Virginia lawmakers are moving forward with a proposal that would place the Commonwealth among a growing number of states exploring direct exposure to bitcoin and other digital assets through public reserves.
Senate Bill 557, patroned by Senator Reeves, would establish the Commonwealth Strategic Cryptocurrency Reserve Fund, a special nonreverting fund housed in the state treasury and administered by the Virginia State Treasurer.
The measure advanced this week after passing the Senate General Laws and Technology Committee in a 13–2 vote.
Under the legislation, Virginia would be authorized to invest state-held funds directly into bitcoin or other qualifying cryptocurrencies, creating what supporters describe as a strategic reserve designed to modernize treasury management and position the state for the future of bitcoin and digital finance.
The bill lays out a detailed framework for how the bitcoin reserve would operate. All funds appropriated for the purpose, along with any bitcoin or cryptocurrency purchased or received, would be credited into the reserve.
Notably, the proposal also accounts for assets that may be generated through blockchain events such as forks or distributed through airdrops, ensuring the state retains ownership of any derivative digital holdings.
Unlike many state accounts, the reserve would be nonreverting, meaning funds would remain in the reserve at the end of each fiscal year rather than returning to the general fund.
SB557 includes guardrails intended to limit speculative exposure. Any cryptocurrency purchased using reserve funds must have maintained an average market capitalization of at least $500 billion over the previous 24 months, a threshold that effectively limits eligibility primarily to bitcoin.
The Treasurer would be required to manage investments under a “prudent person” standard, balancing diversification and risk minimization. The bill also permits the use of derivatives if the Treasurer determines they serve the best interest of the fund.
To address security concerns, the legislation authorizes the Treasurer to contract with third-party entities, including qualified custodians that employ secure technologies such as cold storage, as well as regulated liquidity providers to facilitate purchases and asset management.
The Treasurer may also commission independent audits through certified public accountants.
In addition, SB557 would establish a five-member Strategic Cryptocurrency Reserve Advisory Committee, including members with expertise in digital asset investments, to provide guidance on valuation methods and investment policy.
The bill mandates transparency through biennial reporting. By December 31 of each even-numbered year, the Treasurer would publish and submit a report detailing the amount and estimated value of bitcoin and other cryptocurrencies held, changes over time, and management actions taken.
U.S. States embracing bitcoin
The proposal comes amid growing interest from U.S. states and municipalities in incorporating digital assets into public portfolios, reflecting broader trends in cryptocurrency adoption and financial innovation.
South Dakota recently introduced House Bill 1155, which would allow the state to invest up to 10% of public funds in Bitcoin.
Earlier this year, Rhode Island lawmakers introduced Senate Bill S2021 to temporarily exempt small Bitcoin transactions from state income and capital gains taxes, with a $5,000 monthly and $20,000 annual cap.
The bill treats Bitcoin as a “digital, decentralized currency” and allows residents and Rhode Island–based businesses to self-certify eligibility while keeping simple records.
The exemption would take effect January 1, 2027, and expire January 1, 2028, as a pilot program to reduce tax friction on everyday Bitcoin use.
New Hampshire is another state actively championing Bitcoin. In May 2025, New Hampshire became the first U.S. state to allow its treasury to invest in Bitcoin and other large-cap digital assets, authorizing up to 5% of certain public funds to be allocated into crypto under House Bill 302. BTC currently qualifies under the market-cap rule.
