California's Move to Seize Dormant Crypto Accounts Sparks Debate | Impact on Custodial Wallets
Edited By
Sophia Wang
A new California law aimed at seizing dormant crypto accounts has raised eyebrows among crypto enthusiasts and advocates. Under Assembly Bill 1052, custodial accounts that remain inactive for three years will be treated as unclaimed property, causing concern among the community.
The Basics of AB 1052
AB 1052 allows the California State Controller’s Office to take custody of inactive custodial crypto accounts. If an account shows no activity—like logging in, making transactions, or responding to communications—assets will be classified as unclaimed.
What's Not Included
Importantly, the law does not apply to self-custody wallets such as hardware wallets or cold storage. Commenters have noted, "Self-custody is safe—cold wallets and hardware wallets fall outside of this law and face no risk of state seizure." This exclusion means individuals firmly holding their crypto assets can breathe easier.
What Owners Should Know
Crypto owners can reclaim their assets by proving their identity if their accounts are seized. To prevent dormancy, owners are advised to:
Log into their accounts regularly
Make trades, deposits, or withdrawals
Engage with communications from custodians
Commenters emphasized a common sentiment, stating, "Just like other abandoned accounts, it adds crypto to the laws that manage unclaimed property."
Additional Provisions in AB 1052
As part of modernization efforts, AB 1052 also introduces:
Optional acceptance of crypto payments by public entities starting in July 2026.
A licensing requirement for companies in the digital asset space.
Conflict-of-interest safeguards for public officials.
Community Reaction
The sentiment in various forums appears mixed. Critics argue that it complicates ownership rights and could erode trust in custodial platforms. One comment pointedly stated, "Stop freaking out. It just adds crypto to the lawsso that owners can retrieve their stuff."
However, some expressed concern for crypto owners outside California, questioning how the law will apply to assets held across state lines.
Key Insights
🔍 Custodial accounts inactive for three years may be seized by the state.
🔒 Self-custody wallets remain protected under this law.
📅 Operators in the crypto space will require licensing beginning July 2026.
✉️ Commenters agree this aligns crypto with traditional unclaimed asset laws.
With California's bill streamlining the treatment of dormant crypto accounts, individuals and businesses alike must remain vigilant regarding their crypto holdings. Will this change the way people engage with custodial services?
What Lies Ahead for Custodial Crypto?
There’s a strong chance that individuals and businesses will begin to re-evaluate their approach to custodial crypto services in light of AB 1052. As people grow increasingly aware of the potential for state seizure on dormant accounts, experts estimate around 60% may start logging into their accounts more frequently or even shifting to self-custody options. Additionally, watchdogs and advocates within the crypto community will likely push for greater transparency from custodial platforms in response to these legislative changes. This could lead to new standards and practices that aim to protect consumers while ensuring compliance with evolving laws, driving a significant shift in how digital assets are managed across the board.
A Lesson from the Past: The Unclaimed Property Tide
Looking back, the evolution of unclaimed property laws provides an interesting parallel. Just as states like California have gradually adapted to include various asset classes under unclaimed property regulations, one can draw similarities to early regulations around abandoned bank accounts in the 1980s. At that time, banks had to navigate a wave of regulatory change, ultimately reshaping how financial institutions interacted with dormant accounts. As such, the crypto community may find itself at a similar crossroad, where adapting to regulatory frameworks can not only redefine ownership perceptions but also influence the financial landscape in ways that resonate down the road.