The Texas House of Representatives has passed a bill aimed at creating a state – managed strategic reserve of Bitcoin (BTC), marking a significant step toward integrating cryptocurrency into the state’s fiscal strategy. The legislation, if signed into law, would make Texas the first U.S. state to officially hold Bitcoin as part of its reserve assets.
Bill Details and Objectives
House Bill 4374, introduced by Republican Representative Dustin Burrows, authorizes the Texas comptroller to establish and manage a Bitcoin reserve fund. The bill specifies that the reserve would be funded through:
Excess state budget surpluses
Proceeds from cryptocurrency – related fines or settlements
Potential allocations from the state’s existing investment portfolios
Supporters of the bill argue that Bitcoin’s decentralized nature and limited supply make it a hedge against inflation and economic volatility. They point to Texas’ status as a hub for crypto mining—owing to its deregulated energy market—and claim the reserve would bolster the state’s financial resilience while promoting innovation.
Legislative Process and Reactions
The bill passed the House with a 91 – 51 vote along party lines, with most Republicans in favor and Democrats opposing. Critics raised concerns about Bitcoin’s price volatility, citing its 2022 crash and recent market fluctuations. Democratic Representative Tracy King argued that the state should prioritize “stable, proven assets” over a cryptocurrency with “no intrinsic value.”
Texas Governor Greg Abbott, a vocal crypto advocate, has signaled support for the legislation. If he signs it, the state comptroller would be required to:
Develop risk management protocols for Bitcoin holdings
Report quarterly on the reserve’s performance to the legislature
Maintain a minimum reserve balance equivalent to 5% of the state’s general revenue fund
Broader Implications for Crypto in Texas
The move aligns with Texas’ ongoing efforts to position itself as a crypto – friendly jurisdiction. In 2023, the state legalized Bitcoin as legal tender for certain government fees, and its energy grid has become a hotspot for Bitcoin mining operations.
Industry groups like the Blockchain Association praised the bill, with CEO Kristin Smith stating, “Texas is leading the way in recognizing digital assets as a legitimate fiscal tool. This reserve could set a precedent for other states.”
However, financial experts warned of potential risks. Economist Mark Calabria noted, “While Bitcoin has shown long – term growth, its short – term volatility could expose taxpayers to significant losses. The state must balance innovation with fiscal prudence.”
What’s Next for the Bill
The legislation now moves to the Texas Senate, where it faces a more divided chamber. If passed there, it will return to the House for final approval before heading to Governor Abbott’s desk.
If enacted, the Texas Bitcoin reserve would operate similarly to national digital asset funds in countries like El Salvador, though on a subnational scale. The bill’s fate remains tied to ongoing debates about crypto’s role in public finance, with advocates framing it as a forward – thinking strategy and critics decrying it as a risky experiment.
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