Michigan joins crypto reserve race with House Bill 4087

A bill to establish a strategic crypto reserve has been introduced in Michigan, making it the 20th state to consider a digital currency-backed reserve.

Presented by Representatives Bryan Posthumus and Ron Robinson on Feb. 13, House Bill 4087 proposes allowing the state treasurer to allocate up to 10% of both the state’s general fund and the economic stabilization fund for cryptocurrency investments.

According to the bill, the state treasurer would be responsible for directly holding and managing any crypto investments using a “secure custody solution,” a “qualified custodian,” or an “exchange-traded product” from a regulated investment company.

The bill also opens the door for crypto lending, stating that if it can be done “without increasing the financial risk to this state,” the treasurer may loan the cryptocurrency to generate additional returns.

Additionally, the bill mandates that any taxes or fees paid to the state in cryptocurrency must be transferred to the general fund. If a payment or fee was originally intended for another fund, the treasurer is required to reimburse that fund in fiat currency equivalent to the crypto received.

With this, Michigan joins 19 other U.S. states that are currently considering a cryptocurrency strategic reserve and are at various stages of legislation. 

Experts speculate Utah will be the first state to pass such a bill due to its 45-day legislative timeline, which is the shortest among all other states. It also benefits from a dedicated digital asset task force that has consistently driven crypto-related laws toward approval.

Meanwhile, Michigan’s bill follows a similar proposal presented in the Texas Senate by Senator Charles Schwertner on Feb. 12. Commenting on the Texas bill, Posthumus stressed that Michigan should “join Texas in leading on crypto policy” by signing the “Michigan Crypto Strategic Reserve.” 

Michigan has previously explored crypto investments via Bitcoin and Ethereum exchange-traded funds. In November, the State of Michigan Retirement System became one of the top five holders of Grayscale’s spot Ethereum ETF via a $10 million investment. This was on top of the $6.6 million invested in ARK 21Shares’ ARKB spot Bitcoin ETF in July.