Arizona is on the verge of becoming the first U.S. state to formally adopt a cryptocurrency reserve fund, a move that could reshape how state governments manage their financial assets. The proposal, Senate Bill 1307 (SB1307), known as the Digital Assets Strategic Reserve Fund, has passed a crucial legislative hurdle and now heads for a final vote in the state House of Representatives.

Crypto Reserve Fund Clears Major Legislative Stage

The bill recently received strong support from the House Committee of the Whole, where members voted in favor of moving it forward for a full House vote. If the legislation passes this final stage, it will be sent to Governor Katie Hobbs for approval.

Under SB1307, the fund would be managed by Arizona’s state treasurer and consist largely of assets seized by the state, as well as additional allocations approved by lawmakers. Up to 10% of the fund could be invested in digital assets each year, allowing the state to participate in the growing crypto economy.

Additionally, a portion of the fund could be lent out under certain conditions, provided that doing so does not create substantial financial risk. This design is intended to generate returns for the state while minimizing exposure to market volatility.

Governor Hobbs’ Veto Power Could Halt the Plan

Despite widespread legislative support, the fate of SB1307 remains uncertain. Governor Katie Hobbs has stated that she will not approve additional legislation until lawmakers address her demand for increased disability funding in the state budget.

She has already vetoed 15 bipartisan bills in the past week, underscoring her commitment to this stance. If lawmakers push the crypto reserve fund forward without addressing her priorities, the governor could halt the bill’s progress regardless of its support.

Public Interest and Crypto Buying on the Rise

The news of the bill's advancement has stirred interest among investors. According to data from CryptoQuant, the Coinbase Premium Index—which tracks buying activity on U.S.-based crypto exchanges—has shown a modest increase. This suggests growing interest in digital assets like Bitcoin among American buyers.

Arizona’s move may further validate crypto assets as legitimate tools for financial management, not just speculative investments. It also signals that some state leaders are willing to consider alternative stores of value in an increasingly volatile economic environment.

Arizona Leads the Way in State-Level Crypto Legislation

In addition to SB1307, Arizona lawmakers are considering another crypto-related measure, the Arizona Strategic Bitcoin Reserve Act (SB1025). While SB1307 includes a variety of digital assets, SB1025 specifically proposes that 10% of the state's public funds be allocated to Bitcoin.

This push for direct Bitcoin investment shows Arizona’s intent to diversify its financial portfolio and position itself at the forefront of digital finance among U.S. states.

Other States Explore Crypto Policy, With Mixed Results

While Arizona moves forward, several other states are exploring similar ideas. New Hampshire and Texas have advanced their crypto-related legislation to second-stage reviews in their respective committees.

Oklahoma, however, failed to progress its own digital asset proposal to the next reading, effectively halting its momentum. These mixed results highlight the challenges and opportunities facing states as they consider integrating crypto into public finance.

Strategic Implications for the Future of Finance

If SB1307 becomes law, it will mark a significant shift in how public funds can be managed. By legally allowing cryptocurrency holdings, Arizona could inspire other states to reconsider the role of blockchain-based assets in long-term fiscal strategy.

Still, the bill’s passage will depend on political negotiation and whether Governor Hobbs is willing to support it amid her budget-related demands. Should it move forward, Arizona will not only lead the way in crypto adoption but may also influence national conversations on public finance and innovation.