Virginia Mandates In-Kind Transfer for Unclaimed Digital Assets

Virginia has modernized its financial statutes by bringing digital assets under the state's custody rules for unclaimed property. The newly signed House Bill 798 ensures that cryptocurrency is handled with a focus on preserving the original asset's value during the escheatment process. Under the new legislation, custodians of unclaimed crypto must transfer these assets to the state 'in-kind.' This requirement prevents the automatic liquidation of digital assets into cash, a move that protects the potential upside for owners who eventually reclaim their holdings and avoids forced sales during market downturns. The law establishes a strict minimum holding period of one year before the state administrator can direct the liquidation of reported but unremitted digital assets. Furthermore, the bill clarifies the definition of abandonment, setting a five-year period of inactivity unless the owner demonstrates engagement through logins or transactions. This move aligns Virginia with other states, including Arizona and California, which have similarly updated their unclaimed property laws to encompass digital assets. Industry representatives, including the chief legal officer of Coinbase, have characterized the law as a necessary update to state statutes. By formalizing the handling of digital assets within state administrative frameworks, Virginia signals a continued engagement with emerging technologies and a commitment to updating financial laws to reflect the digital economy.