North Carolina House Approves 5% State Funds for Cryptocurrency

The North Carolina House of Representatives has passed a bill that allows the state to invest public funds in approved cryptocurrencies. The Digital Assets Investment Act, or House Bill 92, was passed on its third reading on April 30 by a vote of 71 to 44. The bill, introduced by Republican House Speaker Destin Hall in February, permits the state treasurer to allocate up to 5% of the state’s investments into designated digital assets. This move is part of a broader effort to modernize the state's investment practices and capitalize on the growing digital asset market.

The investments can only be made after obtaining an independent third-party assessment confirming that the crypto holdings are maintained with a secure custody solution and that risk oversight and regulatory compliance standards are met. New amendments to the bill also allow the treasurer to examine the feasibility of allowing members of retirement and deferred compensation plans to elect to invest in digital assets held as exchange-traded products (ETPs).

In addition to HB92, the House also passed the State Investment Modernization Act, or HB 506, with little discussion on April 30, in a 110 to 3 vote. This bill aims to create the North Carolina Investment Authority (NCIA) to take over investment management from the treasurer. If passed into law, authority to invest in digital assets would transfer from the treasurer to NICA, and it would require approval from its board of directors based on third-party assessments to make crypto investments. Local news reported that Treasurer Brad Briner supports both bills.

North Carolina's move to allow state investments in cryptocurrencies is part of a broader trend in the United States, where several states have begun to explore the integration of cryptocurrencies into their financial systems. This development could set a precedent for other states considering similar measures, potentially accelerating the adoption of digital assets in public finance. The bill's passage marks a significant step forward in the state's efforts to modernize its investment practices and align with the evolving financial landscape.

However, the bill's journey is not yet complete. It must still pass through the state Senate and be signed into law by the governor. If approved, North Carolina will join a select group of states that have taken proactive steps to incorporate cryptocurrencies into their financial strategies. This development could set a precedent for other states considering similar measures, potentially accelerating the adoption of digital assets in public finance.

The passage of this bill also highlights the evolving regulatory landscape for cryptocurrencies. As more states and governments explore the potential of digital assets, there is a growing need for clear and consistent regulations to guide their integration into traditional financial systems. North Carolina's initiative could serve as a model for other jurisdictions seeking to balance innovation with prudence in their approach to cryptocurrencies.