Historic Legislation: Texas became the first U.S. state to establish a state-backed Bitcoin reserve through Senate Bill 21, signed into law on June 21, 2025.
Purpose: The reserve aims to hedge against inflation and diversify Texas’ financial reserves, managed by the Texas Comptroller of Public Accounts.
Investment Scope: The fund is limited to cryptocurrencies with an average market capitalization of at least $500 billion over the past 24 months, currently only Bitcoin (BTC).
Bipartisan Support: The bill passed with strong bipartisan backing, 25-5 in the Senate and 101-42 in the House, reflecting Texas’ crypto-friendly stance.
Economic Impact: The reserve positions Texas as a leader in digital asset adoption, potentially influencing other states and federal policy.
In a groundbreaking move, Texas has become the first U.S. state to establish a state-backed Bitcoin (BTC) reserve, following the signing of Senate Bill 21 (SB 21) into law by Governor Greg Abbott on June 21, 2025. The legislation, officially titled the Texas Strategic Bitcoin Reserve and Investment Act, marks a bold step in integrating cryptocurrencies into state financial strategies, aiming to hedge against inflation and diversify Texas’ financial reserves. This development positions Texas as a pioneer in state-level cryptocurrency adoption, potentially setting a precedent for other states and even federal policy.
The Road to Senate Bill 21
Introduced by Senator Charles Schwertner (R-Georgetown) and sponsored in the House by Representative Giovanni Capriglione (R-TX), SB 21 passed the Texas Senate on March 6, 2025, with a 25-5 vote and the House on May 21, 2025, with a 101-42 vote. The bill received bipartisan support, reflecting Texas’ growing reputation as a hub for blockchain and cryptocurrency innovation. “Senate Bill 21 is about recognizing digital assets not as a trend but as a strategic opportunity,” Capriglione stated on the House floor, emphasizing the bill’s role in “strengthening the state’s fiscal resilience”.
The legislation establishes the Texas Strategic Bitcoin Reserve, a special fund outside the state treasury, managed by the Texas Comptroller of Public Accounts. The fund is financed through legislative appropriations, dedicated revenue streams, investment proceeds, and voluntary cryptocurrency donations from Texas-domiciled individuals. To ensure financial prudence, investments are restricted to cryptocurrencies with an average market capitalization of at least $500 billion over the previous 24 months, a threshold currently met only by Bitcoin (BTC).
Why a Bitcoin Reserve?
The primary goal of the bitcoin reserve is to serve as a hedge against inflation and economic volatility. Senator Schwertner argued, “Texas cannot expect to put its money in a one-percent savings account and keep up with inflation. We need to be forward-thinking as individuals are when it comes to financial assets”. Bitcoin (BTC), often referred to as “digital gold” due to its limited supply of 21 million coins and decentralized nature, is seen as a store of value comparable to traditional assets like gold or land.
Texas’ move comes amid a broader national trend, with states like New Hampshire and Arizona also adopting Bitcoin reserves. The state’s decision aligns with comments from Lieutenant Governor Dan Patrick, who stated, “Some have called Bitcoin ‘digital gold,’ and I believe its limited supply and decentralized nature make it a critical asset for Texas’ future”.
1/Texas just passed a law to create a Strategic Bitcoin Reserve.Not a resolution. Not a study.A real, codified plan for the state to acquire and hold Bitcoin.We’re officially past the point of theory. pic.twitter.com/ck8AzieXQv
— BTC in D.C. (@btcindc_) May 29, 2025
This sentiment is echoed in posts on X, such as one from @btcindc_ on May 29, 2025, which celebrated Texas’ move: “A real, codified plan for the state to acquire and hold Bitcoin. We’re officially past the point of theory”.
Structure and Safeguards
The Texas Strategic Bitcoin Reserve is designed with several safeguards to mitigate the risks associated with cryptocurrency’s volatility. The Comptroller can contract with Texas-based third-party custodians and liquidity providers with audited financial records and expertise in digital asset management. Additionally, a five-member Texas Strategic Bitcoin Reserve Advisory Committee, including cryptocurrency experts, will guide investment strategies and risk management. The Comptroller is required to publish biennial reports detailing the reserve’s holdings, valuation changes, and administrative actions, ensuring transparency.
The bill also allows the Comptroller to engage in activities like staking and using financial derivatives, provided legal ownership remains with the state. However, concerns about volatility and security remain. Critics argue that Bitcoin (BTC)’s price fluctuations—evident in its recent drop from $109,350 in January 2025 to $85,821 amid market volatility—pose risks to taxpayer funds. To address these concerns, the legislation includes stricter oversight provisions and limits speculative spending.
Economic and National Implications
Texas’ economy, the second-largest in the U.S. with a GDP of $2.7 trillion in 2024, stands to benefit from its crypto-friendly policies. The state has already attracted major Bitcoin mining operations and fintech companies, and the reserve could further solidify its position as a digital asset hub. Lee Bratcher, president of the Texas Blockchain Council, testified that “a strategic Bitcoin reserve is an amount of Bitcoin that’s set aside for emergency purposes or for the long-term well-being of the state’s finances”.
Key Details of Texas Strategic Bitcoin Reserve (SB 21)
Aspect Details Legislation Senate Bill 21, signed June 21, 2025 Purpose Hedge against inflation, diversify state financial reserves Management Texas Comptroller of Public Accounts, with advisory committee Investment Criteria Cryptocurrencies with ≥$500B market cap over 24 months (currently only BTC) Funding Sources Legislative appropriations, revenue streams, investment proceeds, donations Safeguards Third-party custodians, biennial reports, risk management via advisory committee Status Effective September 1, 2025
Key Details of Texas Strategic Bitcoin Reserve (SB 21)
Nationally, Texas’ move could influence other states and federal policy. Investment manager VanEck estimates that if 20 proposed state-level Bitcoin reserve bills are enacted, approximately $23 billion worth of Bitcoin (BTC), or about 247,000 BTC, could be acquired. This trend is gaining momentum, with Senator Cynthia Lummis proposing federal legislation to purchase 1 million BTC over five years.
Looking Ahead
While Texas’ Bitcoin reserve is a pioneering step, it has sparked debate. Critics argue that government involvement in a decentralized asset like Bitcoin (BTC) contradicts its ethos and exposes taxpayers to financial risks. Supporters, however, see it as a forward-thinking strategy to bolster Texas’ financial resilience in an evolving digital economy.
As the law takes effect on September 1, 2025, the success of the Texas Strategic Bitcoin Reserve will depend on prudent management and market conditions. With Bitcoin (BTC)’s price volatility and global economic uncertainties, all eyes will be on Texas as it navigates this uncharted territory. Whether this move inspires other states or serves as a cautionary tale remains to be seen, but for now, Texas is leading the charge in state-backed cryptocurrency adoption.
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