A federal lawsuit seeking to claim 3.8 million dormant bitcoin through an obscure application of police lost-and-found statutes has prompted congressional action, with the latest draft of the CLARITY Act explicitly barring states from treating untouched self-custodied assets as abandoned property.

The case, which values the targeted bitcoin at roughly $200 billion at current prices, hinges on a novel legal theory: that bitcoin addresses inactive for years can be deemed "lost" under state unclaimed property laws, allowing a private party to petition for title through procedures typically reserved for physical items turned over to police departments. The plaintiff argues that the owner's failure to move the coins or demonstrate ongoing control constitutes abandonment.

• Section 20216 of the draft CLARITY Act explicitly prohibits treating self-custodied digital assets as abandoned, unclaimed, or subject to adverse possession based solely on dormancy.

• The provision establishes federal preemption over state escheatment laws for self-custodied crypto, protecting an estimated 3+ million bitcoin that hasn't moved in five+ years.

• The bill advances amid bipartisan concern that a favorable ruling would invite copycat claims and undermine property rights for all self-custody holders.