Michigan Advances Crypto Reserve Bill Allowing State Investments in Digital Assets
Michigan is moving forward with legislation that would allow the state to invest part of its budget in cryptocurrencies. House Bill 4087 advanced to a second reading on Thursday and has now been referred to the Committee on Government Operations.
The bill, introduced in February by Republican Representatives Bryan Posthumus and Ron Robinson, would permit the state treasurer to allocate up to 10% of funds from Michigan’s countercyclical and economic stabilization reserves into digital assets. The measure proposes the creation of a ”strategic crypto reserve” under specific investment and security guidelines.
Key Provisions of the Bill
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Up to 10% Investment in Crypto: The state treasurer would be authorized to invest up to 10% of certain reserve funds in cryptocurrencies.
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Approved Custody Methods: Assets must be held through one of three secure methods — a government-controlled custody solution, a qualified third-party custodian (like a bank or trust company), or exchange-traded products managed by a registered investment firm.
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Security Requirements: The bill outlines strict security standards, including exclusive government control of private keys, end-to-end encryption, geographically distributed secure data centers, and regular audits.
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Crypto Lending Option: The state may lend out its crypto holdings to earn additional income, as long as it doesn’t expose public funds to increased financial risk.
While the legislation does not name specific cryptocurrencies such as Bitcoin, it defines eligible assets broadly as digital currencies that use encryption for creation and transactions and operate independently of central banks.
Critics Warn of Risk Beyond Bitcoin
The Michigan Bitcoin Trade Council has voiced strong opposition to the bill, arguing that its broad definition could allow the state to invest in altcoins that are more volatile and centralized. The group called for a clear market cap requirement and criticized the absence of language limiting the reserve to Bitcoin.
“There is no safeguard preventing the purchase of riskier, centralized cryptocurrencies,” the group said, warning that the bill could expose public funds to unnecessary risk.
National Context
Michigan joins Massachusetts and Ohio in advancing similar crypto reserve legislation. So far, only New Hampshire, Arizona, and Texas have passed laws allowing state investment in digital assets. Several other states—including Montana, North Dakota, and Pennsylvania—have rejected such proposals, while 17 others currently have related bills under review, according to the Bitcoin Reserve Monitor.
Featured image from: cointelegraph.com