(Photo illustration by Namthip Muanthongthae / Getty Images)
The North Carolina House gave the green light to a pair of bills this week that would change how the state manages its pension fund and allow that fund’s investments to include cryptocurrencies like Bitcoin.
A five-member board of appointees would manage the state’s $127 billion in investments under House Bill 506. And House Bill 92 would give that board the power to invest up to 5% of the state’s portfolio in cryptocurrency.
The measures represent a concentrated effort to shift the state’s approach to investing. North Carolina’s pension system has a $16 billion deficit, and the fund’s investments have yielded lower returns in comparison to other states’ portfolios in recent years.
State Treasurer Brad Briner, a Republican elected in November, has thrown his support behind both bills. He currently serves as the sole final authority over the state investments. His GOP predecessor, Dale Folwell, had practiced a more conservative approach to the pension fund.
State Treasurer Brad Briner (File photo)‘Investment authority’ would be appointed, require experience
The five-member North Carolina Investment Authority would include the treasurer and four other members. The treasurer, Speaker of the House, Senate President Pro Tem and governor would be able to appoint one member each.
Appointees would be required to have “expert knowledge of investments” and more than 10 years of “successful management” of pensions, endowments or other investments.
The board would appoint a chief investment officer — someone with similar, if not more extensive, qualifications to board appointees. That CIO would negotiate and execute third-party contracts on behalf of the board.
HB 506 passed the House with little discussion Tuesday, 110-3.
Pension fund could include Bitcoin
The bill to allow investment in cryptocurrency is backed by House Speaker Destin Hall (R-Caldwell).
It limits the investments to the crypto equivalent of mutual funds, rather than direct investments in specific currencies.
And it lays the groundwork for the treasurer and law enforcement to examine both a “strategic reserve” of digital assets collected by the state, as well as allowing state employees to invest part of their portfolios in crypto.
The bill’s supporters view it as another plank of proactive and wise investing — arguing that the state should utilize a growing corner of the market.
“We need to spread the allocation around,” said Rep. Keith Kidwell (R-Beaufort). “Just like any good investment broker would do for you.”
But Democrats who opposed the measure warned of Bitcoin and other cryptocurrencies’ volatility — and cautioned against betting part of state workers’ pensions on them.
“I still have a lot of questions about this investment strategy and the level of commitment we’re making to it,” said Rep. Maria Cervania (D-Wake).
Opinions on the bill outside of the General Assembly have split. Gov. Josh Stein has said he supports the measure and allowing Briner to have more control over state investments. Representatives of the State Employees Association of North Carolina have expressed opposition.
The measure passed 71-44 on Wednesday, and now heads to the Senate.
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