In May 2025, Arizona passed the Strategic Digital Asset Reserve Act (SB1373), allowing the state treasury to invest up to 10% of public funds in digital assets such as Bitcoin, becoming the first state-level legislation to include cryptocurrency in public fund allocation. The bill includes three major innovations:

1. Investment Scope: Breaking through traditional treasury bond restrictions, allowing pension funds and others to allocate crypto assets;

2. Custody Mechanism: 50% of assets are held by the Federal Reserve System, and 50% are controlled by the state government with their own private keys;

3. Revenue Distribution: 30% of the revenue is allocated to an education fund, creating a precedent for cryptocurrency to benefit public utilities.

Other states such as Texas and Alabama are also following up with legislation, forming a 'state-level cryptocurrency arms race,' with an estimated 10 states injecting $3.7 billion in funds from 2025 to 2027, accounting for 1.2% of BTC circulation. The bill promotes compliant crypto custody and tax innovation but also faces risks such as price volatility (daily fluctuations may exceed 3%) and energy disputes (an annual increase of 42 billion kilowatt-hours in nationwide allocation).