Key Takeaways:
- Virginia Gov. Abigail Spanberger signed HB 798 on April 13, 2026, requiring exchanges to transfer dormant crypto to the state in-kind after 5 years.
- Coinbase CLO Paul Grewal called the law good news, as it prevents immediate forced liquidation of unclaimed digital assets.
- The law takes effect July 1, 2026, giving crypto custodians roughly 2.5 months to prepare operational compliance changes.
- Self-custody through non-custodial wallets remains the only way to keep digital assets fully outside escheat reach.
Virginia Law Requires Dormant Crypto Held In-Kind by State for at Least One Year
The law amends Virginia’s Disposition of Unclaimed Property Act to include explicit rules for digital assets and digital asset accounts. It takes effect July 1, 2026. However, critics say that definition fits millions of crypto holders who buy assets and hold them for years with no intent to abandon them.
Under the new framework, property held in a digital asset account is presumed abandoned after five years of inactivity. Any ownership action by the account holder, such as buying or selling assets, accessing the account, or communicating with the custodian, resets that clock.
When a custodian holds full control of the private keys needed to transfer an asset, the law requires delivery of the token itself to the state administrator. Partial-key holders must retain the asset until a full transfer is possible.
Once the state receives the digital assets, it must hold them for at least one year before any potential sale. Owners who file a claim before that one-year period ends can receive the higher of either the sale proceeds or the market value of the asset at the time of the claim.
Owners who come forward after the one-year hold can receive the asset itself if the state still holds it, or the sale proceeds if it has been liquidated. The bill passed the Virginia House 96-2 on Feb. 6, 2026, and cleared the Senate 40-0 on March 4, 2026. Delegate C.E. Cliff Hayes Jr. (D) prefiled the legislation Jan. 13, 2026.
Coinbase Chief Legal Officer Paul Grewal called the signing “good news” for the industry, noting that the law updates Virginia’s unclaimed property framework to cover digital assets and ensures they are escheated in-kind rather than converted to dollars at transfer.
For crypto exchanges operating in Virginia, the law creates explicit operational duties. Custodians that currently lack systems for in-kind transfers to state administrators will need to build or update those processes before July 1.
For account holders, the law reduces the risk that dormant holdings get sold at a market low. A forced liquidation during a price downturn could permanently erase gains that would have recovered with more time.
Crypto has historically presented problems for state unclaimed property administrators because traditional frameworks assumed assets could be liquidated without meaningful loss. Virginia’s approach preserves market exposure during the state’s custody period.
The legal concept driving the law is custodial escheat, a framework courts have upheld for over a century, despite controversy. That distinction does not satisfy everyone. In Libertarian circles, the objection is principled: inaction after five years does not mean relinquishment. A holder who bought bitcoin in 2021, logged in twice, and went quiet has not abandoned anything. The account is dormant. The intent is not gone.
States have a financial stake in how broadly they define abandonment. Collectively, state unclaimed property programs hold billions of dollars in assets. Interest earned on those funds flows to state budgets. Claim rates nationwide remain low, meaning a significant portion of what states take in never gets returned to owners.
Some states hire third-party auditors on contingency arrangements, where the auditor earns a percentage of whatever unclaimed property is identified. That structure creates pressure to classify more accounts as abandoned. Critics have compared the practice to bounty hunting, with private firms motivated by volume rather than accuracy.
Virginia becomes one of the first states to adopt detailed unclaimed property rules specifically designed for digital assets. Advocates view the legislation as a model other states may follow when updating older statutes that predate cryptocurrency.
Holders with dormant custodial accounts have until July 1, 2026, to take action demonstrating ownership and reset the five-year dormancy period. Self-custody through non-custodial wallets falls outside the scope of the law entirely.
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