Arizona’s legislature has passed a pioneering measure that could allow the state to invest billions of dollars in Bitcoin (BTC) and other cryptocurrencies. The legislation, known as S.B. 1025, permits state public funds to allocate up to 10% of their managed assets into digital assets, positioning Arizona as a leader in the integration of digital assets into public finance.
First State To Invest In Bitcoin
According to Bloomberg, the newly passed bill defines eligible investments as any “digital representation of value” not based on the US dollar or foreign currencies. This broad definition is designed to encompass a variety of digital assets, including Bitcoin and non-fungible tokens (NFTs).
Additionally, the legislation establishes a Digital Assets Strategic Reserve Fund, intended to hold seized cryptocurrency assets and future appropriations. The fund will mandate on-chain auditability and standardized risk controls, ensuring transparency and security in managing these investments.
Arizona’s legislative action reflects a growing trend among US states, including Texas, Florida, and New Hampshire, which are exploring Bitcoin-backed reserve strategies. These states aim to attract blockchain innovation and diversify their public asset portfolios.
If signed into law, Arizona would become the first state in the nation to formally hold Bitcoin in its treasury, setting a significant national precedent for the integration of cryptocurrencies into public finance frameworks.
Following the legislative vote, Bitcoin was trading near $95,000, having recently made a 25% recovery from its monthly lows earlier in April. This renewed interest among institutional investors, coupled with Arizona’s move to recognize Bitcoin as a sovereign reserve asset, is contributing to positive market momentum.
Governor Hobbs’ Decision Loom
Arizona’s total public assets under management (AuM) exceed $31.4 billion as of 2025. Under Senate Bill 1025, the state could allocate up to $3.14 billion to invest in digital assets, including Bitcoin and NFTs.
This allocation would make Arizona the second-largest institutional holder of Bitcoin among US public entities, surpassing notable corporate holders like Tesla and Marathon Digital, the latter being the largest Bitcoin mining firm.
The legislation emphasizes that all investments in digital assets must comply with standard fiduciary risk management protocols. This requirement aims to protect public funds from the inherent volatility and custodial risks associated with cryptocurrency investments.
By mandating high liquidity and high-security instruments, Arizona is prioritizing the safety of its public assets while venturing into the digital currency space.
Despite the bill’s passage, Arizona Governor Katie Hobbs has not yet indicated her position on the Bitcoin legislation. Following a recent bipartisan agreement on disability funding disputes, she eased a previous veto threat.
However, her signature on the bill will be crucial; it would immediately authorize the allocation process for investing in digital assets. Conversely, a veto could halt the bill and pause all associated budgetary allocations.
Featured image from DALL-E, chart from TradingView.com
