In a significant legislative turnaround, the Arizona State Senate has revived a key digital currency bill, breathing new life into the effort to establish a state-run reserve fund for Bitcoin and other digital assets. Following a narrow 16-14 vote, the Senate passed a motion to reconsider House Bill 2324 (HB 2324), which had initially been defeated during its third reading in the House of Representatives on May 7.
This revived bill, if it becomes law, would authorize the state to manage digital assets seized in criminal forfeiture cases. Specifically, it proposes the creation of a “Bitcoin and Digital Assets Reserve Fund” to be overseen by the state treasurer. The distribution structure outlined in the bill is detailed. The first $300,000 from forfeited digital asset sales would be allocated to the Attorney General's Office. Any amount exceeding that would be split, with 50% going to the Attorney General, 25% to the state general fund, and the remaining 25% to the new digital assets reserve fund.
The legislative journey of HB 2324 is set against a backdrop of robust debate and varying approaches to cryptocurrency within Arizona's government. Governor Katie Hobbs has demonstrated a cautious and nuanced stance, signing some crypto-related proposals while rejecting others. Earlier this year, Hobbs signed House Bill 2749 into law, which allows the state to take custody of unclaimed cryptocurrency and establishes a Bitcoin reserve fund that does not use any taxpayer money. This fund can grow its holdings through mechanisms like staking rewards and airdrops.
However, the Governor has vetoed more ambitious bills that sought to more deeply integrate crypto into the state's finances. Senate Bill 1025, which would have permitted the state treasurer to invest up to 10% of public funds into Bitcoin, was struck down by Hobbs. In her veto letter, she stated that “Arizonans' retirement funds are not the place for the state to try untested investments like virtual currency.” Similarly, she vetoed SB 1373, citing the “current volatility in cryptocurrency markets” as a reason not to commit general fund dollars.
The revival of HB 2324 underscores the persistence of some lawmakers to establish a clear regulatory framework for digital assets. The bill outlines three options for handling the seized digital assets: storage in state-approved digital wallets, sale through licensed crypto exchanges, or retention in their native form based on market and security assessments. The legislation now heads back to the House for a final reconsideration vote, the outcome of which will be another crucial marker for the future of cryptocurrency policy in Arizona.