North Carolina House Endorses Legislation Allowing $127B State Pension Fund to Invest in Cryptocurrencies
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North Carolina tiptoes into uncharted territory with a pair of game-changing bills, potentially reshaping its investment landscape. The two bills in question are House Bill 92, also known as the Digital Assets Investment Act, and House Bill 506. If passed, they could allow the state to delve into the world of digital assets, including cryptocurrencies, in its pension funds.
Dipping a Toe in the Crypto Waters: House Bill 92
House Bill 92 opens up the possibility of investing up to 5% of certain retirement funds in digital assets. This could include Bitcoin, stablecoins, and non-fungible tokens (NFTs). Initially, the bill proposed a 10% investment cap, but lawmakers shaved it down to reduce perceived risk. Importantly, the bill doesn't require that the state invest in cryptocurrencies, it simply gives the treasury the authority to explore new avenues.
The bill also orders the Treasurer's Office to investigate the feasibility of a Bitcoin reserve NC. This theoretical reserve could be built from crypto assets seized or forfeited by law enforcement agencies, such as the State Bureau of Investigation. Rep. Mike Schietzelt (R-Wake), the bill's sponsor, insists that this move is about securing long-term fiscal stability for the state.
Risky Business or Fiscal Fortitude? The Great Debate
Democratic critics voiced their concerns about House Bill 92, despite some support. The primary worry is the volatility of digital assets. Rep. Tracy Clark (D-Greensboro) calls the idea "risky gambling with retirement funds." Meanwhile, Rep. Marcia Morey (D-Durham) uses the Bored Ape NFT example — once worth $1.3 million, now valued at a fraction of that — to illustrate the risk.
However, supporters of the bill argue that the district treasurer, Brad Briner, and his team are equipped to handle the risk, with strict guidelines to ensure the security of invested funds.
Shaking up Decision-making: House Bill 506
The second bill, House Bill 506, aims to overhaul how investment decisions are made. At present, the decision-making authority rests solely with the state treasurer. But under Bill 506, responsibility would be transferred to the North Carolina Investment Authority, a new five-member board. This board would include the treasurer, along with four appointees from the governor, House Speaker, Senate President Pro Tem, and the treasurer himself.
Appointees must boast a minimum of ten years’ experience managing pensions, endowments, or similar investment vehicles. The board would also hire a Chief Investment Officer (CIO) with even greater credentials to oversee strategy, contracts, and asset allocation decisions. House Bill 506 sailed through the House, clinching a 110-3 vote.
Crypto Legislation: A Growing National Trend
North Carolina isn't alone in its policy shift. States like Texas, Arizona, and New Hampshire are exploring similar avenues for crypto integration into their financial strategies. The vocal endorsement of digital assets by former President Trump has spurred more state-level lawmakers to propose similar initiatives. In North Carolina, Senate Bill (SB 327) is under review, which, if enacted, could allow up to 10% of public funds to be invested directly into Bitcoin for staking or lending purposes.
Both bills now proceed to the state Senate for review, with further reading and potential amendments on the horizon. If approved, the legislation could position North Carolina as a trailblazer in state-level digital asset adoption, although pension funds would face increased oversight demands and market risks tied to cryptocurrency fluctuations.
- The Digital Assets Investment Act, House Bill 92, proposes investing up to 5% of certain retirement funds in digital assets like Bitcoin, stablecoins, or NFTs, downgraded from an initial 10%.
- The Treasurer's Office is ordered to investigate the feasibility of a Bitcoin reserve NC, potentially built from seized crypto assets.
- Critics argue House Bill 92 is risky gambling with retirement funds, citing the volatility of digital assets like Bitcoin and the dropped value of NFTs.
- In contrast, supporters of House Bill 92 believe the district treasurer and his team can handle the risk with strict guidelines to secure the invested funds.
- House Bill 506 proposes a shift in decision-making, transferring investment authority from the state treasurer to the North Carolina Investment Authority.
- States such as Texas, Arizona, and New Hampshire are also exploring crypto integration into their financial strategies, mirroring the vocal endorsement of digital assets by former President Trump.
- Senate Bill (SB 327) in North Carolina, if enacted, could allow up to 10% of public funds to be invested directly into Bitcoin for staking or lending purposes.
- Both House Bill 92 and House Bill 506 now move to the state Senate for review, with potential amendments and increased oversight demands on pension funds in the event of cryptocurrency adoption.
