North Carolina House Approves 5% Crypto Investment in Pension Funds

The North Carolina House of Representatives has made a significant move that could alter the state's investment strategies by approving two key bills related to the management of the state’s $127 billion pension funds. House Bill 92, known as the Digital Assets Investment Act, and House Bill 506, which proposes restructuring investment oversight, have both passed after extensive debate. These bills aim to address a $16 billion pension shortage and are now headed to the Senate for further consideration.

House Bill 92 allows the state treasurer to invest up to 5% of any one retirement fund in digital assets, including cryptocurrencies like Bitcoin, stablecoins, and non-fungible tokens (NFTs). Originally, the bill proposed a 10% cap, but lawmakers reduced it to 5% to mitigate perceived risks. This bill does not mandate crypto investment but authorizes it, giving the treasury the flexibility to explore new asset classes. It also directs the Treasurer’s Office to conduct feasibility studies for a Bitcoin reserve, potentially composed of seized or forfeited crypto assets handled by law enforcement agencies.

House Bill 92 faced criticism from several Democrats who expressed concerns about the volatility of digital assets. Representative Tracy Clark referred to the idea as “gambling with retirement funds,” while Representative Marcia Morey used the example of a Bored Ape NFT bought by pop star Justin Bieber, which lost significant value, to illustrate the risk. Supporters of the bill, however, have confidence in District Treasurer Brad Briner’s judgment, citing his experience and willingness to establish strict guidelines for any such investment.

House Bill 506 proposes restructuring how final investment decisions are made. Currently, the sole authority lies with the state treasurer. If enacted, HB 506 would transfer that responsibility to the newly formed North Carolina Investment Authority, a five-member board. This board would include the treasurer and four appointees, each chosen by the governor, House Speaker, Senate President Pro Tem, and the treasurer himself. All appointees must bring at least a decade of experience managing pensions, endowments, or similar investment vehicles. The board will also be responsible for selecting a Chief Investment Officer (CIO) with even greater credentials to oversee strategy, contracts, and asset allocation decisions. HB 506 passed overwhelmingly in the House by a 110-3 vote.

North Carolina is not the only state considering such policy shifts. Several other states, including Texas, Arizona, and New Hampshire, are also reviewing legislation to integrate crypto into public finance strategies. President Donald Trump’s vocal support of digital assets has prompted more state-level lawmakers to propose similar initiatives. In North Carolina, a separate Senate Bill (SB 327) is already under review that could allow up to 10% of public funds to be invested directly into BTC, which can be used in staking or lending strategies.

Both investment bills now head to the state Senate, where they will face further review and reading. If approved, the legislation will be sent to Governor Josh Stein, who has expressed conditional support for expanding the state investment toolkit. The passage of these bills marks a significant shift in North Carolina’s financial direction, reflecting a growing trend toward integrating digital assets into state-level investment strategies. The outcome of these bills will have a substantial impact on the management of the state’s pension funds and could set a precedent for other states considering similar measures.