The Texas Legislature has passed a bill to create a cryptocurrency reserve managed by the Comptroller of Public Accounts. The bill now goes to Gov. Greg Abbott’s desk to be signed into law.
Senate Bill 21—titled the Texas Strategic Bitcoin Reserve and Investment Act—would establish the Texas Strategic Bitcoin Reserve as an asset to the state investment strategy. If Gov. Abbott approves the bill, Texas will be the third state in the nation to establish a cryptocurrency reserve, after Arizona and New Hampshire.
The Bitcoin Reserve would be a separate fund disconnected from the state treasury and administered by the state comptroller. All cryptocurrency qualified for investment in the reserve must have a market cap greater than $500 billion over the previous 12-month period. Bitcoin is the only cryptocurrency that currently adheres to those requirements.
The comptroller would have the authority to buy, exchange, manage, stake, retain or liquidate any digital assets in relation to the reserve. Proceeds from selling cryptocurrency may be used to pay costs associated with managing and administering the reserve, and any money in the reserve may be invested with the state treasury pool.
Third-party contractors may be contracted to manage the reserve, including qualified custodians and liquidity providers. Both the state and contractors must use cold storage to prevent unauthorized access to digital assets.
If needed, the comptroller would be empowered to temporarily liquidate reserve cryptocurrency for state cash management under certain conditions. The comptroller would later return the
transferred funds along with any earned interest to the reserve. Funds used to supplement the reserve may come from legislative appropriations, resident donations and investment returns.
Gov. Abbott’s approval of SB 21 would establish an advisory committee composed of five members to oversee custody and operations of the reserve. These members would include the comptroller, a member of the comptroller’s investment advisory board and three members with expertise in cryptocurrency investments. Board activities would include:
- Recommending ways for valuing assets in the reserve.
- Establishing investment policies relevant to the investment objectives and asset allocation.
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