Virginia Enacts Law Requiring State to Hold Unclaimed Crypto

Virginia has enacted a new law requiring the state to hold dormant cryptocurrency in its original form for a set period before any sale. The primary keyword, Virginia enacts requiring state hold, marks a shift in how the state handles abandoned crypto accounts.

Understanding the New Law

The measure, signed into law by Governor Abigail Spanberger on April 14, updates Virginia's unclaimed property statute to include digital assets. Under the law, cryptocurrency held in customer accounts that show no activity for five years will be presumed abandoned and transferred to state custody.

Key Provisions

• The state must hold digital assets for at least one year before any liquidation.
• Owners who come forward can reclaim their property in its original form if it remains unsold.
• The law defines digital assets as representations of value used as a medium of exchange, unit of account, or store of value.

Industry Reaction and Implications

Paul Grewal, chief legal officer at Coinbase, said the measure ensures that digital assets are handled in a way that preserves their native form during the unclaimed property process. The law introduces new compliance requirements tied to reporting, custody, and transfer procedures for crypto firms operating in Virginia.

Benefits for Users

The law offers stronger protections against forced liquidation and a clearer path to reclaiming assets that fall into dormancy. This shift addresses a long-standing concern among crypto users and industry firms, where states have liquidated digital assets soon after taking custody, leaving owners with only the cash value at the time of sale.

Key Takeaways

• Virginia's new law requires the state to hold unclaimed crypto in its original form for at least one year.
• The law aims to reduce the risk of missing gains during market increases for owners who reclaim their funds.
• Crypto firms must comply with new reporting, custody, and transfer procedures.
• The law provides stronger protections for users against forced liquidation.

Frequently Asked Questions

What happens to unclaimed crypto under the new law?

Unclaimed crypto is held in its original form for at least one year before any liquidation, allowing owners to reclaim their assets if they come forward.

How does the law impact crypto firms operating in Virginia?

The law introduces new compliance requirements for crypto firms, including reporting, custody, and transfer procedures, to ensure digital assets are handled properly.