Crypto News Today: California Protects Unclaimed Crypto From Forced Liquidation

 The Californian legislation is currently maintaining unclaimed crypto in its original form, preventing compulsory liquidation. Cryptocurrency investors are provided with additional safeguards.

California has adopted a radical law to guard the unclaimed cryptocurrency assets against forced realization. 

Senate Bill 822 (SB 822), which was signed by Governor Gavin Newsom on October 11, 2025, is a change to the California Unclaimed Property Law extending its definition to include digital financial assets such as Bitcoin and Ethereum. 

The new law guarantees that unutilized crypto assets do not get converted to cash, but rather they are kept in a digital structure prior to being held by the state.​

Dormant Crypto Now Safeguarded: What SB 822 Means

SB 822 categorizes digital financial assets as intangible property that are liable to the Unclaimed Property Law after three years of absence of claim. 

The owners of such assets are required to inform apparent owners six to twelve months prior to transferring the assets to the custody of the state. 

This notification comes with a form that has been approved by the State Controller and with which owners can confirm the ownership and restart the dormancy clock.​

The legislation stipulates that holders are obliged to hand over the precise nature and volume of digital property, together with private keys to the Controller or licensed custodians within 30 days of the final report. 

Permitted by the Department of Financial Protection and Innovation, these custodians shall uphold strong levels of security and compliance in handling the assets in a safe manner. 

Notably, missing cryptocurrencies are stored in default; no liquidation may be effected, unless no claim is asserted to such assets within 18 or 20 months after transfer, when the Controller may decide to liquidate such assets into fiat currency.​

New Legal Standards Enhance Crypto Owner Rights

This bill is a significant move in the direction of updating property laws to fit the computer age.

Source – X

 It erases any possible doubt regarding the treatment of the dormant crypto accounts and helps avoid the premature liquidation of assets by custodians or exchanges. 

According to the comments of Coinbase Chief Legal Officer Paul Grewal on X, the law prevents the state from selling the unclaimed investments of Californians in crypto without their agreement.​

In the event of liquidation, owners have the right to reclaim their original digital assets or proceeds of the sale. 

The act also requires more transparency and communication from the crypto custodians, who must proactively inform owners and safely dispose of unclaimed assets under high standards of custodianship.​

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