Arizona's Crypto Reserve Bill Advances, Governor's Veto Threat Looms

Arizona’s push to integrate digital assets into its state financial infrastructure is nearing a critical milestone as the crypto reserve bill moves ahead. The state’s Strategic Digital Assets Reserve Bill (SB 1373) passed the House Committee of the Whole on April 17 and now awaits one final vote before heading to Governor Katie Hobbs for approval. The bill proposes the creation of a Digital Assets Strategic Reserve Fund, which would consist of digital assets seized during criminal proceedings. The fund would be managed by Arizona’s state treasurer, who would be authorized to invest up to 10% of its total balance in digital assets each fiscal year. Additionally, the treasurer could lend out fund assets to generate returns, provided this does not elevate financial risk.

Despite clearing the House committee stage, the bill’s path forward remains uncertain. Governor Hobbs has vowed to veto all legislation until lawmakers address funding for disability services. She has already rejected 15 bills this week and has previously exercised veto power on several House-approved proposals. SB 1373 is advancing in parallel with another digital asset-focused proposal, the Arizona Strategic Bitcoin Reserve Act (SB 1025). This bill would allow Arizona’s treasury and state retirement fund to invest up to 10% of available assets specifically in Bitcoin. It passed the House Committee of the Whole on April 1 and is also awaiting a final vote.

Arizona now finds itself at the forefront of the growing state-level crypto reserve movement. While Utah passed Bitcoin-related legislation in early March, it removed the Bitcoin reserve provision during final approval. Texas and New Hampshire, however, have seen similar bills advance through their legislatures, with the Texas Senate approving its Bitcoin reserve bill on March 6. Just recently, Kentucky Governor Andy Beshear officially signed House Bill 701, known as the “Bitcoin Rights” bill, into law—making the state one of the latest to enact legislation protecting digital asset users and operations. Missouri is also in the mix, with its Special Committee on Intergovernmental Affairs reviewing its own Bitcoin reserve proposal.

This development in Arizona underscores a broader trend of states exploring the integration of digital assets into their financial systems. The passage of SB 1373 and SB 1025 through their respective committees indicates a growing acceptance of cryptocurrencies as a viable asset class for state investments. The potential for these bills to become law could set a precedent for other states considering similar measures, further solidifying the role of digital assets in public finance. However, the uncertainty surrounding Governor Hobbs’ veto threat adds a layer of complexity to the situation, as the fate of these bills hinges on the resolution of funding disputes for disability services. The outcome of this legislative process will be closely watched by both crypto enthusiasts and financial analysts, as it could signal a significant shift in how states manage and invest their financial reserves.