Texas Lawmaker Proposes $250 Million Cap on State’s Bitcoin Purchase Plan
Overview
On March 10, 2025, Texas State Representative Ron Reynolds introduced a bill to limit the amount of cryptocurrency investments that the state and local governments can hold as reserve assets. The bill proposes a maximum cap of $250 million from Texas’ Economic Stabilization Fund, also known as the Rainy Day Fund, for Bitcoin (BTC) and other cryptocurrencies. Additionally, it restricts local governments, including cities and counties in Texas, to a maximum investment of $10 million in cryptocurrencies.
Background
This bill follows the Texas Senate’s approval of the “Strategic Bitcoin Reserve” bill (SB-21) on March 6, which allows the state comptroller to purchase Bitcoin as a reserve asset without any investment cap. SB-21 was designed to strengthen the state’s financial position by adding Bitcoin to its asset portfolio. Reynolds’ bill, however, seeks to impose limits on these investments to mitigate potential financial risks for the state and its local governments.
The push for a state Bitcoin reserve gained traction after President Donald Trump signed an executive order establishing a Strategic Bitcoin Reserve and U.S. Digital Asset Reserve. Several states have since proposed similar initiatives, with Texas being one of the leading adopters. In January, Texas Lieutenant Governor Dan Patrick named the creation of a Texas Bitcoin Reserve as a legislative priority for the 2025 session.
Bitcoin Reserve Movement Across the U.S.
Texas is not the only state considering Bitcoin reserves. In Utah, lawmakers debated a bill that would allow up to 5% of state public funds to be invested in “qualified digital assets.” However, the provision allowing direct Bitcoin investments was ultimately removed before the bill was passed. This leaves Texas and Arizona as the leading states in the Bitcoin reserve race at the legislative level.
Details of the Proposed Bill
Reynolds’ proposed bill (HB 4258) includes the following key provisions:
- State investment cap: The Texas state comptroller can invest a maximum of $250 million from the Rainy Day Fund into Bitcoin or other cryptocurrencies.
- Local government investment cap: Cities and counties within Texas will be limited to a maximum of $10 million in cryptocurrency investments.
- Implementation date: If passed and signed by the governor, the bill is set to take effect on September 1, 2025.
Political Divide Over Cryptocurrency Investments
The bill introduces a political divide over how Texas should approach cryptocurrency investments. While SB-21, sponsored by Republican Senator Charles Schwertner, allows unlimited Bitcoin investments, Reynolds, a Democrat, is pushing for a regulated cap to control exposure to the volatile cryptocurrency market. However, it remains unclear whether Reynolds fully supports the state’s Bitcoin reserve initiative or simply wants to impose stricter controls.
If passed and signed by Governor Greg Abbott, the bill will go into effect in September 2025.
Market Impact
If Texas successfully establishes a state-backed Bitcoin reserve, it could set a precedent for other U.S. states and even influence national policy regarding Bitcoin adoption. The state’s investment in BTC could legitimize the asset further and increase its adoption. However, by placing an investment cap, the bill aims to balance Bitcoin adoption with financial risk management.
As Texas already serves as a hub for Bitcoin mining and blockchain innovation, the state’s decision to hold BTC in its reserves could further attract investment and technological advancements. However, the financial risk associated with Bitcoin’s price volatility has raised concerns among lawmakers who favor a cautious approach to public investments in digital assets.
Conclusion
- Texas lawmakers are debating whether to impose a $250 million cap on Bitcoin investments by the state and a $10 million cap for local governments.
- The bill aims to reduce financial risks associated with Bitcoin’s volatility.
- If passed, Texas would still be one of the first U.S. states to establish a Bitcoin reserve, but under stricter regulations.
- The outcome of this legislative debate will determine the future of Bitcoin’s role in Texas’ financial strategy.
Investors and industry participants should keep a close watch on the legislative process, as Texas’ stance on Bitcoin could have significant implications for broader cryptocurrency adoption in the U.S.
