In a bold regulatory shift, California is moving to classify digital assets under its unclaimed property laws. A recently approved bill by the State Assembly proposes that cryptocurrencies, like Bitcoin, which remain inactive on exchanges for over three years, be transferred to state custody.
This program carefully adheres to current regulations regarding unclaimed safe deposit boxes and inactive bank accounts. By incorporating crypto assets into the Unclaimed Property framework, California is broadening its reach in digital finance oversight — potentially setting a model for other U.S. states to follow.
Under the new proposal, if a crypto user fails to interact with their digital assets on an exchange for a period of three years, the platform would be legally obligated to transfer those funds to the state government. While individuals would retain the right to reclaim their holdings, they would now need to navigate an official recovery process through state authorities.
This shift could notably affect long-term investors who follow the “HODL” strategy or forget about minor balances left on older accounts. The move is already drawing criticism from privacy advocates and crypto supporters, who warn that the policy may lead to government overreach and complicate the process of proving ownership of cryptocurrency assets.
Although the bill has cleared the California Assembly, it has yet to be approved by the State Senate and signed by the governor. Still, its passage in the Assembly reflects rising political momentum to regulate the digital finance space. If enacted, the legislation could serve as a blueprint for nationwide crypto policy.
In the meantime, crypto holders in California are advised to assess any dormant accounts to avoid potential asset forfeiture under the proposed rules.
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