Arizona Governor Vetoes Crypto Reserve Plans, Signs Tough New Rules for Kiosk Operators

Arizona Governor Katie Hobbs has vetoed two crypto-related bills, Senate Bill 1373 and Senate Bill 1024, effectively stalling the state’s push toward integrating digital assets into its public financial system. 

However, the governor’s decision was accompanied by the signing of House Bill 2387. This bill introduces regulations for cryptocurrency kiosk operators to enhance consumer protection and curb fraud.

Governor Hobbs Vetoes Two Senate Crypto Bills 

Senator Mark Finchem sponsored SB 1373. It proposed establishing a Digital Assets Strategic Reserve Fund to be managed by the State Treasurer. 

The reserve would consist of appropriated funds and seized digital assets. The Treasurer would be authorized to deposit assets in secure custody solutions or exchange-traded products. 

The bill also permitted the Treasurer to invest up to 10% of the fund annually and loan digital assets to generate returns, provided financial risks to the state remained minimal.

However, Governor Hobbs rejected it, citing that a similar bill had already passed into law. Last week, BeInCrypto reported that Hobbs signed HB 2749.

The bill allows the state to take ownership of abandoned digital assets if the owner fails to respond to communications within three years.

“Current volatility in cryptocurrency markets does not make a prudent fit for general fund dollars. I have already signed legislation this session which allows the state to utilize cryptocurrency without placing general fund dollars at risk, which is the responsible path to take,” Hobbs stated.

This rationale aligns with her earlier veto of SB 1025 on May 2. The bill proposed creating an Arizona Strategic Bitcoin Reserve.

Meanwhile, SB 1024, sponsored by Senator Wendy Rogers and Representative Jeff Weninger, aimed to allow state agencies to accept cryptocurrency for payments, including fines, taxes, and fees. 

It would have permitted agencies to enter into agreements with cryptocurrency service providers, establish transaction terms, and clarify payment liability. Yet again, the Arizona Governor vetoed it. 

“While this bill would allow State agencies to enter into agreements to protect the State from risks associated with cryptocurrency, legislators on both sides of the aisle acknowledged it still leaves the door open for too much risk,” the veto letter read.

Notably, Hobbs vetoed 36 bills on Monday. Nonetheless, one crypto bill, HB 2387, secured her approval. The bill mandates crypto kiosk operators to provide clear disclosures in multiple languages, obtain acknowledgment, and issue detailed receipts after each transaction. 

It calls for using blockchain analytics to help prevent fraud and for operators to maintain a written anti-fraud policy. It also ensures that live customer service is available 24/7.

The bill sets transaction limits of $2,000 per day for new customers. Furthermore, it raises the limit for existing customers from $5,000 to $10,500.

In addition, operators are required to offer full refunds for fraudulently induced transactions if reported within 30 days, subject to law enforcement verification.