Key Takeaways
- Arizona has voted to pass a bill establishing a Strategic Bitcoin reserve after vetoing separate crypto legislation.
- State Governor Hobbs signed a bill creating a Bitcoin and Digital Assets Reserve Fund.
- The Strategic Bitcoin Reserve fund will oversee digital assets, preventing Bitcoin from being used for general fund transfers.
Arizona Governor Katie Hobbs has signed a law creating a Strategic Bitcoin Reserve, making Arizona the second state after New Hampshire to give the state treasury the green light to invest in Bitcoin and other top cryptocurrencies.
By signing House Bill 2749 into law, Governor Hobbs officially allowed the state to claim ownership of all digital assets that have been abandoned for at least three years to establish the State Strategic Bitcoin Reserve.
The Initial Bill Was Vetoed
Before the breakthrough, at least four Bitcoin Reserve-related bills were debated in Arizona this year. However, the House vetoed Senate Bill 1025 but passed House Bill 2749, which has now become law. According to the law, the state’s custodians can stake the crypto for rewards or airdrops, which can then be deposited into a newly established Bitcoin and Digital Asset Reserve Fund. Commenting on the development, the bill’s sponsor, Jeff Weninger, said in a statement:
“This law ensures Arizona doesn’t leave value sitting on the table and puts us in a position to lead the country in how we secure, manage, and ultimately benefit from abandoned digital currency […] we’ve built a structure that protects property rights, respects ownership, and gives the state tools to account for a new category of value in the economy.”
Increase Through Staking and Airdrops
The Arizona Strategic Bitcoin Reserve bill, introduced last February and backed by Jeff Weninger, received bipartisan support. In addition to mandating the treasurer to look for ways to grow the digital asset fund, the legislation directs that a qualified custodian may actively stake the assets to generate returns for the state. Any rewards earned on unclaimed digital assets held for three years will be deposited into the new fund.
Additionally, the bill explains that any cryptocurrencies in the state’s custody that remain inactive for three years will be presumed abandoned unless the owner can demonstrate they have been actively logging into the account, initiating communication, or executing transactions. The bill also makes it clear that the state cannot sell any cryptocurrencies below the prevailing exchange rates. Further, the reserve bill says sales can only be conducted via recognized digital asset exchanges or commercially reasonable methods for less-liquid tokens.
Conclusion
Apart from Arizona and New Hampshire, several other states are debating similar Strategic Bitcoin Reserve bills, with Texas and North Carolina emerging as potential candidates for passing them into law. While the Arizona Strategic Bitcoin Reserve bill doesn’t explicitly allow for direct investment but rather a transfer of unclaimed cryptocurrencies, staking, and airdrops, it represents a big step forward besides showing the state’s willingness to support crypto-friendly legislation.
Frequently Asked Questions
What is a strategic reserve?
A strategic reserve is a stock of a systemically important input that can be released to manage severe supply disruptions.
What is a strategic Bitcoin reserve?
A strategic Bitcoin reserve refers to the intentional holding of Bitcoin as a reserve asset by corporations, institutions, or governments to strengthen financial security, hedge against inflation, and diversify investments.
How does a strategic Bitcoin reserve work?
Holding Bitcoin in reserve follows the same logic as keeping gold, foreign currencies, or other financial assets in a treasury. Bitcoin’s global nature enables quick reserve deployment when needed, although physical gold and illiquid real estate assets do not share this benefit.
