ultimately, they will be.
governments like municipalities are also institutional investors.
the question is whether to keep a portion of their reserves in cash (where the value will depreciate), more conservative investments like bonds (where the gains are small), or......bitcoin.
If the reserves are there, then they should be kept in liquid or semi-liquid assets, because the municipality may need to dip in to the reserves and withdraw it very frequently. And now the risk in investing in Bitcoin is that it is a very volatile asset and it is entirely possible that the prices can dip by 50% or 60% within a month. Here the municipality may not be in a position to wait for 3-4 years, so that the prices may come back to the previous levels.