Arizona Bill Proposes Allowing State Government to Hold and Operate Seized Bitcoin

Arizona Senate Bill 1649 (SB 1649) has passed through the Senate Finance Committee and Rules Committee and is now heading for a vote by the full Senate. If passed, the bill would empower the state treasurer to manage digital assets seized by law enforcement for the long term, rather than immediately auctioning them off for cash.

Currently, most states in the United States quickly sell seized cryptocurrencies for US dollars, with the funds going into the state treasury. SB 1649 proposes establishing a "Digital Asset Strategic Reserve Fund" to be managed by the state treasurer, encompassing seized Bitcoin, XRP, DigiByte, and eligible USD stablecoins. The fund could choose to hold, invest, or lend these digital assets, with the aim of generating additional revenue for the state treasury through price fluctuations or yield generation.

To mitigate security risks, the bill explicitly stipulates that all digital assets must be held by qualified custodians, including federally or state-chartered banks, trust companies, or exchange-traded products approved by the U.S. Securities and Exchange Commission. This mechanism is designed to address external concerns about the security of government-held crypto assets. Notably, the bill sets a unique asset eligibility standard: in addition to the three explicitly listed cryptocurrencies, other digital assets must meet a "fair value score of no less than 1% relative to Bitcoin" to be considered. This scoring benchmark uses a Bitcoin price target of $100,000 as a reference point, rather than traditional metrics like market capitalization or liquidity. As of now, the price of Bitcoin is around $67,000, which has not yet reached that threshold, so even if some assets technically meet the standards, they cannot be immediately included in the reserve. The bill passed the Finance Committee on February 16, 2026, by a vote of 4-2, and subsequently passed the Rules Committee on February 24 and was placed on the "consent calendar," meaning it can proceed to a full vote without item-by-item debate. Judging from the committee voting structure, the bill has received majority support from the Republican-led Senate, reflecting a growing trend in some U.S. states to incorporate Bitcoin into public asset management policies, with similar motions having emerged in states like Tennessee, Texas, and Missouri.