California’s Crypto Grab? New Bill Puts Unclaimed Bitcoin on Chopping Block

California lawmakers just fired a warning shot at dormant crypto wallets—and the crypto community is rattled. A proposed bill could let the state seize unclaimed digital assets after just 3 years of inactivity. Here’s what you need to know.

## The Fine Print: How California Plans to ‘Rescue’ Your Crypto

The legislation—dressed up as consumer protection—would treat cryptocurrencies like forgotten bank accounts or uncashed checks. After the waiting period, those assets get liquidated into good old-fashioned fiat (because nothing says ‘progress’ like converting Bitcoin into inflation-prone dollars).

## The Backlash: Crypto Holders Cry Foul

Privacy advocates call it a dangerous precedent, while Bitcoin maxis are (predictably) screaming about government overreach. Meanwhile, the state’s budget office is already counting potential revenue—because when has California ever missed a chance to monetize someone else’s oversight?

Sleeping on your crypto keys just got riskier. And if you think this won’t inspire copycat bills in other states, you haven’t been paying attention to how governments treat ‘unclaimed’ money.

TLDR

• California has passed Assembly Bill AB-1052 to classify dormant crypto wallets as unclaimed property.
• The bill allows the state to seize inactive Bitcoin and other cryptocurrencies after three years of no user activity.
• The legislation applies mainly to exchange-based wallets and not to private cold storage wallets.
• Seized digital assets will be held in their original crypto form and not converted into fiat currency.
• Users can reclaim their assets by proving ownership and verifying their identity with proper documentation.

California’s State Assembly has approved bill AB-1052, allowing seizure of dormant Bitcoin and crypto wallets. The legislation categorizes long-inactive digital assets as unclaimed property. It now moves to the State Senate for potential revisions before final enactment.

California Targets Dormant Bitcoin in New Bill

The bill targets bitcoin holdings left untouched for more than three years in hosted wallets. Authorities may seize these assets if account holders fail to show activity within the designated period. The law applies primarily to wallets held on exchanges rather than private cold storage.

Though the assets will remain in crypto form, they will be stored by a state custodian until reclaimed. Users must provide proper identification to retrieve their funds if they become active again. The state cannot liquidate the holdings under any circumstances during the custody period.

AB-1052 passed unanimously in the Assembly with a 78-0 vote on Tuesday, showing strong bipartisan support. While it pushes for accountability, it also raises concerns among long-term holders. Many see the measure as government overreach, especially targeting those practicing long-term holding strategies.

Ethereum and Altcoins Affected Under New Guidelines

The proposed law does not apply solely to Bitcoin but includes ethereum and other major cryptocurrencies. After three years, assets in inactive accounts holding altcoins also fall under the bill’s scope. It makes no distinction based on token value or market cap.

The bill aligns crypto with traditional financial assets already regulated as unclaimed property under existing California law. Under the same rules, banks must report inactive accounts, allowing the state to hold those funds until claimed. The new bill updates this process to include digital currencies.

However, the legislation focuses only on custodial platforms that manage user accounts. Therefore, private wallets or cold storage options are not subject to these seizure rules. This exclusion underscores the push for self-custody among digital asset holders.

Users Face Pressure to Stay Active

Privacy advocates argue that the bill infringes on the financial freedom of crypto users. By design, many early adopters remain anonymous and inactive, making them potential targets. The law forces users to engage periodically or risk temporary asset loss.

Some view the bill as promoting wallet activity but question its enforcement and fairness. Long-term holders, especially those in decentralized environments, may choose to avoid custodial services. The measure has added urgency for users to reevaluate their asset storage decisions.

If approved by the Senate, the law will reshape how California treats unclaimed digital property. Stakeholders await the Senate’s decision, which could include amendments. The outcome may influence how other states regulate dormant crypto accounts.