AB2335 - Unclaimed property: digital financial assets.

Amended IN Senate July 02, 2026 Amended IN Senate June 22, 2026 Amended IN Assembly May 18, 2026 Amended IN Assembly April 22, 2026 Amended IN Assembly March 26, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 2335 Introduced by Assembly Member Valencia February 19, 2026 An act to amend Sections 1501, 1516.5, 1532, and 1563 of, and to add Sections 1563.5 and 1564.6 to, the Code of Civil Procedure, relating to unclaimed property, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 2335, as amended, Valencia. Unclaimed property: digital financial assets. (1) The Unclaimed Property Law (UPL) prescribes the circumstances under which intangible property, including digital financial assets, escheats to the state, including how and when apparent owners must be notified that their property is at risk of escheating and the manner in which escheated property must be delivered to the State Controller. Existing law also requires that business associations holding a financial asset that is potentially subject to escheatment provide notice to the owners of that asset as specified. This bill would establish mechanisms for the management of digital financial assets, as defined, that escheat to the state. The bill would create the Digital Asset Claims Reserve Account and the Digital Asset Reserve Fund for these purposes. The bill would require the Controller to hold an escheated digital financial asset in its native form no earlier than 18 months and no later than 20 months after it is reported to the Controller by the holder of the asset, and, if it is not claimed by the owner within that time, to liquidate the asset and deposit the net proceeds in the Digital Asset Claims Reserve Account. The bill would require the Treasurer to invest moneys in the Digital Asset Claims Reserve Account pursuant to the Treasurer’s existing authority to invest surplus money. The bill would require the Controller to transfer all interest, earnings, and investment income credited to the Digital Asset Claims Reserve Account to the Digital Asset Reserve Fund on a quarterly basis. The bill would create the Digital Asset Reserve Board, which would be assigned specified tasks relating to administration of the Digital Asset Reserve Fund, including establishing investment policies to be followed by the Controller when investing moneys in the fund by converting them into high-quality digital assets. The bill would authorize the Controller to take specified actions related to digital financial assets and would require the Controller to publish a quarterly report, as specified. Under the bill, a person who makes a valid claim before the disposition of the digital financial assets is entitled to receive the digital financial assets in their native form or in fiat currency, as specified, or in cash if the digital financial assets were liquidated. The bill would authorize the Controller to use assets within the Digital Asset Reserve Fund to pay for the administration and management of the fund, thereby making an appropriation. (2) Under existing law, a person holding funds or other property escheated to the state must file a report with the Controller and pay or deliver the escheated property to the Controller within a specified time, unless another person establishes their right to the property. Existing law requires any payment to the Controller of at least $2,000 in unclaimed cash to be made by electronic funds transfer. The bill would permit the Controller to direct the holder of a digital financial asset to sell or to otherwise liquidate the digital financial asset and deliver the net proceeds in lieu of the native digital financial asset, as specified. The bill would require a holder of funds or other property escheated to the state that is directed to sell or liquidate the digital financial asset to do so for no less than the prevailing market price of the digital financial asset at the time of sale. Digest Key Vote: 2/3 Appropriation: YES Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. It is the intent of the legislature to clarify that digital financial assets are intangible property that are subject to the Unclaimed Property Law. SEC. 2. Section 1501 of the Code of Civil Procedure is amended to read: 1501. As used in this chapter, unless the context otherwise requires: (a) “Apparent owner” means the person who appears from the records of the holder to be entitled to property held by the holder. (b) “Banking organization” means any national or state bank, trust company, banking company, land bank, savings bank, safe-deposit company, private banker, or any similar organization. (c) “Business association” means any private corporation, joint stock company, business trust, partnership, or any association for business purposes of two or more individuals, whether or not for profit, including, but not by way of limitation, a banking organization, financial organization, life insurance corporation, and utility. (d) “Digital Asset Reserve Fund” means a fund consisting of high-quality digital assets purchased with interest, earnings, and investment income credited to the Digital Asset Claims Reserve Account established under Section 1564.6. (e) “Digital financial asset” has the same meaning as in subdivision (g) of Section 3102 of the Financial Code. (f) “Employee benefit plan distribution” means any money, life insurance, endowment or annuity policy or proceeds thereof, securities or other intangible property, or any tangible property, distributable to a participant, former participant, or the beneficiary or estate or heirs of a participant or former participant or beneficiary, from a trust or custodial fund established under a plan to provide health and welfare, pension, vacation, severance, retirement benefit, death benefit, stock purchase, profit sharing, employee savings, supplemental unemployment insurance benefits or similar benefits, or which is established under a plan by a business association functioning as or in conjunction with a labor union that receives for distribution residuals on behalf of employees working under collective-bargaining agreements. (g) “Financial organization” means any federal or state savings and loan association, building and loan association, credit union, investment company, or any similar organization. (h) “High-quality digital asset” means a digital financial asset with an average market capitalization of at least one hundred billion dollars ($100,000,000,000) over the most recent 12-month period. (i) “Holder” means any person in possession of property subject to this chapter belonging to another, or who is trustee in case of a trust, or is indebted to another on an obligation subject to this chapter. (j) “Life insurance corporation” means any association or corporation transacting the business of insurance on the lives of persons or insurance appertaining thereto, including, but not by way of limitation, endowments, and annuities. (k) “Owner” means a depositor in case of a deposit, a beneficiary in case of a trust, or creditor, claimant, or payee in case of other choses in action, or any person having a legal or equitable interest in property subject to this chapter, or their legal representative. (l) “Person” means any individual, business association, government or governmental subdivision or agency, two or more persons having a joint or common interest, or any other legal or commercial entity, whether that person is acting in their own right or in a representative or fiduciary capacity. (m) “Private key” means a unique element of cryptographic data used for signing transactions on a blockchain that is known to the owner of the element. (n) “Residuals” means payments pursuant to a collective bargaining agreement of additional compensation for domestic and foreign uses of recorded materials. (o) “Digital Asset Claims Reserve Account” means the segregated account established within the State Controller under Section 1564.6. (p) “Net proceeds” means the amount received following the sale of the financial asset after all necessary administrative costs are deducted. SEC. 3. Section 1516.5 of the Code of Civil Procedure is amended to read: 1516.5. (a) Pursuant to Section 1510, any digital financial asset held or owing by a business association escheats to the state if unclaimed by the owner for more than three years from either of the following: (1) The date a written or electronic communication to the owner is returned undelivered by the United States Postal Service or by electronic mail or other electronic messaging method, as applicable. (2) The date of the last exercise of an act of ownership interest by the owner in the digital asset account if the owner does not receive written or electronic communications from the holder or the holder does not have the means of systematically tracking or monitoring the nondelivery of those communications. (b) The running of the three-year period under paragraph (1) of subdivision (a) shall cease immediately upon the exercise of an act of ownership interest in the digital asset account or written, oral, or electronic communication with the holder as evidenced by a memorandum or other record on file with the holder or its agents. (c) For purposes of this section, an “exercise of an act of ownership interest” includes any of the following actions by the owner regarding the digital asset account: (1) Conducting a transaction regarding the digital asset account, including buying or selling digital assets, depositing into or withdrawing from the account fiat currency or other property whether by a one-time transaction or a recurring transaction previously authorized by the owner. (2) Electronically accessing the digital asset account. (3) Conducting any activity with respect to another digital asset account or any other property owned by the owner with the same holder. (4) Taking any other action that reasonably demonstrates to the holder that the owner knows that the property exists. (d) (1) The last known address of an apparent owner, for the purpose of determining the jurisdiction over property subject to escheat pursuant to this section, is either of the following: (A) The address used for purposes of delivering first-class United States mail. (B) Any description, code, or other indication of the location of the apparent owner that identifies the state of last known address, even if the description, code, or indication of the location is not sufficient to direct the delivery of first-class United States Postal Service mail to the apparent owner. (2) If there is a conflict between the address identified in subparagraph (A) of paragraph (1) and any description, code, or other indication identified in subparagraph (B) of paragraph (1), the address identified in subparagraph (A) shall be deemed as the last known address of the apparent owner. (e) (1) The business association shall send the notice required by this section to the apparent owner of a digital financial asset by electronic means. The business association may also send the notice by United States mail if the business association sends physical correspondence to the apparent owner in the ordinary course of business, or if it is the preferred method of contact for the apparent owner as indicated in the business association’s records. (2) The business association shall satisfy the electronic notification requirement by using the apparent owner’s preferred method of contact as indicated in the business association’s records, and thereafter by using at least two of the following methods: (A) Push notifications. (B) Text messages. (C) Email correspondence. (f) Subdivision (e) shall apply regardless of the value of the digital financial asset and whether the apparent owner has consented to electronic service. (g) Notice pursuant to this subdivision shall be sent not less than 6 nor more than 12 months before the time the digital financial asset becomes reportable to the Controller under this chapter. (1) The notice shall state at the top of the communication: “THE STATE OF CALIFORNIA REQUIRES US TO NOTIFY YOU THAT YOUR UNCLAIMED PROPERTY MAY BE TRANSFERRED TO THE STATE IF YOU DO NOT CONTACT US,” or substantially similar language. (2) The notice shall specify the time when the digital financial asset will escheat and the effects of escheat, including the need to file a claim for the return of the digital financial asset. (3) The notice shall do all of the following, in boldface type or in a font a minimum of two points larger than the rest of the notice, exclusive of the heading: (A) Specify that since the date of last interest, or for the last two years, there has been no indication of owner interest in the digital financial asset. (B) Identify the digital financial asset by number or identifier, which need not exceed four digits. (C) Indicate that the digital financial asset is in danger of escheating to the state. (D) Specify that the Unclaimed Property Law requires business associations to transfer a digital financial asset if it has been unclaimed for three years. (E) Specify that digital financial assets will be transferred to the Controller, held in their native form during the period required by subdivision (b) of Section 1563, liquidated to fiat currency under subdivision (b) of Section 1563 thereafter, and that the net proceeds of any liquidation will be deposited into the Digital Asset Claims Reserve Account established under Section 1564.6. (4) The notice shall include a form, prescribed by the Controller, by which the owner may confirm the owner’s current address. If that form is completed, signed by the owner, and returned to the holder of the digital financial asset, or other device in which the owner’s property is being held, it is no longer considered inactive and the escheat period restarts. In lieu of returning the form, the holder may provide a telephone number or electronic means to enable the owner to contact the holder. If a holder is contacted by a presumed owner by telephone or electronic means, the holder shall document that contact in a memorandum which the holder is required to keep on file. That contact serves to indicate owner interest in the digital financial asset and restarts the escheat period. (h) In addition to the notice required pursuant to subdivision (b) or (c), the holder may give additional notice at any time between the date of last owner interest and the date the holder transfers the digital financial asset to the Controller. (i) The holder of any partial key to any digital financial asset that is subject to Section 1516.5 shall attempt to obtain the minimum number of keys required to transfer the digital financial assets within 60 days of determination that the digital financial assets are eligible for escheatment. SEC. 4. Section 1532 of the Code of Civil Procedure is amended to [Text truncated for display. Full text available on Congress.gov.]