Arizona Passes Bills to Invest 10% of Public Funds in Bitcoin

Arizona's legislative body has taken a significant step towards integrating Bitcoin into its treasury by passing two key bills aimed at establishing a digital asset reserve. Senate Bill 1025, known as Arizona’s Bitcoin reserve bill, was approved by the House of Representatives with a narrow margin of 31-25. This legislation authorizes the state treasurer to invest up to 10% of Arizona’s public funds into Bitcoin and potentially other digital assets. Republican Representative Jeff Weninger noted that this initiative aligns with similar efforts being considered in approximately 15 other states, positioning Arizona as a leader in this area.

A second measure, Senate Bill 1373, was passed more decisively with a 37-19 vote. This bill proposes the creation of a reserve fund managed by the state treasurer, which would be funded by digital assets seized during criminal investigations. Both bills place Arizona ahead of other states, such as Texas and New Hampshire, in efforts to formalize cryptocurrency holdings at the state level.

However, the future of these bills remains uncertain due to Governor Katie Hobbs' ongoing veto campaign. Hobbs has pledged to veto every bill reaching her desk until a bipartisan budget deal is finalized, citing a $122 million budget shortfall tied to the Division of Developmental Disabilities. Her veto campaign has already blocked 15 bills in recent weeks, giving her the highest veto rate among U.S. governors in 2024. Although Hobbs has not directly commented on the Bitcoin bills, her broader stance poses a significant threat to their passage.

Supporters of Arizona’s digital asset proposals argue that a Bitcoin reserve could provide the state with a hedge against inflation and a new avenue for asset diversification. They believe that integrating Bitcoin into the state treasury could help diversify state assets and mitigate the risks associated with traditional financial instruments. However, opponents caution that Bitcoin’s price volatility and ongoing regulatory uncertainty could expose public funds to greater risk, potentially leading to financial instability.

The passage of these bills marks a significant milestone in Arizona’s efforts to embrace digital assets. If signed into law, they would make Arizona the first state to formally establish a Bitcoin reserve, allowing for up to 10% of public funds to be invested in virtual currencies. The outcome of Governor Hobbs' decision will be crucial in determining the future of digital asset integration in Arizona’s treasury.