Arizona Governor Vetoes Bitcoin Reserve Bill Citing Volatility

Arizona Governor Katie Hobbs has vetoed a bill that would have allowed the state to hold Bitcoin as part of its official reserves, effectively ending efforts to make Arizona the first US state to adopt such a policy. The Digital Assets Strategic Reserve bill, which would have permitted Arizona to invest seized funds into Bitcoin and create a reserve managed by state officials, was formally struck down on Friday.

Governor Hobbs cited concerns over the volatility and lack of regulatory clarity surrounding digital assets as the primary reasons for her veto. In a statement, she emphasized that the Arizona State Retirement System is one of the strongest in the nation because it makes sound and informed investments. She added that Arizonans’ retirement funds are not the place for the state to try untested investments like virtual currency.

The bill had passed a final vote in the state House on April 28, with 31 members voting in favor and 25 opposing. Governor Hobbs had previously stated she would veto any legislation not tied to a bipartisan agreement on disability funding. This veto comes amid a broader national conversation about the integration of digital assets into traditional financial systems.

A companion bill, SB1373, which would authorize the state treasurer to allocate up to 10% of Arizona’s rainy-day fund into digital assets like Bitcoin, has not yet reached a final vote. Arizona joins several other states where similar efforts have failed. In recent months, similar proposals in Oklahoma, Montana, South Dakota, and Wyoming have stalled or been withdrawn.

In contrast, North Carolina’s House passed the Digital Assets Investment Act on April 30, allowing the state treasurer to invest up to 5% of certain funds in approved cryptocurrencies. The bill has now been moved to the state Senate for consideration. The state-level efforts to create Bitcoin reserves come amid a push from US President Donald Trump and Republican lawmakers to do the same in the federal government. Trump signed an executive order in March with a proposal for a “Strategic Bitcoin Reserve” and a “Digital Asset Stockpile.”

Governor Hobbs' decision underscores the ongoing debate surrounding the role of digital assets in state finances. While proponents argue that holding Bitcoin could provide diversification and potential long-term gains, critics point to the high volatility and regulatory uncertainties associated with cryptocurrencies. The veto highlights the cautious approach taken by some policymakers in the face of these challenges, prioritizing stability and regulatory compliance over innovation.

The veto also reflects the broader national conversation about the integration of digital assets into traditional financial systems. As more states and institutions explore the potential benefits and risks of cryptocurrencies, the outcome in Arizona serves as a case study in the complexities involved. The decision by Governor Hobbs to veto the bill suggests that while there is interest in digital assets, there is also a need for more clarity and stability in the regulatory environment before widespread adoption can occur.