Bitcoin stack with Texas flag in the background.

In a landmark move, the Texas Senate Banking Committee has unanimously advanced Senate Bill 21 (SB-21), proposing the creation of a Texas Strategic Bitcoin Reserve.

The Texas Senate Banking Committee has unanimously passed Senate Bill 21 (SB-21), which proposes the creation of a Texas Strategic Bitcoin Reserve. The bill, which was passed with a 9–0 vote on February 27, 2025, would authorize the Texas Comptroller to manage investments in bitcoin and other digital assets.

The bill is a key part of a broader initiative to expand the types of investments that the Texas Treasury can hold. Currently, the treasury is only allowed to invest in a limited number of asset classes, such as stocks, bonds, and real estate. SB-21 would add bitcoin and other digital assets to this list.

SB-21 would also create a new special fund within the state treasury to be named the Texas Strategic Bitcoin Reserve. The reserve would be funded by legislative appropriations, dedicated revenues, purchases of cryptocurrencies, investment earnings, and donations.

The bill defines the term “major cryptocurrency” as any cryptocurrency that has an average market capitalization of at least $500 billion for the preceding 12 months. It also specifies that any cryptocurrency acquired by the comptroller must be a major cryptocurrency at the time of purchase.

According to the bill, the comptroller is authorized to:

1. Acquire, sell, hold, and otherwise manage bitcoin and other cryptocurrencies on behalf of the State in accordance with the provisions of this Section.

2. Pay all administrative expenses incurred in connection with the administration of this Section.

3. Contract with third parties for the administration, investment management, or other services related to the Strategic Bitcoin Reserve.

4. Be reimbursed for administrative expenses by the Strategic Bitcoin Reserve.

The bill also provides for the auditing of the Strategic Bitcoin Reserve by a certified public accountant. An advisory committee, appointed by the comptroller and composed of experts in cryptocurrency investments, will advise the comptroller on matters pertaining to the valuation of cryptocurrencies and the investment of funds in the Strategic Bitcoin Reserve.

Texas Strategic Bitcoin Reserve And A Volatile Market

The advancement of SB-21 comes amid notable volatility in the bitcoin market. Recently, the price of bitcoin has seen a significant downturn, entering a technical bear market with more than a 20% decline from its January peak of $109,350 to about $85,821.

This downward trend has been attributed to several factors, including substantial outflows from spot bitcoin ETFs, macroeconomic uncertainties, and a major $1.5 billion hack on the ByBit exchange, which reports claim was orchestrated by North Korean actors.

However, proponents of SB-21 argue that establishing a bitcoin reserve could serve as a strategic hedge against inflation and economic volatility. State Senator Charles Schwertner, who introduced the bill, highlights that bitcoin possesses strategic potential for enhancing Texas’s financial resilience.

SB-21 Impact: Good and Bad

The proposal has sparked a range of opinions. Supporters see it as a futuristic move that positions Texas at the forefront of financial innovation. They argue that including bitcoin in the state’s financial portfolio would diversify assets and provide a safeguard against traditional market fluctuations.

This initiative aligns with a broader shift in the U.S., with multiple states exploring the integration of digital assets into their financial strategies.

Earlier this year, Oklahoma introduced a bill to allow the state to invest in bitcoin, and Arizona lawmakers are currently considering a similar measure that would authorize the state to allocate up to $1 billion to cryptocurrency investments.

Utah is also making strides in this domain with a bill that aims to establish a cryptocurrency task force and authorize the state treasurer to invest in digital assets.

However, critics voice concerns over the prudence and potential risks of such investments. The volatility of bitcoin prices raises questions about the stability of public funds allocated to digital assets.

Critics warn that this exposure could have implications for the state’s ability to fund essential public resources and services. Additionally, the recent ByBit exchange hack, reportedly affecting ether and other tokens, further fuels the apprehension of those opposed to the bill.