Colorado legislature updates regulations on unclaimed property and virtual currency management

House Bill 1224, introduced in the Colorado State Legislature on March 3, 2025, is poised to reshape the landscape of virtual currency and unclaimed property management in the state. The bill aims to clarify the treatment of virtual currencies, streamline reporting processes, and enhance the authority of the state treasurer's office in handling unclaimed assets.

At the heart of the legislation is a significant shift in how virtual currency is defined and treated. Under the new provisions, virtual currency will be presumed abandoned three years after the last indication of interest from its owner. This change mandates that holders of unclaimed virtual currency must liquidate these assets within 30 days of reporting them to the state treasurer, with the proceeds going directly to the state. Notably, owners will have no recourse for any increase in value post-liquidation, a point that has sparked considerable debate among stakeholders concerned about the implications for investors.

The bill also proposes to shorten the record retention period for holders from ten years to six, reducing the administrative burden on businesses. Additionally, it tightens the timeline for the state administrator to initiate actions regarding unclaimed property from ten years to six, aiming for a more efficient resolution process.

Further amendments include a requirement for claimants to provide nonpublic documents to prove ownership of unclaimed property and a reduction in the maximum compensation for recovery agreements from up to 30% to a flat 10%. These changes are designed to discourage excessive claims and streamline the recovery process.

Opposition has emerged from various quarters, particularly from advocates for virtual currency owners who argue that the liquidation requirement could unfairly penalize individuals who may wish to retain their assets. Critics also express concern over the potential loss of value for owners who may not be aware of the new regulations.

As Colorado navigates this legislative shift, the implications for both the economy and individual investors are significant. Experts suggest that while the bill aims to modernize the handling of unclaimed property, it may also deter investment in virtual currencies due to the perceived risks of abandonment and liquidation.

With the bill now under consideration, stakeholders are closely watching its progress, anticipating that its passage could set a precedent for how other states manage virtual currencies and unclaimed assets in the future.