The Alabama House Ways and Means General Fund Committee has delayed the vote on HB482. This bill would authorize the State Treasurer to invest in various digital assets, including cryptocurrencies like Bitcoin and Ethereum. Rep. Mike Shaw, R-Hoover, the bill’s sponsor, introduced HB482. This bill is one of three in a package that aims to promote cryptocurrency and blockchain technology. The bill would additionally exempt virtual currencies from state property taxes and allow the South Dakota Investment Council to invest in cryptocurrency ETFs.
HB482, based upon state legislation passed in Ohio, would further expand Alabama’s financial exposure to the nascent cryptocurrency market. The committee ultimately opted to delay a vote on HB482 and HB484. This action demonstrates their prudent opposition to the proposed bill.
Rep. Shaw described HB482 as a strategic reserve bill, like legislation passed in numerous other states. That would allow the State Treasurer to invest up to 10% of state funds in digital assets. This investment would be made in accordance with Fair Market Value and the principles of Just Compensation. The bill defines virtual currencies as digital assets. It seeks to create the regulatory framework in which new uses and investments in them can flourish.
“Bitcoin, Ethereum, things like that, or the ETFs that trade in those currencies.” - Shaw
One major highlight of HB482 was a provision to exempt virtual currencies from property taxes. This latest measure is an effort to increase the adoption of digital currencies in Alabama. It achieves this by removing a future tax liability for such asset holders.
Rep. Shaw highlighted the significance of the bill as a means to bring clarity and certainty to Alabamians who own crypto assets.
“I think roughly 20 percent of Alabamians own crypto assets of some sort,” - Shaw
He pointed to the bill’s effect of sending a strong message to the global community that Alabama was serious about engaging with cryptocurrency through good legislation.
“This gives them some certainty about the future, also signals to the world that we’re looking at crypto and we’re implementing policy through legislation, not just rule-making.” - Shaw
Yet despite some progress, a large contingent of committee members raised serious concerns about the bill. Rep. Whitt expressed his apprehension of the great risk in allowing the state to invest taxpayer dollars in digital assets.
“I completely understand the ability that you’re wanting to diversify your portfolio to get the highest rate of return,” - Whitt
“But I don’t want to risk the state’s money.” - Whitt
Whitt further argued that the new State Treasurer, Young Boozer wouldn’t use the investment option.
“I think Treasurer Boozer, in the conversations I’ve had with him, is that he would not utilize this,” - Whitt
“I think Treasurer Boozer is one of the most conservative state treasurers, and he’s an example for the nation in my opinion.” - Whitt
Rep. Shaw further anticipated that the bill could improve how information is distributed, saving industry time and money.
“My concern is what comes down the road ten years from now.” - Whitt
HB482 is based on a similar bill introduced in Ohio by Republican state Rep. Steve Demetriou. This bill would further limit all investing in cryptocurrency to no more than 10% of the total investment portfolio. This strategic approach aligns Alabama with other states exploring the potential of digital assets while implementing safeguards to protect state funds.
“You can put meeting announcements, all of that, in a way you wouldn’t have to, I don’t want to upset some of our local press, but in a way that you wouldn’t have to advertise in newspapers,” - Shaw
The bill states that “digital assets must be stored in a secure manner.” This increases the level of protection for the state’s investments. Bypassing security measures, HB482 allows the State Treasurer to start investing in digital assets. This strategy aims to be nimble and innovative while maximizing environmental and community return on investment and minimizing risk.
The bill stipulates that digital assets must be stored in a relatively safe manner, adding another layer of protection for the state's investments. By enabling the State Treasurer to invest in digital assets subject to certain restrictions, HB482 aims to strike a balance between embracing innovation and managing risk.
