The incoming administration of President-elect Donald Trump and an intensified lobbying effort may drive U.S. states toward adopting more crypto-friendly policies in 2025. Proposals could include allowing public pension funds and state treasuries to invest in bitcoin.
Supporters of cryptocurrency view it as a hedge against inflation, akin to gold, and argue that government adoption could stabilize bitcoin’s price fluctuations and enhance its legitimacy. However, critics warn that bitcoin's speculative nature and extreme volatility pose significant risks for investors.
Recent developments, such as bitcoin reaching $100,000 and the U.S. Securities and Exchange Commission approving exchange-traded funds (ETFs) holding bitcoin, highlight 2024 as a milestone year for cryptocurrency. Trump’s pledge to position the U.S. as the global leader in bitcoin further energizes its advocates.
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State-Level Crypto Advocacy Gains Momentum
Bitcoin proponents anticipate an influx of legislation in 2025 as crypto lobbying grows and venture capital fuels the industry. For instance, a bill introduced in Pennsylvania sought to permit state pension funds to invest in bitcoin. While it didn’t pass, it generated significant public interest, according to Republican Mike Cabell, the bill's sponsor.
Advocacy groups like Satoshi Action predict similar bills will be introduced in at least 10 states next year. Additionally, a proposed federal bitcoin reserve, championed by Sen. Cynthia Lummis of Wyoming, may influence state-level policies.
Public Pension Funds Remain Hesitant
Despite bitcoin’s rising popularity, public pension funds, managing nearly $6 trillion, remain cautious. According to Keith Brainard of the National Association of State Retirement Administrators, crypto’s short track record and volatile nature don’t align with the long-term risk profiles of these funds. While there may be limited investments in crypto-related sectors, substantial bitcoin investments are unlikely in the near term.
State treasurers like Louisiana’s John Fleming have adopted a pragmatic approach, introducing systems to allow cryptocurrency payments for state services. However, Fleming remains skeptical about bitcoin as an investment, citing concerns over its unpredictable future value.
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Institutional Interest May Increase Gradually
The approval of bitcoin ETFs by major asset managers like BlackRock and Fidelity could gradually attract institutional investors. Analysts suggest pension boards are still assessing the viability of crypto investments, a process that typically requires time.
Some states, such as Wisconsin and Michigan, have already invested modest amounts in bitcoin ETFs. Meanwhile, Jersey City’s mayor and former New Jersey gubernatorial candidate, Steven Fulop, advocates for integrating crypto investments into public pension portfolios. Fulop predicts broader acceptance of bitcoin within institutional funds over time.
The Road Ahead
While the crypto sector faces challenges, growing advocacy, institutional interest, and legislative efforts signal a potential shift toward greater adoption of bitcoin at both state and federal levels. However, questions about its long-term stability and suitability for public funds remain unresolved.