The state of Texas recently purchased about $5 million worth of bitcoin through a BlackRock-administered exchange-traded fund, a representative for the state comptroller’s office confirmed in an email to The Dallas Morning News on Monday.

The purchase came several months after Texas Gov. Greg Abbott signed into law Senate Bill 21, a high-profile and controversial legislative effort that enabled the Texas comptroller’s office to establish a publicly funded strategic cryptocurrency reserve.

It also amounts to one of the first-ever cryptocurrency transactions by a state government amid a broader federal and state government embrace of the recently surging crypto industry. Other states, including New Hampshire and Arizona, have passed similar crypto reserve bills.

And last year, Wisconsin’s and Michigan’s pension funds also purchased crypto, although with the comptroller’s purchase Texas has now become the first state to actually fund such a reserve.

“The industry is maturing and growing — it’ll continue to become more mainstream, and I think Texas staking out a leadership position will be very beneficial to Texans over time, similar to what the oil and gas industry has done over the last century,” said Lee Bratcher, president of the Texas Blockchain Council, a crypto lobbying group that championed the state legislative effort.

“I think we’re only scratching the surface,” Bratcher said.

The state made the roughly $5 million purchase through BlackRock’s iShares Bitcoin Trust ETF (IBIT), a fund managed by the major asset management firm that trades in U.S. dollars but generally reflects the price of bitcoin. As of early afternoon Monday, IBIT was trading around $48, reflecting a roughly 20% loss over the past month and a 13% decrease since the beginning of the year.

Those valuations broadly align with the recently highly volatile price of bitcoin: Early this year — amid a crypto frenzy inspired largely by the new, extremely crypto-friendly Trump administration — the world’s predominant cryptocurrency soared to above $100,000 for the first time in its history, and then in early October reached an all-time high above $126,000.

Since then, though, as fears have grown about a cooling economy and a potential AI bubble that could send the stock market plummeting, valuations of cryptocurrencies have also dipped. One bitcoin traded at around $85,000 on Monday, near the digital coin’s lowest price since April.

‘Placeholder investment’

The state of Texas made its purchase late last month at a price around $87,000, according to a social media post by Bratcher, who said he first learned of the state’s purchase through a recent Zoom call that included acting Texas Comptroller Kelly Hancock. The comptroller’s office did not respond to a question from The News asking about the specific price the state paid for its IBIT purchase.

The ETF purchase is “a placeholder investment,” said Kevin Lyons, a representative for the comptroller’s office, until the agency formally contracts with what it’s referring to as a cryptocurrency custodian. The agency is now reviewing responses from a request for information it issued and will later award an official contract, Lyons said.

While the new state law did not include a specific funding amount, Texas legislators have since allocated $10 million to the reserve. The amount represents a tiny fraction of the state’s $338 billion state budget, although the legislation’s supporters have argued it still amounts to an important measure of support for an emerging industry.

“I think with Texas leading in this way, it’s going to reap benefits for many decades to come across the state,” Bratcher said. “From a job creation perspective to a tax revenue perspective and everything in between.”

Earlier this year, addressing legislators ahead of a vote on SB 21, state Rep. Giovanni Capriglione, R-Southlake — one of the driving forces behind the crypto push — struck a similar note, calling the reserve bill “a forward-thinking measure” that was about “recognizing digital assets not as a trend but as a strategic opportunity” and “strengthening the state’s fiscal resilience.”

Yet even if Texas’ public crypto investment remains minuscule, many economists and fiscal watchdogs have criticized SB 21 along with other recent pro-crypto legislation on multiple fronts, arguing it amounts to a lobbyist-driven effort that’s likely to benefit the crypto industry much more than the state’s residents.

And while Texas has recently embraced bitcoin mining and other facets of the industry, with even Abbott pushing to make the state a global “crypto leader,” critics have pointed out that cryptocurrency itself has long been plagued by concerns about scams, corruption and energy use.

“It’s also backwards to our values in Texas,” John Griffin, a finance professor at the University of Texas at Austin, said earlier this year.

“Basically you have a conservative legislature saying, ‘We want less government,’ and yet here’s a case where you are wanting or encouraging government to speculate and possibly prop up an asset class.”

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