South Dakota Votes Down Bitcoin Reserve Bill After Committee Decision #CriptoNews

Tldr

• South Dakota’s House Commerce and Energy Committee voted 9-3 to kill House Bill 1202
• The proposal would have allowed up to 10% of state funds to be invested in Bitcoin
• State officials worried about Bitcoin’s volatility and lack of intrinsic value
• Representative Logan Manhart vows to bring the bill back in 2026
• Bitcoin dropped below $92,000 on Monday amid broader market concerns

South Dakota has joined a growing list of states rejecting proposals to invest public funds in Bitcoin. The state’s House Commerce and Energy Committee effectively killed House Bill 1202 on Monday by voting to defer it until the 41st legislative day—a tactical move since the session only lasts 40 days.

The bill, sponsored by Republican Representative Logan Manhart, aimed to allow South Dakota to put up to 10% of its public funds into Bitcoin as part of a strategy to diversify the state’s investments. Manhart promoted the idea as a smart way to protect value during times of inflation.

This rejection comes just days after Montana lawmakers voted down a similar proposal. Montana’s House Bill 429, introduced by Representative Curtis Schomer, failed in a 41-59 vote last week. That bill would have created a special fund for investing up to $50 million in cryptocurrencies, stablecoins, and precious metals.

Matt Clark, who serves as South Dakota’s State Investment Officer, raised red flags about the proposal during committee discussions. “Bitcoin does not have any underlying physical use,” Clark explained. “It does not generate income, much like commodities or other kinds of assets.”

Clark suggested that while Bitcoin might someday be suitable for state investment portfolios, current market conditions make it too risky. He warned that changing the law now would create confusion rather than financial benefits.

Representative Manhart pushed back against these concerns, arguing that Bitcoin’s limited supply and decentralized structure make it a valuable asset worthy of state investment. Though disappointed by the outcome, Manhart took to social media platform X to announce his intention to reintroduce the legislation next year, stating simply: “We will be back next year.”

Weighing Risk Against Reward

Lawmakers who voted against the bill pointed to two main issues: Bitcoin’s wild price swings and the fuzzy regulatory picture surrounding cryptocurrencies. Many felt uncomfortable putting taxpayer dollars into an asset class known for its unpredictability.

The uncertain regulatory environment for cryptocurrencies at both state and federal levels added to these concerns. With rules still being developed, many legislators preferred a cautious approach rather than rushing into uncharted territory.

South Dakota and Montana aren’t alone in pumping the brakes on Bitcoin investments. Similar bills have stalled in North Dakota, Wyoming, and Pennsylvania, showing a pattern of caution among state governments when it comes to crypto assets.

However, not all states are backing away from Bitcoin. According to tracking data, about 18 state-level Bitcoin reserve proposals remain active across the country. States including Florida, Arizona, Utah, Texas, and Missouri continue to explore cryptocurrency investment options, suggesting the idea isn’t dead nationwide.

The timing of South Dakota’s decision coincided with a rough day for crypto markets. Bitcoin fell nearly 4% on Monday, trading at $91,980 as tech stocks dropped and market anxiety increased. This market volatility may have reinforced lawmakers’ concerns about Bitcoin’s stability as a potential investment for public funds.

For supporters of state Bitcoin reserves, these rejections represent bumps in the road rather than the end of the journey. As more states consider similar bills, the debate over whether public funds should include cryptocurrency investments continues to evolve.

Manhart’s commitment to bringing the bill back in 2026 shows that interest in exploring Bitcoin as a component of state investment strategies remains strong. As regulations develop and more data becomes available about Bitcoin’s performance over time, future proposals might address the concerns that sank the current legislation.

While government entities approach cryptocurrency cautiously, private companies continue to embrace Bitcoin. MicroStrategy (now known as Strategy) recently expanded its Bitcoin holdings to nearly 500,000 BTC with a $2 billion purchase, highlighting the contrast between corporate and government approaches to digital asset investment.

The rejection of Bitcoin reserve bills in states like South Dakota and Montana illustrates the complex considerations facing government officials as they weigh financial innovation against their responsibility to protect public funds. Both states have chosen to wait and watch rather than be early adopters in the cryptocurrency space.

For Bitcoin advocates, these setbacks are temporary hurdles in what they see as the inevitable integration of digital assets into mainstream finance. For skeptics, the decisions represent prudent caution in the face of a still-maturing asset class.

As the cryptocurrency market continues to develop and regulatory frameworks become clearer, states will likely revisit these decisions. For now, South Dakota has joined Montana in deciding that the time isn’t right for public Bitcoin investments, but the door remains open for future consideration.