Arizona’s Bitcoin Reserve Bill Faces Rejection
In a significant move against the establishment of a Bitcoin reserve, Arizona’s governor has turned down a proposal that sought to utilize seized digital assets for this purpose. This decision marks the third instance of crypto-related legislation being dismissed this session.
Governor Hobbs Opposes Bitcoin Reserve Legislation
On a recent Tuesday, Governor Katie Hobbs of Arizona vetoed a proposed crypto bill that intended to incorporate digital assets into the state’s forfeiture laws, ultimately aiming to create a Bitcoin Reserve from these seized assets. The Arizona State Senate had reignited interest in House Bill 2324 (HB 2324) just two weeks prior, following its earlier failure to secure approval in the House of Representatives. The Senate’s decision to reconsider the bill breathed new life into it, sending it back to the House for further deliberation.
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On June 24, HB 2324 managed to secure a 34-22 vote in the House, pushing it forward to the governor’s desk. However, it became the third Bitcoin Reserve proposal to be rejected in the past two months. Governor Hobbs, in her July 1 decision, expressed concerns that the bill would discourage local law enforcement from collaborating with the state on digital asset forfeiture by reallocating seized assets away from local jurisdictions.
The bill proposed an update to Arizona’s forfeiture laws, aiming to encompass digital assets and introduce new protocols for the seizure, storage, and allocation of cryptocurrencies. Additionally, it sought to modernize the rules around property forfeiture, offering protections for innocent owners and setting limitations on property seizures to tackle the complexities of crypto in criminal investigations.
A key aspect of the bill was the creation of a “Bitcoin and Digital Assets Reserve Fund” to manage crypto assets acquired through criminal asset forfeiture. The revival of HB 2324 followed the enactment of House Bill 2749 (HB 2749), which, on May 7, became a law updating Arizona’s unclaimed property regulations to include Bitcoin and other cryptocurrencies. This effectively established the state’s inaugural crypto reserve.
Despite this “pro-crypto” gesture, Governor Hobbs has vetoed two other bills, Senate Bill 1025 (SB 1025) and Senate Bill 1373 (SB 1373), citing the untested and volatile nature of crypto assets as unsuitable for state funds.
Connecticut Takes a Stand Against Bitcoin Reserves
Following in Arizona’s footsteps, Connecticut has enacted a similar measure. Governor Ned Lamont recently signed into law a “Bitcoin Reserve Ban,” effective October 1, prohibiting the state from accepting, holding, or investing in crypto assets.
According to reports from Bitcoinist, House Bill 7082 (HB 7082), titled “An Act Concerning Various Revisions to the Money Transmission Statutes, State Payments and Investments in Virtual Currency,” received unanimous approval from both the House and Senate in mid-June. This bill revised Connecticut’s money transmission laws with a strong focus on digital asset regulation. It expanded the definition of money transmission to include digital wallets and crypto kiosks, and imposed new licensing, compliance, and disclosure requirements on businesses handling virtual currencies.
Significantly, HB 7082 explicitly forbade the creation of a strategic reserve, stipulating that “Neither the state nor any political subdivision of the state shall (…) establish a reserve of virtual currency.”
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