No Bitcoin Reserve: Arizona Governor Vetoes Crypto Reserve Bill For The Third Time

Key Insights:

• Arizona Governor Katie Hobbs has vetoed House Bill 2324, with more rejections possible in the future.
• This bill was a proposal to create a state-managed “Bitcoin and Digital Assets Reserve Fund” from seized crypto.
• Governor Hobbs’ biggest issue with HB 2324 was that it might “disincentivize local enforcement from working with the state on digital asset forfeiture.”

Arizona Governor Katie Hobbs has thrown another crypto bill out the window once again. 

According to reports, Hobbs vetoed House Bill 2324, which is a proposal that would have allowed the state to stockpile seized cryptocurrencies in a reserve fund. This marks the third time she has blocked similar bills, in a clear statement that Governor Hobbs, and by extension, Arizona, are not fans of crypto. 

What Was House Bill 2324?

House Bill 2324 was geared towards creating a state-managed “Bitcoin and Digital Assets Reserve Fund.”  This fund would hold and manage crypto assets seized by the state through criminal proceedings. 

Under the bill’s proposed structure, the first $300,000 worth of seized digital assets would go directly to the Attorney General’s office.

In addition, any amount over that threshold would have been divided 50% to the Attorney General. 25% will go to the state’s general fund and the last 25% to the newly created digital assets reserve fund

Lawmakers supporting the bill argued it could help Arizona prepare for the future, while funding public services with already seized assets. 

Why Governor Hobbs Rejected the Bill

In her July 1 veto letter, Governor Hobbs outlined one major concern.

According to the governor, the bill could “disincentivize local enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions.” 

She argued that the bill might discourage local law enforcement from cooperating with state agencies. This is if they believed they wouldn’t benefit directly from seized digital assets.

In essence, Hobbs’ issues with the bill were that while the state would be responsible for managing the confiscated crypto, other agencies that rely on forfeiture proceeds for funding might be cut out of the process.

The Rocky Path to Rejection

HB 2324 had a wild ride through Arizona’s legislature. 

After being voted down during its third reading in the House back in May, the bill was revived with a reconsideration vote and narrowly passed in a 34–22 vote on June 24. Despite this comeback, the governor’s veto ultimately killed it.

And unless a two-thirds majority in both the House and Senate is achieved to override it, the bill is likely to stay dead. It is worth mentioning that this is not the first time Governor Hobbs has opposed state-backed crypto initiatives.

For example, in May 2025, she vetoed Senate Bill 1025, which planned to create an “Arizona Strategic Bitcoin Reserve”. This bill would have allowed the state treasurer to invest up to 10% of state funds in Bitcoin. 

Around the same time, she also blocked Senate Bill 1373, which was also geared towards a digital treasury sourced from seized digital assets, much like HB 2324. Despite these rejections, Hobbs has not dismissed crypto entirely. 

She signed House Bill 2749, which allows for a digital asset reserve fund albeit under a different legal framework.  

That bill, which was enacted in May, is set to integrate crypto into Arizona’s financial and unclaimed property systems. It also places crypto reserve fund management under the state treasurer, and is set to usher in more control and transparency.

Democratic Caution on Crypto Is Growing

Governor Hobbs’ approach to crypto is by no means isolated. Instead, it is part of a whole trend within the Democratic Party. It generally favors caution and consumer protection over speed.

Some Republicans have pushed for embracing Bitcoin as a state asset. Most Democrats, however, are continuing to point out issues about the risks involved. 

A good example is Connecticut’s recent move to ban state agencies from investing in cryptocurrencies. This move was passed unanimously and ultimately signed by Democratic Governor Ned Lamont.

At the national level, Senator Elizabeth Warren continues to be one of the most vocal crypto critics. 

During recent hearings on the GENIUS Act, Warren pointed out how the 2022 collapse of major crypto firms. These nearly caused a systemic financial crisis and wiped out $2 trillion in value. Warren and other democrats continue to advocate for stricter federal oversight.

Any future crypto-focused bills on the state or even federal levels might have tough fights ahead of them.