Bitcoin Breaks Into State Policy As South Dakota Weighs 10% Allocation

Overview

South Dakota is considering a significant legislative proposal that would allow the state to allocate up to 10% of certain public funds into Bitcoin. This move, initiated by Rep. Logan Manhart, aims to change the existing investment rules and reintroduces a previously stalled effort to embrace cryptocurrency in state finances.

Legislative Proposal Details

Rep. Logan Manhart has filed House Bill 1155, which seeks to grant the State Investment Council the explicit authority to hold Bitcoin in its investment portfolio. This proposal is a revival of a similar initiative that was introduced in 2025 but failed to progress. The new bill aims to establish a clear cap on the state’s exposure to Bitcoin, limiting it to 10% of the funds available for investment.

The text of the bill specifies that this limit “may not exceed 10%” and provides options for how the state could gain exposure to Bitcoin, including through direct holdings or regulated financial products. This is significant because it marks a formal attempt to integrate cryptocurrency into state financial management.

Custody and Security Considerations

In addition to setting a financial limit, the bill addresses concerns regarding custody and security, which are critical when dealing with a volatile asset like Bitcoin. It outlines requirements for using qualified custodians or exchange-traded products, as well as implementing encrypted storage and multi-signature controls. These rules are designed to mitigate the risks associated with managing public funds in cryptocurrencies.

Supporters of the bill argue that Bitcoin could serve as a hedge against inflation and diversify the state’s investment portfolio. However, there are also concerns from opponents regarding the inherent volatility of Bitcoin and potential legal or accounting complications that may arise from using state funds for such investments.

Historical Context and Political Landscape

The introduction of House Bill 1155 comes after last year’s proposal, House Bill 1202, was deferred in committee and did not move forward during the 2025 legislative session. This history is important as it indicates that while there is some support for the idea, there are also substantial practical and political challenges that need to be addressed.

Opposition is expected from fiscal watchdogs and certain lawmakers who are apprehensive about public perception. The duty of care in managing public funds, such as those earmarked for pensions, has been emphasized in previous discussions and is likely to be a focal point in upcoming committee hearings.

From author

The legislative effort in South Dakota to integrate Bitcoin into public fund management reflects a growing interest in cryptocurrency among state governments. While the proposal introduces a cautious approach by limiting exposure and addressing security concerns, the challenges it faces highlight the complexities of adopting such innovative financial strategies. The outcome of this bill could set a precedent for other states considering similar measures.

Impact on the crypto market

• A successful passage of the bill could signal increased institutional adoption of Bitcoin.
• The legislative move may inspire other states to explore cryptocurrency investments.
• The proposal highlights ongoing debates about the volatility and risk management associated with digital assets.
• Increased scrutiny and regulation surrounding cryptocurrency in public finance may emerge.
• The outcome may influence public perception of Bitcoin as a legitimate asset class.