- North Carolina’s House has passed HB 92 bill to allow crypto investments up to 5% of state funds.
- The bill requires third-party security and compliance checks before any crypto investments are made.
- A second bill could shift investment authority from the treasurer to a newly formed state board.
North Carolina’s House of Representatives has approved a bill that would allow the state to invest public funds in cryptocurrency assets. The Digital Assets Investment Act passed its third reading on April 30th with a vote of 71 to 44.
This bill will allow the state treasurer to invest up to 5 percent of state investment in approved digital assets. These investments must pass the gatekeeping of third-party risk and compliance assessments. In addition to that, the legislation contemplates exploring crypto exchange-traded products (ETPs) for retirement and deferred compensation plans.
North Carolina Approves Crypto Investment Legislation
The bill was introduced by republican House Speaker Destin Hall in Feb. Incorporating digital assets is a big step for North Carolina and its most significant step toward integrating digital assets into its investment strategies. The proposal allows trading only in digital assets with a market cap of at least $750b. Until now, this requirement effectively restricts eligible assets to Bitcoin. It applies to the General Fund and the Highway Fund, which are managed by the state.
The legislation uses additional safeguards. Any crypto holdings need to be stored in secure cold wallets in a state guarded by multi-signature verification. There would be independent audits performed every month. To sell crypto, two-thirds legislative approval was needed and only in financial emergencies.
Supporters of the bill argue that the move could provide a hedge against inflation and diversify North Carolina’s financial holdings. Lead sponsor Representative Keith Kidwell said the measure was a logical investment move, not a speculative gamble.
Lawmakers Debate Bill’s Potential Impact
The legislation has triggered both optimism and concern among lawmakers and the public. Democratic Representative Maria Cervania expressed skepticism, raising issues about the volatility and security of digital currencies. State workers have also come on board with the concerns. State Employees Association of North Carolina Flint Benson warned that putting public pension funds in crypto could undermine someone’s retirement benefits. The Critics fear that digital assets have an inherent volatility that is too risky to public finances.
The House, however, overwhelmingly passed its corresponding State Investment Modernization Act, or HB 506, 110 to 3. This bill would set up the North Carolina Investment Authority (NCIA). This would eventually take over on the investment responsibilities from the treasurer. If both of those bills are enacted, then the NCIA would gain authority over digital asset investments. Crypto allocations would still require board approval and compliance with third-party assessments.
North Carolina Follows Arizona in Crypto Legislation Push
The U.S. state of North Carolina joins others in the push for government-level digital asset investment. This follows Arizona, which passed two bills to create a state Bitcoin reserve. Gov. Katie Hobbs is expected to sign Arizona’s bills, SB 1025 and SB 1373. If signed, the bills would authorize up to 10 percent of Arizona funds to be invested in Bitcoin or other crypto reserves.
However, North Carolina’s proposal does not allow direct crypto purchases. Instead, it is opening a path for spillover via exchange-traded products. Although HB 92 has garnered wide praise, Governor Josh Stein hasn’t publicly endorsed it, but he has reportedly welcomed its direction. His administration sees it as part of the state’s financial modernization goals.
The North Carolina Senate now takes up the bill, where it will be further debated and possibly amended. Lawmakers will decide whether North Carolina will become one of the first states to formally adopt digital assets into its financial strategy.
