Michigan has advanced its strategic cryptocurrency reserve bill, moving to a second reading on Thursday.
The Michigan House Bill 4087 aims to permit state investment in crypto assets under specific conditions and has been referred to the Committee on Government Operations after its second reading.
This legislation modifies the Michigan Management and Budget Act to set guidelines for a strategic crypto reserve, although it does not specifically mention Bitcoin (BTC).
The bill arrives during a recent pause in state-level Bitcoin reserve discussions.
The legislation requires the state to manage crypto assets through one of three approved methods: a “secure custody solution,” a qualified custodian like a bank, trust company, or state-regulated entity, or exchange-traded products from registered investment firms.
Additionally, the state can lend out cryptocurrency to generate extra returns, provided it does not increase financial risk.
Crypto reserve bill isn’t limited to Bitcoin
The bill outlines strict technical security requirements for custody solutions, which include exclusive government control of private keys, end-to-end encryption, no smartphone access, geographically diverse secure data centers, multiparty transaction authorization, and regular security audits.
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It does not clarify which digital assets can be utilized for the strategic reserves beyond this guideline:
“Digital currency utilizing encryption techniques to regulate unit generation and verify fund transfers, operating independently of a central bank.”
Michigan Bitcoin Trade Council in opposition
The Michigan Bitcoin Trade Council has expressed opposition to the bill, stating, “there is no market capitalization threshold in the legislation that would prevent the state from purchasing other cryptocurrencies besides Bitcoin.”
The state Bitcoin advocacy group contends that including other crypto assets in a strategic reserve would introduce “unnecessary risk,” as all other cryptocurrencies besides Bitcoin are viewed as “centralized and high-risk.”
Only three states have passed law
Michigan now joins Massachusetts and Ohio with strategic crypto reserve bills progressing to the committee stage, as noted by Bitcoin Laws.
Currently, only New Hampshire, Arizona, and Texas have implemented laws allowing state treasurers to invest in Bitcoin and crypto assets.
Strategic Bitcoin reserve bills have been turned down in Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania, with 17 additional states having pending legislation, according to Bitcoin Reserve Monitor.
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