Arizona Governor Katie Hobbs has vetoed a controversial bill that would have allowed the state to hold Bitcoin as part of its financial reserves. The legislation, known as the Digital Assets Strategic Reserve bill, proposed letting Arizona invest seized funds into Bitcoin and create a government-managed reserve. It had recently passed the state House with a narrow 31-25 vote.

Governor Hobbs, in her veto statement, emphasized that Arizona's retirement system should not be exposed to “untested investments” like virtual currency. She stated that sound and informed investment strategies have made the state retirement fund one of the strongest in the nation, and that Bitcoin does not align with that standard.

The bill's rejection halts Arizona’s attempt to become the first U.S. state to officially adopt Bitcoin as part of its treasury strategy. Meanwhile, a related bill, SB1373—which would allow the state treasurer to allocate up to 10% of Arizona’s rainy-day fund into digital assets—still awaits a final vote.

Arizona now joins a growing list of states where similar crypto treasury proposals have failed. Recent efforts in Oklahoma, Montana, South Dakota, and Wyoming have all stalled or been withdrawn.

On the flip side, North Carolina has taken a bold step forward. On April 30, its House passed the Digital Assets Investment Act, permitting up to 5% of specific funds to be invested in approved cryptocurrencies. The bill now heads to the Senate for review.

These state-level crypto initiatives mirror a broader federal push, as former President Donald Trump signed an executive order in March proposing a federal “Strategic Bitcoin Reserve” and “Digital Asset Stockpile,” signaling a growing political divide on digital asset adoption in public finance.