Buy, hold, die: Bitcoin across a Texas lifetime

Buying: what does Texas require?

Less than almost any state. Buying, selling, and holding Bitcoin is legal in Texas, and under Supervisory Memorandum 1037 – the Texas Department of Banking's foundational 2014 guidance – exchanging cryptocurrency you own for dollars is not money transmission, so no state license is required to sell your own coin.^[1] The full legal picture, including the federal § 1960 seam that still applies to anyone transmitting other people's money, lives on what Texas law says about Bitcoin. The tax side is equally clean at the state line: Texas has no individual income tax, constitutionally prohibited since Proposition 4 passed 74–26 in November 2019, so there is no state tax on Bitcoin gains.^[3] The federal side is the whole tax story: since IRS Notice 2014-21, virtual currency is property for federal purposes – every sale, trade, or purchase made with appreciated Bitcoin is a taxable event, with capital gains computed against cost basis.^[2] A Texan's Bitcoin taxes are federal taxes; the state simply declines to add any.

Holding: what do you actually own, and who else owns it?

Texas answered the first question in statute before most states thought to ask it. House Bill 4474 (signed June 15, 2021, effective September 1, 2021) wrote virtual currency into the Texas Uniform Commercial Code – defining it, establishing what “control” of it means, and clarifying how security interests in it are perfected.^[12] The second question is where Texas gets distinctive: it is a community property state. Under Family Code § 3.003, property possessed by either spouse during marriage is presumed community property, and the spouse claiming otherwise bears the burden of proof.^[9] Applied to Bitcoin: coin bought with income earned during the marriage is presumptively half your spouse's, regardless of whose exchange account or hardware wallet holds it; coin owned before the marriage, or received by gift or inheritance, can be separate property – if its history can be traced. The blockchain, for once, is on the record-keeper's side: acquisition dates and flows are provable in a way commingled cash never was.

Dying: what taxes apply to inherited Bitcoin in Texas?

At the state level: none, twice over. Texas repealed its inheritance tax effective September 1, 2015,^[4] and on November 4, 2025 voters approved Proposition 8, amending the Texas Constitution to prohibit any state estate, inheritance, or death tax – making the absence permanent in the strongest form state law offers.^[5] That leaves only the federal estate tax, and its threshold is high: the One Big Beautiful Bill Act (signed July 4, 2025) set the exemption at a permanent, inflation-indexed $15 million per person – $30 million per married couple – from January 1, 2026.^[6] Below that line, the dominant tax fact is the stepped-up basis: because Bitcoin is property, 26 U.S.C. § 1014 resets an heir's cost basis to fair market value at death – unrealized gains accrued over the decedent's lifetime are never income-taxed.^[7][2] And community property adds the quiet Texas advantage: under § 1014(b)(6), both halves of community-property Bitcoin – including the surviving spouse's own half – take the date-of-death basis, a double step-up unavailable in common-law states.^[7][8] Executors carry the paperwork: Texas probate requires the estate inventory to state fair market value at death, which also fixes the heirs' new basis.^[13]

The access problem: why a statute cannot open a hardware wallet

Here the law runs out of reach, and honesty requires saying so plainly. Texas adopted the Revised Uniform Fiduciary Access to Digital Assets Act (TRUFADAA, Estates Code Chapter 2001) effective September 1, 2017 – a genuinely useful statute that lets executors, trustees, agents under a power of attorney, and guardians compel custodians to grant access to a decedent's digital assets, with the strongest authority flowing to fiduciaries whose documents grant it expressly.^[10][11] For Bitcoin on an exchange, that works: the exchange is a custodian, and a properly drafted will or trust reaches it. But self-custodied Bitcoin has no custodian. A seed phrase is knowledge, not an account; there is no company to serve, no password to reset, no statute to invoke. Coin whose keys die with the owner is not tied up in probate – it is gone, permanently, while remaining visible on the blockchain forever. The estate-planning literature's entire toolkit – letters of instruction, multisignature arrangements, dead-man switches, corporate custodians – exists because TRUFADAA cannot reach a steel plate in a safe. The same property that makes Bitcoin seizure-resistant in life makes it loss-prone at death. That is not a flaw in Texas law; it is the asset's deepest design choice, showing up in inheritance. Even the state met it from the other side: the Strategic Bitcoin Reserve exists precisely because holding real coin means solving custody deliberately, in advance, with named responsible parties.

The honest counterweight

The friendly numbers above describe the state; they do not make the personal problem easy. Community property cuts both ways – the presumption that favors a surviving spouse in a step-up also means Bitcoin a spouse believed was solely theirs is likely half-owned already, and tracing separate property through years of transactions is real forensic work. The stepped-up basis rewards holding until death, which sits oddly with an asset whose owners are told to plan meticulously for access at death. And every mechanism that solves the access problem – sharing keys with family, multisig with a lawyer, a custodian – trades away some of the self-sovereignty that motivated self-custody in the first place. Texas law removed the state-level friction; the remaining decisions are genuinely hard, personal, and worth a licensed professional's time. This page is the map, not the counsel.