Arizona’s groundbreaking push into state-managed crypto funds faces a critical juncture. A key bill proposing a digital asset reserve is nearing final legislative approval, potentially positioning the state as a pioneer in government blockchain adoption.
On April 17, State Bill 1373, also known as the Strategic Digital Asset Reserve Bill, successfully passed a preliminary full House review after clearing the Committee of the Whole. This legislation envisions creating a specialized fund primarily composed of digital assets seized during criminal investigations.
The proposal grants the state treasurer authority to manage this reserve. It includes provisions allowing the investment of up to 10% of the fund’s total value into various digital assets each fiscal year. Furthermore, the treasurer could loan out the fund’s holdings, provided it doesn’t elevate the fund’s financial risk.
This legislative progress places Arizona among the frontrunners in a growing trend where states like Texas and New Hampshire explore state-level digital asset strategies for potential revenue and modernization.
SB 1373 isn’t the only crypto-focused initiative advancing. It moved through earlier committee stages alongside SB 1025, a distinct proposal centered solely on Bitcoin. While SB 1373 covers digital assets broadly, SB 1025 focuses specifically on BTC.
This Bitcoin-centric bill would permit Arizona’s treasury and state retirement system to allocate up to 10% of their available funds directly into Bitcoin. It also details plans for storing the crypto token holdings in a segregated federal reserve account. SB 1025 passed the Committee of the Whole on April 1 and is also pending a final vote.
However, the future for both crypto initiatives hangs in the balance due to potential executive action. Governor Katie Hobbs has publicly stated her intent to veto all legislation until lawmakers address a significant funding shortfall for state disability services.
Governor Hobbs, a Democrat, has expressed dissatisfaction with the Republican-controlled legislature’s handling of the $122 million budget gap for the Division of Developmental Disabilities. In an April 17 social media [post], she labeled their funding proposal as “unserious.”
This political standoff presents a formidable obstacle. Governor Hobbs has already vetoed 15 bills just this week and maintains the highest rejection rate of any U.S. governor in 2024, having blocked over 20% of legislation presented, much of it originating from Republican lawmakers.
Arizona’s engagement with the crypto sphere extends beyond reserve funds. In February, lawmakers introduced House Bill 2387, aimed at mitigating Bitcoin ATM fraud through measures like daily transaction limits, mandatory operator licensing, and clear refund policies.