Texas Becomes Third U.S. State to Establish Strategic Bitcoin Reserve

Texas has officially become the third U.S. state to hold Bitcoin as part of its public financial reserves, following New Hampshire and Arizona. Governor Greg Abbott signed Senate Bill 21 (SB 21) into law authorizing the creation of a state-managed Strategic Bitcoin Reserve that will be administered by the Texas Comptroller of Public Accounts.

Under SB 21, the state is permitted to purchase, hold, and manage Bitcoin using surplus public funds, dedicated revenue streams, and voluntary donations. The law stipulates that only digital assets with an average market capitalization exceeding $500 billion over the previous 12 months are eligible for inclusion, effectively limiting the reserve to Bitcoin alone at this stage.

The bill also permits the reserve to generate passive returns through staking, lending, or other yield strategies, as long as they align with a conservative risk-management framework. Custody must be maintained through secure, audited systems, and assets must be kept in cold storage with third-party custodians based in Texas.

A key feature of the new law is the creation of an advisory board to oversee the reserve’s operation and strategy. This board, composed of public officials and independent financial experts, will help guide investment decisions and ensure compliance with risk and transparency standards.

To maintain public accountability, the Texas Comptroller will be required to publish a detailed report every two years, outlining reserve performance, asset holdings, and any income generated from the Bitcoin held.

To prevent the Bitcoin reserve from being used as a fallback during budget shortfalls, House Bill 4488 was passed in parallel. This measure protects the reserve from being swept into the state’s general fund unless explicitly authorized by the Legislature, a safeguard designed to preserve the long-term financial integrity of the initiative.

The initiative also reflects Texas’s growing role as a national leader in cryptocurrency adoption. With a vibrant blockchain sector and one of the largest concentrations of Bitcoin mining operations in the United States, Texas is positioning itself not only as a regulatory haven for digital assets but now as a state-level investor in them.

Texas joins a growing list of jurisdictions experimenting with Bitcoin as part of their fiscal architecture. New Hampshire passed similar legislation earlier this year, and Arizona followed soon after with its own digital asset reserve framework. Meanwhile, states such as Utah, Oklahoma, and North Carolina are actively exploring related initiatives.

With the law now in effect, the Texas Comptroller is authorized to begin developing procedures for asset acquisition, custody arrangements, and reporting standards. While no official timeline has been announced, initial Bitcoin purchases for the reserve could begin once these frameworks are in place and market conditions align.

By enshrining Bitcoin into its state finance laws, Texas is not just making a symbolic gesture, it is actively redefining the role digital assets can play in public wealth management. Whether this move proves to be visionary or premature may depend on how the broader crypto ecosystem evolves in the months and years ahead.