Arizona Blocks Bitcoin in State Reserves: A Setback for Digital Asset Adoption

Arizona Governor Katie Hobbs has vetoed a proposed bill that would have authorized the state to include Bitcoin in its official reserves, thus halting efforts to make Arizona the first U.S. state to adopt such a policy. The Digital Assets Strategic Reserve bill would have allowed Arizona to invest confiscated funds into Bitcoin and establish a reserve managed by state officials. This bill was officially rejected on Friday, according to the Arizona State Legislature’s website. In her statement, Hobbs explained her decision, emphasizing that the Arizona State Retirement System is a strong fund that makes prudent investments, and that retirement funds for Arizonans should not be used for untested assets like virtual currencies.

The bill had previously passed the Arizona House with 31 votes in favor and 25 against. Hobbs had indicated she would veto any legislation lacking bipartisan support on disability funding. Another related bill, SB1373, which would have authorized the state treasurer to allocate up to 10% of the state's rainy-day fund into digital assets like Bitcoin, has not yet received a final vote. Similar efforts to create Bitcoin reserves in other states such as Oklahoma, Montana, South Dakota, and Wyoming have been stalled or withdrawn. Conversely, North Carolina’s House approved a bill allowing up to 5% of certain funds to be invested in cryptocurrencies, now moving to the Senate. These state-level initiatives are part of a broader movement, inspired by federal discussions led by figures like Donald Trump and Republican lawmakers, to incorporate Bitcoin into government reserves.