Arizona Governor Vetoes Bill for State-Managed Crypto Reserve Fund

Arizona Governor Katie Hobbs has vetoed a bill that sought to establish a state-managed reserve fund for holding seized cryptocurrencies. House Bill 2324, which proposed the creation of a “Bitcoin and Digital Assets Reserve Fund,” was passed by the state House in a 34-22 vote on June 24 after being revived by the Senate. The bill outlined a specific allocation for seized crypto: the first $300,000 would go to the attorney general’s office, with any remaining funds split between the AG’s office, the state’s general fund, and the proposed reserve. However, Hobbs rejected the bill, arguing that it would discourage local law enforcement from cooperating with state authorities by diverting seized assets away from local jurisdictions.

This veto is not an isolated incident. Hobbs has a history of opposing digital asset legislation. In May, she vetoed Senate Bill 1025, which would have created an Arizona Strategic Bitcoin Reserve allowing up to 10% of state funds to be invested in Bitcoin. She described cryptocurrencies as “untested investments.” Additionally, she vetoed Senate Bill 1373, which aimed to form a Strategic Digital Assets Reserve using seized crypto assets. Despite these rejections, one crypto-related measure has made it into law. House Bill 2749, enacted in May, modifies Arizona’s statutes to incorporate crypto assets into the state’s financial systems and unclaimed property laws, while also establishing a separate Bitcoin and Digital Assets Reserve Fund managed by the state treasurer.

Hobbs' actions reflect a broader trend among US states exploring the integration of cryptocurrencies into public finance. In June, Texas Governor Greg Abbott signed a bill to create the Texas Strategic Bitcoin Reserve, and in May, New Hampshire passed legislation allowing the state to invest in both cryptocurrencies and precious metals. These initiatives highlight the growing interest in digital assets as a potential component of state financial strategies.

In New York, Attorney General Letitia James has criticized two federal stablecoin bills, arguing that they lack sufficient investor protections and may enable fraud. She called for stricter regulation of stablecoin issuers, FDIC protection, and digital identity requirements. James warned that the bills do not adequately address the dangers of anonymous transactions, which can facilitate fraud and criminal activity. She recommended that stablecoin issuers be regulated in the same manner as banks, given their similar functions, and called for mandatory Federal Deposit Insurance Corporation protection for stablecoin deposits. She also pushed for digital identity requirements for all transactions to eliminate anonymity that could be exploited by bad actors. Additionally, she raised concerns that stablecoins could unfairly disadvantage local community banks already facing economic pressures.

In Virginia, crypto-friendly political action committees are making waves, especially after the Protect Progress PAC spent over $1 million to help elect Democrat James Walkinshaw in a special election. The PAC is part of a larger pro-crypto lobbying movement that plans to influence upcoming elections and legislation nationwide. This support is part of a plan by Fairshake to influence elections by backing candidates who are favorable to crypto innovation and regulation.