Relating to civil asset forfeiture of digital currency or other similar property.

Contracts

Terms of Service (TOS) & User Agreements: You must amend customer agreements immediately to include:

• Seizure Protocol: Explicit notice that assets subject to a valid warrant will be transferred to government custody.
• Cessation of Yield: A clause stating that staking rewards, interest, or yield generation ceases immediately upon seizure transfer.
• Indemnification: Language protecting your institution from liability regarding market volatility or depreciation while the asset is in State custody.

Hiring/Training

Compliance & Fraud Teams:

• Staff must be trained to distinguish between a standard "freeze order" and an SB1498 "transfer warrant."
• Implement training on verifying destination wallet addresses provided by Law Enforcement Agencies (LEAs) to prevent irreversible transfers to fraudulent addresses (social engineering risks).

Reporting & Record-Keeping

Valuation Snapshots:

• Because the law defines "proceeds" to include market appreciation, you must generate a timestamped valuation of the asset at the exact moment of transfer.

Chain of Custody:

• Retain the Transaction Hash (TXID) as the primary receipt of compliance. This replaces the traditional paper receipt for physical cash seizures.

Fees & Costs

Network Fees ("Gas"):

• The statute is silent on transaction costs. Update internal policies to either deduct network fees from the seized balance or require the seizing LEA to provide a wallet with sufficient funds to cover the transfer. Do not absorb these costs.