The Texas Senate has approved a bill to create a strategic Bitcoin reserve, marking a significant step in the state’s embrace of digital assets. Senate Bill 21 (SB-21) passed with a 25-5 vote on March 6, 2025, after a heated debate on the Senate floor. If enacted, Texas will become the first U.S. state to establish a government-held digital asset reserve.
SB-21 was introduced by Texas State Senator Charles Schwertner and aims to diversify the state’s financial holdings by incorporating Bitcoin into its reserve. The legislation empowers the Texas Comptroller to manage investments in Bitcoin and other digital assets, citing the need for a hedge against inflation and economic instability.
The bill proposes the creation of a Texas Strategic Bitcoin Reserve as a special fund outside the state treasury, granting it flexibility in investment decisions.
The reserve’s funding sources include legislative appropriations, designated revenues, investment earnings, and donations. To ensure financial prudence, the bill mandates independent audits and oversight from an advisory committee consisting of the comptroller and cryptocurrency investment experts.
Schwertner defended the measure on the Senate floor, stating, “We don’t have stacks of dollar bills and safes like we did in medieval times. What we have is digital currency.” He argued that Bitcoin’s scarcity and decentralized nature could help safeguard Texas’s balance sheet against inflationary pressures.
Market Volatility and Strategic Timing
The Senate vote comes amid significant turbulence in the cryptocurrency market. Bitcoin has experienced a sharp decline, dropping more than 20% from its January high of $109,350 to approximately $85,821. This downturn has been attributed to major outflows from spot Bitcoin ETFs, broader macroeconomic uncertainties, and a $1.5 billion hack of the ByBit exchange, reportedly carried out by North Korean actors.
Despite these market fluctuations, SB-21 supporters argue that Bitcoin represents a long-term store of value. Schwertner emphasized that traditional fiat currencies are subject to central bank manipulation and inflation, diminishing their purchasing power over time. “Texas cannot expect to put their money in a 1% savings account and keep up with inflation,” he said. “We need to be forward-thinking.”
The bill has drawn opposition from lawmakers who caution against exposing public funds to the volatility of digital assets. Critics highlight the risks associated with price swings and cybersecurity threats, pointing to the recent ByBit hack as a reminder of vulnerabilities in the crypto sector.
Some senators also questioned whether Bitcoin should be classified as a strategic asset. While proponents liken it to gold, skeptics argue that its price unpredictability makes it unsuitable for a government-held reserve. Nevertheless, the growing adoption of Bitcoin among institutional investors and other U.S. states has intensified the debate over its legitimacy as a financial instrument.
Texas Joins Broader Movement Toward Digital Reserves
Texas is not alone in exploring the integration of digital assets into state financial strategies. According to Bitcoin Reserve Monitor, 32 Bitcoin reserve bills have been introduced across 24 states. Last month, South Dakota lawmakers postponed a similar initiative, citing concerns over long-term price volatility.
At the federal level, President Donald Trump has already signed a national Bitcoin reserve. He has suggested that the U.S. Treasury could accumulate Bitcoin as a strategic asset alongside existing reserves of gold. Additionally, Senator Cynthia Lummis has proposed the BITCOIN Act, which calls for the federal government to acquire one million bitcoins over the next five years.
SB-21 now moves to the Texas House of Representatives, where lawmakers will debate its merits before a final vote. If approved, the bill will require Governor Greg Abbott’s signature to become law. Abbott has previously expressed strong support for the cryptocurrency industry, stating in 2022, “We are promoting [crypto], we are advancing it.”
Should Texas finalize its Bitcoin reserve, it could set a precedent for other states considering similar measures. With digital assets increasingly intersecting with traditional finance, the outcome of SB-21 could have far-reaching implications for the future of government-held Bitcoin reserves across the country.
