New Virginia Law Mandates In-Kind Transfer of Dormant Crypto Assets

On April 13, 2026, Virginia’s Governor Abigail Spanberger enacted House Bill 798, which introduces significant regulations for the management of dormant cryptocurrency assets. The law stipulates that cryptocurrency exchanges and custodians must transfer inactive digital assets to the state in their original token format, rather than converting them to cash.

This legislation, set to come into effect on July 1, 2026, marks a crucial shift in how unclaimed digital property is handled. The law dictates that any cryptocurrency account deemed inactive for five years will be considered abandoned, prompting custodians to transfer these assets to the state.

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According to the statute, an account holder can reset this inactivity clock by engaging in any ownership action—such as trading or accessing their account—thereby retaining their digital assets. When a custodian has full control over the private keys required to move an asset, they are obligated to send the original token to the state. In situations where custodians only have partial key access, the assets must remain in their possession until a complete transfer can occur.

Once the state obtains these digital assets, a holding period of at least one year must follow before any potential sale takes place. Owners who assert their claims prior to the conclusion of this period can choose to receive either the asset’s market value at the time of the claim or the proceeds from its sale. If owners come forward after the one-year hold, they may claim either the asset if it remains unsold or the sale proceeds if it has already been liquidated.

The legislative journey for HB 798 began with overwhelming support in the Virginia Assembly, where it passed the House with a 96-2 vote on February 6, 2026, and the Senate unanimously approved it on March 4, 2026. Delegate C.E. Cliff Hayes Jr. (D) championed the bill, initially filing it on January 13, 2026.

Paul Grewal, Chief Legal Officer at Coinbase, expressed his approval of the law, indicating that it represents positive progress for the sector. He noted that the requirement for in-kind transfers rather than immediate liquidations is beneficial, particularly in reducing the risk of forced sales during market downturns.

For cryptocurrency exchanges operating in Virginia, the law imposes new responsibilities. Firms lacking the necessary systems to facilitate in-kind transfers to state authorities will need to prioritize developing or updating their operational frameworks by the upcoming deadline.

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Historically, the state management of cryptocurrencies has posed challenges due to outdated frameworks meant for traditional assets. Virginia’s adoption of this law reflects a growing recognition of the necessity for modern regulations that accommodate digital currencies and their unique characteristics.

Despite the law’s advancements, it has sparked discussions regarding the definition of abandonment in the context of cryptocurrency. Critics, particularly within Libertarian circles, argue that a lack of activity does not equate to an intent to relinquish ownership, emphasizing that many holders are simply biding their time. The legal principle of custodial escheat, while upheld for over a century, remains a contentious topic.

As state unclaimed property programs manage billions in assets, the way abandonment is defined will likely impact future financial strategies for states. Virginia’s proactive approach may inspire other states to consider similar legislative updates, ensuring that the evolving nature of cryptocurrency is properly addressed.