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 bill calls for a study on the feasibility and benefits of the state holding Bitcoin and other virtual currencies. The study, which would be conducted by the Department of State Treasurer, aims to examine the potential impact, security measures, and custodial options associated with holding digital currencies. This proactive approach showcases North Carolina’s interest in exploring the benefits and risks of virtual currency holdings.
Amid the ongoing crypto crisis in the United States, the North Carolina House of Representatives has taken this proactive stance to delve into the intricacies of the situation. On June 28, the bill was passed, allocating $50,000 to conduct a detailed analysis of “acquiring, securely storing, insuring, and liquidating” both gold bullion and virtual currencies such as Bitcoin.
The study would analyze the advantages of allocating a portion of the state’s General Fund to virtual currency holdings, including as a hedge against inflation and systemic credit risks. It also aims to determine if such holdings can reduce portfolio volatility and increase long-term returns.
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 for pop the language being added to the bill.
In addition to exploring the benefits of virtual currencies like Bitcoin, the study outlined in the bill recognizes the importance of assessing the costs, benefits, and security measures associated with different depository options. This includes evaluating the feasibility of utilizing privately managed depositories, depositories from other states, or establishing a state-administered depository within North Carolina. The goal is to determine the most suitable custodian and administrator for virtual currency assets held by the state and its agencies.
The inclusion of virtual currency and specifically Bitcoin in the legislation highlights the state’s proactive approach to studying digital currencies and their potential benefits. During the bill’s hearing, Dan Spuller, head of industry affairs at the North Carolina Blockchain Initiative, testified on behalf of the Initiative and successfully advocated for the inclusion of language related to Bitcoin. This move demonstrates the Initiative’s ongoing efforts to promote Bitcoin and blockchain technology within the state.
In another related matter, on May 4, the North Carolina House passed another bill with unanimous support. This bill prohibits the state from accepting payments made with a Central Bank Digital Currency (CBDC) and also prevents the United States Federal Reserve from using the state as a testing ground for future CBDC initiatives.
Initially, the bill was designed to stop all crypto payments within the state, but it was later amended to specifically prohibit CBDC payments. This means that state-affiliated institutions will not be accepting CBDC payments. While the legislation is in the best interest of the state, there are concerns that it could hinder innovation in digital assets and impede the growth of cryptocurrencies like Bitcoin in the state. Furthermore, the state recently imposed a one-year ban on crypto mining.
