Arizona Becomes the First State in the US to Pass Legislation Creating a Strategic Bitcoin Reserve

Arizona became the first state in the nation to pass legislation creating a Strategic Bitcoin Reserve after both chambers of the legislature approved the measure

Arizona has become the first state in the U.S. to establish a Strategic Bitcoin Reserve after both chambers of the legislature approved the measure in votes that broke largely along party lines on Thursday.

Both the House and Senate approved the bill, which now heads to Governor Katie Hobbs for her signature.

The legislation, sponsored by Republican Senator Wendy Rogers, authorizes the state treasury to invest a portion of public funds in Bitcoin (BTC).

The bill passed the House 29-25 and the Senate 31-25, with four lawmakers not voting in the Senate. No members were excused or absent during either vote, Satoshi Action Fund CEO Dennis Porter shared.

The bill's passage comes after years of discussion and proposals in several state legislatures concerning the role of digital assets in public finance.

While several states have debated cryptocurrency-related measures, Arizona's is the first to authorize a Bitcoin reserve explicitly, following a broader national conversation about the implications of digital assets for state-level fiscal strategies.

Backers of the proposal, such as members of the Bitcoin advocacy group Block Action VIP, had argued that establishing a Bitcoin reserve could help Arizona diversify its assets, hedge against inflation, and position the state at the forefront of digital financial innovation.

They also highlighted Bitcoin's fixed supply and decentralized nature as advantages over traditional fiat reserves, especially amid concerns over national debt and currency devaluation.

However, critics, including members of the Center for Economic and Policy Research, had warned that Bitcoin's extreme price volatility could expose state funds to significant financial risk.

Some also raised concerns over the lack of federal regulation surrounding crypto and questioned whether public monies should be used to invest in speculative assets.

The bill's language categorizes Bitcoin investments as digital currency holdings within the state's investment portfolio, subject to the oversight and limits defined by Arizona's existing public fund management regulations.

At present, these regulations empower the state treasurer to make investment decisions in accordance with diversified portfolio management practices.