North Carolina could add bitcoin and other cryptocurrency into its state investment portfolio under a bill moving in the state House this week. Advocates, including the House speaker, think it could improve returns for the state pension fund.

The Digital Assets Investments Act is the first bill sponsored by new Republican House Speaker Destin Hall. Hall said in a news release that the legislation would make North Carolina a leader in technological innovation. He said cryptocurrency investments have “the potential to generate positive yields for our state investment fund.”

Hall’s co-sponsor is Rep. Steve Ross, R-Alamance, who said the state treasurer should have the option to diversify the pension plan’s investments. That could help make the pension plan for retired state employees more stable in the long run.

“We have to do something, because we continue to lose money in the pension plan,” he said. “We’re just not meeting our goal, and so we want to give him every tool that there is available to be able to beat the benchmark that he’s trying to beat, in order to get the return necessary to be able to pay the benefits.”

Similar bills have been introduced in dozens of other states, and there’s interest in government crypto investments at the federal level. One of President Donald Trump’s first executive orders launched a study of a possible national cryptocurrency stockpile, and he’s continued to discuss that proposal recently. Trump has also hired former North Carolina congressional candidate Bo Hines to be executive director of the Presidential Council of Advisers for Digital Assets.

Dan Spuller with the Blockchain Association pushed for North Carolina’s bill. He says Wisconsin is already investing in cryptocurrency through its retirement fund. Spuller thinks Bitcoin is the likely first step for North Carolina.

“It’s set up to say digital assets more broadly, but Bitcoin is by far the most stable and the most secure and the most mainstream,” he said.

But similar legislation was recently voted down in Wyoming after the state’s chief investment officer, Patrick Fleming, voiced concerns about the proposal during a committee hearing there.

“Over the last 10 years, Bitcoin has been one of the best investments out there,” Fleming told Wyoming lawmakers in January. “It’s just been a moonshot. But when you when you look at the volatility of it — for instance, in 2021 it was down 77% — those are the types of things that we do not want in our portfolio.”

But Ross, the bill’s co-sponsor in North Carolina, stressed that the proposed legislation here doesn’t allow for direct investments in Bitcoin or other specific cryptocurrencies.

Colin Campbell

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WUNC

“It’s not a bitcoin bill,” he told WUNC. “It’s a digital asset bill, and the investments can only be made in an ETF — exchange-traded fund. They can’t go out and buy bitcoin or any other coin by itself. They can only invest in an exchange-traded fund that’s highly capitalized.”

The funds are similar to mutual funds, but for cryptocurrency. North Carolina’s bill also differs from Wyoming because the state treasurer would have the option to add digital assets, but wouldn’t be required to do so. The treasurer would only be allowed to invest up to 10% of any state funds in cryptocurrency.

North Carolina’s new state treasurer, Republican Brad Briner, declined an interview request for this story, but spokeswoman Loretta Boniti told WUNC that he looks forward to reviewing the bill.

“There are many compelling innovations happening in digital assets and it is important that our state explore opportunities to modernize,” Boniti said in an email. “Treasurer Brad Briner has previously expressed his concerns with investment performance, which ranks North Carolina 49th or 50th in the nation, and we look forward to working with the legislature to improve the performance of the pension plan in a comprehensive manner.”

Spuller, the cryptocurrency advocate, said he expects North Carolina could be among the first states to pass a cryptocurrency investment bill this year.

“The fact that it was introduced by the speaker of the House is quite interesting, and I think that’s going to get a lot more attention going forward, so I think other states will pass it,” Spuller said.

While Hall’s support is a good indication the bill will pass the House, Senate leader Phil Berger said he’s not yet sure whether his chamber will back it.

“I don’t know that I know enough about it to say whether it’s a good idea or a bad idea,” Berger told reporters. “I just need to study that a little bit more. Some of these younger folks are a little more attuned to that particular issue than I have been, but I’ll figure it out.”

The legislature has passed other cryptocurrency-related bills in recent sessions. One became law last year over a veto from then-Gov. Roy Cooper. It bans state government from accepting payments through a central bank digital currency, something that doesn’t yet exist in the U.S. but is opposed by cryptocurrency advocates.

“Our state’s been fairly forward-thinking on the whole industry in general,” Spuller said.

Gov. Josh Stein told The News & Observer he’s supportive of Hall’s cryptocurrency investments bill. The bill is scheduled for its first committee hearing Tuesday in the House Commerce and Economic Development Committee.