SB178: SB178 State Depository Board; allow the state treasurer to invest in Bitcoin; provide

25 LC 56 0310 Senate Bill 178 By: Senators Dolezal of the 27th, Beach of the 21st and Dixon of the 45th A BILL TO BE ENTITLED AN ACT To amend Article 3 of Chapter 17 of Title 50 of the Official Co de of Georgia Annotated,1 relating to state depositories, so as to provide for the State Depository Board to allow the2 state treasurer to invest in Bitcoin; to provide for a limit on such investment; to provide for3 requirements for the safe handling of such assets; to provide for the loaning of such assets;4 to provide for definitions; to provide for related matters; to repeal conflicting laws; and for5 other purposes.6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:7 SECTION 1.8 Article 3 of Chapter 17 of Title 50 of the Official Code of Geo rgia Annotated, relating to9 state depositories, is amended by revising subsection (b) of Code Section 50-17-63, relating10 to deposit of demand funds, investment of funds, reports, remittance of interest earned, motor11 fuel tax revenues, as follows:12 "(b) All departments, boards, bureaus, and other agencies of th e state shall report to the13 board, on such forms and at such times as the board may prescribe, such information as the14 board may reasonably require concerning deposits and withdrawals pursuant to this Code15 section and shall enable the board to determine compliance with this Code section. Interest16 S. B. 178 - 1 - 25 LC 56 0310 earned on state funds withdrawn from the state treasury on appr oved budgets shall be17 remitted to the Office of the State Treasurer by each department, board, bureau, or agency18 and placed in the general fund. The board may permit the state treasurer to invest in any19 one or more of the following: bankers' acceptances; commercial paper; bonds, bills,20 certificates of indebtedness, notes, or other obligations of th e United States and its21 subsidiary corporations and instrumentalities or entities sanct ioned or authorized by the22 United States government including, but not limited to, obligations or securities issued or23 guaranteed by Banks for Cooperatives regulated by the Farm Cred it Administration, the24 Commodity Credit Corporation, Farm Credit Banks regulated by th e Farm Credit25 Administration, Federal Assets Financing Trusts, the Federal Fi nancing Bank, Federal26 Home Loan Banks, the Federal Home Loan Mortgage Corporation, the Federal National27 Mortgage Association, the Financial Assistance Corporation chartered by the Farm Credit28 Administration, the Government National Mortgage Association, the Import-Export Bank,29 Production Credit Associations regulated by the Farm Credit Adm inistration, the30 Resolution Trust Corporation, and the Tennessee Valley Authorit y; obligations of31 corporations organized under the laws of this state or any othe r state but only if the32 corporation has a market capitalization equivalent to $100 million; provided, however, that33 such obligation shall be listed as investment grade by a nation ally recognized rating34 agency; the shares of any mutual fund the investments of which are limited to securities of35 the type described in this subsection and distributions from which are treated for federal36 income tax purposes in the same manner as the interest on said obligations, provided that37 at the time of investment such obligations, or the obligations held by any such unit38 investment trust or the obligations held or to be acquired by a ny such mutual fund, are39 limited to obligations which are rated within one of the top tw o rating categories of any40 nationally recognized rating service or any rating service recognized by the commissioner41 of banking and finance, and no others, or to securities lending transactions involving42 securities of the type described in this subsection; bonds, not es, warrants, and other43 S. B. 178 - 2 - 25 LC 56 0310 securities not in default which are the direct obligations of the government of any foreign44 country which the International Monetary Fund lists as an industrialized country and for45 which the full faith and credit of such government has been ple dged for the payment of46 principal and interest, provided that such securities are liste d as investment grade by a47 nationally recognized rating agency; Bitcoin, as such term is d efined in Code Section48 50-17-68; or obligations issued, assumed, or guaranteed by the Internati onal Bank for49 Reconstruction and Development or the International Financial Corporation, provided that50 such securities are listed as investment grade by a nationally recognized rating agency;51 provided, however, that interest earned on the investment of motor fuel tax revenues shall52 be defined as motor fuel tax revenues and shall be appropriated in conformity with and53 pursuant to Article III, Section IX, Paragraph VI(b) of the Con stitution of Georgia. The54 board may also permit the state treasurer to lend any of the securities of the type identified55 in this subsection subject to the limitations of subsection (b) of Code Section 50-5A-7 and56 this chapter."57 SECTION 2.58 Said article is further amended by adding a new Code section to read as follows:59 "50-17-68.60 (a) As used in this Code section, the term:61 (1) 'Bitcoin' means the decentralized digital currency hosted on the public blockchain by62 the same name.63 (2) 'Exchange traded product' means any financial instrument t hat is approved by the64 Securities and Exchange Commission or the Commodity Futures Trading Commission65 that is traded on a federally regulated exchange and derives its value from an underlying66 pool of assets, such as stocks, bonds, commodities, or indexes.67 (3) 'Private key' means a unique element of cryptographic data used for signing68 transactions on a blockchain.69 S. B. 178 - 3 - 25 LC 56 0310 (4) 'Qualified custodian' means any federal or state chartered bank, trust company, or70 special purpose depository institution or a company regulated by the state which holds71 digital assets for an approved exchange traded product.72 (5) 'Secure custody solution' means a technological product or blended product and73 service which has all of the following characteristics:74 (A) The private keys that secure digital assets are exclusively known by and accessible75 by the government entity;76 (B) The private keys that secure digital assets are exclusivel y contained within an77 encrypted environment and accessible only via end-to-end encrypted channels;78 (C) The private keys that secure digital assets are never contained in, accessible by, or79 controllable via a smartphone;80 (D) Any hardware that contains the private keys that secure digital assets is maintained81 in at least two geographically diversified secure data centers;82 (E) The secure custody solution enforces a multiparty governan ce structure for83 authorizing transactions, enforces user access controls, and lo gs all user initiated84 actions;85 (F) The provider of the secure custody solution has implemented a disaster recovery86 protocol that ensures customer access to assets in the event th e provider becomes87 unavailable; and88 (G) The secure custody solution undergoes regular code audits and penetration testing89 from audit firms.90 (b) The board shall not permit the state treasurer to invest more than 5 percent of any fund91 into Bitcoin.92 (c) Any digital assets acquired pursuant to this chapter shall be held:93 (1) Directly through the use of a secure custody solution;94 (2) On behalf of the state by a qualified custodian; or95 S. B. 178 - 4 - 25 LC 56 0310 (3) In the form of an exchange traded product issued by a regi stered investment96 company.97 (d) The board may permit the state treasurer to loan digital a ssets, so long as such loan98 does not increase the financial risk to the state."99 SECTION 3.100 All laws and parts of laws in conflict with this Act are repealed.101 S. B. 178 - 5 -