Key Takeaways
- Arizona’s Senate Finance Committee has approved two crypto bills, SB 1025 and SB 1373, that propose investing public funds into a specialized fund to purchase cryptocurrencies with a market capitalization of above $500 billion.
- The Arizona Strategic Bitcoin Reserve Act (SB 1025) would allow the treasury and state retirement fund to invest up to 10% of available funds into BTC. It also suggests that the state’s Bitcoin reserves be held in a secure and segregated account managed by the federal government.
- The Strategic Digital Assets Reserve Bill (SB 1373) is set to create a reserve fund administered by the state treasurer that will be capitalized by crypto assets confiscated by law enforcement as part of criminal investigations.
- Both bills await a Senate and House floor vote, after which they will head to Governor Katie Hobbs’ desk to be signed into law. However, there are concerns that the Democrat governor could veto them. Arizona, Texas, and Oklahoma lead the charge to become the first U.S. states to establish a strategic Bitcoin reserve.
The Arizona Senate Finance Committee cleared the Arizona Strategic Bitcoin Reserve Act (SB 1025) and the Strategic Digital Assets Reserve Bill (SB 1373) on Monday, with the bills now headed to the House floor for a full vote. The state is one step away from adopting the apex cryptocurrency as a reserve asset.
Arizona Senate Prepared To Vote On Strategic Bitcoin Reserve Bill
If passed, the bills would allow the state to establish a strategic digital asset reserve that will be capitalized by public funds and exiting cryptocurrencies confiscated by law enforcement through criminal proceedings. Arizona would also become the first U.S. state to include Bitcoin in its financial framework.
SB 1025, co-sponsored by Senator Wendy Rogers and Representative Jeff Weninger, proposes that Arizona’s state treasury and state retirement system can invest up to 10% of their available funds into Bitcoin (BTC). The bill also includes provisions for storing the state’s Bitcoin reserves in a secure and segregated account within the U.S. government’s federal Bitcoin reserve, ensuring safe and responsible asset management.
Meanwhile, SB 1373 focuses on creating a digital assets strategic reserve fund that would be administrated by the state treasurer. The fund will predominantly consist of crypto assets confiscated by law enforcement and potentially newly invested public funds. However, the bill restricts the treasurer from investing more than 10% of the fund’s total value in any fiscal year but may loan out assets to generate returns, provided that such actions do not increase financial risks.
Arizona’s House Rules Committee ruled that both bills are “constitutional and in proper form”. According to “Bitcoin Laws”, a group that keeps tabs on Bitcoin-related regulations across the United States, the bills have passed their assigned committee and should be headed for a full floor vote. The state’s House of Representatives is majority Republican, which gives the legislation a decent chance of passing. However, the main hurdle could be the state’s Democratic governor, Kaite Hobbs. She has blocked 22% of all bills passed by the House in 2024 – the highest rate of any state governor.
With the Senate Rules Committee, which sets the rules by which debate on an adopted bill is conducted on the Senate floor, approving both proposals, it is now headed to the House for further deliberations.
Arizona, Texas, And Oklahoma Leading The Race To Establish State-Led Bitcoin Stockpile
While Arizona is leading the race to establish the first state-based digital asset stockpile, several other states are hot on its heels. Earlier this month, the Texas Senate passed the Strategic Bitcoin Reserve Bill (SB 21) by a 25-5 vote and is now awaiting Governor Greg Abbott’s signature to become law. The bill aims to create a specialized fund outside of the state treasury to hold Bitcoin. This reserve managed by the state comptroller is intended to allow Texas to own the flagship cryptocurrency as a financial asset. It also enables voluntary donations in Bitcoin from Texan residents, fostering a sense of shared ownership.
Following the vote, Democratic Representative Ron Reynolds introduced a new bill proposing the state’s comptroller not be allowed to invest more than $250 million of its Economic Stabilization Fund or the “rainy day” fund in Bitcoin or other cryptocurrencies. The legislation filed on March 10 also suggested that Texas municipalities or counties could not invest more than $10 million in crypto assets. The landmark SB 21 seemingly has no cap on how much Bitcoin the comptroller could purchase for the reserve.
Back in January, Texas Lieutenant Governor Dan Patrick said that the state’s legislative priorities for this year include a proposal to establish a state-controlled strategic Bitcoin reserve.
Meanwhile, the Oklahoma House of Representatives passed the Strategic Bitcoin Reserve Act (HB 1203) on March 24 with an overwhelming majority of 77-15 votes. The bill proposed by Rep. Cody Maynard would allow the state government to invest up to 10% of public funds in Bitcoin and other digital assets with a market capitalization of more than $500 billion. It is now headed to the state’s Senate for hearing and subsequent voting.
Utah, which was widely expected to be the first state to establish a strategic Bitcoin reserve, recently passed a crypto legislation. However, it removed all references to the creation of a strategic Bitcoin reserve at the last moment, instead opting to protect residents’ right to self-custody of their Bitcoin and other crypto assets.
U.S. Government Could Utilize Gold Reserves To Acquire Bitcoin For Strategic Reserve
On March 7, President Donald Trump signed an executive order establishing the federal Strategic Bitcoin Reserve and Digital Asset Stockpile. The reserve will comprise Bitcoin and other cryptocurrencies seized by law enforcement as part of criminal investigations. Trump has directed his Commerce and Treasury secretaries to develop “budget-neutral” methods to acquire additional Bitcoin for the strategic reserve without any incremental cost to taxpayers.
Recently, Bo Hines, the executive director of the President’s Council of Advisers on Digital Assets, suggested that the U.S. government could utilize its gold reserves to acquire Bitcoin. This proposal aligns with Sen. Cynthia Lummis’ BITCOIN Act, which aims for the federal government to purchase up to 1 million BTC over five years, representing about 5% of the total supply of 21 million Bitcoins.
He indicated that by realizing profits from gold certificates, the government could fund Bitcoin purchases without impacting the taxpayer. The proposed plan is to sell these certificates, currently held by the Federal Reserve, and use the proceeds to buy more BTC.