Virginia's House of Delegates approved legislation in February 2026 that requires custodial exchanges to transfer dormant customer crypto assets to state custody without converting them to cash, joining a small group of states that have rejected forced liquidation as the default approach to abandoned digital property.

Virginia House Bill 798, which cleared the chamber 96 to 2 on February 6, 2026, amends the state's Disposition of Unclaimed Property Act to formally include digital financial assets. Under the bill, when a customer account at a centralized exchange or custodial wallet provider becomes dormant under existing state thresholds (the bill does not yet define a specific trigger period; the default under Virginia's existing unclaimed property framework draws from the Revised Uniform Unclaimed Property Act, which uses a 3 to 5 year inactivity window), the platform must remit the assets to the state treasury in their original form.

The state must then hold those assets for a minimum of one year before taking any further action. Owners retain the right to claim their property at any time with no deadline.

The law applies to centralized exchanges and custodial wallet providers. Users who hold crypto in self-custody wallets or on hardware devices are not expected to be subject to the bill's requirements. That interpretation is drawn by inference from comparable state frameworks rather than from explicit language in HB 798's text, and compliance teams seeking certainty on this point should await implementing regulations or seek independent legal counsel.

Why In-Kind Matters

The alternative, which several states currently require, is forced liquidation: the exchange converts the crypto to dollars at the prevailing market price before handing the funds to the state. Illinois, Kentucky, and Delaware all mandate this approach. Bloomberg Tax analysis has noted that forced liquidation creates irreversible tax events for owners and permanently cuts them off from any recovery in asset value.

Virginia's bill explicitly avoids that outcome, at least during the minimum holding window.

The legal framework underlying these laws traces back to the 2016 Revised Uniform Unclaimed Property Act, a model statute from the Uniform Law Commission that added virtual currency to the category of escheatable property. Roughly a dozen states have adopted some version of the act, but implementation varies widely. Bloomberg Tax has noted that companies currently face significant ambiguity around how to determine when a crypto account is truly abandoned, how to remit assets to states that lack clear procedures, whether states will shield them from owner claims over value changes during the dormancy period, and whether jurisdictions without liquidation mandates will accept cryptocurrency directly.

Virginia's bill reduces that ambiguity for exchanges operating in the state. Courts have also held that non-cash property requires specific statutory authority for escheatment, and HB 798 fills that statutory gap directly, a point of material relevance to exchange legal teams assessing their liability exposure under Virginia law.

Comparing the State Landscape

Virginia's one-year minimum holding period is the shortest of any state that has enacted explicit in-kind custody rules.

California's SB 822, signed in October 2025 and effective January 1, 2026, requires 18 to 24 months of in-kind holding before any liquidation is permitted. A separate California measure, AB 1052, which remained active legislation as of early 2026 and had not yet been enacted into law, would prohibit the state from converting crypto to fiat indefinitely if passed. Arizona's HB 2749, signed in May 2025, directs unclaimed digital assets into a Bitcoin and Digital Assets Reserve Fund with a three-year holding requirement.

Senator Josh Becker, the California Democrat who authored SB 822, framed the issue in straightforward terms when that bill was signed: "Virtual currency is an increasingly common part of people's financial lives, and California's laws need to reflect that reality." California State Controller Malia M. Cohen added that the law "modernizes California's unclaimed property law by ensuring virtual currencies are treated like other financial assets."

These California voices speak to the same policy question HB 798 addresses, though their remarks concern California legislation. Verse Press sought comment from HB 798's sponsor and Governor Glenn Youngkin's office; none was available before publication.

HB 798 follows a sequence of crypto-friendly legislation that Virginia has already enacted. In 2022, Governor Youngkin signed HB 263, which authorized state-chartered banks and credit unions to provide virtual currency custody services in both fiduciary and non-fiduciary capacities. Virginia also put crypto ATM regulations in place in 2026. HB 798 is a logical extension of that existing policy framework rather than an isolated act.

On-Chain Context

The scale of dormant crypto holdings globally adds weight to how these laws are written. Analysts estimate that between 2.3 and 3.7 million Bitcoin, representing roughly 11 to 18 percent of the fixed 21 million supply, are considered permanently lost.

In July 2025, approximately 80,000 BTC valued at around $8.6 billion at the time moved from Satoshi-era wallets that had been inactive for 14 years, a reminder that dormant does not always mean gone. Other notable movements earlier in 2025 reinforce the pattern: a single day saw 32,322 BTC (approximately $3.9 billion) exit wallets that had been inactive for three to five years, the largest single-day dormant wallet movement recorded in 2025, and 62,800 BTC exited wallets older than seven years, more than double the equivalent figure from 2024.

What It Means Outside the US

Exchanges operating in markets like India, Nigeria, Kenya, and South Africa will not face direct obligations under Virginia law, but the direction of travel is relevant.

India has no dormant property framework for crypto yet, though a June 2025 mandate from the Financial Intelligence Unit requires exchanges to refresh identity verification for accounts inactive for more than 18 months, which is the closest functional parallel.

Nigeria's Investments and Securities Act, signed on March 25, 2025, recognized digital assets as securities but includes no dormancy provisions despite the country hosting one of the world's largest peer-to-peer crypto markets.

Kenya signed its Virtual Asset Service Provider Act in October 2025, establishing oversight by the Central Bank of Kenya and the Capital Markets Authority and creating licensing requirements for crypto businesses operating in the country. The law does not yet address what happens to dormant customer holdings.

South Africa has the most developed exchange licensing framework on the continent, with comprehensive licensing under the Financial Sector Conduct Authority, but similarly lacks rules governing what happens to abandoned custodial holdings. South Africa's regulatory position is structurally closest to Virginia's pre-HB 798 state: strong custody and licensing rules paired with a gap in dormant account procedures.

Across all four markets, a significant share of crypto activity takes place through non-custodial wallets. In India, Nigeria, and Kenya especially, where distrust of centralized platforms runs high, users routinely hold assets outside any custodial arrangement that a Virginia-style dormancy law could reach. That dynamic makes the non-custodial carve-out in HB 798 a detail of practical relevance to exchanges assessing their international compliance footprint.

What Comes Next

The bill's Senate passage and gubernatorial signature are the remaining steps before HB 798 becomes law.

Implementing regulations, which will specify the precise dormancy trigger period and the procedures for in-kind transfer, have not yet been published. Absent a Virginia-specific definition, the operative benchmark is the Revised Uniform Unclaimed Property Act's default framework of 3 to 5 years of account inactivity.

Virginia has existing unclaimed property infrastructure, including a state programme that recently returned $11.5 million to residents. Private firms such as Avenu Insights and Analytics have already built crypto custody capability through a relationship with Gemini Trust Company, demonstrating that the private-sector infrastructure needed for in-kind crypto transfers is already operational in Virginia and does not need to be built from scratch to support HB 798's requirements.

The one-year minimum holding period, shorter than any peer state, leaves open how quickly the state could move to disposition once that window closes, a question that exchanges and their legal teams will be watching as regulations take shape.