Could Your Dormant Bitcoin Wallet Be Legally ‘Abandoned’? The CLARITY Act Says No
Can a wallet you haven’t touched in a decade legally stop being yours? A pending New York lawsuit has forced Congress to answer that question directly, and the answer taking shape inside the CLARITY Act could reshape how every state in the country treats dormant self-custodied crypto.
The case behind the provision is almost absurd in scale. A claimant identified in court filings as Noah Doe, alongside two affiliated companies, has asked a New York court to award them title to 39,069 dormant Bitcoin addresses holding an estimated 3.8 million BTC combined — close to 18% of all the Bitcoin that will ever exist, worth hundreds of billions of dollars at current prices. The legal theory leans on old state “lost and unclaimed property” statutes, the same category of law that lets a state eventually claim an abandoned bank account after years of no activity. The filing points to an on-chain notice campaign, a public press release, and a defined claim window as evidence that the coins were, in the claimants’ framing, abandoned property that nobody came forward to reclaim.
Whatever the merits of that specific case, the underlying legal gap it exploits is real: most state unclaimed-property laws were never written with irreversible, self-custodied cryptographic keys in mind, and inactivity is often treated as sufficient evidence of abandonment for other asset types. A wallet holder who simply hasn’t moved coins in years — for entirely mundane reasons, like storing a long-term holding in cold storage — could, under some states’ existing frameworks, theoretically face the same kind of claim.
New language now being negotiated into the CLARITY Act aims to close that gap categorically. Under the current draft provision, inactivity or dormancy alone cannot be treated as grounds for a self-custodied digital asset to be deemed abandoned, unclaimed, or forfeited under any federal, state, or local law. Practically, that means a self-custodied wallet cannot become subject to adverse possession or a “finder’s title” claim solely because its owner hasn’t moved the funds or otherwise shown continued interest — the exact theory underpinning the New York lawsuit. Because federal law would preempt conflicting state statutes on this point, the shield would apply uniformly nationwide rather than varying by which state a holder happens to reside in.
The provision draws a specific line that matters for how it would actually apply: it protects assets held directly through private keys under a person’s own control, not crypto sitting with an exchange, broker, or other third-party custodian. Coins parked on a centralized platform would remain subject to the ordinary unclaimed-property rules that already govern dormant brokerage and bank accounts. Courts would still need to work out exactly where that line falls in edge cases — custodial arrangements that blur the distinction, for instance, or wallets controlled jointly by multiple parties — but the core principle is narrower and clearer than a blanket protection for all crypto everywhere.
None of this settles the pending lawsuit outright, since the claimants have also pointed to direct contact attempts and formal notice procedures that go beyond simple inactivity. But if this language survives into a final version of the CLARITY Act, it would eliminate the simplest and broadest version of the legal argument being used against dormant Bitcoin holders: that silence alone equals abandonment. For anyone holding coins in long-term cold storage, that would mark one of the more concretely protective provisions to emerge from a bill otherwise mostly focused on market structure and regulatory jurisdiction.
This article is for informational purposes only and does not constitute legal advice. Pending legislation can change substantially before final passage; consult a qualified attorney regarding any specific self-custody or property-law concerns.
Learn more about the fundamentals of secure self-custody on the Bitcoin Academy.