Michigan's Crypto Reserve: A Shield Against Dollar Devaluation

Michigan’s strategic cryptocurrency reserve bill, House Bill 4087, has advanced to the next legislative stage, marking a significant step in the state’s push to diversify its financial reserves with digital assets. The bill, introduced in February 2025 by Republican Reps. Bryan Posthumus and Ron Robinson, would permit the state treasurer to allocate up to 10% of Michigan’s general and economic stabilization funds into cryptocurrency investments. It recently cleared procedural hurdles and was referred to the Government Operations Committee, positioning it for further debate and potential enactmentMichigan Bitcoin Reserve Bill Moves Forward After Months of Delay^[1].

The proposed legislation aligns Michigan with a growing trend among U.S. states exploring Bitcoin and crypto reserves. Currently, only New Hampshire, Arizona, and Texas have enacted laws enabling state treasurers to invest in Bitcoin, while over 20 states, including Michigan, have active legislation under considerationMichigan Advances Bitcoin Reserve Bill: A New Era for Crypto^[2]. Advocates argue that such reserves could hedge against inflation and currency devaluation, drawing parallels to sovereign wealth funds like Norway’s oil fund. Kadan Stadelmann, CTO of Komodo Platform, emphasized that Michigan’s detailed security provisions—such as exclusive government control of private keys, geographically diversified data centers, and regular audits—address past vulnerabilities seen in states like FloridaMichigan Bitcoin Reserve Bill Moves Forward After Months of Delay^[1].

Critics, however, raise concerns about Bitcoin’s price volatility and the regulatory uncertainties surrounding crypto assets. The Michigan Bitcoin Trade Council has opposed the bill, citing risks from the lack of a market capitalization threshold, which could allow the state to invest in non-Bitcoin cryptocurrencies perceived as less stableMichigan Crypto Reserve Bill Advances To Second Reading^[4]. The legislation also permits the state to loan out cryptocurrency holdings to generate additional returns, provided it does not increase financial riskMichigan lawmakers push crypto reserve bill | Invezz^[5]. This provision reflects a broader industry trend of leveraging crypto assets for yield, though it introduces complexities in custody and governance.

The bill’s progression occurs amid a surge in institutional and state-level interest in Bitcoin. As of early 2025, over 47 states have introduced or are considering crypto reserve legislation, with about 26 still activeMichigan Bitcoin Reserve Bill Moves Forward After Months of Delay^[1]. The Trump administration’s expressed support for a national Bitcoin reserve has further fueled state-level initiatives, as governments seek to diversify beyond traditional assets. Michigan’s pension fund already holds small Bitcoin exposure through ETFs, signaling incremental adoptionMichigan progresses Bitcoin Reserve bill to invest 10% state funds …^[3].

If passed, the bill would require the state treasurer to hold crypto assets through one of three methods: a “secure custody solution,” a qualified custodian, or exchange-traded products from regulated investment companies. These requirements aim to mitigate risks while ensuring compliance with existing financial regulationsMichigan lawmakers push crypto reserve bill | Invezz^[5]. The legislation does not specify particular cryptocurrencies but defines eligible assets as those using encryption to regulate unit generation and operate independently of central banksMichigan Crypto Reserve Bill Advances To Second Reading^[4].

The debate over Michigan’s bill underscores the broader national conversation about crypto’s role in public finance. While proponents highlight its potential as a hedge against dollar devaluation and a tool for economic resilience, skeptics warn of the risks posed by market fluctuations and regulatory gaps. As the bill moves through the committee process, its outcome could influence neighboring states like Illinois, Ohio, and Pennsylvania, which are also considering similar measuresMichigan Bitcoin Reserve Bill Moves Forward After Months of Delay^[1].