Texas has taken a bold step towards financial independence by passing Senate Bill 21, which allows the state to build its own Bitcoin reserve using taxpayer dollars. Governor Greg Abbott signed the bill into law, paving the way for Texas to invest in Bitcoin and other top-tier cryptocurrencies.
Unlike the federal government’s recent announcement of a “Strategic Bitcoin Reserve,” Texas’s initiative is aimed at hedging against inflation and solidifying the state’s position as a leader in the crypto space. State Senator Charles Schwertner highlighted Bitcoin’s decentralized nature and fixed supply as reasons for the move, emphasizing its potential as a long-term store of value.
The Texas Comptroller’s office will oversee the management of the state’s Bitcoin reserve, with funding coming from legislative appropriations, investment earnings, and private donations. The law grants Texas the authority to actively buy and manage Bitcoin, potentially exploring yield-bearing mechanisms like staking or lending in the future.
In contrast, the federal government’s Strategic Bitcoin Reserve is limited to assets seized in criminal investigations and cannot be expanded unless purchases are “budget-neutral.” The Federal Bitcoin Reserve lacks an independent advisory board or a mandate to generate returns on its holdings, with custody remaining with the Treasury Department and U.S. Marshals Service.
With Texas projected to have billions in its Economic Stabilization Fund in 2025, the state could allocate hundreds of millions to Bitcoin purchases without jeopardizing its fiscal position. A 1% allocation could result in Texas acquiring thousands of BTC, potentially making it one of the largest sovereign holders of Bitcoin globally.
As Texas moves forward with implementing SB 21, companion legislation (HB 4488) will safeguard the reserve from being diverted for unrelated uses. With Washington and Austin taking divergent approaches to Bitcoin, Texas is poised to become the first state in the U.S. to hold cryptocurrency by choice, setting a precedent for financial autonomy and innovation.