California has signed Senate Bill 822 (SB 822) into law, making it the first U.S. state to safeguard unclaimed digital assets from forced liquidation. Governor Gavin Newsom approved the legislation on October 22, 2025, marking a significant milestone in cryptocurrency regulation.
The law requires exchanges and custodians to transfer unclaimed cryptocurrency in its native form, rather than converting it to cash. For instance, unclaimed Bitcoin must remain as Bitcoin, and unclaimed Ethereum must remain as Ethereum. This protection extends to other digital assets, including altcoins and stablecoins, ensuring that owners retain full value and growth potential.
Previously, unclaimed crypto assets could be liquidated into U.S. dollars if not claimed by the owner, often resulting in missed gains if the asset's value increased post-liquidation. SB 822 eliminates this risk, providing greater security for long-term investors and protecting against unnecessary depreciation.
Exchanges and custodians must now meticulously track unclaimed assets and maintain them in their original form, which may necessitate updates to internal processes, wallets, and reporting systems. While this could require additional effort, it promotes improved security and management practices.
This legislation is viewed as a major victory for crypto holders, enhancing confidence in digital asset ownership. It sets a precedent that could inspire other states to adopt similar laws, balancing innovation with consumer protection in the evolving financial landscape.
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