Michigan has advanced its strategic cryptocurrency reserve bill, moving it to a second reading on Thursday.
House Bill 4087, which would allow the state to invest in crypto assets under certain conditions, was referred to the Committee on Government Operations. The legislation proposes amendments to the Michigan Management and Budget Act to establish guidelines for a strategic crypto reserve, without specifically naming Bitcoin.
The bill arrives amid a slowdown in state-level crypto reserve initiatives. Introduced in February by Republican Representatives Bryan Posthumus and Ron Robinson, it would allow the state treasurer to invest up to 10% of funds from Michigan’s “countercyclical budget” and “economic stabilization fund” in cryptocurrency.
Under the proposal, the state must hold crypto assets using one of three approved methods: a secure custody solution, a qualified custodian such as a bank, trust company, or state-regulated firm, or exchange-traded products from registered investment companies. The legislation also permits the state to loan cryptocurrency to generate additional returns, provided it does not increase financial risk.
The bill outlines strict technical security standards for custody solutions, including exclusive government control of private keys, end-to-end encryption, restricted smartphone access, geographically diversified secure data centers, multiparty transaction authorization, and regular security audits. While it does not list specific digital assets, any crypto used for the strategic reserve must meet these security requirements.
“Digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, and that operates independently of a central bank.”
Michigan Bitcoin Trade Council voices opposition
The Michigan Bitcoin Trade Council has criticized the bill, arguing that it lacks a market capitalization threshold to prevent the state from purchasing cryptocurrencies other than Bitcoin.
The advocacy group contends that including other crypto assets in a strategic reserve would introduce “unnecessary risk,” noting that, unlike Bitcoin, most other cryptocurrencies are centralized and carry higher vulnerability.
Few states advance strategic crypto reserve legislation
Michigan now joins Massachusetts and Ohio as one of the few states with strategic crypto reserve bills that have reached the committee stage, according to Bitcoin Laws.
To date, only New Hampshire, Arizona, and Texas have passed laws allowing state treasurers to invest in Bitcoin and other crypto assets.
Bills proposing strategic Bitcoin reserves have been rejected in Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania, while 17 additional states currently have pending legislation, according to Bitcoin Reserve Monitor.
