Texas Edges Closer to ‘Strategic Bitcoin Reserve’ Backed by Governor Abbott

Bill author Sen. Charles Schwertner (R-Georgetown) hailed the legislation as a “bold step” that diversifies Texas’s balance sheet and cements its position at “the forefront of financial innovation.” Co-sponsor Rep. Giovanni Capriglione (R-Southlake) argued the move “positions Texas as a forward-thinking state prepared for the evolution of global finance.”

If Abbott signs the bill, Texas will become only the second state, after New Hampshire, to authorize a Bitcoin treasury reserve. Arizona advanced a similar measure last year but Governor Katie Hobbs vetoed it. At the federal level, President Donald Trump signed an executive order formally establishing a national Strategic Bitcoin Reserve. The Texas vote therefore adds momentum to a nascent movement of Republican-led jurisdictions betting on BTC as a macro hedge.

Not everyone is on board with the plan. Critics argue that allocating public funds to a highly volatile asset like Bitcoin exposes taxpayers to unnecessary financial risk and could pressure the state to intervene during periods of market instability. Concerns have also been raised over the lack of clear cost estimates and safeguards against potential market manipulation, with some noting that key oversight details remain unresolved during legislative discussions.

Consumer advocates have raised concerns over Bitcoin's volatility, highlighting its 64% decline in 2022, as well as the environmental and social impact of Texas’s rapidly expanding mining industry. Residents living near large-scale mining sites have reported persistent noise from industrial cooling systems, while energy experts warn that the sector’s substantial electricity consumption adds stress to the state’s power grid, particularly during peak demand periods like summer heatwaves.

Under SB 21, the Texas Strategic Bitcoin Reserve may be initially funded through legislative appropriations, dedicated revenues, investment earnings, and donations. The reserve is restricted to investing in cryptocurrencies that have maintained an average market capitalization of at least $500 billion over the preceding 12 months. The comptroller is permitted to liquidate reserve assets and temporarily transfer funds to the state treasury for cash management purposes, with the stipulation that these funds, along with any accrued interest, be returned to the reserve. Additionally, the comptroller may contract for independent audits and is authorized to engage in staking and derivatives activities if they are considered beneficial to the reserve.

Because the House made minor amendments, SB 21 must receive a concurrence vote in the Senate—a step supporters expect to be procedural, given the chamber’s earlier approval. Once the paperwork reaches Abbott’s office, he will have until roughly mid-June to sign or veto the measure. Should it become law, implementation details—including custody partnerships, procurement rules, and any initial Bitcoin purchase—will fall to the comptroller, who must also publish biennial reserve reports beginning in 2026.

A Texas Bitcoin reserve would add a heavyweight economy—ranked eighth in the world by GDP if it were a country—to the small but growing list of public entities holding BTC. Supporters say the move could attract additional fintech investment, hedge against inflation, and position Texas as a testing ground for crypto-driven public finance strategies. Critics argue that it amounts to speculative use of public funds and warn it could intensify pressure on the state’s already strained power grid due to the energy demands of Bitcoin mining. Regardless of stance, the legislation highlights how rapidly Bitcoin has transitioned from corporate balance sheets to the realm of government finance—making state budget hearings the newest frontier in America’s digital asset debate.