Texas Enacts Law Empowering Seizure of Digital Assets Linked to Crime

Texas has enacted a significant piece of legislation that empowers law enforcement to seize digital assets linked to criminal activities. Senate Bill 1498, approved on June 20, grants authorities the power to confiscate digital assets such as Bitcoin, NFTs, stablecoins, and other cryptocurrencies that are involved in or derived from illegal activities. This bipartisan law is set to come into effect on September 1.

The new law stipulates that digital assets can be seized if they were used in or obtained from crimes including drug trafficking, fraud, theft, organized crime, or human trafficking. Additionally, any increase in the value of these seized assets from the time they were acquired to the time of seizure can be claimed by the state. This provision ensures that the state can benefit from the appreciation of these assets, further deterring criminal activities.

Under SB1498, law enforcement agencies are required to transfer any seized digital assets into a secure, offline wallet. Access to this wallet is restricted to the agency or the state’s attorney, ensuring the safety and integrity of the seized assets. The forfeiture case will be filed in the county where the seizing agency is based, streamlining the legal process and ensuring accountability.

This legislation brings digital property under the same civil asset forfeiture rules that already apply to cash, vehicles, and real estate used in criminal acts. Lawmakers have highlighted that SB1498 addresses gaps in current laws, making it a necessary measure as digital assets become increasingly integral to financial crimes. By extending these rules to digital assets, Texas aims to create a more comprehensive framework for combating financial crimes in the digital age.

SB1498 is part of a broader effort by Texas to update its legal framework to address the evolving landscape of digital assets. The state has also passed SB21, signed by Governor Greg Abbott on June 22, which establishes a dedicated framework for holding Bitcoin. This reserve, managed separately from the general treasury, is designed to strengthen the state’s financial resilience and serve as a hedge against inflation. Texas is now the third state in the US to pass a Bitcoin reserve law, following Arizona and New Hampshire.

This legislative move by Texas underscores the state's proactive approach to integrating digital assets into its legal and financial systems. By empowering law enforcement to seize digital assets tied to crimes and establishing a Bitcoin reserve, Texas is positioning itself as a leader in the regulation and utilization of digital currencies. This dual approach not only enhances the state's ability to combat financial crimes but also demonstrates its commitment to leveraging digital assets for financial stability and growth.