The Illinois state legislature is considering a bill seeking to include cryptocurrencies in its inventory of assets. Under the new bill, “abandoned” cryptocurrencies can be claimed by the state.
The bill is an amendment to the Illinois Uniform Unclaimed Property Act that lets the state claim custody over abandoned cryptocurrencies.
If the owner of the asset fails to show interest over the property in question anytime within five years, it can be claimed by the state.
The bill was received from the House Revenue and Finance committee on March 12 after its deliberation on the draft of the bill introduced on February 20.
Aside from “virtual currencies,” the bill seeks to amend the act that provides measures on all kinds of property in the custody of homeowners. This includes actual properties, security deposit containers, cash orders, and securities.
How does the bill actually affect cryptocurrencies?
Failing the “five-year” test means you lose custody over your assets. This means that the state looks at when the owner last indicated “curiosity” or interest on their property.
The indication of curiosity refers to a timeframe within which there were still some interactions between custodians and proprietors. This is either by communicating with the proprietor regarding information changes and withdrawals from the asset, among others.
The new bill will require the same test for cryptocurrencies. If the owner fails to show interest over the digital assets for five years, the bill will consider them “abandoned.”
How will the government claim abandoned cryptocurrencies?
According to the bill, the custodian will have to liquidate the digital asset first. From there, they will lose rights over the gains from the assets. The gain will consequently go to the government, who also becomes the administrator of the asset.
As written in the bill:
“The holder shall liquidate the virtual currency and remit the proceeds to the administrator. The liquidation shall occur anytime within 30 days prior to the filing of the report under Section 15-401.”
The bill adds:
“The owner shall not have recourse against the holder or the administrator to recover any gain in value that occurs after the liquidation of the virtual currency under this subsection.”
What should we expect if the bill should pass into law?
Essentially, the focus of the bill covers only crypto custody businesses. According to reports, the only cryptocurrency custodian headquartered in Illinois is the Chicago Mercantile Change (CME), but they do not exercise direct custody over Bitcoin (BTC) derivatives yet.
In previous reports, Unclaimed Property Professionals Organization noted that, as more crypto owners and companies consider cryptos as a legitimate medium of exchange, there will be more “unclaimed property issues” that may arise.
Nevertheless, the bill considered by the Illinois state legislature is something to ponder on for crypto-holders.
Making sure that they tend to their assets from time to time must now be completely necessary – that is, if crypto-holders want to keep their ownership secured for a longer amount of time. Otherwise, they would lose not only ownership over them; they will also lose the gains in value that they could have made from holding the asset.