Broader Asset Scope – The bill does not limit investments to Bitcoin; instead, it defines eligible assets broadly as digital currencies operating independently of central banks, sparking debate over volatility and risk.
Michigan’s House Bill 4087, introduced in February 2025 by Representatives Bryan Posthumus and Ron Robinson, is making renewed progress after months of delay.
Michigan’s House Bill 4087 would allow the state to invest in cryptocurrency under defined conditions. It will enable the state treasurer to allocate up to 10% of funds from Michigan’s
to crypto assets. The bill would amend the Michigan Management and Budget Act to establish a framework for a strategic crypto reserve.
It includes detailed security requirements: assets must be held using approved custody methods (secure custody solution, qualified custodian, or exchange-traded products from registered investment companies), the state must maintain exclusive control over private keys, employ encryption, restrict access (e.g. no smartphone access), distribute data storage geographically, require multi-party transaction authorisations, and conduct regular audits.
The bill also allows for the possibility that crypto holdings could be loaned out, so long as it does not increase financial risk. Importantly, the definition of eligible digital assets is broad: the bill does not limit investments to Bitcoin (BTC) alone.
Instead, it defines acceptable assets as
“digital currency in which encryption techniques are used to regulate the generation of units … verify the transfer of funds, and that operates independently of a central bank.”
Supporters argue that the proposed crypto reserve could hedge against inflation and the diminishing value of fiat currency, offering diversification benefits in Michigan’s portfolio of public funds. They see the move as part of a broader trend among states considering similar strategic reserve or BTC reserve legislation.
Critics, however, raise several concerns. One major worry is volatility: cryptocurrencies (especially those beyond BTC) can be subject to sharp price swings. There are also concerns around security (e.g. cyber risks, custody of keys), regulatory uncertainty, and the lack of specific safeguards in the bill for excluding weaker or less established cryptos. Some groups, like the Michigan BTC Trade Council, oppose the lack of a market-capitalisation floor or other criteria to limit which cryptos the state might purchase.
Politically, the bill clearing procedural hurdles — being placed on the House’s second reading calendar and referred to the Government Operations Committee — is significant, as it signals momentum. Michigan would join a few US states (Texas, New Hampshire, and Arizona) that have already enacted laws allowing state treasurers to invest in crypto or maintain crypto/BTC reserves.
If the bill passes, Michigan could become a model for other states weighing similar digital-asset reserve strategies. There could be financial implications, such as potential gains (if crypto performs well), but also risks of losses. Because of that, the implementation details — custody, audit mechanisms, risk limits — will be heavily scrutinised.
Another implication is regulatory: how federal oversight, securities law, and state law interact will matter, especially if assets beyond BTC are involved. Transparency and reporting requirements, if built in, will be key to maintaining public trust.
Finally, the bill’s progress may pressure neighbouring states and others with similar bills to act more swiftly or with narrower or broader definitions of assets. Depending on how markets view crypto exposure, states that lag might find themselves politically or economically disadvantaged.
