Arizona Senate Passes Revived Bitcoin Reserve Bill for Seized Crypto Assets

Highlights:

• Arizona Senate passes HB 2324 to establish a Bitcoin and Digital Assets Reserve Fund for confiscated digital assets.
• The fund will be managed by the state treasurer and used for custody, sale, or retention of seized crypto assets.
• The bill modifies state forfeiture laws to include digital assets and outlines rules for their seizure and allocation.

Arizona is advancing its digital asset legislation after the state Senate passed House Bill 2324, a proposal to create a reserve fund for seized cryptocurrencies. 

The bill, originally rejected in the House, was revived through procedural motions and approved in a 16-14 vote. It now returns to the House for a final decision before reaching the governor’s desk.

Bill Establishes State-Managed Crypto Reserve Fund

House Bill 2324 seeks to form a Bitcoin and Digital Assets Reserve Fund overseen by the Arizona state treasurer. This fund would handle cryptocurrencies and tokens seized during criminal investigations and forfeitures. It gives the state authority to store, sell, or retain crypto assets depending on security and market conditions.

The bill also allows investment of seized crypto into regulated crypto exchange-traded funds (ETFs). Any returns from such investments would be directed back to the state treasury. The goal is to ensure efficient, lawful, and potentially profitable management of digital assets acquired through legal enforcement.

Additionally, the law outlines custody requirements, including use of state-approved wallets and licensed custodians. These measures aim to protect asset integrity and maintain proper legal oversight in accordance with blockchain-specific protocols.

Seizure and Distribution of Confiscated Crypto

HB 2324 introduces a distribution model for funds generated from seized digital assets. The first $300,000 of value would go to the Arizona Attorney General’s office. Beyond that, proceeds would be divided: 50% to the Attorney General, 25% to the state’s general fund, and 25% to the new reserve fund.

The bill amends state forfeiture laws to formally include digital assets. It allows the state to confiscate crypto if the owner is deceased, deported, has fled, or if ownership cannot be verified. Diligent efforts must be made to identify rightful owners before assets can be lawfully seized.

This update ensures that Arizona’s legal structure keeps pace with evolving technologies and reflects a broader strategy to handle blockchain-based financial instruments under state control.

Legislative Context and Governor’s Past Actions

The revival of HB 2324 comes amid increased legislative interest in digital assets following President Trump’s return to office. Arizona is one of several U.S. states pursuing crypto regulation at the state level. This bill follows a trend of selective support for crypto-related laws by Governor Katie Hobbs.

Governor Hobbs signed House Bill 2749 in May, creating Arizona’s first crypto reserve fund for unclaimed digital assets obtained through airdrops and staking. However, she has also vetoed several aggressive crypto bills, citing risks to public finances.

Among the rejected bills was Senate Bill 1025, which proposed state investment of treasury funds into crypto, and Senate Bill 1373, aimed at forming a broader strategic reserve. Despite these vetoes, the passage of HB 2324 in the Senate marks a notable step forward in Arizona’s digital asset policy efforts.

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