Michigan lawmakers are considering a bill that would allow the state to invest a portion of its emergency funds in digital currencies.
On September 18, the proposed legislation, House Bill 4087, reached its second reading and was passed along to the Committee on Government Operations for further consideration.
The bill, introduced in February by Republican representatives Bryan Posthumus and Ron Robinson, would enable the state treasurer to allocate up to 10% of two financial reserves, the Economic Stabilization Fund and the Countercyclical Budget Reserve, into certain types of cryptocurrency.
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Rather than listing specific cryptocurrencies, the bill defines eligible assets as digital currencies that use encryption to manage how units are created and verify transactions, and that operate without oversight from a central bank.
To manage risk and protect public funds, the bill outlines three methods for holding digital assets: through a dedicated, secure custody system, with a qualified custodian such as a regulated bank or trust company, or by investing in exchange-traded products from registered investment firms.
There is also a provision that allows the state to lend out its digital assets in certain cases, provided the arrangement does not expose the state to increased financial risk.
The legislation also requires strict security measures for storing cryptocurrency. These include limiting private key access to the government, using encrypted systems, restricting mobile device access, and storing data in secure locations.
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