The Satoshi Action Fund is advancing efforts to secure state-level protections for Bitcoin self-custody, employing strategies similar to those used by the cannabis industry to navigate federal regulations. This initiative aims to create “safe haven” states for Bitcoin users, providing legal assurances for holding and using the digital asset.
Dennis Porter, CEO and co-founder of the Satoshi Action Fund argues that state law holds precedence in the absence of federal law. Porter stated,
“If federal law contradicts state law, the federal government is required to enforce it and cannot require state or local law enforcement to assist them.”
He highlighted the cannabis industry’s success in thriving despite federal prohibition, attributing it to states passing laws that protect cannabis use and possession, which the federal government has been reluctant to counter aggressively.
Per Porter’s comments, the Satoshi Action Fund seeks to preempt federal action by establishing state laws safeguarding Bitcoin rights. He said,
“We are creating safe haven states for Bitcoin today instead of waiting for the federal government to act,”
Porter emphasized that waiting delayed the cannabis industry’s progress by decades, a setback he aims to avoid for Bitcoin.
This state-level strategy, Porter argues, has historical precedent in movements such as women’s suffrage, civil rights, and same-sex marriage. According to Porter, these movements gained momentum at the state level before culminating in federal legislation. “Studies back up the claim that when there is a flurry of activity at the state level, the federal government reacts and passes the same or similar legislation,” he noted.
However, some legal experts caution about the limitations of state laws in the face of federal authority. Attorney Joe Carlasare pointed out that federal law is supreme over state law in most cases. “It doesn’t matter what laws a state passes if the Feds decide to preempt it,” Carlasare commented. He acknowledged, though, that he believes the federal government cannot lawfully ban the self-custody of Bitcoin.
Further, in response to Porter, Carlasare continued, “No State passed a law (again, still just a bill) yesterday Dennis! An election year stunt was successfully performed and you claimed, for sensationalist reasons that it would ‘shift the election.’” Carlasare argues,
“The cannabis comparison is weak. Possession is still illegal under Federal law, but Feds rarely prosecute basic possession (they haven’t for years). That is why cannabis “thrives” — not because of state laws. The Feds concentrate prosecute on large trafficking of it.”
Progress toward state-level protection for Bitcoin
Amid these discussions, Pennsylvania has taken a significant step by passing House Bill 2481, also known as the “Bitcoin Rights” bill. The bipartisan legislation, which passed the House of Representatives with a 176-26 vote, aims to protect residents’ rights to self-custody digital assets and establishes guidelines for taxing digital asset transactions.
As reported previously, the bill now moves to the Republican-controlled Senate and, if enacted, would position Pennsylvania among states proactively addressing crypto regulation without clear federal guidelines.
The bill’s passage reflects growing advocacy for state-level crypto protections, supported by groups focused on integrating Bitcoin into mainstream financial systems. Pennsylvania, a critical swing state with an estimated 1.5 million crypto owners, has become a focal point for these efforts. The Satoshi Action Fund hopes the state’s actions will influence other states to adopt similar measures, especially as federal agencies like the Securities and Exchange Commission and the Commodity Futures Trading Commission continue to deliberate over digital asset regulation.
While challenges remain due to the supremacy of federal law, the momentum at the state level signifies a concerted effort to establish legal protections for Bitcoin users. The outcome of these initiatives may shape the future landscape of Bitcoin regulation across the United States.
