California’s New Crypto Grab: Inactive Wallets Face State Seizure After 3 Years

Golden State turns into gold-digger state with aggressive unclaimed property rules.

California just upgraded its ‘finders keepers’ policy—now targeting dormant crypto wallets. Forget lost socks; your Bitcoin could vanish if untouched for 36 months.

How it works: The same archaic laws used to confiscate forgotten bank accounts now apply to digital assets. No warnings, no grandfather clauses—just a one-way trip to Sacramento’s coffers.

Bonus irony: The state that birthed Silicon Valley innovation now treats crypto like abandoned gift cards. Meanwhile, lawmakers still can’t define ‘blockchain’ without Googling.

Pro tip: Move your coins or lose them—because nothing inspires financial responsibility like the threat of government appropriation.

TLDR

• California State Assembly passed bill AB-1052 allowing the state to seize crypto from inactive custodial platform accounts after three years
• The bill passed 78-0 in the Assembly and now moves to the Senate for potential amendments
• Assets will be held by custodians rather than liquidated, allowing original owners to reclaim them later
• The bill only applies to centralized exchanges and custodial platforms, not self-custody cold wallets
• California also passed AB-1180 creating a pilot program for paying state fees with digital currencies

California lawmakers have taken a major step toward regulating cryptocurrency holdings with the passage of Assembly Bill 1052. The legislation allows the state to seize digital assets from inactive accounts on centralized exchanges after three years of dormancy.

The California State Assembly approved the bill with a unanimous 78-0 vote on Tuesday. The legislation now heads to the California Senate where lawmakers may introduce amendments before final approval.

Democratic lawmaker Avelino Valencia introduced the bill to modernize California’s unclaimed property laws. The legislation treats cryptocurrencies like Bitcoin the same as traditional abandoned assets such as dormant bank accounts and uncollected tax refunds.

Under the proposed law, crypto users must interact with their exchange accounts at least once every three years. Failure to do so triggers the state’s authority to seize the assets as unclaimed property.

Key Provisions of the Bill

The legislation includes several important protections for crypto holders. Assets seized by the state will remain in cryptocurrency FORM rather than being converted to cash. A designated custodian will hold the digital assets on behalf of the state.

Original owners retain the right to reclaim their cryptocurrencies at any time. They must provide proper identification to recover their seized assets from the state custodian.

Early drafts of AB-1052 included provisions for self-custody wallets. Lawmakers removed these sections from the final version. The bill now focuses exclusively on custodial platforms and centralized exchanges.

This change means users who store their crypto in cold wallets or personal hardware devices remain unaffected. The law specifically targets assets held by third-party custodians like major cryptocurrency exchanges.

Mixed Industry Response

The crypto community has expressed divided opinions about the new legislation. Supporters argue the bill creates a fair system for handling abandoned digital assets.

They point out that custodians will preserve the cryptocurrencies rather than liquidating them immediately. This approach protects the original value of the assets for future reclamation by rightful owners.

Critics view the bill as government overreach into private financial holdings. Privacy advocates argue the legislation violates principles of self-sovereignty that form the foundation of cryptocurrency philosophy.

Some crypto enthusiasts referenced early bitcoin holders who remained inactive for years before eventually accessing their funds. They worry the three-year timeframe could harm legitimate long-term investors.

The bill does encourage self-custody practices by exempting personal wallets from seizure. Users who control their own private keys face no risk of state intervention.

California also passed companion legislation AB-1180 during the same session. This bill creates a pilot program allowing residents to pay certain state fees using digital currencies. The dual passage shows California’s growing engagement with cryptocurrency regulation.