California Moves to Reclaim Dormant Crypto Assets

California Assembly has passed AB 1052, led by Democratic Assemblymember Avelino Valencia, to reclaim dormant digital assets on exchanges.

The bill modernizes unclaimed property laws to include digital assets, impacting centralized platforms in California without affecting self-custody wallets.

California Assembly Approves Bill AB 1052 for Crypto

The California State Assembly, with 78 votes in favor, has approved AB 1052, addressing dormant cryptocurrency assets. Democratic Assemblymember Avelino Valencia spearheaded the bill to incorporate digital assets into unclaimed property regulations.

The legislation, now pending before the California Senate, targets digital assets held on centralized exchanges within California. It mandates the asset’s transfer to state custody after three years of account dormancy.

Centralized Exchanges Face New Crypto Compliance Mandates

The legislation impacts centralized exchanges operating within California, leaving self-custody wallets untouched. Community reactions highlight concerns of privacy and centralization; however, many acknowledge its extension of existing property laws.

This bill introduces a new safeguard against loss of dormant digital currencies. If enacted, it could establish precedent for other states, although the full market consequences remain uncertain until implemented. Federal agencies have yet to comment on this measure.

First State-Level Escheatment Law for Crypto Assets

AB 1052 follows mechanisms used for traditional dormant assets, like bank accounts, applying escheatment after a specific inactivity period. This move marks the first significant state-level adaptation for crypto custody.

Experts see potential replicated models in other jurisdictions, relying on California’s experience. They note the parallel with traditional assets and commend its preventive nature in safeguarding dormant crypto resources.

“AB 1052 aims to modernize our approach to unclaimed property, ensuring that digital assets are included under our stewardship.” – Avelino Valencia

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