Arizona is on the verge of enacting a law that paves the way for government investment in Bitcoin and digital assets.

The draft law on the reserve of digital assets in the state of Arizona is nearing its final stage after receiving initial approval from the House of Representatives on April 17, and it is now preparing for the final vote. Bill No. 1373, known as the "Strategic Digital Assets Reserve Act," aims to create a special fund for confiscated digital assets within criminal cases, a move that positions Arizona as a leading state in embracing digital asset technologies.

A Digitally Managed Fund with Specific Investments

The bill stipulates that the state treasurer will manage the fund, granting them the authority to invest up to 10% of the total value of digital assets in it annually. It also allows them to lend part of these assets, provided that such actions do not expose the fund to any additional financial risks, reflecting a thoughtful approach towards developing the state's digital financial infrastructure.

Balancing Bitcoin and Other Digital Assets

This project is parallel to another bill numbered 1025, which focuses on allowing the state treasury and pension system to invest up to 10% of their funds exclusively in Bitcoin. The law includes a provision requiring the storage of those assets in a separate federal reserve account, enhancing trust in the management of these digital assets with the highest levels of security and transparency.

Veto Threats That May Hinder Legislative Progress

Despite this progress, both bills face a political challenge from the governor's office. Governor Katie Hobbs has pledged to use her veto power against all bills until lawmakers agree on a law funding services for the disabled to compensate for a $122 million deficit. Hobbs described the funding proposals put forward by Republicans as "not serious and impractical" in a post on platform X.

In the same week, the governor used her veto against 15 bills, marking the highest rejection rate among U.S. governors during 2024, having blocked over 20% of bills, most of them led by Republicans.

An Integrated Strategy for Regulating Digital Currencies

These steps are part of a broader strategy for the state of Arizona aimed at enhancing the regulation of digital assets within the state and reducing fraud associated with them. In February, state lawmakers introduced Bill No. 2387, which aims to regulate Bitcoin ATMs by setting a maximum limit on daily transactions, imposing mandatory licensing on operators, and adopting refund policies to protect consumers.

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