California house passes unclaimed crypto and merchant payments bill 78-0

California’s State Assembly has unanimously passed a groundbreaking bill that redefines how the state handles unclaimed crypto and merchant payments. The bill has sparked controversy and cautious optimism across the digital asset community.

Assembly Bill 1052, passed 78-0 on June 3, brings cryptocurrency under California’s existing unclaimed property laws. Under the proposed rules:

• Exchanges must transfer unclaimed crypto to the state after 3 years of account inactivity

• The state must hold digital assets in their original form (no forced liquidation to fiat)

• Businesses gain explicit permission to accept crypto for goods and services

“This isn’t a crypto grab – it’s actually protection against liquidation,” explains Eric Peterson of Satoshi Action Fund, who helped draft early versions. “Your Bitcoin stays Bitcoin when reclaimed.”

The ticking clock for inactive accounts

The passed bill defines inactivity as:

• No logins, trades, deposits, or withdrawals for 36 months

• No other actions demonstrate awareness of the assets

Unlike traditional unclaimed property processes, where financial institutions liquidate holdings, AB 1052 mandates that unclaimed crypto and merchant payments remain in their native form when transferred to state custody.

“If passed, California would become the first state to explicitly protect crypto holders from forced sales under unclaimed property laws,” Peterson told journalists.

Merchant payments get legal clarity

The legislation’s second major component removes ambiguity around unclaimed crypto and merchant payments in commercial transactions. Businesses would gain clear authorization to:

• Accept digital assets for goods/services

• Use crypto in private transactions

• Hold cryptocurrency without immediate tax consequences

“This could significantly boost crypto adoption among California businesses,” noted Hailey Lennon, former Coinbase counsel. “Most small merchants currently avoid crypto due to regulatory uncertainty.”

Why crypto holders are divided

Reactions across social media reveal sharp divisions:

Supporters argue:

• Prevents exchanges from liquidating dormant accounts

• Creates clearer merchant payment rules

• Matches existing policies for bank/brokerage accounts

Critics counter:

• State custody still means loss of control

• Potential privacy concerns

• Sets a precedent for other states to follow

Dennis Porter of Satoshi Action Fund cautions: “While California’s approach improves on liquidation models, 40+ states still have outdated systems that automatically convert unclaimed crypto and merchant payments to cash.”

What happens next

The bill now moves to California’s Senate, where amendments are likely. Key dates:

• July 1, 2026: Proposed effective date

• 2024-25: Potential licensing requirements for crypto businesses

Notably, the law wouldn’t affect self-custodied wallets – only exchange-held assets. As debates continue, one thing’s clear: California’s handling of unclaimed crypto and merchant payments could set a national standard for how governments interact with dormant digital assets.

Final note: The bill requires exchanges to maintain detailed records of all unclaimed crypto and merchant payments, with audit provisions to prevent abuse. Governor Newsom is expected to weigh in after Senate review.