Cryptocurrency Advocates Urge Congress to Set National Regulatory Standards
President Donald Trump’s recent executive order aimed at facilitating employee investments in “alternative assets” has sparked a broader discussion among state lawmakers advocating for the inclusion of cryptocurrency in state-managed retirement and pension plans. Currently, there are no federal regulations explicitly prohibiting such alternative investments, which encompass assets like cryptocurrencies, private equity, and real estate. Nevertheless, fiduciaries remain cautious due to factors such as high volatility, transparency issues, regulatory ambiguity, and elevated fees associated with some of these investments.
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The shifting landscape was further highlighted when the Department of Labor rescinded a previous guidance from the Biden administration that advised plan managers to exercise caution regarding cryptocurrency investments in May. In a significant move, lawmakers from at least 20 states have introduced bills this year that would permit state treasurers, pension boards, and other fiduciaries to invest public funds in digital currencies. The proposed legislation typically restricts investments to a range of 5% to 10% of the total funds, acknowledging the inherent volatility of digital assets. State pension funds may acquire cryptocurrencies like Bitcoin directly, often with specific guidelines in place to ensure only established assets are included, or indirectly through investment vehicles such as exchange-traded funds (ETFs) or equity stakes in cryptocurrency companies.
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Some states have already begun incorporating cryptocurrency into their investment portfolios. For instance, in August, Michigan’s retirement systems disclosed an investment of $11.4 million in the ARK 21Shares Bitcoin ETF, a significant increase that still accounts for merely 0.03% of the state’s total assets valued at $79 billion. Meanwhile, the Wisconsin Retirement System has previously invested in Bitcoin ETFs but reported divesting its holdings by early 2025.
North Carolina’s Representative Stephen Ross, a long-time advocate for cryptocurrency investment, expressed optimism about his state’s potential progression in this area. In 2015, he was instrumental in updating North Carolina’s Money Transmitters Act to include virtual currencies, making it one of the first states to legislate on digital assets. This year, he introduced House Bill 92, known as the North Carolina Digital Assets Investments Act, which would allow the state treasurer to allocate up to 5% of the retirement fund, valued at $127 billion, to digital assets. The proposal mandates that these assets must be in the form of ETFs with a minimum average market capitalization of $750 billion over the previous year, effectively excluding riskier cryptocurrencies.
While Ross acknowledged skepticism from the state employees association regarding the bill, he emphasized that every investment carries some risk and that this initiative merely recognizes the role of cryptocurrency in a diversified portfolio. He noted that the initial resistance to cryptocurrency mirrors the early hesitance surrounding exchange-traded funds when they first emerged. “Crypto is becoming more mainstream,” Ross remarked, advocating for its inclusion in balanced investment strategies.
The North Carolina House approved HB 92 in May, forwarding it to the Senate. Ross expressed confidence that it would reach the governor’s desk when the legislature reconvenes for its short session in May, especially since the governor has shown interest in signing it.
Advocates are calling for specific cryptocurrencies, particularly Bitcoin, to be recognized as strategic assets akin to gold and oil, and are pushing for the establishment of state-level reserves. Following Trump’s establishment of a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile in March, states like Arizona and New Hampshire have proposed similar initiatives.
Many proponents assert that these measures are vital to safeguard against the declining purchasing power of the dollar, a concern that has grown since the U.S. abandoned the gold standard in 1971. For context, $100 in 1971 would only be equivalent to approximately $12.56 today, as reported by the Federal Reserve Bank of Minneapolis.
Kentucky Representative T.J. Roberts is among those voicing concerns over this issue. He highlighted that his primary legislative focus this session was House Bill 2, which eliminated taxes on gold and silver. Roberts expressed his limitations as a state legislator in dismantling the Federal Reserve or reinstating a gold or crypto standard. Instead, he aims to foster an economic environment in Kentucky that encourages exploration of alternative currencies. This year, he introduced House Bill 376, which would have allowed state retirement and deferred compensation funds to invest in digital asset ETFs. Although the bill did not pass, he intends to propose or support similar measures in future sessions.
While skepticism remains regarding the risks associated with cryptocurrency investments, Roberts contended that the real danger lies in maintaining the status quo. He stressed the uncertainty surrounding the current funding for Kentucky’s pension and retirement systems, arguing that assets like Bitcoin, gold, and silver not only preserve value but have also significantly appreciated, particularly in the context of Trump’s administration.
The narrative of rising digital asset values is a recurring theme among supporters. Oklahoma Representative Cody Maynard introduced House Bill 1203, which aimed to create a state-level strategic Bitcoin reserve and enable state retirement funds to invest in digital assets. Maynard noted that since the bill’s failure in committee, Bitcoin’s price has surged approximately 34%, presenting a missed opportunity for the state. He calculated that a mere 5% allocation of Oklahoma’s $2.2 billion pension fund could have yielded nearly $750 million in gains, which could have strengthened pensions without imposing additional costs on taxpayers.
Maynard emphasized the absence of regulations guiding state pension funds in investing in digital assets and the necessity for responsible practices. “This isn’t about speculation,” he asserted. “It’s about fiscal responsibility and ensuring that Oklahoma’s pension systems remain competitive as other states and institutional investors advance.”
Senator Brian Guthrie, who co-authored HB 1203 with Maynard, indicated plans to reintroduce a similar bill focused solely on digital assets in pensions, despite the initial bill’s failure.
David Ramirez, CEO of For Us All, a 401(k) investment platform that allows employees to include digital assets in their retirement portfolios, highlighted the importance of offering such options to promote equity and close the wealth gap among retirees. He noted a significant interest from younger employees in contributing to retirement accounts that incorporate cryptocurrency, suggesting a shift in investment preferences.
However, not everyone supports the idea. Alicia Munnell, founder of the Center for Retirement Research at Boston College, criticized the inclusion of Bitcoin in 401(k) plans, labeling it a poor choice due to its speculative nature and volatility. She argued that veering away from traditional investments is unlikely to enhance returns and is not a prudent option for retirement plans.
Vermont Representative Will Greer expressed understanding for states exploring cryptocurrency to bolster pension funds, but he cautioned that it remains too nascent to be considered a stable investment. He introduced House Bill 370, the Cryptocurrency Public Protection Act, which would prohibit public pension plans from investing in digital assets while establishing guidelines for cryptocurrencies. The legislation also mandates the Vermont Pension Investment Commission and state treasurer to divest from any existing digital asset holdings. Although the bill did not progress this session, Greer indicated openness to amending it to allow investments in stablecoins—digital assets pegged to real-world assets and deemed less volatile.
Under the recently enacted GENIUS Act, stablecoins must be fully backed by liquid assets like U.S. dollars or short-term Treasury bills on a 1-to-1 basis, ensuring that holders can theoretically redeem their digital assets at any time for their equivalent value. Regardless, Greer stressed the importance of lawmakers addressing the evolving cryptocurrency landscape. “This technology is here to stay,” he remarked. “The challenge lies in ensuring its ethical use without creating more issues than it solves. We currently lack clarity on the long-term returns of stable and modest cryptocurrencies.”
