T Skevington and M Bacina
Illinois to acquire abandoned digital currencies
The Illinois State Legislature has referred a bill to its House Revenue and Finance Committee to explicitly add "virtual currencies" to the list of assets
which can be repossessed by the government.
The bill, which was first introduced on 20 February 2020, proposes to amend the Revised Uniform Unclaimed Property Act (Act) by including the following new definition:
(32) "Virtual currency" means any type of a digital unit, including cryptocurrency, used as a medium of exchange, unit of account, or form of stored value, which does not have legal tender status recognized by the United States.
The term does not include: (A) the software or protocols governing the transfer of the digital representation of value; (B) game-related digital content; or (C) a loyalty card or gift card.
Further proposes amendments provide that virtual currencies as defined by the Act will be considered abandoned “five years after the last indication of interest". Essentially, five years after any interaction with the rightful owner of the underlying assets.
Unsurprisingly, the Illinois State Government does not intend to directly obtain ownership of digital currency obtained through the amended Act. The digital currency obtained must be liquidated by the "holder", which in the majority of cases will be the custodian. In particular, the bill provides that:
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.
Of course, repossession of abandoned digital currency is rarely a simple matter. There are hundreds of thousands of Bitcoin which have been sitting dormant in wallets for years, and advances in quantum computing to one side, will be unable to be recovered if the private keys have been lost. This bill will likely only affect digital asset custodians and exchanges, who hold digital currencies on behalf of others but retain control of the digital currency.
Whether this bill passes is another matter.
In Australia, it is arguable that digital currencies are already covered by the Uncollected Goods Act 1995 (NSW) (Goods Act), and the other State and Territory equivalents. The Goods Act applies to “goods” the subject of a “bailment”, with goods being defined as “chattels personal, other than things excluded from this definition by the regulations”, of which there are currently none. Chattels personal has a broad common law meaning, which encompasses intangible assets.
Broadly, the Goods Act provides that uncollected goods are any goods which a customer has failed to take delivery of, or which a bailee can reasonably expect to be relieved of any duty to safeguard. The Goods Act provides that uncollected goods need to be sold, after a notice period which varies depending on the value of the goods being sold, with any proceeds of sale being dealt with under the Unclaimed Money Act. There is currently no definition of digital currencies under the Goods Act.