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Michigan is pressing ahead with House Bill 4087, widely known as the Michigan crypto reserve bill, which would allow the state to create a strategic cryptocurrency reserve under strict custody and security rules.
The proposal, introduced in February by Republican Representatives Bryan Posthumus and Ron Robinson, seeks to amend the Michigan Management and Budget Act to permit the allocation of up to 10% of funds from the state’s countercyclical budget and economic stabilization fund into digital assets.
The Michigan crypto reserve bill has already moved to a second reading in the House and was referred to the Committee on Government Operations. If enacted, it would mark a significant step for Michigan as it joins other U.S. states exploring the role of cryptocurrencies in public finance.
The Michigan crypto reserve bill sets out three custody options for managing state-owned digital assets: secure in-house storage, qualified custodians such as banks or state-regulated firms, or exchange-traded products (ETPs) from registered investment companies.
To safeguard holdings, the bill mandates exclusive government control over private keys, strict end-to-end encryption, and a ban on smartphone-based access. In addition, the state would maintain data across secure, geographically diverse centers within Michigan. Transactions would require multiparty authorization and be subject to regular independent security audits.
The legislation also provides for the possibility of lending digital assets to generate revenue, though it specifies that such activity must not increase the state’s financial risk.
House Bill 4086, introduced alongside the Michigan crypto reserve bill, proposes the establishment of a Michigan bullion depository within the Department of Treasury.
Not all stakeholders support the Michigan crypto reserve bill. The Michigan Bitcoin Trade Council, a local advocacy group, has expressed strong opposition, arguing that the bill lacks safeguards to ensure only Bitcoin is included in the reserve.
“The idea of a strategic Bitcoin reserve is an interesting one, but it must be crafted very carefully,” — Michigan Bitcoin Trade Council, in a public statement.
The council’s concern centers on the absence of a “clear market capitalization” threshold in House Bill 4087. Without such a limitation, the state could potentially invest in smaller, riskier cryptocurrencies that are prone to collapse, exposing public finances to volatility.
“Other cryptocurrencies will attempt to use the state as a piggy bank to prop up risky projects that are doomed to fail,” — Michigan Bitcoin Trade Council.
The group insists that Bitcoin is the only digital asset with a proven history of resilience and security, making it the only suitable choice for a state-level reserve.
The Michigan crypto reserve bill reflects a broader national debate on whether U.S. states should adopt digital assets as part of their treasury strategies. According to Bitcoin Laws, Michigan now joins Massachusetts and Ohio in bringing forward similar proposals at the committee stage.
Some states have already taken action. Texas, New Hampshire, and Arizona have enacted legislation authorizing their treasurers to invest in Bitcoin and other cryptocurrencies. However, in states such as Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania, comparable measures were rejected.
So far, 46 states have engaged in discussions around crypto reserves. Yet, beyond the handful that have enacted laws, only 17 states currently have proposals pending, according to Bitcoin Reserve Monitor.
At the federal level, the U.S. Congress earlier this month advanced an appropriations bill that directs the Treasury Department to assess the feasibility and governance of a Strategic Bitcoin Reserve. This suggests that the debate over crypto reserves is not limited to state legislatures but is also gaining traction in Washington.
The Michigan crypto reserve bill now faces further scrutiny in the legislative process. Supporters argue it positions the state at the forefront of financial innovation, while critics warn of the dangers of including speculative tokens.
