Michigan Proposes Strategic Bitcoin Reserve Bill, Joins Growing List of States Eyeing Crypto Investments

Michigan has become the latest U.S. state to propose a bill aimed at establishing a strategic Bitcoin reserve, bringing the total number of states with pending crypto reserve-related legislation to 20. On February 13, Representatives Bryan Posthumus and Ron Robinson introduced House Bill 4087 (HB 4087), which seeks to amend the state’s Management and Budget Act to allow Michigan to invest in cryptocurrency as a means to increase yields for state funds.

This move positions Michigan as a key player in the growing trend of states exploring crypto reserves, joining the ranks of other states like Texas that have already introduced similar legislation. Posthumus, a proponent of the bill, expressed his enthusiasm on social media, stating, “Michigan can and should join Texas in leading on crypto policy by signing into law my bill creating the Michigan Crypto Strategic Reserve.”

Key Provisions of the Bill

The proposed legislation would grant the state treasurer the authority to invest in cryptocurrencies using funds from both the state’s general fund and economic stabilization fund, with a cap set at 10%. However, the bill does not specify which cryptocurrencies would be eligible for purchase as part of the reserve, leaving room for flexibility in asset selection.

One notable feature of the bill is its provision allowing the state to lend cryptocurrency in order to generate additional returns. The bill specifies that the state treasurer can loan out crypto “if cryptocurrency can be loaned without increasing financial risk to this state.” This provision aims to maximize the state’s returns while minimizing potential risks associated with crypto lending.

Additionally, the bill mandates that Michigan must hold its cryptocurrency assets directly through secure custody solutions or exchange-traded products offered by registered investment companies. This requirement ensures that the state’s crypto assets are managed with the same level of security as other state investments.

Michigan’s Growing Crypto Involvement

Michigan’s state pension fund is already exposed to Bitcoin and Ether through exchange-traded funds (ETFs), making the proposed bill a natural extension of the state’s existing interest in cryptocurrencies. The new bill would formalize and expand the state’s crypto involvement, potentially offering a new avenue for increasing state revenues.

In a separate post on social media, Posthumus also suggested the idea of creating a state-backed stablecoin, which he proposed could be named “MichCoin.” He argued that the stablecoin could be tied to Michigan’s gold and silver reserves, offering a form of currency with tangible value.

A Nationwide Trend

Michigan’s proposal adds to a growing number of U.S. states that are advancing legislation to incorporate cryptocurrency investments into their financial strategies. As of now, 20 states have introduced crypto reserve bills that have progressed beyond committee stages. Among the latest is Texas, which filed its own legislation earlier this week to allow state investments and trading in crypto assets.

North Dakota, however, remains the only state to have rejected such legislation, standing apart from the increasing momentum toward crypto adoption at the state level.

The Future of State Crypto Reserves

As more states explore the potential of cryptocurrency as a financial tool, the broader implications for public investment strategies become increasingly clear. States like Michigan are positioning themselves to capitalize on the growing crypto market, potentially boosting state funds and setting a precedent for other states to follow.

With the continued development of crypto infrastructure and the increasing acceptance of digital assets, Michigan’s proposed Bitcoin reserve could mark a pivotal moment in the integration of cryptocurrency into state-level finance. As the bill moves through the legislative process, it will be closely watched by crypto enthusiasts, policymakers, and financial experts alike.