California Passes Law to Protect Unclaimed Crypto Assets from Forced Liquidation

California's new law prevents forced liquidation of unclaimed crypto assets, ensuring safe custody until owners reclaim them.

Fridah Kangai
October 15, 2025
1:07 pm

Fridah Kangai

Fridah Kangai is a dedicated crypto journalist with a sharp eye for market trends, blockchain innovation, and digital asset movements. She specializes in breaking down complex topics into clear, engaging stories for both seasoned investors and curious newcomers. With a passion for decentralization and a pulse on the ever-evolving crypto space, Fridah delivers timely, accurate, and insightful coverage. Her work bridges the gap between technology and everyday understanding in the world of cryptocurrency.

California law protects dormant crypto assets from forced liquidation.
Unclaimed digital assets must stay intact under new California law.
Crypto investors gain more security under California’s new legislation.

California has recently passed groundbreaking legislation to protect dormant digital assets such as Bitcoin and Ethereum. Governor Gavin Newsom signed Assembly Bill 1052 (AB 1052) into law, revising the state’s Unclaimed Property Law. According to this law, unclaimed crypto assets will be transferred to the state’s custody without being sold or converted into cash.

According to the new regulations, digital assets that have not been traded on custodian platforms, including exchanges, within three years are to be transferred to a licensed custodian designated by the State Controller.

The role of these custodians is to hold the assets in their original form safely, such that the owners are given an opportunity to recover the assets without the liquidation being automatic.

Also Read: Senate Democrats’ DeFi Crackdown Sparks Fierce Crypto Industry Revolt

SB 822 Strengthens Crypto Asset Protection

Besides AB 1052, Senate Bill 822 (SB 822) was also signed into law, further solidifying the security of digital assets. SB 822, sponsored by Senator Josh Becker, applies explicitly to cryptocurrencies such as Bitcoin and Ethereum. The bill clarifies the treatment of dormant digital assets, which should be considered intangible property under California laws governing property.

The State Controller may also appoint custodians to manage unclaimed cryptocurrency assets as permitted by law. The assets can, however, be exchanged for fiat currency, provided that no claim is made within a period of 18 to 20 months. This ensures that unclaimed crypto assets are adequately secured and also provides a mechanism to sell the assets in case of need after a prolonged period of inactivity.

Crypto Community Welcomes Legislative Changes

The crypto community has been delighted with the new laws. Paul Grewal, the Chief Legal Officer at Coinbase, claims that SB 822 is a significant victory for crypto investors. Grewal emphasized that the bill prohibits the state from liquidating unclaimed assets without the owner’s consent.

In this provision, the issue of security and treatment of unclaimed crypto assets is considered in California.

Thank you @GavinNewsom for signing SB 822, which stops the state from liquidating Californians’ unclaimed crypto investments without their consent. Also thank you @SenJoshBecker, who sponsored the bill. Now it's time for California to join the 46 other states, along with @secgov,…
— paulgrewal.eth (@iampaulgrewal) October 14, 2025

These new protections represent a significant step forward for California in protecting digital assets and ensuring the safety of crypto investors. This action will set a powerful precedent for other states, and they may also follow suit by modifying their own digital asset regulations.

Also Read: BitMine Shocks Market with $103.7 Ethereum Buy, Expands Massive Treasury