There is a way to lose crypto that has nothing to do with hacks or a misplaced seed phrase. You leave an exchange account alone for a few years, the confirmation emails start bouncing off a dead address, and the state takes custody of what is sitting in it. This is not a hypothetical. California's version of the rule has been in force since January 1, 2026, and its clock runs three years.
How your coins end up at the treasurer's office
Escheatment is old, boring law. Every state runs a process for property whose owner has gone quiet: forgotten savings accounts and uncashed insurance payouts. The company holding the property reports it, hands it to the state, and the state holds it for the owner with no deadline to claim. The National Association of Unclaimed Property Administrators puts the national pile at roughly $70 billion belonging to about one in seven Americans. States paid $4.49 billion of it back in fiscal 2024.
What changed is who counts as a holder. An account at a US exchange is a custodial relationship, legally close to a bank deposit — the platform controls the keys, you have a claim against the platform. Once a state names digital assets in its unclaimed property statute, that platform picks up a reporting duty it never had before.
The four states with real rules
| State | Statute | Dormancy | Handed over as |
|---|---|---|---|
| California | SB 822 (Ch. 660) | 3 years | Tokens, unliquidated |
| Arizona | HB 2749 (Ch. 150) | 3 years | Native transfer |
| Maine | LD 1969 (PL Ch. 675) | 5 years | Native delivery |
| Virginia | HB 798 | 5 years | In kind, held 1 year |
California moved first and moved hardest. Governor Gavin Newsom signed SB 822 on October 11, 2025. The dormancy clock starts at a returned communication or the owner's last act of ownership interest, and it runs three years. The holder then delivers "the exact digital financial asset type, private keys, and amount, unliquidated" to a state-selected custodian within 30 days of the reporting deadline. The Controller may convert those assets to dollars no sooner than 18 months and no later than 20 months after the report is filed.
State Senator Josh Becker, who carried the bill, framed it as catching the statute up to how people actually hold money.
"Virtual currency is an increasingly common and valuable part of people's financial lives, and California's laws need to reflect that reality."
Virginia arrived in April. Governor Abigail Spanberger signed HB 798 on April 13, 2026, and it took effect July 1. Five years of inactivity triggers the presumption of abandonment. Custodians with full control of the private keys transfer the assets in their native form rather than selling them, and the Commonwealth has to hold them for at least a year before any sale. Coinbase's chief legal officer, Paul Grewal, publicly welcomed the signing, singling out the in-kind requirement as the part that mattered. Arizona's HB 2749 and Maine's LD 1969 follow the same shape at three and five years respectively, both requiring delivery in native form inside 30 days.
Everywhere else, there is no crypto-specific statute — and that is the worse situation, not the safer one. General unclaimed property law still applies to a custodial account. Most state treasuries have no way to custody a token, so the practical default is that the exchange sells your coins and remits dollars.
The dormancy clock is the wrong number to watch
Coverage of these laws keeps fixating on three years versus five years. That is the less important number. What decides whether escheatment costs you anything is whether the asset arrives at the state as tokens or as cash.
Run it through: you hold one bitcoin in an account you stopped checking in 2022. Under an in-kind rule, the state holds one bitcoin, you file a claim, you get one bitcoin. Under a liquidate-and-remit default, the exchange sells at whatever Tuesday's price happened to be, the state holds the dollars, and you get the dollars back years later regardless of what the price did. You also inherit a disposal you did not choose and did not time, in a tax year you were not paying attention to.
What resets the clock
- Logging into the account
- Buying, selling, transferring, or withdrawing
- Answering an email or letter from the custodian
- Not counted: price appreciation, staking rewards accruing on their own, simply continuing to hold
The trigger that catches most people is the returned communication. Change jobs and lose the email address the account was opened under, and the custodian's outreach bounces. Dormancy testing then begins on an account you would swear you still actively own. Continuing to hold the asset does nothing to stop that; the statutes measure whether you are reachable, not whether you still care.
Self-custody sits outside all of this
None of the four statutes reach a wallet whose keys you hold yourself. There is no holder to file a report, and no custodian to hand anything over. Congress has moved to say so in writing: Section 20216 of the Digital Asset Market CLARITY Act (H.R. 3633) provides that inactivity, dormancy, or an absent indication of interest in a self-custodied digital asset is not grounds to treat it as abandoned, unclaimed, or forfeited under any federal, state or local law. The provision preempts state law, and it exists because litigants have started testing whether old lost-and-found doctrines might reach the millions of bitcoin that have never moved.
Check whether the clock already ran
If you had an account at a US exchange you have not touched since the last cycle, two things are worth an hour of your Saturday. Log in, confirm the email and address on file, and make one small transaction. Then search the NAUPA state unclaimed property directory and its free MissingMoney portal, which covers 49 states in one query — under your current name, any former name, and every state you have lived in. State claims are free. Anyone asking for a percentage to "recover" the money is selling you a search you can run yourself.
For the statutory language behind California's version, the full text of SB 822 spells out the delivery and conversion windows precisely.
What to do about it this month
Legislatures are treating custodial crypto the way they treat a dormant checking account, and more states will copy the pattern now that four have drafted it. The defense is unglamorous: current contact details, one login a year, and an account you could name from memory if someone woke you at 3am. The people who lose money to these rules will be the ones who assumed that owning an asset and being findable were the same thing.