West Virginia Eyes Bitcoin Reserves as Lawmakers Advance Inflation Hedge Bill

TLDR

• West Virginia moves closer to a Bitcoin Reserve with a capped 10% treasury allocation
• Inflation Protection Act limits digital assets to bitcoin via strict market-cap rules
• New bill outlines custody, staking, and lending rules for state-held bitcoin
• Treasury gains flexibility while safeguards aim to manage crypto volatility risks
• West Virginia joins states exploring bitcoin as a long-term inflation hedge

West Virginia moved a step closer to creating a state-level Bitcoin Reserve as lawmakers advanced a measure allowing limited exposure to digital assets and precious metals. The proposal seeks to position the treasury with tools that support long-term protection against inflation and market uncertainty. The plan introduces new investment options and also sets strict safeguards for digital asset use.

Bitcoin Reserve Framework Strengthens Treasury Flexibility

West Virginia introduced the Inflation Protection Act to establish a framework that could include a Bitcoin Reserve within treasury operations. The bill authorizes the Board of Treasury Investments to place up to 10% of managed funds into approved assets, and it sets rules for oversight. The draft also restricts eligibility to digital assets with an average market capitalization above US$750 billion.

This threshold currently points only to bitcoin and therefore the Bitcoin Reserve component sits at the center of the proposal. The bill also permits stablecoin allocations, yet these must meet clear regulatory approval at the federal or state level. The measure further outlines options for digital asset custody through qualified custodians, exchange-traded products, or designated treasury systems.

The Bitcoin Reserve allocation cap applies at the time of purchase, and rising prices would not require immediate selling. The board must halt new acquisitions if the total exceeds the 10% limit until balances shift. The legislation has moved to the Senate Banking and Insurance Committee, and it awaits further review.

Custody Rules and Operational Standards for Bitcoin Reserve Assets

The plan establishes detailed custody rules to strengthen management of any Bitcoin Reserve and related holdings. It outlines requirements for key control, geographic redundancy, disaster recovery and internal access controls. The treasurer must also document procedures that maintain full legal ownership of digital assets.

The bill allows the treasurer to use staking services, and it requires safeguards that prevent new financial exposure. It also authorizes lending arrangements when legal ownership remains with the state under defined risk conditions. These elements aim to standardize activity without expanding the scope of permitted assets.

Precious metals fall under similar operational rules, and the treasury may hold them directly or through regulated products. Cooperative custody with other states is also allowed under policies set by the treasurer. Retirement systems face narrower options and may only use exchange-traded products for digital exposure.

States Broaden Digital Asset Tools as Bitcoin Reserve Plans Expand

The measure arrives as several states examine similar Bitcoin Reserve or digital asset frameworks across the United States. Texas, Arizona and New Hampshire already enacted laws that allow limited exposure through direct or indirect structures. Other states proposed comparable efforts in 2025, yet many stalled due to concerns tied to volatility and oversight.

Rhode Island recently reintroduced a bill that would exempt small bitcoin transactions from state income and capital gains taxes. That pilot aims to support broader use of digital payments within daily commerce, and it remains under review. West Virginia now joins this trend with legislation that centers a Bitcoin Reserve as a tool for long-term value protection.

The Inflation Protection Act also coincides with federal debate on digital asset rules as Congress evaluates the CLARITY Act. Discussions continue over treatment of stablecoins, decentralised finance activity, and federal oversight roles. West Virginia’s bill, meanwhile, continues its path through the state legislature with an uncertain timeline yet growing attention on its Bitcoin Reserve provisions.

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