South Dakota Bill Proposes Allocating 10% of State Funds to Bitcoin

South Dakota lawmakers have introduced House Bill 1155, a proposal that would allow the state’s Investment Council to allocate up to 10% of public funds into Bitcoin. The measure marks the state’s most ambitious attempt yet to integrate digital assets into its treasury strategy, following earlier efforts that stalled without clear custody frameworks.

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Institutional‑Grade Safeguards

Unlike prior bills, HB 1155 goes beyond simply authorizing Bitcoin purchases. It establishes strict institutional‑grade custody and compliance requirements, ensuring that any allocation is managed with the same rigor as traditional assets. The bill outlines three pathways for holding Bitcoin:

• Direct custody by the Investment Council, with private keys stored in encrypted hardware.

• Qualified custodians approved under federal and state law.

• Exchange‑traded products (ETPs) issued by registered investment companies.

By mandating secure private key management and diversified custody options, the proposal aims to address concerns about volatility, fiduciary responsibility, and regulatory oversight.

Market Context

South Dakota’s move comes amid growing momentum for Bitcoin adoption at the state level. Texas, Arizona, and New Hampshire have already passed legislation allowing Bitcoin investments, setting a precedent for public treasuries to treat BTC as a reserve asset. Advocates argue that Bitcoin offers diversification and a hedge against inflation, while critics warn of exposure to extreme price swings.

Outlook

If passed, South Dakota would become one of the first states to formally allocate treasury funds into Bitcoin under a federally compliant framework. The bill reflects a broader trend of U.S. states experimenting with digital assets as part of long‑term financial planning. Debate is expected to center on risk management, but the proposal signals that Bitcoin is increasingly viewed as a legitimate component of institutional portfolios.