North Carolina House Approves Bill for Crypto Investment in Retirement Funds

The North Carolina House has passed Bill 92, allowing investments up to 5% of state retirement funds in cryptocurrencies. The bill has sparked debate over the risks associated with digital assets. Meanwhile, a separate bill proposes changes to the management structure of state retirement investments, establishing a board for decision-making. Both bills now head to the Senate for consideration.

In a notable decision, the North Carolina House of Representatives has approved House Bill 92, enabling State Treasurer Brad Briner to invest up to five per cent of state retirement funds into digital assets such as cryptocurrencies. This move highlights a growing interest in alternative investment strategies amid shifting financial landscapes. The bill passed on Wednesday, with some debate regarding the potential risks associated with such investments.

The bill, primarily sponsored by Republican Mike Schietzelt, aims to expand treasurer investment options without mandating any specific investment direction. “What this does is allow the state treasurer to do his job…on the long-term fiscal health,’ Schietzelt commented, insisting it merely opens up an additional asset class.

On the other side, some Democratic representatives shared concerns about the volatile nature of cryptocurrencies. They fear these could jeopardise the security of retirement funds. Rep. Tracy Clark voiced strong apprehension while highlighting how a mere $6.35 of state funds could be used for purchasing a non-fungible token, brandishing it as gambling with taxpayers’ money.

Further to emphasise the risk, Rep. Marcia Morey presented a striking example during the discussion. She held up an image of a Bored Ape NFT, previously bought by Justin Bieber for around $1.3 million, which had plummeted in value by roughly 95%. Her remark resonated with fears over investment instability in the realm of digital assets.

Despite the dissenting voices, Schietzelt defended Briner’s capacity as a judicious investor, expressing absolute confidence in his ability to set procedural guidance for future treasurers. However, Democratic Rep. Curtis Loftin warned against basing legislative changes on the current office holder’s reliability, instigating a more stable regulatory framework.

House Bill 92 goes beyond just allowing investments; it also requires Briner to consult with the N.C. State Bureau of Investigation to establish a reserve for handling seized digital assets. This aims to improve the process of liquidating confiscated assets in a timely manner, with revenues feeding into the state’s Civil Penalty and Forfeiture Fund.

In parallel news, another bill, House Bill 506, aims to overhaul the governance surrounding state retirement fund investments. Currently, the treasurer possesses exclusive decision-making power. The new proposed structure would establish a five-member board, named the North Carolina Investment Authority, to approve investment strategies, including a member appointed by the state treasurer, as well as others from gubernatorial and legislative branches.

Both pieces of legislation are now with the Senate, requiring their approval before reaching Governor Josh Stein for final consideration. The outcome remains critically important for the future of North Carolina’s investment strategy as it navigates the complexities of integrating digital assets into its financial framework.