Relating to the establishment and administration of the Texas Strategic Bitcoin Reserve for the purpose of investing in cryptocurrency and the investment authority of the comptroller of public accounts over the reserve and certain other state funds.

89(R) SB 21 - Enrolled version - Bill Text

S.B. No. 21

AN ACT

relating to the establishment and administration of the Texas

Strategic Bitcoin Reserve for the purpose of investing in

cryptocurrency and the investment authority of the comptroller of

public accounts over the reserve and certain other state funds.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. This Act may be cited as the Texas Strategic

Bitcoin Reserve and Investment Act.

SECTION 2. Chapter 403, Government Code, is amended by

adding Subchapter V to read as follows:

SUBCHAPTER V.

TEXAS STRATEGIC BITCOIN RESERVE

Sec. 403.701. DEFINITIONS. In this subchapter:

(1)

"Airdrop" means a gratuitous distribution of

cryptocurrency to persons who hold cryptocurrency, generally made

in a broad, equitable, and nondiscretionary manner.

(2)

"Bitcoin" means a type of decentralized

cryptocurrency created by a peer-to-peer network that operates

independently of any central authority or bank.

(3)

"Cold storage" means a method of storing private

keys required to engage in transactions involving cryptocurrency

that:

(A) has a nexus to a secure physical location;

(B) is protected from unauthorized access; and

(C)

is isolated from any Internet network

connections.

(4)

"Cryptocurrency" means a type of virtual currency

that utilizes cryptography to secure transactions that are

digitally recorded on a distributed ledger, such as a blockchain.

(5)

"Fork" means a change to the consensus mechanism

of a distributed ledger that creates a separate ledger, which may

result in a new cryptocurrency that shares a common transaction

history with the previous cryptocurrency up to the point of the

change.

(6)

"Qualified custodian" means a state or federally

chartered financial institution or other entity regulated by this

state that has custody of a virtual currency.

(7)

"Reserve" means the Texas Strategic Bitcoin

Reserve established under this subchapter.

(8)

"Virtual currency" has the meaning assigned by

Section 12.001, Business & Commerce Code.

Sec.

403.702.

LEGISLATIVE FINDINGS; PURPOSE. The

legislature finds that:

(1)

bitcoin and other cryptocurrencies are assets with

strategic potential for enhancing this state's financial

resilience;

(2)

bitcoin and other cryptocurrencies can serve as a

hedge against inflation and economic volatility; and

(3)

the establishment of a strategic bitcoin reserve

serves the public purpose of providing enhanced financial security

to residents of this state.

Sec.

403.703.

ESTABLISHMENT AND ADMINISTRATION OF RESERVE.

(a) The Texas Strategic Bitcoin Reserve is established as a special

fund outside the state treasury. The comptroller has custody of and

shall administer and manage the reserve. The reserve consists of:

(1)

money transferred or deposited to the credit of

the reserve by legislative appropriation;

(2)

revenue that the legislature by general law

dedicates for deposit to the credit of the reserve;

(3)

subject to Section 403.704, bitcoin and other

cryptocurrency purchased using money in or received by the reserve,

including any cryptocurrency:

(A)

derived from the fork of a distributed

ledger; or

(B)

distributed pursuant to an airdrop to the

state's cryptocurrency addresses; and

(4)

investment earnings and interest or rewards earned

on assets in the reserve.

(b)

In its administration and management of the reserve, the

comptroller may acquire, exchange, sell, supervise, manage, or

retain any kind of investment that a prudent investor exercising

reasonable care, skill, and caution would acquire, exchange, sell,

supervise, manage, or retain in light of the purposes, terms,

distribution requirements, and other circumstances then prevailing

for the reserve, taking into consideration the investment of all

the assets of the reserve rather than a single investment.

(c)

The legislature may appropriate funds for deposit to the

credit of the reserve for the purposes of:

(1) investing in bitcoin or other cryptocurrency; and

(2) administering and managing the reserve.

(d)

The comptroller may spend bitcoin or other

cryptocurrency in the reserve or use the net proceeds from the sale

of bitcoin or other cryptocurrency in the reserve to pay the

reasonable costs associated with administering and managing the

reserve.

(e)

Money in the reserve may be invested with the state

treasury pool.

(f)

Except as provided by Section 403.706, the comptroller

may not transfer money in the reserve to the state treasury unless

authorized by the legislature in the General Appropriations Act or

another law.

Sec.

403.704.

MARKET CAPITALIZATION REQUIREMENT. Bitcoin

or other cryptocurrency purchased using money in the reserve must

have an average market capitalization of at least $500 billion over

the most recent 24-month period.

Sec.

403.705.

THIRD-PARTY CONTRACTS AND PERMISSIBLE

TRANSACTIONS; AUDITS.

(a)

The comptroller may contract with one or

more third-party entities for the administration or management of

the reserve, including contracting with:

(1)

a qualified custodian who employs secure custodial

technologies, including cold storage; and

(2)

a qualified liquidity provider to facilitate the

purchase and management of assets in the reserve.

(b)

For purposes of Subsection (a)(2), "qualified liquidity

provider" means an entity that:

(1)

is licensed or regulated under applicable federal

or state law;

(2)

maintains audited financial statements prepared

by a regulated auditor;

(3)

has at least five years of experience trading in

the digital assets industry;

(4)

maintains an office and has a registered principal

in this state; and

(5)

has certified in a method prescribed by the

comptroller that the provider meets the requirements of

Subdivisions (1)-(4).

(c)

If the comptroller determines it is in the best interest

of the reserve, the comptroller may use derivatives.

(d)

The comptroller may contract with a certified public

accountant to perform an independent audit of the reserve.

Sec.

403.706.

TEMPORARY TRANSFER FOR CASH MANAGEMENT. (a)

The comptroller may liquidate the reserve's assets and temporarily

transfer money from the reserve to the state treasury if necessary

for the purposes described by Section 403.092.

(b)

The comptroller shall, as soon as practicable after the

date of a transfer under Subsection (a), return the transferred

money to the reserve along with the interest, if any, earned on the

money while held in the state treasury.

Sec.

403.707.

TEXAS STRATEGIC BITCOIN RESERVE ADVISORY

COMMITTEE. (a) In this section, "committee" means the Texas

Strategic Bitcoin Reserve advisory committee.

(b) The committee is composed of the following five members:

(1) the comptroller;

(2)

one member of the comptroller's investment

advisory board established under Section 404.028, appointed by the

comptroller; and

(3)

three members with expertise in cryptocurrency

investments, appointed by the comptroller.

(c)

The committee shall advise the comptroller regarding

the administration and management of the reserve, including:

(1)

recommendations for valuing assets in the reserve;

and

(2)

the establishment of prudent investment policies

relating to the investment objectives of and asset allocation in

the reserve.

(d)

A member of the committee is not entitled to receive

compensation for service on the committee or reimbursement for

expenses incurred in the performance of official duties as a member

of the committee.

(e)

Members of the committee appointed by the comptroller

serve at the will of the comptroller.

(f) Chapter 2110 does not apply to the committee.

Sec.

403.708.

BIENNIAL REPORT. Not later than December 31

of each even-numbered year, the comptroller shall publish on the

comptroller's Internet website and submit to the legislature a

report that includes:

(1)

the amount of bitcoin and other cryptocurrency

held in the reserve on the last day of the preceding state fiscal

biennium;

(2)

an estimate of the monetary value of the bitcoin

and other cryptocurrency held in the reserve on the last day of the

preceding state fiscal biennium;

(3)

the changes, if any, in the amount and estimated

monetary value of bitcoin and other cryptocurrency in the reserve

during the period the cryptocurrency has been held in the reserve,

disaggregated by cryptocurrency type; and

(4)

a description of the actions taken by the

comptroller to administer and manage the reserve during the

preceding state fiscal biennium.

Sec.

403.709.

RULES. The comptroller may adopt rules as

necessary to administer this subchapter.

SECTION 3. Section 2256.004(a), Government Code, is amended

to read as follows:

(a) This subchapter does not apply to:

(1) a public retirement system as defined by Section

802.001;

(2) state funds invested
by the comptroller
[
as

authorized by Section 404.024
];

(3) an institution of higher education having total

endowments of at least $150 million in book value on September 1,

2017;

(4) funds invested by the Veterans' Land Board as

authorized by Chapter 161, 162, or 164, Natural Resources Code;

(5) registry funds deposited with the county or

district clerk under Chapter 117, Local Government Code; or

(6) a deferred compensation plan that qualifies under

either Section 401(k) or 457 of the Internal Revenue Code of 1986

(26 U.S.C. Section 1 et seq.), as amended.

SECTION 4. As soon as possible after the effective date of

this Act, the comptroller of public accounts shall:

(1) adopt rules as necessary to implement this Act;

and

(2) appoint members to the Texas Strategic Bitcoin

Reserve advisory committee as required by Section 403.707,

Government Code, as added by this Act.

SECTION 5. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.

______________________________

______________________________

President of the Senate

Speaker of the House

I hereby certify that S.B. No. 21 passed the Senate on

March 6, 2025, by the following vote: Yeas 25, Nays 5;

May 25, 2025, Senate refused to concur in House amendments and

requested appointment of Conference Committee; May 27, 2025, House

granted request of the Senate; May 30, 2025, Senate adopted

Conference Committee Report by the following vote: Yeas 23,

Nays 8.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 21 passed the House, with

amendments, on May 21, 2025, by the following vote: Yeas 101,

Nays 42, two present not voting; May 27, 2025, House granted

request of the Senate for appointment of Conference Committee;

May 29, 2025, House adopted Conference Committee Report by the

following vote: Yeas 110, Nays 25, two present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor