Kansas lawmakers are considering a new bill that would allow the state to hold bitcoin as part of a long-term reserve. The proposal, called Senate Bill 352 (SB 352), was introduced by Republican Senator Craig Bowser.

Instead of buying bitcoin with taxpayer money, the bill would use unclaimed digital assets that already fall under state law. The bill has already taken its first step forward. It was sent to the Kansas Senate Financial Institutions and Insurance Committee, where lawmakers will now review it in more detail.

SB 352 takes a different approach than many other bitcoin reserve proposals. Kansas would not purchase bitcoin on the open market. Instead, the reserve would be built using digital assets that have been abandoned by their owners, along with rewards earned from those assets over time.

Under the bill, any amount of digital assets would be considered abandoned if the owner has been inactive for three years after the state or custodian tries and fails to contact them.

If the owner shows any activity, such as logging into their account, the clock immediately stops. The bill only applies to custodial accounts, meaning digital assets held by exchanges, banks, or licensed custodians. Personal wallets that people control themselves are not included.

One of the most important parts of the bill is how it treats bitcoin compared to other digital assets. The legislation clearly states that the state treasurer “shall not deposit bitcoin in the state general fund.” This means bitcoin cannot be used to pay for everyday government expenses.

Instead, it would be held as a long-term reserve asset. Other digital assets do not receive the same protection.

Under SB 352, 10% of non-bitcoin digital assets deposited into the reserve would be sent to the state’s general fund, but only if lawmakers approve spending it. Supporters say this shows that Kansas views bitcoin as something to hold for the future, not something to sell quickly.

The bill also allows the state’s chosen custodian to stake digital assets and receive airdrops. Staking means locking up digital assets to help run their blockchain network and earning rewards in return. Airdrops are free distributions of digital tokens, often given to holders of certain assets.

If unclaimed digital assets remain in state custody for another three years, all staking rewards and airdrops earned during that time would be transferred into the Digital Assets Reserve Fund.

This allows the reserve to grow slowly over time without new purchases. The Kansas State Treasurer would manage the reserve fund and oversee how the assets are stored, used, or sold.

If the state ever needs to sell digital assets, those that trade on major exchanges must be sold at market prices. Assets without active trading markets, such as NFTs, could be sold using other reasonable methods.

Any money spent from the bitcoin reserve would require separate approval from the legislature, adding another layer of oversight.