California is setting a new precedent in how governments handle digital money.
Governor Gavin Newsom recently signed a new law that makes it the first U.S. state to ensure unclaimed cryptocurrencies are not automatically converted into cash. Under the law, these digital assets will stay in their original form when they are handed over to the state, giving owners a better chance to reclaim what is rightfully theirs.
Bringing Cryptocurrencies Under California’s Unclaimed Property Law
Senate Bill 822, introduced by Senator Josh Becker (D–Menlo Park), extends the state’s Unclaimed Property Law to include cryptocurrencies like Bitcoin and Ethereum, putting digital assets under the same rules as abandoned bank accounts and securities.
The law establishes clear rules for handling dormant cryptocurrency accounts, those inactive for three years, by treating digital assets as intangible property under California law.
How the Law Protects Dormant Crypto
The law allows the State Controller to appoint licensed custodians to securely manage unclaimed crypto. If no owner comes forward within 18–20 months of reporting, the Controller may convert the assets to cash, ensuring the process is transparent and regulated.
Companies must notify owners 6–12 months before reporting dormant accounts, using a Controller-approved form that can restart the escheatment period. Within 30 days after reporting, holders must transfer the exact crypto, including private keys and amounts, to licensed custodians appointed by the State Controller.
Custodians must have official licenses from the Department of Financial Protection and Innovation to ensure compliance and safe management.
California Gains Support from Crypto Experts
The bill passed both the Senate and Assembly unanimously in September and was signed into law by Governor Newsom on Saturday.
The law has received strong support from the cryptocurrency community. Paul Grewal, Coinbase’s Chief Legal Officer, tweeted:
“Thank you GavinNewsom for signing SB 822, which stops the state from liquidating Californians’ unclaimed crypto investments without their consent,”
He also thanked Senator Josh Becker for sponsoring the bill and called on the state to join the 46 others, along with the SEC, in protecting the right to stake crypto on platforms like Coinbase.
Modernizing California’s Property System
California’s SB 822 also modernizes the state’s unclaimed property system, which had long been stuck in outdated, paper-based processes.
By keeping unclaimed crypto in its original form and placing it under licensed custodians, the law protects value, ensures transparency, and makes it easier for owners to reclaim their assets.
California is leading the way in protecting digital asset owners and setting an example for other states to follow.
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FAQs
California law SB 822 ensures unclaimed crypto stays in its original form, giving owners a better chance to reclaim their assets.
Licensed custodians, appointed by the State Controller, securely manage unclaimed crypto until the rightful owner claims it.
If no owner claims it within 18–20 months of reporting, the State Controller may convert unclaimed crypto to cash.
Companies notify owners 6–12 months before reporting inactive accounts and transfer exact crypto and keys to licensed custodians.
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