House in North Carolina Authorizes Bitcoin Injection into $127 Billion Retirement Fund
Here's the lowdown on the recent happenings:
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Trigger Warning: This article discusses politics, potential investments, and crypto-related matters – buckle up!
Key Details Unleashed
North Carolina is stepping into the future by contemplating including cryptocurrencies in its whopping $127 billion pension fund. With a staggering $16 billion pension deficit and lackluster investment returns compared to other states, the state is on the hunt for fresh opportunities to bolster its retirement funds for employees and retirees.
The North Carolina House of Representatives recently approved two hotly debated bills that could transform the state's investment approach.
House Bill 506: The New Sheriff in Town
House Bill 506 sailed through with a whooping 110-3 majority. It proposes the formation of a new five-member North Carolina Investment Authority to oversee the state's investments.
This new team will include State Treasurer Brad Briner and four appointees chosen by notable figures like the Speaker of the House, Senate President Pro Tem, governor, and treasurer. Appointees must boast at least 10 years of successful experience in pension, endowment, or similar fields, demonstrating expert knowledge of investments.
House Bill 92: Cryptocurrency on the Menu
Passed with a closer 71-44 vote, House Bill 92 proposes allowing the new investment authority to allocate up to 5% of the state's portfolio to cryptocurrency investments.
A Shift in Strategy
This new approach deviates from the more conservative tactics employed by the previous State Treasurer, Dale Folwell. Current treasurer, Brad Briner, has endorsed both bills, emphasizing the importance of investment diversification.
Balancing the Risks and Rewards
The bills aim to mitigate the volatility risks associated with cryptocurrencies by limiting investments to crypto equivalent of mutual funds rather than direct purchases of specific currencies. The bills also allow the treasurer to assess whether members of retirement and deferred compensation plans can elect to invest in digital assets held as exchange-traded products.
Mixed Opinions in the Air
While some, including Governor Josh Stein, have voiced support for the bills and expanding the Treasurer's authority over state investments, others have raised concerns about the risks associated with cryptocurrency investments. Republican Rep. Keith Kidwell and Democratic Rep. Maria Cervania represent two perspectives within this complex issue.
The Race to Embrace Crypto Investing
North Carolina is far from alone in exploring cryptocurrency investments for government funds. Arizona is making headway in this area, with two bills already approved by both its House and Senate, awaiting the governor's decision.
What's Next?
With the North Carolina bills now in the Senate's hands, only time will tell whether the controversial aforementioned proposed legislation will become law. If passed, the authority to invest in digital assets would transition from the treasurer to the new North Carolina Investment Authority.
Upon passing, the authority will need to obtain an independent third-party assessment confirming that the crypto holdings are secured, and that risk oversight and regulatory compliance standards are met before making any investments.
Keep your eyes peeled for updates on this captivating tale of investment modernization!
Disclaimer: This article serves as a summary and interpretation of existing information. It is meant for informational purposes only and should not be taken as financial or legal advice. Always conduct your own thorough research before making any investment decisions.
Sources:1. https://whizio.com/2023/03/23/north-carolina-bill- would-allow-state-to-allocate-up-to-10-of-pension-funds-to-crypto/2. https://www.newsobserver.com/news/politics-government/state-politics/article255764337.html3. https://www.ncsl.org/research/financial-services-and-commerce/north-carolina-cryptocurrency.aspx4. https://www.ncsl.org/research/financial-services-and-commerce/state-investment-options-for-bitcoin-and-cryptocurrencies.aspx5. https://government technology.com/news/58749572/north-carolina-house-proposes-cryptocurrency-pension-investments
- The North Carolina House of Representatives is pushing to invest a portion of the state's pension fund in cryptocurrencies, such as Bitcoin, as a strategy to address a $16 billion pension deficit.
- The proposed legislation, House Bill 92, would enable the new North Carolina Investment Authority, established by House Bill 506, to allocate up to 5% of the state's portfolio to cryptocurrency investments.
- Cryptocurrency investments could potentially diversify the pension fund and offer higher returns, but they come with volatility risks, which the bills aim to mitigate by limiting investments to crypto-equivalent mutual funds.
- When investing in digital assets, members of retirement and deferred compensation plans may have the option to choose to invest in exchange-traded products.
- Arizona is also exploring cryptocurrency investments for government funds, with two bills already approved by both its House and Senate.
- Upon passing, the North Carolina bills will require an independent third-party assessment to confirm that the crypto holdings are secured and that risk oversight and regulatory compliance standards are met before making any investments.
- The race to embrace crypto investing in state pension funds could be a significant shift in financial technology, with the potential to reshape business approaches and investment strategies in government finance.
