Texas makes first purchase for state's bitcoin reserve

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Texas took an initial step to fund a strategic bitcoin reserve with the purchase of approximately $5 million of shares in a bitcoin exchange traded fund, according to the state comptroller's office.

A bill signed into law by Gov. Greg Abbott in June, created the reserve as a way to diversify the state's investments and participate competitively in the digital economy. Texas, along with Arizona and New Hampshire, are the only states to enact cryptocurrency reserve laws so far.

The purchase of shares in iShares Bitcoin Trust ETF was made the morning of Nov. 20 at a per share price of $51.8694 when bitcoin was trading at $91,336.32, a spokesman for the Texas comptroller said this week. The shares are "a placeholder investment" until the state formally contracts with a cryptocurrency custodian chosen through a request for proposals process, he added. 

"The Texas Legislature passed a bold mandate to create the nation's first Strategic Bitcoin Reserve," Kelly Hancock, the state's acting comptroller, said in a statement. "Our goal for implementation is simple: build a secure reserve that strengthens the state's balance sheet."

The Texas law authorizes the comptroller to acquire, exchange, sell, manage, and retain the fund's investments and limits purchases to cryptocurrencies with a market capitalization of at least $500 billion.

State legislatures were hit with a deluge of digital asset-related bills this year, including measures to create digital asset funds or reserves and allow state or public pension fund investments in bitcoin or other cryptocurrencies, although few were enacted, according to the National Conference of State Legislatures.

Arizona Gov. Katie Hobbs signed a bill for a Bitcoin and Digital Assets Reserve Fund consisting of abandoned digital assets, while vetoing other measures allowing the investment of public money in digital assets. 

New Hampshire's law allows the state treasurer to invest up to 5% of public funds in digital assets and precious metals. A $100 million bitcoin-backed bond deal through a state conduit issuer is in the works.