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.