Michigan Pushes Groundbreaking Bill to Establish State-Level Strategic Crypto Reserve

Michigan just dropped a legislative bombshell—state lawmakers are advancing a bill to create the nation's first state-level strategic cryptocurrency reserve.

Breaking the Mold

Forget waiting on federal action. Michigan's proposal would allocate a portion of state reserves into digital assets—Bitcoin and Ethereum leading the charge. It's a direct challenge to traditional treasury management, positioning crypto as a legitimate store of value rather than just speculative gambling chips.

Why It Matters

This isn't just political theater. States watching from the sidelines see Michigan's move as either revolutionary or recklessly optimistic—depending on which finance bureaucrat you ask. The bill could set precedent, forcing other states to confront crypto's role in public finance whether they're ready or not.

Wall Street's worst nightmare? A state government outperforming their hedge fund returns with a simple 'buy and hold' crypto strategy—now that would be a delicious irony.

Michigan government could become crypto holders

House Bill 4087 allows the state to maintain its digital assets in three possible ways: through a secure custody solution, through a qualified custodian such as a bank, trust company, or state-regulated firm, or by acquiring exchange-traded products (ETPs) from registered investment companies.

Security procedures for the crypto holdings include exclusive government control over private keys, end-to-end encryption of all data, and the prohibition of access via smartphones. 

Michigan-owned digital assets’ information will be stored in secure data centers in different locations within the state. At the same time, transactions WOULD require multiparty authorization, in addition to regular independent security audits.

The bill allows the state to loan out crypto to generate additional revenue, provided that such activity does not increase exposure to financial risk. 

House Bill 4086, which was also introduced during the same month by Representatives Alabas Farhat, Ron Robinson, and Bryan Posthumus, would create the office of a Michigan bullion depository within the Department of Treasury. 

Opposition from state Bitcoin Trade Council

The Michigan Bitcoin Trade Council, a local advocacy group for Bitcoin adoption, is opposing House Bill 4087 for lacking a “clear market capitalization” threshold to restrict the reserve exclusively to Bitcoin. Representatives who forwarded the proposal did not specify which digital assets will be acquired and kept.

Without such a safeguard, the council argues, the state could invest in smaller, more speculative cryptos that are centralized and prone to collapse, which could expose Michigan’s finances to unnecessary volatility.

“The idea of a strategic bitcoin reserve is an interesting one, but it must be crafted very carefully,” the group stated. “Other cryptocurrencies will attempt to use the state as a piggy bank to prop up risky projects that are doomed to fail.”

The council insists Bitcoin is the only digital asset with a proven track record of stability and security, and the “sole instrument that would be prudent for a state-level reserve.” 

Strategic crypto reserve talks in American states grow 

Michigan’s crypto reserve bill comes on the backdrop of legislative conversations around crypto reserves in the United States. According to Bitcoin Laws, Michigan joins Massachusetts and Ohio as states where similar proposals have reached the committee stage.

Some states like New Hampshire, Arizona, and Texas have already enacted laws that authorized their treasurers to invest in Bitcoin and other crypto assets. However, other states have not been as receptive, as Bitcoin reserve bills have been rejected in Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania. 

46 states have been part of the discussion so far, but aside from the 3 aforementioned jurisdictions, only 17 are in the “pending” column, according to figures from Bitcoin Reserve Monitor.

Earlier this month, the US Congress moved forward with an appropriations bill that had sections asking the Treasury Department to determine the feasibility and governance of a Strategic Bitcoin Reserve. 

The smartest crypto minds already read our newsletter. Want in? Join them.