North Carolina is stepping up its game in the digital asset space. The state recently introduced a new bill, House Bill 92, known as the “Digital Assets Investments Act.” This bill, if passed, will give the state the green light to invest public funds into digital assets like Bitcoin (BTC).

The bill’s introduction represents a significant step toward embracing the future of finance, allowing North Carolina to engage with cryptocurrencies as part of its long-term investment strategy.

What’s in the Bill?

The bill aims to allow the State Treasurer of North Carolina to invest in digital assets, which include Bitcoin, other cryptocurrencies, stablecoins, nonfungible tokens (NFTs), and any digital asset offering economic or proprietary rights. The key provision of the bill specifies that only those digital assets with a market capitalization of at least $750 billion over the past 12 months will be eligible for investment.

At present, Bitcoin is the only digital asset meeting this threshold. With a market cap of nearly $2 trillion, Bitcoin is firmly positioned to be the central focus of North Carolina’s proposed digital investment strategy. In contrast, other cryptocurrencies such as Ethereum fall short of the required market cap, making them ineligible for state investments under the bill’s criteria.

Rationale Behind the Bill

The bill’s sponsors—Representatives Destin Hall, Mark Brody, and Steve Ross—are advocating for Bitcoin investments with an eye on both financial returns and technological innovation. As Hall noted in a statement, Bitcoin offers the potential to generate positive yields for the state’s funds, while also positioning North Carolina as a leader in adopting new technologies. The move to embrace digital assets reflects the growing recognition of blockchain and cryptocurrency as pivotal to the future of global finance.

However, the bill also places safeguards to ensure the responsible management of state funds. While the bill allows for investments in Bitcoin and other digital assets, it sets strict security and oversight requirements. The total allocation to digital assets from any state fund cannot exceed 10% of its total balance at the time of investment, ensuring that funds are diversified and risks are mitigated.

How It Works

If passed, House Bill 92 will empower the State Treasurer to oversee these investments, allowing the purchase of Bitcoin or other digital assets directly or through exchange-traded products (ETPs) listed on major exchanges like the NYSE or NASDAQ. These products would need to meet specific security criteria to ensure safe and transparent investments.

The bill’s flexibility also allows the State Treasurer to invest in various special funds, including retirement systems and health plans, while keeping each fund’s specific needs in mind. North Carolina currently manages roughly $9.6 billion in reserve funds, in addition to $127 billion in its retirement systems. As such, the state has the capacity to make sizable investments in Bitcoin if the bill passes.

North Carolina’s Position Among Other States

North Carolina is not the only state exploring digital asset investments. Florida has introduced House Bill 487, which also proposes allocating 10% of public funds into Bitcoin. Other states, like Utah and Arizona, are taking similar steps. Utah’s bill has already passed the state house and is now being considered by the state senate, while Arizona is moving forward with its legislation.

This growing movement reflects a broader trend across the United States. States are increasingly recognizing Bitcoin as a viable investment asset, not just for private investors, but also for public funds. With Bitcoin’s price history and adoption rate continuing to climb, states may find it beneficial to hold a stake in the digital currency as a long-term investment.

What It Means for the Future

If House Bill 92 is passed, it could significantly change the way North Carolina handles public investments. It could lead to a stronger, more diversified portfolio for the state’s reserves and retirement funds, tapping into the growing cryptocurrency market. Additionally, North Carolina could further solidify its reputation as a forward-thinking state in terms of technology and finance.

The bill’s passage may also have broader implications for other states, pushing them to reconsider their own stance on Bitcoin and digital asset investments. With more states already taking steps to invest in Bitcoin, North Carolina’s initiative could serve as a model for others looking to take the plunge into the digital asset market.

In conclusion, North Carolina’s move to introduce a bill allowing Bitcoin investments is a significant development in the cryptocurrency world. It demonstrates the state’s commitment to embracing new financial technologies and paves the way for future investment in digital assets.