Arizona Moves to Become First U.S. State with Bitcoin Reserve

Arizona is on the verge of becoming the first U.S. state to establish a Bitcoin reserve, following the passage of two significant bills that are now awaiting the governor's signature. On April 22, the Arizona House advanced Senate Bill 1025, known as the “Arizona Strategic Bitcoin Reserve Act,” with a narrow 31-25-4 vote. This legislation paves the way for the state to treat Bitcoin as a strategic investment asset. Concurrently, Senate Bill 1373, which proposes the creation of a “Digital Assets Strategic Reserve Fund” to support broader digital asset management, was passed with a 37-19-4 vote on the same day. Both bills had previously cleared the Arizona Senate on February 27 and are now headed to Governor Katie Hobbs’ desk for final approval.

State Representative Jeff Weninger commented on SB1025, stating that the bill allows the treasurer to invest up to 10% into Bitcoin and other digital assets. He noted that while this may start as an optional measure, it could become more prevalent as the state's investment strategies evolve. However, the final step in this process hinges on Governor Katie Hobbs’ approval. Governor Hobbs had previously stated that she would veto any bill unless legislators presented a bipartisan funding plan to safeguard healthcare for Arizonians with disabilities. This stance put many pending proposals in uncertainty. However, with new legislation clearing both chambers on April 24, the political climate may be shifting, potentially increasing the likelihood that SB1025 and SB1373 receive her signature and become law.

If signed into law, Arizona would officially become the first U.S. state to establish a Bitcoin reserve, surpassing other states that have recently explored similar initiatives. Notably, New Hampshire is also making strides with its House Bill 302, which advanced to a full Senate vote after clearing a second Senate committee with a 4-1 vote. Industry experts predict that if around 20 state-level Bitcoin reserve bills were to pass nationwide, they could collectively drive over $23 billion in new demand for Bitcoin, potentially reshaping the future of state treasury strategies. Mathew Sigel, VanEck’s Head of Research, stated that if enacted, these bills could drive $23 billion in buying, or 247k BTC, independent of any pension fund allocations.

Despite growing interest in state-level Bitcoin reserves, market sentiment around federal action remains skeptical. The probability of Trump establishing a Bitcoin reserve within his first 100 days has dropped sharply to just 2%. This cautious outlook comes even as Bitcoin continues its upward momentum. However, the focus remains on the potential impact of state-level initiatives on the broader cryptocurrency landscape. If Arizona's bills are signed into law, it could set a precedent for other states to follow, potentially leading to a significant shift in how state treasuries manage their assets.