Virginia’s House Bill 798, signed into law by Governor Abigail Spanberger in April 2026 and effective July 1, 2026, imposes a mandatory 12-month holding period on unclaimed cryptocurrency before the state can liquidate it. This requirement means that when digital assets are presumed abandoned after five years of inactivity, Virginia must first transfer and hold them in their original cryptocurrency form for at least one full year before converting them to cash. For example, if someone’s Bitcoin held in a dormant exchange account becomes unclaimed property under Virginia law, the state cannot immediately sell that Bitcoin—it must keep it as Bitcoin for 12 months, exposing both the owner’s assets and state treasuries to cryptocurrency market volatility during that waiting period.
This new law represents one of the nation’s first attempts to address how state treasure departments handle crypto assets abandoned by owners. Unlike traditional unclaimed property—bank accounts, stock shares, and insurance proceeds—cryptocurrency poses unique challenges around custody, valuation, and market risk. Virginia’s approach reflects growing recognition that digital assets require different treatment than legacy financial instruments, though it creates practical complications for state administrators and ongoing uncertainty for property owners.
Table of Contents
- Why Virginia Enacted the 12-Month Crypto Holding Requirement
- How In-Kind Holding Works and Its Limitations
- The Five-Year Dormancy Threshold and Triggering Events
- How Owners Reclaim Unclaimed Crypto Assets
- Edge Cases and Common Issues in Crypto Claims
- How Activity Resets the Dormancy Clock
- Implications for Exchanges and State Treasury Administration
- Frequently Asked Questions
Why Virginia Enacted the 12-Month Crypto Holding Requirement
The passage of HB 798 emerged from concerns that rapidly liquidating unclaimed cryptocurrency could leave owners worse off if markets recover after a forced sale. Historically, states have held unclaimed property as a custodian, often liquidating shares or other assets relatively quickly to simplify administration. But crypto markets move differently—a digital asset worth $1,000 when seized might be worth $3,000 a year later, or vice versa. The 12-month mandate forces the state to absorb the volatility risk while owners retain the possibility of significantly better returns if they reclaim during a market upturn.
Virginia’s law also addresses a practical problem: many crypto exchanges and wallet providers lack formal processes for transferring dormant accounts to state custody. The one-year timeline gives exchanges and the state time to establish secure protocols for moving digital assets into state-controlled custody rather than rushing the process with inadequate safeguards. This waiting period also creates a window for owners to discover their forgotten assets and reclaim them before any sale occurs, which protects both individual owners and the state from unnecessary disputes. The broader context is regulatory uncertainty at the federal level. By establishing its own framework, Virginia signaled that states won’t wait for federal crypto custody standards to emerge—they’re building procedures that protect consumers while acknowledging that cryptocurrencies are legitimate forms of unclaimed property.
How In-Kind Holding Works and Its Limitations
Under Virginia’s law, unclaimed crypto assets must be transferred and held in their original form. This means Bitcoin stays as Bitcoin, Ethereum as Ethereum—no conversion to stablecoins or immediate liquidation to cash. The in-kind requirement protects owners from being locked into a sale at potentially unfavorable prices, but it creates significant operational challenges for state treasury departments. Most state custody infrastructure is designed for traditional securities and cash, not managing private keys, navigating blockchain networks, or handling the technical complexity of storing digital assets securely. A critical limitation is the volatility risk borne during the holding period. If a owner’s forgotten Ethereum holdings surge 200% in six months, the state is sitting on dramatically appreciated assets it must eventually account for.
Conversely, if values crash 50%, the owner—upon reclamation—may receive far less than the original amount. This creates reputational and legal risk for state officials, who could face criticism for failing to liquidate at more favorable times. The law doesn’t address whether states can hedge this risk through derivative contracts or staking arrangements, leaving treasuries in an ambiguous position about what actions are permissible during the holding period. Another limitation involves custody security and liability. If a state’s digital asset storage is hacked or a key is lost, the law doesn’t clearly specify whether the state is liable for the full current market value or the value when seized. This ambiguity may lead to expensive litigation and insurance costs that weren’t anticipated when the law passed.
The Five-Year Dormancy Threshold and Triggering Events
Virginia’s law presumes cryptocurrency is abandoned after five years of inactivity—matching the dormancy period for most traditional unclaimed property under Virginia law. Inactivity means no transactions, account access, or other demonstrable owner awareness for that full period. For someone who purchased Bitcoin in 2020 and forgot about their exchange account, the clock starts ticking from the last login or transaction; if they don’t touch the account by 2025, the exchange must report it to the state by mid-2026, and Virginia becomes custodian. The five-year threshold differs from some states’ approaches to checking accounts, where inactivity triggers much sooner. For crypto, the longer period reflects recognition that owners sometimes intentionally hold assets long-term and may not access accounts for extended periods. However, this also creates a problem: many owners have no idea their accounts trigger abandonment at all.
Exchange policies vary widely—some proactively notify inactive users, others don’t. By the time an owner realizes an account has been reported to the state, the transfer may already be underway or complete. One important protection in HB 798 is the activity reset mechanism. Any transaction, any login, or demonstrable owner awareness restarts the five-year clock to zero. This means an owner who accesses their forgotten exchange account even once—checking a balance, moving funds, updating security settings—automatically extends the dormancy period by another five years. The challenge is that not all exchanges have equally robust activity-logging systems, and disputes can arise over what constitutes sufficient “activity” to reset the clock.
How Owners Reclaim Unclaimed Crypto Assets
When an owner comes forward to claim their cryptocurrency before Virginia liquidates it, they have two options: they can reclaim the property in its original form (the actual Bitcoin, Ethereum, etc.) if it hasn’t been sold, or they can receive the sale proceeds if the state has already liquidated after the 12-month period expires. There’s an important protection: owners receive whichever is greater—the original property, the sale proceeds, or the current market value of the assets as of the claim date. This “greater of” provision prevents owners from being harmed if they claim after a market downturn following a forced sale. The practical process for reclamation is still being developed by Virginia’s treasurer’s office. Owners typically start by searching the state’s unclaimed property database (unclaimed.virginia.gov) or working with the state directly if they know where their assets went. They’ll need to prove ownership—usually through exchange account records, wallet transaction histories, or correspondence with the original custodian.
For older or lost documentation, this can be time-consuming. Unlike traditional unclaimed property claims, crypto ownership verification has no standardized procedures across exchanges or custodians, so the state may request additional proof like blockchain transaction records or identity verification through multiple methods. A significant limitation is that owners must act before liquidation occurs. If Virginia has already sold the crypto during its 12-month holding period, the owner receives cash proceeds, not the asset—even if that asset has tripled in value since the sale. There’s no way to “undo” a sale or reclaim the original asset after liquidation. This creates urgency: owners who suspect they have forgotten accounts should search state databases and contact exchanges immediately, rather than waiting years.
Edge Cases and Common Issues in Crypto Claims
One frequent complication involves exchanges that have ceased operations or gone bankrupt. If an exchange holding unclaimed crypto fails before transferring custody to Virginia, the assets may be caught in bankruptcy proceedings rather than flowing to state control. The law assumes a functioning handoff from custodian to state, but real-world exchanges don’t always cooperate or exist. If Mt. Gox-style failures happen, unclaimed property holders could be stuck in line behind secured creditors with no clear path to recovery through Virginia’s system.
Another edge case is the definition of what qualifies as “digital assets” under HB 798. The law covers cryptocurrencies but excludes non-cashable rewards, in-game items, and certain regulated securities. This means someone with forgotten NFTs or points balances may not have recourse through Virginia’s unclaimed property process—the state might categorize these as non-qualifying digital assets. Owners of obscure altcoins face a different risk: if Virginia’s treasury deems a token too illiquid to value or sell during the holding period, custody becomes complex, and liquidation might be delayed indefinitely, trapping owners’ money in a legal limbo. There’s also a tax complication the law doesn’t address: when the state holds crypto for 12 months or longer, does the owner face capital gains tax on unrealized appreciation? Crypto tax treatment is unsettled federally, but owners could theoretically owe tax on the growth of assets they don’t control and can’t access during the holding period. This represents a hidden cost of abandonment that Virginia’s law doesn’t acknowledge or resolve.
How Activity Resets the Dormancy Clock
Virginia’s law includes a critical protection: any activity on an account restarts the dormancy period from scratch. This means if someone logs into their exchange account, initiates a transaction, updates security settings, or withdraws funds—anything that demonstrates owner awareness—the five-year countdown resets. For owners who discover forgotten accounts after three or four years of dormancy, a single login can buy them another five years before state seizure becomes imminent.
However, this protection only works if the original custodian (exchange or wallet provider) accurately logs and reports activity. Some exchanges have inconsistent record-keeping or don’t clearly communicate which actions trigger a reset. An owner might assume a password reset or account security update counted as activity, but if the exchange doesn’t record it, the dormancy counter still ticks toward five years. Additionally, if an account has been transferred to state custody already, the owner cannot reset the clock through activity—they can only reclaim through the state process, which is slower and involves additional documentation requirements.
Implications for Exchanges and State Treasury Administration
This law creates obligations for both cryptocurrency exchanges and Virginia’s state treasurer to establish new procedures. Exchanges must identify dormant accounts, notify account holders before reporting them, securely transfer custody to the state (rather than liquidating and sending cash), and maintain detailed records of transfers. These requirements are administratively expensive—many small or decentralized exchanges may struggle to meet them, while major platforms like Coinbase and Kraken have the compliance infrastructure to adapt.
For Virginia’s treasurer, the law expands the scope of unclaimed property administration into an entirely new asset class with unfamiliar risks. Holding cryptocurrency requires secure digital infrastructure, skilled personnel to manage wallets and private keys, decisions about staking or using assets, and constant vigilance against theft or loss. If Virginia lacks the technical expertise, it will need to contract with digital asset custodians—further increasing costs and introducing third-party risk. The 12-month holding period extends the state’s liability window, meaning treasuries face prolonged exposure to market losses, hacking risks, and operational failures with no clear insurance mechanisms or federal fallback if something goes wrong.
Frequently Asked Questions
What counts as “inactivity” that triggers the five-year abandonment period?
No transactions, account logins, or demonstrable owner awareness for five years. Any activity—a login, deposit, withdrawal, or account update—resets the clock to zero.
Can I reclaim my crypto if Virginia has already sold it?
Yes, but you receive cash proceeds or the current market value (whichever is greater), not the original cryptocurrency. You cannot reclaim the asset itself if it’s been liquidated.
When does the 12-month holding period start?
It begins after the state takes custody of the asset, which typically occurs after the original custodian (like an exchange) reports it as abandoned and transfers it to Virginia.
What if my exchange goes bankrupt before my crypto reaches state custody?
Your assets could be caught in the exchange’s bankruptcy proceedings rather than protected under Virginia’s unclaimed property law, leaving you competing with other creditors.
Does Virginia’s law protect cryptocurrency exchanges I’ve used?
The law applies to assets held by custodians in Virginia or reported under Virginia law. Assets held on overseas exchanges or in self-custody wallets may not be covered.
What happens to the value of my crypto if Virginia sells it at a loss?
Under the “greater of” rule, you receive whichever is greater—the sale proceeds, the original property value, or current market value as of your claim date. You’re protected from losses caused by state-executed sales.