California Passes Law to Protect Unclaimed Crypto

California Leads with Groundbreaking Crypto Law

In a major move for digital asset regulation, California has officially signed Senate Bill 822 (SB 822) into law, making it the first U.S. state to protect unclaimed crypto assets from forced liquidation.

Traditionally, unclaimed assets—like forgotten bank accounts or insurance payouts—are transferred to the state and often converted to cash. But with this new legislation, California now requires unclaimed cryptocurrencies to be transferred in their native form, rather than liquidated into fiat.

This is a significant win for crypto holders and signals a progressive approach to digital asset management in one of the world’s largest economies.

What SB 822 Means for Crypto Owners

The Unclaimed Crypto Law recognizes that digital assets are not like traditional property. By preventing automatic conversion of these assets into U.S. dollars, California ensures that the value, utility, and ownership integrity of the original tokens are preserved.

Under this law, if someone forgets about or loses access to their crypto holdings and they are deemed “unclaimed,” those assets will no longer be cashed out by the state. Instead, the state must hold them in their original cryptocurrency form, such as Bitcoin, Ethereum, or other tokens.

This approach respects the volatile and evolving nature of digital assets, while also offering better protection for rightful owners who may reclaim them in the future.

A New Standard for Digital Asset Custody

California’s move could influence other states to adopt similar protections, especially as crypto ownership continues to rise across the U.S.

By recognizing the importance of maintaining digital assets in their native state, SB 822 sets a precedent for how crypto should be handled under escheatment laws—rules that govern the transfer of unclaimed property to the state.

This legislation is a notable step in bridging the gap between traditional financial systems and emerging Web3 technologies. It’s also a strong signal that state governments are beginning to understand and respect the unique nature of digital property rights.