State Senator Chris Rose has introduced legislation to permit the West Virginia Treasury to diversify its holdings by including digital assets and precious metals.

The Inflation Protection Act of 2025, submitted on Feb. 14, proposes allowing investment in digital assets with a market capitalization exceeding $750 billion.

Currently, this applies only to Bitcoin (BTC), with Ethereum’s (ETH) $328.3 billion market cap being more than 50% below the mandated threshold.

The bill would cap investments in digital assets and precious metals at 10% of total treasury funds, offering flexibility to hold assets either on-chain or through exchange-traded funds (ETFs).

Proponents argue that such diversification could provide a hedge against inflation and fiscal instability, particularly as concerns rise over the long-term impact of deficit spending at both state and federal levels.

Growing trend among states

West Virginia is among almost two dozen US states that are considering digital asset reserves as a strategy to protect public funds from currency devaluation. The trend began with Wyoming in 2024.

On Feb. 6, Utah’s House of Representatives approved a similar bill, which now awaits a Senate vote. If passed, it would authorize the state’s treasury to allocate funds into Bitcoin, high-value altcoins, and stablecoins, reflecting a broader acceptance of digital assets as legitimate reserve instruments.

Kentucky introduced legislation the same day to permit up to 10% of state funds to be allocated to Bitcoin and other digital assets. The move follows increasing legislative interest in digital currencies as an alternative store of value amid concerns over inflation and rising national debt.

Michigan followed suit on Feb. 13, with Representatives Bryan Posthumus and Ron Robinson proposing a digital asset reserve bill. Unlike similar measures in other states, the Michigan proposal does not specify limitations on asset types, potentially allowing for a broader range of crypto investments.

Other states include Texas, Wyoming, North Dakota, North Carolina, South Dakota, Massachusetts, New Hampshire, Ohio, Pennsylvania, Maryland, Iowa, Arizona, Oklahoma, Tennessee and Wisconsin. Meanwhile, lawmakers and regulators in several other states have called for similar legislative action.

At the federal level, President Donald Trump recently directed a working group to explore the feasibility of a national digital asset reserve as part of an executive order signed last month.

The initiative has fueled speculation that individual states may act ahead of federal policymakers in integrating Bitcoin into government financial strategies, particularly as the regulatory landscape for digital assets continues to evolve.

Potential economic implications

Analysts suggest that increasing state-level adoption of Bitcoin reserves could drive additional demand for digital assets, potentially influencing market prices and broader financial market trends.

According to a recent analysis by asset management firm VanEck, states pursuing such legislation could contribute up to $23 billion in Bitcoin demand.

This trend may also encourage greater institutional involvement in the digital asset space as state treasuries begin treating Bitcoin as a legitimate reserve asset alongside traditional stores of value such as gold.

As more states pursue similar initiatives, financial experts predict that legislative efforts to integrate digital assets into public funds will gain further traction. However, critics warn that Bitcoin’s price volatility could pose risks to public treasuries, requiring careful risk management strategies.

The West Virginia bill will now proceed to committee review before further legislative consideration, with lawmakers and analysts closely watching how the state navigates the challenges and opportunities of digital asset adoption.

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