South Dakota Attorney General Marty Jackley will introduce legislation in the 2026 Legislature designed to give law enforcement explicit authority to seize digital cryptocurrency accounts, arguing the technology has become a haven for online crime. Jackley cited statewide cryptocurrency-related losses of $13.8 million in 2024, including $7.8 million lost by victims over 60, and framed the proposal as a necessary modernization of investigative tools; this will be his 10th bill for the session. https://www.dakotanewsnow.com/2026/01/06/ag-jackley-propose-legislation-strengthen-digital-cryptocurrency-investigations/

What the bill appears intended to change

• Statutory scope: Extend existing asset-seizure and forfeiture frameworks to explicitly cover digital assets held on exchanges, in custodial accounts, and — to the extent practicable — on-chain wallets.
• Legal process: Provide clear authority for subpoenas, preservation orders, emergency freeze warrants, and court-ordered turnover of assets and account records from intermediaries.
• Investigative tools: Authorize use of blockchain analytics, compelled cooperation from centralized exchanges, and mechanisms for cross-jurisdictional coordination and mutual legal assistance.

Operational and technical obstacles

• Custodial vs non-custodial holdings: Forfeiture from centralized providers is straightforward in principle (court orders to custodians), but non-custodial wallets present a technical limit: without access to private keys, authorities cannot move funds even with a court order.
• Speed and volatility: Crypto’s 24/7 markets and price volatility make timely preservation orders critical; slow legal processes risk dissipation of value or on-chain obfuscation.
• Chain obfuscation: Mixers, privacy coins, cross-chain bridges, and fast peer-to-peer transfers reduce traceability and increase the complexity and cost of investigations.
• Evidence integrity: Seizing digital assets requires strict chain-of-custody practices for keys, seed phrases, exchange export files, and forensic snapshots to preserve admissibility and avoid accidental loss.

Due-process and policy trade-offs

• Forfeiture safeguards: Any expanded seizure authority will need statutory guardrails — probable-cause thresholds, notice and hearing procedures, clear victim-restoration paths, and transparency/reporting requirements — to limit overreach and protect lawful owners.
• Custody and asset management: States must decide whether seized crypto is liquidated immediately, held in cold storage, or managed via third-party custodians; each option carries custodial risk, accounting complications, and potential market impact.
• Interagency coordination: Effective implementation depends on training for prosecutors and investigators, investment in forensic tools, and formal relationships with federal partners and private sector compliance teams.

Market and behavioral implications

• Deterrence vs displacement: Stronger seizure powers could deter some fraud schemes but may accelerate criminal migration to privacy-enhancing services, decentralized protocols, or more sophisticated laundering chains.
• Compliance burden: Exchanges and custodial services would face more requests and legal complexity at the state level, increasing compliance costs and potentially altering onboarding, KYC, and reserve practices.
• Victim recovery dynamics: A clearer legal pathway for freezing and repatriating assets could improve restitution outcomes for victims — a pressing concern given the disproportionate losses among older residents.

Jackley’s proposal signals a continued trend of state-level attempts to adapt traditional law-enforcement tools to crypto assets; the legislative text and implementing rules will determine whether the measure meaningfully closes investigative gaps or merely redistributes enforcement burdens. The bill is slated for introduction in the 2026 session as Jackley’s 10th legislative filing.