Kansas legislators move to create state-backed Bitcoin reserve fund

Kansas state lawmakers have proposed a state-run BTC and digital asset reserve fund that will primarily hold cryptocurrencies transferred to the state government under unclaimed property laws. The filing follows a trend in the U.S. of states integrating crypto into their financial strategies.

Craig Bowser, Kansas state Senator, introduced SB-352 to the state Senate floor on Thursday, Jan. 22, to create a state fund using crypto that ends up in state hands through unclaimed property rules. The proposal highlights the increasing acceptance of cryptocurrency by institutions and government agencies across the U.S. since March last year, when President Donald Trump created a U.S. strategic Bitcoin reserve fund by executive order. This move aimed to seize cryptocurrency acquired from criminal or civil cases, rather than selling it at auction. 

Kansas to allow 10% of deposits to the reserve fund into the general fund

Kansas lawmakers have previously focused largely on tax incentives to block startups and on pilot programs for digital payments within state agencies to integrate crypto into state financial strategies. The recent proposal of SB-352 signals a more ambitious effort that could operate like sovereign wealth funds, allowing the state to hold, manage, and grow crypto holdings for public benefit. 

The SB-352 bill allows the state treasurer to credit up to 10% of each deposited digital asset into the Bitcoin and digital asset reserve fund to the state’s general fund. The reserve fund will consist of all airdrops, staking rewards, and interest earned, as prescribed in K.S.A. 58-3952(f) and amendments thereto. 

According to the proposal, all expenditures from the Bitcoin and digital assets reserve fund are bound by appropriations acts upon warrants of the director of accounts. So far, some states have already explored a strategic Bitcoin reserve as a treasury strategy; however, the Kansas bill focuses more on custody rules and unclaimed property. 

At the time of publication, BTC was down 0.6% to $89,365. The token has lost roughly 6.5% this week as we head into the weekend. ETH, on the other hand, had lost 2.14% on the daily chart, trading at $2,945 after losing almost 11% this week. 

Kansas follows a wave of proposals by other states across the U.S.

Kansas joins other states that have enacted legislation establishing crypto reserve funds, such as Arizona, Utah, and Oklahoma. Wyoming has already established a blockchain legal framework, including crypto banks and a special-purpose depository charter. Wyoming became the first U.S. state to launch a blockchain-based stablecoin, issuing the Frontier Stable Token on several blockchain networks, with reserves backed by USD and short-term treasuries.

Additionally, Texas has also accepted Bitcoin for state fees and passed Senate Bill 21 last year, creating the Texas Strategic Bitcoin Reserve. According to a Cryptopolitan report,  Texas Strategic Bitcoin Reserve is funded by legislative appropriations, dedicated fees, investment returns, and voluntary cryptocurrency gifts. 

Florida and Arizona have also experimented with pilot programs for digital asset management in government operations. Florida established a proposal early this month to form a Bitcoin reserve. For eligibility, the House Bill (HB) 1039 required the state to purchase only a cryptocurrency with an average market cap of at least $500 billion over the past 24-month period. This means the reserve will only hold BTC with a market cap exceeding $1 trillion for now. Ethereum falls short of the requirement, with a market cap of roughly $354 million as of now. 

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