South Dakota Uniform Unclaimed Property Act Virtual Currency Amendments

HB 1196 adds a statutory definition of “virtual currency” to SDCL chapter 43-41B. The definition covers a digital representation of value used as a medium of exchange, unit of account, or store of value that does not have legal tender status recognized by the United States. It excludes software or protocols governing transfer, game-related digital content, and loyalty or gift cards.

The act also adds a crypto-specific abandonment standard. Virtual currency is deemed abandoned three years after the latest indication of interest. The term “indication of interest” is tied to an action or communication by the apparent owner showing knowledge of the property or intent to retain ownership of property held, issued, or owing by the holder.

• Three-year dormancy trigger: covered virtual currency becomes presumed abandoned three years after the latest owner indication of interest.
• Administrator discretion: the State Treasurer, as administrator, may decline virtual currency that is not freely transferable, has nominal value, or costs more to maintain, notice, or sell than its estimated value.
• Rulemaking authority: the administrator may prescribe classes or types of virtual currency exempt from reporting or liquidation through rules under chapter 1-26.
• Liquidation model: unless another disposition applies, a holder must liquidate unclaimed virtual currency within 30 days before filing the annual report and remit the proceeds to the administrator.
• Alternate disposition: if liquidation cannot reasonably be completed, the holder must notify the administrator, who must direct the alternate disposition of the virtual currency.

The amendments modify the notice language in South Dakota’s annual unclaimed-property reporting section. For property valued at $50 or more, a holder generally must mail notice before filing the annual report, unless the holder’s records indicate the owner’s address is inaccurate. For abandoned virtual currency, the notice must state that the property may be sold by the holder before remittance to the administrator.

The report must be verified and include owner and property information specified in SDCL § 43-41B-18. The general report is filed before November 1 each year for property as of the preceding June 30, while life insurance company reports are filed before May 1 for property as of the preceding December 31.