The Texas bitcoin bill most people are asking about is Senate Bill 21, which Governor Greg Abbott signed on June 20, 2025. It created the Texas Strategic Bitcoin Reserve, a state-held fund of bitcoin kept outside the regular treasury and managed by the comptroller of public accounts. Texas became one of the first states in the country to put public money and public custody behind a cryptocurrency reserve.
SB 21 sits on top of several earlier Texas laws that already recognized digital asset ownership, regulated crypto exchanges, and gave miners a narrow tax break. Together they add up to one of the more developed state frameworks for bitcoin, but the reserve itself is the headline change.
What Senate Bill 21 Actually Creates
The law establishes the Texas Strategic Bitcoin Reserve as a special fund held outside the state treasury. The comptroller has custody and is responsible for managing the assets. The legislature wrote findings into the bill describing bitcoin as a potential hedge against inflation and economic volatility, framing the reserve as a long-term holding rather than a trading account.
Not every cryptocurrency qualifies for purchase with reserve funds. An asset must have maintained an average market capitalization of at least $500 billion over the preceding 24 months. As of mid-2025, bitcoin is the only cryptocurrency that consistently clears that threshold, which effectively limits the reserve to bitcoin for the foreseeable future.
How the Reserve Gets Funded
Three sources can feed the reserve:
- Legislative appropriations.
- Revenue the legislature specifically dedicates to the fund.
- Direct donations of bitcoin or other cryptocurrency from the public.
The reserve also automatically receives any cryptocurrency produced by a fork of a blockchain the state already holds, and any airdrop sent to a state cryptocurrency address. In practical terms, if Texas holds bitcoin and a fork occurs, the resulting forked coins belong to the reserve by operation of the statute, with no further legislative action needed.
Custody and Cold Storage Requirements
SB 21 does not let the comptroller leave reserve bitcoin on an exchange. Holdings must be kept in cold storage, meaning the private keys are tied to a secure physical location, protected from unauthorized access, and disconnected from the internet. A qualified custodian must hold the assets. The law defines that as a state or federally chartered financial institution, or another entity regulated by Texas.
The combination of cold storage plus a regulated custodian is meant to put reserve bitcoin behind the same kind of safeguards the state applies to other public assets, while recognizing that the custody technology for cryptocurrency is different from safeguarding cash or securities.
How the Reserve Fits with Texas’s Earlier Crypto Laws
SB 21 is the newest piece, but a reader looking at “the Texas bitcoin bill” is often also looking at the laws that make bitcoin usable and ownable under state rules. Three earlier measures matter.
Legal Ownership Under House Bill 4474
Signed on June 15, 2021, HB 4474 added virtual currency to the Texas Business and Commerce Code, the state’s version of the Uniform Commercial Code. It defines virtual currency as a digital representation of value that works as a medium of exchange, unit of account, or store of value, often secured using blockchain technology.
The practical effect runs through the concept of “control.” You have control of a virtual currency if the system gives you the power to benefit from the asset and the exclusive ability to prevent others from doing the same. In practice, that means holding the private key. Control matters because it determines whether a lender can take a legally enforceable security interest in your bitcoin. Before the law, using digital assets as collateral in Texas was legally uncertain because the UCC had no mechanism to describe who “possessed” something that exists only on a distributed ledger.
The law also protects a good-faith buyer. If you purchase bitcoin for value and have no reason to know about a competing ownership claim, you take the asset free of that claim, similar to the holder-in-due-course protection that has long existed in banking.
Exchange Reserves Under House Bill 1666
HB 1666, signed in June 2023, created Chapter 160 of the Texas Finance Code. It targets digital asset service providers operating in the state and was shaped by the exchange failures of 2022.
The core rule is that exchanges must hold reserves sufficient to cover every dollar of customer deposits. Commingling is flatly prohibited. A service provider cannot mix customer bitcoin or dollars with its own operating capital, proprietary accounts, or other company property. Exchanges must file a report with the Texas Department of Banking within 90 days after the end of each fiscal year, and that report must include an independent auditor’s attestation. The department can also require access to records through an auditor at any time. Violations can lead to suspension or revocation of a provider’s money transmission license.
Separately, companies that facilitate digital asset transactions in Texas generally need a money transmission license under Chapter 152 of the Texas Finance Code. Applications go through the Nationwide Multistate Licensing System, and the filing fee is $10,000, non-refundable regardless of outcome.
Gas Severance Tax Relief Under House Bill 591
HB 591, passed in 2023, exempts gas consumed at a well site from the state’s gas production (severance) tax when that gas would otherwise have been legally vented or flared. This applies where pipeline capacity cannot keep up with production, where connecting to a pipeline is not commercially feasible, or where the operator has not committed the well’s gas to a pipeline.
For bitcoin mining, the arrangement is straightforward. Set up computing equipment at the well site, use the otherwise-wasted gas to generate electricity on location, and skip the severance tax that would normally apply. The result is a lower effective power cost and reduced methane emissions.
One common misreading is worth flagging. HB 591 is not a broad sales and use tax exemption on grid electricity used for mining. It applies only to the gas production tax on gas consumed at the well site. Miners pulling power from the standard grid pay the same taxes as any other industrial consumer.
What the Texas Bitcoin Bill Does Not Do
SB 21 governs a state-held reserve. It does not change how you, personally, are taxed on bitcoin you buy, sell, or mine. It also does not override federal rules. The Texas UCC treats bitcoin and similar assets as property for purposes of ownership and transfer, but a digital asset can still be a “security” under federal law at the same time. The SEC applies the Howey test to decide whether a particular token is an investment contract, and state property status does not change that analysis. Bitcoin itself is widely regarded as falling outside the securities framework because no central promoter controls its development or price, but other tokens may be treated differently, which can subject holders and businesses to both regulatory regimes at once.