Arizona Senate Advances Bill to Create Crypto Reserve Fund

TLDR

• Arizona lawmakers advanced Senate Bill 1649 to create a state-managed crypto reserve funded by seized digital assets.
• The Senate Finance Committee approved the bill in a 4 to 2 vote before sending it to the full Senate calendar.
• The proposed fund would hold Bitcoin, XRP, DigiByte stablecoins, and certain NFTs obtained through criminal proceedings.
• The Arizona State Treasurer could invest up to 10 percent of public funds in digital assets under the measure.

Arizona lawmakers are advancing Senate Bill 1649 to create a state-managed digital asset reserve. The proposal would place seized cryptocurrencies under the control of the State Treasurer. The measure now awaits a full Senate vote after clearing two key committees.

The Senate Finance Committee approved SB 1649 in a 4–2 vote on February 16. Lawmakers then moved the bill through the Rules Committee and placed it on the full Senate calendar by February 24. The proposal authorizes the Arizona State Treasurer to establish a Digital Assets Strategic Reserve Fund.

The fund would hold digital assets that courts seize, confiscate, or receive through surrender in criminal cases. Lawmakers state that the fund would not rely on direct taxpayer appropriations. However, the Treasurer could invest up to 10% of public funds in digital assets under the bill.

Bitcoin and the Arizona Crypto Reserve Strategy

The legislation lists Bitcoin as an eligible asset for the proposed reserve. Lawmakers cited Bitcoin’s fixed supply of 21 million coins in committee discussions. Supporters argue that this cap supports its use as a hedge against inflation.

Senator Mark Finchem supports holding seized Bitcoin instead of auctioning it immediately. He said the state should benefit from potential appreciation rather than sell assets quickly. “The state should capture value for taxpayers,” Finchem said during hearings.

The bill permits the Treasurer to loan digital holdings to generate returns. However, the Treasurer must ensure that lending does not introduce added financial risk. Custody rules require multi-party governance and geographically distributed data centers.

Governor Katie Hobbs has vetoed similar digital asset proposals in the past. She cited volatility as a concern in prior veto letters. SB 1649 must pass the full Senate before it can reach her desk.

XRP and DigiByte Included in Eligible Assets

The bill names XRP and DigiByte alongside Bitcoin as approved assets. Lawmakers also included stablecoins and non-fungible tokens within the eligible categories. The measure does not limit holdings to a single blockchain network.

Arizona has built legal frameworks for digital assets over the past year. In May 2025, HB 2749 allowed the state to retain unclaimed digital assets in native form. The law prevented automatic conversion of abandoned crypto into cash.

Separate legislation seeks to exempt cryptocurrency from state property taxes. Lawmakers have also addressed crypto ATM fraud through new compliance rules. Operators must provide full refunds to defrauded first-time customers.

The new ATM rules also cap daily transactions for new users at $2,000. Lawmakers said the cap aims to reduce fraud exposure. The provisions operate independently from SB 1649.

Law enforcement agencies often use forfeiture proceedings to seize digital assets. Victim restitution holds legal priority over agency claims in criminal cases. In crypto matters, victims may claim the actual digital assets taken.

Texas and Connecticut have enacted laws addressing criminal forfeiture of digital assets. South Dakota advanced SB 43 to define cryptocurrency as a seizable asset. New Hampshire remains among seven states pursuing strategic reserve legislation as of early 2026.

SB 1649 now stands on the Arizona Senate calendar for a full floor vote. Lawmakers have not scheduled a final vote date. The bill requires majority approval before it proceeds further in the legislative process.

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