Arizona edges closer to crypto treasury, but governor threatens veto over budget dispute

Arizona is one step away from becoming the first US state to hold Bitcoin and other digital assets in its Treasury, but a political standoff with Governor Katie Hobbs threatens to derail the effort before it reaches her desk.

Senate Bill 1373, the Digital Assets Strategic Reserve Fund, was approved by the House Committee of the Whole on April 17 and now awaits a final floor vote. The bill proposes creating a fund managed by the state treasurer, comprising digital assets seized by the state and funds appropriated by the legislature.

The state Treasurer would be authorized to invest up to 10% of the fund annually in digital assets, including Bitcoin, and to lend these assets to generate additional returns, provided such actions do not increase financial risk.​

A companion measure, Senate Bill 1025, the Arizona Strategic Bitcoin Reserve Act, also passed the House Committee of the Whole on April 1 and is awaiting a final vote. This bill would permit the state Treasury and retirement system to invest up to 10% of available funds specifically in Bitcoin

Hobbs vows veto over budget priorities

If enacted, these bills would position Arizona at the forefront of integrating digital assets into state financial strategies.

However, Governor Hobbs has pledged to veto all legislation not already on her desk until lawmakers address a $122 million funding shortfall for the state’s Division of Developmental Disabilities.

Hobbs said in a social media post on April 17:

“Business as usual cannot continue. Any bill not already on my desk will be vetoed.”

Both bills, supported largely by Republican legislators, would be managed through the state treasurer’s office. While the reserve fund would rely on forfeited assets or budgeted funds, the investment bill opens the door to direct allocation of state capital into large-cap cryptocurrencies, primarily Bitcoin.

The moves come amid broader GOP support for crypto initiatives, especially since President Donald Trump’s return to office. Still, Hobbs’ resistance mirrors pushback seen in other Democrat-led states, where concerns over fiscal risk and volatility have stalled similar legislation.

Other states falter, but momentum builds

Arizona’s momentum contrasts with failed attempts elsewhere. Oklahoma’s Strategic Bitcoin Reserve Act collapsed this week during a final Senate review, despite passing multiple House committees. In previous months, crypto reserve bills have also failed in Montana, North Dakota, and Wyoming.

Utah, once a frontrunner, removed language allowing the state treasurer to hold Bitcoin directly, opting instead for legal protections around crypto custody and mining.

Meanwhile, Texas and New Hampshire still have pending legislation involving limited digital asset investments. According to Bitcoin Laws, over three dozen strategic Bitcoin reserve proposals are active across 20 states.

Despite setbacks in several legislatures, proponents argue that Bitcoin could offer states a hedge against inflation and a modern alternative to traditional cash reserves. Critics remain skeptical, warning that speculative assets like crypto pose unacceptable risks to taxpayer dollars.

Arizona’s final vote on SB1307 is expected within days. However, the Governor’s next move may determine whether the state charts a new path or joins the growing list of stalled efforts.

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