Along the campaign trail this year, President-elect Donald Trump characterized himself as crypto-friendly, touting plans to create a presidential crypto advisory council and a national crypto stockpile.
At the annual Bitcoin Conference in Nashville in July, he said he would make America the “crypto capital of the planet.” So when Trump prevailed in the election, the crypto market took off.
Now people from all walks of life are trying to get in on the action, including a couple of members of the Pennsylvania Legislature.
State Rep. Mike Cabell, a Luzerne County Republican, sent out a memo to his fellow legislators Monday announcing potential legislation that, if signed into law, would allow the Pennsylvania treasurer to invest up to 10% of the state’s general fund in Bitcoin.
The change could “help Pennsylvania keep pace with inflation and economic change,” he wrote.
One week after the election, the value of one Bitcoin — the world’s most popular digital, decentralized currency — had jumped by 28.7%. It continued to surge this week, sitting at more than $89,000 for one Bitcoin by Thursday afternoon, a 30.9% increase since Election Day. Enthusiasts hope that number will hit six figures by the time Trump is inaugurated Jan. 20, though investments in cryptocurrency tend to be volatile.
Other cryptocurrencies like Dogecoin, a favorite of the world’s richest person and Tesla CEO Elon Musk, have realized similar highs. Musk, who stumped for Trump and gave out millions of dollars on the campaign trail, will soon lead the new Department of Government Efficiency (DOGE) with former Republican presidential candidate Vivek Ramaswamy.
What such a bill would do
The proposed bill, which hasn’t been formally introduced, would have to gain support from a Democratic-controlled House, a Republican-majority Senate and Democratic Gov. Josh Shapiro.
But a more immediate obstacle is the end of Cabell’s term. The Legislature doesn’t reconvene until January, and Cabell lost his reelection campaign in this year’s primary by four votes, so he will exit the state House before the legislation even has a chance to exist.
But State Rep. Torren Ecker, a Republican from Adams County, said he would continue Cabell’s Bitcoin fight once he leaves.
Cabell said he feels good about such a bill’s odds, with some of his fellow legislators already receiving calls from constituents advocating for Bitcoin investments. His main goal in the coming winter months, he said, will be to help his colleagues learn.
“It’s still something that your normal, everyday investor doesn’t know a ton about,” Cabell said. “A goal would be to educate my fellow legislators on Bitcoin and why this would be a good investment.”
The balance of the state’s general fund — its main pool of money holding 85% of Pennsylvania’s tax revenue — stood at $9.7 billion Wednesday. Most state expenditures, including payments to state programs, are drawn from the fund.
Under current law, Treasurer Stacy Garrity is required to invest money from the general fund only as a “prudent person” would, said treasury spokesperson Erik Arneson. Investments by the treasurer, he said, are overwhelmingly short term.
The Bitcoin investment bill would not be cryptocurrency’s first win in Pennsylvania. A 2016 state law reinterpreted the definition of “money” to include products “generally recognized as a medium of exchange,” including Bitcoin.
And in late October, Cabell’s Blockchains Basics Act passed the state House with bipartisan support — 176 voted in favor against 26. If the bill had made it through the state Senate and to Shapiro’s desk before the end of session on Nov. 13, Pennsylvania businesses could have accepted cryptocurrency as payment for their services, without additional taxes.
But the bill ran out of time. Ecker said he will work with Cabell and cryptocurrency experts on next steps for the legislation.
A February 2024 poll from Pew Research showed that 63% of Americans said they had little to no confidence in the safety of cryptocurrency. About 17% of Americans have invested in, traded or used cryptocurrency, a number that hasn’t grown since 2021.
‘An unequivocally bad idea’
Not everyone thinks investing Pennsylvania taxpayer money in Bitcoin is a good idea.
Hilary Allen, a financial regulation professor at the American University Washington College of Law, called the potential policy “an unequivocally bad idea.”
Because the value of Bitcoin ebbs and flows with the market, cryptocurrency as an investment lacks safeguards and is subject to volatility, she said.
“There is no reason why the price of Bitcoin won’t fall to zero tomorrow, other than that people don’t believe it will,” she wrote in an emailed statement. “That is not a great hedge against risk and uncertainty.”
Some states have invested in alternative currency to protect against the economic uncertainty of the U.S. dollar. Wisconsin’s pension fund purchased more than $160 million in Bitcoin shares early this year, and Michigan’s pension fund invested $6.6 million this summer. The Utah Legislature enacted a law in March allowing the investment of public funds, including from its general fund, in precious metals.
But Andrew Bull, a Philadelphia lawyer specializing in digital assets, said Cabell’s proposed strategic Bitcoin reserve was mostly unprecedented.
“It’s quite uncommon, definitely, to see elected representatives do such a bold dive into such a unique asset class like Bitcoin,” said Bull, the founding partner of Bull Blockchain Law.
Bull said Bitcoin investments can be successful, but economists are still trying to understand the volatility of a cryptocurrency that has existed for only 15 years, much less than traditional investments.
“If there’s an ability for those assets to be held over time, I think it’s a very sound strategy,” he said.
Despite worries about Bitcoin’s volatility, Cabell said Pennsylvanians gave a clear signal at the ballot box that they’re more concerned about the economy than risky investments.
“I’m equally, if not way more concerned about inflation, the devaluation of the U.S. dollar,” he said.