The Ohio House has modified a proposed cryptocurrency reserve fund to broaden its investment options beyond digital assets. Amendments allow for traditional investments like bonds and exchange-traded funds while renaming the fund and providing liability protections for officials. The changes aim to balance risk and potential returns for state funds.
In Columbus, Ohio, the Ohio House is advancing a measure originally designed as the Ohio Strategic Cryptocurrency Reserve, but recent amendments have expanded its scope significantly. One key change, approved recently, permits the state Treasurer to invest in a wider array of assets, including traditional options such as bonds or exchange-traded funds, alongside cryptocurrencies. The fund's name has been altered to the Ohio Strategic Reserve Fund, removing the specific reference to cryptocurrency.
Another amendment, passed on Tuesday, offers liability protections to officials managing the fund against losses from poor investment performance. During a hearing, state Rep. Ismael Mohamed, D-Columbus, raised concerns about the extent of these protections. “Does that also apply to acts of negligence or mismanagement?” he asked. “I certainly understand that the goal of this amendment, but I wanted to make sure does it apply to that degree to actual acts of negligence or impropriety?”
The bill's sponsor, state Rep. Steve Demetriou, R-Bainbridge Twp., responded that the protections likely do not cover negligence, emphasizing protection for state employees acting in good faith from market fluctuations. “Those employees of that agency or office are not liable for fluctuations in the market,” he said, adding that he would follow up to clarify.
Originally, the proposal allowed the Treasurer to discretionarily invest up to 10% of uncommitted funds from the general fund, rainy-day fund, and lottery trust in digital assets with a market capitalization of at least $750 billion—currently only Bitcoin qualifies, with a $2.4 trillion market cap as of October 7. Ethereum trails at about $538 billion. The Treasurer's office, as explained by Zach Prouty in May testimony, prioritizes safety, liquidity, and earnings for state investments, which generated $2 billion in interest over the last two fiscal years.
A May amendment directs 5% of interest from mortgage insurance and unclaimed funds, plus 10% from the rainy-day fund, to support the new reserve. Prouty noted that such a revenue stream would provide consistent cash flow without disrupting budgeted dollars, aligning with the goal of long-term holds rather than short-term trading.