How Texas Got Bipartisan Support to Buy $10 Million Worth of Bitcoin - Ep. 859
🎯 Summary
Podcast Summary: How Texas Got Bipartisan Support to Buy $10 Million Worth of Bitcoin - Ep. 859
This episode of Unchained features Lee Bratcher, President and Founder of the Texas Blockchain Council, discussing the successful legislative effort in Texas to establish a strategic Bitcoin reserve for the state, backed by a $10 million appropriation.
1. Focus Area
The primary focus is on Public Sector Adoption of Bitcoin, specifically the legislative and political journey to secure state-level approval for purchasing and holding Bitcoin as a strategic reserve asset. Secondary themes include the political dynamics of crypto legislation at the state level and the importance of property rights in driving early academic interest in blockchain technology.
2. Key Technical Insights
- Custody Requirements: The legislation mandates that the Comptroller must hold the Bitcoin asset directly, not just gain exposure via ETFs. Acceptable custody methods include using a qualified custodian, multi-institutional custody, or multi-signature solutions, emphasizing the state’s intent to learn about key management.
- Exchange Requirements: The chosen liquidity provider (exchange) must have been in business for five or more years and maintain a principal office in Texas, aiming to ensure stability and local commitment.
- Derivatives Latitude: Language allowing the Comptroller to use derivatives is included primarily to ensure compliance with “prudent investor standards” and provide maximum latitude, rather than indicating an intent to use derivatives for the reserve itself.
3. Market/Investment Angle
- Conservative Allocation: The $10 million allocation is considered highly conservative, representing only 0.0004% of Texas’s $250 billion annual budget, making it a meaningful pilot for technology adoption while being financially negligible in case of loss.
- Long-Term Strategy: The reserve is explicitly intended as a “long-term strategy by and hold,” signaling a commitment to the asset class rather than short-term trading.
- Pension Fund Precedent: The discussion noted that some public entities, like the Fairfax County pension fund outside D.C., have already successfully allocated to Bitcoin, setting a precedent for state-level treasury management.
4. Notable Companies/People
- Lee Bratcher (Guest): Founder of the Texas Blockchain Council, instrumental in lobbying and conceptualizing the reserve.
- Chairman Giovanni Capriclione: Key legislative champion in the Texas House, leading the Digital Assets committee.
- Lieutenant Governor Dan Patrick & Governor Greg Abbott: High-level state officials who supported the bill, creating strong tailwinds.
- Custody Bidders: Major industry players vying for the custody contract include Coinbase, Anchorage, Kraken, Blockchain.com, and Unchained Capital.
- Hernando de Soto: Economist whose work on property rights in the developing world heavily influenced Bratcher’s academic interest in blockchain for land administration.
5. Regulatory/Policy Discussion
- Bipartisan Support: The bill passed with overwhelming bipartisan support (26 of 31 Senators, 103 of 150 House members), demonstrating that digital asset policy can transcend partisan divides, especially when driven by education and local economic interests.
- Age Correlation: Political support correlated strongly with age demographics: about half of Texans under 30 own digital assets, while only 6% of those over 70 do. This younger, digitally native base influences both parties.
- State-Level Momentum: Texas joins New Hampshire (which passed legislation but lacks an appropriation) in advancing state-level Bitcoin initiatives, with 26 other states having proposed similar legislation. Arizona’s initial reserve bill was vetoed by the Governor.
6. Future Implications
The Texas move signals a growing trend of state-level experimentation with digital assets, driven by a desire to foster innovation and manage existing surpluses. Bratcher suggests that other states with budget surpluses (like North Carolina or Florida) are likely candidates for the next reserve, while states with significant deficits (like California or Illinois) face a much harder political sell. The conversation also touched on federal optimism, referencing Senator Lummis’s bill and the potential for federal “Bitcoin bonds.”
7. Target Audience
This episode is most valuable for Crypto/Web3 Professionals, Public Finance Officials, State Legislators, and Policy Analysts interested in regulatory frameworks, institutional adoption, and the political economy of digital assets.
🏢 Companies Mentioned
đź’¬ Key Insights
"Celestia co-founder John Adler has proposed replacing the network's proof-of-stake model with a new proof-of-governance system amid a 93% drop in the value of [token]."
"Partnering with Solana and stablecoin issuers Circle and Paxos, Fiserv will also integrate fraud and settlement controls, with custody responsibilities falling to larger financial institutions."
"Fiserv is launching a new stablecoin initiative aimed at helping regional and community banks participate in the fast-growing digital asset market."
"Coinbase will debut its first US-regulated perpetual-style futures products on July 21st, offering Bitcoin and Ether contracts designed to mirror global perpetual futures while complying with CFTC regulations."
"Polymarket is close to raising over $200 million in a round led by Peter Thiel's Founders Fund, which would value the platform at approximately $1 billion."
"there's also going to be restrictions on the type of collateral that somebody can post in order to take out that leverage. On Hyperliquid, you can post Bitcoin, you can post other things, whereas here in the US, it might you might have to post cash or maybe USDC, a regulated stablecoin, but you're probably not going to be able to post Solana as collateral..."