Texas could soon become the first state in the nation to establish a financial reserve backed by Bitcoin. Sen. Charles Schwertner (R-Georgetown) is spearheading Senate Bill 21 (SB 21), a proposal that would create a state-managed cryptocurrency fund aimed at bolstering Texas' financial security and positioning the state at the forefront of digital asset adoption.
SB 21, one of Lt. Gov. Dan Patrick’s legislative priorities, would set up a fund outside the state treasury under the Texas Comptroller of Public Accounts. The fund’s purpose? To purchase Bitcoin and other cryptocurrencies, amassing at least $500 million in digital assets. Additionally, the fund would be open to donations of Bitcoin and other cryptocurrencies, raising questions about oversight and potential market influence.
A Hedge Against a Troubled Economy?
During a Senate Business & Commerce Committee hearing, Schwertner framed his proposal as a response to the growing national debt and rising interest rates.
"In 2024, interest costs on the national debt totaled $881 billion—surpassing most other components of the federal budget," Schwertner said. "This is why people are reaching for alternatives to fiat currency because all fiat currency eventually goes to its natural worth, which is the paper it's printed on."
Schwertner emphasized Bitcoin's track record, citing a 60% compound annual growth rate over the last decade as evidence of its long-term viability.
"The state of Texas should have the option of evaluating the best-performing asset of the last 10 years," he argued. "We need to position Texas in the best course with all possibilities regarding solvency long-term.”
Concerns Over Stability and Manipulation
While some lawmakers support the idea of using state funds more proactively, others are raising concerns about security, volatility, and potential exploitation.
Sen. José Menéndez (D-San Antonio) questioned the safety of investing public funds in digital assets, even as Texas' Economic Stabilization Fund (ESF)—commonly called the Rainy Day Fund—reaches its legal cap.
"I think it's long overdue that we put our reserves to work on behalf of taxpayers," Menéndez said. "My concerns are just the safety and security of the investments."
Meanwhile, Sen. Nathan Johnson (D-Dallas) warned against private investors leveraging the state's participation for their own gain.
"They might be using us, the state of Texas, to manipulate their market," Johnson said. "How do we guard against that kind of bad behavior?"
Johnson suggested limiting the fund to state-appropriated funds only, prohibiting private donations to prevent undue influence. Schwertner countered that the legislation would include safeguards and oversight mechanisms to prevent misuse.
Texas Leading the Crypto Charge
Advocates argue that Texas—already home to a booming Bitcoin mining industry—could cement itself as a leader in digital finance. Lee Bratcher, president of the Texas Blockchain Council, said the bill could make Texas the most “forward-looking state in America” on financial resilience and digital asset innovation.
"The proper custody of this asset is critical," Bratcher noted. "This bill empowers the comptroller's office to ensure donations are handled responsibly and assets are securely stored."
Bitcoin’s Wild Ride
Bitcoin’s price has been on a rollercoaster, nearly doubling since September 2021 and briefly surpassing $100,000 late last year before settling around $95,000. Unlike the U.S. dollar, Bitcoin has a fixed supply, leading some to view it as a hedge against inflation.
Texas isn’t alone in exploring cryptocurrency-backed reserves—32 other states have introduced similar legislation. However, if SB 21 passes, Texas would be the first to officially establish such a fund, setting a precedent for other states to follow.
What’s Next?
With Texas legislators eyeing $24 billion in surplus funds this session—along with the Rainy Day Fund overflow—how much they are willing to invest in Bitcoin remains an open question. Schwertner’s bill will now advance through the legislative process, where further debate over risk, oversight, and long-term strategy is expected.
