California Becomes First State to Protect Unclaimed Crypto from Forced Liquidation
California has develop into the primary US state to formally shield unclaimed cryptocurrencies from being forcibly transformed to money, marking a milestone in how governments deal with dormant digital property.
Key Takeaways:
- California’s new regulation protects unclaimed crypto from pressured liquidation, preserving property of their unique type below state custody.
- Senate Bill 822 expands the state’s Unclaimed Property Law to cowl digital property like Bitcoin and Ethereum.
- Custodians should notify homeowners earlier than reporting property as unclaimed and switch the precise crypto sort.
Governor Gavin Newsom signed Senate Bill 822 into regulation over the weekend, making certain that Bitcoin, Ethereum, and different crypto property stay of their unique type when transferred to state custody below the state’s Unclaimed Property Law (UPL).
The invoice, authored by Senator Josh Becker (D-Menlo Park), handed each chambers unanimously in September earlier than receiving the governor’s approval on Saturday.
California Expands Unclaimed Property Law to Cover Dormant Crypto Assets
The regulation updates California’s decades-old UPL, which governs how the state handles dormant monetary property akin to deserted financial institution accounts, securities, and insurance coverage proceeds.
Under the brand new provisions, digital monetary property at the moment are formally categorised as intangible property topic to the identical framework, addressing a long-standing authorized hole over how to deal with inactive crypto holdings.
The change applies to accounts that stay untouched for a minimum of three years following failed contact makes an attempt.
Previously, ambiguity round digital property had left custodians and exchanges unsure about their obligations and reporting procedures.
Under SB 822, digital asset custodians are required to notify obvious homeowners between six and twelve months earlier than property are reported as unclaimed.
Notifications should observe a standardized type permitted by the Controller’s Office, permitting customers to reclaim or reactivate their holdings earlier than state intervention.
Once the escheatment course of begins, holders should switch the precise sort and quantity of the asset, together with the related personal keys, to a state-approved custodian inside 30 days.
These custodians should maintain legitimate licenses issued by the Department of Financial Protection and Innovation.
The Controller could later convert unclaimed crypto to fiat after 18 to 20 months, with rightful homeowners nonetheless entitled to reclaim their property or equal sale proceeds.
Alongside SB 822, Governor Newsom additionally signed Senate Bill 243, which establishes the nation’s first authorized guardrails for AI “companion” chatbots.
Michigan Lawmakers Advance Bitcoin Bill
Last month, Michigan lawmakers revived House Bill 4087, which might let the state allocate up to 10% of funds to Bitcoin and different cryptocurrencies, probably becoming a member of Texas, Arizona, and New Hampshire in sovereign crypto initiatives.
The transfer positions Michigan alongside a rising checklist of states eyeing Bitcoin as a hedge and strategic reserve asset, becoming a member of early movers like Texas, New Hampshire, and Arizona.
International momentum is constructing as nicely. The Philippines recently introduced a bill to establish a strategic Bitcoin reserve with a 20-year lockup interval.
Meanwhile, El Salvador, the primary country to adopt Bitcoin as legal tender, is reportedly including gold to its nationwide reserves.
Pakistan has also taken a major policy turn with its plans to set up a government-led Strategic Bitcoin Reserve, introduced in May 2025 by Bilal Bin Saqib, head of the Pakistan Crypto Council.
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