CS/CS/HB 1039 full text · Session Watch

1 A bill to be entitled

2 An act relating to the establishment and

3 administration of a state cryptocurrency reserve;

4 creating s. 215.987, F.S.; providing definitions;

5 establishing the Florida Strategic Cryptocurrency

6 Reserve Fund as a special fund assigned to the State

7 Board of Administration; providing the objective of

8 the reserve; providing for the custody,

9 administration, and management of the reserve;

10 providing sources of the reserve; authorizing the

11 Legislature to appropriate funds for deposit to the

12 credit of the reserve for specified purposes;

13 authorizing the board to pay certain costs using the

14 cryptocurrency in the reserve or the net proceed from

15 the sale of cryptocurrency in the reserve; authorizing

16 transfer of the reserve money to the State Treasury

17 under certain circumstances; authorizing the board to

18 dispose of certain cryptocurrency received by the

19 reserve; providing requirements for cryptocurrency to

20 be purchased for the reserve; authorizing contracts

21 with third parties for the administration or

22 management of the reserve; authorizing the board to

23 use derivatives under certain circumstances;

24 authorizing contracts with certified public

25 accountants for independent audits; establishing the

26 Florida Strategic Cryptocurrency Reserve Fund Advisory

27 Committee within the board; providing for committee

28 membership; providing duties and terms of committee

29 members; providing construction; requiring the board

30 to adopt rules; amending s. 215.44, F.S.; requiring

31 the board to provide to the Legislature certain

32 information relating to the reserve; providing an

33 effective date.

35 WHEREAS, cryptocurrencies are assets with strategic

36 potential for enhancing this state's financial resilience and

37 positioning this state for the future digital economy, and

38 WHEREAS, cryptocurrencies can serve as a hedge against

39 inflation and economic volatility, and

40 WHEREAS, the establishment of a cryptocurrency reserve

41 serves the public purpose of providing enhanced financial

42 security to residents of this state, NOW, THEREFORE,

44 Be It Enacted by the Legislature of the State of Florida:

46 Section 1. Section 215.987, Florida Statutes, is created

47 to read:

48 215.987 State cryptocurrency reserve fund.—

49 (1) DEFINITIONS.—As used in this section, the term:

50 (a) "Airdrop" means a gratuitous distribution of

51 cryptocurrency to users of a blockchain or protocol, generally

52 made in a broad, equitable, and nondiscretionary manner.

53 (b) "Blockchain" means a mathematically secured,

54 chronological, decentralized, distributed, and digital ledger or

55 database that consists of records of transactions that cannot be

56 altered retroactively.

57 (c) "Board" means the State Board of Administration.

58 (d) "Committee" means the Florida Strategic Cryptocurrency

59 Reserve Fund Advisory Committee established in this section.

60 (e) "Cryptocurrency" means a virtual currency that is not

61 issued by any central authority, is designed to function as a

62 medium of exchange, and uses encryption technology to regulate

63 the generation of units of currency, to verify fund transfers,

64 and to prevent counterfeiting.

65 (f) "Distributed ledger" means technology in which data is

66 shared across a network that creates a public digital ledger of

67 verified transactions or information among network participants

68 and cryptography is used to link the data to maintain the

69 integrity of the public ledger and execute other functions.

70 (g) "Fork" means a change to the protocol of a distributed

71 ledger system which creates a separate ledger, which may result

72 in a new cryptocurrency that shares a common transaction history

73 with the previous cryptocurrency up to the point of change.

74 (h) "Governmental entity" has the same meaning as in s.

75 215.986(1).

76 (i) "Private key" means a unique element of cryptographic

77 data used for signing transactions on blockchain.

78 (j) "Qualified custodian" means a state or federally

79 chartered financial institution or other entity regulated by

80 this state which is authorized to have custody of virtual

81 currencies on behalf of its clients.

82 (k) "Qualified liquidity provider" means an entity that

83 meets all of the following requirements:

84 1. Is licensed or regulated under applicable federal or

85 state law.

86 2. Maintains audited financial statements prepared by a

87 regulated auditor.

88 3. Has at least 5 years of experience trading in the

89 digital assets industry.

90 4. Maintains an office and has registered principal in

91 this state.

92 5. Has certified in a manner prescribed by the board that

93 the provider meets the requirements of subparagraphs 1.-4.

94 (l) "Reserve" means the Florida Strategic Cryptocurrency

95 Reserve Fund established in this section.

96 (m) "Secure custody solution" means a technological

97 product or blended product and service meeting all of the

98 following criteria:

99 1. The cryptographic private keys are:

100 a. Exclusively known by and accessible to the governmental

101 entity or the qualified custodian.

102 b. Contained within an encrypted, hardware-secured

103 environment and used only to sign and authorize cryptocurrency

104 transactions through end-to-end encrypted channels.

105 c. Never stored on or accessible through a smartphone.

106 2. The hardware containing the cryptographic private keys

107 is maintained in a secure data center. As used in this

108 subparagraph, the term "secure data center" means a physical

109 facility that maintains third-party certifications, uses

110 certified cryptographic hardware, enforces physical and

111 environmental security, and ensures logical isolation.

112 3. A multiparty governance structure for authorizing

113 transactions is implemented, user access control is enforced,

114 and all user-initiated actions are logged. A smartphone may be

115 used, but only to authenticate authorized users of the secure

116 custody solution, including through biometric authentication.

117 4. The provider of the technological product or blended

118 product and service has implemented a disaster recovery protocol

119 ensuring state access to assets if the provider becomes

120 unavailable.

121 5. The technological product or blended product and

122 service undergoes regular code audits and penetration testing,

123 with identified vulnerabilities promptly addressed.

124 (2) ESTABLISHMENT; ADMINISTRATION.—

125 (a) The Florida Strategic Cryptocurrency Reserve Fund is

126 established as a special fund assigned to the board. The

127 objective of the reserve is to grow the reserve as much as

128 possible to ensure the long-term financial sovereignty of this

129 state. The board has custody of and shall administer and manage

130 the reserve. The reserve consists of:

131 1. Money transferred or deposited to the credit of the

132 reserve by legislative appropriation.

133 2. Revenue that the Legislature by general law dedicates

134 for deposit to the credit of the reserve.

135 3. Cryptocurrency purchased using money in or received by

136 the reserve, including:

137 a. Cryptocurrency derived from the fork of a distributed

138 ledger, the retention of which has been approved by the board;

139 or

140 b. Cryptocurrency distributed pursuant to an airdrop to

141 this state's cryptocurrency addresses, the retention of which

142 has been approved by the board.

143 4. Investment earnings and interest or rewards earned on

144 assets in the reserve.

145 (b) To administer and manage the reserve, the board may

146 acquire, exchange, sell, supervise, manage, or retain authorized

147 investments that a prudent investor exercising reasonable care,

148 skill, and caution would acquire, exchange, sell, supervise,

149 manage, or retain in light of the objective of the reserve,

150 taking into consideration the investment of all the assets of

151 the reserve rather than a single investment.

152 (c) The Legislature may appropriate funds for deposit to

153 the credit of the reserve for the purposes of:

154 1. Investing in cryptocurrency.

155 2. Administering and managing the reserve.

156 (d) The board may spend cryptocurrency in the reserve or

157 use the net proceed from the sale of cryptocurrency in the

158 reserve to pay the reasonable costs associated with

159 administering and managing the reserve. Costs and fees of the

160 board for investment services shall be deducted from the

161 reserve.

162 (e) The board may transfer money in the reserve to the

163 State Treasury only when authorized by the Legislature in the

164 General Appropriations Act or other law.

165 (f) Cryptocurrency received by the reserve which is not

166 compliant with applicable federal or state law may be disposed

167 of by the board in accordance with applicable law.

168 (3) MARKET CAPITALIZATION REQUIREMENT.—To be eligible to

169 be purchased for the reserve, a cryptocurrency must have an

170 average market capitalization of at least $100 billion over the

171 most recent 12-month period.

172 (4) THIRD-PARTY CONTRACTS AND PERMISSIBLE TRANSACTIONS;

173 AUDITS.—

174 (a) The board may contract with one or more third-party

175 entities for the administration or management of the reserve,

176 including:

177 1. A technology provider of a secure custody solution.

178 2. A qualified custodian that uses a secure custody

179 solution.

180 3. A qualified liquidity provider to facilitate the

181 purchase and sale of assets in the reserve.

182 (b) If the board determines it is in the best interest of

183 the reserve, the board may use derivatives.

184 (c) The board may contract with a certified public

185 accountant to perform an independent audit of the reserve.

186 (5) FLORIDA STRATEGIC CRYPTOCURRENCY RESERVE FUND ADVISORY

187 COMMITTEE.—

188 (a) There is established the Florida Strategic

189 Cryptocurrency Reserve Fund Advisory Committee within the board.

190 (b) The committee shall be composed of the following five

191 members as a resource to the board of trustees of the board,

192 subject to confirmation by the Senate, as follows:

193 1. The executive director of the board, who shall serve as

194 chair.

195 2. Three members appointed by the board with expertise in

196 cryptocurrency investments.

197 3. One member appointed by the board with expertise in

198 digital asset security.

199 (c) The committee shall advise the board regarding the

200 administration and management of the reserve, including:

201 1. Recommendations for valuing assets in the reserve.

202 2. The establishment of prudent investment policies

203 relating to the investment objectives of and asset allocation in

204 the reserve.

205 3. Recommendations for the establishment of prudent

206 custody and security policies for the reserve.

207 (d) A member of the committee is not entitled to receive

208 compensation for service on the committee.

209 (e) Appointed members shall serve for 4-year terms. A

210 vacancy shall be filled for the remainder of the unexpired term

211 in the same manner as the original appointment.

212 (6) NO PRIVATE CAUSE OF ACTION.—This section does not

213 create a private cause of action related to compliance with the

214 requirements of this section.

215 (7) RULEMAKING.—The board shall adopt rules as necessary

216 to administer the Florida Strategic Cryptocurrency Reserve Fund.

217 Section 2. Paragraph (g) is added to subsection (5) of

218 section 215.44, Florida Statutes, to read:

219 215.44 Board of Administration; powers and duties in

220 relation to investment of trust funds.—

221 (5) On or before January 1 of each year, the board shall

222 provide to the Legislature a report including the following

223 items for each fund which, by law, has been entrusted to the

224 board for investment:

225 (g) With respect to the Florida Strategic Cryptocurrency

226 Reserve Fund, the following information:

227 1. The amount of cryptocurrency held in the reserve on the

228 last day of the preceding fiscal year.

229 2. An estimate of the monetary value of the cryptocurrency

230 held in the reserve on the last day of the preceding fiscal

231 year.

232 3. Any changes in the amount and estimated monetary value

233 of cryptocurrency in the reserve during the period the

234 cryptocurrency has been held in the reserve, disaggregated by

235 the cryptocurrency type.

236 4. A description of the actions taken by the board to

237 administer and manage the reserve during the preceding fiscal

238 year.

239 Section 3. This act shall take effect January 1, 2027.