North Carolina made history recently after its House of Representatives passed a bill commissioning a study on cryptocurrency and gold bullion. More specifically, the study would look into how financially feasible it would be for the state to hold a portion of its funds in Bitcoin and gold bullion.
What would it cost the state to acquire, store, and potentially liquidate both asset classes? Can they hedge against inflation? These are questions that the study will try to address. The study also has potential benefits for the crypto industry as a whole.
1. Government Support for Crypto
For years, the government and the crypto industry have had a tumultuous relationship, mostly owning to institutional distrust of crypto. In fact, North Carolina passed a bill banning the testing of Central Bank Digital Currencies only a few months ago.
But with this bill, more federal and state support for cryptocurrency can be expected. Because, at its core, this bill signals that cryptos are worth considering for the storing of state funds. Other states might follow suit and look into the feasibility of storing their funds in crypto.
And if the study shows that such a move towards crypto is feasible and beneficial, cryptocurrency could become a valid and accepted means of securing state funds. This can only serve to benefit the industry as government support for it will be unprecedented.
2. Stability for Tokens
While many people like to think of cryptocurrency purely as an investment vehicle, there are many other uses for such tokens. Some people use cryptocurrency to pay for everyday items and bills, some people use cryptos to save for the future, and some enjoy gambling with Bitcoin. For these people, having some sort of price and structural stability is important.
One of the goals of the study is to determine if cryptocurrencies can reduce volatility but the bill itself and the potential use of crypto by the state could guarantee this. By having state funds in crypto, the government will be incentivized to ensure price stability through legislation, support for crypto businesses, and creating an environment for the industry to thrive. These, in turn, will create more price stability.
3. Legal Benefits for Crypto Businesses
The North Carolina government, and other state governments that might follow after it, being invested in the use of cryptocurrency will likely trickle down to businesses in the states. If state funds are held in cryptocurrency, there will be more incentive for pro-crypto laws to be passed to create a thriving environment for businesses. From possible tax breaks to access to legal support, businesses of all kinds that deal in crypto would reap significant benefits.
This is especially important given how many crypto businesses have struggled to be legally recognized in the past. Some have also been forced to move their operations to other states and countries due to legislative issues. But this bill, and the connection it could create between governments and cryptos, would benefit crypto businesses.
