Two days after New Hampshire Governor Ayotte signed a bill that created the first crypto currency reserve in the country, Arizona Governor Hobbs signed H.B. 2749 that also establishes a reserve fund for abandoned digital assets. The new Arizona law establishes a process for identifying and handling unclaimed digital assets, ensuring they are held for a specified period before being sold. A Bitcoin and Digital Assets Reserve Fund has been created, with the state treasurer able to deposit a portion of the fund’s assets into the state’s general fund after legislative approval.
H.B. 2749, provides a process for digital assets to be deemed abandoned after a specific period, typically three years, if the holder fails to contact the owner or if the owner’s communication is returned as undeliverable. There is a presumption of abandonment after three years, which can be overcome by the owner taking an “act of ownership interest” or by communicating with the holder.
The Bitcoin and Digital Assets Reserve Fund will hold unclaimed digital assets for three years before being sold. The state treasurer can seek legislative approval to deposit 10% of the assets in the reserve fund into the state’s general fund.
Why Is This Good?
The purpose of the law is to protect the value of digital assets held by the state and ensure they are not liquidated immediately. Arizona investors who claimed the money from their abandoned assets have lost out in the past because the value of their crypto increased after it was sold. Holding the asset in the reserve fund for three years would protect the increasing value of the asset during the state holding period.
According to Jeff Pickel, Principal, Abandoned and Unclaimed Property at Ryan, “the bill is a good step in the right direction on the escheatment of digital assets because it directs companies to report the property in its native form rather than liquidate and report as cash as some other states have mandated. This bill was a result of advocacy efforts by the Unclaimed Property Professionals Organization, and there are similar bills pending in Alabama, California, and Texas. The hope within the industry is that other states will use this bill as a model, should they choose to include digital assets in their definition of unclaimed property.”
Please contact Ryan’s unclaimed property professionals for additional information on this new process.
TECHNICAL INFORMATION CONTACTS:
Mark A. Paolillo
Principal
Ryan
857.288.1976
mark.paolillo@ryan.com
Susan Han
Principal
Ryan
442.244.2447
susan.han@ryan.com
Jeff Henshall
Principal
Ryan
404.682.1200
jeff.henshall@ryan.com
Christopher Jensen
Principal
Ryan
469.399.4142
christopher.jensen@ryan.com
Julia Killinger-Colbus
Principal
Ryan
julia.killinger-colbus@ryan.com
410.568.0800
Jeff Pickel
Principal
Ryan
857.362.7522
jeff.pickel@ryan.com
Sonja Roman-Molina
Principal
Ryan
954.740.6255
sonja.roman@ryan.com
The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.