Following an avalanche of concerns from current and retired state workers, as well as some state legislators, Republican leaders in the state House of Representatives have agreed to a number of changes in their proposal to invest the state pension into cryptocurrencies such as Bitcoin.
The crypto industry has contributed heavily to Republican politicians in recent years, and GOP leaders at the state and national levels have responded with new efforts to embrace the industry. In the state legislature, House Bill 92 would allow North Carolina Treasurer Brad Briner to invest billions of dollars from the State Pension Plan into cryptocurrencies.
On Wednesday a House committee on pensions approved a newly rewritten version of the bill, as well as another bill, House Bill 506, thay would put new safeguards on the Treasurer's office and its investments strategies. In combination, the two bills would reduce the amount the state could put into crypto — lowering the maximum amount from 10% of the pension to 5% — as well as creating a new advisory board that would oversee state invements, taking away the state treasurer's ability to unilaterally make investment decisions.
Supporters of the crypto investment plan, including Briner, a Republican won won election in November, point to the large gains Bitcoin and other digital coins have returned to investors over the past decade. Opponents say it's too speculative and could lead to large losses for retired state workers just a easily as it could lead to large gains.
The State Employees Association of North Carolina was strongly opposed to the bill originally, but a lobbyist for the group said Wednesday it now supports the proposal due to the new changes and safeguards being proposed. SEANC represents thousands of state employees.
We appreciate [House Speaker Destin Hall] working with us on this bill," SEANC lobbyist Suzanne Beasley said. "We had a great meeting with him. While our folks are still a little nervous about the volatility of this investment, we are okay with the decrease in the amount that can be invested. They're going to take a leap of faith."
Unlike many bills at the legislature that divide lawmakers along party lines, this one has revealed generational divides. Older lawmakers have tended to be more skeptical, while it's the younger politicians — including the 37-year-old Hall— who have been the bill's most enthusiastic supporters.
But most politicians aren't Millenials like the House Speaker is.
"People who are my age and older don't know about crypto currency," Rep. Amos Quick, a 56-year-old Democrat from Greensboro, said Wednesday. "And to be quite honest, the retirees that I've spoken with have a little trepidation. Because it's unknown what it is, how it works, and how it will benefit them."
There's been susbstantial pushback against the bill even within the GOP caucus, a rarity for any bill that enjoys public support from the House speaker. Wednesday's changes show that the bill will continue to move forward, but that skeptics have also been able to make it less aggressive than originally proposed.
Rep. Mike Schietzelt, a 38-year-old Republican from Wake Forest, is one of the bill's lead backers and said Wednesday the new changes to the bill should help convince skeptics. He acknowledged the concerns that crypto can be a volatile investment. But he said as long as the state times its investments right, it can use that volatility to make a lot of money.
"While the volatility may cause give some people pause, we're not putting it all on black and letting the roulette wheel spin," Schietzelt said. "It is limited. There are guardrails. And we have multiple layers of review before we can engage in this process. We're not gambling with anybody's money here."
Briner attended Wednesday's hearing over both bills, saying he approves the measure to take away some of his power. He said 47 other states already have a similar system in place and North Carolina needs to join the rest. Allowing the treasurer to make solo investment decisions, he added, has not gone well: North Carolina ranks either 49th or 50th in pension investment returns, depending on how you look at the numbers.
The investment strategies of the past, Briner said, have led to North Carolina receiving about 1.5% less on its investments than the average state. And since the state has more than $100 billion in investments, that means the state would be getting around $2 billion a year more every year if it had just been average.
In addition to the efforts to make the office more professional and subject to more oversight, Briner said, making crypto investments should also help the state make more money.
If the state had been making that extra $2 billion a year recently, he added, it would've given lawmakers much more flexibility in the annual budget — which is approximately $32billion this year, projected to grow to $32.6 billion in the new fiscal year starting in July.
"We seek to follow in the path of many other states who have enjoyed better investment results,"Briner said. "I seek to relinquish some of my power to a board of qualified investment professionalsto help deliver better returns for this state, so that we can get to a better place, not just for our budget, but for our retirees."
