Michigan’s cryptocurrency legislation divides specialists: Broader asset portfolios versus exclusive Bitcoin safeguards

Michigan’s House Bill 4087, which would permit the state to invest up to 10% of its general and stabilization funds in cryptocurrencies, has moved forward for a second reading in the state House of Representatives after a seven-month delay. First introduced in February 2025 by Republican lawmakers Bryan Posthumus and Ron Robinson, the measure is now set for assessment by the Committee on Government Operations [ 1 ]. Should the bill become law, Michigan would join Texas, New Hampshire, and Arizona—three states that have already implemented legal structures for holding state-level

reserves [ 2 ]. For example, Texas has allocated $10 million for Bitcoin acquisitions, although New Hampshire and Arizona have not yet funded their reserves [ 1 ].

The bill specifies strict security measures for managing crypto assets, requiring the state to have sole access to private keys, utilize encryption, and require multi-party approval for transactions. Holdings must be managed through secure custody services, qualified custodians, or exchange-traded products (ETPs) offered by registered investment firms. The proposal also allows the state to lend its digital assets as long as no additional financial risk is incurred, aiming to produce returns while managing exposure [ 3 ]. However, critics argue the bill’s broad criteria for digital assets—not restricting them to Bitcoin—could increase risk. The Michigan Bitcoin Trade Council opposes the bill, advocating for limiting reserves to Bitcoin only, citing concerns about centralization risks from other cryptocurrencies [ 3 ].

The bill’s advancement reflects a wider movement among states toward holding crypto reserves. Currently, more than 26 states have active legislation regarding crypto reserves, and 47 states have either proposed or are considering similar initiatives, partly in response to President Donald Trump’s March 2025 executive order calling for a national Bitcoin reserve [ 2 ]. While advocates see this as a hedge against inflation and a way to diversify state assets, detractors warn of Bitcoin’s price swings—even though it surged 25% year-to-date, reaching a new high of $124,500 in August 2025 [ 1 ].

Backers of the measure, including industry professionals such as Kadan Stadelmann of Komodo Platform, contend Michigan’s security protocols address past missteps in states like Florida. Stadelmann highlighted that features such as disaster recovery strategies and systematic audits could become a benchmark for other states, potentially encouraging neighboring areas like Illinois and Ohio to accelerate their crypto initiatives [ 5 ]. Additionally, the U.S. House has tasked the Treasury Department with evaluating the practicality of a federal Bitcoin reserve, emphasizing aspects like custody, cybersecurity, and accounting procedures [ 1 ].

Yet, opposition persists, especially from those worried about regulatory ambiguity and insufficient protections against less robust cryptocurrencies. The Michigan Bitcoin Trade Council criticized the lack of requirements, such as a minimum market capitalization, to restrict which assets could be purchased by the state [ 4 ]. Meanwhile, federal authorities and lawmakers continue to discuss the role of digital assets in government finance, with the U.S. House progressing with an appropriations bill to study management of a prospective national Bitcoin reserve [ 3 ].

If the legislation passes, it could become a template for other states, though its rollout will be scrutinized for financial risk management and compliance with regulations. The methods chosen for asset custody, auditing, and risk controls will be vital for its effectiveness. As the policy debate continues, Michigan’s move highlights the increasing acceptance of Bitcoin among institutions, with 17 other states still awaiting decisions on their own crypto reserve bills [ 3 ].