Michigan Proposes Bitcoin Reserve, Explores State Stablecoin

Michigan has joined the growing list of U.S. states exploring the potential of cryptocurrencies as a strategic reserve. On February 13, Representatives Bryan Posthumus and Ron Robinson introduced House Bill 4087, which aims to amend the state's Management and Budget Act to establish a strategic Bitcoin (BTC) reserve. This move makes Michigan the 20th state to propose legislation related to state crypto investments, pending a vote.

The Michigan bill, if passed, would allow the state's treasurer to invest in cryptocurrencies from both the general fund and economic stabilization fund, with a cap of 10%. The legislation does not specify any limits or guidelines for the types of cryptocurrencies that can be purchased for the reserve. Additionally, the bill includes a provision for lending cryptocurrencies, provided it does not increase financial risk to the state, to yield further returns.

The state must hold cryptocurrencies directly through secure custody solutions or exchange-traded products from registered investment companies. Michigan's state pension fund already has exposure to Bitcoin and Ether exchange-traded funds.

In a separate development, Representative Posthumus floated the idea of "MichCoin," a stablecoin tied to the state's gold and silver reserves. He believes that the state of Michigan should create this stablecoin to have real value.

Currently, 20 U.S. states have crypto reserve bills that have advanced beyond the level of a House committee. The most recent state to propose or amend a crypto bill was Texas, which filed legislation this week to allow the state to invest and trade crypto assets. North Dakota is the only state to have rejected legislation regarding crypto investments.