Arizona Pioneers Bitcoin Reserve: A New Era for State Finance

Arizona has signed historic bills into law to form a Bitcoin reserve, the initial US state to legally count digital assets as a portion of its public funds. The bills, SB1025 and SB1373, enable the state treasurer and retirement system to invest up to 10% of any public funds in digital assets, with Bitcoin leading the charge. This would potentially divest some $3.14 billion in digital assets, creating a "Digital Assets Strategic Reserve Fund" comprised of forfeited crypto assets and future appropriations.

The new bill requires on-chain auditability and normalized risk management to secure public funds. Investments will fall under Arizona's public fund management, aligning it with regulation and oversight. The bills before signing into law by Governor Katie Hobbs are a vote of confidence in the increased demand for digital assets at state and federal levels, providing an opening for other states.

While proponents view a Bitcoin reserve as diversifying government assets and hedging against inflation, critics point to the price volatility of Bitcoin and the lack of widespread federal regulation. Taxpayer money should not go into speculation coffers, others demand. If Arizona goes the maximum permissible 10%, it will have an investment of around 31,000 BTC on its books, making it one of the top institutional bitcoin holders in America.