Texas has officially established a legal framework for holding Bitcoin as part of its financial reserves, following the signing of Senate Bill 21 (SB 21) by Governor Greg Abbott on June 21, 2025.
Legal Structure for Bitcoin Reserve Approved
The new law empowers the Texas Comptroller of Public Accounts to manage a dedicated Bitcoin reserve fund, which will be maintained outside the state treasury. Legislative appropriations, dedicated fees, investment income, and voluntary donations of cryptocurrency will support the fund. It introduces formal guidelines for the acquisition, custody, and liquidation of digital assets under state supervision.
A key provision in SB 21 limits investments to digital assets with a minimum average market capitalization of $500 billion over the preceding 12 months, a criterion currently met only by Bitcoin. This restriction is designed to mitigate exposure to volatile or thinly traded tokens, effectively making Bitcoin the sole eligible asset for the reserve.
Additional Measures to Protect State Crypto Holdings
SB 21 follows the earlier passage of House Bill 4488, a complementary measure enacted to protect the state's Bitcoin and other cryptocurrency reserves from being absorbed into Texas’s general revenue fund. Without this legal safeguard, funds allocated for digital asset holdings faced the risk of being liquidated in 2025 to cover budgetary shortfalls.
Together, the two pieces of legislation form a comprehensive framework: HB 4488 secures the legal status of Bitcoin reserves under state law, while SB 21 provides the operational authority to purchase and manage those assets.
Policy Adjustments and Oversight Provisions
During its progression through the legislature, SB 21 underwent several revisions. Notably, the House Committee on Delivery of Government Efficiency introduced clearer operational protocols, risk management guidelines, and limits on speculative investments using public funds. These amendments were aimed at addressing concerns over Bitcoin’s inherent price volatility and the fiscal prudence of allocating government resources to such assets.
Broader Implications and Industry Response
The decision to formalize Bitcoin as a strategic reserve asset marks a notable development in state-level digital asset policy. Supporters argue that this move could enhance Texas’s financial resilience, act as a hedge against inflation, and position the state as a leader in digital asset integration within public finance.
However, critics have flagged the initiative’s exposure to risks, including market volatility, regulatory shifts, and cybersecurity threats. Questions remain about whether allocating taxpayer resources to inherently speculative assets aligns with sound fiscal governance.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
