I believe subparagraph C is: (C) the property was lawfully seized by a State or local law enforcement agency and transferred to a Federal agency.
I think it is good there is law that would allow them to prevent criminals (who might've stolen your money) from getting away with their offense by saving the money on a digital currency. I gather these people could actually include large corporations that mightve taken advantage of people by means of lies.
However, being allowed to do this, and actually be able to do it my pose an issue, as these criminals might save the stolen money on PC wallet files saved on a cloud or email, and access them after the full procedure.
This law is not for criminals, but rather the ordinary citizen that is moving money around the world and away from the government controls. Governments want to control every aspect of our lives!
You're right, this law is not for criminals because the biggest criminals on the planet are governments and central bankers.