Arizona Governor Vetoes Bill to Create Bitcoin Reserve Fund

Arizona’s House Bill 2324 (HB 2324), which sought to establish a reserve of Bitcoin and other digital assets from criminal forfeitures, was vetoed by Governor Katie Hobbs on July 1. The bill aimed to create a state-managed fund composed solely of seized crypto, but it faced opposition due to its potential impact on law enforcement cooperation.

Governor Hobbs cited concerns that the bill would disincentivize local law enforcement from cooperating with the state in cases involving digital asset forfeiture. The proposed distribution framework of HB 2324 would have redirected part of the proceeds from seized digital assets away from local law enforcement agencies. Under the bill, 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, with 50% going to the Attorney General, 25% to the state’s general fund, and 25% to the Bitcoin and Digital Assets Reserve Fund.

HB 2324 was revived last month and swiftly passed in the Senate before clearing the House on a 34-22 vote just last week. However, the veto by Governor Hobbs was not entirely surprising, as she had previously rejected several crypto-related measures. Notably, she shut down Senate Bill 1025, which aimed to allow state officials to invest up to 10% of treasury and pension assets in digital assets like Bitcoin.

The rejection of HB 2324 highlights the ongoing debate surrounding the regulation and management of digital assets within the state. While the bill sought to create a dedicated reserve fund for seized crypto, the concerns raised by Governor Hobbs underscore the importance of maintaining cooperation between local law enforcement and state authorities in handling digital asset forfeitures. The veto also reflects the cautious approach taken by the governor towards crypto-related initiatives, as seen in her previous actions against similar proposals.