Arizona Governor Vetoes Third Cryptocurrency Reserve Bill

Arizona Governor Katie Hobbs has vetoed House Bill 2324, which aimed to establish a Bitcoin and Digital Assets Reserve Fund backed by seized criminal assets. This decision marks the third rejection of cryptocurrency-related reserve proposals in Arizona’s current legislative session, indicating a cautious approach to integrating digital assets into state finances.

House Bill 2324, initially failing a House vote in early May, was later revived and passed with a 34-22 vote on June 24. However, Governor Hobbs vetoed the bill, citing concerns that it could discourage cooperation between local law enforcement and state authorities in digital asset forfeiture cases. The Governor’s veto letter to House Speaker Steve Montenegro emphasized that the bill might disincentivize local law enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions.

This veto follows two earlier vetoes of similar legislation: Senate Bill 1025, which would have allowed the state to invest up to 10% of public funds in Bitcoin and other digital assets, and Senate Bill 1373, which aimed to create a Digital Assets Strategic Reserve Fund funded by seized digital assets and legislative appropriations. Additionally, Senate Bill 1024, proposing that state agencies accept cryptocurrency payments for fines and taxes, was also vetoed. These repeated vetoes underscore Governor Hobbs’ conservative fiscal philosophy, prioritizing taxpayer protection and cautious integration of emerging financial technologies.

Despite these setbacks, Arizona has made progress with HB 2749, signed into law on May 7. This legislation establishes a reserve funded by unclaimed property, including virtual currencies, airdrops, and staking rewards. Unlike the rejected bills, HB 2749 does not authorize direct investment in cryptocurrencies but instead leverages unclaimed digital assets already in state possession. This approach aligns with the Governor’s cautious fiscal management, avoiding the use of active state funds for cryptocurrency investments while still acknowledging the growing presence of digital assets in public finance.

The reserve fund created by HB 2749 represents a pragmatic step toward integrating blockchain-based assets without exposing taxpayers to undue risk. This balanced strategy may serve as a model for measured digital asset adoption that safeguards taxpayer interests while recognizing the evolving financial landscape. As other states adopt divergent policies, Arizona’s approach highlights a nuanced and cautious method of incorporating digital assets into public finance.