Ayotte signs law allowing N.H. treasurer to invest in Bitcoin

“The whole point,” Ammon said, “is the federal government is not managing fiscal policy, monetary policy well, and I don’t expect them to do any better. It’s going to get worse.”

This legislation will give the treasurer more options to diversify the state’s investment portfolios and pursue returns that beat inflation, Ammon said.

“We’ll see what she does with it,” he added.

While several other states are actively considering similar legislation, proponents said New Hampshire was first to reach the finish line, making it a potential trendsetter.

Dennis Porter, co-founder and CEO of Satoshi Action Fund — a Bitcoin policy group that produced model legislation that Ammon used to craft the version that New Hampshire adopted — said in a statement the state had just “sparked a movement.”

This law authorizes the state treasurer to invest up to 5 percent of public funds in digital assets held by a “qualified custodian” that meets certain criteria spelled out in the law.

New Hampshire State Treasurer Monica I. Mezzapelle told The Boston Globe that her office may consider using money from certain state funds that have “a more aggressive or long-term strategy” to invest in digital assets, but the volatility of such investments makes them unsuitable for funds the state uses to cover its ongoing expenses.

Mezzapelle said the funds that might be a good fit for such aggressive investments currently total about $30 million, which means the state could invest up to about $1.5 million in digital assets — that said, there are no plans to buy cryptocurrency immediately. This law just adds digital assets and precious metals to an “extensive” menu of authorized options, she said.

Notably, a digital asset must have a market capitalization that averaged at least $500 billion in the preceding calendar year to qualify for state investment. That means Bitcoin, which has a market cap of roughly $1.9 trillion, is currently the only cryptocurrency eligible for state investment. (The market cap of another major cryptocurrency, Ethereum, briefly surpassed $500 billion in 2021, but is now about $220 billion.)

While proponents of the legislation cited the market cap threshold as a guardrail to ensure taxpayers won’t be suckered by fad-fueled “memecoins” and other especially risky investments, skeptics like Democratic Senator Cindy Rosenwald said the state was effectively “picking winners and losers” by selecting the arbitrary threshold.

Rosenwald told colleagues last week they shouldn’t authorize the state treasurer to “gamble” taxpayer money on a notoriously volatile digital currency.

“At a time when we’re going to be making very difficult budget decisions driven by a shortage of available funds … I do not believe it is prudent to authorize legislation that could expose state and local finances to this level of risk and unpredictability,” she said.

But a couple of her GOP colleagues said they have full faith in Mezzapelle to consider the available options and make prudent investment decisions.

“I absolutely trust our treasurer … she’s done such a great job investing our current funds,” said Senator Timothy P. Lang Sr.

Senator Daniel E. Innis — who is also a professor at the University of New Hampshire Peter T. Paul College of Business and Economics — said he doesn’t personally invest in Bitcoin and wouldn’t advise others to do so.

“However, I think we need to trust the treasurer to do the right thing,” he said. “These are folks who understand markets. They understand assets. They understand how to invest for the best return.”

This article first appeared in Globe NH | Morning Report, our free newsletter focused on the news you need to know about New Hampshire, including great coverage from the Boston Globe and links to interesting articles from other places. If you’d like to receive it via e-mail Monday through Friday, you can sign up here.

Steven Porter can be reached at [email protected]. Follow him @reporterporter.