California Safeguards Unclaimed Crypto from Forced Liquidation

California has enacted laws AB 1052 and SB 822, safeguarding unclaimed cryptocurrencies in native form, prohibiting forced liquidation, and transferring assets after due diligence to the State Controller’s Office.

This legislation provides clarity for custodial accounts, aiming to protect consumer assets and ensuring consistency across different asset types, impacting centralized exchanges in California.

California Leads with Unclaimed Crypto Protection Law

The California legislature passed the first-ever law ensuring unclaimed cryptocurrency is kept in its native form. This safeguards consumers’ interests by preventing forced conversion to fiat. Sponsored by State Controller Malia M. Cohen and introduced by Senator Josh Becker, the law mandates custodial diligent asset care. Exchanges must report dormant accounts for state management.

Exchanges Must Retain Digital Form Under New Law

The legislation affects custodians and centralized exchanges, demanding them to comply with keeping assets digital. It reassures consumers their crypto won’t be liquidated without consent. Senator Becker remarked on the bill’s consumer protection nature, while its clarity dismisses past confusion in crypto custody laws, ensuring consistent cryptocurrency treatment.

Josh Becker, Senator, California – “SB 822 updates California’s Unclaimed Property Law to make [coverage of virtual currencies] explicit. … [It] helps clear up any confusion and ensures virtual currencies are treated consistently.”

California Law Aligns Modern Crypto with Traditional Assets

The move aligns with past property laws, where traditional assets were safeguarded similarly. The crypto adaptation reflects asset modernization, not drastic policy shifts. Compliance expert Joe Ciccolo noted the significance of this consumer-friendly approach, suggesting a positive impact on how digital assets are conserved on behalf of California residents.

Joe Ciccolo, Compliance Analyst – “This legislation ensures digital assets left dormant in custodial accounts are held in their native form and are not forced to liquidate, bringing much-needed clarity.”