Michigan Advances Bill for State Crypto Reserves

After seven months of legislative inactivity, Michigan’s ambitious proposal to create a state-run Bitcoin reserve has regained momentum. House Bill 4087, introduced in February by Republican Representatives Bryan Posthumus and Ron Robinson, cleared procedural hurdles on Thursday and was formally referred to the Government Operations Committee. The bill would authorize the state treasurer to allocate up to 10% of Michigan’s general and stabilization funds into cryptocurrency, marking one of the most significant state-level crypto investment proposals in the nation.

The advancement comes amid growing interest from state legislatures across the country. According to data from BitcoinLaws.io, approximately 47 states have introduced or are considering Strategic Bitcoin Reserve legislation, with about 26 states currently carrying active bills under consideration. This movement represents a fundamental shift in how state governments are approaching treasury management and currency diversification.

What distinguishes Michigan’s proposal from previous failed attempts in other states is its comprehensive security framework. Kadan Stadelmann, Chief Technology Officer at Komodo Platform, emphasized that Michigan’s detailed security provisions address weaknesses that doomed previous efforts in states like Florida. The bill mandates that taxpayers would need to trust a third-party “secure custody solution” or “qualified custodian,” while the state would maintain “exclusive control over private keys.”

Additional security measures include robust “disaster recovery protocols” and mandatory “regular audits/penetration testing” to ensure the protection of state assets. These provisions are designed to mitigate concerns about cryptocurrency’s volatility and security risks, making the proposal more palatable to cautious legislators and concerned citizens alike.

Industry experts view Michigan’s move as part of a broader geopolitical strategy rather than mere financial speculation. Stadelmann dismissed fears of Michigan “buying the top” with Bitcoin hovering around $117,000, characterizing cryptocurrency as “a geopolitically significant asset” that nation-states and U.S. states are “naturally” choosing to accumulate. He emphasized that states must prepare for a “multi-polar world” where “the U.S. Dollar may no longer be the sole reserve currency of the world, being joined by other currencies like perhaps Yuan or Rubles.”

Stadelmann also cautioned against ignoring traditional precious metals, pointing to El Salvador’s reported move to add gold to its reserves and noting that in the U.S., both gold and silver are “written into the constitution.” This balanced approach suggests that cryptocurrency reserves are being viewed as part of a broader diversification strategy rather than a replacement for traditional asset classes.

The success of Michigan’s legislation could have significant regional implications. Stadelmann believes that if Michigan succeeds, it could pressure neighboring states like Illinois, Ohio, and Pennsylvania to “revive their efforts to avoid being left behind.” This regional domino effect reflects what he describes as inevitable “hyperbitcoinization” spreading across the country at the state level.

Concurrently, at the federal level, the U.S. House recently advanced an appropriations bill directing the Treasury Department to study the feasibility and governance of a Strategic Bitcoin Reserve, including custody, cybersecurity, and accounting standards. This parallel movement suggests that cryptocurrency reserve considerations are gaining traction across multiple levels of government, potentially creating a coordinated approach to digital asset management in public finance.