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<ns0:Id>20250AB__233599INT</ns0:Id>
<ns0:VersionNum>99</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
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<ns0:LegislativeInfo>
<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>AB</ns0:MeasureType>
<ns0:MeasureNum>2335</ns0:MeasureNum>
<ns0:MeasureState>INT</ns0:MeasureState>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Valencia</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Valencia</ns0:Name>
</ns0:Legislator>
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<ns0:Title> An act to amend Sections 1501, 1516.5, and 1563 of, and to add Section 1563.5 to, the Code of Civil Procedure, relating to unclaimed property, and making an appropriation therefor. </ns0:Title>
<ns0:RelatingClause>unclaimed property, and making an appropriation therefor</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Unclaimed property: digital financial assets.</ns0:Subject>
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<ns0:DigestText>
<html:p>The Unclaimed Property Law (UPL) prescribes the circumstances under which intangible property, including digital financial assets, 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. Existing law also requires that business associations holding a financial asset that is potentially subject to escheatment provide notice to the owners of that asset as specified.</html:p>
<html:p>The bill would create the Digital Asset Reserve Fund into which digital financial assets shall be deposited, as specified. This bill would require the Controller to convert digital financial assets escheated to the state into high-quality digital assets, as specified. The bill would require the notice provided by holders of digital
assets to include a notification that, if escheated, the assets will be put into the Digital Asset Reserve Fund. The bill would create a Digital Asset Reserve Board assigned specified tasks relating to administration of the fund. The bill would authorize the Controller to take specified actions related to digital financial assets and would require the Controller to publish a quarterly report, as specified. This bill would authorize the Controller to use assets within the Digital Asset Reserve Fund to pay for the administration and management of the fund, thereby making an appropriation.</html:p>
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<ns0:VoteRequired>TWO_THIRDS</ns0:VoteRequired>
<ns0:Appropriation>YES</ns0:Appropriation>
<ns0:FiscalCommittee>YES</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
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<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
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<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_66EFCA31-AC99-43F1-B7A0-0C655D6B254F">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:Content>
<html:p>It is the intent of the legislature to clarify that digital financial assets are intangible property that are subject to the Unclaimed Property Law.</html:p>
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 1501 of the
<ns0:DocName>Code of Civil Procedure</ns0:DocName>
is amended to read:
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<ns0:LawSection id="id_AD9B77F6-7102-4DD4-B6A3-4AC839E0320A">
<ns0:Num>1501.</ns0:Num>
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<ns0:Content>
<html:p>As used in this chapter, unless the context otherwise requires:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Apparent owner” means the person who appears from the records of the holder to be entitled to property held by the holder.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Digital Asset Reserve Fund” means a fund consisting of digital financial assets escheated to the Controller pursuant to Section 1516.5.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Digital financial asset” has the same meaning as in subdivision (g) of Section 3102 of the Financial Code.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
“Financial organization” means any federal or state savings and loan association, building and loan association, credit union, investment company, or any similar organization.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
“High-quality digital asset” means a digital financial asset with an average market capitalization of at least one hundred billion dollars ($100,000,000,000) over the most recent 12-month period.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
<html:span class="EnSpace"/>
“Residuals” means payments pursuant to a collective bargaining agreement of additional compensation for domestic and foreign uses of recorded materials.
</html:p>
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 1516.5 of the
<ns0:DocName>Code of Civil Procedure</ns0:DocName>
is amended to read:
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<ns0:Num>1516.5.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Electronically accessing the digital asset account.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Conducting any activity with respect to another digital asset account or any other property owned by the owner with the same holder.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Taking any other action that reasonably demonstrates to the holder that the owner knows that the property exists.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The address used for purposes of delivering first-class United States mail.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Identify the digital financial asset by number or identifier, which need not exceed four digits.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Indicate that the digital financial asset is in danger of escheating to the state.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
Specify that the Unclaimed Property Law requires business associations to transfer a digital financial asset if it has been unclaimed for three
years.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
Specify that digital financial assets will be immediately put into the Digital Asset Reserve Fund until the rightful owner is identified.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
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.
</html:p>
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<ns0:Num>SEC. 4.</ns0:Num>
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Section 1563 of the
<ns0:DocName>Code of Civil Procedure</ns0:DocName>
is amended to read:
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<ns0:Num>1563.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
Except as provided in subdivisions (b) and (c), all escheated property delivered to the Controller under this chapter shall be sold by the Controller to the highest bidder at public sale in whatever city in the state affords in the Controller’s judgment the most favorable market for the property involved, or the Controller may conduct the sale by electronic media, including, but not limited to, the internet, if in the Controller’s judgment it is cost effective to conduct the sale of the property involved in that manner. However, no sale shall be made pursuant to this subdivision until 18 months after the final date for filing the report required by Section 1530. The Controller may decline the highest bid and reoffer the property for sale if the Controller considers the price bid insufficient. The Controller need not offer any
property for sale if, in the Controller’s opinion, the probable cost of sale exceeds the value of the property. Any sale of escheated property held under this section shall be preceded by a single publication of notice thereof, at least one week in advance of sale, in an English language newspaper of general circulation in the county where the property is to be sold.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Securities listed on an established stock exchange shall be sold at the prevailing prices on that exchange. Other securities may be sold over the counter at prevailing prices or by any other method that the Controller may determine to be advisable. These securities shall be sold by the Controller no sooner than 18 months, but no later than 20 months, after the actual date of filing of the report required by Section 1530. If securities delivered to the Controller remain in the custody of the Controller, a person making a valid claim for those securities under this chapter shall
be entitled to receive the securities from the Controller. If the securities or digital financial assets have been sold, the person shall be entitled to receive the net proceeds received by the Controller from its sale. United States government savings bonds and United States war bonds shall be presented to the United States for payment. Subdivision (a) does not apply to the property described in this subdivision.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Digital financial assets held by the Controller shall be deposited into the Digital Asset Reserve Fund, which is controlled by the Controller. Upon receipt, the Controller shall convert digital financial assets in their native form to high-quality digital assets.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Legislature may, through subsequent legislation, direct the Controller to deposit 10 percent of the digital assets held in the Digital Asset Reserve Fund into the General Fund.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The Controller may spend digital financial assets in the Digital Asset Reserve Fund or may sell digital financial assets and spend the net proceeds from the sale to pay reasonable costs associated with administering and managing the Digital Asset Reserve Fund.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The Controller shall publish a quarterly report on its internet website that includes:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The amount of each digital financial asset held in the Digital Financial Asset Reserve Fund.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
An estimate of the monetary value of each digital financial asset in the Digital Asset Reserve Fund.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Any change in the amount and estimated monetary value of digital financial assets in the Digital Asset Reserve Fund.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The Controller may hire or engage the services of an investment analyst to assist in such investment decisions.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
All escheated property consisting of military awards, decorations, equipment, artifacts, memorabilia, documents, photographs, films, literature, and any other item relating to the military history of California and Californians that is delivered to the Controller is exempt from subdivision (a) and may, at the discretion of the Controller, be held in trust for the Controller at the California State Military Museum and Resource Center, or successor entity. All escheated property held in trust pursuant to this subdivision is subject to the applicable regulations of the United States Army governing Army museum activities as described in Section 179 of the Military and Veterans Code. A person claiming an interest in the escheated property may file a claim to the
property pursuant to Article 4 (commencing with Section 1540).
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The California State Military Museum and Resource Center, or successor entity, shall be responsible for the costs of storage and maintenance of escheated property delivered by the Controller under this subdivision.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The purchaser at any sale conducted by the Controller pursuant to this chapter shall receive title to the property purchased, free from all claims of the owner or prior holder thereof and of all persons claiming through or under them. The Controller shall execute all documents necessary to complete the transfer of title.
</html:p>
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<ns0:Num>SEC. 5.</ns0:Num>
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Section 1563.5 is added to the
<ns0:DocName>Code of Civil Procedure</ns0:DocName>
, to read:
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<ns0:Num>1563.5.</ns0:Num>
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<html:p>A governing board, the Digital Asset Reserve Fund Board, shall be established. The Digital Asset Reserve Fund Board shall:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
Create guidelines for valuing assets in the Digital Asset Reserve Fund.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Establish prudent investment policies relating to the investment objectives of and asset allocation in the Digital Asset Reserve Fund.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The Digital Asset Reserve Fund Board shall consist of:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The Controller.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The State Treasurer.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The
Director of the Department of Finance.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
One member appointed by the Speaker of the Assembly.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
One member appointed by the Senate Committee on Rules.
</html:p>
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(6)
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Two members appointed by the Governor.
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(d)
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The appointed members of the governing board shall have expertise in digital financial asset investments.
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<html:p>
(e)
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The members of the board shall serve without compensation but shall be reimbursed for actual and necessary expenses incurred through service on the board.
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(f)
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The members of the Digital Asset Reserve Board are subject to the Political Reform Act of 1974, Title 9 (commencing with Section 81001) of the Government
Code.
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(g)
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The members appointed by the Senate Committee on Rules, the Speaker of the Assembly, and the two members appointed by the Governor shall have three-year staggered terms. The initial appointees of the Senate Committee on Rules and the Speaker of the Assembly shall serve two-year terms. Any vacancy occurring during an unexpired term shall be filled by appointment for the unexpired term.
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