A cursory learn of headlines this week has led some crypto traders to cheer the historic creation of digital asset reserve funds by two states.
Governors of New Hampshire and Arizona have signed payments that created what appeared to be the primary two digital asset reserves in US state historical past.
Nonetheless, a better overview of these reserves reveals a considerable distinction between their precise textual content and social media posts about them.
Take into account Arizona’s newly signed regulation authorizing the creation of a “bitcoin (BTC) and digital assets reserve fund.” Though a fund is, certainly, now approved by regulation, Arizona won’t be making any crypto purchases.
As an alternative, the state might solely add seized belongings from civil and legal authorized proceedings to its so-called Bitcoin Reserve Fund.
In accordance with Arizona’s newly-revised Part 44-302 statute, the state now defines sure kinds of property, like checks, annuities, certificates of deposit, and digital belongings, as “presumed abandoned” if they’re lawfully within the possession of the state and their proprietor doesn’t declare them for 3 years.
Topic to a wide range of circumstances, the state might thereafter assume possession of such “abandoned property” like digital belongings, and add these belongings to its so-called “digital assets reserve fund.”
In different phrases, Arizona has merely outlined the circumstances below which it might overtake possession of different folks’s property, together with digital belongings.
It won’t be shopping for any digital belongings below this regulation.
The fantastic print on crypto reserve funds
Alternatively, New Hampshire’s new regulation acquired 1000’s of likes and shares on social media earlier this week on the promise that the state would turn out to be the primary state to “invest” in cryptocurrency.
Few seen the purposeful, singular tense of the phrase cryptocurrency.
Certainly, buried within the regulation in paragraph II, a provision prohibits the state treasurer from investing any public funds in any digital asset with a market capitalization under $500 billion averaged over the earlier calendar yr.
Stablecoins are additionally exempted from this market cap minimal.
Just one digital asset has a market capitalization of over $500 billion: bitcoin.
Learn extra: Trump’s Strategic Bitcoin Reserve audit is now 5 days overdue
Due to this fact, regardless of the regulation’s creation of a digital asset reserve, the one digital asset investments allowed by regulation presently are stablecoins — which shouldn’t enhance in worth, by definition, and are subsequently not significant investments — and BTC.
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