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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
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 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, 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
that is 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 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 and current agency processes for digital asset seizure and sale. However, JLBC expects H.B. 2324 to generate revenue to the state General Fund and 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 used in, acquired through or traceable to the commission of an offense.
2. Allows a peace officer to seize digital assets that are subject to forfeiture 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 involves digital assets, 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 paid to the Office of the Attorney General; and
b) if a forfeited digital asset is sold for more than $300,000, the remaining balance must be divided by paying 50 percent to the Office of the Attorney General, 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 Bitcoin and Digital Assets Reserve Fund, administered by the State Treasurer, to store, manage and allocate digital assets securely and consisting of forfeited digital assets in the form of a digital asset or Bitcoin.
9. Specifies that monies in the Bitcoin and Digital Assets Reserve Fund are subject to legislative appropriation.
10. Defines digital asset as virtual currency, cryptocurrency or any other digital-only asset that confers economic, proprietary or access rights or powers.
11. Makes technical and conforming changes.
12. Becomes effective on the general effective date.
House Action
COM 2/18/25 DPA/SE 9-0-0-1
3rd Read 3/4/25 50-8-2
Prepared by Senate Research
March 13, 2025
MG/AL/ci