North Carolina is making waves in the world of cryptocurrency with the introduction of legislation that could potentially allow up to 5% of state retirement funds to be allocated to digital assets and cryptocurrencies. This bold move comes at a time when institutional crypto adoption is on the rise, despite concerns about ongoing market volatility that continue to worry traditional investors.
The North Carolina crypto investment proposals, known as the Investment Modernization Act (House Bill 506) and the State Investment Modernization Act (Senate Bill 709), are currently making their way through both chambers of the state legislature. These bills would establish an independent investment authority under the state Treasury to evaluate and select digital assets for state retirement funds.
Unlike similar legislation in other states, the North Carolina bills do not specify any particular market cap criteria for eligible assets. Instead, digital assets are broadly defined to include cryptocurrency, stablecoins, NFTs, or any electronic assets that provide economic rights to holders.
To address concerns about security and risk management, the bills include requirements for secure custody solutions to protect state retirement funds. The investment authority would also need to carefully assess the risk-reward profile of potential investments before exposing state retirement funds to cryptocurrency market volatility.
In addition to the general crypto investment proposals, there is a separate Bitcoin Reserve and Investment Act (Senate Bill 327) that proposes allocating up to 10% of public funds specifically to Bitcoin. This alternative approach requires multi-signature cold storage wallets and limits liquidation to severe financial crises with two-thirds legislative approval.
The North Carolina crypto investment initiatives are part of a broader national trend, with Bitcoin Law tracking around 41 similar bills across 23 states. Critics of these proposals cite cryptocurrency market volatility as a primary concern, while proponents point to the potential returns from institutional crypto adoption.
At the federal level, President Trump has recently established a Strategic Bitcoin Reserve using cryptocurrency from government seizures, further legitimizing digital assets as investment vehicles for public funds.
The outcome of these crypto investment bills in North Carolina could have a significant impact on how state retirement funds nationwide approach digital assets in the future. Balancing potential returns against cryptocurrency market volatility presents both opportunities and challenges for pension fund managers.