Arizona Becomes the First U.S. State to Pass a BTC Reserve Bill

Arizona has become the first U.S. state to pass a bill allowing for a portion of public funds to be invested in virtual currencies like Bitcoin, potentially placing the state at the forefront of integrating digital assets into its treasury.

The state’s House of Representatives on Monday passed two major pieces of legislation that will now go to Democratic Governor Katie Hobbs for approval. However, the bills' future remains uncertain as a budget standoff threatens to stall any legislation reaching Hobbs’ desk.

Arizona's Bitcoin Reserve Bill Passes Despite Close Vote

In a third House reading, lawmakers passed Senate Bill 1025—known as Arizona's Bitcoin reserve bill—by a close 31-25 vote. The bill would authorize the state treasurer to invest up to 10% of Arizona's funds into Bitcoin and potentially other digital assets.

"This bill is about options. It provides an option for the state treasurer to diversify a portion of the state's assets into cryptocurrencies, if and only if the treasurer deems it appropriate and in the best interest of the state," said Republican Representative Jeff Weninger, a sponsor of the bill.

Weninger added that the measure aligns with initiatives being considered in around 15 other states. He noted that the bill would likely serve as an "idle threat" as there is no immediate demand for such digital asset holdings.

A second measure, Senate Bill 1373, passed more comfortably with a 37-19 vote. This bill proposes establishing a reserve fund managed by the state treasurer, specifically funded by digital assets seized during criminal investigations.

The passage of both bills positions Arizona ahead of states like Texas and New Hampshire in efforts to integrate cryptocurrency holdings at the state level.

Governor Hobbs' Veto Threat Looms Over Bitcoin Bills

Despite the legislative victories, the fate of SB1025 and SB1373 remains uncertain. Governor Katie Hobbs has vowed to veto every bill reaching her desk until a bipartisan budget deal is finalized.

On April 17, Hobbs affirmed her stance, attributing a $122 million budget shortfall to the Division of Developmental Disabilities.

"I will continue to use my veto pen to prioritize the needs of the people of Arizona and ensure that our state's limited resources are used wisely," Hobbs stated in a news release.

Although Hobbs has not commented directly on the Bitcoin bills, her broader veto campaign has already blocked 15 bills in recent weeks, earning her the highest veto rate among U.S. governors in 2024.

According to Dennis Porter, CEO of the Satoshi Action Fund, no members were excused or absent during Monday's votes. Final tallies recorded 29-25 for SB1025 in the House and 31-25 in the Senate, with four lawmakers abstaining.

As previously reported by Coin Edition, backers of Arizona's digital asset proposals maintain that a Bitcoin reserve would provide the state with a hedge against inflation and a new avenue for asset diversification.

Conversely, opponents argue that Bitcoin's price volatility and the ongoing regulatory landscape would expose public funds to greater risk.