The day before, Rep. Jordan Pace reintroduced Bill H. 4256, known as “The Strategic Digital Assets Reserve Act Of South Carolina,” into the House of Representatives of South Carolina.
Key aspects of the bill indicate that it allows the State Treasurer to allocate up to 10% of the resources managed by the state into digital assets, including bitcoin, and that the state’s Strategic Digital Assets Reserve may encompass up to one million bitcoin.
The legislation also specifies that the purpose of establishing such a reserve is due to the fact that “inflation has diminished the purchasing power of assets maintained in state funds” and that “bitcoin, a decentralized digital asset, along with other digital assets, possess distinctive characteristics that can serve as a safeguard against inflation and economic fluctuations.”
While the bill does not clarify whether state officials are to retain the private keys for the bitcoin and other digital assets accumulated for the reserve, it empowers the State Treasurer to formulate policies and procedures to secure the assets safeguarded within the reserve, which may involve the use of cold storage or engaging a third party to oversee the custody of the assets. The State Treasurer is also allowed to enlist the help of a third party to aid in the formation, upkeep, and management of the reserve’s security.
As outlined in the bill, the State Treasurer would be tasked with generating a biennial report showcasing the total quantity of digital assets contained in the reserve, the U.S. dollar valuation of those holdings, as well as transactions and expenditures related to the reserve since the last report. Additionally, the State Treasurer would be mandated to disclose proof of reserves, which comprises the public addresses of the digital assets held in the reserve on an official state website, allowing citizens to independently examine and validate the reserve’s assets.
Ultimately, the bill mandates that the Strategic Digital Asset Reserve be subject to audits that encompass an assessment of the effectiveness of the security of custody solutions; a review of compliance with local, state, and federal regulations; and an appraisal of internal controls to counter cyber intrusions and mismanagement.
The bill stipulates that these independent audits should take place annually and be submitted to the appropriate oversight committee. Any suggestions arising from the independent audits must be addressed within 90 days following the release of the report, and a subsequent report detailing the corrective measures taken must also be submitted to the oversight committee.