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North Carolina seeks to hold digital assets, gold on the balance sheet

Can gold and digital assets protect North Carolina against systemic credit risks? A new bill that sailed through the House of Representatives wants the state to study the two assets as a hedge against inflation to boost the territory’s coffers.

House Bill 721 received the support of 73 legislators—all 67 Republicans and 6 Democrats—while 40 opposed it. It now moves to the Senate, with whose approval it would advance to Governor Roy Cooper’s desk for his signature.

The bill wants the state’s Treasury Department to investigate the feasibility of “acquiring, securely storing, insuring, and liquidating gold bullion and virtual currency.”

This study will give the state better insight into whether these two asset classes can help the Tar Heel State “to hedge against inflation and systemic credit risks, reduce overall portfolio volatility, and increase portfolio returns over time.”

The bill was first introduced in April as the “State Precious Metals Depository Study.” It initially focused on gold but later incorporated digital assets.

Rep. Mark Brody, who sponsored the bill, has been working with stakeholders in the digital asset sector to incorporate the asset class into the bill. The Blockchain Association’s Dan Spuller has been a key contributor to the proposed legislation, including testifying before the House.

The bill tasks the state Treasury with studying the cost and benefits of utilizing a private depository for the custody of gold or digital assets. It also proposed building a state-administered depository, appropriating $50,000 for the research.

“This is step one to eventually try to protect our assets in North Carolina. A lot of folks in the cryptocurrency world, as well as the precious metal world, know […] the U.S. government is consistently and knowledgeably devaluing its currency,” Rep. Brody commented.

As North Carolina explores digital assets, it has joined Florida in a revolt against the proposed digital dollar. Brody was one of the architects of a bill passed in May, barring the use of the central bank digital currency (CBDC) in the state. It also banned the federal government from conducting pilot tests in the state for the digital dollar, arguing it’s aimed at financial surveillance.

At a national level, North Carolina is also playing a leading role in shaping the future of digital assets in the U.S. In Congress, Rep. Patrick McHenry (R-NC) has been leading efforts to regulate the sector. He’s currently spearheading a push to give the Commodity Futures Trading Commission (CFTC) greater authority over the industry.

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