Arizona Governor Katie Hobbs Vetoes Bill to Manage Confiscated Crypto

Governor Katie Hobbs has vetoed House Bill 2324, which aimed to establish a state-managed reserve fund comprising seized digital assets. The bill, passed by the Arizona House with a 34–22 vote on June 24, 2025, sought to create a "Bitcoin and Digital Assets Reserve Fund" to manage cryptocurrencies forfeited through criminal proceedings.

Governor Hobbs expressed concerns that the bill could deter local law enforcement agencies from collaborating with the state on digital asset seizures. In her veto letter, she stated that the legislation "disincentivizes local enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions."

Under the proposed bill, the first $300,000 worth of seized cryptocurrency would have been allocated to the Attorney General's office. Any amount exceeding that would be divided, with 50% going to the Attorney General, 25% to the state's general fund, and the remaining 25% to the newly established reserve fund.

This veto marks the third time Governor Hobbs has rejected cryptocurrency-related legislation. In May, she vetoed Senate Bill 1025, which proposed creating the Arizona Strategic Bitcoin Reserve, allowing the state treasurer to invest up to 10% of state funds in Bitcoin. She cited concerns over the volatility and untested nature of cryptocurrencies. Additionally, she vetoed Senate Bill 1373, which aimed to establish a Digital Assets Strategic Reserve Fund to manage seized or allocated digital assets.

Despite these vetoes, Governor Hobbs has shown support for certain crypto-related measures. In May, she signed House Bill 2749 into law, which allows the state to manage unclaimed digital assets by integrating them into Arizona's financial and unclaimed property frameworks. This legislation enables the state to hold unclaimed cryptocurrency in its original form, rather than converting it to fiat currency.

Arizona's cautious stance contrasts with actions taken by other states. For instance, Texas Governor Greg Abbott signed a bill in June to create the Texas Strategic Bitcoin Reserve, a state-managed fund that will hold Bitcoin as part of the state's long-term assets. Similarly, New Hampshire passed legislation in May enabling the state to invest in cryptocurrency and precious metals.

The debate over the integration of cryptocurrencies into state financial systems continues, with proponents arguing for modernization and opponents cautioning against potential risks. As digital assets become increasingly prevalent, states like Arizona are grappling with how to balance innovation with fiscal responsibility.

The future of cryptocurrency legislation in Arizona remains uncertain. While the state has taken steps to incorporate digital assets into certain aspects of its financial system, Governor Hobbs' recent vetoes indicate a preference for a measured approach. Lawmakers and stakeholders will likely continue to explore avenues for integrating cryptocurrencies, keeping a close eye on developments in other states and at the federal level.