Texas Bitcoin Reserve: How One State Is Leading Others

Texas has officially become the first U.S. state to gain Bitcoin (BTC -0.15%) exposure using public funds. The move, announced by Texas Blockchain Council President Lee Bratcher and confirmed in multiple reports, marks a turning point in how governments think about Bitcoin as a reserve asset. It also gives other states a real-world blueprint for adding Bitcoin exposure alongside traditional holdings like cash, bonds, and gold.

At the same time, a growing number of states are racing to pass “strategic Bitcoin reserve” laws, with some already authorizing Bitcoin or Bitcoin ETF investments at the treasury level. Texas may not be the only player in this new monetary experiment for long—but it is undeniably the first to put real capital to work.

Why Would States Turn to Bitcoin?

For governments, the logic behind Bitcoin is similar to the logic behind gold or foreign currency reserves: resilience. States want assets that are hard to debase, globally liquid, and uncorrelated to a single fiat currency or central bank policy.

Bitcoin offers several advantages in that context.

Diversification

Bitcoin gives treasuries another store-of-value asset alongside gold, Treasuries, and cash. Over the last decade, Bitcoin has dramatically outperformed most major asset classes, including gold—rising thousands of percent while gold has roughly doubled over the same period. That doesn’t eliminate volatility risk, but it does explain why policymakers are starting to view a small allocation as a potential long-term hedge rather than a speculative bet.

Inflation Hedge

Inflation has re-emerged as a political and economic flashpoint over the past five years. With Bitcoin’s supply mathematically capped at 21 million coins, some policymakers see it as a way to diversify away from assets explicitly tied to inflationary monetary policy. Even a relatively small allocation can function as a form of “insurance” against extreme scenarios in the broader monetary system.

Transparency

Another major benefit is transparency. On-chain Bitcoin holdings can be audited by anyone using a blockchain explorer, and ETF positions are disclosed through standard financial reporting. This visibility can help build trust between taxpayers and public officials by making it harder to quietly mismanage or reallocate reserve assets.

Texas: First State With a Bitcoin Reserve via ETF

Texas has positioned itself at the front of the pack by actually deploying capital into Bitcoin exposure, not just debating it on paper. The state’s first step has been to use a spot Bitcoin ETF rather than holding Bitcoin directly—reducing custody complexity while still tracking Bitcoin’s price.

Crucially, this differs from previous state actions. While Wisconsin’s State Investment Board allocated pension funds to the IBIT ETF in 2024, Texas is the first to deploy direct state reserve capital—effectively moving Bitcoin from a “retirement investment” to a “sovereign treasury asset.”

Source – Texas Legislature

Texas Economic Facts

Texas brings substantial economic weight to this experiment. With an economy of roughly $2.77 trillion, it is the second-largest state economy in the U.S. and would rank around eighth in the world if it were an independent country. The state has consistently outpaced national growth in recent years and continues to attract businesses and population at scale.

Texas is also an energy powerhouse. It dominates U.S. oil and natural gas production and has quietly become a renewable energy leader as well. The state now produces close to 30% of America’s total wind-generated electricity, with rapidly growing solar and battery capacity, making it a natural hub for Bitcoin mining and broader digital asset infrastructure.

Texas BTC Reserve Structure

Texas’ current Bitcoin exposure comes through a $5 million allocation to BlackRock’s spot Bitcoin ETF (IBIT), executed under the framework of the Texas Strategic Bitcoin Reserve created by Senate Bill 21. The reserve is a dedicated state fund for holding Bitcoin and other qualifying digital assets, separate from the general treasury.

That structure accomplishes a few things at once:

• Regulated exposure: The state gets Bitcoin price exposure through a SEC-regulated fund rather than needing to manage private keys immediately.
• Operational simplicity: The Comptroller’s office can treat IBIT like any other ETF position from an accounting and reporting perspective.
• Policy signaling: Using a dedicated strategic reserve underscores the view of Bitcoin as a long-term reserve asset, not a short-term trade.

Public commentary from Texas officials and industry advocates suggests that this initial $5 million may be just the beginning. Several sources indicate a total planned allocation of up to $10 million, with a second tranche potentially devoted to self-custodied Bitcoin once custody, security, and vendor selection are fully worked out. For now, however, only the ETF portion has been executed.

Oversight and Governance

The Texas Bitcoin ETF position is overseen by the Texas Comptroller of Public Accounts under the same investment-policy framework that governs other state reserve assets. Senate Bill 21, signed into law in June 2025, formally established the Texas Strategic Bitcoin Reserve as a dedicated state fund managed by the Comptroller.

Under SB 21, the reserve:

• Is capitalized with $10 million in state funds for Bitcoin and other assets that meet a $500 billion, 24-month average market-cap threshold,
• Operates separately from the general state treasury to protect it from routine budget sweeps, and
• Must follow strict rules for custody, cold-storage security, and regular reporting to lawmakers and the public.

The IBIT allocation is intended as a temporary, regulated vehicle while Texas completes an RFP process to select long-term custody providers and move a portion of the reserve into self-custodied Bitcoin.

Top 5 States Most Likely to Build Bitcoin Reserves

Texas may be the first state to actually buy a Bitcoin ETF with public funds, but it’s not alone in its ambitions. Multiple states have already passed or introduced legislation to create their own Bitcoin or digital asset reserves, with varying levels of aggressiveness and progress.

Below is a quick comparison of five states that are especially likely to follow Texas’s lead in practice.

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1. New Hampshire

New Hampshire is the first state to formally pass a strategic Bitcoin reserve law and is arguably the purest legislative template in the U.S. so far. House Bill 302, signed into law in May 2025, authorizes the state treasurer to invest up to 5% of total public funds in a mix of precious metals and digital assets with a market capitalization above $500 billion—a threshold that currently only Bitcoin meets.

The law gives the treasury flexibility in how it holds these assets. Digital assets can be:

• Held directly by the state using a secure custody solution,
• Held via a qualified third-party custodian, or
• Held through an exchange-traded product such as a Bitcoin ETF.

The treasurer is required to manage risk, document custody choices, and report on performance. While New Hampshire was the first to pass such a framework, it has taken a more gradual approach to actually allocating capital, making Texas the first state to execute a live Bitcoin exposure using public funds.

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2. Arizona

Arizona has taken a different route by tying its Bitcoin reserve to unclaimed digital assets rather than direct taxpayer funding. House Bill 2749, signed into law in May 2025, updates the state’s unclaimed property statutes to account for cryptocurrency and establishes the Bitcoin and Digital Assets Reserve Fund.

Under this framework, the fund is composed of airdrops, staking rewards, and interest generated from unclaimed digital assets that the state is temporarily holding. Instead of immediately liquidating abandoned crypto, Arizona can now:

• Hold digital assets in their native form for a defined period (typically up to three years),
• Earn staking rewards or yield where appropriate, and
• Eventually sell assets if they remain unclaimed, with proceeds handled under existing unclaimed property rules.

Lawmakers have also discussed routing a portion of confiscated or forfeited digital assets into the reserve fund through future legislation, which would deepen the state’s long-term exposure to Bitcoin and other major digital assets. For now, Arizona’s approach centers on protecting residents from losing upside on unclaimed crypto while building a modest reserve in the process.

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3. Massachusetts

Massachusetts has emerged as one of the most closely watched “next wave” states, thanks to a series of proposals to create a Bitcoin strategic reserve in one of America’s most fiscally conservative, deep-blue jurisdictions.

Republican State Senator Peter Durant has sponsored multiple bills—including S.1967 and SD.422—that would allow the state treasury to invest up to 10% of the Commonwealth Stabilization Fund (its “rainy day” fund) in Bitcoin and other digital assets. Companion House bills (such as HD.3762) share the same broad goal.

Key features of the proposals include:

• A cap of up to 10% of the Stabilization Fund allocated to Bitcoin and digital assets,
• Authority to deposit seized Bitcoin or other digital assets into the reserve, and
• Detailed custody and risk management requirements to prevent mismanagement.

So far, the legislation has received a lukewarm response in hearings, with lawmakers raising questions about volatility and fiduciary risk. Still, the fact that a heavily Democratic state like Massachusetts is seriously debating a Bitcoin reserve underscores how quickly the idea has gone mainstream.

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4. Michigan

Michigan is another strong candidate to follow Texas, with House Bill 4087 framing Bitcoin as part of a broader strategic reserve and crisis-management toolkit. The bill, introduced in February 2025 by Republican Representatives Bryan Posthumus and Ron Robinson, would allow the state treasurer to invest up to 10% of certain key funds—including the general fund and the countercyclical budget and economic stabilization fund—into cryptocurrency.

The proposal includes several important guardrails:

• Clear caps on the percentage of each eligible fund that can be allocated to digital assets,
• Custody options that include secure state-controlled solutions, qualified custodians, or regulated exchange-traded products, and
• Regular audits and transparency requirements around holdings and performance.

Supporters argue that a Bitcoin reserve could help Michigan hedge against economic shocks and inflation while potentially improving long-term returns. Critics, largely from the Democratic side of the aisle, have pushed back on volatility, transparency, and systemic risk. As of now, the bill remains in committee but has attracted national attention as one of the more comprehensive state-level Bitcoin reserve frameworks.

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5. Ohio

Ohio is moving on two tracks at once. Senate Bill 57, known as the Ohio Bitcoin Reserve Act, and House Bill 18, the Ohio Strategic Cryptocurrency Reserve Act, together envision a state financial system that both invests in and transacts with digital assets.

Broadly speaking, these bills would:

• Authorize certain state funds to be invested in Bitcoin and other digital asset products, including ETFs,
• Empower state entities to accept payments in cryptocurrency via approved payment processors, and
• Set custody and security standards for any digital assets held on behalf of the state.

Both bills are still working their way through committee, and Ohio officials have emphasized the need for strong consumer protection and regulatory clarity. If passed, Ohio would instantly become one of the most significant state-level players in Bitcoin adoption, not just as an investor but also as a potential on-ramp for citizens paying certain state fees in crypto.

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Will Texas Inspire More State Bitcoin Reserves?

It’s increasingly clear that state-level Bitcoin reserves are no longer a fringe idea. New Hampshire has already passed a law authorizing Bitcoin investments; Arizona has created a Bitcoin and Digital Assets Reserve Fund for unclaimed property; Massachusetts, Michigan, and Ohio are actively debating their own strategic reserve bills.

Texas, however, has crossed an important psychological line by actually deploying public capital into a Bitcoin ETF. Its combination of economic scale, energy dominance, and pro-innovation policy makes it a natural testbed for this concept. If the program performs well—both financially and politically—it’s likely that other states will feel more comfortable following its lead, perhaps moving even faster into direct Bitcoin custody than Texas itself.

For now, the crypto community is watching closely. What happens in Austin, Concord, Phoenix, Boston, Lansing, and Columbus over the next few years may shape how Bitcoin fits into the broader architecture of public finance in the United States.

Learn about other digital asset developments and policy shifts here.