A House committee voted to report House Bill 1203 out ‘‘do pass,’’ approving language that would allow qualified fund managers to invest state funds in certain digital assets under defined limits and safeguards.

Sponsor Representative Cody Maynard said the measure ‘‘will allow our fund managers and make sure that they cannot allocate more than 10% of our portfolio’’ to eligible digital assets. The bill sets a high-market-cap threshold for eligible assets: Maynard told the committee the bill requires any digital asset considered for investment to have a market capitalization of at least $500,000,000,000 (five hundred billion dollars), a threshold intended to restrict purchases to large, liquid assets.

Members questioned security and custody. Leader Mintz asked how the state could be assured that digital assets would be secure; Maynard said the bill allows several custody options, including exchange-traded products (ETPs), qualified custodians, or self-custody under strict guidelines. Andy N. Ferguson, chief policy advisor in the State Treasurer’s office, told the committee the treasurer’s office is statutorily restricted today and manages liquidity and bonds rather than daily market instruments.

Lawmakers debated volatility and portfolio management. Maynard argued diversification benefits and cited historical returns for bitcoin, while members raised concerns about pump-and-dump schemes and whether a $500 billion market-cap threshold and a 10% initial allocation cap are adequate safeguards. Representative Lappack asked whether the cap applies at the time of purchase; the sponsor said the bill limits allocation ‘‘at the time of the investment’’ so managers would not be forced to sell following price appreciation.

The committee approved the bill by a 12-2 vote. Committee discussion noted the bill is permissive — it does not compel fund managers to purchase digital assets — and that implementation choices and rebalancing policies would remain with the investing entities.