Recent legislative action in Texas is positioning the Lone Star state to be an important hub for web3 and blockchain technology. 

On Monday, the state House of Representatives passed a bill that requires digital asset service providers operating in Texas to segregate and separately account for customer funds. It also requires exchanges to file a proof-of-reserves attestation with the Texas Department of Banking. The success of the proof-of-reserves bill follows last week’s passing of the Flare Gas mitigation bill which brings clarity to Bitcoin miners in the state.  

Lee Bratcher, president of the Texas Blockchain Council, confirmed in an interview that there are more bills in the works for the state that, if passed, will position Texas as a leader in digital assets. 

“The first microchip was invented in Texas, but it was monetized in Silicon Valley,” he said. “We don’t want to miss out on the next wave of innovation.”

The Texas Blockchain Council put together a team of industry experts to weigh in some of the legislation – one of whom is Nic Carter, who warned the world about a coordinated attack on crypto he called Operation Chokepoint. 

Bratcher explained that the gas-flaring bill would save money for oil and gas operators and make Bitcoin mining more environmentally friendly. 

Read more: Utah’s Bill to Govern DAOs Increases the Pressure for a Federal Policy

“House Bill 591 confirms that an oil and gas operator would not need to pay severance tax on gas that was formally flared or vented,” he said. “Bitcoin miners are helpful in that they are able to bring out a shipping container full of mining machines and redirect that formerly flared gas into a generator and mine Bitcoin with it. This creates a positive environmental impact, with a 63 percent reduction in the carbon impact of that formerly flared gas that’s now consumed inside of a generator.”

The bill will also lead to jobs and tax revenue for the state, where Bitcoin mining remains strong, Bratcher said. 

“We have over 20 industrial-scale Bitcoin mining operations in Texas, with more than 2,200 megawatts worth of mining in total – the largest state by far,” he said. 

The Blockchain Association has voiced its opposition to a bill that would limit Bitcoin miners’s ability to participate in grid balancing services. 

“We’ve been making every effort to educate different members of the legislature that it’s not a healthy bill for the grid or miners,” he said. “We have every indication from the Texas House of Representatives that they have no intention of passing it.” 

Beyond protecting consumers on exchanges and Bitcoin miners, Texas has been actively pushing for a state bill to define decentralized autonomous organizations, or DAOs. According to Bratcher, the proposed Texas DAO bill is unlike similar legislation in Wyoming, Utah, Vermont and Tennessee. 

“It’s a different framework to what’s been tried in the past,” he said. “It uses the unincorporated non-profit association framework, rather than the LLC. We feel it’s more effective for the formation of DAOs.” 

Bratcher believes it’s a coin flip as to whether it passes. He said he’s not concerned that the U.S. will end up with 50 different jurisdictions in lieu of a federal DAO bill. “Usually what happens is when there’s a new type of entity formation, there’s some experimentation but then all states will eventually coalesce around one or two bills,” he said. 

On the topic of national bills, Bratcher has spoken out against a central bank digital currency. “A lot of politicians are starting to figure out that CBDCs don’t align with their worldview. What’s interesting is Bitcoin is the antithesis of CBDC, and while many elected officials don’t understand Bitcoin, they are against CBDCs. It’s a really interesting dynamic for state and national politics,” he said. 

There are 38 members of Congress and two Senators who represent Texas in Washington DC and they are all being given the same message by the state legislature and governor, Bratcher said: “Texas does not approve of a central bank digital currency.”