California approves law to preserve unclaimed crypto in original form

Senate Bill 822 (SB 822) covers crypto assets such as Bitcoin and Ethereum, and ensures that unclaimed crypto assets retain their original form when remitted to the state, rather than being liquidated, according to the bill. Governor Newsom signed the bill into law on Saturday.

The passage of SB 822 marks a major step in California's efforts to modernize its property and financial laws to address digital assets, and has been welcomed by key figures in the crypto community. 

"Thank you [Gavin Newsom] for signing SB 822, which stops the state from liquidating Californians' unclaimed crypto investments without their consent," Paul Grewal, chief legal officer of Coinbase, said Monday on X. "Now it's time for California to join the 46 other states, along with [SEC] that protect the right to stake with [Coinbase] and others."

Specifically, SB 822, sponsored by Senator Josh Becker, spells out terms for a framework for handling dormant cryptocurrency accounts — those left untouched or inactive for three years. By classifying digital financial assets as intangible property, the legislation removes uncertainty about how such holdings should be treated under California's existing property reclamation system.

Under the new legislation, the State Controller is authorized to appoint one or more licensed custodians to manage and safeguard unclaimed crypto assets. These custodians will be responsible for securely maintaining the crypto holdings while ensuring compliance with state standards, according to the bill.

The Controller may convert the assets to fiat currency if no claimant has come forward within 18 to 20 months after an unclaimed account is reported. "These securities shall be sold by the Controller no sooner than 18 months, but no later than 20 months, after the actual date of filing of the report required by Section 1530," the bill says.