Arizona becomes first U.S. state to pass Strategic Bitcoin Reserve bill

Arizona has made history as the first U.S. state to pass legislation establishing a Strategic Bitcoin Reserve, following a voting session by the state legislature on Apr. 28.

Senate Bill 1025 was approved by the Arizona House by a vote of 31 to 25, according to the state legislature’s website. The bill, sponsored by Republican Senator Wendy Rogers, is a daring step toward incorporating cryptocurrency into state-level financial strategy. It permits the state treasury to invest up to 10% of public funds in Bitcoin (BTC).

By a vote of 37-19, SB1373, a companion measure, was also approved by the legislature. It suggests establishing a reserve fund run by the state treasurer with assets seized during criminal proceedings, with a broader focus on digital assets. Both bills position Arizona as a national frontrunner in digital asset adoption, ahead of similar efforts in states like Texas and New Hampshire.

A Bitcoin reserve, according to proponents, could diversify state assets, help protect against inflation, and get Arizona ready for a financial future driven by blockchain. They point to Bitcoin’s decentralization and fixed supply as its main advantages over fiat money.

While SB1025 stipulates that Bitcoin must be kept in a segregated Federal Reserve account, SB1373 allows the treasurer to lend assets from the fund, as long as risk is kept to a minimum.

However, both bills now face an uncertain future at the desk of Democratic Governor Katie Hobbs. On Apr. 17, Hobbs posted on X that she would veto every bill until the Republican-controlled legislature passes a “serious, bipartisan funding solution that protects healthcare for Arizonans with disabilities.”

She criticized a proposed budget as “unserious and a complete nonstarter,” referencing a $122 million funding shortfall in the state’s Division of Developmental Disabilities.

While Hobbs has yet to comment directly on the crypto bills, her veto threat casts doubt over their prospects. In the past few weeks, she has already rejected 15 bills and holds the highest veto rate of any U.S. governor in 2024. Arizona’s bold crypto move could inspire other states if it survives the governor’s desk.