SB283INTRODUCED
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SB283
PSI4FGE-1
By Senator Barfoot
RFD: Banking and Insurance
First Read: 01-Apr-25
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5 PSI4FGE-1 04/01/2025 HL (F)HL 2025-1068
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First Read: 01-Apr-25
SYNOPSIS:
This bill would authorize the State Treasurer to
invest certain monies in digital assets.
A BILL
TO BE ENTITLED
AN ACT
Relating to the State Treasurer; to permit the
investment of certain funds in digital assets.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. For the purpose of this act, the following
words and phrases have the meanings respectively ascribed to
them by this section.
(1) BLOCKCHAIN. Data that is shared across a network to
create a ledger of verified transactions or information among
network participants linked using cryptography, to maintain
the integrity of the ledger, and to execute other functions
and distributed among network participants in an automated
fashion to concurrently update network participants on the
state of the ledger and any other functions.
(2) DIGITAL ASSET. A virtual currency, cryptocurrency,
native electronic asset, stablecoin, non-fungible token, or
any other digital-only asset that confers economic, propriety,
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any other digital-only asset that confers economic, propriety,
or access rights or powers.
(3) EXCHANGE-TRADED PRODUCT (ETP). Any financial
instrument that is approved by the United States Securities
and Exchange Commission, or the Commodities Future Trading
Commission, that is traded on an American regulated exchange
and derives its value from an underlying pool of assets, such
as stocks, bonds, commodities, or indexes.
(4) PRIVATE KEY. A unique element of cryptographic data
used for signing transactions on a blockchain that is known to
the owner of the unique element.
(5) QUALIFIED CUSTODIAN. Any federal or state chartered
bank, trust company, or a company regulated by the state that
has custody of a digital asset for an exchange-traded product.
(6) SECURE CUSTODY SOLUTION. A technological product or
blended product and service that has all of the following
characteristics:
a. The private keys that secure digital assets are
exclusively known and accessible by the governmental entity.
b. The private keys that secure digital assets are
exclusively contained within an encrypted environment and are
accessible only via end-to-end encrypted channels.
c. The private keys that secure digital assets are
never contained by, accessible by, or controllable via a
smartphone.
d. Any hardware that contains the private keys that
secure digital assets is maintained in at least two
geographically diversified specially designated secure data
centers.
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centers.
e. The secure custody solution enforces a multi-party
governance structure for authorizing transactions, enforces
user access controls, and logs all user-initiated actions.
f. The provider of the secure custody solution has
implemented a disaster recovery protocol that ensures customer
access to digital assets in the event the provider becomes
unavailable.
g. The secure custody solution undergoes regular code
audits and penetration testing from audit firms, and any
identified vulnerabilities are promptly remedied.
Section 2. (a) Subject to the requirements of this
section, the State Treasurer may invest any monies otherwise
available to the State Treasurer for investment in digital
assets.
(b) The investment in digital assets from any of the
funds described in this section shall not exceed, in
aggregate, 10 percent of the balance of the fund at the time
of the investment.
(c) The State Treasurer may invest in digital assets
that meet either of the following:
(1) The digital assets are an exchange-traded product.
(2) The average market capitalization of the digital
assets over the preceding 12 months is at least seven hundred
fifty billion dollars ($750,000,000,000), as determined by the
State Treasurer using a commercially reasonable method.
(d) Any digital asset acquired as an investment under
this section must be held in one of the following ways:
(1) Directly by the State Treasurer through the use of
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(1) Directly by the State Treasurer through the use of
a secure custody solution.
(2) On behalf of the state by a qualified custodian.
(3) In the form of an exchange-traded product issued by
a person registered pursuant to Chapter 6 of Title 8, Code of
Alabama 1975.
(e) The State Treasurer may loan the digital assets
acquired as an investment under this section to bring further
returns to the applicable fund if the State Treasurer
determines that the loan does not increase the financial risk
of the investment.
(f) The State Treasurer may adopt rules to implement
this section.
Section 3. This act shall become effective on October
1, 2025.
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