Michigan Advances Long-Delayed Crypto Reserve Bill

Michigan has taken another step toward creating a state crypto reserve, with House Bill 4087 moving to a second reading on Thursday after a seven-month delay.

The bill, introduced by Republican Representatives Bryan Posthumus and Ron Robinson, would let the state invest up to 10% of its funds in cryptocurrency. 

If passed, Michigan would join New Hampshire, Texas, and Arizona in permitting government-held crypto reserves. This marks a growing trend with more than 26 states now considering similar legislation to allow strategic crypto investments.

Michigan Crypto Reserve Bill Moves Forward

The legislation includes strict security rules for holding crypto. Required custody methods include secure custody solutions, qualified custodians such as banks or trust companies, or exchange-traded funds from registered investment companies. 

The state must maintain exclusive control of private keys, meaning only the government can access and manage its crypto holdings.

Other safeguards include end-to-end encryption, no smartphone access to assets, geographically diverse secure data centres, multi-party transaction approvals, and regular audits. The state may loan out cryptocurrencies to generate returns, but only if this does not raise financial risks.

Supporters say the bill offers a modern way to diversify Michigan’s public funds and capitalise on the growing acceptance of cryptocurrencies.

They believe Bitcoin can act as a hedge against inflation and the weakening global role of the dollar. With cautious rules in place, the bill is seen as a balanced approach to innovation and safety.

However, the Michigan Bitcoin Trade Council opposes the bill’s broad definition of eligible assets. They argue it allows cryptocurrencies other than Bitcoin, which they believe adds unnecessary risk. Non-Bitcoin tokens are often more centralised and less reliable, they say.

Michigan already has some experience with digital asset investment, with its state pension fund holding a multi-million-dollar position in Grayscale’s Ethereum ETF.

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