North Carolina Seeks to Invest Pensions in Cryptocurrency

• NC bills propose investing up to 5% of state pension funds in digital assets like crypto.
• A new investment authority would manage crypto allocations for NC retirement funds.
• Crypto assets must be held in secure custody under the proposed North Carolina legislation.

North Carolina Lawmakers have submitted two legislation bills that propose moving 5% or less of their pension funds into cryptocurrencies and digital assets. The proposed change represents a major policy transition in handling public retirement money, enabling managers to invest in cryptocurrencies, stablecoins, and non-fungible tokens (NFTs).

The two bills, titled the State Investment Modernization Act (House Bill 506) and Senate Bill 709, were filed in both chambers of the North Carolina legislature this week. These bills seek to establish an independent “Investment Authority” under the control of the State Treasury. Under this new authority, allocating 5% of state retirement funds to digital assets would fall under its management responsibilities. The main objective of this legislation seeks to modernize state investment strategies by acknowledging the rising interest in digital currencies.

Framework for Managing Crypto Investments

The proposed legislation presents a standardized system for handling state funds by requiring secure vault solutions. Digital assets must undergo evaluation by the Investment Authority, which will perform risk and reward assessments to make selection choices. The proposed legislation makes secure custody solutions mandatory for public fund digital asset investments.

The proposal highlights the importance of carefully considering the risks and rewards of investing in digital assets. Still, it empowers the Investment Authority to invest in any digital asset of its choosing without any constraint as to the minimum market capitalization of the asset. Such a definition of digital assets gives the authority to consider numerous possibilities in investing, ranging from Bitcoins to emerging assets in the blockchain space.

Related: North Carolina Proposes 10% Bitcoin Treasury Investment

A Growing Trend of Institutional Crypto Adoption

These bills join similar legislations adopted across various states because governments recognize the emerging pattern of institutional adoption of cryptocurrency. The North Carolina legislative plan emerged after earlier efforts like Senate Bill 327, which focuses solely on Bitcoin investment. The federal government has demonstrated its interest in cryptocurrencies by establishing a Strategic Bitcoin Reserve.

However, critics continue to express skepticism due to the high volatility of the cryptocurrency market. This means that the bills do not require the portfolio holder to hold them for the long term, hence more flexibility. Nevertheless, the volatility of the market is an area of concern that legislators and fund managers will have to consider as these initiatives progress.

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