Yesterday, representative Jordan Pace reintroduced Bill H. 4256The “Law of Reserve of Strategic Digital Assets of South Carolina”, in the House of Representatives of South Carolina.
The most prominent aspects of the bill include the fact that it allows the State Treasurer to invest up to 10% of the funds under state administration in digital assets, including Bitcoin, and that the State digital asset reserve can include up to one million bitcoin.
The bill also establishes that the reason to establish this reserve is because “inflation has eroded the purchasing power of assets held in state funds” and that “Bitcoin, a decentralized digital asset and other digital assets offer unique properties that can act as a coverage against inflation and economic volatility.”
The bill does not stipulate whether or not state officials must maintain private keys for Bitcoin and other digital assets that it accumulates for the reserve, although it allows the state treasurer to develop policies and protocols to protect the assets sustained in the reserve, including the use of cold storage or the hiring of a third party to maintain the custody of the acts. The state treasurer can also use a third to help in the creation, maintenance and management of reserve security.
According to the bill, the state treasurer would be responsible for preparing a biennial report that includes the total amount of digital assets held in the reserve, the value of the US dollar of those assets and transactions and expenses related to the reserve from the previous report. In addition, the state treasurer must publish reservation tests, which includes the public addresses of digital assets held in the reserve on an official website of the State, allowing citizens to audit and verify independently the reservation holdings.
Finally, the bill stipulates that the reserve of strategic digital assets experiences audits that include an examination of the quality of the safety of custody solutions; an evaluation of compliance with local, state and federal laws; and an evaluation of internal controls to mitigate against cyber attacks and poor management.
According to the bill, independent audits must be carried out annually and submit to the relevant supervision committee. Any recommendation resulting from independent audits must be addressed within 90 days after the issuance of the report, and a follow -up report that details the corrective actions taken to the Supervision Committee must also be provided.
