North Carolina’s House of Representatives passed a bill that allows the state treasurer to invest in cryptocurrencies. The bill was approved with a 71 to 44 vote. This result places North Carolina second to Arizona in fully approving a crypto law. The states in America are currently voting on whether public funds should be allocated to crypto reserves. Having passed the House in North Carolina, the bill will now move to the Senate for another vote. The House passed the Digital Assets Investment Act, also called House Bill 92. The bill allows for up to 5% of public funds. The allocation further requires that a third party ascertains whether the investment meets standards regarding secure custody, risk assessment, and regulatory compliance. The House also passed the State Investment Modernization Act, House Bill 506, with a vote of 110 to 3. The bill proposes a new North Carolina Investment Authority (NCIA) to take over the treasury’s responsibilities. The NCIA would decide which crypto investments to make, given that the third-party regulator approves. House Bill 92, however, was initially capped at 10% investment for cryptocurrency. The current amendment of the bill has cut that allocation in half. Many politicians who oppose the bill suggest that the allocation will gamble away the state retirement funds. It has been suggested that legislators invest their money in crypto and leave taxpayers to make their own investment decisions. At one stage during the debate, Democrat Marcia Morey held up a printed picture of a Bored Ape NFT that Justin Bieber bought for $1.3 million, which inevitably lost 95% of its value. It was made clear that many risks inherent to digital assets should be considered. However, despite these elaborate protestations, the House passed the bill, albeit with safeguards limiting the amount of risk exposure to public funds. State workers, moreover, raised complaints about the crypto investments, such as Flint Benson from the State Employees of North Carolina, who objected that Bitcoin’s volatility could put state pensions at risk. This seemed to be the main issue that concerned dissenters in the debate, that crypto could be an insecure and risky bet of public funds. The House Bill 92, therefore, introduced many safeguards to assure the public that the state government was not taking unnecessary risks. Some examples of safeguards, contained in the bill, include the requirement of monthly independent audits and a two-thirds majority to decide emergency spending of the reserves. Arizona, meanwhile, is the leader in the race to pass new crypto laws regarding reserve treasuries. However, Arizona has passed a bill that allows up to 10% of public funds to be allocated to crypto investments, which is quite a hefty investment for a state treasury. North Carolina still requires a Senate vote to pass the new laws. The latest development of crypto treasuries could affect the underfunded public pension system, which is facing its problems. Regardless of the outcome, North Carolina has become a leader, next to Arizona, regarding crypto adoption at the state level.
