What happened?
California passed Senate Bill 822, making it the first U.S. state to officially protect unclaimed cryptocurrencies from being forcibly converted to cash. The law updates the state’s Unclaimed Property Law to treat digital assets like Bitcoin and Ethereum as intangible property and requires custodians to notify owners 6–12 months before reporting assets as unclaimed. After three years of inactivity custodians must transfer the exact crypto (and relevant keys) to state‑approved custodians, and the Controller can convert to fiat after about 18–20 months while still allowing owners to reclaim their assets or proceeds.
Who does this affect?
This affects crypto holders with dormant accounts, since their assets could be moved into state custody instead of being liquidated immediately. It also hits exchanges and digital asset custodians, which now must follow standard notice rules, hold proper licenses, and transfer exact types of crypto and keys when escheated. State controllers and approved custodians will take on custody responsibilities, and other states or platforms that serve Californians may need to change how they handle unclaimed crypto.
Why does this matter?
Market‑wise, keeping unclaimed crypto in kind reduces the risk of sudden state‑driven selloffs, which could be supportive for prices compared with forced liquidations. The law also brings clarity and compliance costs for custodians and exchanges, which may raise operational overhead but make the market more predictable for institutions. Finally, California’s move sets a legal precedent that other states or countries might follow, reshaping long‑term supply dynamics and how governments think about holding or managing crypto reserves.