Key Takeaways
- A bill addressing long-inactive crypto wallets, specifically those dormant for over three years, has been approved.
- The bill passed the assembly 78-0 and now moves to the Senate for any amendments.
- The bill received mixed reactions from the crypto community, with several supporting it while a few opposed it.
The California state assembly has passed a new bill targeting dormant crypto wallets. The bill allows the state to seize crypto from these wallets if they remain inactive for an extended period.
The new bill comes amid heightened user awareness of crypto in the United States, but many were not pleased with the time frame after which the state can seize it.
Not Your Keys Not Your Crypto
The California State Assembly bill AB-1052 aims to designate long-inactive cryptocurrency holdings as “unclaimed property,” enabling the state to seize them.
Users must engage with their accounts at least once every three years to prevent temporary seizures. The assets will stay in cryptocurrency form and not be liquidated, enabling consumers to retrieve them later.
The draft legislation passed the House 78-0 on Tuesday. It will now go to the California Senate, where it could be modified further.
There is a famous saying in the crypto ecosystem: “Not your keys, not your crypto.” This mantra advocates for self-custody and managing one’s crypto portfolio via cold wallets rather than depending on exchanges to manage one’s crypto portfolio.
The latest California bill is a twist on the famous crypto saying, encouraging crypto holders to actively interact with their wallets at least once every three years to evade seizures. However, few were pleased with the bill, while others called it a net positive for the industry.
Crypto Industry Divided Over Bill
On the one hand, the bill’s proponents claimed that inactive crypto wallets that the authorities can seize will suit the industry.
If passed, the new legislation allows for unclaimed Bitcoin (BTC) and other crypto assets not to be liquidated by the state but held by a custodian for customers to reclaim later. The state cannot liquidate these assets; if a user comes in later to reclaim them, they can be returned via appropriate identification.
On the other hand, privacy advocates called it an attack on users’ right to spend their money, who don’t want to disclose their holdings. Many others cited the example of several early crypto whales who have remained inactive and anonymous for decades before liquidating or moving funds.
The bill also advocates self-custody rather than holding these assets on crypto exchanges, as the law would primarily focus on exchange wallets rather than cold wallets. Thus, users holding assets in cold wallets will more likely escape the seizure.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
