TLDR
- Texas becomes the third state to create a strategic Bitcoin reserve.
- Ethereum could be added to Texas’s reserve if its market cap stays above $500B.
- The reserve is funded by taxpayer money and managed outside the state treasury.
- Texas law mandates biennial reports on Bitcoin holdings for transparency.
Texas has officially created a strategic Bitcoin reserve through Senate Bill 21, marking a bold step in integrating cryptocurrencies into state-level financial reserves. Following its passage, the state now looks toward Ethereum as a potential next asset to include in the reserve. The law, signed in June 2025, establishes strict criteria for asset inclusion, with Bitcoin qualifying as the only asset so far. As Ethereum nears the necessary market cap, discussions are now focused on whether it will meet the criteria.
Texas Moves to Secure Digital Assets for State Reserve
In June 2025, Texas became the third U.S. state to implement a strategic cryptocurrency reserve, following Arizona and New Hampshire. Governor Greg Abbott signed Senate Bill 21 into law, allowing the state to hold digital assets as part of a special fund outside the traditional state treasury.
The legislation specifies that only assets with a market capitalization of at least $500 billion over a 24-month period are eligible for inclusion. Currently, Bitcoin, valued at over $2 trillion, is the only cryptocurrency meeting the criteria.
Texas’s Bitcoin reserve aims to secure state funds in digital assets, which are seen as a way to protect the state’s finances against traditional economic risks. The fund will be managed by the Texas Comptroller of Public Accounts, and the assets will be stored in cold wallets for security. Biennial reports will be provided to ensure transparency in how the reserve is managed.
Ethereum Could Be the Next Digital Asset Included
As Bitcoin becomes the sole asset in Texas’s reserve, state lawmakers are eyeing Ethereum as a potential future inclusion. Senator Charles Schwertner, the bill’s sponsor, indicated that Ethereum could be added to the reserve if it maintains a market cap above $500 billion over a continuous 24-month period.
Although Ethereum has met this threshold sporadically, its market cap recently dropped below the required $500 billion mark, temporarily excluding it from consideration.
Schwertner emphasized that Ethereum’s inclusion would only happen if its market performance becomes stable enough to meet the criteria.
“If Ethereum sustains its market cap over 24 months, it could be added to the reserve,” Schwertner noted. The Texas Comptroller is currently reviewing potential custodians for the reserve, ensuring that any additions to the fund meet state regulations and security standards.
Comparison with Other State and Federal Crypto Initiatives
While Texas’s strategic Bitcoin reserve is a significant development, it stands apart from similar initiatives in other states. Arizona, for example, has implemented a crypto reserve that focuses on assets seized through criminal forfeiture, not direct investments from state funds. New Hampshire, on the other hand, allows its treasury to invest in cryptocurrencies that meet the $500 billion market cap requirement, but does not mandate the creation of a dedicated fund like Texas.
Federal efforts to create a strategic Bitcoin reserve were also initiated by an executive order from President Donald Trump in early 2025. This order outlines a strategy for using confiscated digital assets to build a federal reserve. Texas’s law, however, is unique in that it uses taxpayer funds to directly purchase and hold cryptocurrencies.
Future Prospects and Challenges for the Texas Reserve
The Texas Bitcoin reserve has already attracted significant attention from both supporters and critics. Proponents argue that it will enhance the state’s financial resilience and position Texas as a leader in digital asset innovation. Critics, however, warn that Bitcoin’s volatility could expose state funds to significant risks, especially during periods of sharp price fluctuations.
Looking ahead, the success of the Bitcoin reserve and any potential expansion to include Ethereum will depend on several factors, including market stability and regulatory clarity. As the Texas Comptroller continues to finalize the implementation of the law, the state’s approach could serve as a model for other jurisdictions considering similar initiatives. The future of the Texas crypto reserve may also influence broader national discussions on how digital assets should be incorporated into public financial strategies.
