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Virginia has instituted a new regulatory framework for dormant digital assets, mandating that the state retain unclaimed cryptocurrency in its original format for a stipulated duration prior to any potential sale.
Governor Abigail Spanberger gave her assent to House Bill 798 on April 14, signifying a modification in the state’s approach to managing inactive crypto accounts. This legislation, effective from July 1, 2026, amends Virginia’s statute on unclaimed property to encompass digital assets.
As per the statute, cryptocurrency stored in customer accounts exhibiting no activity for five years will be considered abandoned and subsequently transferred to state custodianship. In contrast to the prevalent practice in numerous jurisdictions, these assets must be transferred “in-kind,” meaning the state assumes possession of the actual digital tokens rather than converting them to cash upon receipt.
This adjustment addresses a persistent apprehension among cryptocurrency users and industry participants. In many instances, states have opted to liquidate digital assets shortly after acquiring custody, leaving individuals who later seek to reclaim their funds with only the cash equivalent at the point of sale. Such a methodology exposed claimants to the risk of forfeiting potential gains during periods of market appreciation.
Virginia must hold crypto for one year
Virginia’s updated legislation seeks to mitigate this exposure. It stipulates that the state must hold digital assets for a minimum of one year before any liquidation occurs. Throughout this interval, owners who present themselves can retrieve their property in its original state, provided it has not yet been sold, or receive either the proceeds from a sale or the market value at the time of the claim, whichever figure is higher.
The law defines digital assets as embodiments of value serving as a medium of exchange, a unit of account, or a store of value, while specifically excluding items such as in-game currencies and non-transferable awards.
Furthermore, it details the criteria for owner activity, which includes engaging in transactions, accessing the account, or undertaking other actions that indicate awareness of the account, all of which serve to restart the dormancy clock.
Provisions regarding custody are contingent upon whether an entity, such as a crypto exchange, possesses control over the private keys associated with the assets. If complete control is held, the entity is obligated to transfer the assets directly to the state. Where control is partial, the entity must retain the assets until such a time as transfer becomes feasible. The statute also permits the state to mandate liquidation in circumstances where it cannot securely maintain custody of certain assets.
The industry’s reception has been favorable. Paul Grewal, chief legal officer at Coinbase, commented that the measure ensures digital assets are managed in a manner that preserves their intrinsic form throughout the unclaimed property process.
Virginia now joins an increasing number of states that have revised their unclaimed property statutes to accommodate digital assets. Jurisdictions like California have adopted comparable measures, although variations exist regarding whether assets are subject to liquidation or must be held in their original form.
For cryptocurrency businesses operating within Virginia, the law introduces novel compliance mandates related to reporting, safekeeping, and transfer protocols.
For individuals utilizing these services, it provides enhanced safeguards against compelled liquidation and a more transparent avenue for recovering assets that become dormant.
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