digital commodity, exchange-traded product (ETP), qualified custodian, and secure custody solution are defined.
- Secure custody solution: multi-facility, encrypted, non-network-connected storage of private keys; end-to-end encrypted access; multi-party governance; immutable audit logs; annual third-party code reviews/penetration tests; disaster-recovery planning.

  1. Investment authorization and limits (9-4-1604)

    • Treasurer may invest funds from:
      • General Fund
      • Revenue Fluctuation Reserve
      • Any other designated state fund
    • Cap: bitcoin holdings may not exceed 10% of each fund’s total assets at purchase time.
    • Annual acquisition cap: no more than 5% of a fund’s total assets in a single fiscal year until the 10% cap is reached.
    • Post-cap: passive appreciation above the cap does not require divestment unless directed by the treasurer.
    • Holding forms: bitcoin may be held directly by the state, by a qualified custodian, or in the form of an ETF/ETP; ETF/ETP positions must be aggregated with direct holdings for cap purposes.
    • No authorization for investing in digital assets other than bitcoin.

  2. Custody and internal procedures (9-4-1605)

    • Treasurer must adopt procedures for secure custody (key generation/storage/transaction authorization/incident response/continuity).
    • Qualified custodians must be supervised by their primary regulator, provide SOC 2 Type II reports, and maintain insurance coverage proportional to assets under custody.
    • No single private entity may hold an entire private key or key shard enabling unilateral transfers.
    • By July 1, 2028, the treasurer must implement an internal self-custody procedure and hold at least 10% of total state-owned bitcoin through that self-custody.

  3. Reporting and oversight (9-4-1606, 9-4-1607)

    • Biennial reporting: by Oct 1 of each even-numbered year, publish on the treasurer’s site and provide to Senate Finance/Ways & Means and House counterpart (for:
      • quantity held at end of the prior fiscal biennium
      • USD value at acquisition and on reporting date
      • purchases/sales/transfers since last report
      • realized gains or income
      • cryptographic proof or verifiable on-chain balance
    • Independent security assessments: available upon request (redacted as needed).
    • Rulemaking: treasurer may promulgate rules under the Uniform Administrative Procedures Act.
    • Investment policy statement: due to the State Funding Board by Jan 1, 2027, covering risk metrics and rebalancing guidelines.

  4. Tax payments and optional acceptance (9-4-1608)

    • Treasurer may establish a program to accept bitcoin for state taxes, fees, or obligations.
    • Bitcoin received must be transferred to the General Fund at market value; payer and collecting department/agency are reimbursed in USD.
    • Participation is voluntary for both payers and agencies.

  5. Evaluation and sunset review (9-4-1609)

    • Comprehensive evaluation of the reserve’s performance and risk must be submitted to the General Assembly by Oct 1, 2032.
    • Committees may recommend continuation, revision, or repeal based on the evaluation.

  6. Effective date and severability

    • Effective July 1, 2026; provisions are severable if any part is invalid.

Fiscal and administrative impact (per fiscal note)
- Estimated state government expenditures:
- One-time: around $1.5 million in FY 2026-27 for consulting and information systems.
- Recurring: about $1.716 million annually starting FY 2026-27 for custodial fees, IT security, regulatory costs, accounting and compliance, reporting, etc.
- Total estimated increase in state expenditures: $3.216 million in FY 2026-27; $1.716 million in subsequent years.
- Revenue impact and broader economic impact are uncertain due to unknown participation levels by agencies and taxpayers.
- The fiscal note notes unknowns regarding the number of qualified custodians and any effects on the Department of Financial Institutions.

Timeline and implementation
- Investment policy statements and rules: by Jan 1, 2027.
- Internal self-custody procedures: by July 1, 2028, with a minimum 10% self-custody share.
- Biennial reports: starting on or before Oct 1 of each even-numbered year.
- Comprehensive evaluation: by Oct 1, 2032.

Overall impact
- Creates a regulated, limited Bitcoin reserve for state funds with explicit custody safeguards and reporting obligations.
- Establishes avenues to accept Bitcoin for certain state payments on a voluntary basis.
- Imposes fiscal costs for setup, ongoing operations, and governance, while introducing new reporting and oversight requirements.

Compiled from official sources — confirm details with the bill’s official record.

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