A proposed provision in the CLARITY Act aims to protect dormant Bitcoin and other self-custodied digital assets from legal claims rooted in abandonment, adverse possession, or finder's title. The legislative push targets a legal dispute over an estimated $200 billion in lost or non-moving cryptocurrency assets, according to CryptoSlate.
At the center of the controversy is a lawsuit that claims 3.8 million dormant BTC by invoking police lost-and-found rules. That case has accelerated efforts on Capitol Hill to clarify property rights for digital assets that have remained unmoved for extended periods. Congressional backers of the bill are racing to stop such litigation strategies before they establish a precedent that could affect holders nationwide.
The latest draft of the CLARITY Act contains Section 20216, which directly addresses the status of inactive, self-custodied digital property. Under the proposed language, a self-custodied digital asset cannot become abandoned, unclaimed, or forfeited. Furthermore, the provision states that such an asset cannot become subject to adverse possession or finder's title solely because its owner has not moved it or otherwise shown continued interest. This statutory safeguard is designed to remove the legal ambiguity that plaintiffs have attempted to exploit by arguing that blockchain dormancy equates to relinquished ownership.
The inclusion of this language reflects a broader legislative acknowledgment that traditional property doctrines do not neatly apply to cryptocurrency. Physical assets may be presumed lost or abandoned when left unattended for years, but a Bitcoin wallet secured by private keys remains under the control of its owner regardless of on-chain activity. Because blockchain transactions are irreversible and wallets do not require physical maintenance, the mere absence of movement does not inherently indicate that the owner has surrendered their rights.
If enacted, the provision would have far-reaching consequences for the digital asset industry. An estimated $200 billion in assets sits in wallets that have not transacted in years, and the threat of third-party claims based on dormancy has emerged as a significant risk for long-term holders. The CLARITY Act would establish that inactivity alone cannot strip an individual of title. This approach would effectively neutralize the exposure linked to the ongoing legal dispute and similar future claims.
Lawmakers are currently working to advance the bill quickly, seeking to close the legal opening that has allowed police lost-and-found analogies to be used against digital property owners. The race to pass the legislation underscores the urgency of providing clear statutory guardrails as courts begin to grapple with novel questions at the intersection of property law and blockchain technology.