Over the past nine years, North Carolina has established itself as a leader in the rapidly growing digital asset sector, more commonly referred to as crypto. This sector is at a critical juncture where both the federal government and North Carolina are poised to pass legislation that will help the industry continue to thrive.
Forward-thinking North Carolina legislators recognize the pivotal role digital assets already play in the modern economy, and have passed legislation through the house that will continue North Carolina’s leadership in the space. But with the current short session, it’s now up to the Senate to carry on North Carolina’s leadership.
The state Senate should pass two pivotal pieces of legislation that made it through the House in 2023. House Bill 690, the No Central Bank Digital Currency Payments to the State Act, led by Rep. Harry Warren; and House Bill 721, the State Precious Metals Depository Study Act, led by Rep. Mark Brody.
House Bill 690 is a significant step forward in maintaining North Carolinians’ financial sovereignty by banning the state of North Carolina from accepting payment in a central bank digital currency or CBDC. Central bank digital currencies are programmable digital monies, capable of constant monitoring by a government. This means that if it were introduced and used in the United States, not only could every purchase you make be tracked and logged by the government, but they could even prevent their use to buy certain goods or services.
The North Carolina House unanimously passed House Bill 690 last summer which underscores both the importance of this legislation and the wide bipartisan agreement for taking action before it’s too late.
House Bill 721, which also passed the House with bipartisan support, puts North Carolina in a proactive position to benefit from digital assets. The legislation would authorize a study, administered through the Department of the State Treasurer, to explore the potential benefits of the State Treasury holding precious metals and digital assets like Bitcoin.
Potential benefits of putting these assets on the state balance sheet include furthering collective economic sovereignty, hedging against inflation and systemic credit risks, reducing overall portfolio volatility, and increasing portfolio returns over time. The inclusion of digital assets, particularly Bitcoin, in House Bill 721 highlights North Carolina’s forward-thinking approach to financial management.
Investing in Bitcoin also became much easier as the US Securities and Exchange Commission recently approved Bitcoin to be bought and sold as exchange-traded funds (ETFs). This allows the state to benefit from the price of Bitcoin while purchasing a product that is more similar to a stock than buying Bitcoin from a digital asset exchange like Coinbase or Kraken. If North Carolina decided to invest it would not even be the first state to do so as Wisconsin recently purchased $160 million worth of Bitcoin through ETFs.
Over the past decade, at both the state and national level, a contingent of dedicated early stakeholders have thoughtfully laid the groundwork for these bills. Nationally, North Carolina Congressman Patrick McHenry, chairman of the US House Committee on Financial Services, has arguably accomplished more for the crypto industry than any other legislator in history, by keeping prudent crypto regulation at the forefront of legislative consciousness.
McHenry’s capstone legislation, the Financial Innovation and Technology for the 21st Century Act (FIT21), the first stand-alone crypto bill to be voted on by the full US House, overwhelmingly passed 279-136 on May 22, 2024, with bipartisan support from North Carolina (nine of 13 voting delegates, including Democratic Congressmen Wiley Nickel, Don Davis, and Jeff Jackson). Rounding out the bipartisan crypto-friendly congressional delegation are US Sen. Ted Budd, a strong supporter of decentralized finance (DeFi); and Congressman Nickel, who is spearheading a bipartisan effort to overturn the controversial SEC crypto policy known as Staff Accounting Bulletin No. 121.
North Carolina’s federal delegation has been complemented by state-level counterparts, including: Reps. Stephen Ross and Jason Saine; Sen. Todd Johnson, former Commissioner of Banks Ray Grace, former Lt. Gov. Dan Forest, and current Lt. Gov. Mark Robinson, among several others.
These innovative North Carolinians have collectively championed three key crypto-related initiatives:
The 2016 North Carolina Money Transmitters Act, a landmark piece of prescient legislation, which established a clear regulatory framework and definition for virtual currencies.
The 2019 establishment of the North Carolina Blockchain Initiative (NCBI), a nonpartisan, all-volunteer task force formed under former Lt. Gov. Dan Forest, which has been instrumental in shaping North Carolina’s digital-asset landscape through educational campaigns.
The North Carolina Regulatory Sandbox Act of 2021, which established a program that allows for innovative financial technology and insurance products to be tested in North Carolina where there may not be regulatory clarity. This program has supported innovation, investment, and job creation.
Through these endeavors, North Carolina has become a significant player in the digital-asset sector, competing alongside other crypto-friendly states like Texas, Florida, and Wyoming.
North Carolina’s historic leadership in cryptocurrency legislation reflects commitment to innovation, economic growth, and consumer protection. By supporting House Bill 690 and House Bill 721, the North Carolina Senate can continue this legacy, ensuring that North Carolina remains at the forefront of cryptocurrency innovation while protecting financial freedom.
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