Lawmakers in North Carolina are pushing forward with groundbreaking legislation that could enable the state to invest a portion of its public retirement funds into digital assets such as Bitcoin and other cryptocurrencies. Two identical bills, House Bill 506 and Senate Bill 709, introduced on March 24 and 25, respectively, aim to establish a new agency — the North Carolina Investment Authority — charged with evaluating and managing investments in these digital assets.
This new initiative, known as the Investment Modernization Act, has been put forth by Representative Brenden Jones. It proposes a framework allowing the Investment Authority to invest up to 5% of various state funds into cryptocurrencies, including stablecoins, non-fungible tokens (NFTs), and other electronically-based assets that offer economic or proprietary rights. Notably, unlike some other state-level proposals, these bills do not impose specific market capitalization thresholds for eligible digital assets.
The authority would retain discretion to assess and determine the suitability of each asset, taking into consideration both risks and potential returns. Furthermore, the proposed legislation mandates that all assets must be securely stored to protect against cyber threats and theft. This careful approach aims to safeguard public funds while venturing into the ever-evolving landscape of digital currencies.
One critical aspect of these bills is that they do not mandate a permanent reserve of cryptocurrencies. As emphasized by various legal commentary, the legislation is designed to authorize rather than obligate the holding of assets like Bitcoin for the long term. This nuanced position places North Carolina among states like Florida, which is exploring similar routes, yet stops short of creating mandatory reserves.
The proposed North Carolina Investment Authority is envisioned to operate under the state Treasury and would be headed by the Treasurer. If enacted, this new body could become a model for other states aiming to modernize their public investment strategies amidst the increasing interest in digital assets across the United States. As cryptocurrencies become integral parts of diversified investment portfolios, this legislative move may mark a significant shift toward broader adoption of digital assets in state-level finance.
Yet, it is crucial to note that the bills will undergo further evaluations and potential revisions before becoming law, with some provisions possibly needing congressional approval. The future of public pension funds in North Carolina could very well hinge on the outcomes of this legislative session, as lawmakers weigh the benefits and risks involved in integrating digital currencies into their investment strategies.
