Texas Transitions Bitcoin Reserve from IBIT to Direct BTC Custody

TLDR

• Texas intends to transition its Bitcoin reserve from IBIT to direct BTC custody
• The state is searching for a cryptocurrency custodian to facilitate this transition
• After utilizing IBIT as a temporary reserve vehicle, Texas is aiming for direct BTC custody
• Texas has launched a search for a provider to handle Bitcoin custody, liquidity, and reporting
• The shift in the Texas Bitcoin reserve transitions from ETF exposure to direct control of BTC

(SeaPRwire) –   Texas is getting ready to transition its Strategic Bitcoin Reserve from ETF-based exposure to directly owned Bitcoin. A search has been initiated by the state for a custody and liquidity provider, turning its Bitcoin reserve strategy into an active procurement phase.

Texas Launches Search for Bitcoin Custody Partner

On May 7, the Texas Comptroller of Public Accounts issued a request for proposals. This document seeks qualified firms to handle custody and liquidity services, as well as reporting systems for the Strategic Bitcoin Reserve.

Currently, Texas maintains roughly $10 million in Bitcoin exposure via BlackRock’s iShares Bitcoin Trust. While the state set up its direct custody infrastructure, the ETF functioned as a temporary vehicle. The updated strategy, however, steers the reserve toward direct ownership of Bitcoin.

The chosen vendor will be responsible for acquiring, securing, managing, and reporting on the reserve’s digital assets. This mandate extends to other digital assets beyond Bitcoin, provided they meet state regulations. Additionally, all assets must be held under the name of the State of Texas.

Transitioning the Reserve From IBIT to Direct BTC

The procurement document outlines a precise transition goal for the reserve. The selected firm is required to facilitate the conversion of IBIT exposure into directly custodied Bitcoin within 60 days of executing the contract.

Opting for direct custody alters how Texas oversees its Bitcoin reserve. While IBIT offers price exposure via an exchange-traded fund, direct custody secures the Bitcoin within a third-party custody framework arranged by the state.

Furthermore, the RFP mandates institutional-grade operational and storage controls. These requirements encompass key management, secure custody solutions, transaction support, and tailored reporting. The provider is also expected to offer liquidity services to facilitate future buying and selling.

Advisory Committee to Oversee Reserve Controls

Acting Comptroller Kelly Hancock has appointed members to the Strategic Bitcoin Reserve Advisory Committee. This panel will provide counsel on custody, risk management, valuation, and reporting, alongside broader advice on managing digital assets.

The committee features Laurie Dotter, Jamie McAvity, Carla Reyes, and Gary Vecchiarelli. With professional backgrounds spanning investment management, Bitcoin mining, digital asset law, finance, and governance, the group offers diverse expertise across the cryptocurrency sector.

Texas also intends to launch a public website for the reserve to display holdings, asset valuations, and educational resources. Interested vendors must submit their proposals for the custody and liquidity contract by June 15.

This initiative builds on previous legislation that established the state-level Bitcoin reserve. Proponents have championed Bitcoin as a strategic hedge against inflation and economic instability. Texas has now progressed from establishing policy to executing its reserve strategy.