Numerous state legislators in the U.S. continue to express disapproval of central bank digital currencies (CBDCs) and have moved to clarify the definition of money before a digital dollar becomes a reality.
Filings submitted to the state assemblies in Utah, South Carolina, South Dakota, and Tennessee show a growing movement by state Senators and Representatives to push back against referring to CBDCs as money.
The bills in question look to exclude a CBDC from the definition of money, and if approved, could represent a significant roadblock in the creation of a digital dollar.
South Carolina State Senator Shane Martin was the first to file a bill in opposition to CBDCs in this latest round of legislation, submitting Senate Bill 861 on Nov. 30, 2023. The state currently defines money as an authorized medium of exchange, and the bill submitted by Martin looks to add that the term “does not include any central bank digital currency” to that definition.
On January 4, Representative Tyler Clancy of the Utah House of Representatives introduced House Bill 164, which describes CBDCs as a “digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States Federal Reserve System, a federal agency, a foreign government, a foreign central bank, or a foreign reserve system, that is: (i) made directly available to a consumer by such entities; or (ii) processed or validated directly by such entities.”
Representative Clancy is looking to amend the state’s definition of money to specify that “a central bank digital currency is not specie legal tender and is not legal tender in the state,” effectively excluding CBDCs from the state’s definition of money under the Utah Specie Legal Tender Act and the state’s Uniform Commercial Code (UCC).
The bill also includes language that would “authorize gold or silver coin or bullion as legal tender,” should the courts or Congress deem them so.
On January 9, the South Dakota Department of Labor and Regulation sent a request to the chair of the state’s Senate Committee on Commerce and Energy, asking that Senate Bill 58 be introduced. The text of the bill looks to update the South Dakota UCC to state that the definition of money “does not include any central bank digital currency.”
And last Friday, Tennessee State Senator Frank Niceley introduced a bill to the state’s Senate that would add the statement “does not include any central bank digital currency” to the current definition of money as defined by the Tennessee UCC, which currently states that “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.”
Florida Governor Ron DeSantis kicked off the anti-CBDC wave when he signed a bill in May 2023 that restricts the state’s use of a digital dollar and also banned using CBDCs issued by foreign governments. DeSantis called on other states to use their commercial codes to enact similar legislation, and multiple legislators have since followed suit.
