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

This legislation modernizes unclaimed property laws to accommodate the unique characteristics of digital assets, impacting how custodians manage dormant accounts.

• Virginia Governor Abigail Spanberger signed House Bill 798 into law on April 13, 2026, requiring custodians to transfer unclaimed digital assets to the state after five years of inactivity.
• The law mandates a minimum one-year holding period before the state can liquidate these assets, addressing concerns over cryptocurrency volatility.
• The bill received overwhelming bipartisan support, passing the House 96-2 and the Senate 40-0, reflecting a strong legislative push for modernization.

• Virginia's previous unclaimed property laws did not account for the volatility and complexities of digital assets, leading to potential losses during forced sales.
• House Bill 798 establishes clear rules for in-kind escheatment, allowing the state to hold digital assets rather than liquidate them immediately, which could preserve their value.
• The legislation aligns with century-old custodial frameworks, ensuring that the management of unclaimed property remains consistent with judicial standards.

Virginia's House Bill 798 represents a significant shift in how unclaimed digital assets are treated under state law. Traditionally, unclaimed property laws assumed that assets could be liquidated without substantial loss of value. However, the rise of cryptocurrencies and other digital assets has exposed the limitations of these outdated frameworks. The volatility inherent in digital currencies means that liquidating these assets during a downturn could result in significant financial losses for their owners.

By mandating that custodians transfer dormant digital assets to the state in their native form after five years of inactivity, the law aims to protect the value of these assets. The one-year holding period before any state liquidation is particularly crucial. It allows for potential appreciation in value, which is essential given the unpredictable nature of cryptocurrency markets. This provision not only safeguards the interests of asset holders but also aligns with the broader trend of recognizing digital assets as legitimate forms of property.

The overwhelming bipartisan support for HB 798—evidenced by the 96-2 vote in the House and a unanimous 40-0 in the Senate—highlights a collective acknowledgment among lawmakers of the need to adapt to the evolving financial landscape. Delegate C.E. Cliff Hayes Jr., who sponsored the bill, emphasized the importance of modernizing unclaimed property laws to reflect the realities of digital finance.

This legislative change is also a response to the growing number of individuals and businesses engaging with cryptocurrencies. As more people invest in digital assets, the potential for unclaimed property increases. By establishing clear rules for how these assets are handled, Virginia is positioning itself as a forward-thinking state in the realm of digital finance.

The implications of this law extend beyond Virginia. While it primarily affects accounts or holders required to report to Virginia administrators, international users with U.S.-based custodians may also benefit indirectly from the preservation of asset value. This could encourage more individuals to engage with digital assets, knowing that their investments are protected from premature liquidation.

In summary, Virginia's House Bill 798 is a proactive measure that addresses the complexities of digital assets within the framework of unclaimed property laws. It reflects a broader recognition of the need for regulatory clarity in the rapidly evolving world of digital finance.

• Cryptocurrency holders in Virginia: They will see direct implications for how their dormant assets are managed.
• Custodians of digital assets: Financial institutions and platforms managing these assets will need to adapt their policies and practices.
• Investors and stakeholders in the crypto industry: They may experience increased confidence in the market due to enhanced protections against forced liquidation.

• Implementation of the law: Monitor how custodians adjust their practices in response to the new requirements, as this will set a precedent for other states.
• Market reactions: Watch for any shifts in cryptocurrency valuations as the law takes effect, particularly regarding dormant assets.
• Legislative trends in other states: Other jurisdictions may follow Virginia's lead, so keep an eye on similar bills being introduced elsewhere.