Michigan Advances Crypto Reserve Bill Amid State-Level Developments

According to Cointelegraph, Michigan has progressed its strategic crypto reserve bill, House Bill 4087, to a second reading, referring it to the Committee on Government Operations. This legislation seeks to amend the Michigan Management and Budget Act to establish guidelines for a strategic crypto reserve, although it does not specifically mention Bitcoin. The bill was introduced by Republican Representatives Bryan Posthumus and Ron Robinson in February and aims to allow the state treasurer to invest up to 10% of funds from Michigan’s countercyclical budget and economic stabilization fund in cryptocurrency. The bill outlines that the state must hold crypto assets through one of three approved methods: a secure custody solution, a qualified custodian such as a bank or trust company, or exchange-traded products from registered investment companies. Additionally, the state can loan out cryptocurrency to generate returns, provided it does not increase financial risk. The legislation also includes detailed technical security requirements for custody solutions, such as exclusive government control of private keys, end-to-end encryption, no smartphone access, geographically diversified secure data centers, multiparty transaction authorization, and regular security audits. It does not specify which digital assets can be used for the strategic reserves, beyond stating that they must be digital currencies using encryption techniques to regulate the generation of units and verify fund transfers, operating independently of a central bank. The Michigan Bitcoin Trade Council has opposed the bill, arguing that the absence of a market capitalization requirement could lead to the state purchasing cryptocurrencies other than Bitcoin, which they claim would introduce unnecessary risk due to their centralized nature. Michigan joins Massachusetts and Ohio in having strategic crypto reserve bills reach the committee stage. Meanwhile, only New Hampshire, Arizona, and Texas have enacted legislation allowing state treasurers to invest in Bitcoin and crypto assets. Strategic Bitcoin reserve bills have been rejected in several states, including Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania, with 17 other states having pending legislation. This development reflects a broader trend of states exploring the potential of cryptocurrency investments, although the path to legal adoption remains varied across the United States.