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California's Assembly has overwhelmingly passed a bill to regulate digital assets, making unclaimed cryptocurrency subject to state property laws and allowing crypto to be used for merchant payments. This legislation aims to provide clarity and a framework for digital asset handling, reflecting a significant step towards integrating crypto into the traditional financial system.
California's Bold Move: Regulating Digital Assets
On June 3, the California State Assembly passed Assembly Bill (AB) 1052 with a 78-0 vote. This comprehensive bill introduces two major provisions:
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Unclaimed Crypto: It subjects cryptocurrency to the state's unclaimed property laws. If a user's crypto account on an exchange shows no "act of ownership interest" for three years, the state can take possession of the idle holdings. Acts of ownership include transactions, deposits, withdrawals, account access, or any action demonstrating the owner's awareness of the property.
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Crypto as Payment: The bill also legalizes the acceptance of cryptocurrency by individuals and businesses for goods, services, and private transactions within California.
What Happens to Unclaimed Crypto?
Unlike previous regulations that might have led to the liquidation of unclaimed assets, AB 1052 mandates that unclaimed Bitcoin, for instance, will remain in its native form. Eric Peterson, a policy director at the Satoshi Action Fund, clarified that custodians must transfer the actual BTC to a state-selected licensed custodian, allowing owners to reclaim their Bitcoin directly from the state. This approach is similar to existing laws for inactive bank and brokerage accounts in California.
The Path Forward and Implementation
AB 1052 now moves to the California Senate for further review, where it could be modified, rejected, or sent to Governor Gavin Newsom for signing or veto. If enacted, the law is slated to take effect on July 1, 2026. It will also require any entity engaging in digital financial asset business activity to be licensed by the Department of Financial Protection and Innovation, unless exempt.
Mixed Reactions and Expert Insights
The bill has garnered mixed reactions. Critics view it as an overreach of governmental power, while proponents argue that it clarifies existing laws and provides a more favorable outcome for crypto holders. Eric Peterson and Dennis Porter of the Satoshi Action Fund, along with former Coinbase regulatory counsel Hailey Lennon, emphasize that similar unclaimed property laws exist in many other states and that this bill improves upon previous frameworks by preserving the crypto's native form. It's important to note that the law does not affect users who self-custody their cryptocurrency.
Sources
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California advances unclaimed crypto, wide-ranging payments bill, Cointelegraph.
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California advances unclaimed crypto, wide-ranging payments bill, StartupNews.fyi.
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California advances bill on unclaimed crypto and merchant payments — TradingView News, TradingView.
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