Tennessee, USA, plans to establish a "Bitcoin Strategic Reserve"! Authorized to use up to 10% of public funds to purchase BTC

Tennessee State Representative Jody Barrett has introduced a new bill aiming to include Bitcoin in the state’s public funds investment portfolio, exploring the strategic role of digital assets in state government finances.
(Background: South Dakota has attempted three times to pass the Bitcoin Reserve Law, proposing a 10% allocation of public funds to BTC)
(Additional context: Fidelity’s 2026 Crypto Market Outlook report suggests more countries may establish Bitcoin reserves, and long-term holding of BTC remains profitable)

U.S. Tennessee State Representative Jody Barrett recently proposed the “Tennessee Strategic Bitcoin Reserve Act” (House Bill 1695, HB1695), which aims to incorporate Bitcoin into the state’s public funds investment portfolio. This marks the latest effort by U.S. state governments to explore digital assets.

Legislative Overview: Tennessee Plans to Establish a Bitcoin Reserve

HB1695 is currently under review in Tennessee’s 114th General Assembly and has been assigned to the House Government Operations Committee for examination. The bill authorizes the state treasurer to invest a portion of public funds in Bitcoin to diversify assets and hedge against inflation risks.

The bill explicitly stipulates that the state’s Bitcoin holdings must not exceed 10% of the total qualified funds, and the annual purchase of Bitcoin must not surpass 5% of the total fund amount until the cap is reached. Additionally, the bill permits only Bitcoin investments, excluding other cryptocurrencies or digital assets. To ensure fund security, the treasurer must establish robust custody and security measures and implement reporting systems. By July 2028, internal self-custody procedures must be in place, with at least 10% of the state’s Bitcoin assets held in custody. Furthermore, the bill requires biennial reports to the legislature on Bitcoin holdings and performance, with a comprehensive review possible in 2032. The treasurer may also explore the possibility of accepting Bitcoin for state tax payments.

Investment Motivation: Combating Inflation and Long-term Asset Diversification

The motivation behind this bill stems from concerns in some U.S. states about ongoing inflation eroding public asset purchasing power, prompting the search for new investment tools. Bitcoin’s fixed supply and high global liquidity make it a prudent addition to long-term investment portfolios.

By including Bitcoin in public financial reserves, Tennessee aims to enhance the long-term risk-adjusted returns of public funds and effectively hedge against inflation. This strategy indicates that some U.S. states are increasingly viewing Bitcoin as a strategically significant asset rather than merely a speculative tool.

However, it is important to note that HB1695 is still in the introduction phase, has not yet undergone committee review or legislative voting, and whether it will ultimately become law remains to be seen. If the bill passes smoothly, Tennessee will become the latest U.S. state to invest in Bitcoin, potentially setting an example for others and marking a gradual official recognition of Bitcoin’s role in public finance.