Michigan crypto reserve bill advances to committee and could let state invest up to 10%, Bitcoin advocates raise concerns

• Allows up to 10% allocation from specified state funds

• Requires approved custody solutions, qualified custodians, or registered ETFs

• Mandates strict security: exclusive key control, end-to-end encryption, and audits

Michigan crypto reserve bill allows up to 10% state allocation to approved digital assets with strict custody rules — read the bill, implications, and key takeaways.

What is the Michigan crypto reserve bill (HB 4087)?

The Michigan crypto reserve bill (HB 4087) would permit the state treasurer to invest up to 10% of funds from the state’s countercyclical budget and economic stabilization fund in qualified digital assets, subject to defined security, custody, and audit requirements. The bill advanced to a second reading and was referred to the Committee on Government Operations.

How would HB 4087 allocate and hold state digital assets?

The bill allows up to 10% allocation from two designated funds and limits custody to one of three approved methods: a secure custody solution, a qualified custodian (bank, trust company, or state-regulated firm), or exchange-traded products from registered investment companies. It also permits lending if risk does not materially increase.

Michigan’s crypto reserve bill has advanced to the committee stage, allowing 10% state investment in digital assets.

Michigan’s House Bill 4087 proposes amendments to the Michigan Management and Budget Act to create a framework for a strategic crypto reserve. The legislation does not explicitly name Bitcoin but defines acceptable digital currency as one that uses encryption to create units and verify transfers while operating independently of a central bank.

The bill was introduced in February by Republican Representatives Bryan Posthumus and Ron Robinson. It specifically authorizes the state treasurer to invest funds from the countercyclical budget and the economic stabilization fund, capped at 10% of those funds combined.

HB 4087 includes detailed security requirements for custody solutions. Key requirements include exclusive government control of private keys, end-to-end encryption, prohibition of smartphone access, geographically diversified secure data centers, multiparty transaction authorization, and regular security audits.

The bill also allows the state to lend crypto holdings to generate additional returns provided the practice does not materially increase financial risk to the funds.

Why do some groups oppose the bill?

The Michigan Bitcoin Trade Council opposes HB 4087 on grounds that the legislation lacks a market-capitalization threshold to restrict the state to Bitcoin only. The council argues that permitting other cryptocurrencies could introduce unnecessary centralization and risk compared with Bitcoin.

Michigan Bitcoin Trade Council pushes back against HB 4087. Source: Michigan Bitcoin Trade Council

How does Michigan compare to other states on crypto reserves?

Michigan is now among several states with active strategic crypto reserve discussions. According to Bitcoin Laws (plain text reference), multiple states have filed similar bills; only New Hampshire, Arizona, and Texas have enacted laws enabling state treasurers to invest in Bitcoin or crypto assets.

Other states with pending or rejected bills are tracked by Bitcoin Reserve Monitor (plain text reference). As of the latest available tracking, only a handful of states have fully enacted enabling legislation, while many others remain in committee or have seen proposals fail.

Only three states can legally invest in crypto. Source: Bitcoin Reserve Monitor

Frequently Asked Questions

Can Michigan’s state treasurer lend crypto holdings under HB 4087?

Yes. The bill permits lending to generate returns provided that lending does not materially increase financial risk to the countercyclical budget or economic stabilization fund.

Does HB 4087 require specific technical controls for custody?

Yes. The bill mandates exclusive government control of private keys, end-to-end encryption, no smartphone access, geographically diversified secure data centers, multiparty transaction authorization, and scheduled security audits.

Key Takeaways

• Authorized allocation: HB 4087 permits up to 10% from two designated state funds.
• Custody and security: The bill sets strict custody and technical security requirements to protect holdings.
• State-level landscape: Michigan joins several states with active bills; only a few states have enacted enabling laws.

Conclusion

HB 4087 marks a significant policy step by proposing a structured approach for Michigan’s strategic crypto reserve, balancing potential returns with strict custody and security mandates. Stakeholders and lawmakers will now weigh financial, technical, and governance implications as the bill proceeds through committee review. Monitor official legislative updates for next actions.