US Crypto Regulations Weekly Recap: States Advance Bitcoin Reserve Bills and More

Florida Senator Proposes Bitcoin Investments to Combat Inflation

Florida Senator Joe Gruters introduced a bill on February 7, 2025, proposing that the state invest a portion of its funds in Bitcoin and other digital assets to mitigate inflation's impact on purchasing power. The bill suggests empowering Chief Financial Officer Jimmy Patronis to allocate up to 10% of certain state funds into Bitcoin, a more significant cap than Wyoming’s recent 3% proposal. This move aligns with a broader trend, as Kentucky also introduced legislation for a Bitcoin reserve, while 17 states are assessing similar measures. 

Utah's bill for a 5% allocation is advancing quickly, positioning it to potentially become the first state with a Bitcoin reserve. Despite some resistance, such as North Dakota's recent rejection of crypto investment proposals, interest in Bitcoin as a strategic reserve asset continues to grow, evidenced by nearly $5 billion inflows to U.S. spot Bitcoin ETFs in January 2025 alone.

North Carolina Becomes 20th U.S. State to Allow Bitcoin Reserves

North Carolina has become the 20th U.S. state to introduce Bitcoin reserve legislation with House Bill 92, allowing the state treasurer to invest up to 10% in qualifying cryptocurrencies with a market cap exceeding $750 billion. As of now, only Bitcoin meets this criterion, greatly surpassing Ethereum's $323 million market cap. Investments will occur through regulated exchange-traded products, with oversight from the Governor and Council of State. 

Additionally, third-party investment managers must manage at least $100 million in assets. Other states like Montana and Florida are also pursuing similar initiatives, with Montana’s House Bill 429 proposing a special revenue account for crypto and digital assets, while Florida's bill advocates Bitcoin as a hedge against inflation. Other states including Maryland, Iowa, and Kentucky are introducing their own bills to incorporate Bitcoin and digital assets as part of their financial strategies, reflecting a growing trend in state-level cryptocurrency adoption.

CFTC Launches Initiatives to Review Prediction Markets and Pilot Digital Asset Program

The U.S. Commodity Futures Trading Commission (CFTC) is taking significant steps under Acting Chair Caroline Pham to address regulatory frameworks for emerging markets through two initiatives. First, a public roundtable is set to review regulations governing prediction markets, affecting platforms like Kalshi and Polymarket. 

This event will engage market participants, legal experts, and stakeholders to evaluate the legality of event contracts under the Commodity Exchange Act and discuss consumer protection and potential regulatory changes, with public comments due by February 21. Pham has criticized previous regulatory approaches as a “sinkhole of legal uncertainty.” 

Second, a Crypto CEO Forum will initiate a pilot program focused on digital asset markets, examining the use of tokenized non-cash collateral like stablecoins via distributed ledger technology. Leaders from major firms such as Coinbase, Ripple, and Circle will participate, emphasizing "responsible innovation" to establish the U.S. as a leader in the digital asset space. Further details on the forum are pending.

STABLE Act of 2025 Introduced, Temporarily Banning Certain Stablecoins Amid Regulatory Push

The STABLE Act of 2025, introduced by US House Financial Services Committee Chairman French Hill and Digital Assets Subcommittee Chairman Bryan Steil, proposes a regulatory framework for stablecoins in response to financial stability concerns. The key provision includes a two-year moratorium on endogenously collateralized stablecoins, which could pose risks of liquidity and market manipulation. A comprehensive study by the US Treasury, in coordination with the Federal Reserve, SEC, and OCC, is mandated to evaluate the technological and governance aspects of stablecoins and their market impact. 

The act defines acceptable stablecoin issuers as either insured depository institutions or qualified non-bank entities, imposing stringent capital and liquidity standards. Issuers will be subjected to monthly disclosures, independent audits, and risk management protocols. Following the bill's passage, federal agencies have 180 days to establish implementation rules, with an 18-month transition period before enforcement.

Elon Musk Calls for Impeachment of Judge After Ruling Limits Access to Treasury Data

Elon Musk has called for the impeachment of New York federal Judge Paul Engelmayer following a ruling that limits Musk's access to U.S. Treasury payment systems and confidential data. This comes after Engelmayer's February 8 decision, which was influenced by concerns raised by 19 Democratic state attorneys general about the potential for corruption and misuse of taxpayer information. 

Musk, leading the Department of Government Efficiency (DOGE), criticized the judge as "corrupt" on his platform X, highlighting his frustrations with the ruling that he believes undermines efforts to curtail federal spending and oversee government waste. The ruling aimed to protect sensitive information from unauthorized access, citing risks associated with hacking and confidentiality. Musk's initiative has focused on scaling back minor federal agencies like USAID, but seeks to leverage Treasury data to target larger inefficiencies in the budget.