Texas launches the first state-level Bitcoin reserve fund, allocating $10 million

Texas has recently passed a groundbreaking bill, becoming the first state in the United States to establish an independent Bitcoin reserve fund supported by public funds. The governor has signed SB 21 and allocated $10 million for the purchase of Bitcoin over the next two years.

This fund will be managed by the state comptroller and established outside the state treasury system. Meanwhile, another bill, HB 4488, ensures that the fund will not be diverted for general fiscal purposes. Even if no Bitcoin has been purchased before next summer, the legal status of this reserve fund will continue to exist.

The SB21 bill considers that Bitcoin and other cryptocurrencies have strategic potential to enhance the fiscal resilience of the state and can serve as tools to combat inflation and economic volatility. The bill specifies in detail the management, usage, and investment scope of the reserve fund.

The Comptroller may invest, exchange, sell, manage, or hold assets according to the standards of prudent and rational investors. Reserve funds may be co-invested with the state treasury fund pool, but shall not be transferred into the state treasury at will. The bill also stipulates market value standards for investable assets, and currently only Bitcoin meets the requirements.

At the execution level, the chief accountant can contract with qualified custodians who possess cold wallet security custody technology, as well as qualified liquidity providers who assist in asset acquisition and management. The bill also allows for the use of derivatives under favorable circumstances and establishes a five-member advisory committee responsible for asset valuation recommendations and investment policy design.

Members of Congress involved in drafting the bill stated that this initiative is a protection of individual financial power and an effective means to combat inflation. He believes that Bitcoin reserves are functionally complementary to existing precious metal custodians.

Currently, several states in the United States are advancing similar Bitcoin reserve bills. Experts believe that state-level Bitcoin reserves can serve as a "policy laboratory" to test new policies more quickly and responsively to public opinion. These initiatives aim to preserve public funds, combat inflation, and ensure that state governments can fulfill their obligations in the future.

Next, Texas will select a suitable custodian through a public and transparent bidding process. Relevant parties have expressed hope to directly custodian physical Bitcoin and control the private keys, rather than simply purchasing an ETF. This process may require some learning and evaluation time.