Arizona Legislators Approve Groundbreaking Proposal to Establish State-Backed Cryptocurrency Reserve

In a landmark move, Arizona’s state government has enacted legislation authorizing the creation of a dedicated cryptocurrency reserve fund using public Treasury assets. The bill, which passed through both legislative chambers, represents one of the first instances of a U.S. state allocating government funds to build a strategic digital asset reserve. This initiative positions Arizona at the forefront of governmental cryptocurrency adoption, with plans to diversify a portion of state reserves into major cryptocurrencies. The measure has sparked discussions about public sector involvement in digital assets and could set a precedent for other states considering similar treasury management strategies in the blockchain era.

Arizona State passes first Digital Reserve Bill

Arizona took a bold step toward integrating crypto into public finance as the Strategic Digital Assets Reserve Bill passed a legislative hearing. 

Following the House Committee of the Whole, the bill remains one vote away from the governor’s desk, before final approval.

If signed into law, it would make Arizona one of the first states to hold digital assets like Bitcoin, NFTs, and stablecoins in a strategic reserve managed by the state treasurer.

Arizona state passes SB 1373 Digital Asset Reserve Bill | April 2025

According to official documents, the bill allows Arizona to invest public funds through qualified digital custodians and crypto exchange-traded products registered in the state.

Annual investments are capped at 10% of the total fund, while digital lending is permitted to generate additional yield.

The reserve itself would be funded by legislative appropriations and assets seized by law enforcement, creating a self-sustaining, crypto-native fund with diverse inflows.

With institutional interest in Bitcoin and stablecoins accelerating, Arizona is positioning itself ahead of states like Texas and New Hampshire, which have only recently started dabbling in blockchain policy.

Following the approval of Bitcoin and Ethereum ETFs last year, US President Donald Trump’s executive order creating a crypto strategic reserve has sparked a crypto adoption push among states. 

Bitcoin vs S&P 500 Divergence, April 2025| Santiment

More so, Bitcoin has consistently outperformed the S&P 500 in recent months, which has spurred States to allocate treasury funds towards crypto. 

Political stand-off between Arizona Governor and the House threatens final approval

Despite bipartisan momentum behind SB 1373 and its sister bill SB 1025 (Arizona Strategic Bitcoin Reserve Act), political friction could derail the effort.

Governor Katie Hobbs has pledged to veto all legislation until lawmakers reach consensus on a separate funding package for disability services. 

While the digital reserve bill saw broad legislative support, it is now caught in the crossfire of the budget standoff. If the governor follows through on his veto, SB 1373 could end up as collateral damage in a fight unrelated to its merits.

Still, as states begin to explore new fiscal instruments to adopt blockchain technology, Arizona’s early push effectively sets a working precedent for similar legislative moves in other states. 

For now, all eyes are on the final House vote—and what comes next from the governor’s office.