Lawmakers in Arizona have taken a significant step toward formalizing state-level engagement with digital assets by advancing legislation that would create a Digital Assets Strategic Reserve Fund, allowing the state to hold, invest and potentially lend seized cryptocurrencies.

Arizona senate backs crypto reserve fund

The measure, Senate Bill 1649 (SB1649), cleared the Senate Finance Committee in a 4–2 vote and was subsequently approved by the Senate Rules Committee, moving it closer to a full Senate vote.

Under the proposed law, the Arizona State Treasurer would administer the reserve, using assets that have been confiscated, forfeited or surrendered through criminal or civil enforcement actions. Instead of relying on taxpayer dollars to acquire crypto on the open market, the fund would be capitalized with these seized holdings.

Eligible assets named in the bill include Bitcoin (BTC), XRP (XRP) and DigiByte, alongside other digital assets that meet specified “fair value” criteria such as stablecoins and non-fungible tokens.

The inclusion of XRP in the reserve’s eligibility framework marks a notable development for the token, as it would represent one of the first instances of a U.S. government entity formally recognizing it as a potential reserve asset.

While the legislation does not require the state to immediately purchase or hold these assets, it establishes a legal structure for doing so in the future.

The bill’s progress highlights a broader trend in U.S. crypto policy, with several states exploring ways to integrate digital assets into public finance strategies.

However, similar initiatives in Arizona have faced pushback in the past from Governor Katie Hobbs, who has expressed caution about exposing state funds to cryptocurrency volatility. SB1649 must still pass both chambers of the legislature and survive executive review before becoming law.