Florida CFO Requests Bitcoin Investment Study for State Pension Funds

TLDR

• Florida CFO Jimmy Patronis requests feasibility report for investing state pension funds in Bitcoin
• Request aligns with Trump’s recent proposal for national Bitcoin stockpile
• Proposed Digital Currency Investment Pilot Program would operate under Florida Growth Fund
• South Korea’s pension fund invested $34M in MicroStrategy stock
• Multiple US states including Michigan, Wisconsin, Arizona exploring crypto for pension funds

Florida’s Chief Financial Officer Jimmy Patronis has initiated steps to evaluate Bitcoin investments for the state’s retirement funds, marking another potential milestone in cryptocurrency’s integration into traditional finance.

In a letter sent Tuesday to the State Board of Administration (SBA), Patronis requested a feasibility report to assess incorporating Bitcoin into the state’s pension portfolio.

The timing of this request coincides with Bitcoin reaching a five-month high, driven partly by market sentiment surrounding the upcoming U.S. presidential election.

Bitcoin’s price movements have shown increased sensitivity to political developments, particularly following former President Donald Trump’s recent statements about cryptocurrency policy.

Patronis’s proposal draws direct inspiration from Trump’s July announcement at the Bitcoin 2024 conference in Nashville, where the former president outlined plans for a national Bitcoin stockpile.

Trump’s proposal centered on retaining 100% of Bitcoin acquired through law enforcement actions as part of a strategic national reserve.

The Florida initiative would operate under the Florida Growth Fund, established by the Florida Technology and Growth Act of 2008.

This framework allows the SBA to invest up to 1.5% of Florida Retirement System Pension Fund assets in technology and growth enterprises with a Florida presence.

In his letter, Patronis highlighted Bitcoin’s potential role as a portfolio diversification tool, referring to its common nickname as “digital gold.”

There’s no telling what the future of #cryptocurrency will be, but FL must stay ahead of the curve on getting the best returns for Floridians. Today, I sent a letter to @FloridaSBA requesting a report on digital currencies. #BTC #Bitcoin

➡️ Read more: https://t.co/4JBL6WBtq1

— Jimmy Patronis (@JimmyPatronis) October 29, 2024

He emphasized the possibility of using cryptocurrency as a hedge against volatility in other major asset classes.

The move aligns with Florida Governor Ron DeSantis’s crypto-friendly stance. In 2022, DeSantis proposed allowing businesses to pay state taxes in Bitcoin, part of broader efforts to establish Florida as a leading cryptocurrency hub.

This initiative gains additional context from recent international developments. South Korea’s National Pension Service has already taken steps into crypto-adjacent investments, purchasing 24,500 shares of MicroStrategy stock for approximately $34 million in the second quarter of 2023.

The proposal specifically calls for the creation of a Digital Currency Investment Pilot Program, which would test the viability of cryptocurrency investments within Florida’s pension system.

Patronis emphasized the program’s potential benefits for state employees, including teachers, firefighters, and police officers.

Other U.S. states have begun exploring similar initiatives. Michigan, Wisconsin, Arizona, and Jersey City have taken steps toward incorporating cryptocurrency into their pension funds. Wyoming and Nebraska have established regulations friendly to blockchain businesses.

Patronis’s letter also addressed the distinction between cryptocurrencies and Central Bank Digital Currencies (CBDCs), which Florida has opposed through recent legislation.

He emphasized that crypto represents decentralized digital currency managed on blockchain technology, contrasting with government-controlled digital currencies.

The CFO requested the SBA complete its feasibility report before the next legislative session, allowing for timely consideration of any necessary policy changes or implementation steps.

The request comes at a time when Bitcoin’s price movements have shown increased correlation with traditional market factors and political developments.

Market analysts note that the upcoming U.S. presidential election could trigger sharp price movements in cryptocurrency markets.

For state pension fund managers, the key consideration remains balancing potential returns against risk management.

Patronis emphasized that any investment decisions would prioritize securing optimal returns for Florida’s public servants.

The timeline for the SBA’s response and subsequent actions remains to be determined, as the board begins its evaluation process of this proposal.