Arizona Establishes Bitcoin Reserve Funded by Seized Criminal Assets

Arizona has taken a significant step in the realm of digital assets with the passage of HB2324, a bill that establishes a state-managed Bitcoin reserve funded by seized criminal assets. This legislation updates Arizona’s forfeiture laws to formally include cryptocurrencies, setting clear rules for law enforcement to securely seize and store these digital assets using approved digital wallets. The first $300,000 of seized assets will go to the Attorney General’s office, with the remainder split between the Attorney General, the state’s general fund, and the reserve fund.

The journey of HB2324 has been eventful. Initially rejected by the House on May 7, the bill faced a narrow 16–14 Senate vote on June 19. Republican Senator Janae Shamp, who had previously voted against it, filed a motion to reconsider. This motion led to the bill returning to the Arizona House of Representatives, where it ultimately passed, paving the way for it to be sent to Governor Katie Hobbs for her signature.

If Governor Hobbs signs HB2324, it will become the second Bitcoin reserve-related bill enacted in Arizona. The first, HB2749, was signed earlier by Governor Hobbs and created a reserve fund for unclaimed digital assets held by the state. This law allows Arizona to take possession of abandoned cryptocurrencies after three years and manage them through the Department of Revenue, but it does not involve criminal forfeiture or law enforcement seizures.

In contrast, two earlier attempts to establish a Bitcoin reserve—SB1373 and SB1025—were both vetoed by Governor Hobbs. These proposals aimed to allow direct state investment in Bitcoin and other cryptocurrencies, a move the Governor rejected due to risk and policy concerns. The passage of HB2324 marks a shift in approach, focusing on seized assets rather than direct investment.

The implications of HB2324 are significant. By creating a Bitcoin reserve funded by seized criminal assets, Arizona is taking a proactive stance on managing digital currencies within the state. This move not only provides a mechanism for law enforcement to handle seized cryptocurrencies but also ensures that these assets are utilized for public benefit. The reserve fund, which will receive 25% of the seized assets, can be used to support various state initiatives, potentially enhancing Arizona’s financial stability and innovation in the digital asset space.