Yesterday, decidedly positive news arrived from the State of Arizona regarding Bitcoin ETFs.
Indeed, some senators have presented a resolution to ask the State pension system to consider adding Bitcoin ETFs to their portfolio.
Summary
Bitcoin ETF news: The resolution presented to the Arizona Senate
The HCR 2041 resolution was introduced yesterday in the Arizona Senate by Senators Smith, Biasiucci, Carbone, Carter, Chaplik, Dunn, Gillette, Gress, Heap, Hendrix, Jones, Kolodin, Marshall, Martinez, Montenegro, Parker B, Payne, and Wadsack.
The Senate of the State of Arizona is made up of 30 Republican majority senators. The senators who introduced resolution HCR 2041 belong to the majority.
The resolution is expressly titled “supporting the potential use of digital assets by the arizona state retirement system and the public safety personnel retirement system”, and directly refers to Bitcoin ETFs.
From a technical point of view, it simply asks that members of the legislature encourage the Arizona State Retirement System (ASRS) and the public safety personnel retirement system to consider the implications of including a digital asset ETF in their investment portfolios.
He also asks for careful monitoring of developments in Bitcoin ETFs and other ETFs on digital assets, and for a report on the feasibility, risks, and potential benefits of directing a portion of the state pension system funds to digital asset ETFs.
In other words, Arizona senators are asking the state pension system to consider investing in Bitcoin ETFs Bitcoin.
The election campaign
It must be remembered, however, that the USA is in the midst of an election campaign in this 2024, as the presidential elections will be held in November.
It is now clear that cryptocurrencies will be an integral part of the electoral campaign, and since HCR 2041 resolution effectively only asks to evaluate potential future ASRS investments in new Bitcoin ETFs, this could also be primarily a propaganda initiative.
However, there is a concrete truth behind this initiative, since Bitcoin is effectively a financial tool that can prove useful for pension funds.
Indeed, pension funds accumulate fiat money over time thanks to workers’ contributions, but then they must hold them in reserve for a long time before giving them back to the workers when they retire.
Due to inflation, pension funds have the difficult task of avoiding or minimizing the loss of real value of the funds they hold on behalf of the workers who contribute to them, and they do so by investing that money instead of just keeping it safe.
Since Bitcoin is a financial tool that allows protection against excessively expansive monetary policies of central banks that produce excessive inflation, it is actually logical that pension funds consider it as a potential investment.
However, being a risk-on asset, unlike gold for example, it is necessary that they do their evaluations well, and obviously consider the possibility of investing only a small portion of the funds they manage.
Therefore, although the resolution HCR 2041 presented by the Arizona senators may primarily be a propaganda initiative, it could have a solid foundation of truth.
Bitcoin ETFs
However, it is not a coincidence that the resolution explicitly mentions Bitcoin ETFs, nor that it was presented only in 2024.
For purely legal reasons, pension funds cannot invest their funds as they please.
They have limitations that are in place to prevent someone from using those funds to speculate on high-risk assets, and among these is the one that prevents them from investing in unregulated financial products.
Cryptocurrencies in the USA are still unregulated financial assets, while in the EU, for example, they are now regulated, but ETFs are instead fully regulated assets. In fact, pension funds already invest widely in ETFs.
Therefore, the landing of BTC ETFs on US markets finally makes it possible for pension funds to invest a portion of their funds in Bitcoin, albeit indirectly.
It should be noted that Bitcoin spot ETFs are directly and fully collateralized in BTC, so buying shares of a Bitcoin spot ETF on the market is equivalent to buying BTC.
This also means that such purchases have an effect on the price of Bitcoin, albeit only indirectly.
The words of Arizona senators hit the latest news on Bitcoin spot ETFs
One thing that can surprise those who do not follow the evolution of Bitcoin is what the Arizona senators wrote in resolution HCR 2041.
In fact, they have put in black and white on an official state political document that they believe the financial investment landscape is rapidly evolving, thanks to the advent of digital assets such as Bitcoin.
After adding that digital assets like Bitcoin have gained significant interest in the world of ETFs, they write that there are already large pension funds that have invested in Bitcoin ETFs.
Furthermore, they explicitly specify that the central government of the USA holds about 200,000 BTC, making it clear how US state entities have the full right to hold Bitcoin.
Obviously, they also highlighted the risks of such an investment, after all the state pension system has the primary obligation to try to at least maintain the real value of the funds it manages, without generating losses.
If after the elections this initiative were to go ahead, it could pave the way for Bitcoin to enter the pension fund sector, opening a new era for Bitcoin itself.
