South Dakota Governor Kristi Noem has vetoed a bill that would have excluded Bitcoin from being termed “money.”
House Bill 1193 is part of a nationwide effort to amend the country’s Uniform Commercial Code (UCC) provisions. While not a federal law, UCC is uniformly adopted across the states and governs all commercial transactions in the country.
In vetoing the bill, Noem expressed concerns that HB 1193 puts South Dakota businesses at a disadvantage in its current state.
I have returned HB 1193 with my VETO.
The bill adopts a definition of “money” to specifically exclude cryptocurrencies. But these revisions do include Central Bank Digital Currencies as money.
These developments concern me for several reasons, which are found in this letter: pic.twitter.com/3eqzdI80if
— Governor Kristi Noem (@govkristinoem) March 10, 2023
“First, by expressly excluding cryptocurrencies as money, it would become more difficult to use cryptocurrency. By needlessly limiting this freedom, HB 1193 would put South Dakota citizens at a business disadvantage,” the governor stated.
While it limits Bitcoin, the proposed bill opens the regulatory door for a digital dollar. This, worries the governor, could become the only viable digital currency. In addition, the government has yet to create a digital dollar, so why draft regulations for the non-existent central bank digital currency (CBDC), she posed.
However, a CBDC is designed to complement the physical cash and is unlikely to become the ‘only viable currency.’ It would also exist alongside physical cash and existing digital payment methods.
“More importantly, South Dakota should not open the door to a potential future overreach by the federal government,” Noem added.
‘An assault on American innovation’
Quite a few leaders and organizations in the digital and financial space had called on the governor to veto the bill. One of these is Club for Growth, a non-profit lobbying for tax cuts, which termed the bill an “assault on the free-market, American innovation and ingenuity, individual liberty, and U.S. national security.”
In a letter to the governor, the organization described Bitcoin and blockchain as the most transformational technology since the internet. The club said these technologies could grow the American economy by trillions of dollars while supporting free speech and the free exchange of ideas.
Club for Growth was one of many organizations to congratulate Noem for vetoing the bill.
Thank you to @govkristinoem for VETOING HB 1193 which limits digital asset freedom in SD!
“[Digital assets] are among the best hopes to protect our fundamental liberties to free speech, free association, and the free exchange of ideas.” – @DavidMMcintosh https://t.co/gJZ02VB6ov
— Club for Growth (@club4growth) March 10, 2023
“[Digital assets] are among the best hopes to protect our fundamental liberties to free speech, free association, and the free exchange of ideas,” commented David McIntosh, the club’s president.
McIntosh, in his criticism of HB 1193, drew parallels between passing the bill and accepting the digital yuan, which is issued by an “authoritarian nation such as China, which [is] actively using CBDCs to attack and limit the freedoms of [its] people.” Although China is the most advanced major economy on the CBDC front, it has faced adoption hurdles.
Not everyone is in support of the governor’s veto. Karl Adam, the president of the South Dakota Banking Association, claimed that the bill provides critical updates to the century-old UCC code.
Adam further argued that digital assets don’t fit into the conventional definition of money.
“This has been defined by the uniform law commissioners as a controllable electronic record – or a CER. So, what that means is if I’m going to my lender, wanting to buy land as an example and pledge my bitcoin as security, there’s no way to perfect that security interest in that bitcoin short of these amendments,” he told one local outlet.
Noem joins his California counterpart, Gavin Newsom, who vetoed a bill that sought to tighten digital asset regulations in the Golden State. As CoinGeek reported, Newsom termed the bill, dubbed California’s BitLicense, as premature and called for a more flexible approach.
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