The Texas Senate Business and Commerce Committee is reviewing a proposal that could see the state investing in cryptocurrencies, specifically Bitcoin. Senate Bill 21, introduced by Georgetown Senator Charles Schwertner, aims to establish a reserve fund for cryptocurrencies with a market capitalization exceeding $500 billion. Currently, only Bitcoin meets this criterion. Schwertner emphasized the potential benefits of including such assets in the state's investment portfolio, stating, "We can buy land, we can buy gold; I think the state of Texas should have the option of evaluating the best performing asset over the last 10 years."
Cryptocurrencies are digital securities created through complex computational processes that generate scarcity and value. Bitcoin's value has surged from $500 per coin in 2016 to over $100,000 recently. In early 2024, the Securities Exchange Commission approved exchange-traded funds (ETFs) for cryptocurrencies.
The proposed crypto reserve would be funded by legislative appropriations and private donations. Although not currently included in the Senate budget, Schwertner plans to advocate for a $21 million appropriation to initiate the fund. The Office of the Comptroller would manage it and report on its performance biennially. Legislative approval would be required for any disbursements.
Comptroller Glenn Hegar testified about potential management strategies for such a fund. While current laws permit investments in SEC-regulated ETFs by state funds like retirement systems, none have done so yet. Hegar noted his office's interest in exploring cryptocurrency investments as part of their financial strategy. He remarked on Texas's innovative spirit: “Pioneering a strategic bitcoin reserve is a natural step for Texas, where innovation and ideas are nurtured and pursued." He assured that any crypto investments would adhere to prudent investor policies.
Schwertner also highlighted broader implications of this bill as a message to Washington regarding federal spending practices: “It is a specific signal to our federal government that is being echoed by many other states.” He mentioned that 32 other states are considering similar measures.
The bill is still under committee review.
