The Texas House of Representatives voted on Tuesday to approve a state bitcoin reserve bill, sending the year’s highest-profile piece of crypto-related legislation to the governor’s desk for a likely signature.
Senate Bill 21 would create the framework for the Lone Star State to stockpile bitcoin and potentially other cryptocurrencies, with control of the reserve, and any potential buying and selling therein, falling under the purview of the state comptroller.
The move amounts to a major policy victory for a resurgent cryptocurrency industry, which has established a major presence in Texas.
It also mirrors efforts underway at the federal level, as well as in other states, even as some argue the GOP-led effort in Texas runs counter to the traditionally conservative market principles the state has long been known for.
Addressing House members ahead of the vote, State Rep. Giovanni Capriglione, R-Southlake, called the reserve bill “a forward-thinking measure” that was about “recognizing digital assets not as a trend but as a strategic opportunity” and “strengthening the state’s fiscal resilience.”
He added: “Texas can take a leadership role in the evolving digital economy.”
The measure sailed through the state chamber, also picking up a new amendment aimed at further restricting which cryptocurrencies would actually be eligible for inclusion. It passed with 105 votes in favor and 23 against, with the “nays” roughly split between fiscally-conservative minded Republicans and Democrats.
Some express doubts
Under state rules, Gov. Greg Abbott will have 10 days to sign the bill, veto it or let it become law without his signature or return it, although The House’s decisive vote also means the body could potentially override a veto.
“The main reason [for voting no] was because it offered little oversight,” Rep. Ron Reynolds, D-Missouri City, told The Dallas Morning News from the House floor, adding that he thought the bill favored wealthy private investors and incentivized risky investments.
While the broad movement to use crypto to create strategic government reserves has offered the industry a sentiment boost and, at least ostensibly, much sought-after legitimacy, digital tokens are notoriously volatile.
The “crypto winter” that began in late 2021 wiped trillions off the sector’s market capitalization before bottoming out, with many of the losses borne by small investors.
“So I thought it was maybe probably too volatile for us to really be doing it based at the taxpayers’ expense,” Reynolds added, “and at the risk of the general public.”
SB 21, a follow up to an earlier state legislative effort, was introduced in February by state Sen. Charles Schwertner, R-Georgetown, and buoyed by a strong endorsement from Lt. Gov. Dan Patrick, who singled it out as one of his priority bills for the session.
Schwertner did not respond to inquiries this week from The News. But in previous remarks, he has cast the state crypto stockpile as a state-level financial response to what he’s characterized as reckless Washington spending, on the basis that such a fund would provide a hedge against a difficult macroeconomic environment.
“It is a specific signal to our federal government,” he said in a statement earlier this year. “The federal government can’t continue to spend like this and expect our country to be as prosperous as it was in the past.”
It’s not yet clear how much public funding would actually be allocated into crypto: The bill does not include a specific amount, although language in the Senate budget could allow for funding in the coming weeks or months.
While New Hampshire became the first state to establish a crypto reserve, Texas could still become the first to actually fund one.
“We’re recommending prudent standards,” Lee Bratcher, the president of the Texas Blockchain Council, a crypto lobbying group, said in an interview last week. “It’ll be a negligible amount in the grand scheme of things for Texas.”
Along with providing a kind of public funding portfolio diversification, establishing the reserve, the bill’s proponents have argued, would also send a powerful signal of encouragement to the crypto industry.
“I think what it represents is Texas leaning forward,” added Bratcher. “We are welcoming to capital formation and jobs and entrepreneurs that are coming from all over the country, particularly the West Coast.”
Crypto as a whole has mostly rebounded after an extended stretch of dramatic price swings and washouts of the sector’s highest profile players.
The industry’s fall from grace culminated with the scandal that brought down entrepreneur Sam Bankman-Fried, which came to light in 2022, while the industry later received a second wind through regulatory approval of new products.
On Tuesday, bitcoin’s price topped $107,000, close to an all-time record. Sentiment has also been bolstered by President Donald Trump, a relatively recent crypto cheerleader, who signed an executive order earlier this year aimed at creating a federal stockpile.
Similar reserve efforts are also underway or have been proposed in dozens of states, including Ohio, Arizona and North Dakota.
While the Texas reserve push has received support from members of both parties, plenty of others around the state are criticizing it as an industry-driven effort that would amount to a fiscally irresponsible misuse of public funds.
“If you go back to the roots of what crypto was created for, it was created to be a decentralized currency to have government out of things,” said John Griffin, a finance professor at UT Austin. “But yet now you’re in a situation where you’re trying to get the government to prop it up.”
