Texas Rep. Files Bill Letting Cities Invest $10 Million in Bitcoin

Bitcoin Magazine

Texas Rep. Files Bill Letting Cities Invest $10 Million in Bitcoin

A Texas lawmaker filed a bill Monday that would let each city and county in the state invest up to $10 million of public money in bitcoin or another cryptocurrency, without setting any rules for how those coins would be held.

House Bill 815, filed by Rep. Ron Reynolds, a Missouri City Democrat, on the first day of prefiling for the 90th Texas Legislature, carries the caption “Relating to the authority of a municipality or county to invest money in cryptocurrencies.” The introduced text, posted on the Texas Legislature’s site, is two sections long.

The bill would amend the Public Funds Investment Act, Chapter 2256 of the Texas Government Code, by adding a new Section 2256.0165, titled “Authorized Investments: Cryptocurrency.” Under that section, “a municipality or county may invest not more than $10 million of its money or money under its control in Bitcoin or another cryptocurrency.” The authority would take effect Sept. 1, 2027, if the bill becomes law.

The $10 million figure is a cap on each city or county, not a single statewide pool. School districts and other local governments covered by the investment act are left out.

What the bill does and does not say

The measure borrows its definitions of “Bitcoin” and “cryptocurrency” from Section 403.701 of the Government Code, the definitions written into law last year by Senate Bill 21, which created the Texas Strategic Bitcoin Reserve. Bitcoin is defined as a decentralized cryptocurrency created by a peer-to-peer network that operates independently of any central authority or bank. Cryptocurrency is defined more broadly as a virtual currency that uses cryptography to secure transactions recorded on a distributed ledger, such as a blockchain.

That means a city or county would not be limited to bitcoin. The bill also does not import the reserve law’s requirement that coins bought for the state fund have an average market capitalization of at least $500 billion over the most recent 24-month period, or its provisions on cold storage and qualified custodians.

The Public Funds Investment Act already requires local governments to adopt a written investment policy that emphasizes safety of principal and liquidity, and to invest with the care a prudent person would use in managing their own affairs. A city or county would still have to add cryptocurrency to that policy before buying any. The new section itself is silent on custody, on audits specific to digital assets, and on how a loss would be handled.