AZ SB1649

Establishes the Digital Assets Strategic Reserve Fund administered by the State Treasurer, funded by legislative appropriations and digital assets seized, confiscated, or surrendered to Arizona

Requires digital assets be held through a qualified custodian (federal/state-chartered bank or trust company) or via an exchange-traded product approved by the SEC, CFTC, or Arizona Department of Insurance and Financial Institutions

Authorizes the State Treasurer to invest fund monies and loan digital assets to generate returns, provided loans do not increase financial risks to the state

Defines eligible digital assets as cryptocurrencies meeting 1% of the "digital gold standard benchmark" (set when Bitcoin reached $100,000), including Bitcoin, Digibyte, XRP, stablecoins, and NFTs

Mandates comprehensive security requirements for custody solutions including geographically diversified data centers, multiparty governance, encrypted environments, regular security audits, and disaster recovery protocols