Minnesota, Alabama Propose Bitcoin Investment, Tax Incentives

Lawmakers in the US states of Minnesota and Alabama have introduced bills that, if passed, would allow each state to invest in Bitcoin. The Minnesota Bitcoin Act, or HF 2946, was introduced to the state’s House by Republican Representative Bernie Perryman on April 1, following an identical bill introduced on March 17 by GOP state Senator Jeremy Miller. This legislation aims to permit the state’s investment board to invest state assets in Bitcoin and other cryptocurrencies, and allow state employees to add crypto to their retirement accounts. It would also exempt crypto gains from state income taxes and give residents the option to pay state taxes and fees with Bitcoin.

In Alabama, Republican state Senator Will Barfoot introduced Senate Bill 283 on the same day, while a bipartisan group of representatives led by Republican Mike Shaw filed the identical House Bill 482. These bills allow the state to invest in crypto but essentially limit it to Bitcoin. The twin Alabama bills do not explicitly name Bitcoin but would limit the state’s crypto investment to assets with a minimum market value of $750 billion, a criterion that only Bitcoin currently meets.

Introducing identical bills in both the House and Senate is a common practice in the US to expedite the bicameral legislative process, allowing laws to pass more quickly. Bills to create a Bitcoin reserve have been introduced in 26 US states, with Arizona currently the closest to passing a law to make one. Pennsylvania was one of the first US states to introduce a Bitcoin reserve bill, in November 2024. However, the initiative was reportedly eventually rejected, with similar bills also killed in Montana, North Dakota, South Dakota and Wyoming.

The push for Bitcoin reserves in these states reflects a growing interest in digital currencies as a potential hedge against inflation and a means to diversify state assets. The legislation in Minnesota and Alabama, if passed, would not only allow for state investments in Bitcoin but also provide tax incentives and payment options for residents, further integrating cryptocurrency into the state's financial ecosystem. This move aligns with a broader trend of states exploring the benefits of digital currencies, despite political and regulatory challenges.