Key Points
- Michigan introduces a bill to establish a strategic cryptocurrency reserve, becoming the 20th state to consider such a measure.
- The bill proposes that the state treasurer can allocate up to 10% of the state’s general and economic stabilization funds for cryptocurrency investments.
A legislative proposal for the establishment of a strategic cryptocurrency reserve has been put forward in Michigan. This makes it the 20th state to contemplate a reserve backed by digital currency.
The bill, House Bill 4087, was presented by Representatives Bryan Posthumus and Ron Robinson on February 13. It suggests that the state treasurer should be allowed to allocate up to 10% of both the state’s general fund and the economic stabilization fund for investments in cryptocurrency.
Details of the Bill
The bill details that the state treasurer would be in charge of directly managing any cryptocurrency investments. This would be done using a secure custody solution, a qualified custodian, or an exchange-traded product from a regulated investment company.
The legislation also paves the way for cryptocurrency lending. It states that if it can be done without increasing the state’s financial risk, the treasurer may loan the cryptocurrency to produce additional returns.
Furthermore, the bill dictates that any taxes or fees paid to the state in cryptocurrency must be transferred to the general fund. If a payment or fee was initially intended for another fund, the treasurer is obligated to reimburse that fund in fiat currency equivalent to the cryptocurrency received.
Other States Considering Crypto Reserves
With this move, Michigan joins 19 other U.S. states that are currently contemplating a cryptocurrency strategic reserve and are at different stages of legislation.
Experts predict that Utah will be the first state to pass such a bill because of its 45-day legislative timeline, the shortest among all other states. Utah also has a dedicated digital asset task force that has consistently pushed crypto-related laws toward approval.
Michigan’s bill is similar to a proposal presented in the Texas Senate by Senator Charles Schwertner on February 12. In response to the Texas bill, Posthumus emphasized that Michigan should “join Texas in leading on crypto policy” by endorsing the “Michigan Crypto Strategic Reserve.”
Michigan has previously investigated crypto investments via Bitcoin and Ethereum exchange-traded funds. In November, the State of Michigan Retirement System became one of the top five holders of Grayscale’s spot Ethereum ETF through a $10 million investment. This was in addition to the $6.6 million invested in ARK 21Shares’ ARKB spot Bitcoin ETF in July.