North Carolina Moves Closer to Allowing Cryptocurrency Investments in State Pension Funds

North Carolina is making significant progress toward becoming one of the first U.S. states to allow public pension funds to invest in cryptocurrencies. This week, the state’s House of Representatives passed two pivotal bills—House Bill 506 and House Bill 92, which could reshape how North Carolina manages its $127 billion investment portfolio. While both bills still need Senate approval, they signal a major shift in the state’s investment strategy.

New Investment Authority and Digital Asset Exposure

House Bill 506 passed with overwhelming bipartisan support, securing a 110-3 vote. The bill proposes the creation of a five-member North Carolina Investment Authority, which would take over responsibility for managing the state’s investments from the state treasurer. In a closer 71-44 vote, House Bill 92 would allow up to 5% of the state's investment portfolio to be allocated to digital assets like cryptocurrency.

State Treasurer Brad Briner, a Republican elected in November, supports both initiatives. If passed, these measures would transfer key decision-making powers from the treasurer to a newly formed board, while expanding investment opportunities to include regulated digital asset products.

Proposed Structure and Oversight

The proposed North Carolina Investment Authority would consist of the treasurer and four additional members, each appointed by the governor, House Speaker, Senate President Pro Tem, and the treasurer himself. All members would be required to have at least a decade of experience managing investments or pension funds and would oversee the hiring of a chief investment officer to manage contracts and day-to-day operations.

The timing of these reforms is critical. North Carolina’s pension system currently faces a $16 billion funding gap and has underperformed compared to similar funds across other states. Supporters of the bills believe modernizing the investment approach, including incorporating digital assets, could help boost long-term returns.

Digital Asset Regulations and Safeguards

House Bill 92 lays out strict conditions for cryptocurrency investments. The state would only be permitted to invest in crypto-based financial products, similar to mutual funds, not in individual coins like Bitcoin. Moreover, any move into digital assets would first require a third-party audit to confirm that secure storage solutions and proper risk management practices are in place.

An amendment to the bill also introduces the possibility for retirement plan participants to opt into digital asset exposure via exchange-traded products.

“We need to diversify just like any smart investor would,” said Rep. Keith Kidwell, a Republican from Beaufort. “This is about building a more resilient and adaptive investment portfolio.”

Mixed Reactions and Political Divide

The legislation has sparked a lively debate both inside and outside the Capitol. While Democratic Governor Josh Stein has voiced support, the State Employees Association of North Carolina has raised concerns, especially over the volatility of cryptocurrencies.

Democratic lawmakers have also expressed skepticism. Rep. Maria Cervania of Wake County remarked, “We still don’t have enough answers about the risks tied to this kind of investment. The commitment seems premature.” Despite the concerns, the proposed legislation includes language to explore the formation of a “strategic reserve” of digital assets and potentially allow public employees to include crypto-based products in their retirement plans.

North Carolina Joins a Growing Trend

North Carolina is not alone in exploring the digital asset space. Arizona recently made headlines after its House and Senate both passed bills aimed at establishing a state-level cryptocurrency reserve fund. If North Carolina’s Senate gives the green light, the state could join Arizona at the forefront of integrating blockchain-based investments into public finance.

These legislative moves highlight a broader trend across the U.S., where states are weighing the potential benefits of digital assets against the inherent market volatility. For North Carolina, the decision could mark a historic pivot in how public funds are invested in the digital age.