- Michigan moves closer to allowing state funds to invest up to 10% in approved digital assets.
- The bill outlines strict custody rules to secure state-held cryptocurrency and reduce financial risk.
- More states and countries are exploring crypto reserves as interest in digital assets continues to grow.
Michigan’s House Bill 4087 has progressed to the committee stage after a second reading on Thursday. The bill proposes allowing up to 10% of Michigan’s countercyclical and economic stabilization funds to be invested in cryptocurrency. It awaits further review under the Committee on Government Operations.
The legislation amends the Michigan Management and Budget Act to authorize a strategic crypto reserve. While the bill does not specifically name Bitcoin, it refers to digital currencies that operate independently of central banks.
Investment Rules and Custody Requirements
The proposed law outlines strict conditions for handling crypto assets. The state treasurer can invest only through approved custody methods. These include secure custody solutions, qualified custodians like banks or trust companies, and exchange-traded products from registered investment firms.
The bill also permits the state to loan out its crypto holdings to generate income, as long as it does not increase financial risk. To ensure security, the bill lists several requirements. These include exclusive government control of private keys, encrypted storage, and restricted smartphone access.
Additional measures include secure, geographically diverse data centers and multi-party transaction authorization. Regular audits would be required to maintain compliance.
State and National Crypto Legislation Trends
Michigan joins a growing number of states exploring crypto reserve strategies. Massachusetts and Ohio also have similar bills in committee. New Hampshire, Arizona, and Texas have already passed laws allowing state treasuries to invest in cryptocurrencies.
Several other states have rejected similar proposals. These include Montana, North Dakota, South Dakota, Wyoming, and Pennsylvania. However, over 17 states still have active crypto-related bills under consideration.
At the federal level, a bill passed in August directs the Treasury Department to assess a potential national Bitcoin reserve. The study will focus on custody, cybersecurity, and accounting standards.
International Developments and Market Signals
The global trend continues to grow. The Philippines introduced a bill for a long-term Bitcoin reserve with a 20-year holding requirement. Pakistan plans to hold a permanent Bitcoin reserve as part of a broader digital infrastructure strategy.
El Salvador has expanded its national reserves to include both Bitcoin and gold. These actions signal rising international interest in digital assets.
Meanwhile, corporate Bitcoin holdings in the U.S. face valuation concerns. A recent report shows 25% of public firms trade below the value of their BTC reserves. While larger companies like MicroStrategy still trade at a premium, treasury buying has slowed. Daily Bitcoin inflows in September hit the lowest level since May. However, retail investors and ETFs are beginning to drive new demand.
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