The battle for cryptocurrency supremacy in the American Southwest heated up on Friday as Arizona State Senator Wendy Rogers (R-Flagstaff) filed a trio of ambitious legislative proposals designed to cement the state’s reputation as a haven for digital asset innovation.
In a direct challenge to the state’s current tax regime, Rogers introduced two bills and a concurrent resolution that would effectively bar the state from taxing virtual currency and prohibit local governments from penalizing the infrastructure providers of the blockchain economy. This decision comes in the wake of Governor Katie Hobbs’ veto of a proposed Bitcoin reserve bill back in April 2022, however there is still an opportunity for voters to express their opinions about cryptocurrency through the ballot box in November of 2022.
The “Crypto-Freedom” Package
Legislation being put forward in Arizona for the upcoming legislative session addresses three distinct areas of Digital Asset Policy.
Senate Bill 1044 is the primary piece of legislation that proposes an amendment to the current state laws in order to ensure that Virtual Currency will be tax-free under Arizona state law. The goal of this legislation is to create a somewhat new definition of Digital Assets under Arizona State Tax Laws so that virtual currencies are not subject to Capital Gains and Property Taxes which Advocates of this legislation believe prevent more people from using Virtual Currency.
Alongside Senate Bill 1044 is Senate Concurrent Resolution 1003 (SCR 1003). SCR 1003 is important because it is not subject to the Governor’s signature, as a Concurrent Resolution is considered a Resolution that does not require signatures on behalf of the Governor. SCR 1003, if enacted, would allow the Legislature of the State of Arizona to refer a question directly to the voters during the next general election. The language of SCR 1003 seeks to amend the Arizona Constitution so that Virtual Currency is not classified as Taxable Property and, in turn, will provide those who hold Cryptocurrencies a form of constitutional protection that will make it difficult for any future State Administration to remove that protection.
Protecting the “Plumbing” of the Network
Senate Bill 1045 relate to the physical infrastructure of the crypto ecosystem, whereas tax exemptions often make the headlines. Senate Bill 1045 prohibits counties, cities and towns from being able to impose certain taxes or fees on people or businesses that are operating blockchain nodes.
Blockchain nodes are the unsung heroes of blockchain systems – computers that support the network by processing transactions, as well as maintaining a copy of the transaction record or ledger. By making it illegal for local governments to impose fines or fees based on zoning requirements against operators of blockchain nodes, Senate Bill 1045 will help to ensure that the decentralised “plumbing” used to power networks like Bitcoin and Ether can continue to function without fear that local regulators will interfere.
A History of Executive Conflict
The aggressive nature of Rogers’ strategy is perceived to have been created due to the contention between the Republican-led legislature and the Governor’s office. In May of 2025, Governor Hobbs vetoed a proposed bill that would have set up a state bitcoin reserve due to concerns related to the volatility of digital assets.
Rogers, a co-sponsor of that failed bill, condemned the veto as shortsighted. By structuring SCR 1003 as a constitutional amendment, Rogers is attempting to bypass the Governor entirely, taking the issue of crypto taxation directly to the electorate in 2026.
Currently, Arizona has laws in place designed to support cryptocurrency use and provides for a process for the state to take custody of unclaimed digital assets after a certain period of time. Advocates believe that if the state does not provide guidelines for how taxes will be applied to cryptocurrency transactions, the state’s ability to compete with other states, such as Texas and Florida, will be diminished.
The National Landscape Shifts
Arizona’s move is part of a larger trend of state-based experimentation with cryptocurrencies, as federal regulations remain undefined; in Ohio, the state’s House of Representatives recently passed a bill exempting all crypto transactions of less than $200 from capital gains taxes, but the bill has not moved forward since June 2018. In direct contrast, there is a growing trend towards a more aggressive regulatory atmosphere for cryptocurrencies in the northeast. New York Assemblyman Phil Steck (D) has recently proposed an excise tax of 0.2% on digital asset transaction, which signals a much tougher stance on cryptocurrencies within that region.
At the federal level, the landscape is also changing. On Friday, U.S. Senator Cynthia Lummis (R-WY), widely considered the “Crypto Queen” of Congress for her advocacy, announced she would retire in January 2027. The absence of a leader in Washington creates uncertainty about the future of the country as a whole. In addition, this uncertainty will likely be increased by increased interest in state-level actions such as Arizona’s efforts to lead the way in regulatory innovations. However, with the 2026 legislative session nearing, it will be interesting to watch Rogers’s efforts to achieve Utah’s goal of making it the first state in the nation to establish a constitutional ban on taxing cryptocurrencies.
