Virginia’s New Legislation on Digital Assets
Virginia’s legislative landscape for digital assets has taken a significant turn with the recent signing of a new law by Governor Abigail Spanberger. This legislation, HB 798, updates the state’s framework on unclaimed property to specifically include digital assets like cryptocurrency. It mandates that any dormant crypto must remain in its original form for a minimum of one year before any potential sale can occur, addressing concerns about forced liquidation.
Legislative Support and Implementation
The bill was passed overwhelmingly in both chambers of the Virginia General Assembly, with a vote of 96-2 in the House and a unanimous 40-0 in the Senate, and will take effect on July 1, 2026. The new regulations align Virginia with a growing number of states that are opting to prevent automatic conversions of dormant cryptocurrency into cash. This shift acknowledges the risks such actions pose, including unexpected tax implications for consumers and the loss of potential financial gains should the value of the cryptocurrency increase before it is liquidated.
Industry Reactions
Coinbase’s Chief Legal Officer, Paul Grewal, praised the legislation on social media, describing it as a positive development. He noted that it updates Virginia’s unclaimed property laws to include digital assets while ensuring they are retained in kind rather than liquidated.
This sentiment was echoed by Paul Howard, a senior director at Wincent, a cryptocurrency trading firm, who emphasized that this law clarifies state custody over unclaimed custodial assets rather than exerting control over private holdings.
Regulations for Dormant Digital Assets
Under the new regulations, owners of dormant digital assets who have complete access to their private keys are required to transfer those assets to the state while maintaining their original format. For those with only partial access, the assets must be held until a full transfer is feasible. Notably, the state treasurer is prohibited from selling any digital assets received for at least a year, providing additional protection to asset holders.
Provisions for Technical Difficulties
Moreover, the law includes provisions for those encountering technical difficulties in liquidating their digital holdings. It mandates that such holders notify the state’s administrator if they believe they cannot liquidate their assets, at which point state officials will assess and suggest alternative solutions.
Liquidation Guidelines
The legislation stipulates that the administrator may ultimately instruct the liquidation of unclaimed digital assets no sooner than one year after a report has been filed. Importantly, owners who submit a claim within that timeframe will have a right to either the proceeds from a sale or the market value of the assets at the time of their claim.
Comparative Legislative Trends
This development follows similar actions taken by other states, including California, where legislation was passed last year to restrict automatic liquidation of crypto assets for unclaimed properties. This growing trend reflects an acknowledgment of the unique characteristics and potential of digital assets and aims to foster greater trust and regulatory clarity within the cryptocurrency sector.
Future Implications
Howard remarked that the five-year abandonment period set forth in HB 798 is a reasonable timeframe that could enhance trust in cryptocurrencies and encourage state entities to collaborate with reputable liquidity providers. He also mentioned the importance of executing liquidations effectively, citing a problematic Bitcoin sale in Germany back in July 2024 as an example of what can go wrong.
In summary, Virginia’s new law marks a progressive step in the treatment and oversight of digital assets, potentially positioning the state as an attractive location for individuals and corporations wishing to manage their cryptocurrency holdings with confidence.
