States are moving to loosen restrictions on using public money for investing in cryptocurrency, but exchanging real dollars for digital assets is lagging behind the laws and the pro-crypto leanings of the Trump administration.
"We have not detected a wave of pension fund interest in crypto post-election specifically because this administration is pro-crypto," said Anthony Randazzo, executive director of the Equable Institute.
"Certainly not in the same way that state legislatures have been debating including crypto in their state reserves."
The Equable Institute is a bipartisan nonprofit organization that tracks public pension systems. The credit ratings agencies are also watching these developments.
According to an S&P Global Ratings report released last week "U.S. states and statewide pension plans are increasingly considering cryptocurrencies, particularly bitcoin, as a reserve investment."
Arizona allows reserve funds to be invested in crypto, while 16 others have opened discussions about allowing reserves to invest in crypto.
Nine states are discussing statewide pension plans investing in crypto.
Eight states do not allow crypto to be held in reserves and four states prohibit the use of crypto in their statewide pension trusts.
Betting on electronic currency with pensions or reserve funds does draw a distinction in strategies.
"The objectives of state reserves and pension funds are very different," said Randazzo. "The former is focused generally on managing the state's cash flow through variance in tax receipts, the latter is an attempt to generate long-term investment returns."
The crypto industry in general is moving towards being more credible under the Trump administration as the President signed an
The President's sons are investing in American Bitcoin, a newly launched bitcoin mining company formed by a merger with Hut 8.
The President and his sons made a crypto move during the campaign by launching World Liberty Financial that offers two types of cryptocurrency.
Trump's digital endorsement could spill over into how and where states invest their money.
"I think it is definitely possible that Republican controlled states will be more open to cryptocurrency in their state reserves given the politics of the White House," said Randazzo.
"There are a number of issues that Republican state leaders are following the federal government on, and this could certainly be an area that states take cues from the Treasury Department."
Wisconsin made news last year by being the first state to sink some of its pension funds into the crypto pool by utilizing an Exchange Traded Fund.
ETFs function like a mutual fund by offering investors a basket approach of mixed securities. The objective is to reduce risk and open opportunities.
"When the Bitcoin ETFs first started trading at the start of 2024, only the Wisconsin Retirement System jumped in as an early investor, and even then, with a tiny fraction of their portfolio," said Randazzo.
"WRS is generally a fully funded pension plan, so they have more resilience and capacity to take investment risks where poorly funded pension plans do not."
In February of this year WRS disclosed they have $321 million in the Bitcoin ETF, an increase from $164 million invested in May 2024.
Michigan has also made some bets on the same ETF using funds from the State of Michigan Retirement System.
"Lobbyists for the crypto industry have had some success convincing state legislators to pass laws authorizing crypto reserves but less success in convincing state pension boards to adopt crypto investments," said Randazzo.
"The fiduciaries for pension funds have to justify why investing in a volatile asset is the most prudent use of their assets."
