Michigan Bullion Depository and Michcoin Act (HB 4086)

HB 4086 would establish the office of the Michigan bullion depository inside the Department of Treasury. The depository would serve as custodian, guardian and administrator for certain bullion and specie transferred to or acquired by the state. The bill assigns oversight to the state treasurer, who would appoint a bullion depository administrator to manage depository operations, depository agents and related transactions involving state bodies or private persons.

The bill also would create the Michigan bullion depositary fund in the state treasury. Depository revenues and specified fee proceeds would flow into that fund, subject to appropriation for administration, depository operations, issuance of gold and silver specie, issuance of Michcoin, vendor payments, depository agents and security functions.

Article 2 of the bill would direct the state treasurer to establish and issue gold and silver specie and to establish a digital currency based on gold and silver. The text defines Michcoin as a digital representation of gold and silver specie and bullion held in a pooled depository account. The bill states that each unit would represent a fraction of a troy ounce of gold or silver held in trust.

The state treasurer could contract with private vendors to build the digital currency, provide a digital wallet or perform other duties. The introduced bill would require the state to provide a way for holders to transfer Michcoin electronically and to use it as legal tender in payment of debt, while also allowing gold and silver specie to be transferred by holders.

HB 4086 would permit the treasurer to issue units or fractional units of Michcoin when a person funds a purchase of gold or silver for the pooled account or transfers eligible gold or silver from a depository account into that pool. The trustee would have to maintain enough gold and silver specie or bullion to redeem all issued but unredeemed digital currency units.

Redemption could occur in two ways under the introduced bill. A holder could present Michcoin for U.S. dollars, in which case the treasurer would sell the corresponding gold or silver from the pooled account and remit the proceeds less any fee. A holder could also redeem for an equivalent fractional number of troy ounces of gold or silver, again subject to fees. The value of a unit at the time of issuance or redemption would be tied to the relevant fraction of a troy ounce as published by the depository.

The proposal includes several operational limits. The depository generally could not engage in precious-metals leasing, swaps, futures, options or other leverage-style transactions, with limited exceptions for ordinary purchase-and-sale price risk and insurance. It also could not credit account balances beyond metals held for the depository and its agents, extend credit except where incidental to authorized functions or operate as a bank or savings-and-loan business.

Other provisions would require rulemaking by the Department of Treasury, reporting by depository agents, procedures intended to reduce taxable-gain accounting burdens, annual reporting to state officials by September 30 and confidentiality protections for individual account records, security records and commercially sensitive information.