California has enacted new legislation requiring the state to hold unclaimed digital assets in their original cryptocurrency form, ending a previous policy of forced liquidation and offering greater protection to investors.
Governor Gavin Newsom signed Senate Bill 822 (SB 822) on October 11, amending the state’s Unclaimed Property Law to explicitly include digital financial assets like Bitcoin and Ethereum. This marks a significant modernization of the state’s legal framework for the digital economy.
Under the prior law, the state was compelled to convert unclaimed cryptocurrencies into USD. The new legislation mandates that the state take custody of these assets in their original digital form.
Paul Grewal, Chief Legal Officer for Coinbase, praised the new law. He noted it prevents “the liquidation of Californians’ unclaimed crypto investments without their consent.”
Custodial platforms, such as centralized exchanges, are now required to notify owners when their balances have been inactive for three years. These notifications must occur between six and 12 months before the assets are transferred to state custody.
The California State Controller will receive these unclaimed cryptocurrencies, including necessary private keys, within 30 days of transfer. The Controller may designate licensed custodians to securely store these assets.
If no valid claim is presented within 18 to 20 months after the assets are reported, the state retains the option to convert them to fiat currency at the prevailing market price.
This approach shields the state from market volatility risks during the initial holding period. It also positions California to potentially benefit from the appreciation of these assets if they remain unclaimed.
The move comes amid increasing adoption of cryptocurrencies in California, a major global technology hub.