Arizona Governor Vetoes Bill, Related to State Crypto Reserve Fund: Here Is Why

Arizona Governor Katie Hobbs has officially vetoed House Bill 2324, a legislative proposal that aimed to create a state-managed reserve fund for holding seized cryptocurrency assets.

The bill, which passed the Arizona House in a 34–22 vote, would have allowed the State Treasurer to oversee a new “Bitcoin and Digital Assets Reserve Fund.” This fund was designed to manage crypto assets obtained through criminal forfeiture and authorize the state to invest, reinvest, or divest in cryptocurrencies and crypto-related ETFs.

Governor Hobbs, however, rejected the proposal in a letter issued Tuesday. She argued that the bill would unintentionally discourage local law enforcement from participating in state-led digital asset forfeiture operations.

By shifting control of seized assets from local jurisdictions to the state fund, the bill would “disincentivize” cooperation from local authorities, Hobbs said.

Why This Matters for the Crypto Market

The veto could have wider implications for cryptocurrency adoption at the state level. While HB 2324 focused on asset forfeiture, it also introduced a new way for governments to interact with digital assets as part of official reserve management.

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If enacted, Arizona would have been among the first U.S. states to formally recognize and structure crypto within a public financial framework. Governor Hobbs’ rejection signals continued regulatory caution and reluctance to integrate crypto into government operations.

For the broader crypto market, this could be seen as a setback for public-sector adoption, reinforcing institutional hesitancy and regulatory uncertainty. Without unified state support, mainstream integration of digital assets into government finance remains on hold.

Kosta Gushterov

Kosta has been working in the crypto industry for over 4 years. He strives to present different perspectives on a given topic and enjoys the sector for its transparency and dynamism. In his work, he focuses on balanced coverage of events and developments in the crypto space, providing information to his readers from a neutral perspective.