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Texas lawmakers are considering a significant move into the cryptocurrency space with Senate Bill 21 (SB 21), legislation introduced by State Sen. Charles Schwertner (R-Georgetown). This legislation proposes the creation of the Texas Strategic Bitcoin Reserve, a state-managed investment fund focused on Bitcoin and other high-market-cap cryptocurrencies. If enacted, Texas would be one of the first U.S. states to establish a government-backed Bitcoin fund, positioning itself as a leader in digital asset adoption. Texas Lt. Gov. Dan Patrick named it as one of his top legislative priorities for the ongoing 89th Legislative Session.
The proposed reserve would operate under the authority of the Texas Comptroller of Public Accounts, functioning outside the state treasury to provide flexibility in investment decisions. The fund would be financed through a combination of legislative appropriations, dedicated revenue sources, private donations, and cryptocurrency holdings accumulated through purchases, airdrops, and forks. Proponents argue that Bitcoin, often referred to as “digital gold,” could serve as a hedge against inflation and economic downturns, much like traditional gold reserves.
Under SB 21, the Texas comptroller would have broad authority over the reserve, including the power to acquire, sell, and manage cryptocurrency holdings. The legislation also establishes an advisory committee consisting of the comptroller and several cryptocurrency investment experts, who would provide guidance on asset management strategies and risk mitigation. The reserve’s holdings would be subject to strict security measures, including the use of cold storage—an offline method of safeguarding digital assets—to prevent unauthorized access or cyber threats.
One of the most significant transparency measures in the bill is the requirement for a biennial report, which would provide details on the amount and value of Bitcoin held in the reserve, any changes in its financial status, and the actions taken to manage it. This report would be submitted to the Texas Legislature and made available to the public, allowing for ongoing scrutiny of the reserve’s performance and management.
“Thank you to Lt. Governor Dan Patrick for designating my bill to establish the Texas Strategic Bitcoin Reserve as one of the Senate’s top 40 priority bills. SB 21 would make our state the first to establish a Strategic Bitcoin Reserve and drive innovation, growth, and financial freedom!”
Source: State Sen. Charles Schwertner (R-Georgetown), X Post, 2.12.2025
Arguments in Favor of a State-Backed Bitcoin Reserve
Supporters of SB 21 highlight several potential benefits of a state-backed Bitcoin reserve. They argue that diversifying Texas’ investment portfolio with digital assets could enhance financial security, especially in times of economic uncertainty. Bitcoin’s decentralized nature and limited supply make it appealing as a store of value, potentially shielding state funds from the inflationary pressures that affect traditional currencies.
Texas has also positioned itself as a hub for cryptocurrency and blockchain innovation, attracting major Bitcoin mining operations and financial technology companies. By establishing a Bitcoin reserve, the state could further solidify its reputation as a leader in digital finance. Some advocates see this move as an opportunity for Texas to gain an early foothold in what they believe is the future of global finance.
Another argument in favor of the bill is the potential for long-term financial gains. While Bitcoin’s price is volatile in the short term, its historical trajectory has shown substantial appreciation over time. If Texas can accumulate Bitcoin at lower prices and hold it as a strategic asset, it could realize significant returns that would benefit the state’s economy and taxpayers.
Additionally, the bill allows for the acceptance of Bitcoin donations from private individuals and organizations, which could further bolster the reserve’s holdings without relying solely on tax dollars. By encouraging private contributions, Texas could grow its cryptocurrency reserves while minimizing financial risk to the state.
Arguments Against the Texas Strategic Bitcoin Reserve
Despite the enthusiasm from supporters, SB 21 also faces significant opposition. One of the primary concerns is Bitcoin’s well-documented volatility. The cryptocurrency market has experienced extreme price swings, with Bitcoin at times losing more than half its value within months. Critics argue that exposing state funds to such fluctuations could put public money at unnecessary risk, especially when compared to more stable investment options such as government bonds or traditional assets.
Another major point of contention is the lack of regulatory clarity surrounding cryptocurrency. Federal agencies like the Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) continue to debate how Bitcoin and other digital assets should be classified and taxed. If new federal regulations impose restrictions on state-level cryptocurrency holdings, Texas could find itself in a legally precarious position, forced to liquidate its Bitcoin holdings under unfavorable conditions.
Security concerns also play a role in the skepticism toward SB 21. Cryptocurrency exchanges and wallets have been frequent targets of cyberattacks, and even sophisticated institutions have suffered losses due to hacking or mismanagement. Although the bill includes provisions for secure custodial practices such as cold storage, critics worry that any misstep in asset management could lead to significant financial losses.
Some opponents also take issue with the broader idea of government involvement in cryptocurrency investments. They argue that Bitcoin, as a decentralized asset, was designed to operate outside of state control, and that government investment in such a volatile asset contradicts the principles of financial prudence. Others contend that Texas should focus on more immediate economic priorities, such as infrastructure, education, and property tax relief, rather than engaging in speculative investment strategies.
How SB 21 Compares to Other States and Countries
If passed, SB 21 would make Texas a pioneer in state-backed Bitcoin investment. While other states, such as Wyoming and Florida, have introduced pro-crypto regulations, none have yet established an official Bitcoin reserve. On the global stage, El Salvador made headlines in 2021 by becoming the first country to adopt Bitcoin as legal tender and building a national Bitcoin reserve. However, its experiment has faced significant financial setbacks due to Bitcoin’s price volatility.
Texas, with its larger economy and well-established financial institutions, may be better positioned to manage a Bitcoin reserve, but the risks remain. If successful, the initiative could set a precedent for other states looking to incorporate cryptocurrency into their financial strategies. If it fails, it could serve as a cautionary tale about the challenges of integrating digital assets into government operations.
Similar Legislation Filed in the Texas House of Representatives
Similar legislation was filed in the Texas House of Representatives by State Rep. Giovanni Capriglione (R-Southlake). SB 21 and House Bill 1598 (HB 1598) both propose the establishment of a Texas Strategic Bitcoin Reserve, but they differ significantly in their structure, administration, and scope. While both bills aim to enhance the state’s financial resilience through Bitcoin holdings, SB 21 takes a broader investment-focused approach, whereas HB 1598 prioritizes long-term security and stability within the state treasury.
One of the key differences is where the reserve is housed. SB 21 places the Bitcoin reserve outside the state treasury, giving it greater autonomy and flexibility in investment strategies. In contrast, HB 1598 keeps the reserve within the state treasury, ensuring tighter state oversight and alignment with traditional government financial practices. SB 21 also allows the state to invest in various cryptocurrencies, not just Bitcoin, whereas HB 1598 strictly focuses on Bitcoin alone, treating it as a long-term asset rather than an investment vehicle.
Another distinction lies in how the assets can be managed and used. SB 21 permits active cryptocurrency investment, including revenue generation through airdrops, forks, and other crypto-related mechanisms. Meanwhile, HB 1598 mandates that Bitcoin holdings remain in cold storage for at least five years before they can be transferred, sold, or converted, reflecting a more conservative, buy-and-hold strategy. Additionally, HB 1598 includes specific restrictions barring transactions with foreign entities or individuals outside of Texas, a limitation not present in SB 21.
Overall, SB 21 favors a more flexible and investment-driven approach, potentially allowing Texas to capitalize on crypto market movements, while HB 1598 prioritizes security and stability, treating Bitcoin as a strategic reserve asset rather than an investment tool. A balanced legislative approach may be needed to combine the stability and oversight of HB 1598 with the investment opportunities and financial flexibility offered by SB 21.
What Comes Next?
SB 21 will need to pass both chambers of the Texas Legislature before it can become law. Should it pass, the Texas Comptroller will be tasked with assembling the advisory committee, establishing security measures, and implementing the investment strategy.
Currently, SB 21 is scheduled for a public hearing in the Senate Business and Commerce Committee, chaired by Schwertner, on Tuesday, February 18th. It is widely expected to be passed out of committee and considered by the overall Texas Senate shortly thereafter.
Whether SB 21 ultimately proves to be a forward-thinking financial strategy or a risky experiment remains to be seen. As cryptocurrency continues to evolve, the success or failure of Texas’ Bitcoin reserve will be closely watched by policymakers, investors, and the public alike.
Final Thoughts
The Texas Strategic Bitcoin Reserve is a bold and ambitious proposal that reflects the state’s growing interest in digital assets. While its supporters see it as a way to hedge against inflation, attract tech investment, and potentially generate long-term gains, its critics warn of the volatility, regulatory risks, and security challenges that come with government-backed cryptocurrency investments. As the debate continues, Texans will have to weigh the potential benefits against the uncertainties that accompany this venture into digital finance.
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