New Hampshire Explores Bitcoin for State Treasury Investments
New Hampshire is venturing into the world of crypto with a legislative proposal that would allow the state to establish a strategic Bitcoin reserve within its treasury. This initiative, spearheaded by State Representative Keith Ammon, aims to diversify state investments and potentially generate passive revenue, aligning with the state's innovative spirit and economic strategy.
The bill allows for up to 10% of the state's public funds, which equates to approximately $360 million based on the treasury balance from June 30, to be invested in digital assets. These assets are not explicitly named as Bitcoin but are defined as those with an average yearly market cap exceeding $500 billion, alongside US-pegged stablecoins. This approach not only includes Bitcoin but potentially other cryptocurrencies should they meet the market cap criteria in the future, thus providing flexibility in investment options.
Economic Implications and Broader Adoption
The legislation mandates that these digital assets be secured through what are termed "secure custody solutions," ensuring exclusive access to cryptographic keys and requiring the involvement of qualified custodians. Only exchange-traded products (ETPs) approved by regulatory bodies like the SEC or CFTC are permissible under this framework, which aims to mitigate risks associated with digital currency storage and transactions.
Currently Bitcoin is the only cryptocurrency that meets the market cap threshold set by the bill, though the state can also invest in stablecoins such as Tether (USDT) and USD Coin (USDC). Moreover, the bill opens up avenues for New Hampshire to participate in staking and lending of digital assets, although Bitcoin itself does not support staking due to its consensus mechanism. This provision suggests a forward-thinking approach, preparing the state for future scenarios where other cryptocurrencies might qualify for inclusion in the treasury reserves.
The introduction of this bill has been welcomed by figures like Dennis Porter, CEO of the Satoshi Action Fund, who clarified that the market cap requirement was set to ensure a focus on Bitcoin without explicitly naming it, a strategy used to navigate political landscapes in some states. This approach is not about being "sneaky" he said, but about crafting legislation that can pass with less friction by being technology-neutral.
New Hampshire is not alone in this legislative exploration. Several other states, including Pennsylvania, Texas, Alabama, and Florida, have either initiated or are preparing similar bills to establish Bitcoin strategic reserves. This trend indicates a broader movement among U.S. states towards recognizing the potential economic benefits of cryptocurrencies in public finance.
As New Hampshire moves forward with this bill, it could influence how other states consider integrating digital assets into their financial strategies, potentially leading to a new era of state-level financial policy that embraces the digital economy's possibilities and challenges. This legislative endeavor might well set a precedent, encouraging a more comprehensive discussion on the role of cryptocurrencies in state treasuries across the nation.