Arizona Moves to Allocate 10% of Funds to Bitcoin

Arizona is on the brink of making history as it nears the approval of legislation that would establish a Bitcoin reserve, positioning the state at the forefront of cryptocurrency integration into public finance. On April 28, the Arizona House of Representatives passed two significant bills: the Arizona Strategic Bitcoin Reserve Act (Senate Bill 1025) and the Digital Assets Strategic Reserve Fund (Senate Bill 1373).

Senate Bill 1025, which passed with a vote of 31 to 25, allows the state treasurer and the retirement system to allocate up to 10 percent of their funds into Bitcoin. This bill also provides for the possibility of depositing Arizona's Bitcoin in a segregated, secure account within a federal Bitcoin reserve, should the U.S. Secretary of the Treasury establish one. Simultaneously, Senate Bill 1373, approved with 37 votes in favor and 19 against, establishes a framework for managing various digital assets, including Bitcoin, stablecoins, and NFTs. The fund would be sustained by legislative appropriations and seized crypto assets, with provisions ensuring that the funds do not lapse at the end of the fiscal year.

Both bills had previously cleared the Arizona Senate on February 27 and were passed by the House without amendments. They are now awaiting Governor Katie Hobbs' final approval. Governor Hobbs' stance on the legislation remains uncertain, as she has expressed that she will not approve any new bills until a bipartisan funding solution is reached for healthcare services for Arizonans with disabilities. This position stems from ongoing budget negotiations, with healthcare funding being a critical issue for her administration.

The passage of these bills marks a significant step forward in Arizona's efforts to integrate cryptocurrency into its fiscal strategy. If approved, Arizona would become the first U.S. state to fully incorporate cryptocurrency into its public finance, potentially serving as a model for other states exploring similar measures. The legislation also aligns with a growing national interest in cryptocurrency as a state issue, following President Donald Trump's executive order in January for the creation of a Strategic Bitcoin Reserve and a Digital Asset Stockpile.

The broader implications of Arizona's legislation extend beyond state borders. The bills could pave the way for more crypto-friendly policies, as Arizona has already taken steps to protect Bitcoin miners and blockchain node operators. The state has also proposed introducing Bitcoin ETFs into its retirement plan portfolio, further solidifying its commitment to cryptocurrency adoption. The heated debates in the House, featuring Republican co-sponsors Sen. Wendy Rogers and Rep. Jeff Weninger, highlighted the potential for Bitcoin to diversify state assets and spur financial innovation.