State Could Invest Up to 10% of Excess Reserves in Digital Assets
Kentucky has become the latest US state to propose a Bitcoin reserve bill, further strengthening the adoption of digital assets at the state level. The legislation, known as KY HB376, was introduced on 6 February by State Representative Theodore Joseph Roberts. If passed, it would allow the State Investment Commission to allocate up to 10% of excess cash reserves into digital assets, including Bitcoin.
The bill does not explicitly name any cryptocurrency. However, it refers to digital assets—excluding stablecoins—that have a market capitalisation exceeding $750 billion, based on the previous calendar year’s average. Currently, Bitcoin is the only cryptocurrency that meets this criterion, with a $1.9 trillion market cap. In contrast, Ethereum, the second-largest digital asset, holds a market cap of around $330 billion, which would need to more than double to qualify.
Kentucky Becomes 16th State to Propose Bitcoin Reserve
With this move, Kentucky has become the 16th US state to introduce legislation for a Bitcoin reserve, joining:
- Arizona
- Alabama
- Florida
- Massachusetts
- Missouri
- New Hampshire
- North Dakota
- South Dakota
- Ohio
- Oklahoma
- Pennsylvania
- Texas
- Utah
- Kansas
- Wyoming
The growing number of states considering Bitcoin reserves could set the stage for a federal-level Bitcoin strategy, according to blockchain expert Anndy Lian.
“If Kentucky moves forward, it creates a roadmap for others to follow,” said Lian. “The SEC, the Federal Reserve, and even Congress will have to determine how to classify Bitcoin in public reserves—whether as a commodity, a security, or something entirely new. This could fast-track regulatory clarity but also risks creating fragmented state-level policies that complicate national decision-making.”
Potential Risks and Regulatory Challenges
Despite its potential benefits, concerns remain over Bitcoin’s volatility. If the value of Bitcoin were to drop significantly, taxpayers could bear the financial burden, raising important governance and risk management questions.
“Consumer protection must be a key consideration,” Lian added. “If Bitcoin’s volatility causes losses, who will be responsible? These are serious governance challenges that must be addressed before large-scale adoption.”
Additionally, Kentucky’s move would require strong infrastructure, including secure custody solutions, enhanced cybersecurity, and an exit strategy in case of market downturns.
Growing Momentum for Bitcoin Reserves Across US States
Kentucky’s announcement follows Illinois’ proposal for a Bitcoin reserve bill just a week earlier, which suggested a minimum five-year holding strategy for state-held Bitcoin.
While Bitcoin’s long-term impact on state finances remains uncertain, Kentucky’s move is seen as a significant vote of confidence in the digital asset. If successful, the bill could encourage institutional adoption and potentially influence other US states—and even countries—to follow suit.
