I would expect that a scenario where they could legally confiscate your coins is also a scenario where they could legally arrest and charge you with a crime. Co

I would expect that a scenario where they could legally confiscate your coins is also a scenario where they could legally arrest and charge you with a crime. Confiscation of money is likely the least of your concerns there. The government could gain valuable intel from bitcoin addresses all the way back to the Mt Gox scandal. They would have only gotten more access since then, especially with legitimate businesses operating as exchanges that follow KYC regulations.