The Texas Senate passed Senate Bill 21 (SB 21), known as the Texas Strategic Bitcoin Reserve and Investment Act, on March 6, 2025, with a 25-5 vote. The bill, authored by Senator Charles Schwertner (R-Georgetown) and sponsored in the House by Representative Giovanni Capriglione, establishes a state-managed Bitcoin reserve to invest in Bitcoin and other cryptocurrencies with a market capitalization of at least $500 billion. It aims to diversify Texas’ investment portfolio, hedge against inflation, and enhance financial resilience.
The reserve, managed by the Texas Comptroller of Public Accounts outside the state treasury, would be funded through legislative appropriations, dedicated revenues, crypto purchases, airdrops, forks, and donations. It includes strict security measures like cold storage and mandates biennial reports for transparency. The bill passed the Texas House on May 21, 2025, with a 105-23 vote and awaits a Senate concurrence vote on House amendments before heading to Governor Greg Abbott for final approval.
If signed into law, Texas would join New Hampshire as one of the first U.S. states with a strategic Bitcoin reserve. However, another bill, SB 778, also related to establishing a Bitcoin reserve, was introduced but referred to the Finance Committee on February 7, 2025, with no further progress noted. Critics, like Senator Roland Gutierrez, raised concerns about cryptocurrency volatility, while proponents argue it positions Texas as a leader in digital asset adoption.
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By investing in Bitcoin and other major cryptocurrencies, Texas aims to diversify its investment portfolio, potentially reducing reliance on traditional assets like bonds or equities. This could hedge against inflation, given Bitcoin’s fixed supply cap of 21 million coins, often likened to “digital gold.” The act positions Texas as a forward-thinking state in the cryptocurrency space, potentially attracting blockchain businesses, startups, and talent. This aligns with Texas’ growing reputation as a tech hub, with cities like Austin already hosting crypto-related companies.
Proponents argue Bitcoin’s decentralized nature and limited supply make it a hedge against fiat currency devaluation, especially in times of economic uncertainty. Texas could benefit if Bitcoin appreciates significantly. Critics, like Senator Roland Gutierrez, highlight cryptocurrency’s price volatility. For example, Bitcoin’s price has fluctuated dramatically in the past, dropping from $69,000 in 2021 to below $17,000 in 2022. A poorly timed investment could lead to significant losses for the state.
Texas would join New Hampshire as one of the first U.S. states to hold Bitcoin as a strategic reserve, potentially inspiring other states to follow. This could normalize cryptocurrency as a legitimate asset class for public institutions. The bill’s strict security measures (e.g., cold storage) and transparency requirements (biennial reports) could set a model for responsible crypto management, influencing federal or state-level regulations.
A state-backed Bitcoin reserve could draw crypto investors and businesses to Texas, boosting local economies. It may also strengthen Texas’ position in global financial markets, given Bitcoin’s borderless nature. By embracing Bitcoin, Texas could align itself with pro-crypto jurisdictions, potentially challenging federal dominance over monetary policy and signaling skepticism toward centralized financial systems.
The reserve’s funding through legislative appropriations or dedicated revenues could strain state budgets, especially if crypto markets underperform. The bill’s reliance on airdrops, forks, and donations adds uncertainty. If Bitcoin’s value grows as projected by bullish analysts (some predict $500000+ by 2030), the reserve could yield substantial returns, funding public projects or reducing taxpayer burdens.
The bill has sparked a clear divide in Texas’ political and economic spheres, reflecting broader debates about cryptocurrency’s role in public finance. Proponents led by Senator Charles Schwertner and Representative Giovanni Capriglione, supporters include pro-crypto lawmakers, blockchain advocates, and tech entrepreneurs. They view Bitcoin as a transformative asset, with Texas’ early adoption giving it a competitive edge. The bill’s passage aligns with Texas’ pro-business stance, as seen in its welcoming of crypto miners after China’s 2021 crackdown.
Supporters argue Bitcoin’s scarcity makes it a superior store of value compared to fiat currencies, which have faced inflationary pressures (e.g., U.S. inflation peaked at 9.1% in June 2022). The 25-5 Senate and 105-23 House votes suggest strong legislative support, reflecting public interest in crypto among younger and tech-savvy Texans. Crypto advocacy groups and industry leaders likely support the bill, seeing it as a step toward mainstream adoption. Critics include cautious lawmakers like Senator Roland Gutierrez and traditional financial experts wary of crypto’s risks.
Critics point to Bitcoin’s price swings, which could jeopardize public funds. For instance, a 50% market crash, as seen in 2022, could lead to significant losses for the reserve. Skeptics argue that cryptocurrencies lack intrinsic value and are driven by speculation, making them unsuitable for state-backed investments. Federal crackdowns or unclear SEC regulations (e.g., ongoing debates over whether Bitcoin is a security) could complicate Texas’ reserve, potentially leading to legal or financial challenges.
Funds allocated to the Bitcoin reserve could be used for more immediate needs, like infrastructure or education, especially in a state with budget constraints. The bill reflects a partisan lean, with Republican-dominated Texas pushing for bold financial innovation, while critics, often Democrats or fiscal conservatives, urge caution. This mirrors national debates, where pro-crypto figures like Senator Cynthia Lummis (R-WY) advocate for Bitcoin reserves, while others, like Senator Elizabeth Warren (D-MA), warn of crypto’s risks.
Younger, tech-savvy Texans and crypto enthusiasts embrace the bill as progressive, while older or risk-averse citizens view it as reckless. Wealthier urban areas like Austin, with strong tech ecosystems, may benefit more from crypto-related growth, while rural regions might see little direct impact, potentially widening economic disparities.
The Texas Strategic Bitcoin Reserve and Investment Act could position Texas as a pioneer in state-level crypto adoption, with potential economic rewards if Bitcoin’s value rises. However, it carries risks due to market volatility and regulatory uncertainties. The divide between supporters, who see it as a visionary move, and critics, who view it as a risky gamble, underscores broader tensions about cryptocurrency’s role in public finance. The bill’s fate now hinges on Governor Abbott’s decision, which could set a precedent for other states.