South Dakota Gov. Vetoes Bill Excluding Crypto From Definition of “Money”

by · March 11, 2023

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 message to South Dakota House Speaker Hugh Bartels, Noem so she had vetoed House Bill 1193, which proposed amending the state’s Uniform Commercial Code, 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, passing the bill would put South Dakota residents “at a business disadvantage” and possibly allow for “future overreach” by the federal government in issuing a digital dollar.

“By expressly excluding cryptocurrencies as money, it would become more difficult to use cryptocurrency,” Noem said. “HB 1993 opens the door to the risk that the federal government could more easily adopt a CBDC, which could then become the only viable digital currency. […] It would be irresponsible to create regulations that regulate something that does not yet exist.”

Conservative advocates supported efforts to get Noem to veto the legislation, citing concerns about economic freedom. The organization Club for Growth wrote a letter to the South Dakota governor urging her to oppose the bill and to draw comparisons between a US-issued CBDC and China’s digital yuan. The South Dakota Freedom Caucus—a group of Republican state legislators—praised Noem’s actions:

Under the proposed UCC amendment, money would be defined as “a medium of exchange currently authorized or adopted by a domestic or foreign government.” Analysts have argued that the wording of the bill, which excluded many digital assets, would not apply to CBDCs: “An electronic record that is a medium of exchange registered and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government. “

Related: CBDCs can be ‘easily weaponized’ to spy on US citizens: Congressman

While China’s central bank has been conducting trials for its CBDC since its introduction in April 2020, the US government is still investigating the potential benefits and risks associated with issuing a digital dollar. As with the South Dakota bill, there has also been pushback to CBDCs at the federal level. In February, Minnesota Representative Tom Emmer introduced legislation aimed at limiting the Federal Reserve’s authority over a CBDC.