New bill would allow Florida to more easily invest in bitcoin

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New legislation would make it easier for the state to invest funds into bitcoin as the digital currency continues to steadily grow.

The bill (SB 550), filed by Sarasota Republican Sen. Joe Gruters, would amend various Florida statutes to provide flexibility in investment decisions for the state while simultaneously protecting state funds against economic uncertainties and inflation.

The legislation would authorize Florida’s Chief Financial Officer to invest in bitcoin using public funds and other digital assets to enhance the state’s ability to weather financial storms and enhance economic security, while hedging against inflation which has eroded purchasing power. The bill would allow the CFO to invest up to 10% of public funds from various state funds into bitcoin.

Within the bill’s text, it states that bitcoin has grown significantly in value and is becoming more widely accepted as payment for goods and services. The state views the decentralized digital currency as a safety net against inflation, a view shared by other sovereign nations and prominent investment advisors such as BlackRock, Fidelity and Franklin Templeton.

If the legislation passes this Regular Session, any acquired bitcoin must be held securely either directly by the CFO, through a qualified custodian, or as part of an exchange-traded product. After adopting certain rules, the CFO or other parties authorized by the CFO would be able to loan the bitcoin held in state funds to generate additional returns if they do not pose an increased financial risk.

Taxes and fees paid in bitcoin would be first transferred to the General Revenue Fund, which would then reimburse the designated fund and convert it into U.S. currency. The Board of Administration, created by Florida’s Constitution, would further be authorized to invest and reinvest available funds of the System Trust Fund.

The Board would face the same restrictions as the CFO, with the bill only allowing a maximum of 10% of total funds to be invested into bitcoin. Any bitcoin acquired by the Board would be required to be held directly by the Board through the use of a secure custody solution.

If passed, the bill would take effect July 1.