Michigan to invest 10% of reserves into crypto

TLDR:

• Michigan’s House Bill 4087 has progressed to a second reading after seven months of inactivity, permitting state treasury investment of up to 10% of reserves in cryptocurrency
• The legislation amends the Michigan Management and Budget Act to establish guidelines for a strategic crypto reserve, with strict custody and security requirements
• Michigan would join Texas, New Hampshire and Arizona as states that have enacted Bitcoin reserve laws, reflecting growing institutional adoption of digital assets

Michigan lawmakers have revived their push for a state cryptocurrency reserve, advancing House Bill 4087 to a second reading on Thursday after seven months of legislative inactivity.

The bill has been referred to the Committee on Government Operations as the state moves closer to authorising digital asset investments from public funds.

The legislation, introduced in February by Republican Representatives Bryan Posthumus and Ron Robinson, would permit the state treasurer to invest up to 10% of funds from Michigan’s countercyclical budget and economic stabilisation fund in cryptocurrency.

The bill amends the Michigan Management and Budget Act to establish guidelines for a strategic crypto reserve, though it does not specifically mention Bitcoin.

“Michigan can and should join Texas in leading on crypto policy by signing into law my bill creating the Michigan Crypto Strategic Reserve,” Posthumus wrote on X.com when the bill was first introduced earlier in February this year.

The legislation outlines three approved methods for holding digital assets: through a secure custody solution, via a qualified custodian such as a bank or trust company, or through exchange-traded products from registered investment companies.

The bill also permits the state to loan out cryptocurrency to generate additional returns, provided this does not increase financial risk.

Security requirements include exclusive government control over private keys, end-to-end encryption of all data, prohibition of smartphone access, and storage in geographically diverse secure data centres within the state. Transactions would require multiparty authorisation, with regular independent security audits mandated.

If approved, Michigan would become the fourth US state to enact Bitcoin reserve legislation, joining Texas, New Hampshire and Arizona. Texas allocated $10 million to purchase Bitcoin in June, whilst the other states have yet to fund their reserves with state money.

The advancement comes during a period of growing institutional adoption of Bitcoin, with the cryptocurrency’s price increasing 25% this year and reaching a record high near $124,500 in August.

The US House has also directed the Treasury Department to study the feasibility of a strategic Bitcoin reserve, examining custody, cybersecurity and accounting standards.

Nearly two dozen US states are currently working to implement Bitcoin reserve legislation, with approximately 26 states maintaining active bills in progress.

The Michigan Bitcoin Trade Council has opposed the current bill, arguing that the absence of market capitalisation requirements could lead to investment in riskier cryptocurrencies beyond Bitcoin.

The bill defines cryptocurrency as “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”. This broad definition has drawn criticism from some advocates who prefer specific focus on Bitcoin due to its established market position.

The legislation’s progress reflects a broader trend of sovereign Bitcoin adoption emerging as a defining characteristic of 2025, with multiple US states and countries considering digital assets as part of their public finance strategy.

Corporate adoption has also contributed to Bitcoin’s market performance, though sceptics remain concerned about the cryptocurrency’s price volatility.

The bill’s advancement after months of dormancy signals renewed momentum for state-level cryptocurrency adoption policies across the United States.