The new year is expected to bring momentum for pro-cryptocurrency policies across the United States as President-elect Donald Trump’s incoming administration aligns with growing lobbying efforts to push states towards adopting crypto-friendly frameworks. Analysts predict more state legislatures will consider bills to allow public pension funds and treasuries to invest in Bitcoin.
Proponents of cryptocurrency argue that Bitcoin, despite its volatility, serves as a valuable hedge against inflation akin to gold. They believe that government adoption will bring legitimacy to Bitcoin, stabilizing its price swings and boosting investor confidence.
However, critics caution that crypto remains a speculative investment. A recent U.S. Government Accountability Office (GAO) report on 401(k) plans flagged Bitcoin’s “uniquely high volatility,” underscoring the lack of a standard approach for projecting returns.
Bitcoin’s record-breaking rally has amplified interest. This year, the cryptocurrency surged past $100,000, bolstered by the U.S. Securities and Exchange Commission’s approval of the first Bitcoin-based exchange-traded funds (ETFs). Trump’s campaign promise to make the United States the world’s “Bitcoin superpower” has further energized advocates.
Keith Brainard, research director at the National Association of State Retirement Administrators, remains skeptical about public pension funds investing heavily in Bitcoin.
“There might be a bit of dabbling in Bitcoin, but it’s difficult to envision a scenario in which pension funds right now are willing to make a commitment,” Brainard said.
Pennsylvania recently saw a bill introduced to authorize public pension funds to invest in Bitcoin. Though it failed to advance before the session ended, its sponsor, Republican Mike Cabell, noted significant public reaction.
“I had a friend who is a rep down the road text me, ‘Oh my God, I’m getting so many emails and phone calls,’ more than he ever did about any other bill,” Cabell said. While Cabell lost his reelection bid, he expects the bill to resurface in 2025.
In Louisiana, State Treasurer John Fleming spearheaded a system allowing residents to make payments to government agencies in cryptocurrencies. Fleming clarified that his move wasn’t about promoting Bitcoin but ensuring flexibility in financial transactions.
“My concern is that at some point it’ll stop growing and then people will want to cash in,” Fleming said. “And when they do, it could tank the value of a Bitcoin.”
Bitcoin adoption among public pension funds remains cautious. The State of Wisconsin Investment Board became the first state entity to invest in Bitcoin ETFs earlier this year, committing $160 million—later reduced to $104 million. Michigan followed suit, reporting an $18 million investment in Bitcoin ETFs.
Steven Fulop, the Democratic mayor of Jersey City and a candidate for New Jersey governor, has pledged to push for Bitcoin exposure within the state’s pension funds if elected. Fulop highlighted Jersey City’s proactive stance, preparing to allocate up to 2% of its $250 million employee pension fund into Bitcoin ETFs.
“We were ahead of the curve,” Fulop said. “And I think that’s what you’re eventually going to see—this is widely accepted, with regard to exposure in all pension funds.”
Venture capitalists and Bitcoin miners are increasingly influencing policymaking at both state and federal levels. Some advocates point to legislation proposed by Sen. Cynthia Lummis, R-Wyo., to establish a federal Bitcoin reserve, which could inspire similar initiatives at the state level.
Mark Palmer, managing director and senior research analyst at The Benchmark Company, said public pension boards are taking a closer look at Bitcoin ETFs following the SEC’s approval.
“Many are likely in the process of getting up to speed on what it means to invest in Bitcoin and kicking the tires, so to speak,” Palmer said. “That’s a process that typically takes a while at the institutional level.”
While significant hurdles remain, 2025 could mark a turning point as policymakers and investors navigate Bitcoin’s growing role in the financial landscape.
