Maryland introduced the Bitcoin Reserve Act, a bill that would allow the state to invest gambling enforcement violation funds into bitcoin. Introduced by Delegate Caylin Young, this is to help the state diversify its funds and hedge against inflation.
Maryland has a “Problem Gambling Fund” under § 9-1A-33 of the State Government Article. The fund is funded by annual fees paid by video lottery operation licensees.
And if an individual who is in the Voluntary Exclusion Program violates their self-exclusion and is found gambling in a casino, any unredeemed items and prizes in their possession are transferred to the Problem Gambling Fund.
Young says this could put Maryland at the forefront of Bitcoin adoption and that bitcoin is a long term store of value.
If passed, the bill would create a bitcoin reserve fund managed by the Maryland State Treasurer. The fund would hold bitcoin and accept bitcoin donations from residents and government agencies.
The bill also says state agencies would accept bitcoin for payments including taxes, fines and fees. But individuals making these payments would be responsible for transaction fees.
Kentucky is another state that recently introduced a similar bill.
The state has introduced House Bill 376, which allows it to invest in bitcoin. While the bill doesn’t specifically name bitcoin, it sets a financial threshold that makes bitcoin the only viable candidate.
This is a national trend, and Maryland and Kentucky are not alone in exploring bitcoin as a reserve asset. According to bitcoinlaws.io, at least 20 states are working on digital asset legislation.
Maryland is the 17th US state to propose a bitcoin reserve plan.
Bitcoin’s fixed supply of 21 million coins makes it attractive to governments looking for an inflation hedge. Some lawmakers think bitcoin could be the “digital gold” to help states protect their financial reserves from the declining value of the US dollar.
While Bitcoin is promising, there are caveats. Its market is very volatile so state reserves could fluctuate a lot. And cybersecurity is a big risk. States investing in bitcoin must have strong security to protect their holdings from hacks and theft.
Regulatory uncertainty is another challenge. Bitcoin is legal in the US but the federal government has not yet provided clear guidance on how states should manage digital assets.
At the federal level, Senator Cynthia Lummis is pushing for a national bitcoin reserve. Her proposal is to have the US accumulate 1 million bitcoin (5% of the total supply) over the next 5 years.
In a recent interview, Lummis said the US must get involved with digital assets, believing that bitcoin can do things to the economy that no one has explored.
But not everyone is in. The European Central Bank has rejected the idea of adding bitcoin to their reserves, citing liquidity and security concerns.