US states propose bills to exclude CBDCs from legal definition of money, challenging their integration into financial systems.
Recent legislative developments in various US states have sparked a debate around the classification of Central Bank Digital Currencies (CBDCs) as money. In states such as Utah, South Carolina, South Dakota, and Tennessee, proposed bills aim to redefine the legal status of CBDCs, potentially hindering their integration into the US financial system.
CBDCs As Seen by US States
In Tennessee, State Senator Frank Niceley has been at the forefront of this movement. He proposed a bill on January 12 to amend the state’s Uniform Commercial Code (UCC). The UCC, a set of laws that standardize commercial transactions across the US, currently recognizes money as an authorized medium of exchange. Niceley’s bill seeks to revise this definition to explicitly exclude CBDCs.
Similarly, in Utah, House Bill 164, introduced by Representative Tyler Clancy on January 4, challenges the status of CBDCs. The bill defines CBDCs as digital forms of money issued by entities like the U.S. Federal Reserve, foreign governments, or central banks. However, it proposes that CBDCs should not be considered legal tender within the state, thereby not recognized as money under Utah’s Specie Legal Tender Act and the UCC.
In South Carolina, Senate Bill 861, introduced by State Senator Shane Martin on November 30, 2023, echoes Tennessee’s approach. It suggests revising the state’s UCC to exclude CBDCs from the definition of money. South Dakota’s legislation, introduced on January 9 as Senate Bill 58, follows a similar path, aiming to redefine money in its UCC to exclude CBDCs.
Interestingly, Florida has already taken significant steps in this direction. Governor Ron DeSantis has signed a law that not only restricts the use of CBDCs within the state but also prohibits CBDCs issued by foreign governments. This move has set a precedent, encouraging other states to use their commercial codes to implement similar restrictions.