North Carolina legislators have introduced new bills that could allow the state to invest up to 5% of its retirement funds into digital assets, including Bitcoin. The move signals growing interest among US states in leveraging cryptocurrency as a viable investment option for public funds.‍

New Investment Strategy for State Pensions

The Investment Modernization Act (House Bill 506) was introduced on March 24 by Representative Brenden Jones and co-sponsored by lawmakers Keith Hall, Ross, Tyson, and McNeely. 

A day later, an identical bill, Senate Bill 709, was presented in the North Carolina Senate. If passed, the legislation would create an independent investment authority under the state’s Treasury to assess and manage digital asset investments for state retirement funds.

Under the bills, digital assets are broadly defined to include cryptocurrencies, stablecoins, non-fungible tokens (NFTs), and any other electronically based assets that confer economic, proprietary, or access rights. 

However, unlike similar bills in other states, the North Carolina proposal does not impose market capitalization requirements for digital assets, giving the newly proposed North Carolina Investment Authority flexibility in its selection process.‍

Balancing Opportunity and Risk

While the proposed legislation does not mandate the purchase of Bitcoin or any specific cryptocurrency, the investment authority would be required to carefully assess the risk-reward profile of each digital asset before including it in state pension funds. 

Furthermore, all digital asset holdings would need to be maintained in a secure custody solution to ensure protection against cyber threats and potential financial losses.

Bitcoin Laws, a legal tracker for digital asset legislation, noted that House Bill 506 is not a Bitcoin reserve bill. Unlike other legislative efforts aimed at directly holding Bitcoin as a strategic reserve, this bill gives investment authorities discretion on whether to allocate funds into digital assets at all.

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