The changing technological landscape of financial crimes requires updated legal frameworks, and South Dakota is positioning itself at the forefront of this evolution. Attorney General Marty Jackley has unveiled proposed legislation aimed at strengthening the state’s ability to investigate and prosecute cryptocurrency-related crimes. This initiative represents a significant shift in how law enforcement approaches digital assets in criminal investigations.
In an announcement that caught the attention of both legal and crypto communities, Jackley outlined plans to modernize South Dakota’s forfeiture laws. The proposed legislation would explicitly authorize law enforcement to seize digital currencies and other virtual assets connected to criminal activities. This move acknowledges the growing role of cryptocurrencies in modern financial crimes, from ransomware attacks to drug trafficking.
“Criminal organizations are increasingly using cryptocurrency to hide their illegal activities,” Jackley noted in his statement. “Our laws need to catch up with the technology criminals are using.”
The timing of this proposal aligns with a national trend of states developing more sophisticated approaches to digital asset crimes. According to a recent MIT Technology Review analysis, at least 15 states have enacted or proposed similar legislation in the past year, reflecting growing concern about the use of digital currencies in criminal enterprises.
What sets South Dakota’s approach apart is its comprehensive scope. Rather than simply adding cryptocurrency to existing asset forfeiture laws, the proposed legislation creates specific protocols for handling digital evidence. This includes provisions for securing private keys, wallet access, and maintaining the chain of custody for digital assets—technical considerations absent from many current state laws.
Law enforcement agencies have expressed support for the measure. Mitchell Police Chief Mark Smith called the proposal “a necessary tool for modern policing,” adding that his department has encountered cases involving cryptocurrency that presented unique challenges under current law.
The bill would also establish training requirements for state and local law enforcement, ensuring officers understand the technical aspects of cryptocurrency investigations. This educational component addresses a critical gap identified by the National Association of Attorneys General, which reported in December that only 23% of state and local law enforcement personnel have received formal training in digital asset investigations.
Not everyone is enthusiastic about expanded forfeiture powers, however. Civil liberties advocates have raised concerns about potential overreach. Dakota Digital Rights Coalition spokesperson Jamie Williams questioned whether sufficient due process protections are included in the proposal.
“Asset forfeiture already poses significant due process concerns,” Williams said. “Adding cryptocurrency to the mix without robust judicial oversight could create new problems for innocent South Dakotans.”
The cryptocurrency industry’s reaction has been measured. Blockchain Association Midwest representative Tyler Carson noted that “clear legal frameworks benefit legitimate cryptocurrency users,” while emphasizing the importance of distinguishing between criminal activity and lawful use of digital assets.
Technical challenges remain significant obstacles for law enforcement agencies pursuing cryptocurrency seizures. Unlike physical assets or traditional bank accounts, cryptocurrencies require specialized knowledge to secure and transfer. The proposed legislation addresses this by establishing a state digital asset repository and protocols for converting seized assets to fiat currency when appropriate.
The bill also contemplates coordination with federal agencies like the FBI’s Cyber Division and the Financial Crimes Enforcement Network (FinCEN), which have developed expertise in tracking cryptocurrency transactions across borders.
Looking ahead to implementation, should the bill pass in 2025, the Attorney General’s office plans to develop comprehensive guidelines for prosecutors and law enforcement. These would include technical procedures for wallet seizure, private key management, and handling of various cryptocurrency types.
One innovative aspect of the proposal involves provisions for handling seized assets that may fluctuate significantly in value during the legal process. Unlike seized vehicles or cash that maintain relatively stable value, cryptocurrencies can experience dramatic price swings. The legislation proposes mechanisms for either securing the assets in their original form or converting them based on specific criteria.
South Dakota’s approach reflects a growing sophistication in how states address the intersection of technology and criminal law. As digital assets continue to integrate into the broader economy, legal frameworks like this one will likely become standard across jurisdictions.
Whether this legislation strikes the right balance between empowering law enforcement and protecting civil liberties remains to be seen. What’s clear is that South Dakota is taking a proactive stance on addressing cryptocurrency in criminal investigations, potentially establishing a model that other states may follow in the coming years.
