Michigan Bill Proposes Restrictions on State CBDC Participation and Enhanced Protections for Digital Asset Users
Earlier this year, the Michigan House of Representatives introduced several new bills aimed at fostering blockchain innovation and addressing certain open issues regarding the treatment of digital assets. As discussed herein, one of these bills, HB 4511 of 2025, provides digital asset users and associated service providers helpful guidance on the state’s current approach to this technology while reflecting broader policy trends at the state and federal levels.
Broad Protections of Digital Asset Ownership
The first section of HB 4511 seeks to prohibit Michigan and its agencies from enacting certain prohibitions regarding digital assets.
Specifically, Section 1a provides that the state may not “ban the holding of digital assets” as a general proposition. This provision would ostensibly safeguard the possession of digital assets by retail consumers within Michigan, while potentially providing comfort to businesses or digital asset service providers seeking to custody digital assets.
Section 1b similarly prohibits the state from “requir[ing] a permit or license for the holding of digital assets.” If signed into law, this provision could provide some measure of operational predictability for businesses and individuals while avoiding the administrative burden and uncertainty associated with potential licensing requirements.
Section 1c serves as a catch-all provision, prohibiting the state from “impos[ing] any other impairment for the holding of digital assets. If signed into law, this provision would seemingly preclude indirect restrictions, such as excessive compliance obligations or discriminatory treatment of digital asset holders under general business regulations, that could negate the pro-digital asset provisions reflected in HB 4511.
In this spirit, Section 1d of HB 4511 prohibits the state from imposing any additional tax, withholding, assessment, or charge based solely on the use of digital assets as a method of payment. This provision is intended to treat digital asset transactions in the same manner as those facilitated with U.S. legal tender for tax purposes.
Prohibition of State-Supported CBDC Activity
The second section of HB 4511 reflects a growing push to prohibit government participation in central bank digital currency (CBDC)-related activities, providing that the state may not “advocate for or support... the testing, adoption, or implementation of a central bank digital currency by the United States government.”
This approach reflects a significant departure from prior efforts to explore CBDCs—essentially, government issued digital assets akin to a “digital dollar.” For instance, in 2022, federal agencies were directed to engage in research regarding the risks and potential benefits of a U.S. CBDC under Executive Order 14067, which tasked the Secretary of the Treasury, in consultation with other relevant agencies, to analyze the potential features and implications of a United States-issued digital currency. However, the current administration has effectively revoked that Order and explicitly prohibited federal agencies from issuing such assets.
Safeguards for Blockchain Participation
The third section of HB 4511 outlines explicit protection for participation in blockchain networks. Section 3a provides that the state may not prohibit “the operation of a node for the purpose of connecting to a blockchain protocol or a protocol built on top of a blockchain protocol.” This provision indicates that participation in critical blockchain mining activity, as well as node operation to facilitate transactions, access blockchain data, and provide digital asset services will be protected in Michigan.
Similarly, Section 3b provides that the state may not ban “the transfer of digital assets on a blockchain protocol.” This ensures that cryptocurrency can be used for payment, investment, or other operational use. Section 3c further provides that the state may not ban “the participation in staking on a blockchain protocol.” This provision confirms protection for those who lock up cryptocurrency to assist in the validation of transactions, an area previously scrutinized by federal securities regulators but recently clarified by the SEC as not constituting securities offerings subject to its jurisdiction.
Lastly, Section 4 provides that there is no civil liability for those who “only validate a transaction for digital asset mining, the operation of a node or series of nodes on a blockchain network, or the provision of digital asset mining or staking services for persons.” Practically, this means that technologically supporting blockchain activity, in the form of mining, staking, or node operation, will not, on its own, give rise to civil liability if HB 4511 ultimately becomes law.
Practical Observations / Implications
HB 4511 Resists CBDC Implementation: Michigan’s bill clearly communicates its alignment with federal directives opposing the implementation and research of CBDCs.
Regulatory Clarity for Cryptocurrency Businesses: The bill provides some clarity for businesses involved in cryptocurrencies operating in Michigan regarding potential future legal and policy developments.
Protections for Infrastructure-Level Participants: HB 4511 seeks to solidify legal protections for node operators, stakers, and miners.
Compounding Compliance Burdens: However, HB 4511 contributes to the burgeoning landscape of state-level digital asset legislation. This proliferation may further exacerbate compliance challenges for businesses engaged in cross-state operations.
Conclusion
This alert was prepared with the substantial assistance of Elijah Travis. If you have any questions or would like more information on the issues discussed herein, please contact William Kraus, Chair of Pierson Ferdinand LLP’s FinTech and Blockchain group.
This publication and/or any linked publications herein do not constitute legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, the author(s) and PierFerd assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, this publication may constitute Attorney Advertising. © 2025 Pierson Ferdinand LLP.
