Led by Texas and New Hampshire, U.S. states across the national map, both red and blue in political stripes, are developing Bitcoin strategic reserves and bringing cryptocurrencies onto their books through additional state finance and budgeting measures.
The rapid spread of proposals — described by some lawmakers as a growing “Reserve Race” — signals a broader shift in how state leaders are thinking about public finance, economic development strategy, and political positioning in a digital economy. While the legislation is still in early stages in many places, the implications could be significant: if state treasuries begin holding Bitcoin-linked assets at scale, the move would mark a major departure from long-standing approaches that prioritize liquidity, stability, and low-risk returns.
According to CNBC, Texas recently became the first state to purchase Bitcoin after a legislative effort that began in 2024, but numerous states have joined the push to pass legislation that will allow them to ultimately buy cryptocurrencies.
How the state-level “Reserve Race” took shape
New Hampshire passed its crypto strategic reserve law last May, even before Texas, giving the state treasurer the authority to invest up to 5% of the state funds in crypto ETFs, though precious metals such as gold are also authorized for purchase. Arizona passed similar legislation, while Massachusetts, Ohio, and South Dakota have legislation at various stages of committee review.
What is notable about the trend is not just the number of bills, but how quickly similar frameworks are appearing across different parts of the country. Many proposals follow a comparable template: grant authority to the treasurer, comptroller, or another investment official to allocate a small percentage of state funds to crypto-related vehicles; add oversight requirements; and create custodial and reporting rules more stringent than those used for traditional holdings.
The momentum reflects both genuine interest in digital assets and a competitive desire among states to brand themselves as innovation-friendly, particularly as crypto companies look for jurisdictions with supportive political and regulatory climates.
Crypto politics are no longer niche
Despite much of the legislation being largely sponsored or co-sponsored by Republicans, the adoption of crypto at the state level is not expected to strictly fall along party lines.
The 2024 election cycle was the first time that the cryptocurrency industry played a major role in lobbying in both state and national elections. In fact, it was the largest corporate donor in an election cycle, with support given to candidates on both sides. It is already amassing a war chest for the 2026 midterms.
Those political dynamics are shaping the incentives for governors and legislators who want to demonstrate they can keep their states competitive in emerging industries — even when the practical financial impact of early reserve programs may be limited.
Congress debates crypto rules as states compete for influence
Congress is currently debating a crypto market structure bill, and state-level politicians are as much out to prove that they, and their states, won’t be left out of the digital assets boom.
At the same time, crypto advocates are gaining more leverage in states where the industry has already established strong economic roots, particularly through mining operations, data infrastructure, and financial services. Where the state-level crypto efforts can be described as “bigger steps” — Texas, Arizona, and Florida, as examples — it has helped to acknowledge the growing political power of crypto advocates in these states.
The prospect of federal rules is also creating uncertainty: states that build governance and legal structures now may be better positioned to adjust quickly if national regulations become clearer, while those that delay could risk losing investment and talent to more proactive rivals.
How crypto reserves are being designed
Similarities in the actions taken across states to date include authorizing the state treasurer or other investment official to allow the investment of a limited amount of public funds in crypto and building out the governance structure needed to invest in crypto. This will often involve more frequent reporting requirements and stronger custodial agreements compared to traditional asset classes.
States are also looking at how to “seed” their reserves. Options can include allocating cash or leveraging government-seized crypto, similar to the approach used at the federal level. President Donald Trump signed an executive order to create a strategic Bitcoin reserve last March, but limited the authorization to seized crypto in an effort to show taxpayers would bear no financial burden.
These designs highlight the central challenge for public finance: state leaders want the upside of exposure to an asset class that has surged over the past decade, but they also want to reduce the political risk of taxpayer backlash if prices fall sharply.
Why Texas was first
It is no surprise that Texas was the first state to fund a crypto reserve. Texas has been a crypto hub for years through its role in Bitcoin mining. The state’s affordable and flexible power, as well as a political environment that has largely been pro-crypto, led Texas in recent years to a sizable position in not just the national, but global Bitcoin hashing market.
Texas has not purchased any on-chain Bitcoin. After passing the legislation to create a Bitcoin reserve that gave authorization to the state comptroller to hold the cryptocurrency, Texas purchased a stake in a Bitcoin ETF — roughly $5 million in the largest ETF, the BlackRock iShares’ Bitcoin Trust (IBIT), which since its launch in January 2024 has grown to over $72 billion in assets under management.
Crypto’s move into core state finance and budgeting
In addition to the concept of reserve funds, states are bringing crypto into core finance functions, with an approach that balances the inherent trepidation of venturing into new terrain with a desire to be a part of the fast-moving crypto realm.
New Hampshire, for example, became the first state to approve the issuance of a Bitcoin-backed municipal bond last November, a $100 million issuance that would mark the first time cryptocurrency is used as collateral in the U.S. municipal bond market. The deal has not taken place yet, though plans are for the issuance to occur this year.
In numerous states, including, Colorada, Utah, and Louisiana, crypto is now accepted as payment for taxes and other state business. As more state public finance crypto efforts develop, the shift represents a change in a core philosophy of safety and liquidity that has dominated the investing of state and local funds for centuries.
In recent decades, assets including real estate and private equity expanded the investment approach of public funds, but crypto represents not only the most recent addition, but the most volatile.
Morgan Stanley has filed papers to launch Bitcoin and Solana ETFs, creating interest in both traditional finance and crypto markets.