- California’s newly signed SB822 will prevent the state from selling its residents’ crypto assets without first informing them so they can lay claims accordingly.
- With the “Unclaimed Property: Digital Financial Assets” bill, California becomes the first state in the US to usher in a framework for unclaimed digital assets.
California has secured a remarkable win for digital property rights in the US by becoming the first state to enact legislation preventing the state Controller from selling residents’ unclaimed crypto assets without preinforming them. SB822 is a significant effort toward crypto-friendly regulation in the U.S. and has set a good precedent for other states in this regard.
The legislation titled “Unclaimed Property: Digital Financial Assets” amends the current Unclaimed Property Law and adds “digital financial assets,” and by extension, cryptocurrency, to the list of intangible property covered by the bill. As a result, apparent owners of digital assets must be notified that their property is at risk of being transferred to state ownership.
The language of the bill prescribes residency conditions that qualify a person’s assets to escheat to the state, how a possible owner must be notified that their property is at risk of state takeover, and how escheated property must be transferred to the State Controller.
According to the legislation, digital assets held by exchanges or other custodians are liable to state ownership if the apparent owner fails to claim ownership of it three years from the last date they indicated interest in the asset.
Custodians, exchanges, private corporations, and trusts are required to reach out to the apparent owners of unclaimed digital financial assets via physical mail or electronically, based on information available and the customer’s messaging consent agreements.
This outreach to the apparent owner of the asset must be between 6 and 12 months before the said asset becomes reportable to the Controller as an unclaimed asset. Owners who fill out and sign an accompanying form will be deemed active, and their escheating period will be recycled, and vice versa.
However, if a person can prove beyond a reasonable doubt that their asset specified in an unclaimed report sent to the Controller is theirs, before it is transferred to the Controller, the holder or exchange “shall not pay or deliver the property to the Controller.”
Crypto Secures Place As Pivotal Asset, Key Political Discourse
California’s policy direction for unclaimed assets not only reinforces the ranking of cryptocurrency among the class of more traditional digital assets but also provides a proactive path for the government to claim and utilize dormant assets belonging to individuals who must have been deceased or permanently unable to access those assets, for the common good.
The legislation passed the Senate’s third reading with a laudable unanimous vote, marking a common sense of obligation towards advancing crypto and innovation, as against voting along party lines. So far, over 45 states are advancing around 200 crypto bills in the legislature, in alignment with the ongoing crypto revolution in the US, where crypto has become a pivotal political discourse.
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