Michigan lawmakers have returned well with proposals that allow the state to put 10% of its public funds into Bitcoin and other digital assets.
House Bill 4087 cleared the procedural hurdles this week after going dormant for more than seven months. This is a major step in state debate over whether to join the government’s growth list to test Bitcoin reserves.
Introduced in February by Republican Party leaders Brian Poshummus and Ron Robinson, the bill will amend Michigan’s management and budget laws to create a “strategic crypto sanctuary.”
If passed, the bill would allow state accounts to invest up to 10% of money in Bitcoin and other digital assets from the Michigan General Fund, the Counter-Circulation Budget, and Economic Stabilization Fund.
However, Michigan’s Bitcoin Trade Council is opposed to the bill because it does not restrict the state from purchasing Bitcoin alone. The group says that including other “cryptocurrencies” “creates unnecessary risk.” This is because many people are “centered and subject to great risks.”
For months, the bill has been stagnating in Lansing, with many thinking the initiative being dead. However, on Thursday, HB 4087 moved on to his second reading at the Capitol and was featured on the Government Works Committee.
Lawmakers say timing is a sign of new momentum in state-level adoption of digital assets. This is the first time it has moved in seven months, and state-level Bitcoin adoption shows no signs of slowing down.
Analysts believe Michigan’s efforts will pressure neighbouring countries such as Ohio, Illinois and Pennsylvania to revive their own proposals.
The bill doesn’t just allow investments. There are strict rules for how Michigan manages digital holdings.
States should exclusively manage government keys, use encryption, have geographically diverse, secure data centers, and conduct regular audits.
Bitcoin can be held in three ways through “Secure Custody Solution” of products traded on eligible custodians such as regulated banks and trust companies, or exchanges provided by registered investment companies.
The bill also allows states to lend digital asset holdings to generate revenue unless they increase financial risk.
These address the issue that killed other state proposals. Taxpayers must trust third-party “Secure Custody Solution” or “qualified custodians.”
Supporters see this as part of a broader effort to diversify state assets and protect them from inflation.
Supporters argue that holding assets like Bitcoin helps protect against inflation and lower currencies, just like sovereign wealth funds that invest in commodities and alternative assets.
If passed, Michigan will become the fourth state with Bitcoin reserve law after Texas, New Hampshire and Arizona. Texas has already allocated $10 million to Bitcoin, but others have not yet provided funding.
