Virginia Governor Abigail Spanberger signed House Bill 798 into law on April 13, 2026, requiring cryptocurrency exchanges and custodians to transfer dormant digital assets to the state in their native token form rather than converting them to cash. The law takes effect July 1, 2026, giving custodians roughly two and a half months to implement operational changes.
Five-Year Dormancy Triggers Escheat Obligation
Under the new framework, property held in a digital asset account is presumed abandoned after five years of inactivity. Any ownership action by the account holder—buying or selling assets, logging into the account, or communicating with the custodian—resets that clock. Custodians holding full control of private keys must deliver the token itself to the state administrator. Those with partial-key control must retain the asset until a full transfer is possible.
Once the state receives the digital assets, it must hold them for at least one year before any potential sale. Owners who file a claim within that one-year window receive the higher of either the sale proceeds or the market value of the asset at the time of claim. Owners who come forward after the one-year hold can receive the asset itself if still held, or the sale proceeds if liquidated.
Legislative Process and Industry Reaction
The bill passed the Virginia House 96-2 on February 6, 2026, and cleared the Senate 40-0 on March 4, 2026. Delegate C.E. Cliff Hayes Jr. (D) prefiled the legislation on January 13, 2026. Coinbase Chief Legal Officer Paul Grewal called the signing “good news” for the industry, noting it updates the unclaimed property framework for digital assets and ensures in-kind escheat rather than forced dollar conversion at transfer.
Critics argue that five years of inactivity does not equate to abandonment. In libertarian circles, the objection is principled: a holder who bought bitcoin in 2021, logged in twice, and went quiet has not abandoned anything. State unclaimed property programs collectively hold billions in assets, with interest income flowing to state budgets. Claim rates remain low nationwide, meaning a significant portion of what states take in never gets returned to owners. Some states hire third-party auditors on contingency arrangements, creating pressure to classify more accounts as abandoned.
Impact on Holders and Exchanges
For account holders, the law reduces the risk that dormant holdings get sold at a market low. Holders with dormant custodial accounts have until July 1, 2026, to take any ownership action to reset the five-year dormancy period. Self-custody through non-custodial wallets falls entirely outside the law's scope, remaining the only way to keep digital assets fully beyond escheat reach.
For crypto exchanges operating in Virginia, the law creates explicit operational duties. Custodians that currently lack systems for in-kind transfers to state administrators must build or update those processes before July 1. Virginia becomes one of the first states to adopt detailed unclaimed property rules specifically designed for digital assets, a model other states may follow when updating older statutes that predate cryptocurrency.