Arizona Bitcoin Reserve Bill | Potential Veto Near Approval

Arizona is on the cusp of becoming the first state to have a government-backed bitcoin reserve.

State Bill 1373, also known as the Strategic Digital Assets Reserve Bill, has cleared the Arizona House and is now one vote away from heading to Governor Katie Hobbs’ desk.

The governor, however, said she will veto all the bills until a bill to fund disability services is passed.

SB1373 has been moving through Arizona’s legislature for a while. On April 17 it passed the House Committee of the Whole, the last hurdle before the full House vote. If it clears that it will go to the governor.

The Arizona Bitcoin Reserve Bill creates a Digital Assets Strategic Reserve Fund managed by the Arizona state treasurer.

The fund will be made up of digital assets seized in criminal proceedings and funds allocated by the state legislature.

Under SB1373 the treasurer will be able to invest up to 10% of the fund’s value in digital assets like bitcoin, stablecoins, NFTs and other blockchain-based assets in any given fiscal year.

The treasurer can also loan out assets from the fund to generate more returns as long as it doesn’t increase financial risk.

The bill has strict guidelines on how these assets will be managed.

For example, digital holdings will need to be secured through qualified custody solutions or stored in state-registered exchange-traded products (ETPs).

“The state treasurer may not invest more than ten percent of the total amount of monies deposited in the fund in any given fiscal year,” the bill says.

SB1373 is moving alongside another bitcoin bill — SB1025, the Arizona Strategic Bitcoin Reserve Act. Unlike SB1373 which includes a range of digital assets, SB1025 is just for bitcoin.

If passed, SB1025 will allow Arizona’s treasury and state retirement systems to invest up to 10% of available funds in bitcoin.

It also includes a provision to store bitcoin in a segregated federal reserve account. The bill passed the House Committee of the Whole on April 1 and is up for its final vote.

With SB1373 and SB1025, Arizona is ahead of the pack. Texas, New Hampshire, Missouri and Utah have proposed similar bills but none have moved as far or as fast as Arizona’s.

Other states are still in the early stages of the legislative process, as Arizona is about to make history, one more vote away.

Despite the bill’s progress, it’s not a done deal yet because of Arizona Governor Katie Hobbs. The Democratic governor has vowed to veto all legislation until lawmakers pass a bill to fund disability services.