AP – The new year will usher in the bitcoin-friendly administration of United States (US) President-elect Donald Trump and an expanding lobbying effort in statehouses that, together, could push states to become more open to crypto and for public pension funds and treasuries to buy into it.
Proponents of the uniquely volatile commodity argue it is a valuable hedge against inflation, similar to gold. Many bitcoin enthusiasts and investors are quick to criticise government-backed currencies as prone to devaluation and say increased government buy-in will stabilise bitcoin’s future price swings, give it more legitimacy and further boost an already rising price. But the risks are significant. Critics said a crypto investment is highly speculative, with so much unknown about projecting its future returns, and warn that investors should be prepared to lose money.
Only a couple public pension funds have invested in cryptocurrency and a new US Government Accountability Office study on 401(k) plan investments in crypto, issued in recent days, warned it has “uniquely high volatility” and that it found no standard approach for projecting the future returns of crypto.
It has already been a landmark year for crypto, with bitcoin hitting USD100,000, the US Securities and Exchange Commission approving the first exchange-traded funds that hold bitcoin and crypto enthusiasts being cheered by Trump’s promise to make the US the “bitcoin superpower” of the world.
Lawmakers in more states can expect to see bills in 2025 to make them crypto-friendly as analysts said crypto is becoming a powerful lobby, bitcoin miners build new installations and venture capitalists underwrite a growing tech sector that caters to cryptocurrencies.
Meanwhile, a new crypto-friendly federal government under Trump and Congress could consider legislation from Senator Cynthia Lummis, R-Wyoming, to create a federal bitcoin reserve on which states can piggyback.
A bill introduced last month in Pennsylvania’s House of Representatives sought to authorise the state’s treasurer and public pension funds to invest in bitcoin. It went nowhere before the legislative session ended, but it caused a stir.
“I had a friend who is a rep down the road text me, ‘Oh my, I’m getting so many emails and phone calls to my office,’ more than he ever did about any other bill,” said the measure’s sponsor Republican Mike Cabell. Cabell – a bitcoin enthusiast who lost his reelection bid – expects his bill to be reintroduced by a colleague.
And leaders of bitcoin advocacy group Satoshi Action said they expect bills based on their model bill to be introduced in at least 10 other states next year.
