Virginia has moved to modernize its unclaimed property rules for the digital era, approving a law that requires the Commonwealth to accept dormant crypto assets in their native token form rather than converting them immediately to cash. House Bill 798, signed by Governor Abigail Spanberger, creates a new framework for how the state will receive, hold and eventually dispose of unclaimed digital property.
The law takes effect on July 1, 2026 and applies a five-year inactivity standard to determine when digital assets are presumed abandoned. Once that threshold is met and the assets are transferred into state custody, Virginia must hold them for at least one year before any liquidation can be authorized. In practical terms, the statute breaks with the older practice of forced conversion at the point of escheatment.
A Different Model for Dormant Crypto
HB 798 establishes a custody pathway that reflects how digital assets actually function. Custodians must transfer eligible assets to the state in-kind, meaning the Commonwealth receives and retains the original cryptocurrency or digital token rather than selling it upon receipt. That approach matters because it preserves the character of the asset itself during the unclaimed property process.
The bill also draws boundaries around what counts as a digital asset for these purposes. While the definition is broad, the statute excludes certain categories such as non-cashable merchant rewards, platform-restricted in-game items and some regulated securities. By doing so, Virginia is trying to distinguish between transferable digital property and closed-loop digital value that does not behave like a recoverable asset.
The Law Shifts Risk Away From Forced Sale Timing
The core policy rationale behind the measure is straightforward. Under older unclaimed property practices, immediate liquidation could lock in losses at the worst possible moment and eliminate any chance that an owner might later recover the upside tied to the original token. HB 798 changes that equation by requiring a minimum holding period, so the timing of a government sale no longer automatically determines the owner’s economic outcome.
That one-year retention window gives owners a meaningful safeguard, but it also transfers new responsibilities to the state. Administrators will now need systems capable of receiving, securing, tracking and valuing native digital assets instead of relying on routine cash conversion. As a result, Virginia is not just protecting owners from premature liquidation but also taking on the operational burden of crypto custody.
Paul Grewal, Coinbase’s chief legal officer, described the change as a way to ensure digital assets are handled in a manner that preserves their native form throughout the unclaimed property process. His framing captures the broader significance of the statute: this is a property-rights adjustment as much as an administrative reform.
Why Other States Will Be Watching
The broader impact of HB 798 may extend beyond Virginia. By pairing a five-year dormancy rule with a mandatory one-year in-kind holding period, the Commonwealth has created a model that tries to balance owner protection with the realities of state administration. That makes the law notable because it offers a concrete template for jurisdictions still struggling to fit crypto into older abandoned-property systems.
For owners, custodians and state treasuries, the trade-offs are now clearer. Owners gain protection from immediate forced liquidation, custodians must build reporting and transfer processes for native assets, and the state assumes exposure to both market volatility and custody risk during the holding period. In that sense, the law redistributes responsibility across the entire dormant-asset chain instead of resolving everything through instant sale.
The decisive phase will come after July 1, when Virginia begins implementing its new custody procedures in practice. How smoothly the state handles in-kind receipts, security and eventual recovery claims will determine whether the model proves durable and whether other legislatures decide to follow it. For now, HB 798 stands out as one of the clearest attempts yet to treat digital assets as digital property rather than just cash awaiting conversion.
