States Dive into Bitcoin: Kentucky and Missouri Explore Digital Asset Adoption

Kentucky and Missouri have joined a growing number of U.S. states exploring the potential of Bitcoin reserves, as more state governments consider digital asset adoption. The move comes as lawmakers seek to diversify their states' investment portfolios and hedge against inflation.

In Kentucky, State Representative Theodore Joseph Roberts introduced House Bill 376 on February 6, which would allow the State Investment Commission to allocate up to 10% of excess state reserves into digital assets, including Bitcoin. The legislation specifies that eligible digital assets must have a market capitalization exceeding $750 billion averaged over the previous calendar year. Currently, only Bitcoin, with its $1.9 trillion market cap, meets this criterion.

Anndy Lian, author and intergovernmental blockchain expert, noted that the SEC, the Fed, and even Congress will have to grapple with how to classify Bitcoin in public reserves – is it a commodity? A security? Something entirely new?

Missouri has also joined the movement, with Representative Ben Keathley filing House Bill 1217, which would authorize the state to hold and accept Bitcoin for state payments. This marks Missouri’s second Bitcoin reserve bill, following Senate Bill 614.

The Kentucky bill includes provisions for state retirement funds to invest in exchange-traded products tied to digital assets and establishes custody requirements with multi-party governance and regular audits. The legislation explicitly excludes Central Bank Digital Currencies from accepted payment methods for tax obligations.

Kentucky and Missouri join the list of states that have introduced Bitcoin reserve legislation, which already included Arizona, Alabama, Florida, Massachusetts, New Hampshire, North Dakota, South Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, and Wyoming.