AUSTIN (KXAN) — Lawmakers discussed creating a new reserve dedicated to investing in Bitcoin on Tuesday.
Texas Senator Charles Schernwer authored Senate Bill 21, which would create the Texas Strategic Bitcoin Reserve. The bill was discussed in the Senate Committee on Business and Commerce.
“Crypto currency is what people believe is. In this case, Bitcoin is finite and decentralized and something that [people] don’t have to worry about governments printing more and more money,” Schernwer said.
Schernwer emphasized that creating such a reserve would help protect against inflation.
“People are really worried about federal overspending that’s been going on decades and the inflation that engenders,” Schernwer said.
Kendall Garrison, CEO of Amplify Credit Union, felt that the government investing in cryptocurrency is risky.
“[Crypto] can be very, very volatile. It can go up very quickly, and it can turn around and go down just as quickly,” Garrison said. “Switching from very safe investments that the state of Texas has today—like government bonds, index funds, hedge fund investments—to cryptocurrency is really increasing the risk in that portfolio.”
That sentiment was also echoed by Cesare Fracassi, the director of the Blockchain Initiative at the McCombs School of Business.
“It has a high correlation with the market. Meaning, when the market does well, bitcoin does well. When the market does poorly, bitcoin does poorly,” Fracassi said.
When asked if it was a good idea to instill a Bitcoin reserve in Texas, Fracassi expressed concerns about a government entity investing on behalf of taxpayer dollars.
“I don’t want the government to take my money and decide how to invest my money. I want to invest my own money,” Fracassi said.
Schernwer, on the other hand, stressed that such an investment isn’t as risky as it could seem.
“All financial assets have volatility. Pieces of land have volatility. Dollar-denominated assets stocks have volatility, and true cryptocurrencies have volatility,” Schernwer said. “Bitcoin in particular is the largest cryptocurrency, the one that trades the largest volume, and I think it has the least amount of overall volatility.
Garrison suggested if the bill passes, there needs to be proper regulations.
“What I would suggest is they have a very strong, very well thought out investment policy that has a stop loss built into it,” Garrison said. “If it decreases more than x percent, then you exit those investments, and on the other side of the coin, if it increases more than x percent, you harvest some of the profits.”
If the reserve is created, it will be overseen by the Texas Comptroller. There also would be a five-person advisory committee—including the Comptroller—that would advise on the management of this reserve.
Texas lawmakers left this bill pending in committee.
