State legislature revises unclaimed property laws affecting virtual currency and record retention

On April 11, 2025, the Colorado State Legislature introduced House Bill 1224, a significant piece of legislation aimed at modernizing the state's approach to unclaimed property, particularly in relation to virtual currency. This bill seeks to address the growing complexities surrounding digital assets and streamline the processes for reporting and reclaiming unclaimed property.

The bill's main provisions include a redefinition of virtual currency, which is now presumed abandoned three years after the last indication of interest from its owner. This change reflects the increasing prevalence of digital assets and the need for clear guidelines on their management. Additionally, holders of unclaimed virtual currency are required to liquidate these assets within 30 days of reporting them to the state treasurer, with the proceeds remitted to the state. Notably, owners will have no recourse for any appreciation in value post-liquidation, a point that has sparked debate among stakeholders concerned about property rights.

Other key amendments in House Bill 1224 include reducing the record retention period for holders from ten years to six, expediting the claims process for reimbursements from the state, and clarifying the administrator's authority over unclaimed thinly traded securities. The bill also introduces stricter requirements for individuals claiming unclaimed property, mandating the submission of nonpublic documents to prove ownership.

The implications of this legislation are multifaceted. Economically, it aims to enhance the efficiency of unclaimed property management, potentially increasing state revenues from liquidated assets. Socially, it raises questions about the rights of virtual currency owners, particularly regarding the lack of recourse after liquidation. Politically, the bill has garnered mixed reactions, with some advocating for the protection of digital asset owners while others support the need for regulatory clarity in an evolving financial landscape.

As House Bill 1224 progresses through the legislative process, its potential impact on property rights and the management of digital assets will likely continue to be a focal point of discussion. Stakeholders, including financial institutions and digital asset holders, are closely monitoring the bill's developments, anticipating how these changes will shape the future of unclaimed property in Colorado.