Arizona Governor Katie Hobbs has vetoed House Bill 2324, which aimed to create a “Bitcoin and Digital Assets Reserve Fund” from seized crypto assets. The bill proposed directing the first $300,000 of confiscated digital assets to the Attorney General’s office, with the remainder split: 50% to the AG, 25% to the state’s general fund, and 25% to the reserve fund.

Governor Hobbs rejected the proposal, arguing it would “disincentivize local enforcement” from participating in digital asset forfeiture, as it removed seized assets from local jurisdictions. Although HB 2324 passed the House with a 34-22 vote, a veto override now appears unlikely.

Hobbs’ Ongoing Crypto Caution

This is not the first time Governor Hobbs has blocked crypto-related legislation. In May, she vetoed Senate Bill 1025, which would have allowed the state to invest up to 10% of its funds in Bitcoin, calling crypto “untested investments.” She also rejected Senate Bill 1373, which proposed a similar reserve of seized digital assets.

However, not all crypto measures were blocked. In May, Hobbs signed House Bill 2749, which amends Arizona’s financial and unclaimed property laws, enabling the state treasurer to manage crypto assets under specific regulatory frameworks — but without using seized funds.

Arizona vs Other Pro-Crypto States

Arizona’s conservative stance contrasts with pro-crypto efforts in other states. Texas recently passed a bill to create its own Bitcoin reserve, while New Hampshire approved legislation permitting investment in crypto and precious metals. Six more U.S. states are advancing similar initiatives.

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The veto drew mixed reactions. While some supported the cautious regulatory stance, others criticized it as a missed opportunity. Crypto commentator Frank Corva voiced skepticism over the governor’s reasoning, questioning whether police departments should benefit from asset seizures.

Another user pointed out that law enforcement motivation may drop if local agencies don’t receive a share of seized crypto — a logic Corva found troubling.

What’s Next for Crypto in Arizona?

With SB 1062 and other proposals still active, Arizona remains a battleground for how digital assets are integrated into government frameworks. Governor Hobbs’ decision has further ignited the national debate over crypto’s role in public finance and criminal asset management.

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