Texas is pulling its $10 million Bitcoin reserve out of BlackRock's spot ETF and moving it into direct custody. The state's comptroller office confirmed the plan this week, saying the shift gives Texas more direct control and transparency over the asset. It's a notable pivot for a government entity that had previously chosen the ETF route for ease of access and regulatory familiarity.
A shift in custody
The reserve — roughly 250 BTC at current prices — has been held in BlackRock's iShares Bitcoin Trust (IBIT) since late 2024. But state officials now argue that holding the actual coins, rather than shares of a fund, aligns better with Texas's long-term strategy. Direct custody means the state can manage its own private keys and avoid the counterparty risk baked into any ETF structure.
Why the change of heart
The comptroller's office cited two main reasons: control and transparency. With an ETF, BlackRock handles the underlying bitcoin, and the state only owns shares. That indirect relationship bothered some lawmakers who wanted proof the state actually controlled the asset. Moving to a self-custody setup — likely through a qualified custodian or a state-run wallet — lets Texas verify its holdings on-chain and respond faster if it ever needs to liquidate.
What this means for other states
Texas was one of the first U.S. states to put public funds into a bitcoin ETF. If the transition goes smoothly, it could encourage other state treasuries to skip the ETF middleman entirely. But the move also comes with operational headaches: the state now needs to secure its own keys, manage wallet software, and handle any audits or reporting without BlackRock's back-office support. The comptroller's office hasn't announced a timeline for the transfer, but the decision is already drawing attention from other state finance departments watching Texas's experiment.
