If approved by the governor, Arizona could be established as the first state to solidify the regulation of crypto and digital assets at the frontier.
Two related bills have been passed by Arizona lawmakers that could position the state as a leader in state-level government cryptocurrency investing, provided they are signed into law by Governor Katie Hobbs.
Senate Bill 1025 was passed by the Arizona House on its third reading. Formally known as the “Arizona Strategic Bitcoin Reserve Act,” it was approved 31-25-4 by the House on Monday.
On the same day, S.B. 1373, a companion bill establishing a “Digital Assets Strategic Reserve Fund,” was passed by the House with a 37-19-4 vote.
Both bills were passed by the Arizona Senate earlier on February 27. After being approved by both chambers without amendments, the bills are awaiting formal transmittal to Governor Hobbs’ desk.
Arizona’s approaches to its proposed state crypto holdings are established by both bills. SB1025 focuses solely on Bitcoin as an investment asset, while SB1373 provides the infrastructure for managing various digital assets.
A separate proposal to include Bitcoin ETFs in the state’s retirement plan portfolio for government workers was introduced in March. Earlier this month, a bill to protect Bitcoin miners and blockchain node operators was also advanced by Arizona.
SB1025 defines how public monies, sourced from the state treasury and pensions, are managed by the state.
The bill also mandates that if a Strategic Bitcoin Reserve is established by the U.S. Secretary of the Treasury to store the government’s Bitcoin, Arizona’s public fund’s virtual currency holdings “may be stored” in a “secure, segregated account within the Strategic Bitcoin Reserve.”
Arizona law would be amended by SB1025 to allow up to 10% of public funds to be invested in virtual currencies, specifically Bitcoin, by the state treasurer and retirement systems.
Meanwhile, a fund is established by SB1373 to hold “monies appropriated by the legislature and digital assets seized by this state,” including those obtained through criminal proceedings.
Under SB 1373, funds allocated from a legislative appropriation are not required to automatically expire or “lapse” at the end of the fiscal year, as is typically mandated by Arizona law.
Digital assets, such as Bitcoin, stablecoins, and NFTs, may be held by the fund, with management handled through approved custody solutions by the State Treasurer.
If the two bills are approved, Arizona could become the first state to have crypto fully integrated into its finances, following similar proposals made by other states.
The governor’s approval is still needed for the bills, with the approval process being at risk due to previous budget negotiations and partisan tensions.
It was warned by Governor Hobbs on X earlier this month that “any bill not already on my desk will be vetoed,” with the reason given being that “extreme Republican legislators” are holding funding for constituents with disabilities “hostage to their political theater.”
Although a budget dispute appeared to have been resolved last Friday, no official statement has been made by Hobbs concerning SB1025 and SB1373.
A response to Decrypt’s request for comments was not immediately provided by Arizona’s press office.
