Texas State Senate Approves New Bill on 02/18/2025

Texan Senator Schwertner proposed Senate Bill 21 to allow the state to invest in cryptocurrencies, specifically bitcoin, during a Senate Business and Commerce Committee meeting. The bill aims to establish a reserve fund for cryptocurrencies with a market capitalization exceeding $500 billion, a threshold currently only met by Bitcoin. Schwertner emphasized the importance of exploring lucrative investment options like Bitcoin to diversify the state’s investment portfolio.

Cryptocurrencies are a modern form of digital assets created through complex algorithms, promoting scarcity and value. The decentralized nature of cryptocurrencies, monitored through blockchain technology, has contributed to the substantial growth in the value of Bitcoin over the past decade. Schwertner noted that Bitcoin’s value has skyrocketed from $500 per coin in 2016 to over $100,000 recently, making it a promising asset for the state to consider.

Under SB 21, the envisioned crypto reserve would receive funding from legislative allocations and private donations. Schwertner proposed a $21 million appropriation in the state budget to seed the fund, with the Office of the Comptroller administering it. The Comptroller would be responsible for publishing biennial reports on the fund’s performance, with disbursements requiring legislative approval.

Testifying before the committee, Comptroller Glenn Hegar discussed the potential role of a crypto reserve in the state’s investment strategy. While current laws permit state funds to invest in regulated ETFs, no state fund has ventured into cryptocurrencies. With over $100 billion in state investments, Hegar expressed interest in exploring crypto trading to enhance asset value. He emphasized the importance of managing potential state crypto assets cautiously within the framework of prudent investment policies.

Beyond financial benefits, Schwertner highlighted the bill’s message to the federal government regarding spending policies and economic uncertainties. By considering crypto investments, states like Texas aim to safeguard against inflation and interest rate fluctuations driven by federal spending. Schwertner mentioned that 32 other states are contemplating similar legislation, signaling a collective response to fiscal concerns at the state level.

The bill is currently awaiting further deliberation by the committee, reflecting the growing interest in crypto investments among states. Overall, Schwertner’s proposal underscores the need for strategic financial management to navigate evolving economic landscapes and foster innovation in investment practices.