California’s Assembly has taken a major step toward redefining how the state handles dormant digital assets, passing Assembly Bill (AB) 1052 with a unanimous 78–0 vote. The legislation updates California’s unclaimed property framework to include cryptocurrencies — allowing the state to take custody of idle exchange-held crypto if left untouched for three years.
Under the bill, a digital asset may be deemed “unclaimed” if the owner has not taken any action that demonstrates awareness or interest in the asset. This includes logging into an account, trading, depositing, withdrawing funds, or performing any activity that signals engagement. If no such activity occurs within three years, the crypto can be seized under California’s escheatment laws — a legal concept long applied in traditional finance but newly extended to the crypto sector.
Crypto Community Divided Over State Seizure of Dormant Assets
The passage of AB 1052 has sparked debate within the crypto community, with reactions split over whether the bill represents a reasonable regulatory update or an intrusion into financial autonomy.
Critics argue the law grants excessive power to the state, raising fears that users’ assets may be unjustly confiscated. Supporters, however, stress that many objections are based on misinterpretations — especially regarding how the state plans to manage unclaimed crypto.
Eric Peterson, policy director at the Satoshi Action Fund and a contributor to an earlier draft of the bill, clarified that the law does not authorize the liquidation of users’ digital assets. Instead, any unclaimed cryptocurrency would be transferred — in its original form — to a state-approved, licensed custodian.
“The Bitcoin is held in native form, not converted to dollars,” Peterson explained.
“You can then get it back from California in Bitcoin.”
Peterson added that the bill mirrors California’s longstanding treatment of dormant fiat assets, such as inactive bank or brokerage accounts. Crucially, the new law does not apply to self-custodied wallets, meaning users who control their own private keys remain unaffected.
Expanding the Framework: Payments and Licensing Requirements
Beyond addressing unclaimed property, AB 1052 also introduces provisions to formally recognize crypto as legal tender for goods, services, and peer-to-peer transactions in California. This could help normalize everyday crypto usage in local commerce.
The bill further mandates that parties engaging in digital asset business activities in the state obtain licensing from the Department of Financial Protection and Innovation (DFPI), unless otherwise exempt. These new licensing and compliance requirements are scheduled to take effect on July 1, 2026, providing businesses ample time to align with the updated regulations.
Quick Facts
- AB 1052 allows California to seize dormant crypto assets after 3 years of inactivity.
- Assets will be preserved in crypto form, not converted to fiat.
- The law does not apply to self-custodied wallets.
- Digital assets are recognized as legal tender for private transactions.
- Licensing requirements for crypto businesses take effect July 1, 2026.
