Yesterday, Rep. Jordan Pace reintroduced Bill H. 4256, the “South Carolina Strategic Digital Asset Reservation Act,” into the South Carolina House of Representatives.
Highlights of the bill include the fact that state accounting will allow up to 10% of the funds under the control of the state to invest in digital assets, including Bitcoin, and that state strategic digital asset reserves could contain up to 1 million Bitcoin.
The bill also states that the reason for establishing such reserves is because inflation erodes the purchasing power of assets held in state funds, and that “bitcoin, decentralized digital assets, and other digital assets provide unique properties that serve as hedges against swelling and economic instability.”
The bill does not specify whether state officials should retain private keys to Bitcoin and other digital assets that accumulate in Bitcoin and other digital assets, but state treasurers can develop policies and protocols to protect protected assets, including third-party contracts to maintain refrigerated or third-party detention. State treasurers can also use third parties to help create, maintain and manage the security of the protected area.
According to the bill, state accountants will be responsible for preparing biennial reports, including the total amount of digital assets held in reserve assets, the US dollar value of those assets, and transactions and expenditures related to reserves since the previous report. State accounts must also publish a preparatory certificate, including public addresses for digital assets held in the reserve on their official website.
Finally, the bill provides that strategic digital asset reserves will undergo an audit, including an investigation into the quality of security of custody solutions. Assessment of compliance with local, state and federal laws. Evaluation of internal controls to mitigate mitigation against cyberattacks and inappropriate management.
According to the bill, independent audits are conducted annually and must be submitted to the relevant oversight committee. Recommendations resulting from independent audits must be addressed within 90 days of the publication of the report, and a follow-up report detailing the corrective action taken must also be provided to the Oversight Committee.
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