California Bill Sparks Outrage Over Alleged Plan To Seize ‘Unclaimed’ Crypto Assets

• California’s AB 1052, a bill amending the existing unclaimed property law to include unclaimed digital assets, has passed the House unanimously.
• The bill, which provides for automatic transfer of unclaimed digital assets to state custody after three years of inactivity, has raised concern among many crypto investors.
• One of the bill’s drafters provides clarity on how the bill potentially benefits crypto holders.

The California House of Representatives has passed AB 1052, a bill that amends various sections of existing legislation to allow the government to take over custody of unclaimed digital assets after a period of inactivity, among other provisions. Despite the bill’s unanimous passage, many crypto investors are critical of the bill over its government interference and anti-privacy implications.

California House Unanimously Passes AB1052

On Tuesday, the California House voted unanimously (68-0) for the bill, which provides a regulatory regime for digital assets and digital asset businesses. According to the bill, persons engaging in “digital financial asset business activity” must be licensed by the Department of Financial Protection and Innovation or be exempt from getting the license.

More interestingly, it opens the door for people and businesses within California to receive payment for goods and services via digital assets. By extension, it validates and legalizes the use of digital financial assets as payment media in private transactions.

Crypto Investors Alarmed After Misunderstanding Bill

AB1052 has moved to the Senate and is pending referral as of this writing. However, the major controversy lies around its inclusion of crypto assets under “unclaimed property” laws, to be taken by the state after three years of inactivity.

“This bill would provide that intangible property held in a digital asset account escheats to the state 3 years after either written or electronic communication to the owner is returned undelivered, or the date of the last exercise of ownership interest, as defined, by the owner,” said the text.

In other words, the holder of a digital asset is required to reach the owner within the period of inactivity. If the message bounces back as undeliverable or the owner fails to respond or declare interest within the three-year window, the asset gets turned over to the state until the owner reclaims it.

Several crypto bloggers and investors have misunderstood the bill to be an attempt towards privacy invasion, a plot to take over people’s funds, and a subtle way to drive crypto investors into withdrawing their funds from exchanges

Contributor Clarifies Bill’s Pro-crypto Stance

Eric Peterson, one of those who crafted the bill, came out to clear the air on the controversies. He clarified that the government does not necessarily “seize” inactive crypto assets indefinitely, but would hold them until the original owner comes forward to claim.

Also, instead of selling off inactive crypto at the prevalent market value when the state claimed it, the bill would allow for the state to hold the original asset e.g, Bitcoin, and return it intact whenever the owner lays claims to it.