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South Dakota lawmakers are back with a familiar idea, this time written with tighter constraints. A revived bill would allow the state to invest a limited portion of public funds in Bitcoin, capped at 10%, after a similar proposal stalled last year. What changed is not ambition but control, with the text reading less like a bet on price and more like a framework designed to withstand scrutiny.
The bill, introduced by Representative Logan Manhart, amends state investment law to add Bitcoin as a permitted asset. It does not force an allocation. It leaves discretion with the State Investment Council, drawing a clear line around risk and signaling that lawmakers want optional exposure rather than a headline grab.
I am proud to say I have released my bill that would allow the State of South Dakota to invest in Bitcoin.
Strong money. Strong state.
— Logan Manhart (@ManhartLogan) January 27, 2026
The proposal caps Bitcoin exposure at 10% of state funds available for investment. That limit sits alongside existing rules that govern bonds, treasurys, and funds. Bitcoin joins the list as an option, not a mandate.
Custody rules do the heavy lifting. Any Bitcoin must be held directly by the state using a secure system, through a qualified custodian, or via an exchange-traded product approved by regulators. The bill defines Bitcoin in narrow terms tied to the original network and proof-of-work chain. It also spells out private key control, hardware security, multi-party approval, audits, and disaster recovery.
This is not an abstract language. It reflects lessons learned since 2022, when custody failures turned into public losses. South Dakota’s drafters want to show that operational risk, not market swings, sits at the center of the design.
The cap does two things at once. It reassures critics worried about volatility and keeps the proposal credible with fiduciaries who manage public money. A capped option fits how states test new asset classes. Public funds added foreign equities in the 1980s using similar guardrails.
Look at recent state moves for context. Texas expanded its legal framework for holding Bitcoin and other digital assets in 2025, approving a Strategic Bitcoin Reserve under strict limits. Arizona followed in 2025, creating a Bitcoin and Digital Assets Reserve Fund tied to custody and record-keeping rules rather than open-market buying. New Hampshire also moved in 2025, granting limited treasury flexibility to hold eligible digital assets.
New Hampshire is once again First in the Nation! 🎉
Just signed a new law allowing our state to invest in cryptocurrency and precious metals. pic.twitter.com/ua9bawZKbM
— Governor Kelly Ayotte (@KellyAyotte) May 6, 2025
None of these steps mandated open-ended purchases. Each was designed to test exposure within narrow guardrails.
At the federal level, progress remains slower. President Donald Trump signed an executive order in March 2025 to establish a Strategic Bitcoin Reserve funded by seized assets. Officials later acknowledged legal limits on direct purchases without congressional backing. States move inside their own lanes.
South Dakota’s bill fits that pattern. It does not claim Bitcoin as a hedge or a cure. It treats it as an asset that may earn a place under strict terms. If you are watching policy, the signal is restraint.
The bill now heads to committee, where custody, accounting, and oversight will face detailed review. Passage is not assured, and even if lawmakers approve it, the State Investment Council may still choose not to allocate any funds.
That outcome would still be instructive. It shows how Bitcoin is entering public finance at this stage: cautiously, with caps and controls, and without urgency. This is often how durable policy takes shape.
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