Kristi Noem, the governor of South Dakota, has used her authority to veto legislation aimed at changing the definition of money to exclude cryptocurrencies.
In a March 9 notice to South Dakota house speaker Hugh Bartels, Noem said he has vetoed House Bill 1193, which proposed an amendment to the Uniform Commercial Code of the country, or UCC, to specifically exclude cryptocurrencies and other digital assets – with the possible exception of central bank digital currencies, or CBDCs. According to the governor, passage of the bill would put South Dakota residents “at a business disadvantage” and potentially allow “future overreach” of the federal government to issue digital dollars.
“By not including cryptocurrencies as money, it will become more difficult to use cryptocurrency,” Noem said. “HB 1993 opens the door to the risk that the federal government could more easily use CBDC, which could then become the only viable digital currency. […] It would be impolite to make regulations governing things that do not exist.
I have returned HB 1193 with my VETO.
The bill uses the definition of “money” to specifically exclude cryptocurrencies. But the revision includes Central Bank Digital Currency as money.
The development is concerned for several reasons, which are found in this letter: pic.twitter.com/3eqzdI80if
— Governor Kristi Noem (@govkristinoem) March 10, 2023
Conservative supporters backed efforts to have Noem veto the legislation, citing concerns about financial freedom. The Club for Growth organization wrote a letter to the governor of South Dakota urging him to oppose the bill and draw comparisons between the US-issued CBDC and China’s digital yuan. The South Dakota Freedom Caucus — a group of Republican state lawmakers — praised Noem’s actions:
thanks @govkristinoem to veto and to listen to the people of South Dakota. We stand with you to uphold this veto and more. https://t.co/0js4qaXL6R
— South Dakota Freedom Caucus (@SDFreedomCaucus) March 10, 2023
According to the proposed UCC amendment, money would be defined as “a medium of exchange currently issued or adopted by a domestic or foreign government”. Analysts stated that the wording of the bill that does not include many digital assets will not apply to the CBDC: “Electronic records that are media of exchange that are recorded and can be transferred in the existing and operated system for the media of exchange before the media of exchange is authorized. or adopted by the government”.
related: CBDC can be ‘easily weaponized’ to spy on US citizens: Congressman
While China’s central bank has been conducting trials for CBDC since its launch in April 2020, the US government is still exploring the benefits and potential risks associated with issuing digital dollars. Like the South Dakota bill, there is also pushback for CBDCs at the federal level. In February, Minnesota Representative Tom Emmer introduced legislation to limit the Federal Reserve’s authority over CBDCs.