Michigan Introduces Four Bills to Regulate Cryptocurrency Investments and Mining

Michigan lawmakers have introduced four new cryptocurrency-related bills this week, marking a significant step in defining the state's approach to digital assets. The proposed legislations, House Bills 4510, 4511, 4512, and 4513, cover a range of topics including public pension investments in crypto, mining, income tax exemptions, and restrictions on Central Bank Digital Currency (CBDC) support.

House Bill 4510, introduced by Representative Bill Schuette, aims to amend Michigan’s Public Employee Retirement System Investment Act. This amendment would allow the state treasurer to invest in cryptocurrencies, specifically those with an average market capitalization of at least $250 billion over the past calendar year. Currently, only Bitcoin (BTC) and Ether (ETH) meet this threshold. These investments would be made through exchange-traded products issued by a registered investment company, ensuring a regulated and secure investment process.

House Bill 4511, sponsored by Representative Bryan Posthumus, proposes to prohibit the state and its subdivisions from banning the holding of digital assets or imposing licensing, permitting, or discriminatory tax requirements based solely on digital asset usage. This bill also bars state agencies from advocating for or supporting any federal CBDC by issuing memoranda or official endorsements. Additionally, it protects blockchain participants by preventing restrictions on node operations, asset transfers, and staking, while shielding validators and node operators from civil liability.

House Bill 4512, introduced by a bipartisan group led by Representative Mike McFall, outlines a Bitcoin mining partnership program targeting abandoned oil and gas wells. Under this proposed program, participants would receive temporary rights to use the wells for energy generation in return for assuming responsibility for plugging, site restoration, and response activity. The bill requires the supervisor of wells to identify eligible sites, publish detailed assessments, and manage a competitive bidding process. Selected participants must provide financial assurances, submit environmental and production data, and report annually. Mining rights are contingent on adherence to these obligations and capped plugging costs.

McFall also led the introduction of House Bill 4513, which would amend Michigan’s Income Tax Act to exempt income earned through the proposed Bitcoin mining program from state income tax. This amendment defines the scope of exempt income and aligns it with the program framework established under HB 4512, providing clarity for both individual and corporate taxpayers participating in the initiative.

In addition to these four bills, Michigan is also considering the creation of a strategic cryptocurrency reserve. Introduced on Feb. 13 as House Bill 4087, this earlier proposal, backed by Representatives Posthumus and Ron Robinson, would authorize the state treasurer to allocate up to 10% of the general fund and Budget Stabilization Fund for crypto investments. This move would further solidify Michigan's commitment to integrating cryptocurrencies into its financial strategies.

These legislative efforts reflect a growing trend among U.S. states to engage with cryptocurrencies and blockchain technology. By introducing these bills, Michigan aims to position itself as a leader in the digital asset space, fostering innovation while ensuring regulatory compliance and financial stability. The proposed measures not only address the investment and operational aspects of cryptocurrencies but also seek to protect participants and promote responsible mining practices. The outcome of these legislative initiatives will be closely watched as they could set a precedent for other states considering similar regulations.