California passes bill to seize Bitcoin left idle on exchanges after three years

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California lawmakers have taken a major step toward expanding state control over cryptocurrency. Assembly Bill 1052, which just passed the California State Assembly, allows the state to seize Bitcoin and other digital assets left idle on exchanges for three years under Unclaimed Property laws. The bill now heads to the California Senate, where legislators will decide its final fate.

This policy classifies cryptocurrency under the same framework used for traditional financial assets, applying regulations that govern bank accounts, stocks, and safe deposit boxes. If a holder does not log in, make a transaction, or update their account within three years, their Bitcoin could be transferred to the State Controller’s Office for custody. The state would keep the digital asset in its original form, instead of converting it to fiat currency, allowing owners to reclaim it later.

The bill specifically targets cryptocurrency held on centralized exchanges, meaning users who store their Bitcoin in self-custodied wallets remain unaffected. California officials justify the measure as an effort to ensure long-term access to digital assets, preventing them from being permanently lost in inactive accounts.

Other states already enforce unclaimed property laws on financial assets, but California’s approach is unique. The policy does not require liquidation, preserving the original asset instead. While designed for consumer protection, the bill introduces new oversight of cryptocurrency markets, placing digital holdings under government custody for the first time.

The future of this legislation depends on the California Senate. If approved, it could set a precedent for other states to follow. Investors will need to monitor their exchange accounts closely, ensuring their assets remain active to avoid intervention.

Sources:

https://decrypt.co/323787/unclaimed-bitcoin-california-seized-theres-catch

https://coingape.com/california-passes-bill-to-seize-unclaimed-bitcoin-and-crypto/

https://techstory.in/californias-ab-1052-clarifying-digital-asset-custody-laws-amid-misinformation/