Forgotten Bitcoin? California Will Be Allowed to Hold Your Unused Exchange Crypto If You Don’t Log In for Three Years

California Moves to Claim Inactive Cryptocurrency from Exchanges

California’s Assembly has passed a bill that would allow the state to take possession of cryptocurrencies held in exchange accounts if owners do not demonstrate activity over a three-year period.

The legislation, known as Assembly Bill 1052 (AB 1052), was approved unanimously in a 78-0 vote on 3 June 2025.

It aims to bring digital assets under the state’s existing unclaimed property laws, which already cover traditional financial accounts like banks and brokerages.

What Does ‘Inactivity’ Mean for Crypto Holders

Under AB 1052, cryptocurrency owners must perform what the bill calls “an act of ownership interest” within a three-year span to avoid having their assets considered unclaimed property.

These actions include transactions such as buying, selling, depositing, or withdrawing, but also extend to simply accessing the account electronically or taking any action that confirms the owner’s awareness of their holdings.

If no such activity occurs, the state would have the authority to take custody of the cryptocurrency.

However, unlike concerns raised by some critics, the bill explicitly states that the state will not liquidate these assets into cash.

Instead, the coins would be held by a licensed custodian, preserving the digital assets in their original form for owners to reclaim later.

Eric Peterson, policy director at the Bitcoin advocacy group Satoshi Action Fund and one of the bill’s contributors, clarified on X,

“Instead of selling your Bitcoin after 3 years of inactivity, custodians must transfer your actual BTC to a licensed custodian selected by the state. The Bitcoin is held in native form, not converted to dollars.”

He also pointed out that similar laws already exist for bank and brokerage accounts in California.

What Happens Next for California’s Crypto Regulation

With the Assembly’s approval, the bill now proceeds to the State Senate, where it may be amended, accepted, or rejected before potentially reaching Governor Gavin Newsom’s desk for signature.

If enacted, the law would take effect on 1 July 2026.

It would also require anyone conducting digital financial asset business in California to obtain a licence from the Department of Financial Protection and Innovation (DFPI), barring those with exemptions.

The bill forms part of a wider push by California to regulate cryptocurrency activities, following the near-simultaneous passage of AB 1180.

That measure would allow state agencies to accept crypto payments for goods and services and requires the DFPI to develop rules to oversee such transactions.

AB 1180 is set to start as a pilot programme running until January 2031, before potential full implementation.

Public Reaction Mixed but Some Clarity Emerges

Reactions to AB 1052 on social media and among crypto enthusiasts have been mixed.

Critics view the bill as government overreach, raising concerns over property rights and control.

However, others argue that there has been some misunderstanding about the bill’s intent and effects.

Responding to Peterson’s post, Dennis Porter, founder of Satoshi Action Fund, noted on the existing unclaimed property frameworks for digital assets,

“Important to also note that many states have a similar broken process that needs to be fixed.”

Hailey Lennon, formerly regulatory counsel at Coinbase, also made similar comment,

“Most states have unclaimed property laws that exchanges comply with. It’s returned to the owner when the owner reaches out to the state.”

One important change from earlier drafts is the removal of provisions related to self-custody.

AB 1052 applies solely to crypto held on exchanges or by custodians, leaving those who manage their own wallets unaffected.

California Joins a Growing List of States Regulating Crypto

California’s move follows similar initiatives in states like Wyoming, Florida, Texas, and New Hampshire, which are also developing regulations around digital assets and payments.

As cryptocurrencies continue to gain traction, more governments are adapting existing financial frameworks to address the unique challenges posed by these new asset classes.

By updating unclaimed property laws to include crypto, California is aiming to bring digital assets into clearer legal territory while offering protections to holders who may otherwise lose track of their tokens after prolonged inactivity.

The next steps in the Senate will determine how this approach takes shape in practice.