Michigan lawmakers introduce crypto reserve bill to regulate digital assets

Michigan has become the latest to join the race to establish a strategic cryptocurrency reserve at the state level.

House Bill 4087 looks to amend the 1984 Management and Budget Act (PA 431) by modifying Section 351 and adding Section 351a, allowing the state treasurer to use public funds to invest in cryptocurrency.

The bill was introduced to the Michigan House of Representatives on February 13 by Representatives Bryan Posthumus and Ron Robinson and will first be reviewed by the Committee on Communications and Technology. 

If approved, it will proceed to the House floor for a vote before moving to the Senate for further consideration. If passed by both chambers, it will require the governor’s signature to become law.

What is House Bill 4087?

The bill, if signed into law, will allow the state treasurer to allocate up to 10% of both the general fund and the economic stabilisation fund towards cryptocurrency investments.

These investments must be held through a “secure custody solution,” a “qualified custodian,” or an “exchange-traded product” from a regulated investment company.

The bill also requires that any taxes or fees paid to the state in cryptocurrency be converted into fiat currency and deposited into the general fund.

If those funds were meant for a different state account, the treasurer must reimburse the correct fund in fiat currency.

A provision in the bill opens the door for crypto lending, allowing the state to loan out its cryptocurrency holdings to earn returns—so long as it doesn’t add financial risk.

“If cryptocurrency can be loaned without increasing the financial risk to this state, the state treasurer is permitted to loan the cryptocurrency to yield further return to this state through rules promulgated by the state treasurer,” an excerpt from HB 4087 reads.

However, it must be noted that the bill doesn’t specifically mention Bitcoin.

This is an approach that has also been taken by a number of other states currently considering similar bills.

20 US states join the crypto reserve race

Referencing data from Bitcoin Reserve Monitor, Michigan has become the 20th US state to consider a cryptocurrency-backed reserve.

Michigan’s bill comes a day after Texas introduced a similar proposal in the Senate, sponsored by Senator Charles Schwertner.

On February 7, Missouri Representative Ben Keathley introduced a second Bitcoin strategic reserve bill that plans to allow the state treasurer to buy, store, and accept BTC under specific conditions. 

A day before, New Mexico Senator Ant Thornton proposed the “Strategic Bitcoin Reserve Act.”

According to experts, state-level Bitcoin reserve bills could significantly impact Bitcoin’s adoption and price trajectory.

Notably, asset manager VanEck estimates that if all 20 proposed state-level Bitcoin reserve bills are enacted, it could drive $23 billion in BTC purchases.

The post Michigan lawmakers introduce crypto reserve bill to regulate digital assets appeared first on Invezz