Protecting your assets Block and tackle—unclaimed property and cryptocurrency

As promoters of cryptocurrencies and digital-asset exchanges face intense scrutiny from tax, securities and other financial services regulators, they will soon have to contend with unclaimed property (or escheat) laws in the United States. This article explores how these laws could apply to cryptocurrency exchanges, hosted wallets, and other market participants, such as banks, broker-dealers and vendors, who are eager to gain a strategic foothold in this burgeoning market.

  • Since 2017, four states have enacted new escheat laws that specifically address cryptocurrency, and several other states are considering legislation in 2018.
  • A recent class action lawsuit filed against Coinbase, a California cryptocurrency exchange, shows that the escheatment of cryptocurrencies is now the subject of litigation.
  • Escheat poses a potential risk to cryptocurrency and market participants if the owner’s assets are liquidated as a result of escheat and the owner misses out on value appreciation.

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