Bill
HB 4087
Authorizes Michigan's State Treasurer to invest up to 10% of the General Fund and Budget Stabilization Fund in cryptocurrency, under strict custody, security, and governance rules
Title: State finance: other; strategic bitcoin reserve; establish. Amends sec. 351 of 1984 PA 431 (MCL 18.1351) by adding sec. 351a.
Status & procedure
- Introduced: March 7, 2025 (sponsor: Rep. Bryan Posthumus).
- Committees: Referred initially to Communications and Technology; later referred to Government Operations. Read first time March 27, 2025. Companion: SB 1626.
- Statutory change: Adds section 351a to the Management and Budget Act (MCL 18.1351).
Purpose
- Authorizes (but does not require) the State Treasurer to invest portions of the State’s general fund and the Countercyclical Budget and Economic Stabilization Fund (Budget Stabilization Fund, BSF) in cryptocurrency and related instruments, establishing statutory parameters and custody/security requirements.
Key provisions
- Permitted funds: General Fund and the Countercyclical Budget and Economic Stabilization Fund (BSF).
- Investment cap: No more than 10% of the available balance in each of those funds may be invested in cryptocurrency.
- Holding methods: Cryptocurrency held by the State must be held directly by the State Treasurer via one of:
- A secure custody solution (detailed below),
- A qualified custodian (federal/state-chartered bank, trust company, or special-purpose depository institution, or a state-regulated company that custody crypto for an approved exchange-traded product), or
- An exchange-traded product (ETP) issued by a registered investment company and traded on a U.S. regulated exchange.
- Custody/security requirements (secure custody solution must):
- Use private keys exclusively known to and accessible by the governmental entity; keys must be stored in an encrypted environment, accessible only via end-to-end encrypted channels, and never stored on or controllable through a smartphone;
- Maintain hardware with keys in at least two geographically diversified, specially designated secure data centers;
- Enforce multi-party governance for transaction authorization, access controls, and full action logging;
- Have disaster recovery protocols to ensure asset access if provider becomes unavailable;
- Undergo regular code audits and penetration testing with prompt remediation of vulnerabilities.
- Payments in crypto: Any taxes or fees paid to the State in cryptocurrency must be transferred to the General Fund; if such payments were designated to another fund, the Treasurer must reimburse that fund from the General Fund in money for the applicable amount.
- Loaning crypto: The Treasurer may loan state-held cryptocurrency (to generate yield) if it can be done without increasing the State’s financial risk, subject to rules promulgated under the Administrative Procedures Act.
Definitions (selected)
- “Cryptocurrency”: digital currency using encryption to regulate generation and verify transfers and that operates independently of a central bank.
- “Exchange-traded product (ETP)”: SEC/CFTC‑approved instrument traded on a U.S. regulated exchange deriving value from an underlying asset pool.
- “Private key” and “qualified custodian” defined as above.
Who is affected
- State Treasurer / Department of Treasury (authority and operational custody decisions).
- The General Fund and BSF (may be partially allocated to crypto).
- Entities receiving tax/fee payments in crypto (treatment flows to General Fund).
- Financial custodians, custodial providers, regulated banks/trusts, and ETP issuers that might serve the State.
Potential fiscal and operational impacts
- The bill is permissive, not mandatory; fiscal impact depends on market performance of cryptocurrencies and choices by the Treasurer. The House Fiscal Agency: no direct fiscal effect anticipated, but potential for either gains or losses; historically these funds have been invested conservatively. Administrative costs expected to be minimal but custody, security, liquidity, regulatory, and market‑volatility risks are material considerations.
Notes
- The bill imposes detailed custody and security controls intended to mitigate operational risk but does not specify which cryptocurrencies may be purchased. Implementation details (loaning, specific custody providers, eligible ETPs) would be defined by Treasury rules and contractual arrangements.
Compiled from official sources — confirm details with the bill’s official record.
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