The Texas state government has made a bold move to embrace digital assets by committing $5 million to BlackRock’s spot Bitcoin ETF, marking a significant point in its changing way of dealing with cryptocurrency. The money put into the ETF represents the first stage of a more extensive $10 million plan that was set aside from the general revenue funds.
The deal was done on November 20, and the confirmation was made public by Lee Bratcher, president of the Texas Blockchain Council. In his statement, he pointed out that the purchase of Bitcoin in an ETF is only a makeshift solution as the state of Texas plans to buy Bitcoin directly. However, the ETF purchase is a temporary instrument until Texas sorts out the mechanisms for self-custody and the related administrative procedures.
Bratcher explained that they are only halfway through the game with the $10 million that has been set aside as a campaign budget for Bitcoin-related strategies, meaning that the whole sum has not been utilized. The state’s planned move to self-custody of Bitcoin is a clear indication of a gradual long-term shift in asset management digitally, which is supported by the legislature and institutional adoption of digital assets.
Source: X
Many involved in the industry have pinpointed the significance of the move as a landmark to governmental attitude changes towards cryptocurrencies. Pierre Rochard, CEO of The Bitcoin Bond Company, said that one of the biggest changes in the perception of Bitcoin is the move from an expectation of government crackdowns to governments becoming directly involved in Bitcoin markets.
Rochard considered the event as one of the signs of the rapid “hyperbitcoinization” the world is experiencing, thus the maturity of the ecosystem when government entities purchase Bitcoin. According to him, the metamorphosis of the narratives is happening at a very fast pace especially in the case of institutional and public-sector players who are increasingly exposed to digital assets.
The move fits well with the state’s initiative to create a strategic reserve of Bitcoin, which was given the green light by Governor Gregg Abbott in June. The regulation permits Texas to keep Bitcoin as part of its treasury assets for the long term, but there are certain criteria that have been established to decide which assets qualify for that.
The bill, as agreed, states that only those cryptocurrencies whose market capitalization is more than $500 billion can be part of the reserve. Since Bitcoin already exceeds this limit, whereas BlackRock’s ETF does not, the latter is being gradually treated as a separate investment entity from the state’s long-term reserve strategy. Moreover, the distinction between the two scenarios explains why the ETF investment is not considered as a part of the state’s official plan for the long-term reserve..
Texas senators have also indicated that the state might broaden its crypto portfolio in the next span of time. According to State Senator Charles Schwertner, the Ethereum network could become part of the reserve if its market cap is over $500 billion for 24 consecutive months, thus pointing to the growing interest in the leading blockchain networks.
Some sources claimed that Texas was the first U.S. state to buy BlackRock’s IBIT ETF, but in fact, the Wisconsin Investment Board was the one that made the initial purchase of IBIT shares worth almost $100 million. According to the opinion of the likes of Eric Balachunas from Bloomberg, Texas is in the company of other large institutional investors, such as Harvard and Abu Dhabi, who have recently taken positions in this fund.
Despite a slight increase in price after hours, IBIT has been on a downward trend of almost 10% year-to-date. Its trading was at $49.56 with a minor 0.22% gain. This is happening while a broader federal approach to Bitcoin is seen as more open. Nevertheless, the state-level activities around the Bitcoin-products keep the momentum going and the spotlight still remains there.
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