California advances bill on unclaimed crypto and merchant payments

California’s lower house has passed a sweeping crypto payments-regulating bill that would also allow the state to take idle crypto holdings from exchanges if an owner hasn’t accessed their account in three years.

The California State AssemblypassedAssembly Bill (AB) 1052 in a 78-0 vote on June 3, which would make crypto subject to the state’s unclaimed property laws and allow California to take possession of crypto in a user’s exchange account if it hasn’t performed “an act of ownership interest” over three years.

Such acts include making atransaction like buying or selling, depositing into or withdrawing from the account, accessing the account, or taking any “other action that reasonably demonstrates to the holder that the owner knows that the property exists.”

The other part of the bill would allow California individuals or businesses to accept crypto asa form of payment for goods, services and the use of crypto in private transactions.

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The bill now heads to California’s Senate, where it could be modified, rejected or passed to Governor Gavin Newsom to sign into law or veto.

If passed, the law would come into effect on July 1, 2026, and prohibit anyone without an exemption from engaging in digital financial asset business activity unless licensed by the Department of Financial Protection and Innovation.

Crypto users mixed opinions on bill

Opinions on the new legislation have been mixed across social media with critics calling the bill an overreach of power, while others argued there had been a misconception about what the finer points of the bill want to achieve.

Eric Peterson, a policy director at the pro-Bitcoinnonprofit organization Satoshi Action Fund, who helped draft an earlier version of the law,saidthere have been some “misunderstandings.”

“What it does is update the unclaimed property laws so when your Bitcoin is turned over as unclaimed property from an exchange, it stays in the form of Bitcoin rather than being liquidated. You can then get it back from California in Bitcoin,” hesaid.

“Instead of selling your Bitcoin after 3 years of inactivity, custodians must transfer your actual BTC to a licensed custodian selected by the state,” Peterson added. “The Bitcoin is held in native form, not converted to dollars.”

Related:California moves forward bill to accept crypto for state payments

California already has similar laws in place for inactive bank accounts and brokerage accounts or equivalent, according to Peterson. The new law also doesn’t affect users whohave opted to self-custodytheir crypto.

Satoshi Action Fund founder Dennis Porter chimed in as well, andsaidit’s crucial to “note that many states have a similar broken process that needs to be fixed.”

Hailey Lennon, a former regulatory counsel atcrypto exchange Coinbase, alsosaidsimilar laws already exist in other states.

“Most states have unclaimed property laws that exchanges comply with. It’s returned to the owner when the owner reaches out to the state,” she said.

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