South Dakota Advances Crypto Regulations to Combat Scams and Facilitate Forfeiture

PIERRE — South Dakota is moving forward with novel legislation to regulate digital currency, aiming to curb scams and streamline the process of seizing crypto assets in criminal investigations. Governor Larry Rhoden is expected to sign two bills into law that address growing concerns about the use of cryptocurrency in illicit activities.

Millions Lost Through Digital Kiosks

One bill focuses on regulating digital currency kiosks, which have become a common tool for scammers. In 2025, South Dakotans lost over $500,000 to scams involving these kiosks, contributing to a national total of $333 million in losses according to reports. These kiosks allow customers to buy or sell cryptocurrency with cash, and scammers often exploit them by convincing victims to send funds to their digital wallets.

Senate Bill 98, as supported by Senators Steve Kolbeck and Representatives Mike Weisgram, will require digital kiosk operators to obtain a state license and adhere to several regulations, including:

• Setting a $1,000 daily transaction limit to prevent significant financial losses.
• Printing paper receipts for customers.
• Explaining terms and conditions before a transaction.
• Disclosing fees and transaction rates.
• Providing refunds to victims of fraud.

Currently, South Dakota licenses 10 operators running 172 kiosks, primarily in urban areas as reported by the South Dakota Division of Banking. In the last two years, these companies filed 158 currency transaction reports involving over $10,000 in cash and seven reports for suspected fraud or money laundering.

Although representatives from the cryptocurrency industry, such as Clara Wulfsen with CoinFlip, expressed support for most of the bill, they argued that the $1,000 daily limit is too restrictive. Despite this opposition, the bill passed the House with a 59-7 vote.

Crypto Asset Forfeiture

The second bill, Senate Bill 43, aims to clarify that cryptocurrency can be seized as an asset in criminal investigations. Attorney General Marty Jackley argued that current law, which focuses on tangible assets, arguably exempts digital currency as stated in a press release. He highlighted that drug dealers and human traffickers frequently use cryptocurrency, with $2.3 billion used in the drug trade in 2024.

This bill received unanimous support from the House Judiciary Committee and passed the House floor on the consent calendar.

Governor Larry Rhoden recently signed nine bills into law, including six introduced by Attorney General Marty Jackley according to the Governor’s office. These new regulations reflect a growing effort to address the risks associated with digital currencies while ensuring law enforcement has the tools to combat criminal activity.