Tennessee lawmakers are actively considering a groundbreaking proposal known as the “Tennessee Strategic Bitcoin Reserve Act,” which seeks to establish a state Bitcoin reserve and position Tennessee as a leader in cryptocurrency policy. The Senate bill, SB 2639, sponsored by Sen. Kerry Roberts, is scheduled to be heard by the Senate Finance, Ways, and Means Committee on Tuesday, April 21, having already advanced from the Senate Commerce and Labor Committee. Its House companion, HB 1695 from Rep. Jody Barrett, however, has stalled in the Finance, Ways, and Means Subcommittee, indicating a potential legislative hurdle.

The core motivation behind this legislative effort is a concern over inflation. Lawmakers explicitly state in the bill that rising prices are eroding the real purchasing power of assets held in the general fund, the revenue fluctuation reserve, and other state pools. Bitcoin is presented in the legislation as a decentralized digital commodity characterized by its fixed supply and global liquidity, arguing that a fiduciary investor could leverage such an asset to enhance long-term, inflation-adjusted returns. Rep. Barrett underscored this sentiment, stating, “This is about responsible stewardship of public finances,” and likened Bitcoin to gold as a hedge against inflation.

Tennessee's initiative is part of a broader trend across U.S. states exploring Bitcoin-focused policies. States like South Dakota and Kansas have introduced bills to allocate public funds to Bitcoin or establish strategic Bitcoin and digital assets reserves. Meanwhile, Rhode Island and Florida have reintroduced or revived legislation to study Bitcoin, facilitate its use, or potentially integrate it into state balance sheets under defined oversight frameworks.

Under the proposed Tennessee legislation, the State Treasurer would be granted authority to invest a limited share of select state funds in Bitcoin. The allocation would be capped at 10% of each eligible fund—including the general fund, revenue fluctuation reserve, and other approved state funds—at the time of purchase. Annual purchases would be further limited to 5% per fiscal year until the overall cap is reached. The bill specifically allows passive price gains to push holdings above this cap without mandating sales, and importantly, it restricts investments exclusively to BTC, barring any allocations to other cryptocurrencies or digital assets.

The bill outlines stringent requirements for how Bitcoin would be held, allowing for direct ownership by the state, through a qualified custodian, or via an exchange-traded product tied solely to BTC. Detailed custody standards are a cornerstone of the proposal, mandating that a “secure custody solution” must store private keys in encrypted hardware, kept offline, and in at least two separate physical locations. Access to these holdings would necessitate encrypted channels and multi-party authorization to ensure maximum security.

Transparency is another key feature of the “Tennessee Strategic Bitcoin Reserve Act.” Every two years, the Treasurer would be required to publish a comprehensive public report. This report would meticulously detail the amount of Bitcoin held, its dollar value at both the time of purchase and at the end of the reporting period, and a summary of all transactions. Crucially, it would also include a cryptographic proof, enabling third parties to independently verify on-chain balances. Summaries of security assessments would also be made available upon request.

Furthermore, the legislation allows the Treasurer to establish a voluntary program for the acceptance of Bitcoin for taxes, fees, or other state obligations. Any Bitcoin received through this program would be transferred to the general fund and recorded at its market value, with the respective state agencies being reimbursed in U.S. dollars.