89R10588 TYPED

By: Schwertner S.B. No. 778

A BILL TO BE ENTITLED

AN ACT

relating to the establishment and administration of the Texas Strategic Bitcoin Reserve; making an appropriation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. This Act may be cited as the Texas Strategic Bitcoin Reserve 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) "Bitcoin" means a type of decentralized cryptocurrency created by a peer-to-peer network that operates independently of any central authority or bank.

(2) "Cold storage" means a method of storing private keys required to engage in transactions involving bitcoin 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.

(3) "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.

(4) "Reserve" means the Texas Strategic Bitcoin Reserve established under this subchapter.

(5) "Virtual currency" has the meaning assigned by Section 12.001, Business & Commerce Code.

Sec. 403.702. LEGISLATIVE FINDINGS. The legislature finds that:

(1) bitcoin is a valuable digital asset with strategic potential for enhancing this state's financial resilience;

(2) bitcoin's decentralized nature and finite supply are unique qualities that can serve as a hedge against inflation and economic volatility; and

(3) the establishment of a strategic bitcoin reserve aligns with this state's commitment to fostering innovation in digital assets and providing enhanced financial security to residents of this state.

Sec. 403.703. PURPOSE. The reserve is established to allow:

(1) this state to own and hold bitcoin as a financial asset; and

(2) persons, including residents of this state, to donate bitcoin to the state for deposit in the reserve to promote the shared ownership of and community investment in this state's financial future.

Sec. 403.704. ESTABLISHMENT AND ADMINISTRATION OF RESERVE. (a) The Texas Strategic Bitcoin Reserve is a special fund outside the general revenue fund in the state treasury. The comptroller has custody of and shall administer the reserve for the purpose of holding bitcoin as a financial asset.

(b) The comptroller shall maintain custody of all bitcoin held in the reserve.

(c) The reserve is a strategic asset of this state and may not be used for purposes other than those authorized by this subchapter.

Sec. 403.705. CERTAIN TRANSACTIONS PROHIBITED. The comptroller may not enter into a transaction to acquire bitcoin to be held in the reserve with a foreign country, an entity or individual located outside of this state, or an entity or individual known to engage in illegal activity.

Sec. 403.706. MANAGEMENT AND SECURITY; AUDITS. (a) The comptroller is responsible for implementing secure storage, management, and reporting systems for all bitcoin held in the reserve.

(b) The comptroller shall adopt and implement policies and procedures to ensure the security of bitcoin held in the reserve, including policies and procedures requiring the use of secure custodial technologies such as cold storage and best practices in digital asset management.

(c) The comptroller may conduct regular audits of the reserve to ensure transparency in the operation and security of the bitcoin in the reserve.

Sec. 403.707. THIRD-PARTY CONTRACTS. The comptroller may contract with a qualified, independent third-party entity based in the United States to assist in the establishment, creation, maintenance, operation, or administration of the reserve.

Sec. 403.708. TRANSFER, SALE, OR CONVERSION OF BITCOIN IN RESERVE. (a) Bitcoin in the reserve may be transferred, sold, or converted only in the manner authorized by this section.

(b) During a regular or special session of the legislature, the legislature may, by adoption of a concurrent resolution approved by a two-thirds vote of the members of each house of the legislature, direct the comptroller to transfer, sell, or convert bitcoin in the reserve and deposit the proceeds realized from the transfer, sale, or conversion to the credit of a fund or account in the state treasury as specified by the legislature in the resolution.

(c) During any period in which the legislature is not meeting in regular or special session, the governor or Legislative Budget Board may by order direct the comptroller to transfer, sell, or convert bitcoin in the reserve, provided that the governor or board first finds that an emergency exists. The order adopted by the governor or board must clearly state the nature of the emergency.

(d) The comptroller shall deposit all proceeds realized from the transfer, sale, or conversion of bitcoin under Subsection (c) to the credit of the general revenue fund.

Sec. 403.709. VOLUNTARY DONATION OF BITCOIN TO RESERVE; RECOGNITION PROGRAM. (a) Except as otherwise provided by this subchapter, the comptroller may accept a gift, grant, or other donation of bitcoin to the reserve from any public or private source.

(b) The comptroller by rule shall adopt and implement a process for the donation of bitcoin to the reserve and establish eligibility requirements for potential donors. The rules adopted by the comptroller must establish a process by which the comptroller may return bitcoin donated to the reserve by a person determined to be ineligible to make a donation of bitcoin under this subchapter before the bitcoin is deposited in the reserve.

(c) All donations of bitcoin deposited to the reserve by the comptroller:

(1) become property of this state; and

(2) shall be deposited and held in the reserve and, except as otherwise provided by this subchapter, managed in the same manner as any other asset in the state treasury.

(d) The comptroller may issue a certificate of acknowledgment to a person that donates bitcoin to the reserve if the person requests the certificate.

(e) The comptroller may establish a recognition program to publicly honor significant contributions of bitcoin to the reserve.

Sec. 403.710. APPROPRIATIONS TO PURCHASE BITCOIN FOR RESERVE. (a) The legislature may appropriate money to the comptroller for the purpose of purchasing bitcoin for deposit in the reserve.

(b) An appropriation to the comptroller for the purpose described by Subsection (a) may be made as a dollar amount or as a percentage of the unencumbered and unexpended balance of the general revenue fund on the date the appropriation is made.

(c) An appropriation described by Subsection (a) may not exceed one percent of the unencumbered and unexpended balance of the general revenue fund for any biennial cycle.

Sec. 403.711. 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 chair of the house committee on appropriations;

(2) the chair of the senate committee on finance;

(3) the comptroller;

(4) one member of the senate appointed by the lieutenant governor; and

(5) one member of the house of representatives appointed by the speaker of the house of representatives.

(c) A member of the committee appointed under Subsection (b)(4) or (5) serves at the will of the appointing authority.

(d) The lieutenant governor and speaker of the house of representatives shall each designate one member of the committee as a co-chair of the committee.

(e) The committee may hold public hearings, formal meetings, and work sessions. Either co-chair of the committee may call a public hearing, formal meeting, or work session of the committee at any time. The committee may not take formal action at a public hearing, formal meeting, or work session unless a quorum of the committee is present.

(f) Except as otherwise provided by this subsection, 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. Service on the committee by a member of the senate or house of representatives is considered legislative service for which the member is entitled to reimbursement and other benefits in the same manner and to the same extent as for other legislative service.

(g) The committee:

(1) may provide comments and recommendations to the comptroller for consideration in adopting rules regarding the use of the reserve or on any other matter related to the reserve; and

(2) shall review the overall operation, function, and structure of the reserve at least semiannually.

(h) The advisory committee may adopt rules, procedures, and policies as needed to administer this section and perform its duties under this section.

(i) Chapter 2110 does not apply to the size, composition, or duration of the committee.

(j) The committee is subject to Chapter 325 (Texas Sunset Act). Unless continued in existence as provided by that chapter, the committee is abolished September 1, 2035.

Sec. 403.712. BIENNIAL REPORT. (a) The comptroller shall prepare a biennial report that includes:

(1) the total amount of bitcoin held in the reserve;

(2) an estimate of the monetary value of the total amount of bitcoin held in the reserve, expressed in dollars;

(3) the growth, if any, in the amount and estimated monetary value of bitcoin in the reserve since the date the previous report required under this section was published;

(4) all transactions and expenditures, if any, related to the reserve made since the date the previous report required under this section was published; and

(5) any security threats made against the reserve since the date the previous report required under this section was published.

(b) Not later than December 31 of each even-numbered year, the comptroller shall electronically publish the report prepared under Subsection (a) on the comptroller's Internet website and notify each member of the legislature of the report's availability on that website.

Sec. 403.713. RULES. The comptroller may adopt rules as necessary to administer this subchapter, including rules related to security protocols, reporting standards, and donation procedures for the reserve.

SECTION 3. 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.