Arizona Governor Vetoes Bitcoin Bill: Causing Controversy in Crypto Community
In a move that has been seen as a setback for public finance innovation, Arizona Governor Katie Hobbs formally vetoed Senate Bill 1025 on May 2. The bill was seen as a landmark effort to allow state public funds – including pension systems – to invest in bitcoin and digital assets.
The bill, dubbed the “Arizona Strategic Bitcoin Reserve Act,” proposes amending existing regulations to allow up to 10% of public funds’ portfolios to be allocated to cryptocurrencies. The bill also includes the possibility of storing digital assets in a “federal strategic bitcoin reserve” if one is established by the U.S. Treasury in the future.
However, Governor Hobbs rejected the initiative, arguing that state pension funds are not the right place to experiment with “unproven” assets like cryptocurrencies. In a letter to Senate President Warren Petersen, Hobbs wrote:
"Arizona’s pension funds are not the place to experiment with unproven investments like cryptocurrencies. Our retirement system is strong because of smart, conservative investment decisions."
Reaction from the crypto community was swift and fierce. Many influential figures in the industry criticized Hobbs’ decision. Prominent investor Anthony Pompliano shared on social media X:
"The governor of Arizona just vetoed a bill that would allow investing in bitcoin. If she can’t outperform bitcoin, she should invest in it."
Wayne Vaughan, CEO of Tierion, was not shy about highlighting the political overtones of the issue:
"Remember this when someone says the Democrats are the crypto party."
Matthew Sigel, head of digital asset research at Vaneck, called the veto “a step backward,” arguing that Hobbs misjudged bitcoin's potential as an inflation hedge and portfolio diversifier.
Supporters of the bill argued that investing in digital assets would put Arizona at the forefront of financial innovation while protecting pension funds from the negative effects of inflation and global economic volatility.
Hobbs' decision, meanwhile, reflects a more cautious stance, in line with the state's traditional investment strategy. But it also highlights a growing divide over the role of cryptocurrencies in public finances in the US – a debate that many say is just beginning.