California Advances Two Key Cryptocurrency Bills

California lawmakers have made significant strides in regulating cryptocurrency within the state, with two key bills advancing through the legislative process. The first bill, Assembly Bill 1052, focuses on unclaimed cryptocurrency assets held on exchanges. This legislation, if enacted, would allow the state to seize cryptocurrencies that have been left unclaimed on exchanges for a period of three years. The bill aims to safeguard these unclaimed assets, ensuring they remain intact and can be reclaimed by their rightful owners from state custody. This move is part of a broader effort to integrate cryptocurrency into the state's financial framework, aligning California with other regions that have already implemented similar measures.

Supporters of the bill have stated that the state government will not liquidate unclaimed Bitcoin or other digital assets but will instead have them held in custody by a third-party custodian for easy retrieval by customers in the future. This means investors' tokens will not be sold at a discount without consent. While the bill has sparked debate among crypto investors and faced widespread opposition on social media, perhaps there is no need to be overly concerned.

The second bill, Assembly Bill 1180, passed unanimously in the State Assembly with a 68-0 vote. This legislation enables state agencies to accept payments in digital currencies, marking a significant shift in how the state handles financial transactions. The bill, introduced by Assembly member Avelino Valencia, is now advancing to the State Senate for further consideration. If enacted, it would require the Department of Financial Protection and Innovation to establish regulations allowing state fees and transactions under the Digital Financial Assets Law to be paid in digital currencies. The bill proposes a pilot program that would run until January 1, 2031, with full implementation scheduled to begin on July 1, 2026, upon approval by Governor Gavin Newsom. Under AB 1180, the DFPI would also be responsible for submitting a report detailing the number and types of crypto transactions processed, as well as any technical or regulatory issues encountered during the program, by January 1, 2028.

Digital financial assets under DFAL are defined as any digital representation of value used as a medium of exchange that is not legal tender. With this legislation, regulators hope to bring California in line with other regions which already allow crypto payments for certain government services. Before passing the Assembly, AB 1180 underwent several amendments. One key revision to the bill removed language concerning ride-sharing companies and personal vehicles used for transportation services, narrowing the bill’s focus to digital asset transactions under DFAL. AB 1180 is expected to complement AB 1052, another crypto-focused bill introduced by Valencia, which would protect the use of digital assets in private transactions and enshrine the right to crypto self-custody. AB 1052 was passed in an Assembly committee with an 11-0 vote on May 23 and is awaiting its third reading. It would prohibit public entities from restricting or taxing digital assets solely based on their use as a form of payment, if passed. Other measures include preventing state and local governments from imposing limitations on hardware or self-hosted wallets, as well as provisions related to unclaimed digital property and public officials’ involvement with digital assets.

California has seen growing interest in crypto policy amid rising political support for digital assets. Figures like state Senator Ben Allen have been pushing for pro-crypto representation within the government. Backing from the electorate also appears to be catching up, with a significant portion of crypto holders in the state expressing support for candidates with pro-crypto platforms. These legislative developments reflect a broader trend towards integrating cryptocurrency into the state's financial and regulatory landscape, positioning California as a leader in digital asset policy.