California Becomes First State to Protect Unclaimed Crypto Under New Law

California has made history as the first U.S. state to formally protect unclaimed cryptocurrency from forced liquidation.

Governor Gavin Newsom signed Senate Bill 822 into law, updating the state’s Unclaimed Property Law (UPL) to cover digital assets like Bitcoin and Ethereum.

Previously, dormant crypto accounts often faced uncertainty about how they were handled.

This new law ensures unclaimed crypto stays in its original form instead of being automatically converted to cash.

Read: The State By State Guide to Unclaimed Assets

What Senate Bill 822 Does

• Expands the state’s Unclaimed Property Law to officially include digital assets.

• Applies to accounts left inactive for at least 3 years after failed contact attempts.

• Requires custodians (like exchanges and platforms) to:

  • Notify owners 6–12 months before assets are marked unclaimed.

  • Use a standardized form approved by the Controller’s Office.

• If no claim is made, custodians must transfer the same crypto type and amount — along with private keys — to a state-approved custodian within 30 days.

• Custodians must hold valid licenses from the California Department of Financial Protection and Innovation.

• The state may convert unclaimed crypto to fiat after 18–20 months, but original owners can still reclaim either the crypto or the cash equivalent later.

Why It Matters

• First-in-the-nation protection for crypto holders with dormant accounts.

• Closes a legal gap that previously left custodians uncertain about how to handle digital assets.

• Gives rightful owners more time and control over their unclaimed crypto.

• Sets a regulatory example other states may follow.

Related Legislation

Governor Newsom also signed Senate Bill 243, creating the country’s first legal guidelines for AI “companion” chatbots, a separate but notable tech milestone for California.

Other States Move Toward Crypto Adoption

• In Michigan, lawmakers are advancing House Bill 4087 to allow up to 10% of state funds to be allocated to Bitcoin and other cryptocurrencies.

• Michigan joins other states like Texas, New Hampshire, and Arizona exploring crypto as a strategic reserve asset.

• Globally, countries are also taking action:

  • Philippines introduced a Bitcoin reserve bill with a 20-year lockup.

  • El Salvador continues to add Bitcoin and gold to its national reserves.

  • Pakistan plans to launch a Strategic Bitcoin Reserve, announced by Bilal Bin Saqib in May 2025.

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