Arizona Advances SB1649 to Create State-Managed Crypto Reserve Fund

Arizona’s proposed crypto reserve is gaining momentum after Senate Bill 1649 (SB1649) cleared the Senate Finance Committee on February 16 in a 4-2 vote. Introduced by Senator Mark Finchem, the legislation now heads to the Senate Rules Committee and could position Arizona at the forefront of state-level digital asset adoption.

SB1649 seeks to establish a Digital Assets Strategic Reserve Fund overseen by the Arizona State Treasurer. The fund would consist of digital assets seized, confiscated, or voluntarily surrendered to the state, along with legislative appropriations. Unlike proposals involving direct cryptocurrency purchases, this bill focuses strictly on managing assets already obtained through legal processes.

Under the proposed framework, the state treasurer would be responsible for secure custody solutions. This could include working with qualified custodians or investing through exchange-traded products issued by Arizona-registered investment companies. The bill also authorizes the treasurer to invest or loan digital assets held in the reserve to generate returns, provided such activities do not increase financial risk. According to the Senate fact sheet, the measure is not expected to impact Arizona’s General Fund. Investment oversight would remain subject to existing constitutional guidelines, with continued review by the Arizona State Board of Investment.

SB1649 outlines clear eligibility criteria for digital assets. The bill broadly defines eligible cryptocurrencies to include virtual currencies, on-chain assets, and tokens that provide economic or access rights. To qualify, assets must meet a minimum threshold based on a “cryptocurrency fair value score,” which evaluates factors such as market capitalization, network activity, transaction volume, development ecosystem strength, and decentralization metrics. Assets must achieve at least 1% of a defined digital gold standard benchmark.

Bitcoin, XRP, DigiByte, stablecoins, and non-fungible tokens are specifically mentioned as eligible assets. As lawmakers debate the Arizona crypto reserve proposal, cryptocurrency prices have recently declined, with Bitcoin trading near $67,035 and XRP around $1.44. Despite market volatility, SB1649 signals Arizona’s growing commitment to structured digital asset management and blockchain innovation.