2024 is a significant year for Bitcoin. Despite the risks, states may see a lightning war of crypto policies in 2025.
Harrisburg, PA (USA) - The new year will usher in President Donald Trump's cryptocurrency-friendly government, along with a growing lobbying effort in state legislatures that could collectively push states to become more open to cryptocurrencies and allow public pension funds and government bonds to purchase it.
Supporters of this uniquely volatile commodity argue that it is a valuable tool for hedging against inflation, similar to gold.
Many Bitcoin enthusiasts and investors quickly criticized government-backed currencies as being prone to devaluation and stated that increasing government purchases would stabilize Bitcoin's future price fluctuations, give it more legitimacy, and further drive up already rising prices.
But the risks are significant. Critics say cryptocurrency investments are highly speculative, with so many unknowns in predicting future returns, and warn that investors should be prepared for losses.
Only a handful of public pension funds have invested in cryptocurrencies, and a recent report by the U.S. Government Accountability Office on cryptocurrency investments in 401(k) plans warns that it has 'unique high volatility' and that no standard method has been found for predicting future returns of cryptocurrencies.
For cryptocurrencies, this has already been a milestone year, with Bitcoin reaching $100,000, the SEC approving the first exchange-traded funds holding Bitcoin, and cryptocurrency enthusiasts cheering Trump's promise to make the U.S. the world's 'Bitcoin superpower.'
More legislation regarding cryptocurrencies could be on the horizon.
More legislators in other states can expect to see bills in 2025 making them cryptocurrency-friendly, as analysts say that cryptocurrencies are becoming a powerful lobbying group, Bitcoin miners are building new facilities, and venture capitalists are backing the growing tech industry catering to cryptocurrencies.
Meanwhile, a new cryptocurrency-friendly federal government under Trump and congressional leadership could consider legislation by Wyoming Republican Senator Cynthia Lummis to establish a federal Bitcoin reserve that states can rely on.
A bill introduced last month in the Pennsylvania House aimed to authorize the state's treasurer and public pension funds to invest in Bitcoin. It went nowhere before the end of the legislative session, but it created a stir.
"I have a friend who is a congressman, and he texted me saying, 'Oh my God, my office has received so many emails and calls,' more than he has for any other bill," said Mike Cabell, the bill's sponsor and a Republican.
Cabell is a Bitcoin enthusiast who lost his re-election bid, and he expects his bill to be reintroduced by a colleague. The leader of the Bitcoin advocacy group Satoshi Action stated that they expect at least 10 other states to introduce bills based on its model legislation next year.
But what about public pension funds?
Keith Brainard, research director for the National Association of State Retirement Administrators, said he does not expect many public pension fund investment professionals managing nearly $6 trillion in assets to invest heavily in cryptocurrencies.
Pension fund professionals would take on risks they deem appropriate, but the track record for Bitcoin investments is short and may only suit a niche asset class, possibly not aligning with their desired risk-return profile.
"They may dabble in Bitcoin," Brainard said. "But it's hard to envision a scenario where pension funds are willing to commit right now."
In Louisiana, Treasurer John Fleming helped the state become the first to introduce a system where people can pay government agencies with cryptocurrencies.
Fleming stated that he is not promoting cryptocurrencies but views this step as a recognition that the government must innovate and be flexible in helping people conduct financial transactions with the state. He said he would never invest his money or state money in cryptocurrencies.
Fleming recalled a recent meeting with a Bitcoin lobbyist where he expressed disbelief that Bitcoin is a good investment.
"What I'm worried about is that at some point it will stop growing, and then people will want to cash out," Fleming said. "When they do that, it could drive the value of Bitcoin down."
In Pennsylvania, Treasury officials stated that they have the authority to independently determine whether cryptocurrencies meet the agency's investment standards under state law, without the need for new legislation.
Nonetheless, given that the agency writes millions of checks each year, highly volatile assets are not suitable for the agency's need for predictability. Officials from the company stated that out of approximately $60 billion invested at any given time, the vast majority are short-term, conservative investments with durations of months.
Pension committees that invest over a 30-year span may have made small investments in companies involved in mining, trading, and storing cryptocurrencies. However, their acceptance of Bitcoin has been very slow.
Mark Palmer, Managing Director and Senior Research Analyst at The Benchmark Company in New York, said this situation could change.
Palmer stated that this year the U.S. Securities and Exchange Commission approved the first exchange-traded funds holding Bitcoin and in October approved the listing of options on these funds, giving pension committees their desired investment vehicles.
Palmer said many people 'may be quickly understanding what it means to invest in Bitcoin and trying it out, while this process typically takes some time at the institutional level.'
Major asset management firms such as BlackRock, Invesco, and Fidelity have Bitcoin ETFs.
Some states are already investing in cryptocurrencies.
In May of this year, the State of Wisconsin Investment Board purchased $160 million in two ETF stocks, representing about 0.1% of its assets, becoming the first state to make such an investment. As of September 30, it later reduced the investment to $104 million in one ETF. A spokesperson declined to discuss the matter.
The Michigan Investment Committee later reported that its Bitcoin ETF purchases were about $18 million, while New Jersey gubernatorial candidate Steven Fulop stated that if elected, he would push for the state's pension funds to invest in cryptocurrencies.
Jersey City, facing Manhattan across the Hudson River, has had Democratic Mayor Fulop preparing for months to purchase Bitcoin ETF shares with 2% of the city's $250 million employee pension fund.
"We're ahead of the curve," Fulop said. "I think what you'll ultimately see is that, with regard to the risk exposure of all pension funds, this is widely accepted, some form of risk exposure."#BTC再创新高
