West Virginia Proposes Digital Asset Reserve Bill as States Push for Bitcoin Hedge

In a notable development, West Virginia State Senator Chris Rose introduced the Inflation Protection Act of 2025 on February 14, proposing a bill that would allow the state's treasury to invest a portion of its holdings in digital assets or precious metals. The bill is part of a growing trend of state-level legislative efforts aimed at establishing digital asset reserves, positioning them as a hedge against inflation caused by ongoing deficit spending.

Key Features of West Virginia’s Digital Asset Bill

The proposed legislation allows the West Virginia Treasury to invest in any digital asset with a market capitalization exceeding $750 billion, which currently includes Bitcoin and stablecoins. As of now, Bitcoin is the only digital asset meeting this market cap requirement. Under the bill, the state could allocate up to 10% of its total funds into digital assets or precious metals, offering a substantial opportunity for diversification.

Importantly, the treasury would be allowed to hold these digital assets either on-chain or through exchange-traded funds (ETFs), providing flexibility in how the state manages its investments.

Growing Momentum for Digital Asset Reserves

Senator Rose’s bill follows a surge in similar legislative proposals across the United States, as states look to Bitcoin and other digital assets as potential stores of value amid concerns about inflation. The increasing focus on digital asset reserves is seen as a response to the structural deficits facing many states, with lawmakers seeking alternative ways to protect state finances from inflationary pressures.

Other States Embrace Digital Asset Investments

West Virginia is not alone in its pursuit of digital asset reserves. Just weeks earlier, Utah passed a bill on February 6 that would allow the state treasury to invest a portion of its funds in Bitcoin, high-value altcoins, and stablecoins. The bill is now in the Utah Senate, where it must pass a vote before reaching the governor for final approval.

Kentucky has also joined the growing movement, introducing a bill that would allow up to 10% of the state’s funds to be allocated to digital assets, including Bitcoin. This legislation, which was submitted on February 6, follows similar proposals from other states looking to diversify their reserves and hedge against inflation.

In Michigan, Representatives Bryan Posthumus and Ron Robinson introduced a bill on February 13 that seeks to establish a strategic digital asset reserve. Unlike the other proposals, Michigan's bill does not specify which digital assets would be included in the reserve, providing broader flexibility in asset selection.

Federal Government Moves Toward Digital Assets

At the federal level, the push for a digital asset reserve is also gaining traction. On January 23, former President Donald Trump commissioned a working group to explore the feasibility of a digital asset reserve for the US federal government. While the federal government is still studying the issue, the rapid pace at which states are advancing similar initiatives could signal a future where digital assets like Bitcoin are integral to both state and national financial strategies.

The Road Ahead

As states like West Virginia, Utah, Kentucky, and Michigan continue to push forward with digital asset reserve legislation, the movement is gaining momentum. If successful, these initiatives could not only provide a hedge against inflation but also help drive significant demand for Bitcoin and other digital assets in the broader market. According to a report by VanEck, such state-level legislative actions could generate up to $23 billion in demand for Bitcoin, marking a transformative shift in the way digital assets are perceived by both lawmakers and financial markets.

With more states likely to introduce similar bills in the near future, the landscape for digital asset reserves is evolving rapidly. As these bills make their way through state legislatures, the question remains: will states lead the charge in adopting digital assets, or will the federal government take the initiative to establish its own digital asset reserve? Only time will tell, but the growing trend at the state level suggests that digital assets may play a crucial role in the future of finance.