Texas Legislature Approves Senate Bill 21, Legalizing the Formation of the Texas Strategic Bitcoin Reserve

In a historic move, the Texas Legislature has approved Senate Bill 21 (SB 21), with the bill legalizing the formation of the Texas Strategic Bitcoin Reserve.

Texas has become the first U.S. state to establish a cryptocurrency reserve, following the approval of Senate Bill 21 (SB 21) by the state legislature. The bill, now awaiting Governor Greg Abbott’s signature, authorizes and directs the Texas Comptroller to create a special fund for buying, holding, and investing in Bitcoin and possibly other digital assets.

The establishment of the reserve has been made possible by a bipartisan effort in the legislature, despite initial opposition from some Democratic lawmakers. The bill passed the House with a vote of 98-46, largely along party lines. A small group of Democrats joined Republicans in supporting the measure.

The fund will be separate from the state treasury and will be used to invest in cryptocurrencies with a market capitalization of not less than $500 billion in the last 12 months. Funding for the reserve will come from legislative appropriations, earmarked revenue, private contributions, and the proceeds of any Bitcoin-related rewards, such as airdrops and blockchain forks.

To ensure appropriate management, SB 21 calls for the creation of a Strategic Bitcoin Reserve Advisory Committee. This committee will be comprised of the comptroller and experts in cryptocurrency investing, who will advise the comptroller on asset management policies and mitigate any risks.

Moreover, the bill mandates strict security protocols for the reserve’s holdings, such as the use of cold storage to safeguard digital assets from cyber attacks. Additionally, the comptroller will be required to publish a report every other year detailing the reserve’s holdings, valuation changes, and administrative activity. This report will be submitted to the Texas Legislature and also published online for public access.

President Donald Trump recently signed an executive order directing the U.S. government to create a federal Strategic Bitcoin Reserve and hold approximately 200,000 bitcoins that were seized in criminal and civil actions. This move underscores the increasing recognition of digital assets as strategic financial instruments.

California is currently considering a similar measure, while Arizona and Utah have also seen proposals for state-level cryptocurrency reserves. This growing interest among states in using cryptocurrencies to enhance financial security is evident.