Arizona Governor Vetoes Revived Bitcoin Reserve Bill For Seized Assets

Arizona’s governor has rejected a recently revived bill that would have established a Bitcoin (BTC) Reserve comprised of seized digital assets. The legislation became the third crypto bill to be rejected by the governor this session.

Governor Hobbs Says No To Bitcoin Reserve Bill

On Tuesday, Arizona Governor Katie Hobbs vetoed a crypto legislation that aimed to update the state’s forfeiture law to include digital assets and create a Bitcoin Reserve out of seized assets.

Notably, the Arizona State Senate revived House Bill 2324 (HB 2324) two weeks ago after it failed to pass the House of Representatives’ third reading in May. The Senate voted in favor of the motion to reconsider the legislation, sending it back to the House for consideration.

On June 24, the bill passed the House with a 34-22 vote in favor before sending it to Governor Hobbs’ desk last week, where it became the third Bitcoin Reserve proposal rejected over the past two months.

According to the July 1 decision, the governor considers that HB 2324 “disincentivizes local law enforcement from working with the state on digital asset forfeiture by removing seized assets from local jurisdictions.”

The legislation would have updated Arizona’s forfeiture laws to include digital assets and establish new provisions for seizing, storing, and allocating cryptocurrencies and other assets.

Additionally, it would have established new procedures for law enforcement to seize digital assets and clarified rules around property forfeiture, including protections for innocent owners and limitations on when properties can be seized, aiming to modernize forfeiture laws to address the complexity of crypto in criminal investigations.

The bill would have also created a “Bitcoin and Digital Assets Reserve Fund” to manage crypto assets obtained through criminal asset forfeiture. HB 2324’s revival followed the enactment of House Bill 2749 (HB 2749), which was signed into law on May 7.

The legislation updated Arizona’s unclaimed property laws to include Bitcoin and other cryptocurrencies, technically creating the state’s first and only reserve for crypto assets. The bill allows authorities to hold unclaimed cryptocurrencies and establish a “Bitcoin Reserve Fund” without using state funds or taxpayers’ money.

Nonetheless, the “pro-crypto” nod from Governor Hobbs has been outshone by her veto of two other bills, Senate Bill 1025 (SB 1025) and Senate Bill 1373 (SB 1373). The Governor argued that crypto assets were too “untested” and volatile for state funds.

Connecticut Bans BTC Reserve

Meanwhile, Connecticut has followed a similar path to Arizona after Governor Ned Lamont officially signed into law a “Bitcoin Reserve Ban” on Monday. Starting October 1, the state will be prohibited from accepting, holding, or investing in crypto assets.

As reported by Bitcoinist, House Bill 7082 (HB 7082), or “An Act Concerning Various Revisions to the Money Transmission Statutes, State Payments and Investments in Virtual Currency (…),” passed both the House and the Senate unanimously in mid-June.

The bill updated Connecticut’s money transmission laws, with a focus on regulating digital assets, and expanded the definition of money transmission to include the use of digital wallets and crypto kiosks.

Moreover, it imposed several new provisions for money transmitters, including strict licensing, compliance, and disclosure requirements on businesses that hold, transmit, or store virtual currency on behalf of others.

Notably, HB 7082 specifically prohibited the establishment of a strategic reserve, detailing that “Neither the state nor any political subdivision of the state shall (…) establish a reserve of virtual currency.”