Texas Poised to Establish the Largest State-Managed Bitcoin Reserve
Texas is on the brink of making history with the creation of the nation’s most extensive state-managed bitcoin reserve. The proposed legislation, known as Senate Bill 21 or the Texas Strategic Bitcoin Reserve and Investment Act, has been forwarded to Governor Greg Abbott’s desk as of June 1, following overwhelming approval from both legislative chambers.
Countdown to a Landmark Decision
According to Article IV, Section 14 of the Texas Constitution, the governor has a period of twenty days post-legislative adjournment to either sign or veto a bill, after which it automatically becomes law. Given that the 89th Legislature adjourned sine die on June 2, Governor Abbott has until June 22 to make his decision. The policy-watch account @Bitcoin_Laws has highlighted this deadline, emphasizing the critical nature of this timeline.
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Implications of the Bitcoin Reserve Legislation
Dennis Porter, CEO of the Satoshi Act Fund and a key advocate for similar initiatives across the country, underscores the significance of Texas joining the ranks of New Hampshire and Arizona, which have already passed related legislation. He notes, “This move is pivotal for Texas, as the state stands ready to join others in pioneering a strategic bitcoin reserve.”
The legislation outlines the creation of a “special fund outside the state treasury,” dubbed the Texas Strategic Bitcoin Reserve, under the supervision of the Comptroller of Public Accounts. This bill authorizes the State Treasurer to invest in Bitcoin and other high-market-cap cryptocurrencies, specifically those with a 12-month average market cap of at least $500 billion.
Management and Oversight
The comptroller is granted the authority to engage qualified custodians employing cold-storage technology, arrange for independent audits, and utilize derivatives for hedging purposes. In cases where cash flow demands arise, the statute permits the temporary liquidation of assets to support the general treasury, with a mandate to replenish funds expediently. An advisory committee, consisting of the comptroller and four appointees, will guide allocation and risk management strategies and is required to publish a biennial reserve report every even-numbered year.
Legislative Journey of SB 21
Introduced by Senator Charles Schwertner on February 12, SB 21 gained unanimous Senate approval on March 6. It successfully navigated through several House amendments in May, ultimately receiving final approval through a conference report adopted by the House and Senate on May 30. The bill was subsequently forwarded to the governor and designated as a legislative priority by Lt. Gov. Dan Patrick, with Rep. Giovanni Capriglione championing its passage in the House.
Strategic Implications for Texas
Senator Schwertner has positioned the bitcoin reserve as a strategic measure against inflation and a means to reinforce Texas’s status as a leader in cryptocurrency. Comptroller Glenn Hegar, responsible for implementing the program, emphasized the prudent approach taken in managing such a volatile asset to safeguard taxpayer dollars. While Governor Abbott has yet to express his stance publicly, his press secretary has indicated that the proposal is under review.
Should SB 21 pass the constitutional deadline, Texas would join the ranks of New Hampshire and Arizona, both of which have enacted similar measures aimed at investing public funds in high-value assets.
Conclusion
As the deadline approaches, all eyes are on Texas and Governor Abbott’s decision, which could solidify Texas’s position as a frontrunner in state-level cryptocurrency investment strategies.
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