$BTC

Arizona has passed two bills (SB 1025 and SB 1373), becoming the first state in the United States to approve the inclusion of Bitcoin in the state strategic reserve. These two bills were passed by the state House of Representatives on April 28, 2025, and are currently awaiting the signature of Governor Katie Hobbs to become law. Here are the key details:

1. SB 1025 (Arizona Strategic Bitcoin Reserve Act):

• Allows the state treasury and state retirement system to invest up to 10% of public funds in virtual currencies like Bitcoin.

• Requires Bitcoin to be stored in secure segregated accounts, and if the U.S. Treasury establishes a federal strategic Bitcoin reserve, state funds may be deposited therein.

• The bill was co-sponsored by Republican Senator Wendy Rogers and Representative Jeff Weninger, passing the House with a vote of 31 to 25.

2. SB 1373 (Digital Asset Strategic Reserve Act):

• Establishes a digital asset strategic reserve fund managed by the state treasurer, with funding sources including legislative appropriations and seized digital assets from law enforcement.

• Allows up to 10% of the total fund to be invested in Bitcoin and other digital assets annually, and permits lending assets to enhance returns without increasing risk.

• The bill passed with a vote of 37 to 19.

3. Potential Impacts:

• Arizona's public asset management is substantial, with state treasury managing over $31.4 billion in assets in 2023. If allocated 10%, approximately $3.14 billion could be invested in digital assets, theoretically allowing the purchase of about 31,000 Bitcoins (at the current price of approximately $95,000 per coin).

• This move could inspire other states to follow suit, with 18 states already proposing similar Bitcoin reserve bills, including Texas, New Hampshire, and Utah.

• Supporters of the bill believe that Bitcoin's decentralization and fixed supply can hedge against inflation and modernize state finances; however, critics warn that its volatility may pose risks.

4. Uncertainty of the Governor's Signature:

• Governor Katie Hobbs (Democrat) is known for her high veto rate, having vetoed 22% of bills in 2024. She has stated that she will veto all bills unless the legislature passes a budget plan protecting medical care for disabled individuals.

• If Hobbs vetoes, the bills may not take effect, but the legislative progress has already garnered national attention.