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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
technical
correction; unclaimed property; interest
(NOW: forfeiture; digital assets; reserve fund)
Purpose
Allows a court to order a person convicted of an offense for which forfeiture applies to forfeit any digital asset that is owned by the convicted person and used in, acquired through or traceable to the offense. Prescribes procedures for a government agency to sell seized digital assets and outlines the allocation of monies acquired from the sale. Establishes the Bitcoin and Digital Assets Reserve Fund (Fund), administered by the State Treasurer, to store, manage and allocate digital assets securely.
Background
Statute subjects all interests in property to forfeiture if the owner of the property is convicted of an offense to which forfeiture applies and the state establishes, by clear and convincing evidence, that the property is subject to forfeiture. A court may order a person convicted of an offense for which forfeiture applies to forfeit property that is: 1) acquired through the commission of offense; 2) directly traceable to property acquired though the commission of offense; 3) used in the commission of or to facilitate the offense; or 4) a substitute asset used in racketeering conduct as outlined (A.R.S. § 13-4304).
All property subject to forfeiture may be seized by a peace officer on process issued pursuant to the Arizona Rules of Civil Procedure or the Arizona Criminal Code. An officer may seize property subject to forfeiture without court process if the officer has probable cause to believe that the property is subject to forfeiture and other outlined requirements are met (A.R.S. § 13-4305).
All property forfeited to the state must be transferred to either the seizing agency or to the agency or political subdivision that employs the attorney for the state. An agency that receives forfeited property may: 1) sell, lease, lend or transfer the property to any local or state government entity for use within the state; 2) sell the forfeited property by public or otherwise commercially reasonable sale; 3) destroy or use any forfeited illegal or controlled substances for investigative purposes on written approval of the attorney of the state; 4) sell, use or destroy all forfeited raw materials, products and equipment used or intended for use in manufacturing and processing a controlled substance; 5) compromise and pay claims against forfeited property; or 6) make any other disposition of forfeited property authorized by law (A.R.S. § 13-4315).
The Joint Legislative Budget Committee (JLBC) cannot determine the magnitude of the fiscal impact of H.B. 2324 in advance as the fiscal impact depends on the amount of digital assets seized as part of the criminal forfeiture process. However, JLBC expects H.B. 2324 to generate revenue to the state General Fund and the Fund and to generate costs to the agency responsible for the seizure and the State Treasurer (JLBC fiscal note).
Provisions
1. Allows a court, after a person is convicted of an offense for which forfeiture applies, to order the person to forfeit 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 offense or a digital asset owned by the person that is directly traceable to the commission of the offense.
2. Specifies that a digital asset that is lawfully seized for forfeiture must 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.
3. Allows a government agency with forfeited digital assets, for forfeitures that only involve digital assets forfeited by the Office of the Attorney General, to sell the digital asset by public or otherwise commercial reasonable sale with expenses of keeping and selling the digital asset and the amount of all valid interests established by claimants, including any restitution ordered by a court, paid out of the proceeds of the sale.
4. Allocates monies from the sale of forfeited digital assets in the following manner:
a) the first $300,000 of any forfeited digital asset must be deposited in the Anti-Racketeering Revolving Fund; and
b) if a forfeited digital asset is sold for more than $300,000, the remaining balance must be divided by depositing 50 percent in the Anti-Racketeering Revolving Fund, 25 percent to the state General Fund and 25 percent to the Bitcoin and Digital Assets Reserve Fund.
5. Requires digital assets to be sold through state-approved cryptocurrency exchanges or other secure platforms to ensure accurate valuation and transparency.
6. Allows a forfeited digital asset to remain it its native form during a sale of forfeited digital assets.
7. Requires a digital asset that is seized pursuant to the forfeiture process to be stored in a state-approved, secure digital wallet system that is managed by authorized personnel to prevent loss, theft or unauthorized access.
8. Establishes the Fund, administered by the State Treasurer, to store, manage and allocate digital assets securely and consisting of forfeited digital assets.
9. Allows the State Treasurer to invest, reinvest and divest any monies in the Fund in digital assets or exchange traded funds that include digital assets and classifies any digital assets or exchange traded funds as property of the state.
10. Requires monies earned from the investment, reinvestment and divestment of Fund monies to be credited to the Fund.
11. Allows the State Treasurer to contract with a qualified custodian to hold digital assets.
12. Specifies that monies in the Fund are subject to legislative appropriation.
13. Defines qualified custodian as a company, federal or state chartered bank, trust company or special purpose depository institution that is licensed in Arizona to sell digital assets and offer custody services to customers.
14. Defines digital asset as virtual currency or cryptocurrency that confers economic, proprietary or access rights or powers.
15. Makes technical and conforming changes.
16. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
1. Specifies that the procedures for selling a forfeited digital asset and distributing sale proceeds as outlined only applies to digital assets that are forfeited by the Office of the Attorney General.
2. Allows the State Treasurer to invest, reinvest and divest any monies in the Fund in digital assets or exchange traded funds that include digital assets and classifies any digital assets or exchange traded funds as property of the state.
3. Requires monies earned from the investment, reinvestment and divestment of Fund monies to be credited to the Fund.
4. Allows the State Treasurer to contract with a qualified custodian to hold digital assets.
5. Defines qualified custodian as a company, federal or state chartered bank, trust company or special purpose depository institution that is licensed in Arizona to sell digital assets and offer custody services to customers.
6. Makes technical and conforming changes.
Amendments Adopted by Additional Committee of the Whole
1. Requires specified proceeds from the sale of seized digital assets to be deposited in the Anti-Racketeering Revolving Fund, rather than paid to the Attorney General.
2. Removes, from the definition of digital assets, other digital-only assets that confer economic, proprietary or access rights or powers.
3. Specifies that the court's authority to order the forfeiture of a digital asset only applies to digital assets owned by a convicted person and used in, or traceable to, an offense and digital assets acquired through the commission of an offense.
4. Removes the specification that a forfeited digital asset may be kept in the Bitcoin and Digital Assets Reserve Fund in the form of a digital asset or Bitcoin.
5. Makes technical and conforming changes.
House Action Senate Action
COM 2/18/25 DPA/SE 9-0-0-1 FIN 3/17/25 DP 5-2-0
3rd Read 3/4/25 50-8-2 3rd Read 5/6/25 16-12-2
Final Read* 5/7/25 26-32-2
(*H.B. 2324 failed House Final Read and was
returned to the Senate for further amendments)
Prepared by Senate Research
June 19, 2025
MG/AL/ci