South Dakota amendment proposal prohibits use of digital currency as money

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A bill seeking to prevent the use of digital currencies to pay for goods and services has been presented before South Dakota’s House of Representatives.

The bill, introduced by Mike Stevens, attempts to amend the state’s Uniform Commercial Code (UCC) by limiting the definition of money. According to the wording of the bill, only monies authorized by a domestic or foreign government will be allowed in the state.

Under this definition, BTC, having been designated as legal tender by El Salvador’s government, would have made the cut. However, a specific clause in the 117-page document rules out digital currency for being an “electronic record,” essentially disqualifying stablecoins.

“The term 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,” the bill read.

Under the amendment, central bank digital currencies (CBDCs) would still be considered money. Despite making the cut, the U.S. has no concrete plans for a CBDC, unlike other countries that have begun preliminary experiments into their viability.

“This is a huge deal. The UCC is creating the framework for CBDCs to be accepted (and #bitcoin denied) via Amazon and all other retailers. All digital transactions,” Andy Roth, President of the State Freedom Caucus Network, said. “This must be stopped. The good news is that we still have a chance to kill this in the 49 other states.”

If the bill fulfills the legislative requirements, the amendments are expected to come into effect on July 1, 2024.

Digital currency bans

Several countries have opted for an outright ban on cryptocurrencies, citing a slew of risks that the asset class poses to customers. Leading the pack is China with the imposition of a blanket ban in the summer of 2021 that brought all industry-related activities to a grinding halt.

China’s ban led to the exit of several of digital asset service providers and miners to new jurisdictions, but non-fungible tokens (NFTs) and metaverse activity continue to thrive.

Other countries with a measure of restriction on digital currencies include Algeria, Bangladesh, Bolivia, Ghana, and North Macedonia. Given the decentralized nature of digital currencies, consumers can still access them using virtual private networks (VPNs) and global digital currency exchanges.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Trust But Verify: Everything