Kansas Lawmakers Propose State-Run Bitcoin and Digital Assets Reserve Fund

Kansas lawmakers have introduced legislation that would create a state-run Bitcoin and digital assets reserve fund, embedding digital assets directly into Kansas’ unclaimed property framework.

The bill proposes that the state treasury formally hold certain digital assets that accrue through abandoned property processes, with liquidation and transfers to the general fund governed by specific statutory conditions.

Filed this week through the 2026 legislative session, the bill would place administration of the new reserve fund under the state treasurer and explicitly allow the state to receive and retain “airdrops, staking rewards or interest” generated from digital assets deemed abandoned under Kansas law.

If enacted, it would also allow for rewards received from staking to be “in the form of digital assets,” subject to legislative appropriations and approval by the state treasurer or a designated official.

In crypto, staking refers to the process of committing digital assets to a blockchain network to help validate transactions and secure the network in exchange for rewards.

Custody and oversight

Kansas state laws designate abandoned assets as those left unclaimed after a set period of owner inactivity, after which they must be reported and turned over to the state treasurer, who holds them for potential recovery by the owner under state law.

Under the bill, digital assets would be presumed abandoned after three years of inactivity following returned communications. Once delivered to the administrator or a designated qualified custodian, the assets could be held in their originating form or staked.

If the assets remain unclaimed three years after transfer, only those rewards or airdrops would be transferred into the Bitcoin and digital assets reserve fund, while the underlying assets remain subject to owner claims, per the bill.

Notably, the bill treats Bitcoin differently from other digital assets by requiring the treasurer to send 10% of most digital asset deposits to the state’s general fund, while prohibiting Bitcoin from being transferred there and keeping it in a reserve fund.

Questions remain

Industry observers say the bill calls into question how a government would manage and oversee digital assets once those are held on a public balance sheet.

The bill faces broader issues such as “governance and operational control, who has authority to buy or sell, how decisions are documented, and whether the assets can be moved safely without single points of failure,” Abdul Rafay Gadit, co-founder of modular blockchain network ZIGChain, told Decrypt.

Volatility, Gadit explained, would become a “headline risk,” while custody will be critical “because weak key management, unclear approval rules, or poor oversight” could result in loss, theft, and reputational damage that could be “harder to fix than a price drawdown.”

The bill also risks public trust “if the reserve’s purpose isn’t clearly defined,” he added.

Safeguards that would allow the public or Kansas’ constituents to verify the state’s holdings would also matter.

“Treat it like public money with higher transparency,” Gadit said. “Publish the reserve policy, decision rights, and limits, then disclose the custody setup in plain terms.”

If the assets are held on-chain, Kansas authorities would need to publish the addresses and keep those consistent, pairing those steps with “periodic independent attestations,” he explained, adding that this means custody reports for the assets are expected to be made public on a regular schedule.