North Carolina Lawmakers Propose 10% Investment into Bitcoin ETFs for State Funds

North Carolina lawmakers have put forward a new bill (SB327) that could see the state allocate up to 10% of its public funds into Bitcoin exchange-traded products, marking a notable step in the growing trend of cryptocurrency adoption by U.S. states.

Introduced on Monday by Representative Destin Hall, alongside Representatives Mark Brody and Steve Ross, the legislation positions North Carolina as the twentieth state to explore Bitcoin reserve policies. If passed, the bill would allow the State Treasurer to invest over $10 billion from various state-managed funds, including the General Fund, Highway Fund, and 24 special funds, into regulated Bitcoin ETFs.

The proposed legislation sets specific criteria for digital assets eligible for investment. To qualify, a cryptocurrency must have maintained a market cap of at least $750 billion over the past year. As of now, Bitcoin stands alone in meeting this threshold, with its market cap far exceeding that of Ethereum, which sits at around $323 million. This requirement ensures that only well-established digital assets are considered, reflecting a cautious yet forward-thinking approach to state investment.

Investment Guidelines and Oversight

The bill outlines a structured framework for managing these investments. It mandates that third-party investment managers overseeing digital assets must have a minimum of $100 million in assets under management and provide annual audited financial statements to the State Treasurer.

However, the legislation allows for flexibility, permitting the Treasurer to waive this reporting requirement following a cost-benefit analysis. Investments would be channeled through regulated exchange-traded products with qualified custodians, offering a layer of security and compliance. The State Treasurer also has the option to pursue direct investments in Bitcoin ETFs or rely on third-party managers, with the possibility of engaging firms both domestically and internationally.

Oversight of the investment process would fall to the Governor and the Council of State, ensuring that public funds are handled with care and accountability. This structured approach aims to balance innovation with the responsibility of managing taxpayer money. North Carolina’s move follows a wave of similar proposals in states like Montana, Florida, Maryland, Iowa, and Kentucky, signaling a broader shift in how state governments view cryptocurrency as a potential asset class.

The state’s relationship with digital currencies has evolved in recent years. In 2023, North Carolina’s House of Representatives passed a bill banning government entities from accepting central bank digital currencies, a decision that resonated with privacy advocates and cryptocurrency supporters. Yet, not all responses have been welcoming. Last year, lawmakers in Henderson, Polk, and Rutherford Counties pushed for tighter regulations on digital asset mining, citing environmental and economic concerns, as reported by NC Newsline. This mixed history underscores the complexity of integrating cryptocurrency into state policy.