Arizona SB 1042: Strategic Digital Asset Reserve Act

SB 1042 would amend Title 35, Chapter 2 of the Arizona Revised Statutes by adding Article 2.2, titled the Arizona Strategic Digital Asset Reserve. The operative section would apply to a “public fund,” defined in the bill as the State Treasurer or a retirement system established under Title 38. The bill is therefore aimed at public monies under state treasury or public retirement-system control, rather than private crypto activity or retail virtual-currency payments.

• It would allow a public fund to invest not more than 10% of the public monies under its control in virtual currency holdings.
• It would define “retirement system” by reference to retirement plans or systems established under Title 38.
• It would allow a public fund to use a federal strategic Bitcoin reserve for storage if the U.S. Treasury establishes such a reserve.
• It would define virtual currency to include stablecoins, while excluding legal tender issued by the United States or a foreign government.

The central provision is permissive rather than mandatory. It states that a public fund “may” invest up to 10% of public monies under its control in virtual currency holdings. The measure does not, in the text reviewed, direct any specific purchase, require a minimum allocation, identify a preferred asset, or set an implementation date. For a legal-reference profile, this distinction matters: the bill would create investment authority if enacted, but it would not itself record an investment decision or establish an operative state holding.

The House research summary describes the bill as authorizing the State Treasurer or a state retirement system to invest in virtual currency holdings. That summary also notes existing Arizona statutes governing state treasury investments and public retirement-system investment authority, giving the proposal its public-finance context. Because SB 1042 is still a bill, those descriptions should be read as proposed changes rather than current law.

The engrossed bill text defines virtual currency as a digital representation of value that functions as a medium of exchange, unit of account, and store of value, and it expressly includes stablecoins. It excludes legal tender issued by the United States or a foreign government. The stablecoin definition incorporates a federal reference: a payment stablecoin as defined in the federal GENIUS Act of 2025 and issued in compliance with applicable federal laws governing that issuance.

SB 1042 also links Arizona public-fund holdings to a possible federal custody pathway. If the U.S. Secretary of the Treasury establishes a strategic Bitcoin reserve for government Bitcoin holdings, the bill would allow a public fund to store its virtual currency holdings in a secure segregated account within that reserve. The language is conditional and does not itself create a federal reserve account.

The measure was prefiled on December 19, 2025, introduced in the Senate on January 12, 2026, and reported do pass by the Senate Finance Committee on January 26, 2026. The Senate passed the bill on third reading on February 25, 2026, and it was transmitted to the House. The House Ways and Means Committee reported it do pass on March 25, 2026, and the House Committee of the Whole took a “Do Pass” action on April 14, 2026. No final House passage, transmission to the governor, signature, veto, or chaptered act entry was found in the sources reviewed for this draft.