Michigan Advances Bill to Create State Crypto Reserve

     

Proposed legislation would allow up to 10% of funds in digital assets

Michigan lawmakers are moving forward with a proposal to establish a state-level cryptocurrency reserve, as House Bill 4087 advanced to a second reading and was referred to the Committee on Government Operations this week.

The measure would amend the Michigan Management and Budget Act, enabling the state treasurer to allocate as much as 10% of the “countercyclical budget” and “economic stabilization fund” into digital assets. While the bill doesn’t specifically name Bitcoin, it outlines approved custody methods, including qualified custodians, secure custody solutions, and regulated exchange-traded products.

Additionally, the legislation would allow the state to loan out crypto holdings to generate extra returns, provided such activity does not introduce additional financial risks.

Bill opens door to multiple cryptocurrencies, not just Bitcoin

The proposal lays out strict custody and security requirements such as government-only control of private keys, multi-party authorization, end-to-end encryption, geographically distributed data centers, and regular security audits.

However, the text defines digital assets broadly as currencies using encryption for unit generation and transaction verification, operating outside of central bank control – meaning it extends beyond just Bitcoin.

Local Bitcoin advocates push back on proposal

The Michigan Bitcoin Trade Council has voiced opposition, arguing that the absence of a market capitalization threshold allows the inclusion of cryptocurrencies other than Bitcoin. The group claims this introduces “unnecessary risk,” asserting that non-Bitcoin assets are more centralized and vulnerable.

Michigan joins growing list of states exploring crypto reserves

If successful, Michigan would follow Massachusetts and Ohio in advancing similar bills to the committee stage. To date, only New Hampshire, Arizona, and Texas have enacted legislation permitting state investment in Bitcoin and digital assets.

Other efforts have faced rejection, including proposals in Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania. Meanwhile, 17 states are still considering comparable legislation, according to Bitcoin Reserve Monitor.