Arizona Legislature Passes Bill That Could See the State Invest Billions of Dollars Into Bitcoin (BTC)

Arizona's legislature has passed a pioneering measure that could allow the state to invest billions of dollars in Bitcoin (BTC) and other cryptocurrencies.

Arizona's legislature has passed a measure that could allow the state to invest billions of dollars in Bitcoin (BTC) and other cryptocurrencies, setting a pioneering precedent in the U.S., local news reports revealed.

The legislation, Senate Bill 1025, passed with a majority vote in both the House and Senate, despite some lawmakers' concerns about the potential risks. It now heads to Governor Katie Hobbs for her signature.

If signed, Arizona would become the first state in the nation to hold Bitcoin in its treasury, setting a significant national precedent for the integration of cryptocurrencies into public finance frameworks.

The bill defines eligible investments as any “digital representation of value” not based on the U.S. dollar or foreign currencies, effectively encompassing a variety of digital assets, including Bitcoin and non-fungible tokens (NFTs).

It also establishes a Digital Assets Strategic Reserve Fund, which will hold seized cryptocurrency assets and future appropriations, with an emphasis on on-chain auditability and standardized risk controls.

The bill specifies that the investments must comply with standard fiduciary risk management protocols, considering factors such as liquidity, solvency, and custodial safety.

This measure is intended to protect public funds from the inherent volatility and custodial risks associated with cryptocurrency investments.

The legislation also mandates that at least 50% of the fund's assets be held in high-grade, highly liquid, and easily marketable securities, such as U.S. Treasury bills, notes, and bonds.

The remaining 50% can be allocated to other types of assets, including but not limited to, short-term obligations of any U.S. government agency, investment-grade corporate debt securities, and common stock issued by U.S. or foreign corporations.

Moreover, the bill expressly permits, but does not require, the investment of up to 10% of the fund's assets in digital assets, subject to certain conditions.

These conditions include high net liquidity, low volatility, and a minimum six-month market presence for any digital asset to be included in the investment portfolio.

The bill's passage follows a recent bipartisan agreement on disability funding disputes, which prompted Governor Hobbs to ease a previous veto threat.

Her signature on the bill would immediately authorize the allocation process for investing in digital assets. A veto, on the other hand, would halt the bill and pause all associated budgetary allocations.

The legislation has sparked debate among lawmakers, with some expressing concern over the potential risks of investing in cryptocurrencies, especially given the recent market downturn.

However, proponents argue that such investments could generate significant returns and help diversify the state's asset portfolio.

Earlier this year, state lawmakers in Texas, Florida, and New Hampshire also proposed bills to create Bitcoin-backed reserve strategies, aiming to attract blockchain innovation and diversify their public asset portfolios.

If signed by Governor Hobbs, Arizona's action could set a new precedent for other states to follow in exploring the possibilities of integrating digital assets into their economic frameworks.

As of 2025, Arizona's total public assets under management (AUM) are over $31.4 billion. Senate Bill 1025 allows the state to allocate up to 10% of its AUM, which comes to $3.14 billion, to invest in digital assets.

This allocation would make Arizona the second-largest institutional holder of Bitcoin among U.S. public entities, second only to the Federal Reserve, and surpass notable corporate holders like Tesla and Marathon Digital, the latter being the largest Bitcoin mining firm.