California’s new crypto law puts 3-year timer on unclaimed Bitcoin

For years, the “HODL” mantra was simple: buy Bitcoin [BTC], move it to a secure spot, and forget it exists for a decade.

But in California, silence is now being codified as abandonment, with negotiations already underway as early as June 2025.

With the passage of Assembly Bill 1052, introduced by Assembly member Avelino Valencia, California, the world’s fourth‑largest economy, has officially incorporated digital assets into its Unclaimed Property Law.

California’s new crypto law

Unlike traditional seizures, the state isn’t liquidating these coins for cash. In fact, under the new law, California must appoint a licensed custodian to hold these assets in their native form.

The lawmakers noted, 

Following Assembly member Valencia’s closing appeal, the floor saw no further debate, underscoring a unified legislative front on the issue of crypto escheatment.

Impact on California’s crypto landscape

That said, the enactment of AB 1052 fundamentally alters California’s crypto landscape by ending the era of regulatory ambiguity for long-term investors.

By officially classifying digital assets as intangible property, California is forcing a clean-up of the ecosystem.

While this boosts institutional legitimacy and lets businesses accept crypto legally, it also creates a heavy compliance burden for exchanges.

So, now these platforms must implement rigorous notification systems to warn users before the three-year clock runs out.

In short, for most investors, the law acts like a ‘use it or lose it’ rule, encouraging HODLers to move their crypto into self-custody to avoid state control.

Is California alone?

Needless to say, California is not the first state to eye dormant crypto, but it is currently the most protective of asset value.

States like Illinois and Delaware were early to create rules for dormant crypto, but their approach comes with a major drawback.

They require any abandoned digital assets to be sold for U.S. dollars before the state takes control.

That means if you lost track of your Bitcoin when it was worth $20,000, the state would immediately sell it, and you’d miss out on any future gains.

Arizona followed a similar path with its 2025 law, which sets a three-year dormancy period and lets the state liquidate assets through approved exchanges.

What’s more?

This turning point arrives just as 2026 brings fresh optimism to the crypto market.  With the entire market trading in a bullish zone, Bitcoin has finally climbed above the $90,000 mark.

Meanwhile, Ethereum [ETH] at press time was also pushing past $3,300 with renewed momentum.

Against this backdrop of rising confidence, the CLARITY Act holds even greater significance.

Final Thoughts

• The three-year inactivity rule pushes custodial users to stay active, shifting the traditional HODL mindset toward self-custody.
• The 69–0 vote shows rare bipartisan agreement, highlighting the urgency of regulating digital assets.