Section 20216 of the latest CLARITY Bill stipulates that self-custodied digital assets shall not be deemed abandoned, unclaimed, or escheated property, nor shall ownership or finder’s rights be transferred to another party, solely due to prolonged inactivity of the wallet or the holder’s lack of ongoing interest.
This regulation overturns state and local laws that treat "a wallet remaining inactive for years" as a justification for transferring ownership.
The Senate drafts of May 8 and May 20 only protected the right to hold self-custodied wallets, while the July 22 version expanded its scope to include property law, addressing whether holders still own the assets within wallets that have been inactive for many years.
This clause defines self-custodied digital assets as assets where the owner has exclusive control over the private key, without reliance on a custodian, exchange, or intermediary.
This definition establishes the boundary upon which the remaining provisions rely.
From wallet access to property ownership
The court must draw a line between two types of digital assets: coins that an individual directly controls via a private key, and coins held by an exchange, broker, or custodian. The federal protections under the new draft of the CLARITY Act apply to the first category.
Unclaimed property laws continue to govern the second category, as the draft explicitly preserves these rules for custodial assets. Recent state amendments have classified exchanges, custodians, and custodial wallet providers as unique categories of assets that may belong to missing owners.
A wallet that holds its own private key and an exchange account holding an equivalent dollar value of Bitcoin will be on opposite sides of this line.
In the case of an exchange, the custodian controls the private key, so the custodian’s state dormancy, reporting, and delivery rules continue to apply as usual.
The case that makes this rule urgent
New York State’s own lost property law demonstrates why this rule now has real teeth. Section 7-B of the state’s Personal Property Law covers property that someone has lost and later turned over to the police.
Article 257 permits ownership to be transferred to the finder under specific conditions, including for property valued at under $10 after a one-year search for the owner has failed.
Noah Doe and two companies are using this framework to claim ownership of 39,069 dormant Bitcoin addresses holding approximately 3.799 million BTC, nearly 18% of Bitcoin’s total supply. Their documentation cites OP_RETURN notification campaigns, press releases, and claim windows as evidence that these coins qualify as unclaimed property.
This theory heavily relies on the wallet's silence, the coins having been inactive for many years, and no owner coming forward to dispute or claim them, and Section 20216 specifically targets this mechanism. Claimants can no longer use prolonged inactivity or lack of communication as grounds to assert ownership under state unclaimed property laws.
Noah Doe’s plaintiffs also cited police reports, OP_RETURN notifications, and their attempts to contact potential owners. This evidence goes beyond mere dormancy and, even if CLARITY becomes law, could enable them to argue that their claim is not based solely on silence.
This provision closes the legal loophole that their case was testing, but it does not resolve the litigation itself, as the court must still weigh whether this additional evidence changes the analysis.
What will happen to this rule next?
In the best-case scenario, Bill 20216 survives Senate negotiations with its priority language fully intact, and the courts interpret the phrase "solely due to inactivity" narrowly enough to provide genuine protection for self-custody.
Theories based on dormancy, like those behind Noah Doe, have become harder to build, as claimants need evidence beyond years of silence to make progress. Holding one’s own private key has gained legal support that self-custody advocates have never truly had before.
In the worst-case scenario, Senate negotiators strip or soften Section 20216 before the final vote, leaving language that allows courts discretion to weigh inactivity alongside other factors when determining claims.
State laws regarding dormant wallets remain possible, and future claimants could still construct theories similar to Noah Doe based on prolonged inactivity combined with notification campaigns.
Self-custody preserves its protection as an activity; holding your own private keys remains legal, and ownership during periods of inactivity for many years remains an unresolved issue that courts must address on a case-by-case basis.
Rule 20216 removed the simplest argument claimants could make regarding silent Bitcoin addresses: that years of inactivity alone constitute abandonment. Whether this is sufficient depends on what survives the Senate negotiations and what the judge ultimately determines silence itself can prove.
Author: CryptoSlate; Translated by Shenchao TechFlow