This year, lawmakers pushed to make Utah the first in the nation in adopting innovative blockchain technology legislation. But, a pivotal item didn’t make it through: giving the treasurer the ability to invest rainy day funds in cryptocurrency on behalf of the state.

After a tight 38-34 vote on the House floor in early February, HB230, titled Blockchain and Digital Innovation Amendments, underwent a substantial transformation. It was eventually approved by the Legislature before the conclusion of the session that ended Friday, but as a heavily diluted version of the original.

The version of the bill that’s making its way to Governor Spencer Cox’s desk for consideration ultimately establishes that state and local governments can’t stop Utahns from using digital assets as a form of payment for legal goods or services, or simply owning them.

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The bill also blocks municipalities from imposing sound or zoning restrictions on digital asset mining businesses in industrial zones.

Representative Jordan Teuscher, R-South Jordan, who sponsored the bill, told lawmakers he had worked with state treasurer Marlo Oaks on the proposal to ensure it was narrowly tailored, and that potential investments were prudent.

“(It) just opens up another asset class for our state treasurer to invest in if he believes it’s in the state’s best interest,” Teuscher said in late February, before the bill was watered down.

That provision failed in the Senate. But, if it had passed, it would have allowed Oaks to use a portion of the state’s rainy day funds to invest in virtual currency, cryptocurrencies, and other electronic assets if it had a market capitalization, or total value of shares, of over $500 billion on average over the previous 12 months, or if the currency is tied to the U.S. dollar.

That restriction, Oaks told the Senate Revenue and Taxation Committee in February, was to avoid buying into smaller, riskier and more speculative currencies.

Utah’s rainy day funds are typically used when there’s an economic downturn, Oaks told senators in a committee meeting in February. Currently, the state has most of those funds invested in the Public Treasurer’s Investment Fund, which prioritizes liquidity and safety over long-term growth.

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“We don’t have highly volatile or speculative assets in the rainy day funds like equities or long-term bonds,” Oaks said. “And so really, the Public Treasurer’s Investment Fund acts like a money market fund with daily liquidity.”

Utah does have the ability to invest in long-term investment portfolios, including cryptocurrency. But, the treasurer can’t specifically use rainy day funds for this endeavor, for which Oaks reiterated, “safety is paramount.”

During the bill hearings, lawmakers expressed concern over whether this allowance would put undue pressure on the treasurer to invest in certain types of cryptocurrencies.

“I do think it can potentially draw undue pressure on those particular kinds of assets,” Oaks responded.

Also, Oaks added, the restraints established by the bill weren’t necessarily enough to dissipate those pressures.

“Really the question I ask is, ‘is this an appropriate investment in these kinds of portfolios?’”