Why Texas leads the blockchain revolution

0:01I'm Ashan Addison from the Cryptocoin Show. Today on Blockchain Interviews, we have back with us Lee Bratcher, president of the Texas Blockchain Council to talk Bitcoin in Texas, blockchain in the US and how our last conversation 10 months ago, how we've been transitioning to continuing to be the crypto capital of the world and uh Texas is at the forefront of that.

0:26Pleasure to have you back, Lee, and excited for this discussion. Yeah, Ashton, thanks for having me on. >> Yeah, so much has happened in in 2025 and the capital continues to pour into one of the greatest returning assets of all time. Bitcoin institutions are only getting further involved with more digital asset treasuries, ETFs, uh leading up to the tokenization of the

0:47stock market and everything moving to blockchain. We can get into all of that. I would love to start off uh as a refresher for those who didn't see our first interview or need to know a little bit more about Texas Blockchain Council on what you and the council have been working on and then we can dive into you know what's sort of happened in the last

1:0410 months. >> Yeah, we are a trade association. So we work on behalf of our member companies um similar to how a chamber of commerce works, right? We work on policy, advocacy, regulatory matters, and we also do business development work for for our members. So, we have about 90 corporate members um which most of the names that you would recognize like

1:27Kraken, Coinbase, Blockchain.com. Um and a lot of the miners like Riot, Marathon, CleanSpark, etc. Um and and we we really work to ensure that Texas and the United States are the jurisdiction that wins. um for digital assets, right? So, we talk about how uh you know, a lot of technology was developed in Texas, but it was monetized in California,

1:53right? Uh in Silicon Valley, we don't want that to happen uh with with Bitcoin and with digital assets. And so, we've been around working for the last 5 years on that mission and um have got some some decent wins under our belt in that time. Definitely. It's a great uh list of names of some of the great crypto exchanges and miners and um they're only

2:16getting bigger and uh you guys have been doing a lot of great work behind the scenes for many years and I feel like a lot of people are starting to realize yeah Texas is one of the greatest places for blockchain and you guys are really helping with that a lot. Can you talk about, you know, just if there was a people that are starting to start a blockchain company or incorporate

2:37blockchain, why is Texas the greatest place in the US to do so? >> Yeah. First of all, it's uh because of the B business and regulatory climate in Texas. Of course, no uh you know personal income tax, state tax, uh corporate taxes are extremely low uh relative to other jurisdictions. So, Texas is a great place to start a business and to run a business. Um, but

3:05on the specifically on the on the crypto side, u we have passed several pieces of legislation that makes Texas more attractive jurisdiction, including uh updating the uniform commercial code um related to using Bitcoin as collateral. You can now perfect your security interests in digital assets through possession of the cryptographic key. So treats them like a bare instrument in in

3:27the law rather than um you know like like a traditional inst uh instrument where you'd have to file UCCC1 uh financing statements. Uh we've also worked with the legislature and the governor to pass a strategic Bitcoin reserve. So the comproller and various entities within the Texas government is becoming uh they are becoming familiar with digital assets, custody, keys,

3:54cryptography, uh you know the whole ecosystem. And uh Texas is actually going to be the first state, the first sovereign entity within the United States to buy Bitcoin and put it on the balance sheet. There's been a $10 million allocation, which of course is a very small amount of money for a state the size of Texas. It's 0.00430 0.00004% of the uh state's budget. Um so it's of

4:23course small for the state but strong signal, right? When you're when you have a state uh actually investing in it, putting on the balance sheet. Um and and so Texas would be similar to like El Salvador and Bhutan in that sense that we're um gaining a great understanding of this this savings technology uh that is Bitcoin and and the rest of the industry uh certainly as well.

4:50Definitely that's super exciting because we know that there's now the Federal Bitcoin reserve but they didn't actually buy any Bitcoin. They just like had Bitcoin that was confiscated and they're like, "Let's just officially call this the reserve." But they've yet to actually buy some. So, if Texas can actually put new cash into uh Bitcoin, that would be exciting. And I could

5:11imagine that would be a domino effect for some of the other states as well and a green flag like, "Hey, let's go. We don't want to be left behind." Uh, and you mentioned there about, you know, having to learn the cryptography. It's like a whole another world with the technology um from the infrastructure that they might be used to in in the stock market and traditional

5:29instruments. Um there's always those technical barriers to entry. How has that been going since you know before our last conversation was before 2025 now with the new administration putting all these uh green lights in and everyone going? How do you see these bodies adapting to actually understanding the new technology? Has that been a big barrier to entry or is

5:49it more just the legislation of getting it in place? Yeah, I think from um a macro kind of perspective thinking about the US administration right now, Secretary Besson, Secretary of the Treasury, Treasury Besson is a huge asset for the country. He's got a tough job. Uh he's got to sell a lot of US Treasury bonds. Uh but he understands digital assets. He

6:12understands stable coins and Bitcoin and and the whole ecosystem. Um, and then of course SEC um, Chairman Atkins is is another uh, champion for the democratization of finance, right? I'm not going to say he's a champion for crypto because he's a regulator. He's he's not championing one technology over another, but he's a champion for um, clear rules of the road and for

6:39protection, you know, investor protections that lead to kind of innovation and not stagnation. So that's that's from the US level. And then when you think about it um kind of at a state level, our comproller uh is currently controller Kelly Hancock. He and his staff are working, they've just submitted an RFI, request for information to uh various companies in

7:03the ecosystem. Companies are responding to that RFI with questions around qualified custody, liquidity providers, insurance, tax and reporting. So, uh, I would say they're not quite yet there from the education perspective, but they know what questions to ask >> and they will very quickly get there. >> Um, and and that's, you know, the job of the Texas Treasury Safekeeping and Trust

7:28Company, which is chaired by the controller, uh, and is also the job of the comprollers's office in general. >> Definitely. And you know, one important piece of legislation as well that you know, it's related to Bitcoin, but uh in the blockchain realm, but probably more businesses will be using it for transactions is stable coins. And I'm curious if Texas blockchain council is

7:50also uh involved in those discussions in there's stable coin legislation. There's been talk of, you know, the the US government really grabbing a hold of stable coins because it's so important for not the volatility of Bitcoin has come down a lot, but stable coins, you know, at least they're pegged to the dollar. And now we've also seen Tether and Bohines move into the position of

8:14the new CEO of USA Tether as they're looking to bring more competitive landscape from Circle as a stable coin and Tether now having more stable coins inside of America. Are you guys playing a part in the stablecoin side of blockchain as well? >> Yeah, so we're working to educate um particularly regional banks, um banking regulators, uh members of of the Texas

8:39congressional delegation in DC and also the Texas legislature here in in Austin um around stable coins. It's a hugely important technology. It's taken off very fast. you know, I if the the growth rate is incredible, incre in fact from a forward-looking perspective, Secretary Bessant estimated, you know, $3 trillion in stable coin circulation by 2030. That

9:02would be a 72% um annual growth rate for stable coins. And I think he might even underestimate it based upon what we're seeing on the Visa dashboard. you know, um, of course we're about 250 billion in in stable coins circulating right now, but the velocity of of that those funds are so high >> that you're seeing a 12-month rolling average of, you know, $50 trillion

9:27transacted, which uh, you know, approaches some other pretty often used forms of of transfer, right? It doesn't appro approach AC yet. AC um >> transacts quadrillions of dollars annually but the the percentage rate of growth for the amount of uh that 12-month rolling average is insane. I mean I looked a couple weeks ago and it was like 37 trillion and if I were to

9:51look today it's like 50 trillion. So >> um and and that's moving a 12-month rolling average in a month matter of like eight weeks, right? So it's pretty pretty impressive growth. Definitely impressive, huge numbers and you know it it all this stuff takes time uh with legislation especially going through all the different steps. When we last spoke, you know, the administration wasn't in

10:12place yet and now it's been 10 months. Uh where do you see how much has progressed since January of 2025 into the you know hopefully we see an exponential growth rate and things move even faster in 2026? How do you see everything progressing with the new administration? Yeah, I I think the administration has done a lot of things right, including I mean in particular uh and I've already

10:38mentioned this, but Bessant, Secretary Bessant and um SEC Chair Atkins are just incredible um you know, champions for for innovation as we've already discussed. We need a CFTC uh chairperson right now. Acting chair fam is doing a great job, but we need someone in that seat pretty quick. So hopefully it's unfortunately not going to be Brian Quintins. we had hoped it would be, but

11:01they've got another great candidate lined up. So, let's let's make sure that happens in the next couple months, get him confirmed, him him or her confirmed. Um, and then we got to avoid any like of the uh shooting ourselves in the foot as an industry, right? We cannot have an FTX. uh we've got to call out, you know, even the president himself and say,

11:21"Hey, >> you know, we love that you're embracing digital assets, but the Trump memecoin was a bad idea." And I think we need to uh collectively as an industry say that's that's fun. We're, you know, >> we're glad that you're getting into the industry, but that that was not your advisor steered you wrong on on that one in particular. >> Um and and I think more people should be

11:44willing to say that. >> Yeah, I agree. And you know, maybe having those little sandbox and innovative zones where you say, "Hey, this is for fun." And like, you know, this isn't going to be the next uh the next Bitcoin, but let's do it. Um maybe having a little bit of those disclaimers in there. Um you know, it's we the innovation that's happening in crypto.

12:04There's a lot of this stuff happening. Um, but people have to, especially if they're just getting involved and maybe that's the first coin they ever bought before Bitcoin, they don't really understand what they're getting into and they think it's uh, you know, a 10-year long hold and and they bought the top and and now they're down. Um, and and maybe it'll take a while to get back up.

12:22But, uh, I I see, you know, Trump and the Trump family working on a lot of different innovations uh, with the world liberty and also the American Bitcoin. And I'd be hardressed not to talk about Bitcoin mining uh in Texas since it is like the leader by far in the states and I know you guys are heavily involved with it as well. Can you give an outlook

12:42on Texas Blockchain Council, how you're involved with Bitcoin mining, how Bitcoin mining is doing in in Texas compared to the US in the world? Yeah, Texas um has about 17% 17 18% of the global hash rate and uh nearly half of the US hash rate. Uh and if you look at as a share of number of megawatts operational in uh by public companies, it's actually over half of the US hash

13:10rate. Uh Texas is going to be the next boom for data centers in general. That's going to be Bitcoin mining, that's going to be AI, compute, training, inference, all those things for a lot of reasons, right? We have a lot of space, we have a lot of energy, we have a lot of stranded energy um because of the geographic dispersion of the state. And uh there's

13:32also some some fortunate things related to our energy only marketplace which is Urkott and some some particularly uh some fiber backbones of the internet that happen to run you know through Dallas you know through certain parts of West Texas up towards Denver um that make it very advantageous here for for from a data center perspective. Of course the Bitcoin miners don't really

13:52care as much about latency but the AI infrastructure um cares a little bit more about that. So, uh, growth is going gang busters. You know, energy grids are typically used to growing about 1% a year. >> Uh, the Texas energy grid is growing far faster than that, closer to 6 7% a year. Uh, and that's been very recent. And and that's hard to do for a grid because

14:15there's a lot of infrastructure that needs to be built, right? If you're used to growing at 1% a year and you're now growing at six times that rate, >> very difficult, very challenging. um hard for the grid operator, hard for the transmission companies. Um you know, it's hard for people to get enough steel in the ground from uh transmission perspective, substations, even down to

14:37the transformer level. There's just a shortage of all that equipment. So, um that's the only thing holding us back right now. We could we could probably double the size of the Texas grid in a matter of of, you know, 10 years. Uh that's obviously impossible, but that's the amount of demand that we're seeing. Yeah, it's crazy the amount of growth and especially in Texas now in Amaro is

14:59where they've announced the the super AI warehouses to to develop um the more grids there and I feel like everyone is underestimating the amount of power that's required since now that everybody is using AI all day every day for their work. Um, and I feel like people also overestimated the amount of power that Bitcoin mining was using and it actually

15:23can create a surplus of power u if if done the right way. Um, is there uh is there an overlap of in the blockchain council like you know this AI infrastructure is like in just hours away from Dallas. It's just it's a huge a lot of capital going in there. Does that affect uh Bitcoin mining or anything that the blockchain council is actually doing? >> Yeah, I I think I mean many of our

15:48members are doing both. So, we are we are just as involved in AI compute. Uh it's the same regulatory bodies. We're working with the public utility commission. We're working with Urkott and the legislature. >> Um keeping our finger on the pulse there. So, um, it's it's a little bit different of a load profile, >> um, and a little bit different of a, you

16:09know, tier tier one versus tier four data center type of situation. So, the capex is >> is 10x or more um, higher than for a Bitcoin mine, but um, other than that, it is about land and power >> and it's about energy and, um, that's that's all the same. And so we're able to use our expertise that we gained from the Bitcoin mining side to help with our

16:34members on the AI compute side too. >> Really cool. Yeah, I'm looking forward to seeing all all the growth that's happening so fast like as you said six to seven times uh what was expected and what it was before. It's like how do you keep up? And AI is just getting so good that in every every 6 months to a year it's like 10 times better. I can imagine

16:56five years from now uh where we'll be with AI and with digital assets. You know, it's really been only been like a year that the administration has been pro crypto and getting involved with it and we're already seeing, you know, trillions move into Bitcoin over the last two three years and that's starting to trickle into other digital assets. So, it's a very exciting time.

17:16>> Absolutely. Yeah, it is exciting and I think um you know one of the things that we'll see more of is the traditional finance industry merge with the digital asset industry. Um we're having the North American Blockchain Summit next week and Kevin Kennedy's executive vice president of NASDAQ is coming to talk about their digital asset strategy, their tokenization strategy. U even SEC

17:39chair Atkins is talking about it and and sending out in memos to the entire SEC staff. So in five years um there will be a significant transition and it won't just be five years from now. It'll be on a spectrum between now and and five years from now where we see uh a significant number of financial products move to uh blockchain rails and u those assets will be traded 24/7 globally. Uh

18:07so that's tough from a regulators perspective. There's a lot of work that needs to happen between now and then. Um but that is the trend and I think we'll see private equity become more liquid. We'll see public equity become more liquid um with lower fees and and more democratization. Uh now with that comes challenges from a regulatory perspective um and a technical infrastructure

18:32perspective. Those things will be solved. Um but you know it's it only it only slows the inevitable if you will. >> Yeah. It's uh there there's a lot of parts to work out in a trady infrastructure that has been going for um for you know nearing a century. Uh and but with the introduction of the Texas stock market as well uh eventually here I feel like they should just start

19:00by you know not having to rebuild the plane while it's flying. maybe build it blockchain first uh with that T0ero settlement and you know cheaper faster using all the technology they can from digital assets. >> Yeah, they they are certainly considering you know the the digital first model at the Texas Stock Exchange. They're not going to build uh on

19:22blockchain from day one. uh mostly because they they're going to launch very soon and and the regulatory um you know work as far as you know with the SEC and the exchanges and the broker dealers is just not quite there yet. Of course, the technologies there. They could do it. Um but that that's probably going to be you know a year uh a couple years down the line before they

19:44transition fully. Um, but but I would be shocked if we didn't see some tokenized assets trading tokenized equity trading pretty quickly on NASDAQ and and Texas Stock Exchange and probably into the New York Stock Exchange as well. >> Yeah. No, it's very exciting and yeah, I could only uh hope that, you know, they'd go all blockchain first, but I know where it's a little immature for

20:07that. Uh, but I can imagine over the next few years it's going to be there because there are clear advantages, cost and speed and everything else. Uh so I'm excited to to see that transition and you mentioned there about the North American Blockchain Summit. I did go last year uh when you guys were were holding it in Dallas and it was an amazing event. Some huge speakers as

20:26well. Um and it's coming up uh in the beginning of October here again. Can you talk a little bit about you mentioned some of some of the speakers and topics, but I feel like there's a lot to be talked about with the Bitcoin mining, the infrastructure, the stock market, and and importantly tokenizing all of the traditional financial assets that are in the US.

20:48>> Yeah, we we will certainly will be talking about that. We have panels about capital markets moving on chain. We have panels about AI and Bitcoin mining infrastructure. Um certainly uh even some fun panels with people like IT Smith and uh Terrell Owens who are former >> uh Cowboys players and NFL Hall of Famers uh talking about this kind of stuff too. Um so we're excited about it.

21:12It's our our flagship conference takes place in the fall every year. This year it'll be at the Bush Presidential Center like it was last year. Um we've done it in Austin several times and in DFW several times. So this will be the fifth year for the event. That's incredible. I can leave a link to the Texas Blockchain Council, everything that the council is working on in the

21:33show notes below. I'll also leave a link to the North American Blockchain Summit. You can check out those speakers and topics and and I will see you at the event because I'm I'm definitely going to be there again because it was uh awesome last year. And I'm wishing you and the team all the best on the event and the council and the legislation, the Texas stock market and everything. and

21:52thank you for putting so much effort towards making Texas the greatest state uh for for crypto and in general in in the US and and really appreciate your time, Lee. >> Yeah, thanks Ashton. Appreciate it.