Key Points:
- Arizona’s HB 2749 allows the state to hold unclaimed digital assets—like Bitcoin—in their native form, while prohibiting new purchases with taxpayer funds.
- Governor Katie Hobbs vetoed SB 1025, which would have permitted direct Bitcoin purchases; attention now turns to SB 1373 for broader investment authority.
- New Hampshire leads the nation by authorizing up to 5 % of its public funds to be invested in cryptocurrencies with market capitalizations over $500 billion—effectively Bitcoin alone at present.
- Other states (e.g., Texas, Montana, Florida) are monitoring these developments, potentially shaping the next wave of U.S. crypto policy.
- Proponents argue that state reserves in Bitcoin can serve as an inflation hedge and bolster financial innovation; detractors warn of volatility risks and political backlash.
Arizona’s HB 2749: Safeguarding Unclaimed Crypto Assets
On May 8, 2025, the Arizona Legislature passed House Bill 2749, titled the “Cryptocurrency Reserve Bill,” which modernizes the state’s unclaimed property laws to recognize digital assets in their native forms. Under this law, assets such as Bitcoin (BTC), Ether (ETH), and other tokens recovered by the state—through escheatment, unclaimed airdrops, or staking rewards—may be transferred into a dedicated state reserve account rather than being liquidated immediately. Importantly, HB 2749 explicitly forbids the state from deploying fresh taxpayer dollars to purchase cryptocurrencies, maintaining a conservative stance on new investments.
Background: Arizona’s historical approach to unclaimed property required conversion of any escheated digital assets into cash. HB 2749 reverses that by acknowledging the growing importance of maintaining the full economic upside of these assets. The reserve account is continuously appropriated and exempt from lapsing rules, giving the State Treasurer authority to hold—and potentially liquidate—assets on a case-by-case basis.
The Standoff Over New Purchases: Vetoes and Pending Legislation
Shortly before signing HB 2749, Governor Katie Hobbs exercised her veto power on Senate Bill 1025, which would have authorized the state to use general funds to purchase up to 5 % of its Budget Stabilization Fund in Bitcoin. In her veto message, Governor Hobbs cited concerns over price volatility and the potential fiscal risk to Arizona’s General Fund.
Attention has now shifted to Senate Bill 1373, currently awaiting gubernatorial action. SB 1373 would create a “Digital Assets Strategic Reserve Fund,” enabling the State Treasurer to invest up to 10 % of the Budget Stabilization Fund in a range of digital assets—Bitcoin, stablecoins, NFTs, and other tokenized instruments—via regulated exchange‑traded products (ETPs) or custody solutions. Should SB 1373 pass into law, Arizona would join New Hampshire as one of the first states to actively allocate public funds to cryptocurrencies.
New Hampshire: Paving the Way as Crypto-Forward Pioneer
On May 6, 2025, New Hampshire became the first U.S. state to authorize direct investment of public funds in digital assets by passing HB 302 and securing Governor Kelly Ayotte’s signature. Under this law:
- Up to 5 % of the state’s public funds may be allocated to financial instruments—exchange‑traded products or direct custody holdings—backed by digital assets with market capitalizations exceeding $500 billion.
- To date, Bitcoin is the sole asset meeting this threshold.
- Investments can also include precious metals, reinforcing a dual strategy against inflation.
New Hampshire’s bold move has been lauded by cryptocurrency advocates as a forward‑thinking hedge against currency debasement and a catalyst for broader institutional acceptance. Observers note that the 60‑day implementation period will likely see the state assemble custodial partnerships and risk‑management frameworks before deploying any capital.
National Implications: A Domino Effect in State Capitols
Arizona and New Hampshire’s legislative breakthroughs are stimulating interest in other statehouses:
- Texas: Lawmakers are drafting similar measures to permit Bitcoin reserves in the Teacher Retirement System and the Rainy Day Fund, although no bills have been voted on yet.
- Montana & Wyoming: Preliminary proposals to recognize crypto as unclaimed property have faced gubernatorial hesitation, reflecting a cautious approach.
- Florida & Pennsylvania: Debates continue over whether state treasurers should diversify into digital assets or maintain traditional asset mixes.
Financial analysts predict a domino effect: if two major states—Arizona (fifth‑largest by population) and New Hampshire—demonstrate fiscal prudence in managing crypto holdings, more states will draft reserve bills in 2025 and 2026.
Risk Management and Regulatory Considerations
State adoption of cryptocurrency reserves entails a complex risk‑management framework:
- Custody Solutions: Partnering with regulated custodians or ETP issuers is essential to safeguard private keys and meet audit requirements. Arizona’s SB 1373 specifies custody by a registered investment company, while New Hampshire allows both direct holding and ETP structures.
- Valuation & Accounting: Marking-to-market digital assets within public‑sector accounting systems requires new valuation policies; states may need to reconcile IFRS or GASB standards for crypto.
- Liquidity Protocols: Establishing triggers for partial sales—during price run-ups or fiscal shortfalls—protects against extreme market swings.
- Transparency & Reporting: Regular legislative reporting on reserve fund performance, asset valuations, and risk exposures will be mandated to ensure taxpayer oversight.
Proponents advocate that a small allocation—capped at 5 % or 10 %—minimizes downside while providing optionality for significant upside if Bitcoin outperforms traditional assets over the long term.
Crypto as an Inflation Hedge: Lessons from Turkey and Beyond
Arizona’s neighbor to the east, Texas, and the global precedent set by Turkey’s Lira crisis offer compelling case studies. When Turkish President Erdoğan politicized the central bank in 2021, the lira collapsed, boosting Bitcoin adoption as citizens sought a god‑less store of value. Arizona’s policymakers cited such events to underscore the utility of Bitcoin reserves in diversifying public sector portfolios against fiat risk. Similarly, proponents reference El Salvador’s 2021 Bitcoin adoption—despite its own challenges—as an experiment in national crypto integration.
Market Reaction and Outlook
Bitcoin’s price exhibited a modest rally of 2 % on the day Arizona passed HB 2749, buoyed by the twin headlines from Arizona and New Hampshire. Traders interpret state reserve initiatives as a potential catalyst for institutional demand, albeit modest relative to global exchange flows. Major investment firms—BlackRock, Fidelity, and Grayscale—have filed for spot Bitcoin ETFs, expecting regulatory approval to amplify on‑ramp liquidity.
In the longer term, state reserve programs may pave the way for municipal and county‑level crypto initiatives, fostering a multi‑tiered public finance ecosystem that embraces digital assets. However, each jurisdiction will balance innovation with fiduciary duty, ensuring that crypto reserves complement rather than compromise traditional budgeting and capital management practices.
Conclusion: A New Chapter in Public Finance Innovation
With New Hampshire breaking ground on May 6 and Arizona swiftly following on May 8, 2025, state‑sponsored cryptocurrency reserves have transitioned from conceptual debate to legislative reality. While Arizona’s HB 2749 takes a cautious approach—holding only unclaimed digital assets—New Hampshire’s HB 302 authorizes proactive investment in Bitcoin. The outcome of Arizona’s pending SB 1373 vote will determine whether the state fully embraces direct crypto allocations.
As more states watch and learn, a growing network of public‑sector crypto holders may emerge, injecting billions of dollars of institutional capital into digital markets. For readers seeking new revenue streams and practical blockchain applications, these developments underscore how public finance is evolving—and why keeping an eye on state legislatures may be as important as tracking crypto exchanges.
