28-01-2025
What would a strategic bitcoin reserve look like in Texas? Two lawmakers have ideas.
What would a strategic bitcoin reserve look like in Texas? Two lawmakers have ideas.
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What does the future of the cryptocurrency market look like under Trump 2.0?
The president-elect promised to make America the 'crypto capital of the planet.'
As the Trump administration explores a U.S. cryptocurrency stockpile, two Texas bills filed this session are looking to be at the forefront of establishing a strategic bitcoin reserve for the state.
The two bills, one filed by state Rep. Giovanni Capriglione, R-Southlake, and the other by Sen. Charles Schwertner, R-Georgetown, seek to establish a strategic reserve for the cryptocurrency in the state, allowing corporations and individuals to donate or use bitcoin as a form of payment.
Last Thursday, President Donald Trump ordered the creation of a crypto task force to explore new regulations and what a U.S. cryptocurrency stockpile would look like. Instead of waiting on the federal government to establish a nationwide reserve, at least eight states, including Texas, have taken matters into their own hands.
Through the bills, the state wouldn't necessarily outright buy bitcoin using taxpayer funds. The bills would, however, create the reserve to be used in emergency situations, for government philanthropic spending and more at the discretion of the Legislature and comptroller.
'The beauty of a Texas strategic bitcoin reserve (through these bills) is it's primarily driven by donations, and there's really no risk to the Texas taxpayer. It's only a net positive,' said Lee Bratcher, founder and president of Texas Blockchain Council.
What would Texas' bitcoin reserve bills do?
While the two bills differ in practice, they both create a strategic reserve for the state to hold the cryptocurrency. They would also allow corporations and Texas residents to donate bitcoin to the state and possibly use it as a form of payment to state agencies.
Major takeaways from House Bill 1598, filed by Capriglione in December:
Establishes a strategic bitcoin reserve for Texas.
Allows the state to accept bitcoin in the form of donations from corporations or Texas residents.
Would be separate from the state's general fund and would be in the custody and discretion of the comptroller.
Minimum five-year holding period for the funds.
Bans hostile foreign entities from donating.
Allows the comptroller the option to tell some state agencies they can accept bitcoin as a form of payment.
'At the end of the day, there's no reason not to,' Capriglione told the American-Statesman. 'Bitcoin has shown that it is easy to use. It's become popular. It's become effective. It's a way to provide independence for individuals to be able to make payments, and it's successful. So why not? Why not allow individuals to have a state accept bitcoin as a form of payment?'
Major takeaways from Senate Bill 778, filed by Schwertner in January:
Establishes a strategic bitcoin reserve for Texas.
Allows the state to accept bitcoin in the form of donations from corporations or Texas residents.
Bans hostile foreign entities from donating.
Would be separate from the state's general fund and would be in the custody of the comptroller.
Allows the Legislature to direct the comptroller on how to use, access or report the funds.
No minimum holding period.
Allows the Legislature to direct the purchasing of bitcoin up to 1% of the general fund.
Creates an advisory oversight committee.
'It's a well thought-out way of dipping our toe into digital assets and the digital economy,' Schwertner said. 'From a state perspective, I think it sends a very important message that we support financial solvency and stewardship at the federal level, because we do it here in Texas regarding a balanced budget.'
Alan Orwick, co-founder of Quai Network and CEO of blockchain development company Dominant Strategies, told the American-Statesman he prefers Capriglione's bill, as he thinks outright purchasing bitcoin is risky.
He said a more gradual approach is needed. Schwertner's bill would allow the Legislature the option to purchase bitcoin but does not outright direct the purchase of the cryptocurrency.
'It could lead to that sort of rush on bitcoin and provide more scrutiny if we're outright buying bitcoin. … I'm not to say that the Senate approach is completely off the table in terms of the buying, but I do think more of a gradual change from the donations and fees compared to the outright buying,' Orwick said.
The major differences that Bratcher noticed between the two bills is the minimum holding periods and whether the state would outright purchase bitcoin.
Bratcher said the council doesn't have a preference on the two bills but thinks the state needs to be at the forefront of establishing a bitcoin reserve to hedge inflation and support the state's economy.
He told the American-Statesman he likes to think of the cryptocurrency industry like the invention of the microchip by Texas Instruments in 1958.
'The microchip was invented in Texas by engineers at Texas Instruments, but it was monetized in California,' Bratcher said. 'We want the economic benefit, the tax revenue, the job creation, the investment that will come with this, the digital asset and the wave of digital innovation that's coming through a digital asset reserve, to accrue and to benefit Texans. Not that we don't want that for the rest of the United States, but we want to primarily be working for the benefit of Texans.'
Is it risky? How does this differ from a federal stockpile?
The discussion of a federal crypto stockpile has been growing in recent years.
Though once skeptical of cryptocurrencies, Trump outlined his intent to create a reserve on the campaign trail and fulfilled a piece of that promise by setting up the task force last week.
His administration argues that holding bitcoin could hedge against inflation and a weakening dollar. He said in July, 'For too long, our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin.'
More: President Trump: Executive order part of plan to make U.S. 'crypto capital of the planet'
According to crypto tracking firm Arkham Intelligence, the U.S. owns nearly $20 billion worth of bitcoin obtained through legal seizures.
U.S. Sen. Cynthia Lummis, R-Wyoming, has argued heavily in favor of establishing a federal reserve, which would probably involve the federal government purchasing bitcoin, though an ideal amount is undetermined. She introduced a bill that would have acquired, over time, 1 million bitcoins to hold for at least 20 years.
Some financial analysts have spoken against a federal cryptocurrency reserve, saying buying and stockpiling bitcoin and other crypto could be too risky or at the detriment of residents and taxpayers.
Orwick said he thinks the state-by-state approach to building reserves is more beneficial because a national policy could cause a run on bitcoin and would make it more volatile.
Bratcher, however, said he believes a national reserve would be beneficial and is necessary going into the future. Many financial services institutions, such as BlackRock and Fidelity, have started getting involved in cryptocurrency trading, which he said de-risks it for states and the federal government.
He thinks states such as Texas filing bills like those from Capriglione and Schwertner would send a message to the federal government.
'Now that the industry is more well-known, more respected, there's policy and regulatory guardrails against things that happened in the past in the digital asset industry that consumers were injured by; those guardrails have come up in a stronger way,' Bratcher said. 'I think it's very much de-risked for state governments and for the federal government to get involved and take advantage of this innovation.'
Capriglione said that since the state now has guardrails and safeguards surrounding cryptocurrency trading — thanks in part to a bill he authored that was signed into law by Gov. Greg Abbott in 2023 — the risks have decreased.
He said the time to establish a reserve for Texas is now.
'It all has to go together. It has to be liquid, has to be safe, and it has to be valuable,' Capriglione said. 'It has to have some sort of regulation to make sure that the public feels confident in holding those assets, and it has to have sophisticated partners and individuals who see the value of it and have been allowing it to be used in really significant transactions.'
