$BTC

Arizona has passed two bills (SB 1025 and SB 1373), becoming the first state in the U.S. to approve the inclusion of Bitcoin in its state strategic reserves. 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 that Bitcoin 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, and passed the House by 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, funded by legislative appropriations and seized digital assets from law enforcement.

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

• This bill passed by a vote of 37 to 19.

3. Potential Impact:

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

• This move may prompt other states to follow suit; currently, 18 states have proposed similar Bitcoin reserve bills, including Texas, New Hampshire, and Utah.

• Supporters of the bills argue 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 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 that protects healthcare for the disabled.

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