Bill Progress and Governor's Position

Texas Governor Greg Abbott has made clear his support for the Texas Strategic Bitcoin Reserve (SB 21) and plans to sign the bill into law. The bill passed the final vote of the state House of Representatives on May 21, 2025 (101 votes in favor, 42 votes against) and is currently awaiting the governor's signature, with an estimated deadline of June 2. If passed, Texas will become the second state in the United States after New Hampshire to include Bitcoin in its state fiscal reserves.


​​Core content of the bill​​

​​Reserve Mechanism​​: Establish a "Texas Strategic Bitcoin Reserve" fund managed by the State Comptroller. The initial funds will come from taxes, fees and donations. In the future, 1% of unrestricted general income can be used to purchase Bitcoin every two years.
​​Asset requirements​​: The reserve assets must have a market value of at least US$500 billion for two consecutive years. Currently, only Bitcoin meets the requirements, but the bill allows for the inclusion of other cryptocurrencies in the future.
​​Security Management​​: Use cold storage solutions (offline storage) and conduct regular audits to ensure asset security.
​​Emergency Provisions​​: In an emergency, the Governor or the Legislative Budget Committee can authorize the sale of Bitcoin from the reserve.


​​Motivation for the bill​​

​​Fighting inflation​​: The bill's sponsors pointed out that Bitcoin's fixed supply (21 million) and decentralized nature can hedge the risk of dollar depreciation.
​​Financial Innovation and Economic Resilience​​: As a "friendly state" for the cryptocurrency industry in the United States, Texas has a large number of mines and blockchain companies. The bill aims to attract more digital asset-related industries to settle down and enhance the state's financial risk resistance.
​​Policy demonstration effect​​: Abbott has long supported cryptocurrencies and has previously signed a number of blockchain-friendly bills. This action may prompt other states to follow suit and form a "crypto reserve" competition.


​​Challenges and Controversies​​

Market volatility risk: Sharp fluctuations in Bitcoin prices may have an impact on state finances. Although the bill emphasizes cold storage and auditing, it cannot completely avoid market risks.
​​Legislative restrictions​​: Unlike New Hampshire, which allows the direct use of 5% of public funds, Texas requires separate legislation to allocate funds, limiting the speed and scale of purchases.
​​Political differences​​: Some scholars believe that the bill has a low priority and its long-term impact remains to be seen; there is a precedent in Arizona where a similar bill was vetoed by the governor.


​​Global and federal impacts​​

​​State-level demonstration effect​​: If Texas successfully implements it, it may inspire eight states, including Florida, that have proposed similar legislation to follow suit, thereby promoting competition among local governments in the United States in the field of digital assets.
Federal policy linkage: The (Bitcoin Strategic Reserve Act) signed by the Trump administration in March 2025 has confiscated 200,000 bitcoins as national reserves, and local policies in Texas may further promote the legalization process at the federal level.
​​International Financial Landscape​​: The practice of Bitcoin as a reserve asset may reshape the global financial order and accelerate its process of becoming a mainstream reserve asset.

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Market reaction and future outlook

​​Short-term impact​​: After the bill was passed, the price of Bitcoin once exceeded $110,000. The market viewed it as a positive policy, but we need to be wary of the risk of a pullback after the short-term benefits are exhausted.
​​Long-term significance​​: Texas may become the "Digital Golden State", attracting an influx of capital, talent and businesses, while providing regulatory and operational experience for other regions.

Summarize

Texas' passage of the Bitcoin Strategic Reserve Act marks a major breakthrough for local governments in the field of digital assets, reflecting both the embrace of cryptocurrency technology innovation and the strategic intention to combat inflation and rebuild economic resilience. Despite market volatility and political controversy, its demonstration effect may promote changes in crypto policies in the United States and around the world.




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