A Landmark Step for Digital Property Rights
California has made history as the first U.S. state to legally protect unclaimed cryptocurrency holdings from forced liquidation. Governor Gavin Newsom signed Senate Bill 822 (SB 822) into law over the weekend, updating the state’s Unclaimed Property Law (UPL) to include digital assets like Bitcoin and Ethereum.
Previously, unclaimed property laws - dating back to the 1950s - required the liquidation of unclaimed financial assets into cash. The new legislation changes that for crypto, mandating that digital assets be preserved in their native form until their rightful owners reclaim them.
The move marks a major step forward in aligning California’s financial laws with modern digital finance, earning praise from the crypto industry for its balance of innovation and consumer protection.
What SB 822 Changes
Under SB 822, custodians such as crypto exchanges or wallet providers must transfer unclaimed crypto holdings to the California State Controller’s Office after three years of inactivity. Importantly, they must do so without converting the assets into fiat currency.
The law applies to a broad range of crypto assets, including Bitcoin, Ethereum, and stablecoins, ensuring that holders’ digital property remains intact. The State Controller can appoint licensed custodians to manage and secure these assets in compliance with state standards.
However, if no claimant steps forward within 18 to 20 months after reporting, the Controller may liquidate the assets into fiat currency - a provision designed to prevent indefinite storage costs and lost records.
California’s Push Toward Crypto Modernization
SB 822 reinforces California’s position as a regulatory trendsetter in digital innovation. The law provides clarity around how crypto fits into existing property systems, removing ambiguity that has long surrounded dormant wallets and exchange accounts.
By defining crypto as intangible property, SB 822 integrates digital assets into California’s broader property reclamation framework, offering legal certainty for both regulators and businesses.
This progressive approach could soon serve as a model for other U.S. states, many of which still lack explicit guidance on handling unclaimed crypto.
Newsom’s Broader Tech and AI Agenda
Governor Gavin Newsom has positioned California as a pro-innovation state, carefully balancing consumer safety and technological progress.
Just days after signing SB 822, he approved Senate Bill 243, which targets AI chatbot safety, requiring operators to implement anti-suicide safeguards, content warnings for minors, and break reminders every three hours.
At the same time, Newsom vetoed Assembly Bill 1064, which aimed to restrict minors’ access to AI chatbots. He argued that the bill risked banning beneficial AI tools rather than protecting users.
While tech advocacy groups such as TechNet criticized SB 243 for its enforcement complexity, child safety advocates applauded Newsom’s efforts to place AI accountability and user safety at the center of digital innovation.
Why This Matters for Crypto Holders
California’s SB 822 doesn’t just modernize law - it establishes a critical precedent. It signals that crypto assets deserve the same legal respect as traditional property, and that governments can adapt legacy systems to accommodate new financial realities without compromising consumer rights.
By preserving unclaimed crypto in its original digital form, the state acknowledges blockchain assets as legitimate property, paving the way for broader recognition nationwide.
