Arizona Governor Katie Hobbs has vetoed a bill that would have allowed the state to invest in Bitcoin using certain seized funds, halting a legislative effort to make Arizona the first U.S. state to hold BTC in its reserves.

The proposal, known as the Arizona Strategic Bitcoin Reserve Act, aimed to authorize state officials to allocate funds into Bitcoin and manage a crypto reserve under government oversight. The governor cited financial risk concerns in her decision to block the bill.

Crypto Community and Lawmakers Push Back

The move has drawn sharp criticism from members of the crypto industry and state legislators. Senator Wendy Rogers, who co-sponsored the bill with Rep. Jeff Weninger, expressed her frustration and pledged to reintroduce the legislation in the next session.

“Politicians don’t understand that Bitcoin doesn’t need Arizona. Arizona needs Bitcoin,” Rogers stated.

Other critics included crypto advocates Jameson Lopp and Anthony Pompliano, who took to X (formerly Twitter) to express their opposition. Pompliano remarked, “If she can’t outperform Bitcoin, she must buy it.”

Broader Debate Over Bitcoin in State Reserves

Had it passed, the bill would have marked a first in U.S. state-level adoption of Bitcoin for official reserves. Similar attempts in Oklahoma, Montana, Wyoming, and South Dakota have also failed due to political and regulatory concerns.

Not all financial experts disagreed with Hobbs’ decision. Longtime Bitcoin critic Peter Schiff applauded the veto, saying governments should avoid speculating in cryptocurrencies with public funds.

Federal Reluctance, But Corporate Appetite Grows

At the national level, the U.S. government remains hesitant to formally adopt Bitcoin. BitMEX co-founder Arthur Hayes stated in a recent interview that it’s unlikely the federal government will build a “strategic Bitcoin reserve” beyond the ~200,000 BTC it currently holds via law enforcement seizures.

In contrast, corporate interest continues to rise. On Thursday, MicroStrategy — led by Michael Saylor — announced plans to double its capital raise to $84 billion to acquire more Bitcoin. The firm also raised its debt issuance target from $21 billion to $42 billion as part of the expansion.

Publicly traded companies increased their Bitcoin holdings by 16.1% in Q1 2025, signaling strong institutional demand despite recent volatility in crypto markets.