Arizona’s latest crypto reserve bill is built to pass Governor Katie Hobbs’ risk test with past vetoes in mind.
Arizona’s handling of digital assets reached a new milestone this week as lawmakers advanced a proposal to establish a Digital Assets Strategic Reserve Fund.
Following a 4–2 vote in the Senate Finance Committee, the bill now heads to the Senate Rules Committee, which is set to review the measure on 23 February ahead of a possible full Senate vote.
Senate Bill 1649 (SB1649) would establish a state reserve overseen by the Arizona State Treasurer to hold and manage selected digital assets. Unlike earlier efforts which focused on buying Bitcoin, this proposal takes a broader and more flexible approach.
Under the bill, the fund could be built using digital assets seized or forfeited to the state, voluntarily surrendered holdings and any funds appropriated by lawmakers. Taxpayer money would only be used if legislators explicitly decide to allocate it.
If funded, the Treasurer would be allowed to invest reserve assets and, in some cases, lend digital holdings, provided this does not increase financial risk to the state. The legislation also introduces a “cryptocurrency fair value” framework, requiring assets to be assessed using metrics such as market capitalisation, network activity and decentralisation.
The bill names several digital asset categories, including Bitcoin, XRP, stablecoins, NFTs and other blockchain-based assets with economic or proprietary rights.
Arizona is not alone in exploring state-level digital asset strategies, with Texas and Missouri among those to have passed or are considering similar measures.
Political reality check
Arizona Governor Katie Hobbs has consistently taken a cautious view on exposing state finances to cryptocurrency volatility, vetoing several crypto-related bills over the last 12 months.
One of the earliest examples came with Senate Bill 1024, which would have let state agencies accept cryptocurrency payments for taxes, fines and fees through approved service providers.
Hobbs’ bigger vetoes, however, targeted bills which tried to put digital assets directly into state finances.
In early May 2025, she blocked Senate Bill 1025, the “Arizona Strategic Bitcoin Reserve Act,” which would have allowed the state to invest up to 10% of its treasury and retirement funds into Bitcoin and other digital assets.
Just days later, she vetoed Senate Bill 1373 (SB1373), a proposal similar to the current SB1649 debate. SB1373 would have set up a Digital Assets Strategic Reserve Fund using legislative appropriations and digital assets seized by the state.
“Current volatility in cryptocurrency markets does not make a prudent fit for general fund dollars,” Hobbs said at the time. “I have already signed legislation this session which allows the state to utilise cryptocurrency without placing general fund dollars at risk, which is the responsible path to take.”
Her mention of other “legislation” pointed to House Bill 2749, which updated Arizona’s unclaimed‑property rules to include digital assets, letting the state hold unclaimed crypto in its original form instead of converting it to cash.
Hobbs also signed House Bill 2387, a law regulating cryptocurrency kiosks, adding new consumer protections for Bitcoin ATM operators, including multilingual scam warnings, better disclosures, transaction limits, and 24/7 customer support
What’s different this time?
The concept of state-backed Bitcoin reserves was first sparked by US President Donald Trump, who issued an executive order on 6 March 2025 to create a strategic Bitcoin reserve alongside a broader US digital asset stockpile. However, Hobbs’ approach to digital assets is reminiscent of the previous administration, when President Joe Biden emphasised safeguards and risk management.
Understanding her stance, there are two key differences between SB1649 and last year’s vetoed bill. First, the new proposal focuses on assets the state already handles, seized, forfeited, or voluntarily surrendered, with any use of taxpayer money requiring an explicit legislative decision.
Second, the “fair value” requirement adds structure and safeguards. It forces the Treasurer to justify asset decisions using measurable criteria, something earlier drafts lacked, giving the reserve clearer oversight and a stronger governance framework.
