California Assembly Approves Comprehensive Crypto Custody and Payment Reform

California's Assembly has unanimously approved comprehensive cryptocurrency legislation that modernizes the state's approach to dormant digital assets while expanding merchant payment options, addressing long-standing regulatory gaps in the rapidly evolving sector.

Assembly Bill 1052 secured overwhelming support with a 78-0 vote on June 3, demonstrating rare bipartisan consensus on cryptocurrency policy reform. The legislation tackles two critical areas: unclaimed property procedures for inactive crypto accounts and legal framework for cryptocurrency merchant transactions.

Under the new provisions, California would assume custody of cryptocurrency holdings from exchange accounts that remain inactive for three years without demonstrable ownership activity. Qualifying acts of ownership include conducting transactions, making deposits or withdrawals, accessing accounts, or performing actions that reasonably demonstrate continued user engagement.

The bill simultaneously establishes legal protections for individuals and businesses accepting cryptocurrency payments for goods, services, and private transactions, potentially boosting adoption across California's diverse economy.

Following Senate consideration, where modifications, rejection, or approval remain possible, the legislation would advance to Governor Gavin Newsom for final disposition. Implementation would commence July 1, 2026, requiring Department of Financial Protection and Innovation licensing for digital financial asset business activities.

Legislative Intent Clarifies Asset Protection Mechanisms

Despite online controversy surrounding the bill's implications, cryptocurrency advocates emphasize the legislation's protective rather than punitive nature. Eric Peterson, policy director at Satoshi Action Fund who contributed to earlier drafting, addressed widespread misconceptions about the bill's actual provisions.

The updated unclaimed property framework ensures cryptocurrency assets transferred to state custody remain in their native digital form rather than being liquidated into dollars, as Peterson explained. This preservation mechanism allows owners to reclaim their original cryptocurrency holdings directly from California's custody system.

Peterson emphasized that custodians must transfer actual Bitcoin and other digital assets to state-licensed custodians rather than converting holdings to fiat currency after three-year inactivity periods. This approach mirrors existing California protocols for inactive bank accounts and brokerage holdings while adapting procedures for digital asset characteristics.

The legislation specifically excludes self-custody arrangements, maintaining individual sovereignty over personally held cryptocurrency wallets and storage solutions.

Broader Regulatory Context Supports Reform

Industry experts note California's approach aligns with existing multi-state frameworks addressing unclaimed digital property. Former Coinbase regulatory counsel Hailey Lennon confirmed that similar laws operate across various jurisdictions, with established processes for owner asset recovery through state coordination.

Satoshi Action Fund founder Dennis Porter highlighted the necessity of addressing "broken processes" affecting multiple states' unclaimed property systems, positioning California's reform as a model for broader adoption.