A significant regulatory shift just took effect in California. Governor Gavin Newsom signed legislation that grants the state authority to take custody of cryptocurrency and digital assets held on centralized exchanges if those accounts remain inactive for three consecutive years.

This move raises critical questions for the crypto community. When your assets sit idle on a regulated platform, you're essentially delegating control to both the exchange operator and now, in this jurisdiction, to state authorities. The three-year threshold might seem generous until you realize that many retail traders abandon accounts after market cycles shift or life circumstances change.

What makes this particularly noteworthy isn't just the custody transfer itself—it's the precedent it establishes. Other states could follow suit with similar or stricter policies. For exchange users, this adds another layer of counterparty risk beyond the platform's operational or security concerns.

The broader implication: centralized platforms remain subject to expanding government regulatory frameworks. This underscores why many in the space emphasize self-custody and decentralized solutions as risk mitigation strategies. Whether you're a long-term holder or active trader, understanding your jurisdiction's policies on dormant accounts and asset custody has become essential due diligence.