North Carolina House Passes Bill Allowing 5% Digital Asset Investment

The North Carolina House of Representatives has passed a significant bill, the "Digital Assets Investment Act" (HB92), which authorizes the state to invest in digital assets. The bill, primarily sponsored by Republican House Speaker Destin Hall, allows the State Treasurer to invest in qualified digital assets and consider incorporating them into state employee retirement plans. The measure now moves to the Senate for further debate.

The bill instructs the Treasurer’s office to explore suitable investment vehicles, recommend contribution limits, and develop educational materials outlining the risks of digital asset investments. Additionally, it proposes a feasibility study on establishing a state-run reserve for seized or forfeited crypto assets, to be overseen by the State Bureau of Investigation in coordination with law enforcement.

This legislative push comes as individual states are rapidly passing legislation to carve out a place in the digital economy. A second measure in North Carolina, SB 327, also known as the "Bitcoin Reserve and Investment Act," was filed on March 19. This proposal would allow up to 10% of public funds to be allocated into Bitcoin, creating a formal reserve and enabling staking, lending, and other yield-generating strategies. Sponsored by Republican Senators Todd Johnson, Brad Overcash, and Timothy Moffitt, the bill positions Bitcoin investment as a “financial innovation strategy” to boost the state’s economic profile. It has passed its first Senate reading and has now been referred to a committee where it must undergo several hurdles, including further readings, in order to become law.

North Carolina is not alone in this endeavor. Arizona, New Hampshire, and Texas are all considering similar Bitcoin reserve legislation. Meanwhile, at least a dozen other states are reviewing related proposals, some of which are juggling multiple crypto bills at once. Several states, including Indiana and Florida, are considering legislation to allow digital assets as options within public pension systems. However, momentum has stalled elsewhere, with initiatives in Oklahoma, Montana, Pennsylvania, North Dakota, South Dakota, and Wyoming failing to gather support.

North Carolina’s HB92 itself was revised slightly in ambition as it was examined in the House. Although an earlier version proposed digital asset investments not exceeding 10% of the fund's balance, the latest iteration has reduced the maximum limit to just 5%. This adjustment reflects a cautious approach to integrating digital assets into the state's financial strategies, balancing the potential benefits with the inherent risks.

The passage of HB92 in the House marks a significant step forward in the legislative process. If the Senate approves the bill and it is signed into law by the Governor, North Carolina will join a growing number of states that are actively exploring the integration of digital assets into their financial systems. This development underscores the increasing recognition of digital currencies as a viable and potentially lucrative investment option for state governments.

The Senate's debate on the bill will be crucial in determining its final outcome. Lawmakers will need to address various issues, including the potential risks and benefits of investing in digital assets, the regulatory framework governing such investments, and the long-term implications for the state's financial stability. The Senate's decision will ultimately shape the future of digital asset investments in North Carolina and set a precedent for other states considering similar initiatives.