Michigan is moving forward with its proposal to create a state-level cryptocurrency reserve. On Thursday, House Bill 4087 progressed to a second reading and was directed to the Committee on Government Operations.
The measure, which updates the Michigan Management and Budget Act, outlines how the state could establish a “strategic crypto reserve.” While the text avoids specifically naming Bitcoin (BTC $116,509), it sets the framework for potential crypto investments under controlled conditions.
The initiative comes at a time when state-level Bitcoin reserve activity has slowed nationwide.
Introduced in February by Republican lawmakers Bryan Posthumus and Ron Robinson, the bill would authorize Michigan’s treasurer to allocate up to 10% of the state’s “countercyclical budget” and “economic stabilization fund” toward digital assets.
Custody and Security Requirements
The legislation specifies three acceptable ways to hold such assets:
- Through a secure custody arrangement,
- With a regulated custodian such as a bank, trust, or licensed state entity,
- Or via exchange-traded products offered by registered investment companies.
It also allows for lending out digital assets to earn yield, provided it does not add extra financial risk.
To reduce vulnerabilities, the bill imposes strict technical safeguards. These include sole government control of private keys, end-to-end encryption, multiparty transaction approvals, prohibition of smartphone access, distributed secure data centers, and routine third-party audits.
Not Limited to Bitcoin
The proposal does not restrict reserves exclusively to Bitcoin. Instead, it defines eligible assets as any digital currency that relies on cryptography to control issuance and validate transactions while operating outside of central bank authority.
This broader scope has drawn criticism from the Michigan Bitcoin Trade Council, which argues the lack of a market-cap requirement could allow the state to purchase “riskier” cryptocurrencies. The group insists that Bitcoin should be the only acceptable option, warning that other digital assets are more centralized and vulnerable.
Wider Legislative Context
If successful, Michigan would join Massachusetts and Ohio in advancing strategic reserve bills through committee review. Currently, only New Hampshire, Arizona, and Texas have enacted laws allowing treasurers to invest directly in Bitcoin and other cryptocurrencies.
Meanwhile, similar measures have failed in Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania. Seventeen additional states still have pending proposals, according to data from Bitcoin Reserve Monitor.
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