HB1598 - Relating to the establishment of a bitcoin reserve within the state treasury and the management of cryptocurrencies by governmental entities.

      By: Capriglione H.B. No. 1598       A BILL TO BE ENTITLED   AN ACT   relating to the establishment of a bitcoin reserve within the state   treasury and the management of cryptocurrencies by governmental   entities.          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 U to read as follows:   SUBCHAPTER U. TEXAS STRATEGIC BITCOIN RESERVE           Sec. 403.701.  DEFINITIONS. In this subchapter:                 (1)     "Bitcoin" means the decentralized digital asset   created by a peer-to-peer network, which operates with no central   authority or banks.                 (2)     "Cold storage" means a method of storing private   keys required to transact in Bitcoin, with a nexus to a secure   physical location, protected from unauthorized access and isolated   from any 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)     "Custody" means the holding, safeguarding, and   managing of Bitcoin assets by the state treasury.                 (5)     "Donor" means a Texas resident who gifts, grants,   donates, bequests, or devises Bitcoin to the Texas Strategic   Bitcoin Reserve.           Sec.   403.702.     LEGISLATIVE FINDINGS. The legislature finds   that:                 (1)     the legislature recognizes Bitcoin as a valuable   digital asset with strategic potential for enhancing the state's   fiscal resilience;                 (2)     Bitcoin's decentralized nature and finite supply   provide unique qualities that can serve as a hedge against   inflation and economic volatility; and                 (3)     A strategic Bitcoin reserve aligns with Texas's   commitment to fostering innovation in digital assets and providing   Texans with enhanced financial security.           Sec.   403.703.     PURPOSE. This fund allows the state to own   Bitcoin as a financial asset and for Texans to voluntarily donate   Bitcoin to promote a shared ownership and community investment in   Texas's financial future.           Sec.   403.704.     ADMINISTRATION OF RESERVE. (a) The Texas   Strategic Bitcoin Reserve is a special fund in the state treasury   outside the general revenue fund in the custody of the comptroller   for the purpose of holding Bitcoin as a financial asset.           (b)     The comptroller shall maintain custody of all Bitcoin   held in the Reserve and is responsible for implementing secure   storage, management, and reporting systems for these assets.           (c)     The Reserve is designated as a strategic asset for the   State of Texas and may not be used for purposes other than those   outlined in this subchapter.           (d)     The comptroller may accept gifts, grants, and donations   of Bitcoin from certain Texas residents or a governmental entity as   defined by Section 2252.001, Government Code.           (e)     The comptroller shall store all Bitcoin for a duration   of at least five years from the date that the Bitcoin enters the   state's custody. After this mandatory period, the Bitcoin may be   transferred, sold, appropriated, or converted to another   cryptocurrency as directed by the comptroller.           Sec.   403.705.     MANAGEMENT AND SECURITY. (a) The   comptroller shall develop policies and protocols to ensure the   secure storage and protection of Bitcoin held in the Reserve,   including the use of secure custodial technologies, cold storage,   and best practices in digital asset management.           (b)     The comptroller shall prohibit transactions involving   foreign countries, entities or individuals outside of Texas, or   entities or individuals known to engage in illegal activities.           (c)     The comptroller may contract with a qualified,   independent, United States-based third-party cryptocurrency entity   to assist in the creation, maintenance, operation, or   administration of the Reserve's security.           (d)     The comptroller may conduct regular audits of the   Reserve to ensure transparency and security.           Sec.   403.706.     BIENNIAL REPORTS. (a) The comptroller shall   prepare a biennial report including:                 (1)  the total amount of Bitcoin held in the reserve;                 (2)     details of the equivalent value of the reserve in   dollars;                 (3)     the growth of the account since the previous   report;                 (4)     any transactions or expenditures related to the   Reserve since the previous report;                 (6)     any security threats experienced since the   previous report; and                 (5)     the amount of Bitcoin that, after the mandatory   five-year holding period, is eligible to be converted or   transferred.           (b)     Not later than December 31 of each even-numbered year,   the comptroller shall electronically publish the report on the   comptroller's Internet website and notify each member of the   legislature that the report is available on the website.           Sec.   403.707.     VOLUNTARY DONATIONS OF BITCOIN BY TEXAS   RESIDENTS.           (a)     The Texas Strategic Bitcoin Reserve may accept a gift,   grant, donation, bequest, or devise of Bitcoin from Texas   residents.           (b)     The comptroller shall develop a straightforward   donation process to facilitate Bitcoin contributions from Texans.           (c)     All Bitcoin donations shall be held in the Texas   Strategic Bitcoin Reserve and managed under the same protocols as   other assets in the treasury.           (d)     Upon request, the comptroller may issue a certificate of   acknowledgment to individuals or organizations donating Bitcoin to   the Reserve.           (e)     The treasury may also establish a recognition program to   publicly honor significant contributions made by Texans.           (f)     The comptroller shall have the discretion to determine   the eligibility of donors.   If the comptroller determines that a   donor is ineligible, the comptroller may establish a process to   return any Bitcoin transferred to the reserve to the ineligible   donor.           Sec.   403.708.     RULEMAKING. The comptroller may adopt rules   as necessary to administer this subchapter, including but not   limited to security protocols, reporting standards, and donation   procedures.           Sec.   403.709.     EXPIRATION. This subchapter expires   September 1, 2035.          SECTION 3.  The heading to Section 403.023, Government Code,   is amended to read as follows:          Sec. 403.023.  CREDIT, CHARGE, CRYPTOCURRENCY, AND DEBIT   CARDS.          SECTION 4.  Section 403.023, Government Code, is amended to   read as follows:          (a)  The comptroller may adopt rules relating to the   acceptance of credit, charge, certain cryptocurrencies, and debit   cards for the payment of fees, taxes, and other charges assessed by   state agencies.  The rules may:                (1)  authorize a state agency to accept credit, charge,   certain cryptocurrencies, or debit cards for a payment if the   comptroller determines the best interests of the state would be   promoted;                (2)  authorize or require a person that uses a credit,   charge, or debit card to pay a processing fee to the state agency   that accepts the card for a payment; and                (3)  authorize a particular state agency to accept   credit, charge, certain cryptocurrencies, or debit cards for a   payment without providing the same authorization to other state   agencies.          (b)  The comptroller may adopt rules relating to the use of   credit or charge cards by state agencies to pay for purchases.  The   rules may:                (1)  authorize a state agency to use credit or charge   cards if the comptroller determines the best interests of the state   would be promoted;                (2)  authorize a state agency to use credit or charge   cards to pay for purchases without providing the same authorization   to other state agencies; and                (3)  authorize a state agency to use credit or charge   cards to pay for purchases that otherwise may be paid out of the   agency's petty cash accounts under Subchapter K.          (c)  The comptroller may not adopt rules about a particular   state agency's acceptance of credit or charge cards for a payment if   the rules would affect a contract that the agency has entered into   that is in effect on September 1, 1993.  The comptroller may not   adopt rules about a particular state agency's acceptance of charge   or debit cards for a payment if the rules would affect a contract   that the agency has entered into that is in effect on September 1,   1999.          (d)  The comptroller may not adopt rules about a particular   state agency's acceptance or use of credit, charge, cryptocurrency,   or debit cards if another law specifically authorizes, requires,   prohibits, or otherwise regulates the acceptance or use.           (e)     State agencies that accept cryptocurrencies shall first   convert the accepted cryptocurrencies to an equivalent value of   Bitcoin, if necessary, before depositing the Bitcoin to the credit   of the Texas Strategic Bitcoin Reserve.           (f)     The comptroller shall establish rules to compensate   departments or agencies for the equivalent value of United States   dollars of the Bitcoin received.          SECTION 5.  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.