As Introduced
135th General Assembly
Regular Session H. B. No. 713
2023-2024
Representative Demetriou
A BILL
To amend sections 145.11, 742.11, 3307.15, 3309.15, 1
3770.06, and 5505.06 and to enact section 2
135.146 of the Revised Code to address 3
investments in digital assets by the state 4
retirement systems, to permit the Treasurer of 5
State to invest certain interim funds in digital 6
assets, and to name this act the Ohio Strategic 7
Cryptocurrency Reserve Act. 8
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 145.11, 742.11, 3307.15, 3309.15, 9
3770.06, and 5505.06 be amended and section 135.146 of the 10
Revised Code be enacted to read as follows: 11
Sec. 135.146. (A) As used in this section: 12
(1) "Digital asset" means a virtual currency, 13
cryptocurrency, native electronic asset, stablecoin, non- 14
fungible token, or any other digital-only asset that confers 15
economic, proprietary, or access rights or powers. 16
(2) "Exchange-traded product" means any financial 17
instrument that is approved by any of the following: 18
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(a) The securities and exchange commission, as defined in 19
section 1701.01 of the Revised Code; 20
(b) The commodity futures trading commission created under 21
the "Commodity Exchange Act," 7 U.S.C. 1 et seq.; 22
(c) The division of securities in the department of 23
commerce. 24
(3) "Private key" means a unique element of cryptographic 25
data used for signing transactions on a blockchain that is known 26
to the owner of the unique element. 27
(4) "Secure custody solution" means a technological 28
product or blended product and service that has all of the 29
following characteristics: 30
(a) The private keys that secure digital assets are 31
exclusively known and accessible by the government entity. 32
(b) The private keys that secure digital assets are 33
exclusively contained within an encrypted environment and are 34
accessible only via end-to-end encrypted channels. 35
(c) The private keys that secure digital assets are never 36
contained by, accessible by, or controllable via a smartphone. 37
(d) Any hardware that contains the private keys that 38
secure digital assets is maintained in at least two 39
geographically diversified specially designated secure data 40
centers. 41
(e) The secure custody solution enforces a multi-party 42
governance structure for authorizing transactions, enforces user 43
access controls, and logs all user-initiated actions. 44
(f) The provider of the secure custody solution has 45
H. B. No. 713 Page 3
As Introduced
implemented a disaster recovery protocol that ensures customer 46
access to digital assets in the event the provider becomes 47
unavailable. 48
(g) The secure custody solution undergoes regular code 49
audits and penetration testing from audit firms, and any 50
identified vulnerabilities are promptly remedied. 51
(5) "Qualified custodian" means any federal or state- 52
chartered bank, trust company, or a company regulated by the 53
state that has custody of a digital asset for an approved 54
exchange-traded product. 55
(B) Subject to the requirements of this section, the 56
treasurer of state may invest interim moneys from any of the 57
following funds in digital assets: 58
(1) The general revenue fund; 59
(2) The budget stabilization fund created under section 60
131.43 of the Revised Code; 61
(3) The deferred prizes trust fund created under division 62
(C) of section 3770.06 of the Revised Code. 63
(C) The investments in digital assets from any of the 64
funds described in division (B)(1) to (3) of this section shall 65
not exceed, in the aggregate, ten per cent of the balance of the 66
fund at the time of the investment. 67
(D) Any digital asset acquired as an investment under this 68
section must be held in one of the following ways: 69
(1) Directly by the treasurer of state through the use of 70
a secure custody solution; 71
(2) On behalf of the state by a qualified custodian; 72
H. B. No. 713 Page 4
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(3) In the form of an exchange-traded product issued by an 73
investment company registered under Chapter 1707. of the Revised 74
Code. 75
(E) The treasurer of state may loan a digital asset 76
acquired as an investment under this section to bring further 77
returns to the applicable fund if the treasurer of state 78
determines that the loan does not increase the financial risk of 79
the investment. 80
(F) The treasurer of state may adopt rules for the 81
purposes of administering this section. 82
Sec. 145.11. (A) The members of the public employees 83
retirement board shall be the trustees of the funds created by 84
section 145.23 of the Revised Code. The board shall have full 85
power to invest the funds. The board and other fiduciaries shall 86
discharge their duties with respect to the funds solely in the 87
interest of the participants and beneficiaries; for the 88
exclusive purpose of providing benefits to participants and 89
their beneficiaries and defraying reasonable expenses of 90
administering the public employees retirement system; with care, 91
skill, prudence, and diligence under the circumstances then 92
prevailing that a prudent person acting in a like capacity and 93
familiar with these matters would use in the conduct of an 94
enterprise of a like character and with like aims; and by 95
diversifying the investments of the system so as to minimize the 96
risk of large losses, unless under the circumstances it is 97
clearly prudent not to do so. 98
Nothing in this section shall be construed to prohibit the 99
board from investing in a digital asset as defined in section 100
135.146 of the Revised Code. 101
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To facilitate investment of the funds, the board may 102
establish a partnership, trust, limited liability company, 103
corporation, including a corporation exempt from taxation under 104
the Internal Revenue Code, 100 Stat. 2085, 26 U.S.C. 1, as 105
amended, or any other legal entity authorized to transact 106
business in this state. 107
(B) In exercising its fiduciary responsibility with 108
respect to the investment of the funds, it shall be the intent 109
of the board to give consideration to investments that enhance 110
the general welfare of the state and its citizens where the 111
investments offer quality, return, and safety comparable to 112
other investments currently available to the board. In 113
fulfilling this intent, equal consideration shall also be given 114
to investments otherwise qualifying under this section that 115
involve minority owned and controlled firms and firms owned and 116
controlled by women, either alone or in joint venture with other 117
firms. 118
The board shall adopt, in regular meeting, policies, 119
objectives, or criteria for the operation of the investment 120
program that include asset allocation targets and ranges, risk 121
factors, asset class benchmarks, time horizons, total return 122
objectives, and performance evaluation guidelines. In adopting 123
policies and criteria for the selection of agents with whom the 124
board may contract for the administration of the funds, the 125
board shall comply with sections 145.114 and 145.116 of the 126
Revised Code and shall also give equal consideration to minority 127
owned and controlled firms, firms owned and controlled by women, 128
and ventures involving minority owned and controlled firms and 129
firms owned and controlled by women that otherwise meet the 130
policies and criteria established by the board. Amendments and 131
additions to the policies and criteria shall be adopted in 132
H. B. No. 713 Page 6
As Introduced
regular meeting. The board shall publish its policies, 133
objectives, and criteria under this provision no less often than 134
annually and shall make copies available to interested parties. 135
When reporting on the performance of investments, the 136
board shall comply with the performance presentation standards 137
established by the association for investment management and 138
research. 139
(C) All investments shall be purchased at current market 140
prices and the evidences of title of the investments shall be 141
placed in the hands of the treasurer of state, who is hereby 142
designated as custodian thereof, or in the hands of the 143
treasurer of state's authorized agent. Evidences of title of the 144
investments so purchased may be deposited by the treasurer of 145
state for safekeeping with an authorized agent, selected by the 146
treasurer of state, who is a qualified trustee under section 147
135.18 of the Revised Code. The treasurer of state or the agent 148
shall collect the principal, dividends, distributions, and 149
interest thereon as they become due and payable and place them 150
when so collected into the custodial funds. 151
The treasurer of state shall pay for investments purchased 152
by the retirement board on receipt of written or electronic 153
instructions from the board or the board's designated agent 154
authorizing the purchase and pending receipt of the evidence of 155
title of the investment by the treasurer of state or the 156
treasurer of state's authorized agent. The board may sell 157
investments held by the board, and the treasurer of state or the 158
treasurer of state's authorized agent shall accept payment from 159
the purchaser and deliver evidence of title of the investment to 160
the purchaser on receipt of written or electronic instructions 161
from the board or the board's designated agent authorizing the 162
H. B. No. 713 Page 7
As Introduced
sale, and pending receipt of the moneys for the investments. The 163
amount received shall be placed in the custodial funds. The 164
board and the treasurer of state may enter into agreements to 165
establish procedures for the purchase and sale of investments 166
under this division and the custody of the investments. 167
(D) No purchase or sale of any investment shall be made 168
under this section except as authorized by the public employees 169
retirement board. 170
(E) Any statement of financial position distributed by the 171
board shall include the fair value, as of the statement date, of 172
all investments held by the board under this section. 173
Sec. 742.11. (A) The members of the board of trustees of 174
the Ohio police and fire pension fund shall be the trustees of 175
the funds created by section 742.59 of the Revised Code. The 176
board shall have full power to invest the funds. The board and 177
other fiduciaries shall discharge their duties with respect to 178
the funds solely in the interest of the participants and 179
beneficiaries; for the exclusive purpose of providing benefits 180
to participants and their beneficiaries and defraying reasonable 181
expenses of administering the Ohio police and fire pension fund; 182
with care, skill, prudence, and diligence under the 183
circumstances then prevailing that a prudent person acting in a 184
like capacity and familiar with these matters would use in the 185
conduct of an enterprise of a like character and with like aims; 186
and by diversifying the investments of the disability and 187
pension fund so as to minimize the risk of large losses, unless 188
under the circumstances it is clearly prudent not to do so. 189
Nothing in this section shall be construed to prohibit the 190
board from investing in a digital asset as defined in section 191
135.146 of the Revised Code. 192
H. B. No. 713 Page 8
As Introduced
To facilitate investment of the funds, the board may 193
establish a partnership, trust, limited liability company, 194
corporation, including a corporation exempt from taxation under 195
the Internal Revenue Code, 100 Stat. 2085, 26 U.S.C.A. 1, as 196
amended, or any other legal entity authorized to transact 197
business in this state. 198
(B) In exercising its fiduciary responsibility with 199
respect to the investment of the funds, it shall be the intent 200
of the board to give consideration to investments that enhance 201
the general welfare of the state and its citizens where the 202
investments offer quality, return, and safety comparable to 203
other investments currently available to the board. In 204
fulfilling this intent, equal consideration shall be given to 205
investments otherwise qualifying under this section that involve 206
minority owned and controlled firms and firms owned and 207
controlled by women, either alone or in joint venture with other 208
firms. 209
The board shall adopt, in regular meeting, policies, 210
objectives, or criteria for the operation of the investment 211
program that include asset allocation targets and ranges, risk 212
factors, asset class benchmarks, time horizons, total return 213
objectives, and performance evaluation guidelines. In adopting 214
policies and criteria for the selection of agents with whom the 215
board may contract for the administration of the funds, the 216
board shall comply with sections 742.114 and 742.116 of the 217
Revised Code and shall also give equal consideration to minority 218
owned and controlled firms, firms owned and controlled by women, 219
and joint ventures involving minority owned and controlled firms 220
and firms ow