Texas Passes Bitcoin Reserve Bill, Innovating Public Fund Support Model

Texas recently approved a groundbreaking bill that will establish the nation's first state-level Bitcoin reserve funded by public money. The governor has signed SB 21, making Texas the third state in the U.S. to legislate the establishment of a state-level strategic Bitcoin reserve.

Although Arizona and New Hampshire are ahead in legislation, Texas goes further by establishing an independent public fund-supported Bitcoin reserve fund, rather than just authorizing related measures. The Texas government has allocated $10 million for purchasing Bitcoin over the next two years. This fund will be managed by the state comptroller and will be set up outside the state treasury system.

At the same time, the governor also signed Bill HB 4488, ensuring that the Bitcoin reserve fund is not affected by the state's periodic "sweeping" mechanism of financial resources, meaning it will not be diverted for general fiscal purposes. Even if no Bitcoin has been purchased by next summer, the legal status of the reserve fund will continue to exist.

Key Points of the SB21 Bill: Specific Implementation Plan from Procurement to Custody

The SB21 bill believes that cryptocurrencies like Bitcoin have strategic potential to enhance Texas's fiscal resilience and can serve as tools to combat inflation and economic fluctuations. Establishing a strategic Bitcoin reserve has public benefits for enhancing financial security for the residents of the state.

According to the bill, the Texas Strategic Bitcoin Reserve will be established as a dedicated fund outside of the state treasury, managed and operated by the Comptroller. The reserve includes: funds transferred from legislative appropriations; revenues allocated by law; Bitcoins and other cryptocurrencies purchased by the reserve; investment returns, interest, or rewards generated by the reserve's assets.

The main provisions of the bill include:

1. Flexible asset management: The chief accountant can invest, exchange, sell, manage, or hold assets 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 shall not transfer reserve funds into the state treasury unless specifically authorized.

4. Scope of Investment Assets: The average market capitalization of the purchased cryptocurrencies must not be less than 500 billion USD in the past 24 months.

5. The Chief Accountant may enter into contracts with qualified custodians who possess cold wallet security custody technology and qualified liquidity providers who assist in asset purchase management.

6. If it is beneficial for reserves, the comptroller may use derivatives.

7. Establish a five-member Strategic Bitcoin Reserve Advisory Committee responsible for asset valuation recommendations and investment policy design, etc.

From Precious Metals to Bitcoin: The Continuation of Financial Sovereignty Exploration

The congressman involved in the drafting of the bill stated that this legislation is a continuation of the financial rights of citizens. He pointed out that about ten years ago, Texas established the first state-level precious metals depository in the United States. He believes that Bitcoin reserves are functionally complementary to precious metals custody, as both can provide scarce, valuable, and transferable resources for individuals, and both are effective means of combating inflation.

Bitcoin Reserve: State-level "Policy Lab"

Various states in the United States are actively promoting legislation related to Bitcoin reserves. For example, Arizona recently passed a bill to establish a confiscated asset reserve fund. The state government's actions in this regard seem to be ahead of the federal government, reflecting the characteristic of states as "policy laboratories" under the federal system of the United States.

Bitcoin policy research experts believe that the core significance of Strategic Bitcoin Reserves (SBR) lies in preserving the value of public funds, combating inflation, and ensuring that state governments can fulfill their obligations in the future. The fiscal structures of different states vary greatly, with some hoping to integrate Bitcoin into their existing investment portfolios or exploring more cutting-edge financial tools.

Custodian Institution Public Tender

The chairman of the Texas Blockchain Council stated that they are assisting cryptocurrency companies in connecting with the Texas Treasury Safekeeping Trust Company (TTSTC) to prepare for future public bidding. They hope that the state government can directly hold physical Bitcoin and manage the private keys, rather than simply purchasing an ETF.

The bill sets detailed conditions for "liquidity providers," but the definition of "qualified custodians" is relatively flexible, possibly to broaden the scope of competition. Several well-known institutions offer various custody solutions, and the Comptroller's Office and TTSTC will need a certain learning process to evaluate the different options.

The implementation of this innovative legislation will provide valuable experience for other states and may have a profound impact on the future cryptocurrency policy in the United States.