Texas Establishes Strategic Bitcoin Reserve: Allocates $10 Million, First Implementation

Texas has recently passed SB 21, becoming the third state in the United States to legislate the establishment of a state-level strategic Bitcoin reserve. Although Arizona and New Hampshire led the way in passing the legislation, Texas is the first state to actually establish an independent Bitcoin reserve fund supported by public funds.

The state government has allocated $10 million, planning to use it to purchase Bitcoin over the next two years. This fund will be managed by the state treasurer and set up outside the state financial system. Meanwhile, the governor also signed HB 4488, ensuring that the Bitcoin reserve fund is not affected by the state's periodic "sweep" mechanism, meaning it will not be diverted for general fiscal purposes.

Main Content of the SB21 Bill

The SB21 bill believes that cryptocurrencies such as Bitcoin have strategic potential to enhance the fiscal resilience of the state and can be used as tools to combat inflation and economic fluctuations. The bill stipulates:

1. Flexible asset utilization: The chief accountant can invest, exchange, sell, manage, or hold based on the standards of rational and prudent investors.
2. Reserve funds can be jointly invested with the state treasury fund pool.
3. The Comptroller may not transfer reserve funds to the state treasury unless authorized.
4. Scope of investment assets: The average market capitalization of the purchased cryptocurrencies in the past 24 months must not be less than 500 billion USD.

At the execution level, the comptroller may enter into contracts with qualified custodians that possess cold wallet security custody technology and qualified liquidity providers that assist in asset purchase management. The bill also allows the comptroller to use derivatives when beneficial to the reserves.

Bitcoin Reserves: A Continuation of Financial Sovereignty Exploration

Representative Giovanni Capriglione, who participated in the drafting of the bill, stated that the strategic Bitcoin reserves are functionally complementary to the previously established Texas precious metals depository. Both provide a scarce, valuable resource that can be transferred between individuals, and both are effective means of combating inflation.

Zack Shapiro, a lawyer at the Bitcoin Policy Institute, pointed out that the core significance of Strategic Bitcoin Reserves (SBR) lies in preserving public funds, combating inflation, and ensuring that state governments can fulfill their obligations in the future. The financial structures of different states vary greatly, with some looking to integrate Bitcoin into existing portfolios or experimenting with more cutting-edge financial instruments.

Selection of Reserve Execution and Custody Institutions

Lee Bratcher, the chairman of the Texas Blockchain Council, stated that they are regularly meeting with interested companies to assist these crypto firms in establishing connections with the Texas Treasury Safekeeping Trust Company (TTSTC). A transparent bidding process will be conducted subsequently.

The SB21 bill sets detailed conditions for "liquidity providers", such as being headquartered in Texas and operating for more than 5 years, but the definition of "qualified custodians" is more flexible. Many well-known institutions have different custodial solutions, and the Comptroller's Office and TTSTC will need a certain learning process to evaluate various solutions.

This initiative marks an important step for Texas in financial innovation and asset diversification, providing a model for other states to reference. As the Bitcoin reserve program progresses, its actual effects and impacts will gradually become apparent.