South Dakota Draft Bill Classifies CBDC as Money, Excludes Crypto

The state of South Dakota has proposed a new bill that makes specific revisions to what constitutes money. The bill explicitly excludes Bitcoin and other existing digital assets from the definition of money, while including central bank digital currencies (CBDCs).

Proposed bill in South Dakota prohibits the use of digital assets as a medium of exchange

The proposed bill, titled “An Act to Amend Provisions of the Uniform Commercial Code” and referred to as HB 1193, aims to amend the state’s Uniform Commercial Code, a set of laws that govern all commercial transactions in the state. It also includes a redefinition of the term “money”.

Introduced in the state House of Representatives by Republican Mike Stevens, the 117-page amendment defines money as a possible medium of exchange only if it is “authorized or adopted” by a government. It said:

“Money means a medium of exchange currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries.”

The bill described that the term money does not include “an electronic record that is a medium of exchange recorded 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,” which is an apparent reference to all cryptocurrencies.

Many in the crypto community have railed against the bill, which defines CBDCs as a form of money while excluding digital currencies. If approved, Amazon and all other retailers will not be able to accept cryptocurrencies, including Bitcoin, as a form of payment, said Andy Roth, the head of the conservative State Freedom Caucasus Network.

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Club for Growth is asking the governor to veto the bill

David McIntosh, president of the Club for Growth, a leading conservative organization, has written a letter to South Dakota Governor Kristi Noem, urging him to veto the HB 1193 bill that specifically excludes Bitcoin and other existing digital assets from the definition of money.

“HB 1193 is an attack on the free market, American innovation and ingenuity, individual liberty, and America’s national security, and it should be vetoed,” McIntosh said in the letter.

He mentioned that Bitcoin and other digital assets represent the most transformative technology since the advent of the internet, noting that they have the potential to grow the economy by trillions of dollars. He added:

“The [cryptocurrencies] are among the best hopes for protecting our fundamental freedoms of free speech, free association, and the free exchange of ideas, as well as our national security, all of which are increasingly threatened by authoritarian governments and entities.”

Despite many efforts, including the introduction of a crypto regulatory framework last September, the US has largely failed to introduce a clear rulebook for crypto in the country. Although lawmakers have stepped up efforts to regulate the crypto industry, the lack of comprehensive crypto legislation has only created more confusion among crypto companies in the country.

In a recent interview with Bloomberg, Coinbase CEO Brian Armstrong said that almost all major financial hubs, including Singapore, Hong Kong, London and most recently, the European Union, have released a regulatory framework for crypto. He warned that the lack of a clear rulebook would drive the crypto industry out of the US.

Do you think governments should recognize cryptocurrency within the definition of money? Let us know in the comments.

About the author

Ruholamin Haqshanas is an accomplished crypto and financial journalist with over two years of experience writing in the field. He has a solid grasp of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi), and the emerging market for non-fungible tokens (NFT). He is an active user of digital assets for money transfers.