Governor Gavin Newsom signed Senate Bill 822 on October 11, making California the first state to shield unclaimed digital assets from forced liquidation. The bipartisan legislation updates the Unclaimed Property Law to include cryptocurrencies like Bitcoin and Ethereum. It ensures these assets are handled similarly to abandoned bank accounts or securities.
The new law prevents cryptocurrency exchanges and custodians from converting dormant holdings into cash without owner consent, addressing concerns raised by industry advocates about potential tax and compliance risks. Instead, unclaimed assets must be transferred unliquidated to a state-approved custodian, along with their private keys.
Authored by Senator Josh Becker, Senate Bill 822 modernizes decades-old rules under California's Unclaimed Property Law. Companies are required to notify owners 6 to 12 months in advance of any escheatment process. The state can only convert these assets to fiat currency after 18 to 20 months of dormancy.
This measure treats digital assets comparably to traditional unclaimed property, such as bank accounts or securities, while aiming to balance innovation with consumer protections. By avoiding forced liquidations, the law seeks to preserve the value of cryptocurrencies for rightful owners and adapt regulatory frameworks to the growing digital asset sector.
The legislation represents a proactive step in California's approach to blockchain and cryptocurrency regulation, potentially influencing other states to follow suit.