- Kansas proposes clear rules for holding unclaimed digital assets while keeping Bitcoin reserved for long term state protection.
- The bill limits state control to licensed custodians and excludes self custody wallets to reduce privacy concerns.
- Kansas also moves to allow limited Bitcoin ETF exposure for public pensions under strict oversight rules.
The Kansas legislators have progressed in developing a new strategy to digital assets in two synchronized bills. State Senator Craig Bowser introduced Senate Bill 352 on January 22. The proposal is on custody rules and long-term public finance planning.
The two are seen as a significant change in the way the state handles cryptocurrencies. Legislators positioned the initiative within the context of control, transparency, and risk limits. The changes avoid speculation and keep a strict regulatory tone.
Kansas Updates Unclaimed Property Rules for Digital Assets
The bill updates unclaimed property laws to include digital assets. It grants legal status to cryptocurrencies held by licensed custodians. Moreover, it outlines how the state would hold, manage, and sell these assets. The Kansas State Treasurer would oversee a separate Digital Assets Reserve Fund.
The bill sets clear conditions for transferring unclaimed assets to state control. Custodial digital assets would transfer after three years of inactivity. Any owner action would reset the inactivity clock immediately. Additionally, the transfer would occur only after failed written or electronic contact attempts. This structure mirrors existing property rules while adapting to digital ownership.
Importantly, the bill limits its scope to regulated custodians. It applies to exchanges, banks, trust companies, and licensed custodians. It excludes self-custody wallets held by individuals. Therefore, the measure avoids privacy concerns tied to personal wallets. It also keeps enforcement focused on regulated institutions.
Reserve Fund Design Keeps Bitcoin Separate
The bill introduces a strict separation rule for Bitcoin. Kansas would hold all Bitcoin inside the reserve fund. Lawmakers would block any transfer of Bitcoin to the general fund. Supporters view Bitcoin as a long-term reserve asset. Consequently, the state would treat it differently from other digital assets.
In contrast, lawmakers could allow limited use of other cryptocurrencies. Up to 10% of non-Bitcoin assets could support the general fund. This option creates flexibility without touching Bitcoin holdings. Furthermore, the bill allows assets to remain in digital form. The state would avoid forced liquidation into cash.
The proposal also permits limited asset management activities. Approved custodians could stake selected assets and collect airdrops. After three years, the reserve fund would receive those rewards. This approach allows slow fund growth without public spending. However, it also increases the need for strong oversight.
Retirement Fund Bill Expands ETF Exposure
Bowser also introduced Senate Bill 34 earlier in January. The bill targets retirement fund investment policy. It would allow the Kansas Public Employees Retirement System to invest in spot Bitcoin ETFs. The proposal caps exposure at 10% of total retirement assets. It also establishes a board of trustees to oversee investments. Similarly, President Trump authorized the Strategic Bitcoin Reserve through an executive order last year.
The board would review performance through annual examinations. It would retain discretion if ETF holdings exceed the 10% limit. The bill entered the Committee on Financial Institutions and Insurance on January 17. It must pass several legislative steps before final approval. Together, both bills signal a clear policy shift from earlier crypto restrictions.
