Arizona Governor Katie Hobbs has vetoed Senate Bill 1025, a measure that would have allowed the state’s retirement fund to invest in virtual currencies such as Bitcoin.
The veto effectively halts a legislative effort that could have made Arizona the first U.S. state to hold digital assets in its financial reserves.
In a letter to Senate President Warren Petersen, Hobbs said she rejected the bill to preserve the strength of the Arizona State Retirement System (ASRS), which she described as “one of the strongest in the nation” due to its “sound and informed investments.”
“Arizonans’ retirement funds are not the place for the state to try untested investments like virtual currency,” she wrote.
SB1025, also known as the Digital Assets Strategic Reserve Bill, proposed allowing state officials to create and manage a crypto reserve using seized funds, including investments in Bitcoin.
The bill passed the state House narrowly, with 31 votes in favor and 25 against, before being vetoed by the governor on May 2.
Hobbs emphasized that Bitcoin and other digital currencies remain volatile and unregulated, making them unsuitable for public funds.
The vetoed bill aimed to establish Arizona as the first state to integrate Bitcoin into official reserve strategies—a move supporters argued could help future-proof state finances amid growing economic uncertainty.
Arizona’s decision underscores a broader national divide over digital asset adoption in public finance. While some states are exploring the use of cryptocurrencies to diversify reserves, others—including Arizona—are taking a more cautious approach.
Similar Bitcoin reserve proposals have stalled or been withdrawn in states such as Oklahoma, Montana, South Dakota, and Wyoming.