Coinbase CLO reacts to California becoming first state to protect unclaimed cryptocurrencies

California is setting a new precedent for how governments handle digital money.

Governor Gavin Newsom recently signed new legislation making the state the first in the U.S. to ensure that unclaimed cryptocurrencies are not automatically converted to cash. Under the law, these digital assets remain in their original form when handed over to the state, giving owners a better chance of reclaiming what is rightfully theirs.

Applying virtual currency to California’s unclaimed property law

Senate Bill 822, filed by Sen. Josh Becker (D-Menlo Park), expands the state’s unclaimed property law to include cryptocurrencies such as Bitcoin and Ethereum, bringing digital assets under the same rules as abandoned bank accounts and securities.

By treating digital assets as intangible assets under California law, the law establishes clear rules for handling dormant virtual currency accounts, i.e., accounts that have not been used for three years.

How the law protects dormant cryptography

The law allows the State Controller to appoint a licensed custodian to securely manage unclaimed cryptocurrencies. If the owner does not come forward within 18-20 months of reporting, the administrator may convert the asset to cash, ensuring transparency and regulation of the process.

Companies must notify owners six to 12 months before reporting a dormant account using an administrator-approved form that allows them to restart the escheat period. Within 30 days of reporting, the holder must transfer the exact cryptocurrency, including the private key and amount, to an authorized custodian appointed by the State Controller.

To ensure compliance and secure management, custodians must obtain an official license from the Department of Financial Protection and Innovation.

California gets help from cryptocurrency experts

The bill passed unanimously in the Senate and Assembly in September and was signed into law by Governor Newsom on Saturday.

This law has received strong support from the crypto community. Coinbase Chief Legal Officer Paul Grewal tweeted:

“Thank you, Gavin Newsom, for signing SB 822, which prevents the state from liquidating Californians’ unclaimed cryptocurrency investments without their consent.”

He also thanked Sen. Josh Becker for sponsoring the bill and urged states to join 46 other countries with the SEC in protecting the right to stake cryptocurrencies on platforms like Coinbase.

Modernizing California’s Real Estate System

California’s SB 822 also modernizes the state’s unclaimed property system, which has long been an outdated, paper-based process.

The law protects value, ensures transparency, and facilitates recovery of assets by owners by keeping unclaimed cryptocurrencies in their original form and under authorized custodians.

California is leading the way in protecting digital asset owners and setting an example for other states to follow.