Arizona Enacts Law to Retain Unclaimed Digital Assets in Native Form

Arizona has recently enacted a significant piece of legislation, House Bill 2749, which allows the state to retain unclaimed digital assets in their original form. This law, signed by Governor Katie Hobbs, introduces a three-year dormancy threshold before digital assets must be turned over to the state. The bill, led by House Commerce Committee Chairman Jeff Weninger, modernizes Arizona’s unclaimed property laws to account for crypto by identifying, collecting, and safeguarding unclaimed digital assets and allowing the state to maintain its value instead of liquidating it.

Under the new law, digital assets will be presumed abandoned if the rightful owner fails to respond to communications or record any activity on an account over a three-year period. After this, holders must give the digital assets to the Department of Revenue in their native form. The law also creates a reserve fund where earnings from unclaimed assets, such as staking rewards or airdrops, can be deposited and later allocated through legislative approval.

This measure is separate from a higher-profile crypto proposal that was recently vetoed. That bill, brought by State Senator Wendy Rogers, sought to create a Strategic Bitcoin Reserve funded by seized state assets. Governor Hobbs vetoed it, citing concerns about volatility and fiduciary risk. Rogers has pledged to reintroduce the bill in the next session.

Across the U.S., state-level attempts to legislate crypto reserves and digital asset policy are heating up, though many are stumbling. Similar bills have also failed in various states. New Hampshire, however, has had some success in passing crypto legislation. Governor Kelly Ayotte signed HB 302 into law, authorizing the state treasurer to allocate up to 5% of public funds to either precious metals or digital assets with a minimum average market cap of $500 billion, effectively greenlighting Bitcoin for state investment.

This law ensures Arizona doesn’t leave value sitting on the table and puts the state in a position to lead the country in how it secures, manages, and ultimately benefits from abandoned digital currency. The passage of this law comes after a series of legislative efforts and debates within the Arizona legislature. Earlier this year, the state's lawmakers passed two Bitcoin Reserve bills, which sought to create a fund using unclaimed crypto, airdrops, and staking rewards. However, Governor Hobbs vetoed one of these bills, citing concerns about the funding structure and the potential risks associated with cryptocurrencies. Despite this setback, the legislature's persistence in pushing for digital asset regulation has culminated in the enactment of the new law.

The new legislation not only addresses the issue of unclaimed digital assets but also underscores Arizona's commitment to embracing innovative technologies. By allowing the state to hold unclaimed digital assets in their native form, Arizona becomes the first state in the U.S. to take such a proactive approach. This move is expected to have far-reaching implications for the broader adoption and regulation of cryptocurrencies, as other states may look to Arizona as a model for managing digital assets.

The passage of this law also highlights the growing acceptance of cryptocurrencies as a legitimate asset class. As more states and jurisdictions around the world grapple with the challenges posed by digital currencies, Arizona's approach offers a potential solution to the problem of unclaimed assets. By establishing a clear framework for claiming and managing these assets, the state aims to ensure that they are not lost or forgotten, but rather utilized for the benefit of the community.

In conclusion, Arizona's new law on unclaimed digital assets represents a significant step forward in the regulation of cryptocurrencies. By allowing the state to claim ownership of abandoned digital assets and establishing a mechanism for their management, Arizona sets a precedent for other states to follow. This move underscores the state's commitment to embracing innovative technologies and highlights the growing acceptance of cryptocurrencies as a legitimate asset class. As the landscape of digital asset regulation continues to evolve, Arizona's approach offers a potential solution to the challenges posed by unclaimed assets, paving the way for broader adoption and integration of cryptocurrencies.