According to The Block, Virginia has officially signed a new law requiring the state, when handling dormant or unclaimed crypto assets, to hold them in “original form” for at least one year and not immediately liquidate them into fiat currency. This legislation is seen as a pioneering standard among U.S. states for the custody of dormant crypto assets.
Limitations of traditional unclaimed property handling mechanisms
In the U.S., states generally have Unclaimed Property Laws. When bank accounts, securities, or other financial assets go unused or uncontacted for a long time, the state government has the authority to take them into its custody. The traditional approach is to liquidate these assets into cash, consolidate them into the state treasury for safekeeping, and then return them to the original owners once they come forward to claim them.
However, applying this mechanism to cryptocurrencies presents clear problems. If a state government, after taking custody, immediately sells crypto assets such as BTC and ETH, then when holders claim them later, they can only recover the fiat value at the time of sale, not the crypto assets’ appreciation during that period. Given the high volatility of cryptocurrencies, this could cause significant losses for the original holders.
The core provisions of Virginia’s new law
This new law explicitly stipulates that once crypto assets are classified as dormant or unclaimed, the Virginia state government must hold the assets in the form of the original cryptocurrency and keep them for at least one year. During this period, the state government may not convert the crypto assets into fiat currency or any other form.
The key significance of this move is to protect the rights of crypto asset holders—so that even if the assets are categorized as dormant for various reasons, holders can still recover the original crypto currency at the time of claiming, rather than a fiat amount after liquidation.
Observations on legislative trends across states
Virginia’s legislation this time reflects that U.S. local governments are gradually coming to recognize the fundamental differences in nature between crypto assets and traditional financial assets. In recent years, as the number of cryptocurrency holders has grown, how to properly handle dormant crypto assets has become an issue that lawmakers in each state must address.
The passage of the law may also prompt other states to reexamine their own unclaimed property regulations and consider whether they need to establish similar “original form” custody provisions for crypto assets, to avoid harming holders’ interests due to forced liquidation.
This article Virginia new law: Dormant crypto assets must be held in “original form” for at least one year was first published on Chain News ABMedia.
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