Remy Blaire: Right now, state governments are sitting on roughly $70 billion that belongs to 33 million Americans. It’s old money from old accounts, including [unclear: “for one forgotten investment accounts”] as well as dormant bank accounts, pensions and, increasingly, crypto. For consumers out there, that can mean losing money meant for retirement or potentially a house down payment. But for the companies holding these accounts, it means risk in terms of audit risk, regulatory penalties and damage to customer trust. And digital assets are making this a more complicated landscape. New laws in California, Arizona as well as Virginia, among others, require or default to sending digital assets to the state in kind, not liquidated, and with dormancy periods of 3 to 5 years, platforms are juggling a patchwork of rules and tracking inactivity at the token level, while Eisen builds essential infrastructure to protect millions of everyday consumers. So joining us today is Allen Osgood, CEO of Eisen, a company inspired by the historic Eisenhower Highway system. Great to have you here. Thank you so much for joining us.
Allen Osgood: Thank you for having me.
Remy Blaire: So we hear about dormant accounts all the time, but can you explain what happens with escheatment?
Allen Osgood: Sure. So escheatment is the state-mandated process where, after a period of a number of years, the company has to look at each account, send a physical piece of snail mail to an address that you probably haven’t lived at for years, and then go through a report and potentially even remit or liquidate that account. And so escheatment, if you rewind all the way back, came from this ye olde England concept of the Crown gives you property, and if you abandon it, they want to take it back. Now, when there’s one kind of apparatus for doing that, that’s one thing. But now it’s been left to all of the state treasurers and legislatures across the US to implement 54 different sets of patchwork rules. And so now large-scale companies, [unclear: “we fortunately fund full circle for myself announced”] Coinbase, one of my prior employers, as a customer of ours, to manage this nationwide is really challenging.
Remy Blaire: And so how do you stay on top of that patchwork of state rules when the consequence of getting it wrong is liquidating your customers? And when it comes to banks and fintechs out there, tell us about the risks.
Allen Osgood: Sure. So the states of California and New York, as an example, will charge you 10 to 12% on underreported assets every year. So say you’re supposed to report $10 million. You’re looking at 1 to 1.2 million in penalties for anything in those states alone. And so part of it is staying on top of what the dormancy requirements are. We think of it in terms of priorities for these businesses. Complying with state rules is priority one, to avoid fines, penalties and interest. But the second priority needs to be retaining those customer accounts. Escheatment is usually a bad outcome for consumers. Think of yourself: how many times have you moved and gone through and updated the address on file at every one of your bank accounts? These institutions are world-class at keeping track of every dollar and cent in your account, but they’re woefully understaffed to be able to stay on top of all of the life changes that happen. And so at Eisen, we offer what we think of as the full account operations lifecycle, being able to manage from open to close what needs to happen to that account. Because people move, lives change, people join the military, people die. There’s all of these different account life statuses that happen. Escheatment is just the tail end. This is what happens if none of these things are updated, which has a huge amount of penalty to companies to do it, but it’s really just a bad consumer experience at the end of the day. Imagine logging in. The very famous story about a guy named [unclear: “Walter”], who bought Amazon shares in the 90s, put them into an E-Trade account, and it turns out to be one of the best investments of all time. He left it there. Kind of does what we’re all taught to do: set it and forget it and let it go up, except for escheatment rules. So he got liquidated in 2008, but didn’t realize it until 2018. And so his experience as the consumer was logging into an E-Trade account and seeing a big, fat zero balance. That’s what we’re trying to protect against. The companies have to follow these rules, but ultimately the best outcome is not escheating them in the first place.
Remy Blaire: Yeah. And I do want to ask you about the role of crypto, in particular digital assets. So what counts as inactivity, especially when we’re talking about tokens?
Allen Osgood: So imagine your... Well, two great examples here. So Satoshi had the first Bitcoin accounts with millions, billions of dollars of value in them. But he hasn’t touched them since. And so if those were on a regulated crypto custodial exchange, those would have been liquidated in like 2014, 2015. And so a three-year dormancy period on what would have been one of the best-returning assets of all time. And so activity can be as simple as logging into your account, doing a trade, anything that shows that you’re in touch with that institution is a way to reset that dormancy clock. So the best advice I give all of our customers is log into your accounts. That’s all you have to do. And if the institution is on top of it and staying on track of rules, they’re just going to reset your clock for another 3 to 5 years.
Remy Blaire: And finally, before I let you go, I understand that Eisen has expanded into other areas, including KYC, disbursements and tax reporting. So tell us why you couldn’t solve the escheatment problem without managing the entire account lifecycle.
Allen Osgood: So the account lifecycle is how you end up in escheatment. And so it’s that combination of: is the identity correct? Is this account up to date with its compliance requirements? And so as we’ve gone through and tried to solve all of these problems for our customers, all of these things feed into trying to ultimately reduce escheatment. And so if we’re successful, we should drive the volume of escheatment down from tens of billions of dollars a year today to as close to zero as we can, while keeping all customers in touch with their money.
Remy Blaire: And we have about 60 seconds here. So for our viewers out there who are wondering where to start, what would you say to them?
Allen Osgood: So I think if you’re a bank, a brokerage, a crypto firm, a credit union, start to research these rules, start to understand where you’re at. And really, if you haven’t done anything, which unfortunately is a very common thing that we see, there are programs that these states make available to you to get waived fines, penalties and interest your first go-around. So we help a lot of our clients go through and try to remediate that. But if you’re a consumer, the best thing you can do is log in to your accounts. And there’s a website that the states put together called Missing Money, where you can actually search for money for yourself. I don’t know if you’ve done this, but one of the viewers from the last show I did messaged me that they found five grand. So if people do find money, please let me know. But the system is designed to try to reunite people with their money, and if the companies can’t do it, the states will. We simply try to help those companies keep the assets and the customers they’ve fought so hard to earn.
Remy Blaire: Well, appreciate your time, Allen. Thank you so much for joining us today, and thank you so much for sharing your insights.
Allen Osgood: Thanks for having me.
Remy Blaire: Thank you.
