Arizona Legislature Advances Bitcoin Reserve Bill Using Seized Assets

Arizona's legislature has taken a significant step forward in advancing a bill that establishes a "Bitcoin Reserve" funded by digital assets seized from criminal investigations. House Bill 2324, which has been approved by the House of Representatives in a 34-22 vote, directs the first $300,000 from seized cryptocurrency to the Attorney General, with the remaining funds split between the state and the reserve. This legislation establishes a reserve fund for assets seized through criminal forfeiture, and if signed by Governor Katie Hobbs, it will become the state's second official law related to cryptocurrency.

The bill, which has been advanced by the Arizona Legislature, aims to create a "Bitcoin and Digital Assets Reserve Fund" overseen by the State Treasurer. This fund will be managed by the state, ensuring that the cryptocurrency held by the state is not self-sovereign. The legislation allows the comptroller to invest in any digital asset with a market cap above $500 billion over the previous 12-month period, making it a significant piece of legislation that directs seized cryptocurrency into a state-managed Bitcoin and Digital Assets Reserve Fund.

The passage of this bill comes after Governor Hobbs rejected a previous "buy Bitcoin" bill, opting instead to approve a bill that allows the state to hold seized Bitcoin. This move by the Arizona Legislature is part of a broader trend in the United States, where several states are exploring the use of cryptocurrency as a reserve asset. The legislation is poised to become law, pending the governor's signature, and will set a precedent for other states considering similar measures.

Economically, this move allows Arizona to utilize crypto seized by law enforcement, mitigating impacts on public resources amid market volatility. The process applies exclusively to digital assets from criminal cases. Unlike other states, Arizona will not invest taxpayer funds in cryptocurrencies. American precedent for state-managed cryptocurrency funded through asset forfeiture is unprecedented. Although any large trades or liquidations by Arizona could draw attention, Governor Hobbs' stance limits proactive market impacts now.

The law permits liquidation on state-approved platforms while bypassing direct audit requirements, offering a more cautious stance on digital currency control and integration within public administration frameworks. The initiative highlights a legal approach to cryptocurrency management without public fund risk. The reserve's implications are limited for now.

Governor Katie Hobbs is expected to sign the bill by July 1, 2025. The reserve will be funded by digital assets forfeited in criminal cases. The Attorney General’s Office receives the first $300,000 per case; remaining assets are distributed among state funds, including a new Bitcoin and Digital Assets Reserve Fund. The bill, awaiting Governor Katie Hobbs' signature, comes after previous proposals including taxpayer funds were vetoed.