The California Assembly just passed a bill that will allow the state to transfer crypto left on an exchange for three years as part of its Unclaimed Property Law.
Despite the provocative name, this bill may actually prove beneficial for California’s crypto owners. Similar laws govern many categories of assets, and this bill would put crypto in line with standard practices.
Could California Seize Unclaimed Bitcoin?
California hasn’t always been the friendliest state for crypto regulations, but it’s been making good progress recently. It has expressed interest in a Strategic Bitcoin Reserve, and its Assembly passed a bill to accept state payments in crypto yesterday.
Today, the California Assembly voted 69-0 to pass AB1052, trying to bring crypto into the Unclaimed Property Law.
At first glance, this bill seems like a concerning development. If a crypto holder leaves their assets on an exchange for three years, will the state seize them outright?
However, California’s Unclaimed Property Law is intended to protect consumers, and they can reclaim their assets from state custody free of charge. Other asset classes like bank accounts, deposits, and brokerages are also covered under this law.
Eric Peterson, the bill’s author, has been proactive in explaining California’s Unclaimed Property Law and how it might impact crypto. He noted that it only applies to third-party exchanges, not private custody.
Under the current legal regime, if an exchange cannot contact its client in any way for more than three years, it could potentially liquidate said user’s assets.
Instead, this bill would make these assets the state’s problem. Regulations demand that businesses attempt to reach out to wayward clients in danger of liquidation. However, after a three-year window, exchanges may need to clean up their books, as keeping these accounts open costs resources. Now, these accounts will be the state’s problem.
Even if an exchange did turn assets over to state custody instead of liquidating them, it might convert them to fiat first. The bill anticipates that problem and addresses it:
Naturally, there’s been a lot of FUD in crypto media coverage, which Peterson has been trying to correct. “Not your keys, not your coins” is a fundamental maxim in the crypto community, after all.
The notion that California might declare user assets “Unclaimed” is sure to ruffle some feathers. However, this business-friendly bill goes out of its way to protect consumers.
After passing the California Assembly, this update to the Unclaimed Property Law must go through other committees, the State Senate, and receive Governor Gavin Newsom’s signature. This unanimous acclamation is a strong start.
Hopefully, this bill can protect users, and California’s crypto enthusiasts can recognize its potential value.
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