Texas Invests $5 Million in Bitcoin ETF as State Crypto Reserve Takes Shape

TLDR

• Texas purchased $5 million in BlackRock’s Bitcoin ETF as a placeholder while building its Strategic Bitcoin Reserve
• The state allocated $10 million earlier this year for direct Bitcoin holdings, with $5 million invested and $5 million pending
• New Hampshire and Arizona are also working on state crypto reserves, though no state has completed a direct Bitcoin reserve yet
• Wisconsin previously invested nearly $100 million in Bitcoin ETFs through its pension fund in 2024
• The Texas Bitcoin reserve legislation only allows assets with market caps above $500 billion, meaning Ethereum could qualify in the future

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Texas bought $5 million worth of BlackRock’s iShares Bitcoin Trust last week. The purchase marks an early step in building what could become the first state-operated cryptocurrency reserve in the United States.

The investment serves as a temporary measure while Texas finalizes contracts with a custodian for direct Bitcoin holdings. A spokesman for the Texas Comptroller of Public Accounts confirmed the ETF purchase is a placeholder until the state completes its formal request for proposal process.

Texas passed the Strategic Bitcoin Reserve and Investment Act earlier this year. The legislation appropriated $10 million in total for the reserve, with the remaining $5 million earmarked for self-custodied Bitcoin once custodial arrangements are complete.

The state recently closed its September request for information from the crypto industry. The RFI sought best practices for implementing and managing the Bitcoin reserve. Multiple entities submitted input on how Texas should structure and operate its crypto holdings.

Race Among States for First Crypto Reserve

Other states are pursuing similar initiatives but remain behind Texas in implementation. New Hampshire became the first state to pass reserve legislation but has not yet made any purchases. State Representative Keith Ammon confirmed no moves have been made as of now.

New Hampshire did authorize a $100 million Bitcoin bond through its Business Finance Authority last week. The private-sector project aims to fund a crypto-backed economic development fund.

Arizona passed legislation allowing the state to use unclaimed crypto properties for building a reserve. The approach differs from Texas by using existing state-held crypto rather than new purchases.

Wisconsin’s investment board bought nearly $100 million in BlackRock’s Bitcoin ETF in May 2024. That purchase went through the state pension fund rather than a dedicated reserve. Wisconsin later sold its $350 million pension stake in the ETF in May of this year.

Michigan has also made Bitcoin ETF investments through its pension system. These pension fund purchases represent a different approach from dedicated state reserves like Texas is building.

The Texas legislation restricts reserve holdings to assets with market caps exceeding $500 billion. Bitcoin currently meets this threshold while most other cryptocurrencies do not. State Senator Charles Schwertner told reporters Ethereum could qualify if it maintains a market cap above $500 billion for 24 months.

Federal Reserve Plans Still in Development

President Donald Trump campaigned on creating a federal Bitcoin reserve. After taking office, Trump issued an executive order directing development of a national crypto stockpile. Federal officials assigned to the project are waiting for Congressional authorization to proceed.

Dennis Porter, CEO of Satoshi Action Fund, has worked with state lawmakers on reserve legislation. His organization provides legislative frameworks states can adapt for their own use. Porter said in an interview the group takes an incremental approach rather than pushing for sweeping changes.

State legislatures will reconvene early next year when more reserve proposals are expected. Porter predicted several additional states will introduce legislation based on work done in 2024. Michigan and Massachusetts have discussed potential proposals.

The recent crypto market decline has not deterred state-level interest in reserves. Bitcoin dropped from above $120,000 to around $87,000 when Texas made its purchase. Porter said the drawdown has not reached a level that would concern lawmakers.

Lee Bratcher, president of the Texas Blockchain Council, posted on social media that Texas “bought the dip” by acquiring Bitcoin exposure at the lower price point.

BlackRock’s iShares Bitcoin Trust has attracted purchases from Texas, Harvard University, and Abu Dhabi according to Bloomberg analyst Eric Balachunas. The ETF launched less than two years ago and has drawn diverse institutional investors. IBIT currently trades at $49.56, down about 10% year-to-date despite increased government interest in Bitcoin.

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