Arizona Governor Katie Hobbs has vetoed a bill that would have created a state-managed reserve fund using bitcoin and digital assets seized from criminal activity. This is the third time Hobbs has put an end to a bill seeking to establish a bitcoin reserve.
The latest Arizona bitcoin reserve bill, House Bill 2324, would have established a “Bitcoin and Digital Assets Reserve Fund”. The fund was to be managed by the Arizona State Treasurer and funded through digital assets seized in criminal cases.
Under the plan, the first $300,000 from seized digital assets would have gone to the Anti-Racketeering Revolving Fund (ARRF), and any remaining funds would be split: 50% to the ARRF, 25% to the state’s general fund, and 25% to the reserve fund.
Supporters of the bill argued the fund would have helped Arizona adapt to the growing role of digital currencies in finance and law enforcement.
The bill had a rough road through the legislature. It failed in the House in May but was revived and passed 34-22 on June 24 after a narrow Senate approval.
Despite the legislative win, Governor Hobbs vetoed the bill on July 1, saying it would harm relationships with local law enforcement agencies.
In a letter to House Speaker Steve Montenegro, Hobbs wrote:
“This bill disincentives local law enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions.”
Her concern is that by taking funds from seized bitcoin and putting them in state control, local agencies might be less willing to help seize or investigate digital assets, weakening enforcement against digital-asset-related crimes.
This isn’t the first time Governor Hobbs has pushed back on bitcoin-related proposals.
She also vetoed Senate Bill 1025, which would have allowed the state to invest up to 10% of its public funds in bitcoin, and Senate Bill 1373, which proposed a separate strategic reserve using seized digital assets and legislative appropriations.
Another bill, SB 1024, which would have allowed state agencies to accept bitcoin for payments such as taxes and fees, was also rejected.
While Governor Hobbs has been skeptical of proposals involving state investment in bitcoin or using seized funds, she has shown support for consumer protection and non-investment uses of digital assets.
In May, she signed HB 2749, which created a separate reserve for unclaimed digital assets—abandoned wallets, airdrops or staking rewards. This fund is managed by the Department of Revenue and doesn’t involve state investment or asset seizure, so it’s a more cautious approach.
She also signed HB 2387, which regulates bitcoin ATMs more strictly to increase consumer protections.
Governor Hobbs’ actions mirror a broader trend among Democratic lawmakers who have been mostly cautious or skeptical of Bitcoin.
For example, Connecticut just passed a law that bans state agencies from investing in bitcoin or accepting it as payment.
This is in line with Senator Elizabeth Warren’s efforts, who has been pushing for tighter federal regulations, citing the digital assets market $2 trillion loss in 2022 as a warning sign.
