Key Points:
- Strategic Bitcoin Reserve Funds: New Hampshire pioneered state-backed crypto reserves in May 2025; Texas formalized an independent Bitcoin reserve fund on June 21, 2025; Arizona’s Senate has passed a bill to stash seized crypto assets.
- Scope and Structure: New Hampshire allows up to 5% of public funds into crypto (currently only Bitcoin exceeds the $500 billion market-cap threshold); Texas’s SB21 creates a separate trust, managed by the State Auditor, to hold Bitcoin and related yields; Arizona’s HB2324 focuses on crime-forfeited tokens.
- Legal Safeguards: Texas’s companion bill HB4488 permanently shields the Bitcoin reserve from being swept into the general fund and guarantees its legal existence even if no purchases occur by next summer.
- Market Context: Bitcoin’s market capitalization recently surpassed $600 billion, solidifying its status as the only coin eligible under the $500 billion threshold rule; states are eyeing small-scale allocations (tens of millions USD) relative to their budgets.
- Broader Trend: Beyond New Hampshire, Arizona, and Texas, various states are revisiting crypto reserve legislation, reflecting mainstream acceptance of digital assets as a store of value and potential yield generator.
Background: States Enter the Crypto Fray
In early 2025, New Hampshire became the first U.S. state to authorize public investment in cryptocurrencies with the enactment of its crypto reserve fund law. The bill permits the State to allocate up to 5 percent of its public funds into any cryptocurrency whose average market capitalization for the previous year exceeds $500 billion—currently only Bitcoin meets this criterion.
On June 21, 2025, Texas Governor Greg Abbott signed Senate Bill 21 (SB21), allowing the establishment of a Strategic Bitcoin Reserve Fund separate from the state’s general treasury and overseen by the Texas State Auditor. This follows Abbott’s signature of House Bill 4488, which insulates the reserve from being re-appropriated to general revenue and cements the fund’s legal status even if no Bitcoin is purchased by next summer.
Meanwhile, Arizona’s Senate revived House Bill 2324, which—unlike New Hampshire and Texas—does not permit fresh investment of public money into crypto. Instead, HB2324 authorizes the state to retain and manage cryptocurrency seized in criminal cases, echoing language in President Trump’s recently issued executive order on cryptocurrency reserves.
This wave of legislation signals a growing recognition among state governments that Bitcoin can serve as a strategic asset. Although individual allocations are likely to total only tens of millions of dollars—modest amounts for state budgets—they mark a symbolic shift in how public treasuries regard decentralized digital assets.
New Hampshire’s 5 Percent Rule
Adoption Date: May 2025 (effective 60 days after passage)
Mechanism:
- States may purchase up to 5 percent of their public funds into cryptocurrencies with annual average market caps exceeding $500 billion.
- Bitcoin is currently the only qualifying digital asset.
- Purchases become permissible as early as July 2025.
Rationale:
New Hampshire legislators viewed a limited, cap-bound allocation as a low-risk experiment in diversifying the state’s investment portfolio. By restricting exposure to a small fraction of total assets and only to the largest and most liquid crypto, the bill aims to balance innovation with fiscal prudence.
Texas’s Independent Bitcoin Reserve (SB21 & HB4488)
Key Features of SB21 (Signed June 21, 2025):
- Independent Fund: Creation of a standalone Bitcoin reserve fund separate from the state’s general fund.
- Eligibility: State may invest in cryptocurrencies with market capitalization above $500 billion—effectively Bitcoin only.
- Funding Sources:
- Bitcoin and other qualifying tokens received via airdrops to a state-controlled address.
- Earnings and interest generated by assets held within the reserve.
- Donations earmarked for the Bitcoin reserve.
- Management: Administered by the Texas State Auditor, currently Glen Hegar.
Legal Protections under HB4488 (Signed June 20, 2025):
- Permanent Shield: Excludes the Bitcoin reserve from being integrated into the state’s general revenue, even if surplus exists.
- Existence Guarantee: Ensures the reserve’s legal foundation remains intact, irrespective of whether purchases occur by summer 2026.
Why an Independent Fund?
By segregating the assets, Texas lawmakers intended to protect the reserve from budgetary pressures and ensure Bitcoin holdings are treated on par with other permanent endowments, such as university or pension funds.
Arizona’s Crime-Forfeiture Crypto Reserve
Legislative Status: Senate passed HB2324 in mid-June 2025; awaiting House consideration.
Scope:
- Asset Source: Cryptocurrency seized through asset forfeiture in criminal proceedings.
- Purpose: To hold and manage confiscated digital assets rather than authorize new state investments.
This approach mirrors policy in other jurisdictions that have struggled to liquidate or account for digital-asset seizures. By formally establishing a mechanism, Arizona aims to streamline the handling of forfeited crypto, preserving its value for law enforcement or public benefit rather than selling at a loss.
Market and Policy Implications
- Bitcoin’s Dominance: With a market capitalization that recently crossed $600 billion, Bitcoin remains the only coin meeting the $500 billion threshold in New Hampshire and Texas legislation. Altcoins, including Ethereum (market cap ~$200 billion) and others, remain ineligible.
- Scale of Investment: Industry experts, like Lee Bratcher of the Texas Blockchain Council, estimate Texas’s initial allocation at “tens of millions of dollars”—significant for crypto circles but negligible relative to a state budget often measured in tens of billions.
- Legal Precedents: These state laws may serve as templates for other jurisdictions. Strong legal protections (e.g., HB4488’s shield from general-fund sweep) underscore legislative intent to treat Bitcoin as a long-term reserve asset, akin to gold.
- Macro Trends: This state-level embrace aligns with municipalities like Miami and Jackson, Tennessee, which have explored paying employees or citizens in Bitcoin, though on a much smaller scale.
Visualization: Timeline of State Bitcoin Reserve Legislation
The following timeline illustrates the legislative milestones in New Hampshire, Arizona, and Texas for establishing state-level Bitcoin reserve or crypto-asset funds:
Conclusion
By mid-2025, a trifecta of U.S. states—New Hampshire, Texas, and Arizona—have forged novel legal pathways for handling cryptocurrency within public finance. New Hampshire’s measured 5 percent cap introduces limited exposure; Texas’s SB21 establishes a standalone, legally protected Bitcoin reserve; and Arizona paves the way for managing crime-forfeited tokens. While actual dollar allocations will likely remain modest relative to overall budgets, these laws mark a symbolic and practical shift in treating digital assets as legitimate components of government treasuries. Looking ahead, other states will undoubtedly monitor these experiments, potentially catalyzing broader adoption of blockchain-based financial strategies across the country.
