Key Takeaways
- Arizona Governor Katie Hobbs vetoed HB 2324, which proposed a state-managed Bitcoin and digital asset reserve fund.
- The bill aimed to allow investment of seized crypto assets but was criticized for potentially disincentivizing local law enforcement cooperation.
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Arizona’s House Bill 2324 (HB 2324), which was revived last month in a bid to form a reserve of Bitcoin and other digital assets from criminal forfeitures, failed to become law after Governor Katie Hobbs rejected the proposal on Tuesday.
In a veto issued on July 1, Hobbs said the bill would disincentivize local law enforcement from cooperating with the state in cases involving digital asset forfeiture.
HB 2324 aims to create a state-managed fund composed solely of seized crypto. However, it would at the same time redirect part of the proceeds from seized digital assets away from local law enforcement agencies.
Under the proposed distribution framework, the first $300,000 from the sale of seized digital assets would be allocated to the Attorney General’s Office. Any remaining proceeds would be divided so that 50% goes to the Attorney General, 25% goes to the state’s general fund, and 25% goes to the Bitcoin and Digital Assets Reserve Fund.
Arizona lawmakers revived HB 2324 last month and swiftly passed it in the Senate. The bill cleared the House just last week on a 34-22 vote.
The veto was not entirely unexpected, given that Governor Hobbs had previously shut down several crypto-related measures. This started with Senate Bill 1025, which sought to enable state officials to invest up to 10% of treasury and pension assets in digital assets like Bitcoin.
Senate Bill 1373, which would have created a Digital Assets Strategic Reserve Fund, and Senate Bill 1024, which aimed to allow state agencies to accept crypto payments for taxes, fees, fines, rent, and penalties, were likewise blocked.
Arizona has only enacted HB 2749, becoming the second US state to pass a crypto reserve bill into law after New Hampshire. The legislation addresses unclaimed crypto assets presumed abandoned.
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