Arizona Governor Vetoes Bill for Bitcoin Reserve Fund

Arizona Governor Katie Hobbs has vetoed House Bill 2324, which proposed the creation of a "Bitcoin and Digital Assets Reserve Fund" to manage digital assets forfeited to the state. The bill, which was passed by the House in a 34-22 vote on June 24, aimed to establish a fund where the first $300,000 worth of crypto in a criminal forfeiture would go to the attorney general’s office. Any amount over that would have been split 50% with the AG, 25% to the state general fund, and 25% to the new reserve fund. However, Governor Hobbs vetoed the bill, stating in a letter that it “disincentivizes local enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions.”

The veto comes after the state’s House initially voted the bill down during its third reading in May, but the Senate revived it in a reconsideration vote last month. The governor’s veto could be overridden with a two-thirds vote by the House and Senate, but this appears unlikely unless some lawmakers switch their vote. This is the third time Governor Hobbs has vetoed a crypto-related bill this session. In May, she vetoed Senate Bill 1025, which would have created the Arizona Strategic Bitcoin Reserve and allowed the state treasurer to invest up to 10% in Bitcoin, citing cryptocurrencies as “untested investments.” She also vetoed Senate Bill 1373, a Strategic Digital Assets Reserve Bill that would have allowed the state to create a treasury from seized assets.

The veto of HB 2324 highlights the ongoing debate surrounding the management and utilization of seized digital assets. While the bill aimed to create a dedicated fund for managing forfeited crypto, Governor Hobbs' concerns revolve around the potential impact on local law enforcement cooperation. The veto underscores the complexities involved in integrating digital assets into state financial frameworks and the need for careful consideration of the implications for law enforcement and state finances.

The rejection of HB 2324 is part of a broader trend in the US, where several states are considering bills to create reserves for stockpiling Bitcoin and other cryptocurrencies. For instance, Texas Governor Greg Abbott recently signed a bill to create the Texas Strategic Bitcoin Reserve, a state-managed fund that will hold Bitcoin as part of the state’s long-term assets. New Hampshire also passed a bill enabling the state to invest in cryptocurrency and precious metals. These developments indicate a growing interest in leveraging digital assets as part of state financial strategies, despite the challenges and controversies that come with it.