AUSTIN, Texas — On Thursday, the Texas Senate passed a bill to diversify the state’s cash reserves into cryptocurrency.
Senate Bill 21, authored by State Sen. Charles Schwertner (R-Georgetown), creates the Texas Bitcoin Reserve.
The bill to make the state’s cash reserves more digital passed the upper chamber by a 25-5 vote. It now heads to the Texas House, and if Gov. Greg Abbott signs it into law, Texas could become one of the first states in the country to have its own cryptocurrency reserve.
Schwertner said the Bitcoin reserve would serve as a hedge against inflation and economic volatility.
“I want Texas to lead in the digital financial economy,” Schwertner said. “I think it is worthwhile that it expands its treasury options and financial options when it comes to stored value, in this case, expanding it to digital assets, such as Bitcoin.”
Senate Bill 21 would create a special investment fund outside of the state treasury, using Bitcoin as its primary currency.
It recognizes Bitcoin as a valuable digital asset, similar to gold, which has long been a financial safeguard.
“Bitcoin offers unique advantages to its limited supply and decentralized nature in the digital era,” Schwertner said. “This bill will allow Texas to diversify our investment approach, participate competitively in the evolving digital financial economy, and leverage the benefits of Bitcoin and other cryptocurrencies.”
Schwertner said it gives greater autonomy and flexibility in investment strategies with state funds. The Texas Comptroller would be able to acquire, exchange, manage and retain investments in Bitcoin and other cryptocurrencies
The bill would require the currency invested in with state funds to have a market capitalization of at least $500 billion over a 12-month period, essentially the value of the mined coins. Currently, only Bitcoin has a market cap above that number.
A five-person advisory committee would offer advice on managing the reserve.
State Sen. Tan Parker (R-Flower Mound) said diversifying assets enhances the state’s fiscal resilience and financial security for its residents.
“What we’re doing here is not adding strength to our balance sheet in Texas,” Parker said. “We’re providing the additional ability for Texas to be autonomous economically and that we’re really providing a hedge against a bad monetary policy that has cost America and Texans so dearly with the horrible inflation.”
Schwertner said investing in digital currency, like Bitcoin, is a game changer for Texas.
“Long term, you cannot expect to put your money in a bank account, and Texas cannot expect to put their money in a 1% savings account and keep up with inflation,” Parker said. “We need to be forward-thinking, as individuals are forward-thinking when it comes to financial assets and the investment of those financial assets.”
However, State Sen. Roland Gutierrez (D-San Antonio) said he has concerns about the stability of cryptocurrency.
Gutierrez pointed out that the price of Bitcoin has dropped 20% since January. Recently, the ByBit exchange was also hacked, and the $1.5 billion loss was thought to have been caused by North Korean hackers.
“We know that is a highly volatile currency and, admittedly, an unregulated currency. Yet here we stand, passing a bill to allow us to go ahead and create this reserve as some backstop against bad economies,” Gutierrez said. “When everything that we have seen from Bitcoin and any other alternative coin shows us that it is not countercyclical, unlike gold in a bad economy.”
Gutierrez said when the economy is down, Bitcoin is down, and he called the fluctuations with the cryptocurrency “insane.” He questioned why create the reserve and said lawmakers would be better off spending those funds on other, more pressing issues.
“Tomorrow, Bitcoin will be up 15%, and then it’ll be down the next day 30%, who knows,” Gutierrez said. “We have so many real concerns in this state, and so many of our citizens that are asking for real help, and the last thing that we need to do is go benefit some tech bro.”
Gutierrez called it a piece of legislation that doesn’t help any constituents in a real way.
“This is just not something that the vast majority of my constituents have or use, [nor] the vast majority of people in this room use,” Gutierrez said. “It is highly volatile. It is a huge concern that the market goes up and down, and it is completely unregulated. If you can’t buy a pizza with it, then you should all be concerned.”
The legislation is a priority for Lt. Gov. Dan Patrick, who presides over the Senate.
“Creating the Texas Bitcoin Reserve is a bold step for other states to follow,” Patrick said in a statement on Thursday. “I stand with President Trump and hope to make Texas the epicenter of America’s digital future.”
President Donald Trump has said he wants to make America the crypto capital of the world. He recently announced plans to create a federal “Crypto Strategic Reserve,” to allow the United States to buy and sell cryptocurrency.
“We’ve got to allow our fund managers to be in a position to succeed, to keep Texas vibrant, to get a great, outstanding return,” Parker said. “I think it’s so important everyone realizes this is 100% in alignment with what President Trump is doing at the federal level, establishing the crypto strategic reserve for America.”
The Senate also passed three other bills on Thursday: Senate Bill 290, which deals with customer complaints before the Public Utility Commission of Texas; Senate Bill 72, which modifies regulations around rental cars; and Senate Bill 703, which would prevent those convicted of indecent assault from working as licensed massage therapists.
The bills now head to the Texas House of Representatives.