BTC News: Arizona Shuts Down Bitcoin Reserve Bill

The last two months have been full of ups and downs for the Bitcoin reserve bills and regulations. While one state moves ahead with a bill promoting the use of crypto assets, other rejects it. Now, Arizona Governor Katie Hobbs has vetoed two major crypto bills after giving a green light to one last week.

Bitcoin Reserve Bill Blocked

On Monday, the Governor’s office shared that the two bills, SB 1373 and SB 1024, have been vetoed by Katie Hobbs. The first bill, SB 1373, would have allowed Arizona to hold cryptocurrencies like Bitcoin as part of its state reserve assets. The state could have reserved up to 10% of Arizona’s rainy-day funds in digital assets like BTC.

The Governor shared her letter to Senate President Warren Petersen, outlining the reasoning behind her veto. She said:“Current volatility in the cryptocurrency market does not make a prudent fit for general fund dollars. I have already signed legislation this session, which allows the state to utilize cryptocurrency without placing general fund dollars at risk, which is the responsible path to take.”

Hobbs was referring to Arizona House Bill 2749, which she signed on May 7. Under this legislation, Arizona can have digital assets like Bitcoin that are unclaimed as part of the state’s reserve.

However, if the ongoing SB 1373 bill cleared the Governor’s table, Arizona would have been the second US state to have a Bitcoin reserve after New Hampshire, which passed a similar bill just last week.

Community’s Reaction to Arizona Governor’s Vetoes

On May 3, Governor Hobbs also vetoed a bill, SB 1025, that allowed Arizona to invest retirement funds in crypto assets, which would have created a Bitcoin reserve. The crypto community had reacted sharply to that veto, with crypto investor Anthony Pompliano saying:

The Governor of Arizona just vetoed a bill that would have seen the state invest in Bitcoin. Imagine the ignorance of a politician to believe they can make investment decisions. If she can’t outperform Bitcoin, she must buy it.

Arizona state Sen. Wendy Rogers also had famously quipped:

Politicians don’t understand that Bitcoin doesn’t need Arizona. Arizona needs Bitcoin.

On May 12, Hobbs did sign one bill around crypto, regulating Bitcoin ATMs. This bill, House Bill 2387, introduces limits on cash deposits and withdrawals to combat money laundering and scams.

The crypto community was not happy with this move either, accusing Arizona of not embracing crypto as state money, but willing to add crypto regulations and hurdles to its wider adoption.

Crypto Integration Into State Finances Delays

The other major vetoed bill, SB 1024, would have enabled citizens to make civil payments, including taxes, using cryptocurrencies. This would have made Arizona the first US state to integrate crypto into both state treasury and payment systems. But in a clear signal that the state isn’t ready to take that leap, Hobbs shot down both.

This isn’t the first time Gov. Hobbs has blocked pro-crypto legislation. In 2023, she vetoed a bill that would have made Bitcoin legal tender in Arizona, arguing that such a move was clearly within the jurisdiction of the federal government, not individual states.

Arizona’s decision is part of a growing pattern of cautious state-level Bitcoin reserve bills. While states like New Hampshire, Wyoming, and Florida are taking a pro-crypto stance, others are hesitating, especially in the absence of federal direction. But more and more states are gradually opening up, evident last week as Bitcoin surged beyond $100K as three US states approved crypto BTC reserve laws in 24 hours.