Big‑picture takeaway: California currently bars local governments from buying assets that are not on the State’s permissible‑investment list, but a new Digital Financial Assets Law (DFAL) coming into force on July 1 2026 gives Culver City a clear pathway—via pilot programs, special‑purpose funds and licensed custodians—to accumulate Bitcoin gradually (e.g., 1 %‑2 % of reserves), store it in institution‑grade cold custody with insurance, account for it under updated GASB/FASB rules, and showcase transparent dashboards that double as an economic‑development magnet.
1 Lay the Legal & Governance Foundation
1.1 Map current authority
- California Government Code §53600‑53601 restricts local agencies to the instruments enumerated in statute; Bitcoin is not yet listed.
- Culver City’s 2025 Investment Policy repeats that statutory limit, so any direct crypto purchase today would violate policy.
1.2 Watch DFAL go live
- Assembly Bill 39 (and SB 401) created the Digital Financial Assets Law; DFAL authorizes DFPI to license crypto businesses and takes effect 7‑1‑2026, with a one‑year compliance extension under AB 1934.
- Culver City can pass a contingent ordinance stating that Bitcoin purchases will commence only once a DFPI‑licensed qualified custodian is available.
1.3 Choose the right municipal vehicle
- Create a special reserve fund (like the Contingency Reserve already referenced in Culver’s FY 25 budget) with its own investment guidelines.
- Alternatively, join or form a Joint Powers Authority (JPA) dedicated to digital‑asset reserves, shielding the General Fund until state rules mature.
2 Clarify Objectives & Sizing
| Objective | Metric | Typical Range | Why it matters |
| Diversify long‑term reserves | BTC allocation as % of unrestricted cash | 1 %–2 % start; cap 5 % | Lowers correlation to bonds & dollar cash |
| Hedge inflation | 5‑yr purchasing‑power delta vs. CPI | Positive spread | Bitcoin’s scarcity thesis |
| Tech‑sector branding | # of new blockchain firms relocated | ≥5 in 3 yrs | Miami & Fort Worth saw inbound interest |
Use scenario analysis—e.g., Bitcoin at $25 k / $75 k / $150 k—when deciding the initial tranche.
3 Acquire Bitcoin Prudently
- Dollar‑cost average (DCA) weekly or monthly through a DFPI‑licensed OTC desk to reduce volatility and avoid price slippage above the city’s mandated bid‑spread threshold.
- Require counter‑parties to screen wallets against OFAC SDN lists.
- Publish trade confirmations within 48 hours on the city’s transparency portal, mirroring quarterly investment reports.
4 Institution‑Grade Custody & Insurance
4.1 Qualified Custodian
- Anchorage Digital is the only U.S. federally chartered crypto bank, offering SOC‑2‑audited cold storage (though note ongoing DHS scrutiny—due diligence is crucial).
- Backup options include BitGo Trust or Coinbase Prime (all DFAL‑license‑eligible by 2026).
4.2 Multisig Cold Storage & Key Ceremony
- Require 3‑of‑5 hardware‑wallet quorum—one key each for the City Treasurer, City Controller, outside custodian, and two escrowed with separate law firms.
4.3 Insurance Layer
- Purchase a “digital‑asset specie” policy (limits to $100 M+ are now common) covering theft, key destruction and employee malfeasance.
- Cold‑storage riders fetch premiums of 1 %‑2 % of asset value, far below historical gold‑vault insurance rates.
5 Accounting, Auditing & Disclosure
- GASB is actively studying crypto guidance; today, municipal holdings fall under GASB 72 (fair‑value hierarchy) while awaiting final pronouncement.
- FASB ASU 2023‑08 requires fair‑value rerating each reporting period—a methodology Culver can voluntarily adopt for extra transparency.
- Engage an audit firm fluent in blockchain for proof‑of‑reserve attestations every quarter; BitcoinTreasuries.net demonstrates accepted public disclosure formats.
6 Risk Management Matrix
| Risk | Mitigation | Trigger‑Action |
| Price drops > 40 % from cost basis | Maintain 5‑year horizon; no forced sale unless reserve ratio < policy floor | Council emergency review |
| Custodian failure | Dual‑custody structure; insured cold keys | Immediate asset transfer |
| Regulatory change (state ban) | Reserve held in JPA outside direct city ownership | Legislative liaison task force |
| Cyber/insider theft | 3‑of‑5 multisig + insurance | Public incident report within 72 h |
7 Community Engagement & Economic‑Development Flywheel
- Announce a “Culver City Digital Innovation Month” when the first BTC tranche settles, inviting startups and film‑tech firms to demo Web3 solutions.
- Partner with local colleges for Bitcoin literacy workshops—mirroring Lugano, Switzerland’s “Plan B” playbook that attracted tech talent.
- Highlight how states like Wyoming and proposals in Texas and Pennsylvania are embracing state‑level Bitcoin reserves, positioning Culver as the SoCal pioneer.
8 Implementation Roadmap
| Phase | Timeline | Milestones |
| Exploratory | Now – Q1 2026 | Legal memo; Council study session; DFPI monitoring |
| Pilot | Q2 2026 | JPA formed; custodian RFP; 0.25 % cash converted via DCA |
| Scale‑up | 2027‑2028 | Grow to 2 % of reserves; insurance review; launch public dashboard |
| Optimization | 2029+ | Consider BTC‑backed municipal bonds; integrate stablecoin cash management post‑GENIUS Act rules |
9 Key Takeaways
- Start small, stay legal: No Bitcoin can be bought until a DFPI‑licensed custodian exists after DFAL goes live in 2026.
- Safety first: Cold multisig + insurance keeps taxpayers whole even in worst‑case scenarios.
- Transparency breeds trust: Daily address balances, quarterly fair‑value marks and third‑party attestations keep the public informed.
- Economic upside: Even a 1 % reserve signals innovation, attracting businesses and diversifying Culver City’s revenue base.
This roadmap is for educational purposes and is not legal or investment advice. Consult municipal counsel, external auditors and a DFPI‑licensed custodian before executing any transaction.