Main Points :
- Michigan’s HB 4087 would allow up to 10% of certain state funds to be invested in cryptocurrency, including Bitcoin and others.
- The bill does not specify that only Bitcoin may be purchased; no minimum market-cap threshold is included to limit the choice of coins.
- Safe custody, lending, and yield generation via crypto loans are included in the bill, under certain risk constraints.
- The Michigan Bitcoin Trade Council (pro-Bitcoin advocacy group) opposes it because of the risk from altcoins and lack of strict limitations.
- Other states (New Hampshire, Texas, Arizona) have passed reserve laws; many others have proposed similar bills.
- At the federal level, the U.S. executive order and related proposals are advancing the concept of strategic reserves of Bitcoin and other digital assets.
- Potential scale of investment: if many state bills succeed, combined purchases could be billions of dollars (tens or hundreds of thousands of BTC), which could affect price dynamics.
Michigan’s HB 4087: Provisions and Controversies
What the Bill Allows
Michigan’s House Bill 4087, introduced on February 13, 2025 by Representatives Bryan Posthumus and Ron Robinson, amends the State’s Management and Budget Act to establish what they term a Strategic Bitcoin Reserve. HB 4087 permits the Treasurer to invest money from two specific state funds:
- The General Fund
- The Countercyclical Budget and Economic Stabilization Fund (sometimes called the “rainy day” fund)
In total, up to 10% of those available funds would be eligible to be placed in cryptocurrency investments. The bill includes the possibility of using secure custody solutions or exchange-traded products, and also allows for lending the crypto, if doing so does not increase state financial risk.
Lack of Restrictions on Altcoins
A major point of contention is that the bill does not restrict which cryptocurrencies may be invested in. There is no minimum market capitalization requirement or other filter to exclude smaller or more risky tokens (commonly called “altcoins”) under this bill. This omission opens the possibility for the state treasury to allocate funds into high-volatility or less established digital assets.
Opposition from Pro-Bitcoin Group
The Michigan Bitcoin Trade Council has opposed HB 4087 on exactly these grounds. Their argument:
- Only Bitcoin is sufficiently decentralized and has proven risk profile to be suitable for a state’s strategic reserve.
- Altcoins tend to be more centralized, more speculative, sometimes riskier or subject to governance or fraud issues.
- Without minimal criteria, the state could inadvertently become a funding source or credibility support for speculative altcoin projects.
Bill Status
As of the latest information, HB 4087 has advanced to Michigan’s House 2nd Reading, and has been referred to the Committee on Communications and Technology.
U.S. Trend: State and Federal Moves Toward Crypto Reserves
States Passing and Enacting SBR (Strategic Bitcoin Reserve) Laws
Some U.S. states have already passed or signed into law strategic Bitcoin (or broader crypto/digital asset) reserve legislation:
- New Hampshire (HB 302): The first U.S. state to enact such a law, it allows investment in digital assets and precious metals with market caps above US$500 billion — presently, only Bitcoin meets that threshold. Invested funds must be held in secure custody or via exchange-traded product.
- Texas (SB 21): Signed into law June 22, 2025. Establishes a state-level reserve for Bitcoin.
- Arizona: Has passed a bill enabling a crypto/digital asset reserve, using seized assets in some cases. One earlier bill was vetoed, another signed.
Federal Level: Executive Order & Policy Proposals
At the federal level:
- In March 2025, President Donald Trump signed an executive order establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile. These will be funded primarily by forfeited digital assets (i.e. seized via law/enforcement) rather than new budget appropriations.
- Related proposed federal legislation (e.g. the BITCOIN Act) would codify reserve accumulation and possibly require additional purchases of Bitcoin or digital assets.
Potential Scale and Market Impact
- VanEck and other analysts estimate that if all state-level proposed SBR bills in about 18 states are passed, total state purchases could amount to US$20-30+ billion in Bitcoin, possibly over 200,000–300,000 BTC.
- Such scale could influence Bitcoin price dynamics, liquidity, institutional adoption, and custody service demand.
Recent Developments & Moving Pieces
- Some states have tried but failed: bills in Pennsylvania, Wyoming, North Dakota, Montana, etc., either stalled in committees or were vetoed or withdrawn.
- New Hampshire’s law (HB 302) goes into effect 60 days after signing, setting precedents for how market-cap filters, custody, and risk controls are structured.
- Michigan’s HB 4087 is part of this broader wave; it is among ~20 state proposals pending as of mid-2025.
Implications for Revenue & Blockchain Use
For readers interested in new crypto assets, revenue streams, and practical blockchain applications, these developments suggest several takeaways:
- New Demand for Secure Custody and Auditing Services: States will need robust custody, key management, audit, and regulatory compliance. This opens business opportunities in institutional custody, insurance, and audit verification.
- Yield-Generating Crypto Products: Bills often include language about lending crypto or using exchange-traded products, implying opportunities (and risks) in DeFi, staking or lending derivatives.
- Risk Management Becomes Central: Volatility, regulatory risk, security risk (e.g., key theft, hacking), and governance of altcoins are central concerns. Structures for limiting exposure will be critical.
- Market Effects on Crypto Asset Prices: If many states accumulate Bitcoin (or other large-cap assets), that could reduce available supply on exchanges, push price, affect liquidity and derivatives markets.
- Regulatory & Legal Precedents: State laws may become models. How states regulate these reserves—including definitions of which digital assets are eligible, what custody standards, what oversight—is likely to shape broader policy.
Comparison: Michigan vs New Hampshire / Texas
| Feature | Michigan HB 4087 | New Hampshire HB 302 | Texas SB 21 |
|---|---|---|---|
| Max % of funds allowed | Up to 10% of General Fund & Rainy Day Fund | Up to 5% into precious metals + digital assets with market cap > US$500 billion (so only Bitcoin at present) | Similar scale; establishes a reserve fund via law, with purchase & holding of Bitcoin; exact % depends on law text. |
| Eligible cryptos | Any (no market cap filter) under Michigan’s bill; altcoins possible | Only high-market-cap assets (> US$500B) — which currently limits to BTC | Focused on Bitcoin explicitly in law text. |
| Lending / Yield permitted? | Yes, if without additional financial risk. | Not explicitly permissive or structured in same lending way. | Less emphasis on lending in law text, more on holding/stitched custody. |
Challenges & Risks
- Volatility: Even large-cap cryptos (Bitcoin in particular) are volatile; market swings can generate large gains but also large losses that might undermine public trust.
- Regulatory Risk: Securities laws, tax law, custody regulation, fraud or governance issues could cause legal liabilities.
- Custody and Security: Mistakes in private key management or lapses in security undermine everything. Some bills require “secure custody solutions” but what that means in practice may vary widely.
- Political & Public Perception: Using taxpayer/rainy-day public funds in volatile assets can generate criticism, especially if losses happen.
- Liquidity and Market Impact: Large purchases by states may move markets; high demand might drive prices up, but could also lead to illiquidity, slippage, or increased cost of acquisition.
What to Watch Next
- How Michigan’s HB 4087 evolves: whether amendments will add limitations (e.g. minimum market cap, only Bitcoin, or tighter risk caps).
- Which other state bills will pass: the pace of adoption across the U.S.
- Federal legislation to follow up the executive order: the BITCOIN Act and related bills that might mandate or fund purchases rather than relying only on seized assets.
- Developments in custody, insurance, auditing—business and technical standards emerging as states put law into practice.
- Market responses: how price behaves, how institutional players position, whether yield or lending features are leveraged.
Conclusion
Michigan’s HB 4087 is a significant example of how state governments are moving from talk to action in the strategic use of cryptocurrency, particularly Bitcoin and possibly other high-cap assets, as reserve assets. Its allowance for up to 10% of key funds, inclusion of lending, and broad eligibility for cryptos make it more ambitious — but also more exposed to altcoin-related risk — compared to other state laws like New Hampshire’s more restrictive market-cap thresholds.
For investors, blockchain technologists, and potential new revenue sources, this suggests opportunities in providing services (custody, risk management, auditing), in designing financial products suited to state reserves, and in being attentive to regulatory shifts. But the flip side is that risk — market, regulatory, security — remains very real, and the public accountability stakes are high.
As the trend accelerates, the question may shift from if state or federal strategic crypto reserves are adopted more widely, to how they are structured — which assets are permitted, how risk is controlled, and who safeguards the infrastructure. For anyone exploring new crypto projects or looking for revenue or utility in blockchain, these legal frameworks may determine what becomes investable or practical.
