Bitcoin as a Public Investment: The Texas Treasury’s Watershed Bitcoin Commitment
Texas has become the first US state to invest in bitcoin (Unsplash/Enrique Macias)
Texas has become the first US state to invest in bitcoin through a new Strategic Bitcoin Reserve, administered through the Texas Treasury Safekeeping Trust Company.
Last year Texas governor Greg Abbott signed Texas Senate Bill 21 into law, creating the reserve as a special fund held outside of the Texas Treasury. The fund is administered and managed by Kelly Hancock, the state’s acting comptroller of public accounts.
A bitcoin reserve is obviously quite a novel form of fund, so what does its allocation look like?
The trust’s first investment was a $5mn commitment to BlackRock’s iShares Bitcoin Trust ETF, which tracks the price of bitcoin. Another $10mn have been appropriated to fund bitcoin investments during 2026.
It does not have any strategic long-term allocation targets because future commitments are determined entirely by the state’s legislature.
The investment in the BlackRock ETF is a temporary position before the fund transitions to a self-custody model.
The treasury is currently reviewing responses from an RFI for custodial services to help develop an RFP which it intends to publish during the first quarter of 2026, a spokesperson for the comptroller told AOX.
As far as selection criteria for a custodian goes, the spokesperson said “safety and security” of the assets are paramount. “The vendor or vendors selected should acquire and hold the state’s assets using industry best practices,” the spokesperson said.
According to the bill, only currencies with an average market capitalization of at least $500bn are eligible for addition to the trust, in practice this means bitcoin (with a market cap of about $1.3tn) is the only cryptocurrency eligible to be held in the reserve.
Investments in bitcoin can be something of a rollercoaster. So far this year bitcoin is down more than 15 per cent - though it has rebounded somewhat and so far this month it is up nearly 5 per cent.
So what, bluntly, is the point of this reserve?
While some investors in bitcoin consider it a growth asset, Texas is treating its investment as a pure currency holding. “We do not have an expected return profile for the digital assets in the reserve. The legislative intent is for us to buy and hold digital assets in the reserve,” the spokesperson said.
The text of SB 21 cites three primary findings justifying its investment: that bitcoin and other cryptocurrencies have “strategic potential for enhancing this state's financial resilience,” that they can be a “hedge against inflation and economic volatility” and that the reserve “serves the public purpose of providing enhanced financial security to residents of this state.”
The investment came around the time of the passage of the Genius (Guiding and Establishing National Innovation for US Stablecoins) Act, which set in place the first federal guidelines for the regulation of cryptocurrency. The act was signed into law in July by Donald Trump, who wants the United States to become the “crypto capital of the world”.
While the Genius Act set the groundwork to regulate bitcoin as a commodity investment just like gold or silver, the final clearance for the commodity’s inclusion in the Texas Treasury was established in a no-action letter from the Securities and Exchange Commission issued on September 30, which allowed state-chartered trust companies to self-custody bitcoin.
While Texas is the first state to put bitcoin in its treasury reserves, Arizona and New Hampshire have created, but not yet funded, similar state-level bitcoin reserves.
As a pioneer in the space, other investors are sure to keep their eyes on Texas as they consider whether bitcoin is a worthy investment for state-level funds.