Michigan Crypto Reserve Bill Advances as Lawmakers Debate Bitcoin

Michigan’s crypto reserve bill has just advanced to committee, and is proposing up to 10% state investment in Bitcoin and digital assets.

The Michigan crypto reserve bill has advanced to a second reading after months of waiting. House Bill 4087, which was first introduced in February, will allow the state treasurer to allocate up to 10% of two major funds into crypto assets.

If approved, Michigan could follow states like Texas, New Hampshire and Arizona, which already permit treasuries to invest in Bitcoin. 

How the Michigan Crypto Reserve Bill Works

Under HB 4087, the state could draw from the countercyclical budget and the economic stabilisation fund to buy crypto. Moreover, up to 10% of these reserves can be invested in digital currencies.

The bill also includes strict security rules to protect funds. For starters, private keys must remain under government control with end-to-end encryption, no smartphone access and secure data centres across multiple regions. 

Multiparty authorisation and regular security audits are also required.

The state treasury could also loan out its crypto holdings, as long as doing so does not increase financial risk.

Debate Over Bitcoin vs. Other Cryptocurrencies

Supporters argue that the Michigan crypto reserve bill strengthens the state’s financial strategy. However, not everyone agrees with its approach.

The Michigan Bitcoin Trade Council, for example, opposes the bill in its current form. The group argues that by not limiting reserves strictly to Bitcoin, the bill exposes state funds to unnecessary risk. 

In their view, Bitcoin is the only digital asset that meets the requirements of decentralisation and security.

Other lawmakers and analysts also see flexibility as a benefit. They argue that a wider definition allows the state to adapt as technology grows, instead of locking into a single asset.

How Other States Handle Crypto Reserves

Michigan is not alone in pursuing digital asset reserves. Only three states currently permit state treasurers to invest in Bitcoin and crypto, and these include Texas, New Hampshire and Arizona.

Texas has already allocated $10 million to Bitcoin, while the other two states have yet to fund their reserves. On the other hand, Massachusetts and Ohio have also advanced similar bills to committee stages, though without final passage.

Several states, including Montana, North Dakota, and Wyoming, have rejected crypto reserve proposals. According to Bitcoin Reserve Monitor, 17 states still have active bills under consideration.

Market Context and Ongoing Adoption

The push for state-level reserves comes as Bitcoin adoption becomes more popular among institutions and governments. Earlier this year, the U.S. House asked the Treasury Department to study a national Bitcoin reserve. That review will cover custody, cybersecurity, and accounting standards.

Corporate adoption has also sped up lately. Many firms now hold Bitcoin in their treasuries as a hedge against inflation and currency risk. This trend has coincided with rising prices, as Bitcoin has gained 25% this year amid an all-time high near $124,500 in August.

Sceptics are still wary, though, because many of them continue to see Bitcoin’s price volatility as a major worry for any public fund. Supporters, however, counter that holding Bitcoin can provide diversification.

This could be important, especially in times of inflation or financial stress.

What Comes Next

The Michigan crypto reserve bill has now moved to the Committee on Government Operations for further review. Lawmakers will need to decide whether to restrict investments to Bitcoin or allow a mix of digital assets.

If approved, the bill would mark Michigan as one of the first states to formally integrate crypto into public reserves. 

That step could influence how other states make their own policies in the months ahead.

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