By: Schwertner, Parker S.B. No. 21
(In the Senate - Filed February 12, 2025;
February 13, 2025, read first time and referred to Committee on
Business & Commerce; March 4, 2025, reported adversely, with
favorable Committee Substitute by the following vote: Yeas 10,
Nays 0; March 4, 2025, sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 21 By: Campbell
A BILL TO BE ENTITLED
AN ACT
relating to the establishment and administration of the Texas
Strategic Bitcoin Reserve for the purpose of investing in
cryptocurrency and the investment authority of the comptroller of
public accounts over the reserve and certain other state funds.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. This Act may be cited as the Texas Strategic
Bitcoin Reserve and Investment Act.
SECTION 2. Chapter 403, Government Code, is amended by
adding Subchapter V to read as follows:
SUBCHAPTER V. TEXAS STRATEGIC BITCOIN RESERVE
Sec. 403.701. DEFINITIONS. In this subchapter:
(1) "Airdrop" means a gratuitous distribution of
cryptocurrency to persons who hold cryptocurrency, generally made
in a broad, equitable, and nondiscretionary manner.
(2) "Bitcoin" means a type of decentralized
cryptocurrency created by a peer-to-peer network that operates
independently of any central authority or bank.
(3) "Cold storage" means a method of storing private
keys required to engage in transactions involving cryptocurrency
that:
(A) has a nexus to a secure physical location;
(B) is protected from unauthorized access; and
(C) is isolated from any Internet network
connections.
(4) "Cryptocurrency" means a type of virtual currency
that utilizes cryptography to secure transactions that are
digitally recorded on a distributed ledger, such as a blockchain.
(5) "Fork" means a change to the consensus mechanism
of a distributed ledger that creates a separate ledger, which may
result in a new cryptocurrency that shares a common transaction
history with the previous cryptocurrency up to the point of the
change.
(6) "Qualified custodian" means a state or federally
chartered financial institution or other entity regulated by this
state that has custody of a virtual currency.
(7) "Reserve" means the Texas Strategic Bitcoin
Reserve established under this subchapter.
(8) "Virtual currency" has the meaning assigned by
Section 12.001, Business & Commerce Code.
Sec. 403.702. LEGISLATIVE FINDINGS; PURPOSE. The
legislature finds that:
(1) bitcoin and other cryptocurrencies are assets with
strategic potential for enhancing this state's financial
resilience;
(2) bitcoin and other cryptocurrencies can serve as a
hedge against inflation and economic volatility; and
(3) the establishment of a strategic bitcoin reserve
serves the public purpose of providing enhanced financial security
to residents of this state.
Sec. 403.703. ESTABLISHMENT AND ADMINISTRATION OF RESERVE.
(a) The Texas Strategic Bitcoin Reserve is established as a special
fund outside the state treasury. The comptroller has custody of and
shall administer and manage the reserve. The reserve consists of:
(1) money transferred or deposited to the credit of
the reserve by legislative appropriation;
(2) revenue that the legislature by general law
dedicates for deposit to the credit of the reserve;
(3) subject to Section 403.704, bitcoin and other
cryptocurrency purchased using money in or received by the reserve,
including any cryptocurrency:
(A) derived from the fork of a distributed
ledger; or
(B) distributed pursuant to an airdrop to the
state's cryptocurrency addresses; and
(4) investment earnings and interest or rewards earned
on assets in the reserve.
(b) In its administration and management of the reserve, the
comptroller may acquire, exchange, sell, supervise, manage, or
retain any kind of investment that a prudent investor exercising
reasonable care, skill, and caution would acquire, exchange, sell,
supervise, manage, or retain in light of the purposes, terms,
distribution requirements, and other circumstances then prevailing
for the reserve, taking into consideration the investment of all
the assets of the reserve rather than a single investment.
(c) The legislature may appropriate funds for deposit to the
credit of the reserve for the purposes of:
(1) investing in bitcoin or other cryptocurrency; and
(2) administering and managing the reserve.
(d) The comptroller may spend bitcoin or other
cryptocurrency in the reserve or use the net proceeds from the sale
of bitcoin or other cryptocurrency in the reserve to pay the
reasonable costs associated with administering and managing the
reserve.
(e) Money in the reserve may be invested with the state
treasury pool.
(f) Except as provided by Section 403.706, the comptroller
may not transfer money in the reserve to the state treasury unless
authorized by the legislature in the General Appropriations Act or
another law.
Sec. 403.704. MARKET CAPITALIZATION REQUIREMENT. Bitcoin
or other cryptocurrency purchased using money in the reserve must
have an average market capitalization of at least $500 billion over
the most recent 12-month period.
Sec. 403.705. THIRD-PARTY CONTRACTS; AUDITS. (a) The
comptroller may contract with one or more third-party entities for
the administration or management of the reserve, including
contracting with a qualified custodian who employs secure custodial
technologies, including cold storage.
(b) The comptroller may contract with a certified public
accountant to perform an independent audit of the reserve.
Sec. 403.706. TEMPORARY TRANSFER FOR CASH MANAGEMENT. (a)
The comptroller may liquidate the reserve's assets and temporarily
transfer money from the reserve to the state treasury if necessary
for the purposes described by Section 403.092.
(b) The comptroller shall, as soon as practicable after the
date of a transfer under Subsection (a), return the transferred
money to the reserve along with the interest, if any, earned on the
money while held in the state treasury.
Sec. 403.707. TEXAS STRATEGIC BITCOIN RESERVE ADVISORY
COMMITTEE. (a) In this section, "committee" means the Texas
Strategic Bitcoin Reserve advisory committee.
(b) The committee is composed of the following five members:
(1) the comptroller;
(2) one member of the comptroller's investment
advisory board established under Section 404.028, appointed by the
comptroller; and
(3) three members with expertise in cryptocurrency
investments, appointed by the comptroller.
(c) The committee shall advise the comptroller regarding
the administration and management of the reserve, including:
(1) recommendations for valuing assets in the reserve;
and
(2) the establishment of prudent investment policies
relating to the investment objectives of and asset allocation in
the reserve.
(d) A member of the committee is not entitled to receive
compensation for service on the committee or reimbursement for
expenses incurred in the performance of official duties as a member
of the committee.
(e) Members of the committee appointed by the comptroller
serve at the will of the comptroller.
(f) Chapter 2110 does not apply to the committee.
Sec. 403.708. BIENNIAL REPORT. Not later than December 31
of each even-numbered year, the comptroller shall publish on the
comptroller's Internet website and submit to the legislature a
report that includes:
(1) the amount of bitcoin and other cryptocurrency
held in the reserve on the last day of the preceding state fiscal
biennium;
(2) an estimate of the monetary value of the bitcoin
and other cryptocurrency held in the reserve on the last day of the
preceding state fiscal biennium;
(3) the changes, if any, in the amount and estimated
monetary value of bitcoin and other cryptocurrency in the reserve
during the period the cryptocurrency has been held in the reserve,
disaggregated by cryptocurrency type; and
(4) a description of the actions taken by the
comptroller to administer and manage the reserve during the
preceding state fiscal biennium.
Sec. 403.709. RULES. The comptroller may adopt rules as
necessary to administer this subchapter.
SECTION 3. Section 2256.004(a), Government Code, is amended
to read as follows:
(a) This subchapter does not apply to:
(1) a public retirement system as defined by Section
802.001;
(2) state funds invested by the comptroller [as
authorized by Section 404.024];
(3) an institution of higher education having total
endowments of at least $150 million in book value on September 1,
2017;
(4) funds invested by the Veterans' Land Board as
authorized by Chapter 161, 162, or 164, Natural Resources Code;
(5) registry funds deposited with the county or
district clerk under Chapter 117, Local Government Code; or
(6) a deferred compensation plan that qualifies under
either Section 401(k) or 457 of the Internal Revenue Code of 1986
(26 U.S.C. Section 1 et seq.), as amended.
SECTION 4. As soon as possible after the effective date of
this Act, the comptroller of public accounts shall:
(1) adopt rules as necessary to implement this Act;
and
(2) appoint members to the Texas Strategic Bitcoin
Reserve advisory committee as required by Section 403.707,
Government Code, as added by this Act.
SECTION 5. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2025.
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