North Carolina S 709 — State Investment Modernization Act

The bill would define “digital asset” broadly to include virtual currency, cryptocurrency, native electronic assets, stablecoins, nonfungible tokens, and other digital-only assets that confer economic, proprietary, or access rights or powers. That definition would place the proposal in the category of state public-fund crypto investment legislation rather than a licensing, exchange, or consumer-protection bill.

The proposed authority would apply to “designated funds,” cross-referenced to funds described in the General Fund and Highway Funds investment statutes and special funds held by the State Treasurer. The bill therefore concerns government-managed investment portfolios. It does not create private market permissions for crypto firms, change money-transmission rules, or create a general retail-investor framework.

• Board approval: The Investment Authority could invest cash of designated funds in digital assets only after approval by its Board of Directors.
• Independent assessment: Approval would depend on a third-party consultant assessment addressing custody, portfolio risk, adverse scenarios, controls, operational robustness, and regulatory compliance.
• Secure custody: The bill defines a secure custody solution as a technological product, or blended product and service, using advanced measures to safeguard private keys and prevent unauthorized access.
• Portfolio cap: Digital-asset investments from any designated fund could not exceed 5% of that fund’s balance during an initial board-set period. The board would review the limit annually and could raise or lower it after that period.

S 709 is broader than the crypto provision. It would create the North Carolina Investment Authority as an entity within, but independent from the control of, the Department of State Treasurer for organizational, staffing, procurement, and budgetary purposes. The proposed board would include the State Treasurer as an ex officio member and four appointed members. The board’s responsibilities would include investment policy statements, risk budgets, global custodian appointment, annual operating budgets, market-oriented compensation plans, and oversight of investment performance.

S 709 was filed on March 25, 2025, passed first reading, and was referred to Senate Rules on March 26, 2025. The House companion, H506, later became Session Law 2025-6 after Governor Josh Stein signed it on June 13, 2025. However, the H506 committee-substitute history shows the proposed digital-asset investment authority was removed from the companion text before enactment. The enacted session law therefore modernizes North Carolina public-fund investment governance, but it should not be described as an operative crypto-investment authorization.