Under Senate Bill 21, the Texas Comptroller would have the authority to invest state funds in cryptocurrencies such as Bitcoin.
AUSTIN, Texas — On Thursday, the Texas Senate approved a bill aimed at diversifying the state’s cash reserves by incorporating cryptocurrency.
Senate Bill 21, introduced by State Sen. Charles Schwertner (R-Georgetown), establishes the Texas Bitcoin Reserve.
This bill, which seeks to modernize the state’s cash reserves, passed the Senate with a vote of 25-5. It will now go to the Texas House, and if signed into law by Gov. Greg Abbott, Texas could be among the first states in the nation to establish a cryptocurrency reserve.
Schwertner stated that the Bitcoin reserve would act as a safeguard against inflation and economic fluctuations.
“I want Texas to be at the forefront of the digital financial economy,” Schwertner remarked. “It is beneficial for Texas to broaden its treasury and financial choices by including digital assets, such as Bitcoin.”
Senate Bill 21 proposes the creation of a dedicated investment fund separate from the state treasury, primarily using Bitcoin as its currency.
The bill recognizes Bitcoin as a valuable digital asset, akin to gold, which has traditionally been a financial safeguard.
“Bitcoin has unique benefits due to its limited supply and decentralized nature in the digital age,” Schwertner explained. “This legislation will enable Texas to diversify our investment strategies, compete in the evolving digital economy, and capitalize on the advantages of Bitcoin and other cryptocurrencies.”
According to Schwertner, the measure grants increased autonomy and flexibility in managing investments with state funds. The Texas Comptroller would be empowered to acquire, trade, manage, and hold investments in Bitcoin and other cryptocurrencies.
The legislation stipulates that any currency invested in with state funds must have a market capitalization of at least $500 billion over a 12-month period, essentially reflecting the value of mined coins. Currently, only Bitcoin meets this requirement.
An advisory committee consisting of five members will provide guidance on the management of the reserve.
State Sen. Tan Parker (R-Flower Mound) mentioned that asset diversification enhances the state’s fiscal resilience and ensures financial security for its residents.
“What we’re doing here is not just fortifying our balance sheet in Texas,” Parker said. “We’re granting Texas greater economic autonomy and establishing a hedge against detrimental monetary policy, which has severely impacted both America and Texans through rampant inflation.”
Schwertner believes that investing in digital currency, such as Bitcoin, could significantly transform Texas.
“In the long run, people cannot rely on traditional bank accounts, and Texas shouldn’t settle for a 1% savings account while struggling with inflation,” Parker stated. “We must adopt a forward-thinking mindset, just as individuals do with their financial assets.”
However, State Sen. Roland Gutierrez (D-San Antonio) expressed concerns regarding the stability of cryptocurrencies.
Gutierrez highlighted that Bitcoin’s value has plummeted by 20% since January. He also noted the recent hack of the ByBit exchange, with losses estimated at $1.5 billion linked to alleged North Korean hackers.
“We know that Bitcoin is an extremely volatile and, admittedly, an unregulated currency. Yet here we are, passing a bill to create this reserve as a safeguard against troublesome economic conditions,” Gutierrez remarked. “All evidence from Bitcoin and alternative cryptocurrencies indicates they do not act countercyclically, unlike gold, during economic downturns.”
Gutierrez added that Bitcoin’s performance declines when the economy falters, calling its fluctuations “insane.” He questioned the rationale behind establishing the reserve and suggested that lawmakers should focus those funds on more pressing state issues.
“Tomorrow, Bitcoin might rise 15%, and the following day it might drop 30%, who knows,” Gutierrez commented. “We have numerous immediate concerns in this state, with citizens desperately seeking real assistance, and we shouldn’t be using funds to benefit a tech tycoon.”
Gutierrez criticized the legislation as not genuinely benefiting constituents.
“This isn’t something that most of my constituents possess or utilize, nor is it used by the majority of people in this room,” Gutierrez noted. “It is highly volatile and poses significant concerns due to its fluctuating market, which remains completely unregulated. If it can’t serve as a medium for everyday transactions, you should all be worried.”
The legislation is a key priority for Lt. Gov. Dan Patrick, who oversees the Senate.
“Establishing the Texas Bitcoin Reserve sets a precedent for other states to follow,” Patrick stated on Thursday. “I stand with President Trump in hopes of positioning Texas as the center of America’s digital future.”
Former President Donald Trump has expressed his desire to establish the United States as the global leader in cryptocurrency. He recently revealed plans to create a federal “Crypto Strategic Reserve” to facilitate the buying and selling of cryptocurrencies in the U.S.
“We need to empower our fund managers to ensure Texas remains prosperous and achieve great returns,” Parker stated. “It’s essential for everyone to realize that this initiative aligns perfectly with President Trump’s efforts at the federal level to establish America’s crypto strategic reserve.”
On Thursday, the Senate also passed three additional bills: Senate Bill 290, addressing customer complaints to the Public Utility Commission of Texas; Senate Bill 72, which amends regulations concerning rental cars; and Senate Bill 703, aimed at prohibiting individuals convicted of indecent assault from working as licensed massage therapists.
These bills are now set to move to the Texas House of Representatives.
