ChainTech Africa

May 13, 2025  — In a decisive move that signals a cautious stance toward digital assets, Arizona Governor Katie Hobbs vetoed three key cryptocurrency-related bills on May 12, rejecting proposals that would have advanced crypto adoption in the state and blocked the future use of central bank digital currencies (CBDCs). Simultaneously, she signed a new law imposing tighter regulations on cryptocurrency ATMs.

The rejected bills — Senate Bills 1373, 1024, and 1095 — were part of a broader legislative push by Arizona lawmakers to expand the role of digital assets in state operations and preemptively prohibit CBDCs. However, Governor Hobbs cited financial risk, regulatory concerns, and market volatility as primary reasons for the vetoes.

Why the Governor Rejected Pro-Crypto Legislation

Senate Bill 1373, which proposed using seized digital assets to fund a state reserve account, was blocked due to concerns about exposing public finances to highly volatile crypto markets. Governor Hobbs emphasized that while digital assets may have a place in the financial landscape, they are currently unsuitable for integrating into state financial reserves.

“Current volatility in cryptocurrency markets does not make a prudent fit for general fund dollars,” Hobbs stated. “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.”

Senate Bill 1024 sought to authorize cryptocurrency payments for fines, fees, and other state-imposed obligations through third-party processors. Despite safeguards in the bill, Hobbs and a bipartisan group of legislators raised concerns about the residual financial and operational risks.

“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,” she noted.

Senate Bill 1095, aimed at banning CBDCs in Arizona before any such currency exists in the U.S., was vetoed as premature and unnecessary. Hobbs underscored that no federal CBDC currently exists and that preemptive bans could limit future policy flexibility.

Crypto ATM Regulation Moves Forward

While rejecting broader crypto integration measures, Governor Hobbs approved House Bill 2387, which introduces new rules for cryptocurrency ATM (or kiosk) operations across Arizona. The legislation reflects a targeted approach to consumer protection and risk management in the rapidly growing sector.

Key provisions of HB 2387 include:

• Mandatory display of fraud alerts in multiple languages.

• Issuance of receipts showing wallet addresses and transaction hashes.

• Use of blockchain analytics to flag suspicious transactions.

• Daily transaction limits of $2,000 for new users and $10,500 for existing customers.

The bill also requires crypto ATM operators to provide 24/7 customer support and fully comply with anti-money laundering (AML) regulations. Importantly, operators must refund any fraudulently induced transactions for new users, including all associated fees.

“If a new customer… has been fraudulently induced to engage in a cryptocurrency kiosk transaction, the kiosk operator shall issue a full refund,” the bill states.

Balancing Innovation and Caution

The governor’s actions highlight a deliberate effort to balance innovation with responsibility. By allowing stricter regulation of crypto kiosks while blocking broader adoption bills, Hobbs appears to be signaling openness to digital assets—within tightly controlled frameworks.

While crypto advocates may view the vetoes as a setback, supporters of HB 2387 argue the measure helps protect consumers without fully shutting the door on blockchain innovation.

Arizona’s stance reflects a broader national debate over how state and federal governments should approach digital assets, with some states racing to embrace crypto, while others—like Arizona—proceed with measured caution.