California Just Drew the Line Between Crypto and Cash: Here’s Why It Matters

Why It Matters

The change forces exchanges and custodians to adapt custody, compliance and accounting practices, could constrain liquidity-management practices, and sets a regulatory precedent likely to influence other states and industry standards.

Summary

California enacted SB 822, a law that bars custodians from forcibly selling unclaimed cryptocurrencies and instead requires them to transfer unclaimed digital assets to the state in-kind. The measure clarifies custody and unclaimed-property rules for tokens, mandates in-kind reporting and transfers, and strengthens consumer protections by preserving owners’ original crypto holdings. The change forces exchanges and custodians to adapt custody, compliance and accounting practices, could constrain liquidity-management practices, and sets a regulatory precedent likely to influence other states and industry standards.