- SB 822 prevents forced liquidation of unclaimed crypto in California.
- Owners can reclaim digital assets or proceeds through state claims.
- Exchanges must notify owners and transfer crypto as-is to a state custodian.
California has set a new standard for cryptocurrency regulation with the passage of SB 822, updating decades-old unclaimed property laws to include digital assets. The law prevents forced liquidation of unclaimed crypto, allowing owners to reclaim their holdings in their original form.
SB 822: Redefining Unclaimed Property for Crypto
Traditionally, unclaimed property—like dormant bank accounts or uncashed checks—would be taken over by the state after a period of inactivity. Applying these rules to cryptocurrency posed unique challenges due to its decentralized nature.
California’s SB 822 requires custodians and exchanges to transfer unclaimed crypto directly to a state-appointed custodian without converting it to cash, protecting users from potential tax events triggered by forced sales. Only assets showing no activity for three years qualify, and owners are notified 6–12 months in advance.
Senator Josh Becker, author of the bill, emphasized the importance of preserving digital ownership rights while providing a clear framework for custodians to manage dormant wallets.
How SB 822 Works in Practice
Consider a dormant wallet scenario: if a user holds Bitcoin on a California-based exchange but hasn’t logged in for three years, the platform must first notify the owner. If unresponsive, the crypto is transferred as-is to a state custodian within 30 days. Owners or heirs can later reclaim their assets, either in crypto or in fiat if sold by the state after an extended period.
Exchanges face compliance obligations, including record-keeping, owner notifications, and coordination with custodians, ensuring both legal compliance and user protection. Self-custodied wallets, however, remain outside the law since no third-party holder exists.
Why SB 822 Matters
SB 822 strengthens consumer protections, sets operational clarity for custodians, and establishes a regulatory precedent in the U.S. It balances user rights, exchange responsibilities, and state oversight, preventing unnecessary liquidation while encouraging responsible crypto management.
California joins Arizona and Texas in integrating digital assets into unclaimed property frameworks but stands out by prohibiting forced liquidation at transfer, prioritizing owner rights. This approach could influence other states to adopt similar consumer-friendly crypto regulations.
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SB 822 is a landmark step toward harmonizing cryptocurrency with traditional financial laws. By safeguarding unclaimed digital assets and ensuring owners retain reclaim rights, California has positioned itself as a leader in crypto regulation, paving the way for a safer and more predictable digital asset ecosystem.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. Coin Brief is not responsible for any financial losses.
