What Texas Law Actually Says About Bitcoin

Is Bitcoin legal in Texas?

Yes — and Texas answered earlier and more clearly than almost any state. On April 3, 2014, the Texas Department of Banking issued Supervisory Memorandum 1037, concluding that cryptocurrency is not “money” under the Texas Money Services Act because it is not sovereign legal tender.^[1] The consequence is structural: activities that would be regulated money transmission when done with dollars are simply not licensed activities when done with bitcoin alone. Buying, selling, holding, and mining are all lawful, and no Texas statute has ever said otherwise. The full arc — every bill, memo, and failed attempt — runs on the Texas Bitcoin law timeline.

The state line: your coin, no license

Under SM 1037 and the Department's standing guidance, selling bitcoin you own — including peer-to-peer — and exchanging crypto for crypto do not by themselves trigger a Texas money-transmission license.^[1][2] The license attaches only when sovereign currency moves in a transmitting capacity: taking dollars from one person to deliver value to another. In 2023 the state modernized the whole framework by adopting the multistate Money Services Modernization Act (SB 895, effective September 1, 2023), without disturbing that core holding.^[5]

Where the federal map disagrees

Texas law is one map; federal law is another, and the seam between them is where people get hurt. A business that exchanges or transmits virtual currency for customers is a money services business under FinCEN's 2013 guidance and must register federally^[12] — and operating unregistered is a standalone federal crime under 18 U.S.C. § 1960, no fraud required.^[11] No Texas memo can waive that. The prosecutions that result are catalogued, case by case, on the Texas Bitcoin case tracker, and the cost of misreading the seam has a face: Mark “Doctor Bitcoin” Hopkins, the Dallas-area P2P educator prosecuted under § 1960 — a registration offense, not a fraud.

Custody, commercial code, and proof of reserves

The 2021 and 2023 sessions built the institutional plumbing. In one June week of 2021, the Department of Banking confirmed state-chartered banks may custody virtual currency under existing Finance Code authority (Industry Notice 2021-03),^[3] and HB 4474 wrote virtual currency into the Texas UCC — defining control and giving lenders commercial-law certainty.^[4] Two years later, months after FTX, HB 1666 made Texas an early proof-of-reserves state: providers must segregate customer funds and file auditor-attested reserve reports with the Department of Banking.^[6] Pro-Bitcoin and anti-trust-me is the consistent Texas posture.

Legal tender, the reserve, and what Bitcoin is instead

Bitcoin is not legal tender in Texas — that title belongs to gold and silver specie under HB 1056 (signed June 22, 2025).^[9] Bitcoin holds the arguably stronger position: SB 21 (signed June 20, 2025, effective immediately) created the Texas Strategic Bitcoin Reserve, managed by the Comptroller outside the state treasury and restricted by a $500 billion market-cap floor that only Bitcoin clears.^[8] In the same June, Texas wrote both hard-money traditions into law — bullion as tender, Bitcoin as reserve.

Taxes and mining: the practical ground

Texas levies no personal income tax, so there is no state tax on bitcoin gains — federal capital-gains treatment still applies.^[13] Mining is lawful at every scale and actively courted: HB 591 (2023) exempted otherwise-flared gas consumed at the wellhead from severance tax,^[7] and the one serious legislative attempt to cap miners' role in ERCOT demand response — SB 1751 — passed the Senate 30–1 and then died in a House committee in May 2023.^[10] The industrial result is mapped, site by site, on the Texas Bitcoin mining map. This page is research, not legal or tax advice — for decisions with stakes, retain a licensed Texas attorney or CPA.