ARIZONA HOUSE OF REPRESENTATIVES Fifty-seventh Legislature First Regular Session
	House: COM DPA/SE 9-0-0-1 | 3^rd Read 50-8-2-0 Senate: FIN DP 5-2-0-0 | 3^rd Read 16-14-0-0 Final Pass: 34-22-4-0

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HB 2324: technical correction; unclaimed property; interest

NOW: forfeiture; digital assets; reserve fund

Sponsor: Representative Weninger, LD 13

Vetoed by the Governor

Overview

Provides for the forfeiture and seizure of a digital asset. Establishes the Bitcoin and Digital Assets Reserve Fund (Reserve Fund).

History

Except as provided in statute, all property, including all interests in such property, described in a statute providing for its forfeiture is subject to forfeiture if:

1) the owner is convicted of an offense to which forfeiture applies; and

2) the state establishes by clear and convincing evidence that the property is subject to forfeiture.

After a person is convicted of an offense for which forfeiture applies, a court may order the person to forfeit:

1) property the person acquired through the commission of the offense;

2) property that is directly traceable to property acquired through the commission of the offense;

3) any property or instrumentality that the person used in the commission of the offense or to facilitate the offense; or

4) substitute assets as prescribed by statute (A.R.S. § 13-4304).

Property that is subject to forfeiture may be seized by a peace officer:

1) on process issued pursuant to the Arizona rules of civil procedure or this title, including a seizure warrant;

2) by making a seizure for forfeiture on property seized on process issued pursuant to law; or

3) by making a seizure for forfeiture without court process if the officer has probable cause to believe that the property is subject to forfeiture and any of the following is true:

a) the seizure for forfeiture is of property seized incident to a lawful arrest for a crime or a lawful search;

b) the property subject to seizure for forfeiture has been the subject of a prior judgment in favor of this state or any other state or the federal government in a forfeiture proceeding; or

c) the peace officer has probable cause to believe that the property is subject to forfeiture and that the delay occasioned by the need to obtain a court order would result in the removal or destruction of the property or otherwise frustrate the seizure (A.R.S. § 13-4305).

Provisions

1. Authorizes a court to order a person who is convicted of an offense for which forfeiture applies to forfeit:

a) any digital asset that is owned by the convicted person and that the person used in or acquired through the person's commission of the office; or

b) a digital asset owned by the person that is directly traceable to the convicted person's commission of the offense. (Sec. 2)

2. Requires a digital asset that is lawfully seized for forfeiture be secured by:

a) gaining access to a private key, passphrase or other access mechanism;

b) securing a digital wallet through blockchain technology; or

c) transferring the digital asset to a state-approved, secure digital wallet or platform. (Sec. 4)

3. Authorizes the entity that receives forfeited property by the state to sell a forfeited digital asset by public or otherwise commercially reasonable sale with expenses of keeping and selling the digital asset and the amount of all valid interests established by claimants, including court order restitution, paid out of the proceeds of the sale. (Sec. 5)

4. Specifies that the first $300,000 from the sale of any forfeited digital asset be deposited in the Anti-Racketeering Revolving Fund and any additional amounts be divided as follows:

a) 50% in the Anti-Racketeering Revolving Fund;

b) 25% in the state General Fund; and

c) 25% in the Bitcoin and Digital Assets Reserve Fund. (Sec. 5)

5. Specifies the digital asset must be sold through state-approved cryptocurrency exchanges or other secure platforms to ensure accurate valuation and transparency and may remain in its native form. (Sec. 5)

6. Provides requirements for storing a digital asset that is forfeited by the AG. (Sec. 5)

7. Establishes the Reserve Fund to store, manage and allocate digital assets securely. (Sec. 6)

8. Specifies the Reserve Fund consists of forfeited digital assets seized or deposited in accordance with statute and is subject to legislative appropriation. (Sec. 6)

9. Authorizes the State Treasurer to invest, reinvest and divest any monies in the Reserve Fund in digital assets or exchange traded funds that include digital assets. (Sec. 6)

10. Classifies any digital assets or exchange traded funds as property of the State. (Sec. 6)

11. Allows the State Treasurer to contract with a qualified custodian to hold digital assets. (Sec. 6)

12. Defines digital asset and qualified custodian. (Sec. 1, 6)

13. Makes a conforming change. (Sec. 3)

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17.                   HB 2324

18. Initials PB           Page 0 Vetoed by the Governor

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