California governor Gavin Newsom is about to sign Assembly Bill 1052, a controversial piece of legislation passed by the state’s Assembly in a unanimous 78-0 vote and is now under Senate review.
The bill allows the state to seize cryptocurrency that hasn’t been touched for three years.
It does this by amending California’s unclaimed property laws to include digital assets like Bitcoin, Ethereum, and other cryptocurrencies held on custodial platforms, such as centralized exchanges like Coinbase.
If a crypto account shows no “act of ownership” for three years—such as making a transaction, depositing, or withdrawing funds—the assets are classified as “unclaimed property.”
The state can then take custody of these assets.
AB 1052 mandates that seized cryptocurrencies be held in their original form, are not converted to cash, and stored by a state-appointed custodian.
Many crypto holders, especially those following a “HODL” (hold on for dear life) strategy, intentionally avoid frequent transactions to let their investments grow.
Critics argue that people should have the right to manage their investments however they want without the government stepping in and taking control any time there’s not enough activity on an account.
While the bill currently applies only to custodial platforms, many believe it will expand and start targeting self-custodied wallets or other private assets.
