South Dakota and Tennessee are debating the creation of their own state Bitcoin reserves

South Dakota and Tennessee are the next states to lead the financial vanguard in the US with two regulatory projects designed to integrate Bitcoin into their state public reserves and funds.

US states continue to show clear signs of transformation in their approach to the new digital economy, with two more taking firm steps to incorporate Bitcoin into their financial strategies. 

South Dakota and Tennessee are now leading this trend. Both have promoted legislative initiatives that seek to protect the value of their public reserves against inflation while simultaneously strengthening their economic autonomy through the use of digital assets.

In South Dakota, Representative Logan Manhart is spearheading a bill that would allow the inclusion of Bitcoin in state funds, while in Tennessee, Jody Barrett is promoting a similar proposal focused on diversifying reserves. These actions reflect a structural shift in regional financial management and pave the way for a new phase in the relationship between government and cryptocurrencies.

South Dakota moves towards Bitcoin adoption

In Pierre, the capital of South Dakota, the legislature has resumed a rapid pace with the return of the bill HB 1155Representative Logan Manhart is leading this initiative, which seeks to authorize the state Investment Council to invest up to 10% of public funds in Bitcoin. The proposal, initially introduced unsuccessfully in 2025, now has greater political support and a forward-looking strategy.

Manhart, who champions several innovative ideas in public finance, defends the measure with the direct message of "Strong money. Strong state". 

Its supporters see Bitcoin a solid reserve that protects the state budget of the erosion of the dollar. The law in question does not require immediate purchases; rather, it creates legal permission for financial officers to buy when the market offers clear opportunities.

South Dakota thus joins states like Texas and Arizona, which are already testing similar approaches to asset management. What stands out here is the ambitious 10% cap and the commitment to decentralization as a path to greater state financial independence.

Tennessee accelerates the integration of Bitcoin into its Treasury

Meanwhile, in the southeastern part of the country, Tennessee is charting its own course toward institutional adoption. State Representative Jody Barrett has spearheaded a regulatory proposal, titled Bill 1695which has already shown significant progress in the House of Representatives. Unlike other broader regulatory frameworks, Tennessee's legislation is surgical, focusing exclusively on Bitcoin and excluding any other type of cryptocurrency or digital asset from the ecosystem.

The plan grants the State Treasurer the authority to use general funds and fluctuation reserves to purchase BTC, with an exposure limit of 10% of eligible funds. The most noteworthy aspect of the proposal is its financial design: annual purchases cannot exceed 5% of the fiscal year until the cap is reached, but passive gains are allowed to exceed this limit without requiring liquidation of the asset. This demonstrates an intention to "hodle"—or hold the asset long-term—similar to the philosophy of large institutional investors.

This state legislative advance is accompanied by other complementary steps. Tennessee has also revised its zoning regulations for facilitate the installation of cryptocurrency mining centersAnd municipalities like Kingsport are already adapting their infrastructure to accommodate these types of operations. Everything indicates that the state wants to position itself firmly for the growth of the ecosystem, combining asset ownership with strengthening the supporting network.

Bitcoin continues to conquer states

Nationally, the conversation about whether US states should hold Bitcoin reserves continues to gain momentum. Initiatives have been launched in several regions seeking to define how to manage seized crypto assets, issue BTC-backed bonds, or even create public funds related to the digital ecosystem. Each step in this direction contributes to shaping the balance between decentralization, regulation, and fiscal efficiency within an economy still debating how to integrate digital value into its traditional financial system.

In this context, the legislative progress in Tennessee and South Dakota marks a turning point, reflecting how Bitcoin has become an increasingly relevant component within the US economic strategy. 

While the federal government still faces regulatory gaps, with delays such as the vote on the CLARITY Act, some states have chosen to take the initiative and test new financial structures, with the aim of building environments where innovation and regulation coexist like in an economic policy laboratory.