Virginia Governor Abigail Spanberger has signed a new law designed to protect dormant digital assets from automatic conversion to cash, according to decrypt.co.
The legislation, HB 798, updates the state's unclaimed property rules to specifically cover digital assets. Under the new framework, the state is prohibited from liquidating crypto held in dormant accounts for at least one year after the assets are delivered.
According to the report from decrypt.co, crypto held in dormant accounts will be presumed abandoned after five years of inactivity. The law, which passed the House 96-2 and the Senate 40-0, takes effect on July 1, 2026.
The move aligns Virginia with other states, such as California, that have moved to stop the automatic sale of unclaimed crypto. Forced liquidation can trigger unexpected tax liabilities for consumers and eliminates potential gains if market prices rise after the state takes possession.
Protecting in-kind transfers
The law mandates that holders with full private key access must transfer dormant assets to the state in their native form. For those with only partial access, the law requires they retain the assets until a full transfer becomes possible.
If owners file a claim within the one-year window following the state's takeover, they are entitled to receive either the sale proceeds or the market value at the time of the claim, the outlet reported.
Industry leaders have reacted positively to the legislative update. Paul Grewal, Chief Legal Officer at Coinbase, described the law as "good news" on social media, stating that it "updates the state's unclaimed property statute to cover digital assets and ensures they are escheated in-kind."
Paul Howard, a senior director at the crypto trading firm Wincent, told decrypt.co that the law helps define state custody of unclaimed assets rather than state control of private assets.
"I believe this is positive for the industry as it helps lay out procedures and recognise digital assets value," Howard said.
He added that the five-year abandonment timeline is a reasonable period that should improve trust in the crypto ecosystem. Howard also noted that the approach could encourage state bodies to work with regulated industry counterparties and liquidity providers for future liquidations.
