TLDR
- North Carolina House passed two bills to reform pension management and allow crypto investments
- A new five-member board would manage the state’s $127 billion investment portfolio
- The legislation allows up to 5% of state funds to be invested in cryptocurrency
- State Treasurer Brad Briner supports both bills, which now head to the Senate
- Arizona is currently leading the state-level race to approve government crypto investment legislation
North Carolina has taken steps toward allowing state pension funds to invest in cryptocurrencies, with the state House approving two bills that would overhaul how the state manages its investments. The measures, which still require Senate approval, could place North Carolina among the first states to formally invest public funds in digital assets.
The North Carolina House passed House Bill 506 and House Bill 92 this week. HB 506, which passed with broad support in a 110-3 vote, would create a five-member North Carolina Investment Authority to manage the state’s $127 billion portfolio. HB 92, which passed in a closer 71-44 vote, would permit up to 5% of the state’s investments to be allocated to cryptocurrencies.
State Treasurer Brad Briner, a Republican who took office in November, has backed both bills. The legislation would shift investment authority away from the treasurer’s sole control to the new board, while expanding investment options to include digital assets.
New Management Structure
Under the proposed changes, the five-member investment authority would include the treasurer and four appointees. Each appointee would be selected by the treasurer, Speaker of the House, Senate President Pro Tem, and governor.
Board members would need “expert knowledge of investments” and at least 10 years of experience managing pensions or other investments. The board would appoint a chief investment officer who would handle third-party contracts.
The reform comes as North Carolina’s pension system faces a $16 billion deficit. The fund has produced lower returns compared to other states in recent years, prompting calls for new investment strategies.
Cryptocurrency Guidelines
The digital assets bill includes several limitations and safeguards. It restricts investments to crypto equivalents of mutual funds rather than direct investments in specific currencies like Bitcoin.
Before any crypto investments could be made, the state would need to obtain an independent third-party assessment confirming secure custody solutions and proper risk oversight. Recent amendments also allow for exploring ways to let retirement plan members elect to invest in digital assets held as exchange-traded products.
“We need to spread the allocation around,” said Rep. Keith Kidwell, a Republican from Beaufort. “Just like any good investment broker would do for you.”
Democrats who opposed the measure expressed concerns about cryptocurrency volatility. Rep. Maria Cervania, a Democrat from Wake County, said, “I still have a lot of questions about this investment strategy and the level of commitment we’re making to it.”
The bill has created divisions outside the legislature as well. Democratic Governor Josh Stein has expressed support for the measure, while the State Employees Association of North Carolina has voiced opposition.
The legislation also contemplates a potential “strategic reserve” of digital assets for the state and options for state employees to include crypto in their own portfolios.
North Carolina follows Arizona in the growing movement of states considering cryptocurrency investments. On April 28, Arizona’s House approved two bills proposing different methods for establishing a state crypto reserve, making it the only state so far whose House and Senate have both passed such legislation.
If the North Carolina bills pass the Senate and become law, the authority to invest in digital assets would transfer to the new investment board, which would make decisions based on third-party assessments.
These legislative efforts represent part of a broader trend as state governments explore opportunities in the evolving digital asset space, balancing potential investment returns against the risks of cryptocurrency markets.
