New Hampshire and Arizona have passed Bitcoin maintenance laws.
These laws differ greatly from federal strategic Bitcoin reserves.
The supply of coins will become more constrained, but it will take time to make meaningful differences.
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New Hampshire signs the bill on May 6th, allowing the state’s Treasury Department to invest in digital assets like Bitcoin (Cryptography: BTC). Arizona followed suit by signing a slightly different bill on May 7th. Now there is another policy catalyst that digital coin owners can benefit from.
Like the federal government’s Strategic Bitcoin Reserve (SBR), these state-level preparations have not yet been implemented. If so, it could have a direct impact on the dynamics of coin pricing and supply.
Let’s find out what these bills do and why they are important.
The first thing I would like to thank for the proposed state-level Bitcoin reserve policy is that they are very different from each other, as are federal SBRs.
For example, new laws in New Hampshire allow state treasurers to use public funds to invest in precious metals such as gold, silver and platinum. It also opens the door to buying cryptocurrency and “digital assets with market capitalizations of over $500 billion,” which also allows you to own Stablecoins. Currently, only Bitcoin meets the market capitalization criteria, but that could change in the future.
Arizona’s new law takes a different approach, redirecting revenues from unclaimed properties to Bitcoin and “top-tier digital assets.” There is no indication that public funds will be allocated or allocated to the purchase of such assets, or that coins seized will be held rather than sold. This strategy could result in much less price upward pressure on coins, but other states are evaluating other passes that could have more impact.
Image source: Getty Images.
The bill under consideration in Texas requires that reserves be filled with funds allocated by Congress. The proposed North Carolina bill calls for the possibility of holding seized digital assets and investing in them using the state pension fund, but the bill does not specifically mention Bitcoin.
Voting for these bills will appear in the coming months, but it is important to note that some attempts, like Montana, have already been voted. Other states are looking at the code spare bills rejected by the governor in question.
The story continues
In contrast to these proposed policies, the federal SBR does not allow direct investment of public funds in Bitcoin or other cryptocurrencies in any way that scales the budget. However, if the government owns them via forfeiture of assets, it requires the retention of all these assets.
From an investment perspective, these different policies may have slightly different strengths in terms of their impact on Bitcoin. Choosing to hold seized assets until at least the state government chooses to use it is at least out of the market. This could potentially raise the price of the asset by reducing outstanding supply floats. Meanwhile, states that plan to directly invest public funds in Bitcoin have a much more bullish impact on its prices.
In any case, there is no way to interpret the new policy band being considered as somehow bearish to Bitcoin. If the federal government implements SBR, the state may not necessarily be dedicated to holding coins in the long term, as the federal government argues it is a more reliable holder than poor investors, but it can scare sales based on poor market sentiment.
New Hampshire and Arizona are just the first few states to pass some sort of digital asset reserve bill. Dozens of people are currently assessing policies and voting for related invoices. Some have already tried to get the bill through their local legislature or to get it past the governor’s veto. These attempts will likely continue for the rest of the year and perhaps beyond that.
The immediate price impact on Bitcoin itself is at best insignificant.
However, over the long term, the effectiveness of increasing competition for supply and holding more supplies in storage rather than sellable can be important. The state’s budget is similar to the budgets of many institutional investors. This means that when permitted, they can bring real capital. And it’s not so much a greater verification of the value of the asset and the long-term viability than if both the state and federal government were out of the way to hold it.
Consider this before purchasing inventory with Bitcoin.
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Alex Carchidi has a Bitcoin position. Motley Fool has a position and recommends Bitcoin. Motley Fools have a disclosure policy.
The state-level Bitcoin reserve is here. This is what you need to know. Originally published by The Motley Fool
