Central bank digital currency; ban
SB1095 would prohibit federally recognized central bank digital currency (CBDC) from being used as legal tender in Arizona and from serving as the medium of payment in contracts, securities, and similar instruments. The bill adds a new chapter to Title 1 defining “legal tender” to exclude CBDC and defining “specie” as precious-metal coins. It also states that the prohibition applies broadly, notwithstanding Title 47, so it would reach commercial transactions as well as other private agreements.
The bill makes conforming changes across several statutes to align Arizona law with the new definition of legal tender and to prevent CBDC from being used in certain payment systems. In the escrow statute, it allows certain distributed ledger technology transfers but bars them from being settled or backed by CBDC and requires settlement in U.S. dollars. It also updates trust company definitions, local video-service fee provisions, and multiple tax statutes to reference the new legal-tender definition and to preserve existing Arizona tax treatment of exchanges involving legal tender, including specie.
In practical terms, the bill would not create a new state currency system; instead, it would restrict one specific form of digital currency in state law and in state-regulated financial and commercial contexts. The affected parties include escrow agents, trust companies, video service providers, counties and municipalities collecting franchise or license fees, taxpayers, and businesses entering contracts governed by Arizona law. The measure is framed as a consumer and commercial protection against CBDC use, while leaving room for other forms of digital asset transfers that are not backed by a CBDC.
The general sentiment in the recorded votes suggests the bill had meaningful support but also notable opposition. It advanced through the Senate and House on party-line or near party-line votes in committee and on final readings, indicating a polarized debate. The final House third reading passed 32-25, showing a narrow but successful majority.
The main point of contention appears to be the policy choice to preemptively ban CBDC use in Arizona, which supporters likely view as protecting monetary privacy, contractual freedom, and state sovereignty, while opponents likely see as unnecessary or overly broad given that CBDC is not yet a standard retail payment method. Another likely area of debate is the bill’s broad reach into private contracts and financial transactions, including its explicit override of Title 47 and its conforming changes to multiple unrelated statutes.
SB1095 would add a new legal-tender chapter to Title 1 and amend statutes in Titles 6, 9, 11, 43, and 47 to incorporate the new definition and prohibit federally recognized CBDC from being treated as legal tender or used as payment in contracts and related instruments. It would also revise escrow and trust-related provisions to exclude CBDC-backed settlement, while preserving distributed ledger technology transfers settled in U.S. dollars. The bill would affect state law governing currency, escrow practices, trust business definitions, local government video-service fee payments, and Arizona income tax provisions that reference legal tender and specie.
The bill appears to have generated a divided but ultimately favorable legislative response. It cleared Senate and House committees with narrow margins in some stages and passed the House on third reading by a 32-25 vote, suggesting support from a majority but substantial opposition. The pattern of votes indicates the measure was controversial and largely partisan or ideologically split rather than broadly consensus-driven.
The central controversy is whether Arizona should proactively ban federally recognized CBDC from legal and contractual use. Supporters likely argue the bill protects monetary freedom, limits government overreach, and prevents future forced adoption of digital currency. Opponents likely object to the breadth of the prohibition, especially the clause applying it to all contracts and commercial transactions notwithstanding Title 47, and may view the measure as unnecessary, speculative, or disruptive to future payment innovation. There may also be concern about the bill’s technical conforming changes and whether they could create uncertainty for escrow, banking, and commercial practices.