State treasury departments handle dormant digital wallets the same way they handle unclaimed property generally: a dormancy period passes, the holder reports the asset, and custody shifts to the state until the owner claims it. What differs state to state is whether the treasury takes the actual cryptocurrency or forces it converted to cash first, and that difference now determines whether an owner who waits too long gets back tokens, dollars, or whichever is worth more. Virginia became the newest state to set rules for this process when Governor Abigail Spanberger signed HB 798, and its approach — holding crypto in its native form rather than cashing it out — breaks from how several other states have handled the same problem. Decrypt reports the bill passed the House 96-2 and the Senate 40-0, with an effective date of July 1, 2026.
Table of Contents
- What Counts as a Dormant Digital Wallet
- Virginia Holds the Crypto Itself, Not Its Cash Value
- Illinois and Kentucky Require Holders to Sell First
- Maine's Middle Path and the State-by-State Patchwork
- What an Owner Gets Back Depends on the State and the Timing
- What This Means for Exchanges and Custodians
- Frequently Asked Questions
What Counts as a Dormant Digital Wallet
A digital wallet becomes "dormant" under unclaimed property law once its owner has shown no sign of activity or interest for a set number of years, and the asset then gets presumed abandoned and reportable to the state treasury. Under Virginia's HB 798, that threshold is five years of inactivity, after which the amended Disposition of Unclaimed Property Act presumes the crypto abandoned and requires the holder — typically an exchange or custodian — to transfer it to state custody, according to The Block. Illinois uses the identical five-year window. Its Revised Uniform Unclaimed Property Act, at 765 ILCS 1026/15-201(6.5), and its implementing rule at 74 Ill.
Adm. Code 760.330 both presume virtual currency abandoned five years after the owner's last indication of interest in the account, per the Illinois Administrative Code. Maine's enacted HB 1313 sets the same five-year clock, measured from the owner's last indication of interest. The trigger is the owner's own inaction — no login, no transaction, no response to a holder's notice — not a decision by the state. Once that period lapses, the clock moves from "dormant" to "reportable," and the holder's legal obligations change.
Virginia Holds the Crypto Itself, Not Its Cash Value
Once Virginia's five-year dormancy period runs, the law requires the state treasury to hold the escheated digital assets "in-kind" — meaning the actual tokens, not a cash conversion — and it bars the state from selling those assets for at least one year after they arrive in state custody, The Block reports. That one-year hold matters because cryptocurrency values swing sharply.
A forced sale at the moment of escheatment could lock in a low price for an owner who later comes forward, while holding the asset lets its value move with the market until a claim is made or a sale becomes necessary. The law defines "digital assets" broadly, but it carves out specific exclusions: non-cashable merchant rewards, platform-limited in-game items, and certain regulated securities fall outside the reporting requirement, according to Decrypt and The Block's reporting on the bill's text. A reader checking whether a specific holding qualifies should look at whether it can actually be converted to cash — if it can't, it likely sits outside the statute.
Illinois and Kentucky Require Holders to Sell First
Illinois takes the opposite approach. Its administrative rule, 74 Ill. Adm. Code 760.407, requires holders to liquidate reportable virtual currency into cash before filing their report, with the sale permitted up to 30 days before that filing, and the proceeds remitted to the state treasurer, per the Illinois Administrative Code.
An owner who later claims the asset from Illinois gets the cash the sale produced — not the coins themselves, and not any price gain the asset saw after the sale. Kentucky is identified as the one state with a statutory requirement that holders liquidate virtual currency before remitting it, rather than permitting an in-kind transfer, according to a 2021 legal analysis from Alston & Bird. That makes the liquidate-first model older and more established in some states than Virginia's hold-in-kind model, even though Virginia's law is the more recent one to draw attention. The practical difference for an owner is timing risk. If an asset's price rises after a mandatory sale in Illinois or Kentucky, that gain belongs to no one — the owner only recovers the sale proceeds, not the market value at the time of the claim.
Maine's Middle Path and the State-by-State Patchwork
Maine's HB 1313 splits the difference. Unlike Illinois' mandatory liquidation rule, it lets the state administrator either direct the holder to liquidate the virtual currency before reporting it, or accept delivery of the asset in its native, in-kind form when the holder is able to transfer it, per Georgeson's analysis of the law. That gives Maine's administrator discretion that neither Illinois' mandatory-sale rule nor Virginia's mandatory-hold rule allows.
This variation traces back to the 2016 Revised Uniform Unclaimed Property Act, whose optional virtual-currency provisions states could adopt on their own terms. Colorado, Illinois, Kentucky, Maine, and now Virginia have each taken up those provisions with different dormancy periods and different liquidate-versus-hold rules, according to analyses from RSM and Alston & Bird. There is no single national rule for what happens to a dormant wallet — the outcome depends entirely on which state's escheat law applies to the holder. For a reader trying to locate missing crypto, this means the first question to answer is which state the holding institution is subject to, since that state's statute — not a federal standard — determines whether a recovered claim returns tokens or cash.
What an Owner Gets Back Depends on the State and the Timing
In Virginia, an owner who reclaims the asset before the state has sold it gets the cryptocurrency itself. If the state already sold the assets — which can only happen after the one-year hold expires — the owner is entitled to whichever is greater: the sale proceeds or the asset's current market value at the time of the claim, Decrypt reports. That "greater of" standard protects owners from a forced sale that happened to occur at a market low.
In Illinois, because liquidation happens before the state ever takes custody, there is no equivalent protection: the claim amount is fixed at the point of sale. An owner recovering a dormant wallet from Illinois should expect a cash payout tied to the value at the time the holder sold it, not the asset's value today. The practical takeaway is to check the specific state's statute before assuming how a claim will be paid. A dormant wallet reported to Virginia's treasury after July 1, 2026 carries different recovery terms than the same asset reported to Illinois or Kentucky.
What This Means for Exchanges and Custodians
Virginia's law also addresses wallets where a custodian holds only partial control over the private keys. In that situation, the holder must retain the assets until a full transfer to the state becomes feasible, and must notify the state administrator in writing if the transfer appears impossible, per The Block's coverage of the bill.
That requirement pushes exchanges and custodians to build dormancy-tracking systems and transfer processes specifically for digital assets, rather than treating crypto holdings the same way they treat dormant cash accounts. Readers who work with or hold accounts at exchanges operating in Virginia should expect more explicit dormancy notices going forward, since the law's compliance burden falls on the holder to flag inactive wallets well before the five-year mark closes.
Frequently Asked Questions
How long does a digital wallet need to sit inactive before a state can claim it?
Virginia, Illinois, and Maine all use a five-year inactivity period, measured from the owner's last indication of interest in the account.
Can a state treasury sell escheated cryptocurrency right away?
Not in Virginia — its law bars any sale for at least one year after the assets reach state custody. Illinois and Kentucky require liquidation before the state even takes custody.
What exclusions does Virginia's law have for digital assets?
Non-cashable merchant rewards, platform-limited in-game items, and certain regulated securities are excluded from the reporting requirement under HB 798.