Estimated Time to Read: 10 minutes
Texas purchased $5 million of Bitcoin after Senate Bill 21 (SB 21) took effect. The move was celebrated as bold and forward-looking. National outlets framed it as a milestone in digital finance. Lt. Gov. Dan Patrick (R) said it would make Texas the epicenter of America’s digital future. Yet the reality beneath the headlines tells a very different story. SB 21 does not advance cryptocurrency freedom. It expands government power. It exposes taxpayers to the volatility of a speculative market. It reduces legislative oversight. It concentrates authority in a single office. It invites corruption through unregulated crypto donations. It undermines the very principles that make Bitcoin valuable in the first place.
Texas Policy Research (TPR) has supported cryptocurrency, decentralization, and free-market adoption for years. Crypto is a tool for individual empowerment, not a toy for government experimentation. It is intended as a check on state authority, not a new playground for bureaucratic financial management. When private Texans buy Bitcoin, they do so voluntarily. When the state buys Bitcoin, it does so with money taken from taxpayers who had no choice in the matter. SB 21 is sold as innovation, but in truth, it is one of the least transparent and least taxpayer-friendly financial structures ever created by the Texas Legislature.
SB 21 Creates a Government-Run Crypto Fund Outside the Treasury
The most consequential decision in SB 21 is that the Texas Strategic Bitcoin Reserve exists outside the state treasury. This design reduces transparency, weakens oversight, and shields financial decisions from the public. Once money is moved into the reserve, the Legislature cannot control it through the normal appropriations process. Taxpayers lose visibility into how their money is being used. The Comptroller gains the ability to buy, sell, trade, and liquidate cryptocurrency without the checks that normally govern public funds.
Supporters claim this structure gives Texas flexibility. In reality, it removes essential safeguards. Funds outside the treasury are harder for taxpayers to follow, harder for lawmakers to monitor, and easier for executive agencies to expand without accountability. SB 21’s structure reflects an intention to maximize executive discretion rather than protect taxpayers. This is fundamentally at odds with the spirit of decentralized finance, which exists to distribute power and limit state control.
Taxpayers Now Shoulder Bitcoin’s Volatility
Bitcoin is volatile. That is not a criticism. It is a fact of a developing asset class. Volatility is acceptable when private individuals choose to assume the risk. It is completely inappropriate when the government forces taxpayers to assume the risk on their behalf. When the Comptroller purchased Bitcoin at a market peak, any loss becomes a public liability. Texas cannot walk away from losses. The burden falls on future budgets, future programs, and future taxpayers.
The Legislature designed SB 21 to treat Bitcoin not as a tool that empowers individuals but as a state-managed investment pool. That approach subverts the principles of cryptocurrency by centralizing risk, power and centralizing decision-making authority. Crypto belongs in the hands of the people, not in the vaults of government.
Oversight in SB 21 Exists in Name Only
To create the appearance of accountability, SB 21 establishes an advisory committee. The structure is purely cosmetic. The Comptroller appoints every member except himself. All appointees serve at his will. There are no legislative appointees and no independent voices. Oversight that is controlled by the same office it is supposed to oversee is not oversight at all.
Reporting requirements are equally weak. A biennial report in a market defined by rapid fluctuations is insufficient and effectively conceals the fund’s performance from the public for long periods. A transparent program would update taxpayers frequently. SB 21 does the opposite. It keeps information scarce and delays disclosure.
Transparency is not a threat to good governance. It is a threat to bad governance. SB 21 was designed to limit it.
The Most Dangerous Part of SB 21: The Risk of Corruption
One of the most alarming and least-discussed provisions of SB 21 is the allowance for cryptocurrency to flow directly into the Strategic Bitcoin Reserve without any requirement to disclose the sender, verify the source of the transfer, or screen the asset for conflicts of interest. SB 21 permits the state to receive cryptocurrency while imposing no mandatory due diligence on the Comptroller. This structure would be dangerous in any context, but within a taxpayer-funded institution, it is particularly reckless.
Texas Policy Research (TPR) strongly supports donor privacy in the private sector. Individuals and private organizations have the constitutional right to support causes, advocacy, or political speech without forced public exposure. Anonymous giving in civil society strengthens liberty because it limits the government’s ability to retaliate against citizens for their beliefs. That principle is central to a free society and consistent with the decentralization ethos that makes cryptocurrency valuable.
However, the situation changes completely when anonymous funds flow into the government itself. A taxpayer-funded institution is not a private association. It is an arm of the state, financed by citizens who cannot opt out of its authority. When the government accepts money from unknown or undisclosed sources, the public loses the ability to understand who may be influencing the institution or seeking to benefit from its decisions. Transparency in government is not optional. It is a fundamental requirement for safeguarding liberty.
The danger is compounded by the nature of cryptocurrency. Blockchain technology is intentionally pseudonymous. Wallet addresses are public but do not contain names. Transfers can originate from individuals, corporations, foreign entities, or automated systems without revealing identity. Transactions can be routed through privacy tools, decentralized exchanges, or mixing services that obscure their origin. In many cases, it is extraordinarily difficult, and sometimes impossible, to determine who actually sent a particular transfer. Even sophisticated blockchain analysis cannot guarantee attribution. Forks and airdrops can place new assets in a state-controlled wallet automatically, without any intentional sender at all.
This means that SB 21 authorizes the state of Texas to receive financial assets whose origin may not be traceable, whose sender may be unknown, and whose intent may be impossible to determine. No other state financial program functions this way. The state cannot accept an anonymous envelope of cash or a wire transfer from an unidentified source. Yet SB 21 effectively creates a digital mechanism for exactly that to occur.
Private anonymity protects individual liberty. Government anonymity threatens it. SB 21 collapses a critical distinction by allowing a taxpayer-funded institution to receive cryptocurrency without the safeguards needed to ensure honesty, legality, or impartiality. This is not a flaw in cryptocurrency. It is a misuse of cryptocurrency by the government. A tool designed to decentralize power is being used to concentrate it behind closed doors.
A state-run investment program must meet a standard of transparency far higher than what is required for private entities. SB 21 fails this standard in every meaningful way. Texans deserve to know who may be sending money into a government account, what interests those actors represent, and whether those transfers have any connection to decisions being made by the Comptroller or his advisory committee. By excluding even the most basic disclosure requirements, the Legislature created a structural vulnerability that invites corruption and undermines public trust. This is one of the clearest examples of why SB 21 is fundamentally anti-transparency and anti-taxpayer.
Texas’s Crypto Landscape Intensifies the Risks
Texas has become a global center for cryptocurrency mining. Mining facilities consume massive amounts of electricity, strain the grid, and raise costs for ordinary Texans. Communities near facilities have expressed frustration with noise, limited job creation, and environmental effects. SB 21 intertwines the state’s financial interests with the performance of this industry. When the government invests in an industry it regulates, the lines between public duty and financial motivation blur.
Crypto was designed to limit state involvement. SB 21 increases it. Texas should never place taxpayers in a position where their financial exposure grows alongside the fortunes of a volatile industry that already places pressure on the state’s energy infrastructure and regulatory framework.
Although SB 21 contains structural weaknesses that expose taxpayers to financial risk and create serious transparency and ethics concerns, the Legislature advanced it with overwhelming support. The Senate adopted the final conference committee report by a vote of 23 to 8, with opposition coming from only 4 Republicans and 4 Democrats. The House voted 110 to 25, with only 17 Democrats and 8 Republicans opposing the measure. Only a small bipartisan group of lawmakers recognized the dangers and voted against a bill that expands government power into a speculative financial arena.
TPR’s Pro-Crypto Case Against State Speculation
Texas Policy Research supports cryptocurrency because it decentralizes power and reduces dependency on centralized institutions. It empowers individuals, protects privacy, and limits government control. These are the exact reasons Bitcoin exists. SB 21 takes those principles and turns them upside down. Instead of placing power in the hands of individuals, it consolidates it within the government. Instead of reducing risk for citizens, it transfers that risk directly onto taxpayers. Instead of encouraging private innovation, it encourages government speculation.
Our opposition to SB 21 was not a rejection of cryptocurrency. It was a defense of it. A decentralized financial system cannot coexist with a government-managed investment vehicle that wields taxpayer funds to speculate in the market. Government involvement undermines the philosophical foundation of crypto and creates risks that private adoption avoids.
When Texas uses taxpayer dollars to buy Bitcoin, it does not strengthen the crypto ecosystem. It weakens it by turning a symbol of financial independence into a tool of government expansion.
SB 21’s Threat to Taxpayers, Transparency, and Crypto Liberty
SB 21 was marketed as a leap into the digital age. It is better understood as a step toward greater state control and reduced public accountability. A program that removes funds from the treasury, concentrates authority in one office, accepts unregulated and undisclosed cryptocurrency donations, and exposes taxpayers to high levels of financial risk cannot be considered responsible governance. Nor can it be reconciled with the values that make cryptocurrency important in the first place.
Bitcoin exists because people wanted freedom from centralized control. SB 21 turns Bitcoin into an instrument of centralized control. It is the antithesis of the decentralization movement. Texas did not need a government-run crypto fund to lead in the digital economy. Texas needed a commitment to free markets, transparency, deregulation, and private innovation. That is how a state becomes the epicenter of America’s digital future.
This is why Texas Policy Research was one of the few voices that stood against SB 21 from the beginning. It is why we continue to oppose this program today. Texas deserves leadership that protects taxpayers, strengthens liberty, and recognizes that cryptocurrency belongs to the people, not the state.
Texas Policy Research relies on the support of generous donors across Texas.
If you found this information helpful, please consider supporting our efforts! Thank you!
