Arizona Passes Bill Creating Bitcoin Reserve Fund From Seized Assets

Arizona has taken a significant step in the realm of cryptocurrency and law enforcement by passing HB2324, a bill that establishes a Bitcoin and Digital Assets Reserve Fund. This fund will be exclusively composed of cryptocurrencies seized through criminal asset forfeiture proceedings. The bill, which passed the House of Representatives on a 34-22 vote on June 24, 2025, following Senate passage on a 16-14 vote on June 19, is now awaiting signature by Governor Katie Hobbs to take effect.

The legislation is designed to avoid the complications that led to the veto of previous Bitcoin reserve bills, SB1373 and SB1025. These earlier proposals would have allowed direct state investment in cryptocurrency holdings using public funds, a move that Governor Hobbs had concerns about due to the speculative nature of such investments. By limiting the crypto reserves to assets obtained through criminal forfeiture, HB2324 sidesteps these issues and ensures that the funds are used for legitimate purposes.

If signed into law, HB2324 would mark Arizona’s second major crypto reserve legislation, following HB2749, which established an unclaimed property reserve fund. This new bill emphasizes the use of criminal asset forfeiture, setting it apart from earlier proposals that sought greater state investment power in cryptocurrencies. By relying on assets already confiscated by law enforcement, the bill avoids the political risks associated with using taxpayer money.

The bill includes provisions for secure custody practices, such as blockchain-based access control, third-party custodian requirements, and state-validated digital wallet usage. These measures ensure that the seized digital assets are managed professionally and securely. Additionally, the legislation outlines how forfeited cryptocurrency will be distributed. The first $300,000 will be directed to the Anti-Racketeering Revolving Fund. Any amount beyond that will be split as follows: 50% will continue supporting the same fund, 25% will go to the state’s general fund, and the remaining 25% will be allocated to the newly established Bitcoin Reserve Fund.

The criminal asset forfeiture model presents a useful mechanism for handling cryptocurrency seized during investigations. Law enforcement agencies are increasingly encountering digital assets in cases involving money laundering, drug trafficking, and financial fraud. The reserve fund allows for the organized handling of these assets, avoiding hasty liquidation that could limit the state’s recovery value. This approach ensures that the state can maximize the benefits of seized assets while maintaining transparency and accountability.

The implications of this legislation are significant. For law enforcement, it provides a new avenue for managing and utilizing seized assets, potentially enhancing their ability to combat crime. For the cryptocurrency community, it represents a significant endorsement of digital currencies by a state government, which could encourage further adoption and innovation in the sector. Additionally, the bill sets a precedent for other states considering similar measures, demonstrating a practical and responsible approach to integrating cryptocurrency into the legal and financial systems.

The passage of HB2324 is a testament to Arizona's forward-thinking approach to technology and law enforcement. By leveraging cryptocurrency to manage seized assets, the state is not only embracing the future of finance but also ensuring that its law enforcement efforts are well-supported and transparent. As the bill awaits the governor's signature, it remains to be seen how this initiative will be implemented and what impact it will have on the broader landscape of cryptocurrency and law enforcement in the United States.