From Sonic Retro
The Jeweled Scepter is an ancient and mysterious artefact from Blaze's world, and plays a key role in Sonic Rush Adventure, where it is stolen by Captain Whisker for Eggman and Eggman Nega. Most of the plot of Rush Adventure sees Sonic and Blaze pursuing the pirate across the ocean to recover it. The Scepter's strength lies in its ability to channel the Power of the Stars, an energy which separates and sustains parallel dimensions.
In Sonic Rush Adventure, the royal family of Blaze's kingdom is said to have been the guardians of the Scepter for generations. During Sonic and Tails' visit to the alternate dimension, it rests at the bottom of Coral Cave, an undersea grotto connected to the alternate-Babylonian ruins on Hidden Island 1. Captain Whisker steals the Scepter during a cutscene at the end of the third level, sicing the Ghost Kraken on Sonic to expedite his escape.
As Sonic, Blaze, Tails, and Marine chase the pirates down over the course of the game, snippets of information about the Scepter come to light, mostly from Blaze's retelling of old legends. Supposedly it has power over the planet's geological activity, as well as being the "key" to the "Power of the Stars". After the final battle against Whisker at Big Swell, Marine recovers the scepter and it is sent back to the royal treasury by Gardon.
However, in the Last Story, Eggman and Eggman Nega smash the treasury and recover the Scepter in the Egg Wizard. In the cutscene, Nega explains that the Power of the Stars which the Scepter harnesses is the same energy which separates parallel universes. And that power can be tapped into - under Southern Island! The last boss of the game, Deep Core, sees the Egg Wizard wield the powered-up Scepter against Super Sonic and Burning Blaze.
After the two Eggmen are defeated, the Scepter is recovered once more, returned to its rightful place, and placed under heavier guard than ever before, hopefully preventing its power from being misused again.