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A BILL to amend the Code of Virginia by adding in Chapter 18 of Title 2.2 an article numbered 6, consisting of sections numbered
2.2-1844
through
2.2-1848
, relating to Commonwealth Strategic Cryptocurrency Reserve Fund established; report.
Be it enacted by the General Assembly of Virginia:
1. That the Code of Virginia is amended by adding in Chapter 18 of Title 2.2 an article numbered 6, consisting of sections numbered
2.2-1844
through
2.2-1848
, as follows:
Article
6
.
Commonwealth Strategic
Cryptocurrency
Reserve
Fund
.
§
2.2-1844
. Definitions.
As used in this article, unless the context requires a different meaning:
"Airdrop" means
a gratuitous distribution
of cryptocurrency to persons
that
hold cryptocurrency, generally made in a broad, equitable, and nondiscretionary
manner
.
"Bitcoin" means
a type of decentralized cryptocurrency created by a peer-to-peer network that operates independently of any central authority or bank.
"Cold storage" means
a method of storing private keys required to engage in transactions involving cryptocurrency that has a nexus to a secure phy
sical location, is protected from unauthorized access, and is isolated from any internet network connections.
"
Cryptocurrency" means
a type of virtual currency that utilizes cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.
"Fork" means
a change to the consensus mechanism
of a distributed ledger that creates a separate ledger,
and that
may result in a new cryptocurrency that shares a common transaction history with the previous cryptocurrency up to the point of the change.
"Qualified custodian" means
a state
-chartered
or federally chartered financial institution or other entity regulated by th
e
Commonwealth
that has custody of a virtual currency.
"Qualified liquidity provider" means an entity that (i) is licensed or regulated under applicable federal or state law
,
(ii) maintains audited financial statements prepared by a regulated auditor
,
(iii) has at least five years of experience trading in the digital assets industry
,
and
(iv) maintains an office and has a registered principal in the Commonwealth.
"Reserve Fund" means the Commonwealth Strategic Cryptocurrency Reserve Fund
established pursuant to
§
2.2-
1845
.
"Virtual currency" means
an electronic representation of value intended to be used as a medium of exchange, unit of account, or store of value. "Virtual currency" does not exist in a physical form; it is intangible and exists only on the blockchain or distributed ledger associated with a particular virtual currency.
§
2.2-184
5. Commonwealth Strategic Cryptocurrency Reserve Fund established
; administration
.
A.
There is hereby created in the state treasury a special nonreverting fund to be known as the
Commonwealth Strategic Cryptocurrency Reserve Fund
(the Reserve Fund)
.
The
Reserve
Fund shall be established on the books of the Comptroller. All funds appropriated for such purpose
, all
bitcoin and other cryptocurrency purchased using money in or received by the Reserve Fund, including any cryptocurrency derived from the fork of a distributed ledger or distributed pursuant to an airdrop to the Commonwealth's cryptocurrency addresses,
and any gifts, donations, grants, bequests, and other funds received on its behalf shall be paid into the state treasury and credited to the
Reserve
Fund.
Interest earned on moneys in the
Reserve
Fund shall remain in the
Reserve
Fund and be credited to it. Any moneys remaining in the
Reserve
Fund, including interest thereon, at the end of each fiscal year shall not revert to the general fund but shall remain in the
Reserve
Fund.
Mo
neys
in the
Reserve
Fund shall be used solely for the purposes of
(i)
investing in bitcoin or other cryptocurrency
,
notwithstanding the provisions of Chapter 45 (§
2.2-4500
et seq.),
and
(ii)
administering and managing the Reserve
Fund
. Expenditures and disbursements from the
Reserve
Fund shall be made by the State Treasurer
.
B. In
h
is administration and management of the Reserve Fund, the
State Treasurer
shall have the full power to invest, reinvest, and manage the assets of the Reserve Fund
with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. The
State Treasurer
shall also diversify such investments so as to minimize the risk of large losses unless under the circumstances it is clearly prudent not to do so,
taking into consideration the investment of all assets of the
Reserve Fund
rather than a single i
n
vestment.
Bitcoin or other cryptocurrency purchased using money in the Reserve Fund must have an average market capitalization of at least $500 billion over the most recent 24-month period.
If the
State Treasurer
determines it is in the best interest of the Reserve Fund, the
State Treasurer
may use derivatives.
§
2.2-184
6
. Third
-
party contracts and permissible transactions; audits.
A. The
State Treasurer
may contract with one or more third-party entities for the administration or management of the
Reserve Fund
, including contracting with
(i) a qualified custodian
t
h
at
employs secure custodial technologies, including cold storage, and (ii) a qualified liquidity provider to facilitate the purchase and management of assets in the
Reserve Fund
.
B. The
State Treasurer
may contract with a certified public accountant to perform an independent audit of the
Reserve Fund
.
§
2.2-184
7
.
Commonwealth Strategic
Cryptocurrency
Reserve
Fund
Advisory Committee.
A
.
The Commonwealth Strategic Cryptocurrency Reserve Advisory Committee (the Committee) is established as an advisory committee in the exe
cutive branch of state government.
The Committee shall
have a total membership
of
five members
. Members shall be
appointed as follows:
1. One member of the
Virginia Treasury Board,
appointed by the
S
tate Treasurer
;
and
2.
Three members with expertise in cryptocurrency investments
, appointed by the
State Treasurer
.
The
State Treasurer
shall serve ex officio.
B. The Committee shall advise the
State Treasurer
regarding the administration and management of the
Reserve Fund
, including (i) recommendations for valuing assets in the
Reserve Fund
and (ii) the establishme
nt of prudent investment policies relating to the investment objectives of and asset allocation in the
Reserve Fund
.
C. No member of the Committee shall receive compensation or reimbursement for expenses incurred in the performance of official duties as a member of the Committee.
Members of the Committee appointed by the
State Tre
asurer
serve at the will of the
State Treasurer
.
§
2.2-18
4
8
. Biennial report.
The
State Treasurer
shall publish
on his website and submit to the General Assembly a report
no later than December 31 of each even-numbered year. Such report shall include
(i) the amount of
the
bitcoin and other cryptocurrency held in the
Reserve Fund
on the last day
of the preceding state fiscal biennium
;
(ii) an estimate of the monetary value of the bitcoin and other cryptocurrency held in the
Reserve Fund
on the last day of the preceding fiscal biennium
;
(iii) the changes, if any, in the amount and estimated monetary value of
the
bitcoin and other cryptocurrency in the
Reserve Fund
during the period
such bitcoin and
cryptocurrency
was held
in the
Reserve Fund
, disaggregated by cryptocurrency type
;
and (iv) a description of the actions taken by the
State Treasurer
to administer and manage the
Reserve Fund
during the preceding fiscal biennium
.