South Dakota governor vetoes bill that says Bitcoin is not money
South Dakota Governor Kristi Noem has vetoed a bill that would have barred Bitcoin from being called “money.”
House Bill 1193 is part of a nationwide effort to change the nation’s Uniform Commercial Code (UCC) provisions. Although not a federal law, the UCC is uniformly enacted across the states and governs all commercial transactions in the country.
In vetoing the bill, Noem expressed concern 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 include the central bank’s digital currencies as money.
This development worries me for several reasons, which can be 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 unnecessarily limiting this freedom, HB 1193 would put South Dakota citizens at a business disadvantage,” the governor stated.
While limiting Bitcoin, the proposed bill opens the regulatory door to a digital dollar. This, the governor worries, could become the only viable digital currency. In addition, the government has not yet created a digital dollar, so why draft regulations for the non-existent central bank digital currency (CBDC), she asked.
However, a CBDC is designed to complement physical cash and is unlikely to become the “only viable currency.” It will also co-exist with physical cash and existing digital payment methods.
“More importantly, South Dakota should not open the door to a potential future handover from 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 those is the Club for Growth, a nonprofit lobbying for tax cuts, which called the bill an “assault on the free market, American innovation and ingenuity, individual liberty and America’s national security.”
In a letter to the governor, the organization described Bitcoin and blockchain as the most transformative technology since the internet. The club said these technologies could boost the U.S. economy by trillions of dollars while supporting free speech and the free exchange of ideas.
The Club for Growth was one of many organizations that congratulated Noem for vetoing the bill.
Thanks to @govkristinoem for VETOING HB 1193 which limits digital asset freedom in SD!
“[Digital assets] are among the best hopes for protecting our fundamental liberties of free speech, free association, and the free exchange of ideas.” – @DavidMMcintosh
— Club for Growth (@club4growth) March 10, 2023
“[Digital assets] are among the best hopes for protecting our fundamental freedoms of free speech, free association and 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 like China, which [is] actively use CBDCs to attack and restrict the freedoms of [its] people.” Although China is the most advanced major economy on the CBDC front, it has faced adoption hurdles.
Not everyone supports the governor’s veto power. Karl Adam, the president of the South Dakota Banking Association, argued that the bill makes critical updates to the century-old UCC code.
Adam further argued that digital assets do not fit into the conventional definition of money.
“This has been defined by the uniform commissioners as a verifiable electronic record – or a CER. So that means if I go to my lender, want to buy land for example and pledge my bitcoin as collateral, there’s no way to perfect that security interest in that bitcoin without these changes, he told a local outlet.
Noem joins his California counterpart, Gavin Newsom, who vetoed a bill that sought to tighten regulations on digital assets in the Golden State. As CoinGeek reported, Newsom called the bill, called California’s BitLicense, premature and called for a more flexible approach.
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