Michigan Joins Crypto Race: Proposes 10% State Fund Allocation

Michigan has joined the race to establish a strategic crypto reserve, with the introduction of House Bill 4087. The bill, presented by Representatives Bryan Posthumus and Ron Robinson on February 13, 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.

The bill outlines that 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. It 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 that 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 February 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 first to invest in Grayscale’s spot Ethereum ETF via a $10 million investment. This was on top of the $6.6 million investment in ARK 21Shares’ ARKB spot Bitcoin ETF in July.