Texas Moves Closer to Establishing a Strategic Bitcoin Reserve

The Texas House of Representatives has advanced the Strategic Bitcoin Reserve Bill (SB 21) to its second reading, moving Texas closer to creating a “Texas Strategic Bitcoin Reserve.” This legislative step would enable Texas, the 8th largest economy globally, to invest in Bitcoin, reflecting a growing trend of state-level cryptocurrency adoption. With Senate support already secured, the bill now awaits the governor’s approval.

• SB 21 passed second reading in Texas House.
• Texas to potentially invest in Bitcoin.
• Awaiting Governor’s approval.
• Texas Blockchain Council involved.

Following the bill’s journey through the Texas Senate, the Texas House of Representatives has now moved it forward, raising both hopes and concerns among stakeholders. If signed into law by Governor Greg Abbott, Texas would join states like New Hampshire and Arizona, which have already passed similar legislation. The specifics of the Bitcoin purchase amount remain undecided, to be addressed in separate legislation, but a budget rider has allocated $21 million to “kick start” the reserve.

The Texas Blockchain Council has been instrumental in guiding SB 21 through the legislative process. Lee Bratcher, a council representative, stated, “The 8th largest economy in the world will now be allowed to buy Bitcoin. This is indeed a positive beginning!” This move underscores Texas’s pro-crypto stance, a state known for its welcoming attitude towards blockchain technology.

However, not all voices are singing the same tune. Critics, including Senator Nathan Johnson, have raised concerns about market manipulation risks—a term referring to the potential for individuals or groups to artificially influence Bitcoin’s price. Johnson’s worries are amplified by the reinstated provision allowing private donations of cryptocurrency. This aspect, which lets people donate Bitcoin, was initially removed but later added back with restrictions. Additionally, law professor Hillary Allen has criticized Bitcoin as a “Ponzi-like asset,” which suggests an investment where returns are primarily generated from new investors rather than real profits, questioning its strategic use.

On the flip side, supporters like State Representative Giovanni Capriglione see Bitcoin as a stable asset akin to gold, citing its limited supply and potential as a hedge against inflation. This debate mirrors the broader national and global trend towards integrating cryptocurrencies into traditional financial systems, following the precedent set by President Trump’s proposal for a national Bitcoin reserve.

The passage of SB 21 positions Texas to potentially become a major player in government-backed Bitcoin investments. Yet, historical actions raise questions about the state’s commitment to such initiatives. Despite establishing a state-run gold depository in 2015, Texas never invested in gold commodities, which could foreshadow similar hesitations with Bitcoin.

As the bill heads to Governor Abbott’s desk, his past support for Bitcoin and social media signals of interest could be a positive sign for its approval. Yet, the outcome remains uncertain, with potential implications for Texas’s role in the crypto space and the broader trend of state-level cryptocurrency adoption across the United States.

Key Takeaways and Questions

• What is the Texas Strategic Bitcoin Reserve Bill (SB 21)?

  SB 21 is a legislative proposal that aims to create a “Texas Strategic Bitcoin Reserve,” allowing the state to invest in Bitcoin as part of its financial strategy.

• What is the current status of SB 21?

  SB 21 has passed the second reading in the Texas House of Representatives and has Senate support, awaiting the governor’s final approval.

• How does Texas’s move compare to other states?

  Texas is following the lead of states like New Hampshire and Arizona, which have already passed similar Bitcoin reserve bills.

• What remains undecided about the Texas Strategic Bitcoin Reserve?

  The specific amount of Bitcoin to be purchased by the state remains undecided, to be addressed in separate legislation, though a budget rider has provided $21 million to “kick start” the reserve.

• What impact could the approval of SB 21 have on Texas’s role in the crypto space?

  If approved, Texas could become a major player in government-backed Bitcoin investments, reinforcing its position as a pro-crypto state.