Texas creates 1st state bitcoin reserve and invests US$ 5 million

Source: Exame Original Title: Texas creates 1st state bitcoin reserve and invests $5 million Original Link: On Tuesday, the Texas made a $5 million investment in bitcoin. With this, the government created the first state reserve of the cryptocurrency in the United States, months after President Donald Trump created a state equivalent in January this year. The expectation is that new purchases will be made in the future.

The information was shared by Lee Bratcher, president of the “Texas Blockchain Council” (Texas Blockchain Council, in free translation). Initially, he announced that the state had invested $10 million in cryptocurrency, but corrected the information and reduced the amount to $5 million.

According to Bratcher, the investment was made through the purchase of shares in a prominent financial institution's bitcoin ETF. In other words, the Texas reserve is not exactly made up of units of the cryptocurrency acquired by the state government, but rather by exposure to the asset through the ETF, which uses the invested amount to buy the digital currency. Bratcher stated that eventually, the state will make direct purchases of the cryptocurrency.

Bratcher also highlighted that the investment is expected to double in the near future, as the Texas state budget has allocated a commitment of $10 million for this type of operation. It is still unclear when the next purchases for the expansion of the reserve will occur.

Texas passed a bill in June of this year that enabled the creation of a state bitcoin reserve. In the United States, the first state in the country to approve a bill of this kind was New Hampshire, but there has not yet been an effective creation of the reserve by the local government. The state of Arizona also approved the creation of a reserve.

Texas law allows investment in other cryptocurrencies for reserve purposes in the future, but requires that they have an average market value over the past 24 months equal to or greater than $500 billion. Currently, only bitcoin meets this requirement.

The strategy adopted by Texas diverged from the reserves created by President Trump in January of this year, which established an exclusive bitcoin reserve and a “national stock” made up of other cryptocurrencies. Furthermore, no asset that is part of the reserves was acquired, but rather seized in police operations.

The U.S. government does not rule out the possibility of purchasing new units of bitcoin in the future, but Trump has determined that any acquisition must be budget-neutral, which has made new federal purchases difficult. Meanwhile, reserves continue to grow at the state level.