California advances unclaimed crypto, wide-ranging payments bill

California is taking significant strides in regulating cryptocurrency through a new bill that could redefine how digital assets are managed in the state. On June 3, the California State Assembly passed Assembly Bill (AB) 1052 with an impressive 78-0 vote, which emphasizes the state’s commitment to unclaimed property laws as they relate to crypto assets. This bill introduces intriguing concepts that merit a closer examination.

One of the key provisions of AB 1052 allows California to take possession of cryptocurrency held in exchanges if the owner hasn’t accessed their account for three years. This is particularly important for safeguarding users’ investments in digital assets. According to the bill, “acts of ownership interest,” such as selling or buying cryptocurrency, making deposits, or logging into the account, must be performed within that three-year window to maintain ownership. If these acts do not occur, the state can claim the idle crypto.

Moreover, the bill extends the opportunity for California residents and businesses to accept cryptocurrency as a legitimate form of payment. This move is a nod to the growing influence of digital currencies in everyday commerce. As businesses increasingly embrace cryptocurrency, this legislation aims to regulate its use in a more structured manner, allowing individuals to buy goods and services using their digital assets.

Once the bill advances to California’s Senate, it may undergo modifications before being sent to Governor Gavin Newsom for final approval. If enacted, the law is scheduled to take effect on July 1, 2026, marking a pivotal moment in California’s engagement with digital currencies. The legislation also requires licensing from the Department of Financial Protection and Innovation for companies conducting digital financial business unless they qualify for an exemption.

Despite the apparent progress, reactions to the proposed bill have been mixed. Detractors argue it may overreach the government’s authority, while proponents assert that it addresses crucial aspects of consumer protection. Eric Peterson, policy director at the pro-Bitcoin nonprofit organization Satoshi Action Fund, has voiced concerns regarding misunderstandings about the law’s implications. He emphasized that the bill seeks to modernize unclaimed property laws, ensuring that when cryptocurrency is declared unclaimed, it remains as digital assets rather than being liquidated into cash. Peterson stated that custodians would need to transfer actual Bitcoin to a state-selected licensed custodian, which protects user rights better than previous frameworks.

This legislative approach ensures that Bitcoin, and potentially other cryptocurrencies, can be reclaimed in their original form, which could boost consumer confidence. Peterson points out that California’s approach mirrors existing laws for inactive bank accounts and investment accounts, providing a familiar framework for individuals.

Echoing this sentiment, Dennis Porter, the founder of Satoshi Action Fund, remarked on the necessity of reforming state laws that govern unclaimed property in a way that benefits cryptocurrency holders. Various states have outdated processes for handling unclaimed financial assets, and California’s changes could serve as a model for improvement elsewhere.

Hailey Lennon, a former regulatory counsel at Coinbase, further elaborated on the existing landscape of unclaimed property laws, explaining that many states have similar regulations. Current laws often allow the return of unclaimed assets to the owners once they make themselves known to the state.

Given the complexities surrounding cryptocurrencies, these regulatory developments are crucial for both users and investors. The bill aims to instill a degree of order within a domain often viewed as chaotic and unregulated. By introducing these guidelines, California seeks to protect the interests of crypto holders, offering clearer avenues for reclaiming assets that might otherwise be lost due to inactivity or oversight.

While the bill has garnered support, it also showcases the challenges that accompany the integration of cryptocurrency into mainstream finance. These legislative efforts underscore the importance of ongoing dialogue between government entities, financial institutions, and the cryptocurrency community. Many are optimistic that thoughtful regulation can lay the groundwork for a safer and more transparent digital asset environment.

As this legislation continues its legislative journey, stakeholders will closely monitor California’s decisions. Many hope that, should the bill become law, it will set a precedent for other states in how they manage cryptocurrency and unclaimed digital property.

For those involved in cryptocurrency, either as casual users or serious investors, staying informed about these developments is paramount. The landscape of digital assets is continually evolving, and understanding local regulations will be essential for ensuring compliance while also making informed decisions about future investments.

In conclusion, California’s passage of AB 1052 represents a significant step in the regulation of cryptocurrencies. By extending unclaimed property laws to digital assets and allowing a framework for businesses to accept crypto as payment, California is poised to help shape the future of cryptocurrency in the United States. However, the mixed reactions surrounding the legislation highlight an ongoing debate about regulation versus freedom in the digital asset space. As California moves forward with these plans, it stands at the forefront of a crucial transformation in how cryptocurrency interacts with both individual rights and state governance.

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