Arizona Breaks New Ground by Approving Legislation to Create a Crypto Reserve

Arizona is a step closer to becoming the first U.S. state to add digital assets to its treasury reserves, with the state House of Representatives approving the legislation Monday in a 31-25 vote.

Most Democratic lawmakers voted against the bill, while most Republicans voted in favor. It now goes to Governor Katie Hobbs, who may not be keen on the legislation, which is a priority for the state GOP.

It's still unclear whether the governor will look favorably on the legislation that was rejected by most Democratic lawmakers. She has vetoed a long list of bills in this session, and if she vetoes this, too, the matter is closed for the year.

If it were approved, Arizona's inclusion of digital assets in its public-funds investments could even outpace the U.S. Treasury Department’s effort to get it done, which still awaits a full accounting of the U.S. holdings before federal officials can move to build the reserve that President Donald Trump has called for.

With the House passing the crypto reserve effort in a 31-25 vote — three Democrats voted in favor — the state surged past others considering similar measures, including New Hampshire, where a bill has passed its House.

But House Speaker Robert Varano, a Democrat, told members that the Senate version of the bill, which is House Bill 1608, would add a new class of preferred stock to the state’s treasury investments. It also cancels out a new tax credit for advanced manufacturing jobs. Both of those bills, however, would still allow the state to invest in digital assets.

The House vote came after a lengthy debate that saw both sides of the aisle present their arguments.

Supporters of the bill, including House Speaker Ben Toma, R-Peoria, argued that it would help the state to diversify its investment portfolio and generate higher returns. They also said that the bill would put the state at the forefront of the rapidly growing cryptocurrency industry.

“We need to be making sure that we’re getting the best possible return on our investments so that we can continue to fund essential state programs and services,” Toma said. “This bill is a common-sense measure that will benefit all Arizonans.”

But opponents of the bill, including House Minority Leader Jennifer Johns, D-Phoenix, warned that the bill is risky and could lead to significant losses for the state. They also said that the bill is unnecessary, as the state already has broad authority to invest in new asset classes.

“This bill is a solution in search of a problem,” Johns said. “There is no evidence that the state needs to invest in digital assets in order to achieve its fiscal goals. In fact, I believe that doing so would be a distraction from the real issues facing our state.”

The governor has been in a budget dispute with Republican lawmakers.

“Any bill not already on my desk will be vetoed until we have a serious, bipartisan funding solution that protects health care for Arizonans with disabilities,” the governor had said in an April 17 posting on social media site X.

That matter may have been resolved with her signature on a disabilities-funding bill last week.