Anything having relation to the voting by the governor comes as dangerous news for anyone who believed that Arizona would be the first state in America to hold Bitcoin in its financial reserves. Governor Katie Hobbs on Friday vetoed SB 1025, which would allow the state to invest in Bitcoin (BTC) with seized funds and create a state-managed digital assets reserve. The bill had just passed the state House with a 31-25 vote, showing a divide even before it got on the desk of the governor.
Hobbs pulled no punches in her veto statement, saying,
“Arizonans’ retirement funds are not the place for the state to try untested investments like virtual currency.”
The bill’s supporters argued that the move could position Arizona as a pioneer in crypto-forward finance, potentially moving faster than even the U.S. Treasury Department in embracing digital assets. But Hobbs clearly wasn’t sold on the vision.
Why It Matters
If signed into law, the bill would have allowed Arizona to hold Bitcoin using forfeited assets—typically funds seized during criminal investigations—and place them into a state-run digital reserve. Backers said the goal was to modernize financial management and potentially diversify the state’s holdings beyond traditional fiat assets.
But opponents, including Hobbs, pointed to the volatility and regulatory uncertainty surrounding cryptocurrencies, particularly as Bitcoin remains down from its 2021 highs, despite some recent momentum.
A Missed First for Crypto in Government?
Had the bill been approved, Arizona could have become the first state in the country to hold crypto reserves, a step that some industry advocates saw as inevitable amid growing institutional interest in digital assets.
The move also comes at a time when U.S. federal policy on crypto remains a patchwork of evolving interpretations, with states often testing boundaries. Wyoming, Texas, and Florida have all flirted with pro-crypto legislation, but none have taken the step of officially integrating Bitcoin into state reserves.
Crypto’s Political Divide Deepens
The veto highlights the partisan split in U.S. crypto policy. While some lawmakers see blockchain-based assets as an innovation frontier, others see them as speculative risks unsuitable for public funds. Hobbs’ firm stance suggests a cautious Democratic approach, emphasizing fiduciary duty and financial conservatism, especially when dealing with public retirement systems.
What’s Next?
The crypto bill may be dead—for now. But its narrow passage in the House and growing legislative interest in digital assets suggest the conversation is far from over. Proponents could reintroduce a revised version in the next session, possibly with stricter controls or clearer risk parameters.
In the meantime, Arizona continues to watch from the sidelines as Bitcoin adoption plays out globally and in the private sector.
