Virginia's New Crypto Law: States Get In-Kind Holdings, Not Fire Sales

Virginia just made a smart regulatory move that crypto holders should pay attention to. Governor Abigail Spanberger signed House Bill 798 into law this week, fundamentally reshaping how the state handles unclaimed digital assets—and it's actually investor-friendly.

Here's what changed: the law amends Virginia's Disposition of Unclaimed Property Act to require custodians hold abandoned crypto in its original form rather than immediately converting it to cash. More importantly, it imposes a mandatory one-year holding period before any liquidation can occur.

Why This Matters for Crypto Holders

The mechanics are crucial. The bill explicitly states: "The administrator may subsequently direct such holder of unclaimed digital assets to liquidate the reported but unremitted digital assets not less than one year following the filing of a report." This framework prevents the nightmare scenario where states dump crypto holdings during market downturns, forcing sellers to accept depressed prices.

By maintaining in-kind custody, Virginia protects asset values for people who eventually reclaim their holdings. If bitcoin or ethereum recovers during that holding period, claimants benefit from the appreciation instead of locking in losses at forced-sale prices.

The Five-Year Abandonment Rule

Virginia also clarified what constitutes abandoned crypto: accounts face a five-year inactivity period before escheatment occurs. However, any signs of owner engagement—logins, transactions, or account activity—reset the clock. This gives people meaningful time to recover forgotten holdings before the state takes custody.

Part of a Broader State Movement

Virginia isn't alone here. We're watching a coordinated wave of states modernizing their unclaimed property frameworks for digital assets:

• •Arizona passed similar legislation in May 2024, allowing state ownership after three years with crypto held in a state-managed reserve fund
• •California has also brought crypto under its unclaimed property umbrella

The trend reflects growing recognition that digital assets require different handling than traditional unclaimed property.

Industry Validation

Paul Grewal, Coinbase's chief legal officer, publicly endorsed the move on X, noting the law "updates the state's unclaimed property statute to cover digital assets and ensures they are escheated in-kind." That's significant—major crypto infrastructure players see regulatory value here.

The Virginia Blockchain Council called it "an important step" that "helps modernize Virginia's financial laws and signals the Commonwealth's continued engagement with emerging technologies." Translation: this positions Virginia as pro-crypto without sacrificing consumer protection.