Arizona Inches Closer to Holding Bitcoin and XRP in Its State Reserve

The bill, Senate Bill 1649 (SB 1649), passed a key legislative hurdle this month and is now moving toward full Senate consideration after clearing both the Senate Finance Committee and the Senate Rules Committee.

The proposal, described in legislative summaries as the “Digital Assets Strategic Reserve Fund,” would empower the Arizona State Treasurer to manage a portfolio of digital assets sourced primarily from cryptocurrency that has been seized, confiscated, or surrendered to the state through law enforcement and civil actions. It represents a significant policy shift in how digital assets are treated within public finance frameworks, moving beyond speculative markets into state treasury operations.

From Seized Assets to Strategic Financial Tools

Unlike earlier state attempts that sought to purchase cryptocurrency using public dollars (and faced political pushback), this bill’s architects have emphasized that it would not tap general taxpayer funds to acquire assets. Instead, it would leverage holdings the state already possesses, or receives through legal processes and allow those assets to be held, invested, and, under certain conditions, loaned out to generate returns. Custody would be overseen through qualified custodians or regulated exchange-traded products, mirroring professional asset management standards.

The bill’s language, as posted on official legislative tracking services, also introduces mechanisms for broad definitions of “digital assets.” These definitions include virtual currencies, tokens meeting certain market and network criteria, such as market capitalization, network activity, and decentralized security metrics, as well as non-fungible tokens and regulatory-compliant exchange vehicles.

Senate Bill 1649, introduced in early February 2026 and sponsored by Senator Mark Finchem (R), builds on earlier Arizona efforts to craft a state-level digital asset reserve. Previous proposals in 2025 were ultimately vetoed by Governor Katie Hobbs amid concerns about fiscal and market risks. Unlike some prior drafts, the current bill would rely on cryptocurrency that is seized, confiscated, or surrendered to the state rather than using taxpayer money to buy digital assets outright.

Bitcoin, XRP, DigiByte and Beyond

One of the most notable features of the bill is its explicit enumeration of eligible assets: Bitcoin and XRP are named alongside other digital currencies like DigiByte, as well as broader categories such as stablecoins and non-fungible tokens (NFTs). By placing these assets into statutory language, the bill signals a degree of institutional recognition of their legitimacy and utility in financial contexts.

For XRP specifically, this development occurs against a backdrop of years of regulatory uncertainty, especially following the U.S. Securities and Exchange Commission’s long-running legal dispute with the asset’s issuer, Ripple Labs. Although that case has seen major legal victories for Ripple in recent courts, the inclusion of XRP here is striking insofar as it embeds the token into a state treasury policy rather than reducing it simply to speculative trading.

Political and Practical Considerations

The bill’s advancement in the legislature reflects broader efforts by certain state policymakers to position Arizona as a crypto-friendly jurisdiction. Supporters argue that formalizing digital assets into state financial tools could attract blockchain businesses, spur technological investment, and signal regulatory clarity at a time when federal policy remains uneven. But not all lawmakers are convinced. The Finance Committee vote was split 4–2, indicating skepticism among some legislators regarding risk, governance, or the fundamental role of digital assets in public finance.

Critics caution that digital assets, despite growing institutional interest, remain volatile and complex to manage. Issues such as secure custody, valuation transparency, auditability, and governance oversight are all unresolved at this stage and will likely surface in floor debates. Questions about how digital assets would be reported in state financial statements and how their market volatility is hedged are also expected to draw scrutiny.

After passing the Senate Rules Committee, SB 1649 is headed to a full Senate vote. If approved there, the bill would then need passage in the Arizona House of Representatives and the governor’s signature to become law. Senate leaders have not yet set a floor vote schedule.