North Carolina Considers Dipping a Toe Into Cryptocurrency

Before becoming North Carolina’s state treasurer, Brad Briner managed the wealth of billionaire former New York Mayor Michael Bloomberg at Willett Advisors. Willett’s philosophy “liberated” him, Briner says, from taking the approach much of the asset management industry has of looking in the rearview mirror.

Rather than solely relying on investment strategies of the past to boost the state’s pension fund assets, Briner has tentatively set his sights on what some call an industry of the future: cryptocurrency. 

The North Carolina Digital Assets Investments Act, which the state House passed earlier this month, would give Briner the legal authority to invest up to 5 percent of the state’s $127 billion pension fund in digital exchange-traded funds. ETFs allow investors to purchase shares in baskets of assets without directly owning cryptocurrency tokens like Bitcoin. 

Briner, however, says the cryptocurrencies likely won’t exceed half a percent of the total portfolio. 

“It’s an option, not an obligation,” Briner told The Assembly. “As we develop a comfort level with Bitcoin, and figure out an appropriate role for it, probably as a hedge to the U.S. dollar, I could see half a percent in Bitcoin as possible.”

The dollar tumbled earlier this year after President Trump announced aggressive tariffs. Briner also blames the federal government’s long-term “spending problem,” which is projected to result in the publicly held federal debt-to-GDP ratio exceeding its World War II-level peak by 2029.

“When the tariff conversation started, the dollar fell 3.5 percent, but Bitcoin rose 4 percent,” said Briner. “It’s acting exactly as a hedge right now.”

The half-percent hedge Briner imagines is worth $635 million of the nation’s ninth-largest public pension fund, which serves more than a million retirees, including teachers, firefighters, and local government employees.

North Carolina’s pension fund consistently underperforms its target of 6.5 percent annual growth, and it underperforms its peers. A 2023 Yale University study found the plan’s annual investment performance ranked dead last across 50 state retirement systems during the prior three years at 4.9 percent, compared to the national average of 7.84 percent. 

As a result, the state’s pension fund is running a deficit of $16 billion. That’s the funding gap between the system’s current assets and its projected obligations to retirees. 

North Carolina’s pension plan is the country’s sixth-best funded state plan when comparing assets to liabilities, and it isn’t in immediate danger of default. But the General Assembly must annually infuse the fund with cash so that checks to more than a million pensioners continue to go out. Last year, legislators allocated $22.8 million to the state’s retirement systems. 

Not everyone agrees the state should invest in digital assets. State Rep. Tracy Clark, a Guilford County Democrat who opposed the House bill, likened investing in cryptocurrency to “gambling with taxpayer dollars.” 

“I would go to Vegas, but I would never invest in cryptocurrency,” Clark said. “It’s a scam-ridden industry and a huge conflict of interest for the Republican Party.”

She referenced a New York Times investigation that showcased how President Donald Trump and his family were benefiting from $TRUMP, a memecoin, while changing regulations that would impact it and other cryptocurrencies.

The bill passed primarily along party lines, with three Democrats supporting the bill and one Republican opposing it. Democratic Governor Josh Stein has indicated he will support the bill, which now goes to the state Senate.

Heavy on Cash

Over the coming decades, the state might have to cut retirement benefits. North Carolina’s pensioners already earn 7.6 percent less than the national average, with retirees receiving $1,500 less a year than if they lived in the average state and worked for the same salary. 

“We’re not giving assets to the people that have been taking care of us for their entire careers, and accepted lower salaries than they would have in the private sector to do it,” said Ardis Watkins, Executive Director of the State Employees Association of North Carolina (SEANC). 

Briner, a Republican who was elected in November, says the state has been too cautious. Under two-term former state Treasurer Dale Folwell, also a Republican, the pension followed a cash-heavy investment approach to guard against stock market downturns. In 2023, 8.2 percent of the state pension’s assets were in cash; the national average cash allocation for state and local pensions was 1.9 percent.

Having more cash on hand hedges the plan against downturns, but it also means that the pension plan missed out on stock market booms over the past decade, impacting the long-term health of the fund. 

A quartet of Republican legislators, led by House Speaker Destin Hall of Caldwell County, co-sponsored the Digital Assets Investments Act to ensure the state did not miss out on another boom: cryptocurrencies. 

“When North Carolina innovates, we do very well,” said co-sponsor Rep. Mike Schietzelt of Wake County. “We’re now poised to capitalize on cryptocurrency’s growth.”

Since the creation of Bitcoin in 2009, cryptocurrencies, which are digital transactions that occur through a decentralized private transfer system, have exploded in popularity and are now collectively worth more than $1 trillion. 

Cryptocurrencies are notoriously volatile, with huge price fluctuations over an hour, day, or year. 

Crypto journalist Andrey Sergreenkov found that Bitcoin’s average annual volatility over the past 10 years is 46.3 percent, which means its price moved up or down, on average, 46 percent annually. Bitcoin is 4.8 times more volatile than the S&P 500, the stock market index tracking the performance of 500 leading companies, 5.3 times more volatile than gold, and 3.1 times higher than Apple stock over the past decade.

This doesn’t concern some supporters, like co-sponsor Rep. Mark Brody of Union County.

“Volatility is a warning for everything you buy,” he said. “You can buy stock that is volatile, too. It’s just a matter of how skilled the people are who watch these markets and decide to venture into them.”

In addition to volatility, cryptocurrencies carry other risks. 

They are neither insured by the Federal Deposit Insurance Corporation nor backed by a safe financial institution like the U.S. Treasury. In 2022, Coinbase, a publicly held crypto trading and storage platform, disclosed that if it were ever to go bankrupt, customers may be treated as unsecured creditors by a bankruptcy court, meaning they could lose all the money put into cryptocurrency investments. 

Regulation also has not caught up to the speed of digital asset proliferation, increasing the likelihood of cryptocurrency scams. In 2022, leading cryptocurrency exchange FTX, once valued at $32 billion, collapsed, after which several top executives were convicted of fraud. 

The bill’s co-sponsors say the legislation includes safeguards against these risks. 

First, the treasurer can only purchase cryptocurrencies that have a minimum average market capitalization (which is calculated by the price of the asset multiplied by the number of shares) of $750 billion over the past 12 months. 

At just under $2 trillion in market capitalization, Bitcoin is the only cryptocurrency that meets these requirements. The lesser-known cryptocurrencies, which are more likely to fail, would never enter North Carolina’s portfolio under the Digital Assets Investments Act.

Second, the treasurer may invest the cash of the designated funds in digital assets only after obtaining an independent assessment by a third-party consultant. Schietzelt imagines the third-party consultant will be an experienced institutional investor that has also researched cryptocurrency, like Charles Schwab. 

Finally, the treasurer cannot put more than 5 percent of the fund’s assets into cryptocurrency. This was a change from the original language of the bill, which would have allowed digital assets to be up to 10 percent of the portfolio. The lower threshold came about during negotiations in the House Pensions and Retirement Committee after legislators and SEANC representatives expressed doubts.

Limiting Risk

Alternative investments—non-traditional asset classes like cryptocurrency that fall outside of stocks, bonds, and cash—have long been a source of controversy for state pension plans. 

They came into vogue in the 2000s, as many pension plans sought to increase their returns, and by 2022, the country’s public pensions had an average allocation of 33.4 percent in alternative investments. 

Though private equity, hedge funds, and real estate are far older investment possibilities than cryptocurrencies, they share one common trait: increased risk. 

Several high-profile public pension funds suffered as a result of overexposure to alternative investments, including Kentucky’s, which was sued by retired state workers, and California’s, which decided to exit all hedge fund investments in 2014. 

Because of the risks of other alternative investments, SEANC’s Watkins originally feared cryptocurrency was like going to the craps table and hoping for the right roll of the dice. But the compromise of a 5 percent cap and a promise from Briner to invest far less than that convinced SEANC to support the measure. 

“Modernizing the retirement system may mean putting a little in some of these more volatile, higher-risk things,” Watkins said. “We support this more limited, reasonable approach.”

Cryptocurrencies have the opportunity to create huge profits. Bitcoin was 2024’s most profitable asset class; over the past fiscal year, Bitcoin’s value soared by 32.2 percent. Meanwhile, the S&P 500 grew by 5.28 percent. The state’s pension fund increased by a mere 1.5 percent.

Across the country, the political and economic environment has shifted in favor of cryptocurrencies. A 2025 survey from the National Cryptocurrency Association found 21 percent of American adults now likely own digital assets. 

The trend isn’t limited to retail investors; institutions are stepping in as well. The Trump administration has established a national Strategic Bitcoin Reserve and hired former North Carolina congressional candidate Bo Hines to be executive director of the Presidential Council of Advisers for Digital Assets. 

State governments have also gotten in on the crypto action. In the past year, 23 states have proposed legislation allowing state funds to be invested in cryptocurrencies or other digital assets. 

Michigan and Wisconsin have already put sizable portions of their pension funds into Bitcoin ETFs. However, less than a year after Wisconsin first invested in cryptocurrency, its state investment board sold its entire $350 million stake in a Bitcoin ETF. 

Briner plans to watch these states carefully if he’s given the opportunity to invest North Carolina’s assets into cryptocurrency.

“If we can learn from them and better the outcomes for our state by shamelessly taking what we learned, we will,” he said. “There’s no prize for inventing new technology here. There’s just prizes for delivering the returns our state needs, so we’re really focused on that.”

Katelyn Cai is a Robertson Scholar at Duke University and UNC-Chapel Hill, and a reporter for The 9th Street Journal in Durham.