In a notable development that reflects a hardline stance towards digital assets, Arizona Governor Katie Hobbs vetoed three key bills aimed at integrating cryptocurrencies into the state's financial system, while approving new legislation that imposes strict restrictions on Bitcoin ATMs.

On May 12, Hobbs used her veto power against Senate Bill 1373, which sought to create a "Strategic Reserve Fund for Digital Assets," allowing the state to hold cryptocurrencies resulting from seizures or official allocations. In her veto message, she stated, "The sharp volatility in the cryptocurrency market makes it unwise to use public state funds in this area."

This decision followed the rejection of another more ambitious bill, known as the "Bitcoin Strategic Reserve Act," which would have allowed the investment of up to 10% of state treasury funds and pension funds in Bitcoin and other digital assets. The governor also rejected a third bill that would have allowed government agencies to accept cryptocurrencies as a means of payment for taxes, fines, and fees.