Texas Representative Ron Reynolds Introduced Legislation to Limit State Bitcoin Investments

The bill caps the Texas Economic Stabilisation Fund at $250 million for crypto purchases. Additionally, local governments face a stricter $10 million investment ceiling.

Texas Representative Ron Reynolds has introduced legislation to limit state investments in Bitcoin, aiming to counter potential risks highlighted by critics.

The bill, filed on March 10, caps Texas Economic Stabilisation Fund crypto purchases at $250 million. Local governments face a stricter $10 million investment ceiling.

Reynolds, a Democrat, is focused on mitigating potential risks tied to the volatile digital assets, as highlighted by critics.

The proposed cap targets the Texas “rainy day” fund, which currently holds roughly $27 billion.

Unwinding Unchecked Crypto Exposure

Critics argue that tying together large sums of taxpayer money and the unpredictable nature of crypto markets could jeopardise fiscal stability. However, proponents see Bitcoin as a hedge against inflation and a way to diversify investment strategies.

The bill comes in response to a March 6 Senate vote approving SB 21, which would allow unlimited Bitcoin reserves.

The measure, spearheaded by Republican State Senator Charles Schwertner, aims to position Texas as a leading state in the cryptocurrency industry.

Earlier this year, Lieutenant Governor Dan Patrick labelled a state Bitcoin reserve a 2025 priority.

While SB 21 has drawn bipartisan support, the lack of investment limits sparked concerns.

The House and Senate must reconcile differing visions for the Texas crypto future by September deadlines.

Local Governments Face Stricter Crypto Investment Limits

The legislation also imposes limits on cities and counties, setting a $10 million ceiling for their own cryptocurrency investments.

This is a stricter limitation compared to the state’s proposed $250 million cap on the Economic Stabilisation Fund.

Analysts have previously warned that smaller municipalities may lack the resources to manage the volatility associated with crypto assets.

For instance, Harris County, home to Houston, oversees a $1.2 billion budget. A $10 million cap represents less than 1% of its reserves.

However, even modest exposure to Bitcoin could help diversify the county’s investment portfolio, according to some financial advisors.

Partisan Tensions Emerge Over Texas Bitcoin Reserve Plans

The Reynolds bill highlights a partisan divide in the Texas legislature over cryptocurrency policy.

Schwertner’s SB 21 enjoyed strong GOP support, framing Bitcoin as an economic innovation and a way to boost the state’s treasury.

However, it’s unclear if the Reynolds bill is meant to oppose or refine SB 21.

If both measures pass, Governor Greg Abbott could sign them into law by September 1.

Neither the Reynolds office nor Schwertner immediately responded to requests for comment.

Questions Over Presidential Authority

The discussion follows President Trump’s March 7 executive order, which proposed a federal “Strategic Bitcoin Reserve,” an initiative that several legal experts have argued oversteps presidential authority.

The President cannot unilaterally allocate funds without Congressional approval.

To counter this, Wyoming Senator Cynthia Lummis on March 11 reintroduced a bill to codify a BTC reserve and grant the President the authority to create it.

Her legislation also mandates Congressional oversight over the digital asset purchases and sales, and the Governors' role in selecting the Bitcoin.

Meanwhile, the Texas state-level clash mirrors broader federal debates over crypto regulation.

What’s Next for Texas Crypto Legislation

Texas lawmakers now face a September 1 deadline to reconcile the House and Senate bills.

The Reynolds cap could be used to amend SB 21 or stall its implementation.

Governor Abbott’s stance will also be pivotal, though he hasn’t yet publicly endorsed either proposal.

National observers are watching Texas closely as a testing ground for state-level crypto policy.

Other states, such as Wyoming, have already adopted their own frameworks for cryptocurrency investments.

As these discussions escalate, more states are expected to join the conversation and introduce similar legislation.

For now, Texas lawmakers are grappling with how to balance innovation with fiscal restraint in shaping America’s crypto future, one bill at a time.