In a pioneering move towards the integration of digital assets into public finance, New Hampshire State Representative Keith Ammon has put forth a bill aimed at establishing a strategic reserve of digital assets for the state treasury. Introduced on January 9, the legislation seeks to reserve up to 10% of the total public funds—approximately $360 million— for investments in digital currencies with a significant market capitalization, specifically targeting assets that maintain an average yearly market cap of over $500 billion. This leap into the world of cryptocurrency underscores an evolving attitude towards alternative financial solutions at the state level.
The proposed legislation is structured to impose a cap on investments in these alternative assets, ensuring that public funds are not entirely exposed to the volatility characteristic of cryptocurrencies. A critical facet of the bill is the requirement for these digital assets to be held through secure custody solutions. This involves stringent measures to safeguard access to private cryptographic keys. The bill stipulates that only qualified custodians and regulatory-approved exchange-traded products (ETPs) may be employed to hold these assets.
Interestingly, currently, Bitcoin is the only cryptocurrency that meets the stipulated market cap requirement according to data from CryptoSlate. The state treasury is also permitted to invest in US-pegged stablecoins, such as Tether USD (USDT) and USD Coin (USDC), representing a cautious yet forward-thinking approach to digital currencies. Moreover, traditional assets like gold, silver, and platinum can also be included in the state’s portfolio, indicating a holistic perspective towards asset diversification.
One of the more intriguing components of the bill is its provision for staking, which allows the state to earn passive income from its holdings. Although Bitcoin itself operates on a proof-of-work consensus mechanism, the proposed legislation paves the way for the potential inclusion of other cryptocurrencies like Ethereum (ETH) and Solana (SOL) contingent upon their market caps meeting the government’s specified thresholds. By integrating these innovative financial strategies, New Hampshire can position itself as a leader in a modernized economic landscape.
Additionally, the proposal has included the option for the state to lend its digital assets, provided that they retain legal ownership and collaborate with verified third-party providers. This aspect of the bill reflects a growing recognition of diverse financial activities involving digital assets. The ability to lend Bitcoin and other cryptocurrencies could augment state revenue streams while navigating the realm of digital finance more confidently.
The reception of the bill has been noteworthy among industry stakeholders. Dennis Porter, CEO and co-founder of the Satoshi Action Fund, has welcomed the legislative initiative, highlighting its high market cap requirement as a thoughtful strategy to limit the state’s exposure to riskier assets like Bitcoin. Porter emphasizes that the intent behind adopting such measures is not to obfuscate but rather to navigate the complexities of regulatory environments across various states.
New Hampshire’s move is emblematic of a larger trend, as Porter points out that multiple states in the US are contemplating similar legislative initiatives. In the coming weeks, it is anticipated that at least ten states may introduce comparable bills aiming to establish Bitcoin strategic reserves. This growing momentum suggests a significant paradigm shift in how states are beginning to approach digital assets and explore their potential benefits despite the inherent risks.
New Hampshire’s legislation represents a significant step towards embracing the future of digital assets within state financial strategies. By carefully designing a framework for investment that emphasizes security, compliance, and a blend of traditional and modern assets, the state is setting a precedent for others to follow. As more states contemplate similar measures, the embrace of cryptocurrencies and digital assets could redefine public treasury management, potentially revolutionizing how states handle their finances in the digital age.