Arizona Governor Katie Hobbs rejected legislation allowing 10% of state funds into cryptocurrencies, prioritizing pension security. The move contrasts with states like Wyoming, which recently expanded crypto-friendly regulations.
Arizona Governor Katie Hobbs vetoed a bill on May 2, 2025, that proposed allocating 10% of state funds into cryptocurrencies, emphasizing the need to protect public pensions from volatile digital assets. The decision aligns with recent SEC warnings about unregulated crypto markets, contrasting with states like Wyoming, which enacted laws supporting blockchain innovation. Hobbs cited risks highlighted by Bitcoin’s recent 12% price drop and BlockFi’s failed restructuring as key factors in her rejection of the legislation.
Legislative Debate and Fiscal Concerns
Governor Hobbs’ veto letter stressed that “retirees’ savings shouldn’t bear the brunt of experimental investments,” directly countering arguments from bill sponsor Sen. Wendy Rogers about modernizing Arizona’s economy. The proposed legislation would have made Arizona the first state to allocate double-digit percentages of public funds to crypto assets.
Regulatory Landscape Shifts
The move follows the SEC’s October 20, 2025 advisory urging caution with public crypto investments, citing liquidity risks in decentralized markets. Meanwhile, Wyoming solidified its crypto hub status on October 18 by granting legal recognition to DAOs – decentralized organizations often linked to blockchain projects.
Market Turbulence Influences Policy
Bitcoin’s plunge to $28,400 on October 22 – its lowest since June 2025 – amplified concerns. This volatility, combined with crypto lender BlockFi abandoning its restructuring plan last week, reinforced Hobbs’ position. Arizona’s blockchain task force instead proposed tokenized bonds for infrastructure projects in an October 19 report, avoiding direct crypto exposure.
Historical Precedents in Tech Adoption
The 2021 Bitcoin rally, which saw prices surge 150% following Tesla’s $1.5 billion investment, ended with a 60% correction within six months. Similar patterns occurred during 2017’s initial coin offering boom, where many projects collapsed after rapid valuations.
Lessons From Digital Payment Evolution
Arizona’s caution contrasts with China’s 2010s mobile payment revolution, where state-backed digital yuan trials followed Alipay and WeChat Pay’s organic growth. Regulators globally now seek middle ground between innovation and systemic protection, as evidenced by the EU’s 2024 Markets in Crypto-Assets framework.
