California’s Crypto Seizure Framework Under Fire As Criticism Resurfaces

• A critical trend has resurfaced online about California’s SB822, legislation that added crypto assets to the state’s unclaimed property framework and provided a system to inform asset owners to claim their assets within a given timeframe or have them transferred to the state
• Many critics claim the move was a desperate attempt by the state to siphon off more funds from residents, since they have only a fixed allocation from the Federal Reserve Bank.

Critics Decry Law as Unfair and Unconstitutional

In October, 2025, California made a pioneering move by becoming the first state to pass legislation that prevents the state’s Comptroller of the Currency from auctioning its residents’ crypto assets without properly notifying them to claim. While many saw it as a massive success in advancing the legitimacy of cryptocurrency and protecting consumer rights, a new group of critics calls it out as a retrogressive and anti-crypto effort.

Per the legislation, digital assets within the custody of exchanges and other such custodians are liable to be claimed by the state if the “apparent owner” does not claim it three years from the date they last indicated interest in the asset.

Others called it “criminal” and unconstitutional, citing how unfair it is to the average Californian to have their savings escheated to the state over inactivity within just three years.

ADVERTISEMENT## Viral Post Sparks Confusion Over Already-Enacted Crypto Legislation

Most of the backlash against the unclaimed properties legislation appears to stem from a controversial post, in which the poster, a reputable industry voice, assumed that the bill had just passed the House and was on its way to the Senate. The only bill that accorded the state the right to claim crypto assets was enacted in 2025.

Additionally, the state does not outrightly seize dormant assets after the 3-year deadline. If it first reaches out to the owners via exchanges between six and twelve months before the asset becomes reportable to the Controller as unclaimed.

Owners who fill out and sign an attached form will be considered active and have their escheating period recycled, while those who fail to respond to their exchanges’ messages will have their funds reported as dormant.

ADVERTISEMENTEven when funds have been transferred to the state, they are held in custody for the rightful owner, not permanently confiscated. A valid proof of ownership would directly earn back the heir’s crypto if it’s still held in its original form.

If the state has already converted the crypto to cash—which is possible within 18 to 20 months—the rightful owner receives the cash equivalent. In both cases, the owner is entitled to any interest on their funds.

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