North Carolina House Committee Approves Controversial Cryptocurrency Investment Bill
RALEIGH, NC — A significant shift unfolded in the North Carolina legislature on Wednesday as a bill allowing the state to invest in cryptocurrency through public funds advanced in a House committee. This proposal, which has attracted scrutiny and debate, comes just one day after the same committee had previously rejected it.
Legislative Dynamics Shift
Initially met with skepticism from Republican lawmakers, the bill’s fate changed dramatically following an intervention from House Speaker Destin Hall. Hall, aware of the concerns surrounding the proposed investment direction for the state pension plan and other funds, attended the House Commerce Committee meeting personally to bolster support. His presence underscored the bill’s priority status within the Republican leadership.
“This is new for North Carolina, but it’s not a new concept worldwide,” Hall asserted during a public presentation after a series of private discussions with GOP members who had reservations about the legislation. He emphasized that many major investment firms around the globe are already utilizing cryptocurrency exchange-traded funds (ETFs) as part of their diversified portfolios.
Investment Framework
If the bill successfully navigates the legislative process and is signed into law, it would permit the allocation of up to 10% of various state funds, including the Pension Plan, to be invested in cryptocurrency ETFs. This approach allows for indirect exposure to cryptocurrencies, as the state would invest in funds containing multiple cryptocurrencies rather than in individual currencies like Bitcoin.
The motivation for this shift is to enhance returns for the state’s pension plan, which currently supports hundreds of thousands of current and retired state employees. However, there is considerable concern among these individuals regarding the investment’s potential risk, given the high volatility often associated with cryptocurrency markets.
Opposition from Lawmakers and Stakeholders
The proposal’s reception has not been uniform. Representative Bryan Cohn, a Democrat from Granville who invests personally in cryptocurrency, voiced concerns about the volatility of crypto markets, cautioning against exposing public funds to unpredictable returns. “Crypto ETFs quickly lose value, and we’ve seen major exchanges collapse. They just disappear,” Cohn stated, reflecting apprehensions voiced by the State Employees Association of North Carolina (SEANC) as well.
Flint Benson, a lobbyist for SEANC, echoed Cohn’s sentiments, asserting, "Bitcoin has been a roller coaster at best, and state employees and retirees do not like the conversation about investing in this highly volatile currency."
A Change in Support
On Tuesday, the committee had rejected the bill amid a chorus of doubts from legislators across party lines regarding the safety and understanding of cryptocurrency. However, by Wednesday, the landscape shifted, with Cohn emerging as the lone public critic of the legislation as it passed through the committee.
The bill’s implementation would squarely fall to State Treasurer Brad Briner, a Republican recently appointed and described by Hall as possessing substantial credentials from his past financial roles. Although Briner did not attend the hearing, he communicated his support for the legislation through a letter, emphasizing the need for innovation in investment strategies for the benefit of North Carolina’s pension plan and other funds.
Looking Forward
As the legislature progresses, further discussions will determine the pathways for investing in cryptocurrencies and the protocols surrounding such investments. Despite having support from key legislative figures, concerns linger regarding the management of public funds in a space characterized by rapid market fluctuations. Legislators and stakeholders alike will monitor the implications of this bill closely as it shapes the future of state investments in North Carolina.
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