Texas Moves First With a Legally Protected Bitcoin Fund
Texas has officially opened a state-backed Bitcoin reserve, becoming the third U.S. state to support a public crypto investment strategy—but the first to lock in legal safeguards that ensure the fund's longevity. Governor Greg Abbott signed Senate Bill 21 into law on Friday, activating the Texas Strategic Bitcoin Reserve and granting the state comptroller authority to buy, sell, hold, and manage Bitcoin directly.
Unlike other states that have flirted with crypto reserves, Texas has now codified its crypto strategy with durable legal protections. The reserve is framed in law as a hedge against inflation and economic volatility, with built-in flexibility for how the state accumulates digital assets.
More Than Just Buying Bitcoin
The legislation goes beyond simple asset purchases. Under SB 21, Texas can acquire Bitcoin through direct buys, forks, airdrops, or donations. This multi-pathway approach gives the fund exposure to Bitcoin’s broader economic flows—not just market trades.
However, there's a strict condition: any digital asset entering the reserve must maintain a $500 billion market cap over 24 months—a bar that only Bitcoin currently clears. This means the state is exclusively targeting Bitcoin, not altcoins or stablecoins, as its inflation hedge.
To safeguard these assets, the law mandates that the comptroller work with licensed custodians or liquidity providers to ensure institution-grade security and compliant custody arrangements.
Oversight and Transparency Embedded in the Law
Transparency is baked into the system. The law requires semiannual public reports detailing the status and performance of the reserve. These reports will be submitted to state leadership and made available to the public, offering real-time insights into Texas’s Bitcoin strategy.
While an advisory committee will assist, the final decision-making power lies with the state comptroller, enabling swift execution of investment strategies without bureaucratic delays.
Legal Armor
One of the most significant protections for the reserve comes from a companion bill—House Bill 4488. This legislation exempts SB 21 from automatic dissolution, which typically affects new funds at the end of a legislative session. In other words, the Bitcoin reserve can't be swept into general funds or killed off later, even if the next legislature disagrees with the policy.
As a result, the reserve has financial autonomy and legal permanence, even if no Bitcoin is immediately purchased. Texas has created a crypto fund that future politicians can’t easily unwind.
Texas vs. New Hampshire and Arizona
While New Hampshire was technically first to authorize Bitcoin as part of a public treasury strategy, it never created a standalone fund. Arizona, meanwhile, launched a reserve fund for unclaimed crypto, but did not allocate new public capital toward active investments.
Texas stands apart by being the first to actively fund a dedicated Bitcoin reserve with ironclad legal protections, public oversight, and a clear roadmap for acquiring and safeguarding digital assets.
With this move, Texas places itself at the forefront of state-level Bitcoin adoption in the U.S., solidifying its place as a crypto-forward jurisdiction that sees digital assets as part of long-term fiscal planning.
