NC House Approves Bill for Cryptocurrency Investments in State Pensions
RALEIGH, NC— The North Carolina House of Representatives passed a significant piece of legislation on Wednesday, allowing the state treasurer to invest up to 5% of public funds—including retirement, education, and transportation funds—in cryptocurrencies and other digital assets. The bill, known as the NC Digital Assets Investments Act, reflects a growing trend among states exploring cryptocurrency investments as part of their financial strategies.
Legislative Background
The legislation, supported by a coalition of 27 Republican sponsors, is aimed at expanding investment options for more than two dozen public funds, including the state’s $129 billion pension plan that covers state employees, police officers, firefighters, and teachers. The House vote concluded with a tally of 71 in favor and 44 against.
Key adjustments made to the original proposal include lowering the investment cap from 10% to 5% and requiring an independent assessment of any proposed cryptocurrency investments by a third-party consultant. Additionally, the bill’s language has expanded the range of eligible cryptocurrencies by removing a previous market capitalization requirement of $750 billion, which effectively limited eligibility to Bitcoin.
Security and Oversight
To address security concerns surrounding digital assets, the bill stipulates that virtual currencies must be held within a "secure custody solution" platform, replacing the initial clause that allowed the state treasurer to hold the exclusive private key to digital wallets. This change aims to enhance the security measures in place for handling public funds.
State Treasurer Brad Briner has expressed his commitment to prudent fiscal management, emphasizing that the decision to invest is ultimately at the discretion of the treasurer. As Briner stated, "We need to diversify our investments to ensure the financial health of this state long-term."
Next Steps for Legislation
The bill will now proceed to the state Senate, which has already expressed support for the concept of public investments in cryptocurrencies. On April 19, the Senate approved a budget that includes a provision allowing for 5% of funds’ assets to consist of digital assets.
Democratic Governor Josh Stein has also shown support for this initiative, stating in an interview with The News & Observer that he believes in empowering the state treasurer to consider a variety of investment options that could yield positive returns.
Context and National Trends
This legislation aligns with a broader trend observed across the country, as at least 40 states have introduced bills related to cryptocurrency this year. States such as Florida, Ohio, Iowa, and North Dakota are all discussing similar proposals, with Wisconsin and Michigan already permitting cryptocurrency investments within their retirement portfolios. Recently, Arizona has also advanced legislation aimed at establishing the first state Bitcoin reserve.
The ongoing conversation about cryptocurrency investments at the state level coincides with former President Donald Trump’s advocacy for a national digital asset reserve tied to Bitcoin, underscoring the growing relevance of digital currencies in public finance.
Concerns Raised by Opponents
Democratic representatives have voiced concerns regarding the increased power granted to the state treasurer under this bill. Rep. Phil Rubin from Wake County cautioned that trusting the treasurer with such significant investment decisions without adequate oversight could pose risks. He cited security issues, referencing the high-profile hack of cryptocurrency exchange Bybit that resulted in a substantial loss attributed to a breach.
The bipartisan debate on the bill reflects a broader discourse surrounding the appropriate governance structures for state investments. A separate bill, House Bill 506, aims to restructure the investment decision-making process in North Carolina, moving from a sole fiduciary model to a shared governance approach.
Conclusion
As this legislation moves to the Senate, its implications for public investment strategies and the management of state employee pensions remain to be fully realized. The introduction of cryptocurrency investing into the state’s financial portfolio marks a significant development in North Carolina’s approach to modernizing and diversifying its investment strategies, a move that may reverberate through the public sector in the coming years.
For further updates on this developing story and to follow the legislative process, please check back with the Raleigh News & Observer.
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