Strategic Digital Assets Reserve Act of South Carolina (H. 4256)

H. 4256 would add a new Strategic Digital Assets Reserve article to Title 11, Chapter 5 of the South Carolina Code. The proposal would authorize the State Treasurer to invest certain unexpended, unencumbered, or uncommitted funds in digital assets, including Bitcoin. Covered funds would include the General Fund, the Budget Stabilization Reserve Fund, and other investment funds managed directly by the State Treasurer.

The bill frames digital assets as a potential reserve asset for state financial management, but it remains a pending legislative proposal. Its provisions are written as conditional authority for state officials and do not create a consumer-facing licensing regime, exchange registration framework, or general authorization for private market activity.

The bill defines “digital asset” broadly to include virtual currency, cryptocurrency, or another natively electronic asset that confers economic, proprietary, or access rights or powers. Bitcoin is expressly included in the definition. The bill also recognizes exchange-traded products approved by the SEC, CFTC, or South Carolina Department of Banking and Securities and traded on a regulated exchange.

For state funds listed in the bill, the Treasurer would be limited to investing no more than ten percent of total funds under management in digital assets. H. 4256 would also prohibit lending digital assets acquired by the covered funds. A separate holding-limit provision would require monitoring of digital asset concentrations in the reserve and would cap any Bitcoin reserve at one million Bitcoin.

H. 4256 places significant emphasis on custody and operational controls. Digital assets acquired under the bill would have to be held directly by the State Treasurer through a secure custody solution, by a qualified custodian on behalf of the state, or in the form of a regulated exchange-traded product. The bill’s custody definition references private-key controls, disaster recovery, code audits, penetration testing, and remediation of identified vulnerabilities.

The State Treasurer would also have to develop policies and protocols for secure storage, including cold storage and other digital asset management practices. The proposal permits the Treasurer to contract with a qualified, independent, U.S.-based cryptocurrency entity to assist with reserve security, maintenance, operation, or administration.

The bill would require biennial reporting on the amount of digital assets held, their U.S. dollar value, and reserve transactions or expenditures since the prior report. It would also require publication of the public addresses for digital assets held in the reserve while keeping private keys and other sensitive security information confidential.

South Carolina residents could make digital asset gifts, grants, donations, bequests, or devises to the reserve through a process developed by the State Treasurer and using approved vendors. Independent testing and audit reports would be required at least annually, with public summaries and a ninety-day response process for material findings or recommendations.