Republicans aim to associate the State of Texas with Bitcoin by proposing a “strategic reserve” that could utilize taxpayer funds to acquire cryptocurrency.
This newest initiative, championed by crypto proponents, has gained notable attention on Lieutenant Governor Dan Patrick’s biennial agenda. Governor Greg Abbott has even shown interest, posting an emoji on X that reflects curiosity as the Senate bill was submitted in early February.
The initiative is spearheaded by GOP Senator Charles Schwertner, who introduced Senate Bill 21, titled the “Texas Strategic Bitcoin Reserve and Investment Act.” This act aims to establish a state crypto reserve. As the chair of the Senate Committee on Business and Commerce, Schwertner made it a priority to have his bill heard first in this legislative session. The committee, consisting of seven Republicans and four Democrats, unanimously approved an amended version of the bill on Thursday, moving it forward for a Senate floor vote.
The proposed legislation would instruct the Texas comptroller to create a reserve fund, separate from the general treasury, giving the agency significant authority to buy, sell, or invest in Bitcoin. The committee’s modifications would restrict the reserve to cryptocurrencies with an average market capitalization of $500 billion over twelve months—a benchmark currently only met by Bitcoin. Oversight of the fund would be managed by an advisory board of crypto investment specialists appointed by the comptroller.
While no specific funding has been allocated for this reserve yet, Schwertner expressed his intention to request legislative budget writers to earmark approximately $20 million for the upcoming biennium.
According to Schwertner, a Texas Bitcoin reserve would not only symbolize the Lone Star State’s backing of the crypto industry but also convey a message against the federal government’s escalating debt. He suggested that the U.S. dollar might one day collapse and that a Bitcoin reserve would provide Texas with a financial safeguard in that scenario.
“Ultimately, all fiat currencies return to their intrinsic value, which is merely the paper they’re printed on,” Schwertner remarked during the February 18 hearing. “We can invest in land or gold. Texas ought to have the opportunity to assess the best-performing asset [Bitcoin] of the last decade.”
Hilary Allen, a law professor at American University specializing in financial regulation, criticized state crypto reserves as imprudent. “There is fundamentally nothing backing Bitcoin. It has no strategic function,” Allen informed the Texas Observer. She likened cryptocurrencies like Bitcoin to a “ponzi-like asset” lacking tangible value, relying wholly on speculative demand and market manipulation.
“The only beneficiaries will be Bitcoin ‘whales,’ those heavily invested in Bitcoin,” she added, suggesting it would create a state-subsidized market for major investors looking to cash out.
Simply purchasing and holding Bitcoin for extended periods would inflate the market, while attempting to sell off crypto holdings strategically could result in a market crash.
Schwertner and his allies dismiss these concerns, asserting that Bitcoin has evolved into a mainstream investment comparable to traditional stocks and financial assets.
Schwertner developed the bill—an updated version of a previous proposal—with input from the Texas Blockchain Council, a trade association representing the crypto sector. Supporters from the group filled the hearing room, and the council’s president, Lee Bratcher, served as the main invited witness in favor of the bill.
Comptroller Glenn Hegar also provided neutral testimony that leaned towards supporting the reserve. He acknowledged that his office could already invest in crypto funds but had chosen not to.
One contentious aspect of Schwertner’s proposal was a provision allowing private individuals and corporations to contribute Bitcoin or other cryptocurrencies to the reserve. This raised alarms that private investors or corporations could manipulate or promote the strategic reserve to their own advantage, potentially facilitating covert influence from foreign or other dubious entities.
“If someone donates $10 billion [in crypto] to the state, they’re essentially creating a market for themselves [and could manipulate it using the state’s authority],” stated Senator Nathan Johnson, a Democrat from Dallas, raising considerable concerns during the hearing. “I don’t want the state to become an instrument of an investor. I believe this should be limited to state funding only. I don’t want billionaire tech entrepreneurs controlling a part of the state.”
In an unexpected turn, Schwertner removed the private donation clause from his bill, which was unanimously approved at a committee hearing on Thursday. Proponents of the Bitcoin reserve had argued that the donation element would minimize risk to taxpayers. “The beauty of a Texas strategic Bitcoin reserve is that it’s driven chiefly by donations, meaning minimal risk to Texas taxpayers. It’s only a net benefit,” Bratcher had previously stated to the Austin American-Statesman.
Bratcher informed the Observer that the group continues to support the revised Bitcoin bill.
“Although we will miss the opportunity to encourage donations to the Texas Strategic Bitcoin Reserve, the Texas Blockchain Council fully endorses the Senate Business and Commerce Committee’s unanimous, bipartisan decision to eliminate the donation aspect of the bill,” Bratcher remarked. “This alteration will streamline future administrative processes necessary for managing the Texas Strategic Bitcoin Reserve.”
GOP Representative Giovanni Capriglione (chair of the new House “DOGE” committee) has also introduced his own version of a Bitcoin reserve bill, allowing for private contributions strictly from Texas residents.
Texas’ initiative to establish a Bitcoin reserve reflects a broader national trend. Following Trump’s election in November, several states rushed to explore the creation of their own crypto reserves as the president suggested forming a federal Bitcoin stockpile. However, lawmakers in various states, including Montana, Pennsylvania, Wyoming, and the Dakotas, have quickly reconsidered and dismissed such proposals. The concept of a state Bitcoin reserve represents a new approach from the crypto industry—an unexpected development in the growth of cryptocurrency, which originally aimed to create a digital currency insulated from government control.
In previous years, advocates had urged state and local governments to accept Bitcoin and other digital currencies as legal tender for paying taxes and other fees. However, crypto enthusiasts have largely shifted away from this focus, now viewing Bitcoin as a legitimate financial asset deserving of favorable regulations and government investment.
Top Republicans in Texas, including Abbott and Patrick, have increasingly engaged with the crypto sector—offering special incentives to the numerous large crypto data centers that have emerged across the state.
In the last session, Republican Senator Bryan Hughes introduced a bill aimed at creating a digital currency backed by state-held gold. GOP Representative Cody Harris has proposed a similar bill in this session, indicating during a blockchain conference in November that the goal is to develop a government-sanctioned entry point for crypto-skeptical investors. “It provides a secure way for people to familiarize themselves with the space. It’s a stepping stone towards owning Bitcoin, rather than competing with it,” he remarked.
Establishing a strategic reserve for a digital, speculative currency isn’t the first attempt by Texas to shield itself from fiat currency fluctuations. In 2015, Texas lawmakers passed a bill (authored by Capriglione) establishing a state bullion depository for the storage of Texans’ precious metals. Afterward, Texas universities were supposed to return their gold holdings from New York to this new Fort Knox of Texas; however, they apparently liquidated their assets instead. Furthermore, Texas hasn’t emerged as a major investor in gold commodities, contrary to expectations. Hegar remarked during the Bitcoin hearing that the state does not currently own any gold, although he was the first individual to deposit his personal gold into the bullion depository.
