Cryptocurrencies and Digital Assets Defined as Money
South Dakota Governor Kristi Noem has vetoed House Bill 1193, which sought to exclude cryptocurrencies and other digital assets from the definition of money under the state’s Uniform Commercial Code (UCC). The bill, which had already passed the state legislature, aimed to provide greater legal clarity for businesses operating with digital assets in South Dakota.
Disadvantages of Excluding Cryptocurrencies as Money
Governor Noem’s veto notice to the state’s House Speaker on March 9 highlighted several reasons for her decision. Firstly, she argued that the bill could put South Dakota at a disadvantage compared to other states that have embraced cryptocurrencies. Excluding cryptocurrencies from the definition of money could make it more difficult to use them and potentially harm the state’s economy.
Risks of Federal Government Overreach
Additionally, Governor Kristi Noem expressed concern that the bill could create a regulatory gap that could be exploited by the federal government to impose its own digital currency on the states. She fears that by excluding cryptocurrencies as money, the state could be vulnerable to federal government overreach, paving the way for future issues in issuing a digital dollar.
I have returned HB 1193 with my VETO.
The bill adopts a definition of “money” to specifically exclude cryptocurrencies. But these revisions do include Central Bank Digital Currencies as money.
These developments concern me for several reasons, which are found in this letter: pic.twitter.com/3eqzdI80if
— Governor Kristi Noem (@govkristinoem) March 10, 2023
Exception for Central Bank Digital Currencies (CBDCs)
Furthermore, the Governor noted that the bill’s exception for central bank digital currencies (CBDCs) could undermine the state’s efforts to regulate cryptocurrencies and digital assets. According to her, CBDCs could potentially crowd out other digital currencies and become the only viable option for businesses and consumers alike.
Mixed Reactions from the Cryptocurrency Community
The Governor’s decision to veto House Bill 1193 has divided opinions within the cryptocurrency community. Some have praised her for recognizing the potential of digital assets and standing up against federal government overreach. Others have criticized her for ignoring the risks and challenges posed by cryptocurrencies, including their potential use for illicit activities and their impact on the environment.
Uncertain Regulatory Landscape for Digital Assets in South Dakota
South Dakota has become a hub for the cryptocurrency and blockchain industries, with several major firms and startups operating in the state. However, the regulatory landscape for digital assets in South Dakota remains uncertain, with lawmakers and regulators grappling with the complexities and risks of this emerging sector.
Adding Uncertainty and Debate to Digital Asset Regulation
Governor Noem’s veto is likely to add further uncertainty and debate to the state’s approach to regulating cryptocurrencies and digital assets. The Governor’s concerns highlight the need for a nuanced and balanced regulatory framework that balances innovation and security, while addressing potential federal government overreach.