The Arizona Senate has advanced a bill to create a digital asset reserve funded by confiscated cryptocurrency, pending final approval.
The Arizona State Senate has taken a significant step by passing bill SB 1649, which aims to create a strategic reserve dedicated to digital assets. This reserve is intended to be funded through cryptocurrency that has been confiscated.
Following its passage through the necessary committees, the bill is now set for a final vote.
The management of the reserve will fall under the purview of the state treasurer, who will have the authority to invest the funds and provide crypto loans, ensuring these activities do not introduce additional financial risks to Arizona's budget.
Custodians, such as banks or trust companies, will be tasked with securely holding the assets. Furthermore, the bill allows for investments in SEC or CFTC-approved exchange-traded products.
The legislation is designed to encompass a variety of digital assets beyond Bitcoin, permitting the inclusion of XRP, Digibyte, stablecoins, and NFTs, as long as they meet specific market value thresholds.
However, the bill faces a challenge from Arizona Governor Katie Hobbs, who has previously vetoed four similar proposals, citing concerns about the volatility of cryptocurrencies and their potential impact on the state's finances.
This legislative push comes amid a downturn in the cryptocurrency market, with Bitcoin currently trading below $64,000, reflecting a 4.3% decrease in just one day.
Notably, Arizona had already taken steps towards establishing a reserve fund for confiscated crypto assets with the passage of bill HB 2324 in June 2025.
