Minnesota Bitcoin Act Seeks to Modernize State Finances

Minnesota could become one of the first states to use Bitcoin and other cryptocurrencies for state investments, retirement plans, and tax payments.

Minnesota State Senator Jeremy Miller has introduced the Minnesota Bitcoin Act (SF2661), a proposal that could see the state become one of the first to accept Bitcoin and other cryptocurrencies for various financial purposes.

The bill, which was introduced on March 18, aims to expand financial options, modernize payments, and create new opportunities for residents. It follows a complete shift in Senator Miller’s views on Bitcoin, which he detailed in the statement announcing the bill.

“As I do more research on cryptocurrency and hear from more and more constituents, I’ve gone from being highly skeptical, to learning more about it, to believing in Bitcoin and other cryptocurrencies,” said Senator Miller.

The senator’s bill would permit the Minnesota State Board of Investment to invest in Bitcoin and other cryptocurrencies, an action that several other states are also exploring.

“I believe global digital currencies are here to stay and it’s inevitable that they become more and more mainstream. I'm proud to introduce this legislation to modernize Minnesota finances and create new possibilities for our residents,” Senator Miller said.

The bill seeks to provide several advantages to the state and its residents. It would exempt investment gains from Bitcoin and other cryptocurrencies from state income taxes. In the U.S., up to $10,000 paid to the state can be deducted from federal taxes, but amounts above that are taxed at both the state and federal levels.

The bill would also allow Minnesota state employees to include Bitcoin and other cryptocurrencies in their retirement accounts, expanding investment options beyond traditional assets.

Moreover, the legislation would grant residents the flexibility to pay state taxes and fees using Bitcoin, further integrating the cryptocurrency into the state's financial system.

Several state lawmakers are advancing plans for Bitcoin and crypto measures. Texas lawmakers are considering a plan for a state-managed Bitcoin reserve, much like Senator Cynthia Lummis’s proposal for a federal measure.

The New Hampshire Senate is set to vote on a bill that would let the state invest in Bitcoin, while Colorado and Utah already accept crypto for tax payments. Louisiana has begun using crypto for state service payments.

On the federal level, Senator Lummis is pushing for a Strategic Bitcoin Reserve Act, which directs the federal government to buy 200,000 Bitcoin annually for five years, ultimately accumulating 1 million Bitcoin.

Senator Lummis recently reintroduced the BITCOIN Act, which permits the government to hold over 1 million Bitcoin as part of a new reserve. The bill also aims to create a regulatory framework for cryptocurrencies, aiming to provide clarity and stability for the industry.