SB822 - Unclaimed property: digital financial assets.

Senate Bill No. 822 CHAPTER 660 An act to amend Sections 1501, 1520, 1532, 1533, and 1563 of, and to add Sections 1516.5 and 1568 to, the Code of Civil Procedure, relating to unclaimed property. [ Approved by Governor October 11, 2025. Filed with Secretary of State October 11, 2025. ] LEGISLATIVE COUNSEL'S DIGEST SB 822, Becker. Unclaimed property: digital financial assets. The Unclaimed Property Law (UPL) prescribes the circumstances under which intangible property 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. Intangible property is only subject to the UPL if the apparent owner’s last known address is within the state or, if that address is unknown, if there is another link to the state, as specified. Existing law provides how and when securities that escheat to the state pursuant to the UPL may be sold and how the securities or funds from their sale may be returned to their owner. This bill would clarify that digital financial assets are a form of intangible property subject to the UPL. With regard to digital financial assets, the bill would specify that an apparent owner’s last known address need not be a complete mailing address if the address is sufficient to identify that it is within the state. The bill would prescribe requirements for holders of digital financial assets to notify apparent owners prior to the assets escheating, which would include a form created by the Controller that may be returned to the holder by the apparent owner to restart the escheatment period, as specified. The bill would specify how escheated digital financial assets must be transferred from the holder to the Controller. The bill would authorize the Controller to select one or more custodians for the management and safekeeping of digital financial assets that have escheated to the state, as specified. The bill would authorize the Controller to convert digital financial assets to fiat currency, as specified. The bill would entitle a person who makes a valid claim for a digital financial asset delivered to the Controller to receive that digital financial asset or, if the asset has been converted, to receive the net proceeds received by the Controller from the sale. Digest Key Vote: MAJORITY Appropriation: NO 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 financial asset” has the same meaning as in subdivision (g) of Section 3102 of the Financial Code. (e) “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. (f) “Financial organization” means any federal or state savings and loan association, building and loan association, credit union, investment company, or any similar organization. (g) “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. (h) “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. (i) “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. (j) “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. (k) “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. (l) “Residuals” means payments pursuant to a collective bargaining agreement of additional compensation for domestic and foreign uses of recorded materials. SEC. 3. Section 1516.5 is added to the Code of Civil Procedure, 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) If the business association has a mailing address for the apparent owner of a digital financial asset in its records, which is not known to be inaccurate, the business association shall send a notice to the owner via certified mail, return receipt requested. (f) If the business association does not have a mailing address for the apparent owner of a digital financial asset in its records, and the apparent owner has consented to electronic service, the notice may be sent electronically. (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. (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 1520 of the Code of Civil Procedure is amended to read: 1520. (a) All tangible personal property located in this state and, subject to Section 1510, all intangible personal property, except property of the classes mentioned in Sections 1511, 1513, 1514, 1515, 1515.5, 1516, 1516.5, 1517, 1518, 1518.5, 1519, and 1521, including any income or increment thereon and deducting any lawful charges, that is held or owing in the ordinary course of the holder’s business and has remained unclaimed by the owner for more than three years after it became payable or distributable escheats to this state. (b) Except as provided in subdivision (a) of Section 1513.5, subdivision (b) of Section 1514, subdivision (d) of Section 1516, and subdivisions (b) and (c) of Section 1516.5, if the holder has in its records an address for the apparent owner of property valued at fifty dollars ($50) or more, which the holder’s records do not disclose to be inaccurate, the holder shall make reasonable efforts to notify the owner by mail or, if the owner has consented to electronic notice, electronically, that the owner’s property will escheat to the state pursuant to this chapter. The notice shall be mailed not less than 6 nor more than 12 months before the time when the owner’s property held by the business becomes reportable to the Controller in accordance with this chapter. The face of the notice shall contain a heading at the top that reads as follows: “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. The notice required by this subdivision shall specify the time when the property will escheat and the effects of escheat, including the need to file a claim in order for the owner’s property to be returned to the owner. The notice required by this section shall, in boldface type or in a font a minimum of two points larger than the rest of the notice, exclusive of the heading, (1) specify that since the date of last activity, or for the last two years, there has been no owner activity on the deposit, account, shares, or other interest; (2) identify the deposit, account, shares, or other interest by number or identifier, which need not exceed four digits; (3) indicate that the deposit, account, shares, or other interest is in danger of escheating to the state; and (4) specify that the Unclaimed Property Law requires holders to transfer funds of a deposit, account, shares, or other interest if it has been inactive for three years. It shall also include a form, as prescribed by the Controller, by which the owner may confirm the owner’s current address. If that form is filled out, signed by the owner, and returned to the holder, it shall be deemed that the account, or other device in which the owner’s property is being held, remains currently active and recommences the escheat period. In lieu of returning the form, the holder may provide a telephone number or other electronic means to enable the owner to contact the holder. With that contact, as evidenced by a memorandum or other record on file with the holder, the account or other device in which the owner’s property is b [Text truncated for display. Full text available on Congress.gov.]