California Allows Seizure of Crypto Assets Inactive for Three Years

California’s Assembly has passed bill AB-1052, allowing the state to take custody of cryptocurrency assets held on exchanges that have been inactive for three years. The proposal sparked significant debate within the crypto community. Eric Peterson, policy director at Satoshi Action Fund, clarified key points.

Under the legislation, if a crypto asset owner shows no sign of activity — such as transactions or account logins — for three years, the asset may be classified as “unclaimed property” and transferred to the state. Importantly, the assets will not be liquidated.

Peterson emphasized that when bitcoin is transferred to the state as unclaimed property, it remains in bitcoin form and is not sold. Owners can reclaim their assets in the same cryptocurrency form.

The bill received unanimous approval in the Assembly (78 votes in favor) and now moves to the California Senate.

The legislation expands existing unclaimed property laws — which already apply to bank accounts and safe deposit boxes — to include digital assets. It does not require private keys or personal wallets to be handed over; exchanges would hold the assets on behalf of the state until claimed.

Critics argue that the measure threatens the decentralized nature of bitcoin, while legal experts note that similar unclaimed property laws exist in most US states.

Crypto attorney Hailey Lennon stated that assets are returned to owners once they contact the state.

Peterson added that preserving assets in cryptocurrency form allows users to benefit from potential future price increases instead of having them converted into fiat currency.

The US House of Representatives is also expected to release an updated draft of a key digital asset market structure bill.