It's about assets on exchanges. Exchanges know who owns the account and where they live.
To put it simply, the bill, once passed, allows the state of California to seize cryptocurrencies left unclaimed on exchanges for 3 years, which can then be claimed by their owners.
Notably, the bill earlier mentioned crypto self-custody provisions which have been deleted.
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How do they know the assets are actually in California? Isn't the Blockchain everywhere and nowhere at the same time?
It's about assets on exchanges. Exchanges know who owns the account and where they live.