California’s New Crypto Law: A Game-Changer for HODLers
California has made a groundbreaking move in the world of cryptocurrency regulation with the passage of Assembly Bill 1052. This new law, introduced by Assembly member Avelino Valencia, officially integrates digital assets like Bitcoin and Ethereum into the state’s Unclaimed Property Law. But what does this mean for crypto investors and platforms?
What the New Law Entails
Effective as early as June 2025, California’s law establishes a three-year dormancy period for unclaimed crypto assets. Instead of liquidating these assets for fiat currency—like many other states do—California will require the appointment of licensed custodians to safeguard them in their native digital form. This approach ensures crypto retains its value, offering greater protection to asset holders who might have misplaced or forgotten their holdings.
The state lawmakers emphasized the importance of consumer protection and the legal recognition of digital assets and blockchain technology. According to Valencia, “California must modernize our economy and systems while safeguarding consumer assets.”
How This Impacts Long-Term Crypto Holders
For years, the mantra of “HODL” has been a guiding principle for Bitcoin investors—buy, hold, and wait out market volatility. However, under this law, failing to interact with your crypto holdings within three years could lead to the state taking control of them. This forces many investors to reassess their long-term strategies, encouraging them to shift their assets to self-custodial wallets such as Ledger or Trezor to avoid state intervention.
Why California Stands Out
States like Illinois and Delaware have instituted similar rules for unclaimed digital assets. However, these states require the liquidation of crypto into U.S. dollars before taking control. This approach often deprives investors of future gains. For instance, losing track of Bitcoin when it’s worth $20,000 means that if the state sells it at that price, you’d miss out on potential profits if Bitcoin’s value surged afterward.
Unlike these states, California’s law fosters a balanced approach, enhancing institutional legitimacy while maintaining asset value for holders. Nonetheless, exchanges operating in the state must now implement robust notification systems to comply with the three-year window, creating additional compliance costs.
Crypto Industry at a Turning Point
The introduction of AB 1052 coincides with a bullish upswing in the crypto market. With Bitcoin trading above $90,000 and Ethereum crossing the $3,300 mark, investor optimism is at an all-time high. This regulation arrives at a critical time, providing the much-needed legal clarity and consumer safeguards to support the growing adoption of cryptocurrencies.
Protect Your Crypto Assets
To safeguard your investments, consider moving your assets to highly secure, self-custodial wallets. A reliable option is the Ledger Nano X, a portable hardware wallet designed to keep your cryptocurrencies offline and protected from state escheatment or potential security breaches.
As California embraces its role as a leader in crypto legislation, it sets a precedent for more states to follow. For crypto enthusiasts, this underscores the importance of staying informed and proactive in managing digital assets.
