Several states in the U.S. have initiated legislative actions to redefine the concept of money, specifically excluding Central Bank Digital Currencies (CBDCs) from this definition. These moves represent a growing skepticism and regulatory caution towards digital currencies issued by central banks.
Legislative actions across four states
The states of Utah, South Carolina, South Dakota, and Tennessee have become focal points in this unfolding narrative. In Tennessee, State Senator Frank Niceley’s bill, introduced on January 12, seeks to amend the Tennessee Uniform Commercial Code (UCC). The UCC, a key legal framework for commercial transactions, would, under this bill, expressly exclude CBDCs from its definition of money. This amendment aligns with the increasing need to delineate the boundaries between digital currencies and traditional financial instruments.
Utah’s approach, led by Representative Tyler Clancy with House Bill 164, echoes a similar sentiment. The bill, introduced on January 4, aims to clarify that CBDCs, despite being digital forms of currency issued by entities like the U.S. Federal Reserve, do not constitute legal tender in the state. This position underlines the state’s commitment to preserving the traditional understanding of money, as outlined in the Utah Specie Legal Tender Act and the state’s UCC.
In South Carolina, State Senator Shane Martin’s Senate Bill 861, filed on November 30, 2023, follows a parallel path. The bill proposes to update the state’s UCC, ensuring CBDCs are not categorized as money. Such legislative efforts are not isolated, with South Dakota introducing Senate Bill 58 on January 9, under the request of the Department of Labor and Regulation. This bill also seeks to exclude CBDCs from the state’s definition of money.
Florida leads the charge
Florida has been at the forefront of this trend, with Governor Ron DeSantis signing into law a bill that restricts the state’s use of CBDCs. This legislation not only prohibits CBDCs issued by foreign governments but also encourages other states to adopt similar measures. Florida’s stance has evidently inspired similar legislative initiatives in other states, highlighting a growing resistance to the integration of CBDCs into the traditional monetary system.
The collective actions of these states signify a pivotal moment in the ongoing discourse surrounding digital currencies and their place in the financial ecosystem. While CBDCs represent a significant technological advancement, these legislative measures indicate a cautious approach by state governments towards integrating them into established financial frameworks. The exclusion of CBDCs from the definition of money underlines concerns about the potential impact of digital currencies on financial stability and sovereignty.
As these legislative developments unfold, they offer critical insights into the evolving dynamics between traditional financial systems and the burgeoning world of digital currencies. The decisions made by these states could set important precedents, influencing how other regions in the U.S. and potentially globally approach the complex intersection of technology, finance, and regulation in the era of digital currencies.