Texas has taken a significant step toward becoming the first state in the US to begin accumulating Bitcoin directly with government funds. State officials confirmed a $5 million purchase from IBIT, BlackRock's spot Bitcoin ETF. While this move doesn't yet directly translate to BTC accumulation, it is considered a transitional phase for the upcoming "Texas Strategic Bitcoin Reserve."
Texas allocated $10 million to establish this reserve at the beginning of the year and began collecting comprehensive information from the industry in September. The state's information request process was completed in recent weeks. Crypto companies submitted proposals guiding Texas on a range of issues, from custodial services to security standards. These proposals will be used to establish the state's long-term Bitcoin accumulation model.
Last week's $5 million ETF purchase is also part of this preparation. A spokesperson for the Texas Comptroller of Public Accounts said the ETF is only a "temporary placeholder" and that actual Bitcoin purchases will begin once a formal custodial agreement is signed. The state's next step is to move to the formal proposal process for selecting a custodian. This move opens the door to a new era in the race to establish Bitcoin reserves with public resources in the US. Previously, some states, such as Michigan and Wisconsin, invested in Bitcoin ETFs through their state pension funds. However, these were investments made for individual retirement funds; accumulating BTC in the state treasury is a different matter.
New Hampshire and Arizona Are Next
Following Texas, New Hampshire and Arizona are also running their own reserve projects. New Hampshire was the first state in the country to enact a Bitcoin reserve law, but no actual purchase has yet been made. Last week, however, the approval of $100 million in Bitcoin bonds was notable. Arizona has taken legal steps to direct the accumulated unowned crypto assets into a reserve fund.
One of the most active figures behind the reserve projects is Dennis Porter, CEO of the Satoshi Action Fund. Porter stated that they have submitted draft laws to states and prefer a gradual progress. He believes the recent decline in the crypto market will not disrupt these initiatives because the downturn is not sufficient to attract the attention of lawmakers. Texas Blockchain Council President Lee Bratcher described the state's latest move as "buying the bottom." He described Texas's purchase of a Bitcoin ETF at $87,000 as "successful timing."
Once the process is complete in Texas, it will be the first time in US history that a state treasury has directly begun holding Bitcoin. This step is expected to serve as an example for other states. Crypto reserve initiatives are expected to accelerate nationwide in the early months of 2025, when the new legislative session begins.
