The North Carolina House of Representatives has passed House Bill 721, which includes provisions to study the acquisition and potential benefits of virtual currency, with a specific focus on Bitcoin. The bill, titled State Precious Metals Depository Study, aims to examine the process of securely holding, insuring, and liquidating virtual currency on behalf of the state. It has now been referred to the Senate for further consideration.
The legislation recognizes the growing importance of virtual currency, as defined in G.S. 53-208.42(20), and proposes evaluating its potential impact on the state’s financial strategy. The study outlined in the bill will analyze the expected benefits of allocating a portion of the General Fund to virtual currency, aiming to hedge against inflation and systemic credit risks, reduce overall portfolio volatility, and increase portfolio returns over time.
Language relating to the study of virtual currency, including the specific reference to Bitcoin, was added after Dan Spuller, head of industry affairs at the North Carolina Blockchain Initiative, testified on behalf of the Initiative in front of the North Carolina House Standing Committee. Spuller, who highlighted in a subsequent tweet that this is one of many pro-Bitcoin pushes the Initiative is making in the state, received unanimous support in the language being added to the bill.
In addition to exploring the potential benefits of virtual currency like Bitcoin, the bill also emphasizes the importance of assessing the costs, benefits and security measures associated with various depository options. The study will examine the feasibility of utilizing a privately managed depository, another state’s depository, or establishing a State-administered depository within North Carolina. The ultimate goal is to determine the most suitable custodian, guardian and administrator for virtual currency assets held by the state, its agencies, political subdivisions, or other instrumentalities.
Quoting directly from the bill, it states, “the expected impact of allocating a portion of the General Fund to virtual currency to hedge against inflation and systemic credit risks, reduce overall portfolio volatility, and increase portfolio returns over time.”
The inclusion of virtual currency and Bitcoin in the legislation showcases North Carolina’s proactive approach to studying Bitcoin and exploring its potential benefits.