California Governor Signs Landmark Law Protecting Unclaimed Crypto Assets From Forced Liquidation
California slams brakes on forced crypto liquidations—unclaimed digital assets get permanent protection.
GOVERNOR'S GAMBIT
California just rewrote the rulebook for dormant cryptocurrency holdings. The governor's signature creates an ironclad shield preventing state authorities from automatically liquidating unclaimed digital assets—a move that preserves wealth for rightful owners who might reappear years later.
CRYPTO'S SAFE DEPOSIT BOX
Unlike traditional unclaimed property that faces mandatory conversion to cash, cryptocurrencies now enjoy special status. The legislation recognizes digital assets don't expire or degrade—they simply wait. No more watching Bitcoin get sold at the bottom because some bureaucrat panicked about storage costs.
FINANCE'S PAPER-PUSHING PROBLEM
Traditional finance would have converted those assets to fiat immediately—collecting fees on the liquidation while destroying potential future gains. Because nothing says 'responsible stewardship' like selling someone's Bitcoin at $30K only to watch it hit $100K later.
California's move signals that crypto isn't just another asset class—it's property worth preserving in its native form. The message to other states? Stop treating digital wealth like forgotten gift cards.
Another ‘important step’
The legislation is "another important step toward modernizing California's regulatory framework to reflect the realities of digital financial assets,” Ciccolo said.
The bill mandates specific requirements for holders of digital financial assets to notify apparent owners prior to escheatment.
Companies must notify owners six to 12 months before assets are reported, using a Controller-approved form that lets them restart the escheatment period, according to the bill.
SB 822 also specifies that holders of digital financial assets must transfer the exact asset type, private keys, and amount, unliquidated, to the Controller's crypto custodian within 30 days after the final reporting date.
The bill authorizes the Controller to select one or more licensed custodians for the management and safekeeping of escrowed digital assets, with custodians required to hold valid licenses issued by the Department of Financial Protection and Innovation.
The Controller can then convert unclaimed crypto to fiat 18 to 20 months after filing, with valid claimants receiving either their assets or the sale proceeds, says the bill.
"SB 822 provides long-awaited clarity by extending the existing UPL framework to digital financial assets, ensuring they're handled consistently and responsibly," he said, noting how the group will stay engaged to ensure the law is applied “consistently, transparently, and in line with its consumer-protection goals.”
Over the weekend, Newsom also signed Senate Bill 243, making California the first state to set explicit guardrails for AI "companion" chatbots.
