Arizona Governor Katie Hobbs Shuts Down Bitcoin Fund Plans Using Seized Assets

Arizona's crypto dreams hit a wall as Governor Katie Hobbs axes plans for a state-backed Bitcoin fund fueled by seized assets. The move dashes hopes for a novel government-led crypto play—proving once again that bureaucrats move slower than blockchain confirmations.

No seized satoshis for you

The proposed fund would have repurposed forfeited assets into Bitcoin holdings, potentially creating Arizona's first sovereign crypto treasury. Instead, the state joins the growing list of governments that can't decide if crypto is the future or just wants to watch it burn.

Regulators gonna regulate

Hobbs' decision highlights the growing tension between crypto innovation and political risk-aversion. While retail investors YOLO into memecoins, politicians still can't agree on basic custody solutions—unless it's for their own campaign donations, of course.

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.

Mixed Reaction From the Crypto Community

The veto drew. 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.