California Passes Bill to Regulate Unclaimed Cryptocurrency

California has taken a significant step forward in regulating virtual assets with the passage of Assembly Bill 1052 (AB 1052) by the Assembly. This legislation aims to oversee unclaimed cryptocurrency and enable businesses to accept cryptocurrency as a form of payment. The bill, which passed unanimously with a 78-0 vote on June 3, is now set to be deliberated by the California Senate.

One of the key provisions of AB 1052 is the application of unclaimed property laws to cryptocurrency. If an exchange account remains inactive for three years—with no transactions, logins, or other activity by the owner—the cryptocurrency will be transferred to the state. Unlike previous policies where assets could be cashed out, the bill mandates that digital assets be stored in their original form. Eric Peterson of the Satoshi Action Fund emphasized that Bitcoin, for instance, will not be cashed out but will be held securely until it is redeemed by the owner.

Another significant aspect of the bill is its allowance for companies and individuals to accept cryptocurrency as payment for goods and services. This provision legitimizes the use of digital assets in private transactions and aligns California with other states that are friendly to cryptocurrency. This move is expected to foster greater adoption of crypto in commerce and integrate custodial digital assets into governance.

Despite the unanimous passage of the bill, there has been mixed feedback from the crypto community. Critics argue that the legislation gives too much power to the state, while others believe it does not significantly alter existing unclaimed property procedures. Peterson countered these criticisms by asserting that the law is designed to protect holders and not to seize their assets. He clarified that the state would not sell off the assets as many expect.

Hailey Lennon, a former regulatory counsel at a major cryptocurrency exchange, provided additional context, noting that most states already have unclaimed property laws that exchanges follow. These assets are returned to the owner when they reach out to the state. This perspective highlights the continuity of existing practices with the new legislation.

If approved by the Senate and signed into law by Governor Gavin Newsom, AB 1052 will take effect on July 1, 2026. The bill also requires all entities involved in digital financial asset businesses to be licensed by California’s Department of Financial Protection and Innovation (DFPI). This regulatory framework is seen as a blueprint for integrating custodial digital assets into governance while promoting the broader adoption of cryptocurrency in commerce.