Arizona Rejects CBDC Ban and Crypto Payments in Major Veto Decision

On May 12, the Governor of Arizona, Katie Hobbs, declined to approve three bills that were friendly to cryptocurrency: Senate Bills 1373, 1024, and 1095.

These proposed laws sought to enhance the government’s involvement in the adoption of digital assets while simultaneously expressing opposition to central bank digital currencies (CBDCs).

Concurrently, the governor enacted House Bill 2387, which implements stricter regulations for cryptocurrency ATM operations within the state.

These actions demonstrate the governor’s cautious stance on incorporating digital assets into the state’s regulatory framework.

### Reasons for Blocking the Pro-Crypto Bills

Senate Bill 1373, which aimed to allocate confiscated digital assets to support a reserve fund, was turned down due to worries about the potential risks that volatile assets could pose to state finances.

Hobbs indicated that existing laws already allow for limited utilization of such funds without jeopardizing the general fund.

She stated:

> “The current volatility in cryptocurrency markets does not make it 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.”

Additionally, the governor did not approve Senate Bill 1024, which would have permitted cryptocurrency payments for fines and other state charges.

Although this bill incorporated third-party payment processors as intermediaries, Hobbs argued that it still exposed the state to unnecessary risk.

She highlighted that legislators across party lines shared her concerns, remarking:

> “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.”

Regarding CBDCs, Hobbs vetoed Senate Bill 1095, aimed at preemptively banning their usage.

She deemed the bill unnecessary, pointing out that there is currently no such digital currency in existence in the United States.

### Regulations for Crypto ATMs

In spite of the vetoes, Governor Hobbs approved House Bill 2387, which sets forth clear guidelines for the operation of cryptocurrency ATMs in the state.

This legislation mandates that kiosk operators display multilingual warnings about fraud, issue receipts that include wallet addresses, and provide transaction hashes. Additionally, ATM operators are required to use blockchain technology to monitor their devices for suspicious activities.

The law imposes a cap on daily transactions at crypto kiosks, setting limits of $2,000 for new customers and $10,500 for established ones. The bill further stipulates:

> “If a new customer has been fraudulently induced to engage in a cryptocurrency kiosk transaction, the cryptocurrency kiosk operator shall issue a full refund for the fraudulently induced cryptocurrency kiosk transaction, including any fees charged in association with the transaction.”

Moreover, operators must provide customer service around the clock and ensure full compliance with anti-money laundering (AML) regulations.