The Utah House Economic Development Committee passed HB 230, also known as the Blockchain and Digital Innovation Amendments, which allows the state to invest a portion of public funds into cryptocurrency. The bill was passed with an overwhelming 8-1 vote on January 28 and now heads to the full House for further approval.

Introduced by Representative Jordan Teuscher on January 21, the bill gives the Utah State Treasurer the authority to allocate up to 5% of certain public funds into "qualifying digital assets." These assets must include cryptocurrencies such as Bitcoin and approved stablecoins, which meet specific criteria. Notably, the digital assets must maintain a market capitalization of over $500 billion or fulfill strict requirements set for stablecoins.

The Role of the State Treasurer

With this legislation, Utah’s State Treasurer would be empowered to make investments in digital assets, which could include activities such as staking and lending these assets, provided they meet the outlined conditions. 

To safeguard these investments, the bill mandates strict encryption requirements. Specifically, the state must store cryptographic private keys in geographically diversified, secure data centers, accessible only through end-to-end encrypted channels. These measures are designed to protect public funds and provide a secure environment for managing digital assets.

What Sets the Utah Bill Apart?

Utah's bill differs from others proposed in the United States by its inclusion of provisions for crypto mining zoning restrictions, which were updated in the bill’s second version. This element reflects Utah’s consideration of the broader impact of blockchain technology on the state's infrastructure.

Additionally, self-custody of digital assets is a key point of the legislation. The bill ensures that no state or local government entity can restrict an individual’s ability to take custody of their digital assets using self-hosted or hardware wallets.

Utah Joins Other States

The Utah bill comes at a time when several other states have introduced similar measures aimed at permitting their treasuries to invest in cryptocurrencies. As of now, 12 states have put forth legislation to allow public funds to be allocated to digital assets, with Utah's neighboring states of Arizona and Wyoming also leading the charge.

Arizona's SB 1025 would allow the state to invest up to 10% of public funds in Bitcoin and other digital assets. Despite some states like Oklahoma and New Hampshire proposing Bitcoin reserves, others have faced challenges in getting their bills passed, including Pennsylvania and Ohio.

Utah's new bill is in line with a broader movement across the U.S., especially after the endorsement of President Donald Trump, who proposed the creation of a national Bitcoin stockpile. In a statement following the bill's introduction, Teuscher expressed his commitment to preparing the state for the future of finance, underscoring the importance of ensuring fiscal sovereignty through the integration of blockchain and digital assets.

Following its approval by the House Economic Development Committee, HB 230 will move to the full House for a vote. If passed, it will then proceed to the Utah State Senate and ultimately to the governor for final approval. Should it pass all stages, Utah will become one of the first states to officially invest public funds in cryptocurrency.