The Texas state senate has passed Senate Bill 21, allowing the state to invest public funds into digital assets, particularly Bitcoin.

Regular third-party audits will be conducted on the reserve, with findings reported to the state legislature every two years.

The rise of digital reserves marks a significant shift in financial policy, as states begin to consider digital assets alongside traditional reserves like gold.

This legislation is seen as a priority for Lieutenant Governor Dan Patrick, who believes it aligns with former President Trump's vision for a federal 'Crypto Strategic Reserve.'

Critics, including Rep. Gutierrez, argue that the state should focus on more pressing issues rather than investing in volatile and unregulated currencies like Bitcoin.

Despite its innovative potential, the bill raises concerns about market volatility, security vulnerabilities, and the necessity for effective regulatory frameworks.

While the Senate showed near-unanimous support for the bill, challenges may arise in the larger House body during the approval process.

The legislation faced bipartisan skepticism prior to the vote, with calls for more information regarding the risks associated with digital asset investments.

Funding for the proposed reserve will come from various sources, including legislative appropriations and private donations, with an advisory committee guiding investment decisions.

The proposal does not mandate Bitcoin purchases, addressing concerns from fiscal conservatives about the risks of such investments.

Supporters of the bill liken Bitcoin to digital gold, asserting its potential to retain value even when traditional currencies decline.

Before becoming law, the proposal still requires a vote in the House of Representatives.