The State of Michigan Retirement System (SMRS) has significantly increased its Ethereum (ETH) holdings, raising its investment to $10 million and surpassing its Bitcoin (BTC) allocation.

This move makes Michigan the first U.S. state pension fund to invest in an Ethereum-based exchange-traded fund (ETF).

Michigan Pension Fund’s Crypto Portfolio

SMRS, which boasts more than $13 billion in assets, began exploring cryptocurrency earlier this year as part of a broader diversification strategy.

In July, it got into BTC with a $6.6 million purchase of ARK 21Shares’ spot Bitcoin ETF, more than six months after the Securities and Exchanges Commission (SEC) approved the investment product.

According to a recent SEC filing, SMRS now holds 460,000 shares in the Grayscale Ethereum Trust (ETHE), valued at about $10.07 million. It also owns another $1.12 million worth of Ethereum Mini Trust shares. Combined, these holdings total nearly $11 million exclusively in Ethereum-based ETFs.

This increased allocation means that SMRS now has more money invested in Ethereum than Bitcoin, given that its ARK 21Shares position is valued at approximately $7 million.

More U.S. States Embrace Crypto Investments

Michigan’s focus on Ethereum reflects a growing interest among U.S. states in the broader potential of digital assets. In Florida, Chief Financial Officer Jimmy Patronis recently advocated for Bitcoin’s inclusion in the state’s retirement system.

In a letter to the Florida State Board of Administration, Patronis cited the state’s strong economic performance and history of innovation as reasons to explore Bitcoin. He proposed a “Digital Currency Investment Pilot Program” to diversify the Florida Growth Fund into such asset classes.

Wisconsin has also allocated a small portion of its pension funds to crypto assets. In August, the State of Wisconsin Investment Board (SWIB) announced it had increased its holdings in BlackRock’s iShares Bitcoin Trust (IBIT) by 447,651 shares.

Meanwhile, Arizona’s state Senate has advanced legislation to add digital assets to its retirement system, with Wyoming and Nebraska enacting laws to attract cryptocurrency mining and establish a regulatory framework for crypto banks.

Pennsylvania’s legislative assembly also recently advanced a “Bitcoin Rights” bill to clarify the state’s regulations on digital assets. If Governor Josh Shapiro signs it, Pennsylvania will join other states in setting its digital asset regulations amid ongoing uncertainty perpetuated by policies like the SEC’s “regulation by enforcement” approach.