Virginia Enacts Law for In-Kind Transfers of Unclaimed Digital Assets

This legislation sets a precedent for how states manage unclaimed digital assets, potentially influencing similar laws nationwide.

• On April 13, 2026, Virginia Governor Abigail Spanberger signed House Bill 798 into law, requiring custodians to transfer dormant digital assets to the state in native token form after five years of inactivity.
• The law mandates a one-year holding period before any sale, ensuring owners receive either the sale proceeds or market value.
• Virginia joins California as a pioneer in addressing the complexities of unclaimed digital assets amid rising cryptocurrency adoption.

• Traditional unclaimed property laws were designed before the advent of digital assets, often leading to immediate liquidations that exposed dormant holdings to market volatility.
• California's Senate Bill 822, signed in October 2025, was the first to bar forced sales of digital assets, prompting Virginia's response to industry advocacy and state interests.
• Virginia holds approximately $3.8 billion in unclaimed property, with low reclamation rates benefiting state treasuries through accrued interest.

Virginia's House Bill 798 represents a significant shift in how states handle unclaimed digital assets, reflecting a growing recognition of the unique challenges posed by cryptocurrencies. The law requires custodians to transfer dormant digital assets to the state in their native token form after five years of inactivity, a move designed to protect asset owners from the risks associated with forced liquidation.

This legislation comes in response to the increasing adoption of cryptocurrencies and the need for regulatory frameworks that can accommodate these digital assets. By mandating a one-year holding period before any sale, the law ensures that owners have the opportunity to reclaim their assets at either the sale proceeds or the market value, thus providing a safety net against market volatility.

The impetus for this law stems from a broader trend of states reevaluating their unclaimed property laws to better align with the realities of digital finance. Delegate C.E. Cliff Hayes Jr., who sponsored the bill, recognized the gaps in existing statutes that failed to account for the unique nature of digital assets. The overwhelming bipartisan support for the bill—passing the House 96-2 and the Senate unanimously—signals a collective acknowledgment of the importance of protecting digital property rights.

Virginia's approach could serve as a model for other states grappling with similar issues. The law not only addresses the immediate concerns of asset owners but also positions Virginia as a leader in the evolving landscape of digital asset regulation. As states like California have already taken steps to protect digital assets, Virginia's legislation may prompt further legislative action across the country, potentially leading to a patchwork of regulations that could complicate compliance for businesses and individuals alike.

The implications of this law extend beyond Virginia, as it may influence how other states craft their own regulations regarding unclaimed digital assets. With billions of dollars tied up in unclaimed property across the United States, the stakes are high for both state treasuries and asset owners. The law's focus on in-kind transfers rather than forced sales could reshape the landscape of digital asset management, encouraging more individuals to engage with their digital holdings rather than allowing them to languish in obscurity.

• Digital asset holders in Virginia who may have previously faced liquidation risks.
• Custodians and financial institutions managing unclaimed digital assets, who will need to adapt to new compliance requirements.
• State treasuries that will benefit from increased reclamation rates and interest from unclaimed assets.

• Implementation of systems: Monitor how local governments prepare for the July 1, 2026, effective date and the systems they put in place for managing in-kind transfers.
• Legislative trends: Watch for similar bills in other states, as Virginia's law may inspire a wave of new regulations addressing digital assets.
• Market reactions: Observe how the cryptocurrency market responds to this legislation, particularly regarding investor confidence and asset management strategies.