Texas Moves Closer to Establishing the Strategic Bitcoin Reserve: Conference Committee Fine-Tunes SB21 Amid Growing State-Level Crypto Adoption

Key Points:

• Conference Committee Formation: The Texas House and Senate have convened a conference committee to reconcile differences in SB21 before Governor Greg Abbott’s signature
  
• Reserve Structure and Oversight: SB21 would establish the Texas Strategic Bitcoin Reserve, managed by the Comptroller and advised by a five-member committee 
• Market Capitalization Threshold: Only cryptocurrencies with market caps exceeding $500 billion—currently just Bitcoin—are eligible for purchase by the reserve 
• Precedent States: New Hampshire and Arizona have passed similar strategic reserve laws, authorizing state treasurers to allocate up to 5% of public funds to high-cap digital assets 
• Market Implications: News of SB21’s progress and analogous laws has bolstered Bitcoin markets, with price fluctuations reflecting investor sentiment and state-level crypto endorsement 

1. Legislative Progress and Conference Committee

On May 27, 2025, the Texas Legislature advanced Senate Bill 21 (“Texas Strategic Bitcoin Reserve and Investment Act”) to its final stage before gubernatorial signature. After the Texas House approved the Senate’s original text with substantial amendments on May 22, the Senate has yet to concur with those changes. To bridge this gap, a conference committee composed of equal members from both chambers was formed to negotiate compromise language and resolve outstanding differences.

The committee’s swift convening underscores legislative leadership’s determination to enact SB21 promptly. Lieutenant Governor Dan Patrick, a vocal proponent of the bill, identified it as a priority in early session strategy discussions. Senate sponsors emphasize that final agreement on operative language—particularly regarding investment thresholds, reporting frequency, and administrative oversight—will be critical to preserving both fiscal prudence and the bill’s strategic vision. Once the committee reports a unified bill, the Senate is expected to ratify the compromise text expeditiously, sending the measure to Governor Greg Abbott’s desk for signature, which insiders predict could occur within one to two weeks.

2. Structure and Oversight of the Texas Strategic Bitcoin Reserve

SB21 would establish the Texas Strategic Bitcoin Reserve as a special fund entirely separate from the state’s general treasury. The fund’s administration and custody would be vested in the Texas Comptroller of Public Accounts, who would exercise investment authority over the reserve’s assets. Specifically, the reserve would consist of:

1. Legislative Appropriations: Funds expressly allocated by the Legislature for reserve capitalization.
2. Dedicated Revenue Streams: Revenues earmarked by statute for deposit into the reserve.
3. Purchased Cryptocurrency: Bitcoin and other qualifying digital assets acquired with reserve funds, including cryptocurrencies derived from forks or received via airdrops.
4. Investment Earnings: Interest, staking rewards, or other returns generated on reserve holdings.
5. Gifts and Donations: Voluntary crypto contributions designated for the reserve.

To guide investment decisions, SB21 also creates a Texas Strategic Bitcoin Reserve Advisory Committee comprising five members: the Comptroller, one existing member of the Comptroller’s investment advisory board, and three individuals with proven cryptocurrency investment expertise, all appointed at the Comptroller’s discretion. The committee’s role is strictly advisory, tasked with recommending valuation practices, risk-management policies, and best practices for asset custody. However, critics point out that the committee’s lack of binding authority and reliance on Comptroller appointments may limit independent oversight, potentially exposing taxpayers to governance risks without robust checks and balances.

3. Market Capitalization Threshold and Cryptocurrency Eligibility

A cornerstone of SB21 is the requirement that only cryptocurrencies with a minimum market capitalization of $500 billion over the preceding 12 months may be purchased by the reserve. At present, this threshold is satisfied solely by Bitcoin, whose market cap recently surpassed $2 trillion amid institutional adoption trends. By enforcing this high-bar criterion, legislators aim to mitigate exposure to smaller, more volatile tokens.

Supporters argue the threshold strikes a balance between risk management and strategic diversification. They assert that Bitcoin’s unparalleled network security, liquidity depth, and broad acceptance make it uniquely suitable for state-level reserve holdings. However, opponents question whether a two-year rolling market cap criterion sufficiently protects against sudden market downturns, advocating for additional safeguards such as periodic re-evaluation cycles or the capacity to adjust threshold levels in response to evolving market dynamics.

4. Comparative Context: Pioneering Steps in New Hampshire and Arizona

4.1 New Hampshire’s Strategic Bitcoin Reserve (HB 302)

On May 6, 2025, New Hampshire became the first U.S. state to enact a Strategic Bitcoin Reserve law when Governor Kelly Ayotte signed HB 302. That law authorizes the state treasurer to allocate up to 5% of certain public funds into digital assets and precious metals with a market capitalization exceeding $500 billion—again limiting immediate eligibility to Bitcoin.

HB 302 establishes a governance framework mandating:

• Custody Standards: Digital assets must be held via qualified custodians, multisignature wallets, or U.S. regulated exchange-traded products.
• Reporting Requirements: The state treasurer must submit annual reports detailing reserve holdings, valuation changes, and any realized gains or losses.
• Public Accountability: The law includes provisions for public audits to ensure transparency and maintain citizen trust in crypto reserve management.

Following passage, New Hampshire’s move catalyzed a wave of policy discussion nationwide, with proponents praising the state’s forward-looking approach to fiscal resilience and critics cautioning against public sector exposure to digital asset volatility.

4.2 Arizona’s Cryptocurrency Reserve Fund

Shortly after New Hampshire’s milestone, Arizona joined the vanguard by enacting legislation to establish a Bitcoin and Digital Assets Reserve Fund. On May 7, 2025, Governor Katie Hobbs signed the law, making Arizona the second state to formally create a reserve fund for unclaimed or forfeit cryptocurrency assets and to update unclaimed property statutes to encompass digital assets. Importantly, while the law does not permit direct investment of public funds, it allows the state to hold abandoned crypto in escrow-like arrangements, ensuring residents retain value accrual opportunities for long-forgotten holdings.

Arizona’s package also includes provisions for future bills that could authorize limited investment of public funds, subject to legislative approval. The state’s pragmatic approach reflects a recognition of blockchain’s growing importance in financial ecosystems while avoiding the immediate fiscal exposure associated with direct crypto investments.

5. Implications for Bitcoin Markets and State Finances

State-level endorsements of Bitcoin through reserve funds have had palpable market effects. In the days following the Texas House’s initial approval of SB21, Bitcoin prices briefly surged past $109,000, reaching all-time highs before settling around $110,000. Investors interpreted legislative momentum as a bullish signal, anticipating that public sector demand could provide sustained support for Bitcoin’s valuation.

From a fiscal perspective, proponents argue that strategic Bitcoin reserves could:

• Hedge Against Inflation: Bitcoin’s capped supply positions it as a potential defense against currency debasement.
• Diversify State Portfolios: Incorporating Bitcoin alongside traditional assets (e.g., gold, Treasury bonds) may enhance overall resilience.
• Generate Returns: Realized gains during bull markets could yield incremental revenue for public services or budget stabilization.

Conversely, critics highlight significant concerns:

• Volatility Risks: Bitcoin’s historical price swings (often exceeding 30% within single quarters) could imperil state budgets if reserves are not hedged or liquidated strategically.
• Regulatory Uncertainty: Evolving federal crypto regulations could impact asset custody, tax treatment, and permissible investment activities for state entities.
• Governance Challenges: Ensuring adequate oversight, preventing conflict-of-interest in advisor appointments, and maintaining public transparency will be critical to safeguarding taxpayer interests.

6. Future Outlook and Next Steps

As SB21 moves toward final passage in Texas, attention will turn to implementation details:

1. Governor Abbott’s Signature: Assuming the conference committee report garners bipartisan support, Governor Abbott is expected to sign SB21 by mid-June 2025.
2. Reserve Funding Schedule: Initial appropriations — projected at “tens of millions” of dollars — will be determined through the summer budget cycle, with the first Bitcoin purchases potentially executed in late Q3 2025.
3. Advisory Committee Appointments: The Comptroller will nominate advisory committee members, whose expertise and independence will be scrutinized by legislators and watchdog groups.
4. Reporting Cadence: Stakeholders are advocating for at least quarterly reporting on reserve performance, exceeding SB21’s current biennial requirement to ensure responsiveness to market fluctuations.
5. Interstate Collaboration: Texas may collaborate with New Hampshire, Arizona, and other states exploring similar measures to share best practices regarding custody solutions, risk-management frameworks, and audit protocols.

Beyond Texas, several other states have introduced strategic Bitcoin reserve bills, though not all have advanced. Legislatures in Utah and Oklahoma have passed committee milestones, while proposals in Florida, Montana, Wyoming, and Pennsylvania stalled in 2025 legislative sessions. As the decentralized finance sector continues to mature, state treasuries and policymakers nationwide will weigh the merits of prudent crypto diversification against traditional portfolio management doctrines.

Conclusion

The Texas Strategic Bitcoin Reserve represented by SB21 stands at the nexus of fiscal innovation and political negotiation. By convening a conference committee, Texas legislators signal both eagerness to harness Bitcoin’s strategic potential and caution in refining governance details. With New Hampshire and Arizona forging ahead, Texas’s eventual passage will cement its status as the third U.S. state to integrate Bitcoin into public finance directly. The initiative’s success will hinge on transparent oversight, adaptive risk-management mechanisms, and responsive reporting structures capable of navigating Bitcoin’s intrinsic volatility. As state treasurers cautiously explore digital assets, the coming months will reveal whether strategic Bitcoin reserves emerge as a mainstream public finance tool or remain a niche experiment in government portfolio diversification.