Utah will become the first state in the United States to formally hold Bitcoin in its reserves, according to Dennis Porter, CEO of the Satoshi Action Fund. The action represents greater faith in Bitcoin as a store of value and represents a watershed moment for the cryptocurrency’s state-level adoption. Utah’s success would further cement Bitcoin’s role in public finance by providing a model for other governments to follow.
Utah lawmakers are busy writing legislation to bring Bitcoin into the state’s economic plan, Porter explains. The state is known for conservative finance and financial innovation, so it is an excellent candidate to be the first to establish Bitcoin reserves. Just as governments maintain gold reserves, proponents say that keeping Bitcoin could be an inflation hedge and a means of stabilizing economies. The action is one of a larger trend towards greater institutional use of Bitcoin. Several companies have already included Bitcoin in their treasury reserves, such as Tesla and MicroStrategy. El Salvador and others have even made Bitcoin legal tender and included it in national reserves. With the typical concerns regarding the long-term solvency of fiat currencies still applying, Utah’s action may prompt other US governments to follow similar tactics.
There are still challenges in the midst of the excitement. Authorities have to address legal and regulatory issues first before implementing Bitcoin in state coffers because of its risk on account of volatility. Detractors contend that rather than speculating on new digital currencies with money, state reserves should stay invested in tested and proven assets. Defenders contend, though, that since it is a decentralized version that can build up long-term worth over time, Bitcoin is an attractive substitute for conventional assets. If Utah goes ahead with the plan, it may provoke a national argument over where Bitcoin is to find a role in public financing. In the next several years, other states—those with prominent finance and tech sectors especially—may follow. As the negotiation process drags on, Utah is at the forefront of government policy and cryptocurrencies, pushing the potentially historic change in state-level fiscal administration.
