In a significant legislative move, Michigan’s policymakers are advancing a proposal that could position the state as a forward-thinking leader in digital finance. The proposed House Bill 4087 has successfully progressed to a second reading by mid-September 2025. This bill aims to modify the Michigan Management and Budget Act, enabling the state treasurer to establish a strategic cryptocurrency reserve.

This proposed legislation permits the state treasurer to allocate up to 10% of specific state funds into eligible digital currencies. These funds include the countercyclical budget and the economic stabilization fund. While the bill refrains from specifying individual currencies, it outlines criteria that digital assets must meet to qualify as investments. Advocates argue that this initiative offers Michigan a novel opportunity to diversify its financial portfolio, mitigating inflation risks while potentially benefiting from crypto market growth.

The bill mandates stringent security measures to ensure safe custody of the assets. Key provisions include exclusive governmental control over private keys, the requirement for state-regulated or bank custodians, and the possibility of investments through registered investment companies or exchange-traded products. Additionally, technical safeguards are prescribed, such as end-to-end encryption, prohibition of smartphone access, geographically-distributed secure data centers, multi-party transaction approvals, and regular security audits.

Proponents highlight that the stringent guidelines alleviate major risks, suggesting that a prudent, limited investment could shield Michigan from potential dollar depreciation while offering growth opportunities. Lawmakers, including Representatives Bryan Posthumus and Ron Robinson, initially introduced the bill in February 2025. Its recent progress, following a period of stagnation, has captured attention. Observers note that other US states have considered similar legislative actions, potentially setting a trend in public sector financial strategies.

Despite its potential, the bill faces skepticism. The Michigan Bitcoin Trade Council expresses concerns about the absence of a market-cap threshold, fearing investments in smaller, volatile tokens. Critics also worry about the volatility of cryptocurrencies, which could expose public funds to significant risks. Moreover, questions linger regarding key management, audit processes, and how potential losses would be managed during severe market downturns.

Currently, the bill is under review by the Committee on Government Operations, where it is expected to undergo rigorous examination. Should it pass, Michigan would join a select number of states authorizing public treasurers to hold cryptocurrencies. This legislative development reflects an evolving approach to financial management in the digital age, signaling a shift towards embracing innovative economic strategies.