Arizona’s bold plan to be the first U.S. state to hold a Bitcoin reserve has run into a major snag. Governor Katie Hobbs vetoed Senate Bill 1025 on May 2, 2025, citing doubts over the volatility of Bitcoin and whether it was the right fit for state investments. The bill that passed the Arizona House on a 31-25 vote sought to permit the state treasurer to invest as much as 10% of Arizona’s money into Bitcoin and other digital currencies.
Governor’s Justification and Political Environment
Democrat Governor Hobbs voiced her concerns regarding the bill, calling Bitcoin an “untested investment” and claiming that it is not appropriate for Arizona’s healthy State Retirement System. In a letter to Senate President Warren Petersen, she highlighted the risks involved with virtual currencies and their possible effect on the state’s fiscal stability.
The veto is consistent with Governor Hobbs’ previous vow to veto non-bipartisan agreement disability funding-related legislation. The political impasse has caused the veto of several bills, among them those involving cryptocurrency, until a solution regarding the $122 million state Division of Developmental Disabilities’ funding gap is reached.
Implications for Arizona and Broader Crypto Legislation
The vetoing of SB 1025 has far-reaching implications for the role of Arizona in the changing environment of cryptocurrency adoption. Supporters of the bill had argued that Bitcoin investment could be an inflation hedge and diversify the state’s asset base. The bill’s defeat can discourage similar efforts in other states, where legislatures are weighing similar options.
Although there was a setback, Arizona remains proactive in exploring cryptocurrency-related bills. Senate Bill 1373, which would create a reserve fund administered by the state treasurer and funded by digital assets recovered through criminal investigations, has cleared the House Committee of the Whole and is waiting for a final floor vote.
At the national level, discussion of state-level cryptocurrency reserves is building. Though Arizona’s progress has been stymied, other states such as North Carolina are moving forward with bills to invest in digital assets. On April 30, 2025, the legislature in North Carolina passed legislation permitting the state to invest up to 5% of some funds in cryptocurrencies, marking increasing interest in the inclusion of digital assets in public finance.
In sum, Arizona’s plan to create a Bitcoin reserve has been suspended because of political disagreements and fear about the volatility of cryptocurrencies. The experience of the state reveals the intricacies involved in mainstreaming cryptocurrencies in public investment plans and indicates the requirement for a thorough evaluation of the risks and gains involved.
