Texas Establishes State Managed Bitcoin Reserve With Legal Protections

Texas has officially established its state-managed fund for Bitcoin, with Governor Greg Abbott signing Senate Bill 21 into law. This legislation creates the Texas Strategic Bitcoin Reserve, making Texas the third state in the U.S. to explore crypto frameworks and the first to commit public funds with explicit legal protections.

The reserve is designed to enhance the state's financial resilience by serving as a hedge against inflation and economic volatility. The comptroller is authorized to buy, sell, hold, or manage any investments in the reserve, with the flexibility to accumulate Bitcoin through various market mechanisms, including direct purchase, a fork, an airdrop, or as a donation.

However, the legislation stipulates that any eligible digital asset must maintain an average market capitalization of at least $500 billion for the 24-month period before acquisition. This threshold is currently only met by Bitcoin, effectively limiting the reserve to this digital asset for now.

Security measures for the reserve assets will adhere to institutional standards. The comptroller is required to contract with a qualified custodian or a liquidity provider for asset storage, ensuring that custody arrangements align with industry best practices. An advisory committee will oversee the reserve, but the comptroller retains ultimate authority. The bill mandates transparency through status and performance reports, which should be made public and filed twice a year with state leadership.

While Texas is the third state to explore crypto frameworks, it is the first to commit public funds with explicit legal protections. The reserve cannot be dissolved by future legislatures, even if no Bitcoin purchases happen immediately. New Hampshire was the first to authorize public investment in Bitcoin, but it kept those assets inside the state treasury without creating a separate reserve or long-term legal protections. Arizona created a structured fund for managing unclaimed crypto but did not commit any new public funds or pursue active investment.

The legal protections for the Texas bill fall under House Bill 4488, which enables Senate Bill 21 to work as intended. HB 4488 legally exempts SB21 from the default sweep and protects its dedicated revenue and interest from being redirected into general state funds. In effect, it guarantees the long-term survival and financial independence of the Bitcoin reserve authorized by SB 21.