Kansas has become the latest US state to explore a formal role for Bitcoin and digital assets in public finances, with lawmakers introducing legislation that would create a state-run Bitcoin and Digital Assets Reserve Fund.
The bill, introduced by state Sen. Craig Bowser, proposes amending Kansas’ unclaimed property laws to explicitly recognize digital assets, including cryptocurrencies and virtual currencies, and to establish a framework for their custody, management and potential sale.
If passed, the legislation would place oversight of the reserve with the Kansas State Treasurer.
Under the proposal, unclaimed digital assets, such as Bitcoin, would be transferred to the government after three years of inactivity following a lack of written or electronic communication to the owner.
There is some ambiguity about what an ‘unclaimed digital asset’ is, but the bill appears to only apply to custodial digital assets held by a legally defined “holder” such as exchanges, banks, trust companies or other licensed custodians, not to self-custodial wallets.
According to the bill, the three-year abandonment clock begins only after written or electronic communication to the owner is returned as undeliverable, and it stops immediately if the owner shows signs of activity, including logging in or accessing another account with the same custodian bank.
Unlike many traditional forms of unclaimed property, the bill allows these assets to be delivered and stored in their original digital form, rather than being immediately liquidated.
The legislation also allows the state’s designated qualified custodian to stake digital assets and receive airdrops, subject to direction from the treasurer.
Any stake rewards or airdropped assets generated after three years will be transferred to BTC and the Digital Assets Reserve Fund, creating a mechanism for the state to accumulate digital assets over time.
In a notable provision, the bill prohibits BTC from being deposited into the state’s general fund.
Instead, Kansas would keep Bitcoin as part of its reserve while directing 10% of deposits of non-bitcoin digital assets into the general fund, subject to legislative appropriations. Supporters argue that this structure treats BTC as a long-term reserve asset rather than a short-term source of income.
States are actively pushing for bitcoin reserves
The bill also determines how the state will handle the sale of digital assets. Cryptocurrencies traded on established exchanges would have to be sold at market prices, while assets without active listings could be sold using other commercially reasonable methods.
The goal of all this is to minimize market disruption while adding clearer safeguards around how state-owned digital assets are managed.
If passed, the legislation would put Kansas alongside a growing number of US states exploring how Bitcoin and other digital assets can fit into long-term financial and custodial strategies.
In recent years, state lawmakers across the country have debated whether Bitcoin could serve as a hedge against inflation, a diversification tool or a way to modernize the public finance infrastructure.