Key Takeaways
- The bill proposes that if a user has not demonstrated any ownership interest in their crypto exchange account for more than three years, the state could take possession of those digital assets
- Covered actions that demonstrate ownership include making a transaction, depositing or withdrawing funds, accessing the account, or engaging in any behavior that reasonably signals knowledge of the property’s existence.
California’s lower house has passed a law, allowing the state to seize crypto left unclaimed on exchanges for 3 years. The Assembly Bill (AB) 1052 was passed in the Assembly in a 78-0 vote on June 3.
The bill proposes that if a user has not demonstrated any ownership interest in their crypto exchange account for more than three years, the state could take possession of those digital assets. The bill which was The bill was originally introduced in the California lower house by member Valencia and has been modified on multiple occasions and will be sent to the Senate for approval.
Covered actions that demonstrate ownership include making a transaction, depositing or withdrawing funds, accessing the account, or engaging in any behavior that reasonably signals knowledge of the property’s existence. The move parallels existing escheatment rules that apply to inactive bank or brokerage accounts in California.
A key excerpt from the legislation reads: “The Unclaimed Property Law provides that all intangible personal property of an apparent owner whose last known address or domicile was in the state, including intangible personal property maintained in a deposit or an account, which is held in a fiduciary capacity for the benefit of another person, escheats to the state if for more than 3 years after it becomes payable or distributable, the apparent owner has not taken specified actions showing an interest in or control of the property.”
In addition to addressing inactive accounts, the bill includes provisions to allow California residents and businesses to accept cryptocurrencies as payment for goods, services, or in private transactions.
One day prior tothis bill being passed, the California State Assembly had passed the Assembly Bill 1180 (AB 1180) requiring the Department of Financial Protection and Innovation (DFPI) to develop rules permitting state fees and transactions under the Digital Financial Assets Law (DFAL) to be payable in crypto. Under the bill, no entity may operate a digital asset business in the state without a license from theunless they are exempt.
The DFPI will be responsible for crafting further rules that govern licensing requirements and state fees related to digital asset transactions under DFAL. Once in effect, the law would require digital asset businesses to comply with licensing and reporting obligations, while users who self-custody their crypto holdings would not be impacted by the escheatment provision.
