Background: Initiated at the state level, two states have already included Bitcoin in their reserves
For cryptocurrency users, the most anticipated policy after Trump's election is undoubtedly the adoption of Bitcoin as a strategic reserve in the U.S., but more than three months after the election, the central government has yet to take action. Is the hope for Bitcoin strategic reserves shattered? Not at all; in fact, in just the past week, two states in the U.S. have officially included Bitcoin in their treasury, and five more are at the legislative stage. Analyzing the differences in funding sources, allocation limits, and custody models adopted by each state reflects local governments' varying tolerances for 'high volatility, decentralized assets.' This article analyzes with a skeptical eye, who is truly laying the groundwork, who is performing political theatrics, and where the potential black swans lie? It also projects the next impact of this 'official HODL' wave on market liquidity and narrative premiums.
How do New Hampshire and Arizona play?
In just 48 hours, New Hampshire and Arizona completed legislation and signed by the governors, marking the beginning of the state treasury holding cryptocurrency. The paths and risk control mechanisms adopted by the two states are almost polar opposites, fully exposing the trade-offs under different political and economic goals.
New Hampshire HB 302 | Active allocation, single stake BTC, set a ceiling
New Hampshire's approach is most similar to 'Treasury-level asset diversification.' The text authorizes the state treasurer to exchange up to 5% of the general fund and rainy day fund directly for digital assets with a market value exceeding $500 billion for one year, with only Bitcoin qualifying in practice.
Legislators emphasize that this 5% cap is a safety valve: if the financial pool expands or contracts, the holding limit will adjust accordingly to avoid a one-time heavy position. However, the text is vague on whether it would be forced to proportionally sell when 'fund size shrinks,' leaving accounting treatment in a gray area.
In custody, HB 302 provides three paths:
State treasury self-managed multi-signature cold wallet;
Custody by licensed 'Special Purpose Depository Institutions (SPDI)' or other regulated banks;
Held through SEC or NFA approved Bitcoin ETFs
If choosing a cold wallet, self-management must meet seven technical standards, including geographical distribution, hardware isolation, and annual penetration testing, to minimize the risk of private key leakage. However, if choosing an ETF, the state treasury actually only obtains a trust certificate—transparency returns to traditional financial ledgers, contradicting the advantages of 'visible and traceable' on-chain.
In terms of information disclosure, the state treasurer must list holdings, costs, and unrealized gains and losses in financial reports quarterly; supporting legislators verbally promised 'to disclose on-chain addresses' to enhance transparency, but this was not written into mandatory terms. The text also comprehensively prohibits leverage, borrowing, or collateral, intending to reduce credit risk to zero, at the cost of sacrificing all interest-enhancing means.
New Hampshire is taking a 'Treasury-level asset diversification' route, with a small proportion, single asset, and extreme conservativeness, but it also directly ties taxpayers to the ups and downs of BTC prices.
Arizona HB 2749 | Passive absorption, zero tax burden, allows Staking
Arizona sees 'not using a dime of taxpayer money' as a core selling point. The new law allows the state government to transfer unclaimed crypto assets (including those with incomplete private keys but identifiable) into a newly established 'Bitcoin and Digital Asset Reserve Fund' after a three-year search period.
The Arizona legislature. From now on, the fund can also legally accept all derived airdrops and staking rewards, forming a compounding cycle without needing to request additional budgets from the parliament.
Bolder still is the scope of the targets, as the text imposes no market value or liquidity thresholds; as long as it falls into the state's hands, it can be included in the treasury. Theoretically, anything from Bitcoin to meme coins with daily trading volumes of only tens of thousands of dollars could be absorbed; the state diversifies risk through holdings but also exposes itself to high-risk price manipulation of small coins.
Custody must be entrusted to licensed compliant institutions in Arizona; during this period, assets are allowed to participate in whole-chain staking to earn returns. This makes the state treasury an active player on-chain for the first time, and if validators are penalized (slashing) or smart contracts fail, losses will also fall on the public sector accounts.
In liquidity scheduling, HB 2749 only allows the state treasurer to convert up to 10% of non-Bitcoin holdings into cash to subsidize general fund expenditures; the BTC portion is locked by legislation and cannot be used unless separately legislated. Information disclosure adopts a 'annual report + parliamentary allocation to be utilized' dual safeguard, but does not require the mandatory public disclosure of on-chain addresses, leading to lower transparency than decentralized standards.
Arizona treats BTC as 'money found that earn interest,' using Staking and airdrops to amplify idle value, cleverly avoiding taxpayer scrutiny, but also placing the state treasury on the front line of on-chain operational risks.
What should we, as investors, pay attention to?
Buying Scale: NH, even at full allocation, only amounts to $300-400 million, with limited impact on BTC liquidity; AZ's initial amount is even less significant.
Narrative Bonus: Official endorsement + 'zero tax burden' story is enough to boost short-term sentiment, but cash flow will not immediately pour in.
Risk Control Comparison: NH trades low returns for 'cap + cold wallet'; AZ exchanges high technology/contract risk for 'cost-free Staking,' with neither mode being a panacea.
Black Swan: If BTC experiences a single-day drop of >20%, NH may face forced impairment due to accounting valuation; AZ will have to face staking slashing or custodial accidents, both of which could allow opposition to overturn cases in the state legislature.
Core Differences
Dimension New Hampshire Arizona Motivation Positioning Public fund diversification Activation of unclaimed assets Funding Heat Active allocation, immediate purchase Passive absorption, no new buying Holding Structure 100% BTC (market value threshold) BTC + any assets entering the treasury Profit Strategy Pure price difference, no leverage Allowed Staking / airdrops, compound returns Liquidity Exit Can fully sell and cash out BTC Permanently locked, non-BTC up to 10% can be allocated Political Stakes Directly betting on taxpayers' wallets 'Zero-cost' political statement
How are other states doing?
State Progress Latest Progress Key Terms Potential Buying Scale / Mechanism Highlights Main Obstacles or Risks Texas High Senate passed in February, already in the House Finance Committee; to be scheduled for a vote by June 2 • Establish a Strategic Bitcoin Reserve for Texas • Funding source: state allocation + private donations; initially planned to allocate $21 million • Target limited to market value ≥ $500 billion (only BTC) • Managed by the comptroller, requires biennial performance report If funding is secured, it will become the first large state to actively buy Bitcoin with public funds; scale remains <1% of BTC daily trading House scheduling and party tug-of-war; if overdue, it will automatically flow out Oklahoma Medium House passed 77:15 in March, but the Senate Tax Committee rejected it on April 14, failing this session • Allows state treasury + pension funds to allocate BTC If revived, it may inject pension-level funds Pension risk is strongly opposed by unions and Democrats, and the clause must be removed for reintroduction Illinois Low HB 1844 only completed one reading, still stuck in Rules Committee • Only accepts donated BTC, state treasury cannot actively buy • Mandatory HODL for five years before it can be used Completely reliant on donation willingness; short-term buying is almost zero No new public fund risk, low political resistance but also difficult to have substantial impact Missouri Stagnant Completed public hearing on March 24, but no further scheduling • Can accept donations and allow state treasury to self-manage cold wallets Theoretically could buy actively, but requires follow-up funding; progress stagnated due to crowded legislative agenda and low priority Florida Withdrawn HB 487 / SB 550 on May 6 'withdrawn and ended' • Originally intended to allow public funds to invest in BTC, with no market value threshold Withdrawal = short-term buying drops to zero Senate finance leaders say 'volatility is too high, not in line with conservative finance'; friendly states temporarily avoiding the spotlight
The key lies in Texas: If successful in scheduling and allocating by June 2, it will mark the first case of 'large-scale public fund buying' and the narrative will be amplified. Conversely, if Texas faces hurdles, it will be more difficult for subsequent states to mobilize.
Buying does not equal legislation: Even if the bill passes, budget allocations still need separate decisions; investors should continue to track allocation bills and the disclosure of on-chain wallet addresses.
Terms vary greatly: From Texas's 'active allocation + single stake BTC' to Illinois's 'pure donation + five-year lock-up,' the risk/reward curves are different, and subsequent states may choose to mix and match.
Conclusion: Does the scale of buying bring substantial effects? Emotions lead the speculation.
New Hampshire allows the state treasury to convert up to 5% of the general/rainy day funds into Bitcoin, with the state fiscal year budget being less than $7 billion; even with a full allocation, it is estimated to only be around $300-400 million; Arizona even passively absorbs unclaimed crypto assets for over three years, making it difficult to reach billion-level amounts in the short term. In contrast, Bitcoin's 24-hour spot trading volume has long maintained at $60-70 billion, and a one-time purchase by the state would only account for <0.1% of the market's daily liquidity; the legislative voice is greater than the actual capital amount; price reactions are more emotional trading rather than actual supply-demand imbalance.
The two state bills were signed on May 6 (NH) and May 8 (AZ) respectively; Bitcoin rose from 96K to nearly 100K within 48 hours, with a weekly increase of about 3%. Axios statistics show that discussions on social media related to the keyword 'Bitcoin Reserve' increased by over 240% during the same period. However, trading volume did not increase correspondingly, indicating a 'headline rally' rather than a large-scale absorption of spot.
In addition, Glassnode points out that the actual annualized volatility over the past 30 days has fallen back to 45-50%, the lowest level since 2021, but the long-term historical range is often above 60%, still incomparable to traditional assets. If a Black-Swan day sees a drop of >20%, New Hampshire's 5% holding will immediately face impairment pressure, while Arizona will also need to bear the additional risks of staking slashing or custodial contract errors.
The official HODL narrative has been 'speculated in advance' by the market; what truly determines the market is the speed of legislative implementation and the actual amount of fiscal allocations. Only when legislation + allocations + on-chain addresses coincide can one say that the main cause of Bitcoin price increase can be attributed to state strategic reserves.
