Iowa HF 246: Investment of Public Moneys in Digital Assets

The bill would permit the Iowa treasurer of state to use public moneys from three specified state funds: the general fund of the state, the cash reserve fund created in Iowa Code section 8.56, and the Iowa economic emergency fund created in section 8.55. The proposed authority would apply notwithstanding existing investment limits in section 12B.10, subsection 4. For each covered fund, the amount invested under the new section could not exceed 5% of the total public moneys in that fund at the time of investment.

HF 246 does not create a general digital-asset investment mandate. It frames the authority as discretionary by stating that the treasurer may invest in the covered categories. The bill’s covered digital-asset category is also narrow for non-stablecoin assets: a digital asset would need a market capitalization of more than $750 billion averaged over the previous calendar year. Stablecoins are separately listed and would need appropriate regulatory approval from a state or the United States before the treasurer could hold them.

The introduced text defines “digital asset” broadly to include digital-only assets that confer economic, proprietary, or access rights, including virtual currency, cryptocurrency, stablecoins, natively electronic assets, and nonfungible tokens. It also defines an exchange-traded product as a financial instrument approved by the SEC, CFTC, or the department of insurance and financial services, traded on a regulated U.S. exchange, and deriving value from an underlying pool of assets.

• Self-held custody: the treasurer could hold digital assets through a secure-custody solution.
• Third-party custody: the state could use a qualified custodian, including a bank, trust company, depository institution, or state-regulated company that takes custody of digital assets.
• Exchange-traded product: the state could hold exposure through an eligible exchange-traded product.

The bill’s secure-custody language is detailed. It would require private-key controls, encrypted channels, geographically diverse secure data centers, user access controls, multiparty governance, action logging, disaster recovery, regular code audits, penetration testing, and prompt remediation of identified vulnerabilities.

HF 246 also addresses digital assets received for taxes or fees where state law permits those payments. If a tax or fee were paid with a qualifying digital asset or stablecoin and the designated fund was not the general fund, the asset would be transferred to the general fund and the designated fund reimbursed in U.S. currency. If a digital asset used for payment did not meet the $750 billion market-cap threshold, it would have to be converted into U.S. currency.

The treasurer could loan a digital asset to generate additional state return only if doing so did not increase the state’s financial risk and only under rules adopted by the treasurer. The bill also gives the treasurer general rulemaking authority under Iowa Code chapter 17A to implement the proposed section.