Arizona Governor Vetoes Crypto Bills Citing Market Instability

Arizona Governor Katie Hobbs vetoed two bills related to cryptocurrency, SB 1024 and SB 1373, while signing one bill, HB 2387, that targets ATM fraud. SB 1024 would have allowed Arizona agencies to accept crypto payments for fines, taxes, and fees through agreements with vetted service providers. SB 1373 aimed to establish a Digital Assets Strategic Reserve Fund to hold crypto obtained through seizures or legislative appropriations.

Governor Hobbs cited market instability as the reason for vetoing SB 1373, stating that the current volatility in cryptocurrency markets does not make a prudent fit for general fund dollars. This veto followed the rejection of Senate Bill 1025, which would have permitted up to 10% of state treasury and retirement funds to be allocated to Bitcoin or other digital assets.

With these vetoes, Arizona joins at least nine other states that have formally blocked similar Bitcoin reserve legislation. The vetoed bills aimed to expand the state’s use of digital assets, but Governor Hobbs expressed concerns about the risks associated with cryptocurrency volatility.

Despite vetoing the core crypto-forward bills, Governor Hobbs signed HB 2387, which imposes strict fraud prevention measures, transaction caps, and compliance rules on crypto ATM operators. The new law mandates that kiosk operators display multilingual fraud warnings, issue receipts with transaction hashes and wallet addresses, and use blockchain analytics to avoid transferring funds to wallets flagged for fraudulent activity.

Additionally, the law caps total transactions for new customers at $2,000 per day and $10,500 for existing customers at the crypto ATMs. Operators must offer 24/7 live customer support and document every transaction in compliance with anti-money laundering protocols.

Governor Hobbs has not entirely shut the door on digital asset regulation. On Wednesday, she signed House Bill 2749 into law, which updates Arizona’s unclaimed property laws to include digital assets. This bill allows the state to retain unclaimed crypto in its original form, rather than liquidating it into fiat.

In summary, Governor Hobbs' actions reflect a cautious approach to cryptocurrency regulation, prioritizing fraud prevention and compliance while acknowledging the risks associated with market volatility. The vetoed bills aimed to expand the state’s use of digital assets, but the signed legislation focuses on regulating crypto ATMs and updating unclaimed property laws to include digital assets.

This approach highlights the need for a balanced regulatory framework that addresses the potential benefits and risks of cryptocurrency. By signing HB 2387 and HB 2749, Governor Hobbs demonstrates a willingness to engage with digital assets while ensuring consumer protection and compliance with anti-money laundering protocols.