California to Seize Unclaimed Crypto: What You Need to Know

Should adopted, California Assembly Bill (AB) 1052 will incorporate cryptocurrencies and other virtual financial assets under the state's Unclaimed Property Law (UPL) . This implies the state may assume custody of crypto that goes unclaimed on marketplaces for more than three years. Although self-custodied wallets or private keys held only by individuals are excluded, the law does apply to digital assets kept by company associations like exchanges.

Between six and twelve months before the item is reportable to the Controller, the holder (e.g., an exchange) must attempt to notify the owner via certified mail or electronically, clearly stating the risk of escheatment, before the state can claim the assets. Once rejected, the digital asset is given to the custody of the California State Controller; however, owners can retrieve their assets from the state at any time free of charge. The law seeks to safeguard customers and stop exchanges from ever holding unclaimed crypto assets.

According to this bill, California crypto users who keep assets inactive on exchanges must keep their contact information current and frequently check their accounts. Additionally brings in fresh compliance requirements for exchanges concerning notice, record-keeping, and asset transfer processes. Considered a consumer protection measure and a modernizing of state law to mirror the growing presence of digital assets, the move also helps to modernize state legislation.