Business

Derek Tonin

New York State wants to confiscate abandoned crypto assets

Although only 11 years old, one of the most common problems discussed amongst Bitcoin users is how to access or recover lost or dormant assets. Well if the state of New York gets its way, all of that lost crypto could soon be confiscated.

Helene Weinstein, representative of New York district 41, has proposed a bill that covers, amongst other things, “An act to amend the abandoned property law, in relation to including unclaimed virtual currency within the scope of property covered by such law.” Quite simply, as some states have started considering crypto to be property, she wants New York to apply escheatment laws to them.

What are escheatment laws? Simply, if the bill becomes law, in theory, it would enable New York to recover and liquidate abandoned crypto after a period of time. It would then keep the funds recovered in a trust for the owner, or their descendants, to claim at a later date.

As cryptonews points out, there are so many unanswered questions and potential problems with this law. How would New York recover crypto; a problem which has troubled countless crypto investors who have lost access to their assets? Will the state be able to identify, without a shadow of a doubt, which accounts belong to users that reside in their jurisdictions? Will there be legal troubles if the price of the digital assets rise immensely compared to the fiat trusts New York would keep? Would New York consider funds that are simply being saved as an investment and left untouched to be abandoned?

While the law may be nearly impossible to implement right now, as more regulation is applied to the cryptocurrency space and better anti-money laundering (AML) and know your customer (KYC) are applied, there’s a very real possibility that states like New York could pursue this in the future. If it isn’t a reality now, it’s fair warning that Bitcoin is meant to be used as a currency, and not held as a property. Hold it too long, and it might no longer be yours.

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