In brief
- California’s SB 822 explicitly includes digital financial assets under the state’s Unclaimed Property Law, treating them like bank accounts and securities.
- The bill preserves unclaimed digital assets in their native form, preventing forced liquidation that would have created taxable events for consumers without their consent.
- Account holders can reclaim their original digital assets, or net proceeds if already converted, after filing a valid claim with the State Controller.
California Governor Gavin Newsom has signed legislation making his the first state to explicitly protect unclaimed crypto from forced liquidation, ensuring digital assets remain in their original form rather than being converted to cash before transferring to state custody.
Senate Bill 822, authored by Senator Josh Becker (D-Menlo Park), updates California’s decades-old Unclaimed Property Law to include digital financial assets, treating Bitcoin, Ethereum, and other cryptos with the same legal framework that governs abandoned bank accounts and securities.
The bill passed unanimously through both chambers in September before being signed by Newsom on Saturday.
The legislation clarifies that digital financial assets are a form of intangible property subject to the Unclaimed Property Law, addressing uncertainty around how California should handle dormant crypto accounts, those untouched for three years after failed contact attempts or inactivity.
“Earlier versions of the bill would have required exchanges, custodians, and wallet providers to forcibly liquidate customers’ digital financial assets before transferring them to the State Controller’s Office—effectively creating a taxable event for consumers without their knowledge or consent,” Joe Ciccolo, Executive Director of California Blockchain Advocacy Coalition, told Decrypt.
“This approach would have introduced significant operational, compliance, and legal challenges for industry, while offering little real protection to consumers,” he added, as CBAC led advocacy efforts throughout the legislative session.
Another ‘important step’
The legislation is “another important step toward modernizing California’s regulatory framework to reflect the realities of digital financial assets,” Ciccolo said.
The bill mandates specific requirements for holders of digital financial assets to notify apparent owners prior to escheatment.
Companies must notify owners six to 12 months before assets are reported, using a Controller-approved form that lets them restart the escheatment period, according to the bill.
SB 822 also specifies that holders of digital financial assets must transfer the exact asset type, private keys, and amount, unliquidated, to the Controller’s crypto custodian within 30 days after the final reporting date.
The bill authorizes the Controller to select one or more licensed custodians for the management and safekeeping of escrowed digital assets, with custodians required to hold valid licenses issued by the Department of Financial Protection and Innovation.
The Controller can then convert unclaimed crypto to fiat 18 to 20 months after filing, with valid claimants receiving either their assets or the sale proceeds, says the bill.
“SB 822 provides long-awaited clarity by extending the existing UPL framework to digital financial assets, ensuring they’re handled consistently and responsibly,” he said, noting how the group will stay engaged to ensure the law is applied “consistently, transparently, and in line with its consumer-protection goals.”
Over the weekend, Newsom also signed Senate Bill 243, making California the first state to set explicit guardrails for AI “companion” chatbots.
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