PIERRE, S.D. (Feb 21, 2024) โ Today, the South Dakota Senate gave final approval to the second of two bills to reject a central bank digital currency (CBDC), removing it from the definition of money in the state and banning the state from accepting it as payment.
Rep. Mike Stevens and a bipartisan coalition of cosponsors introduced House Bill 1163 (HB1163) and House Bill 1161 (HB1161) on Jan. 25. HB1163 would expressly exclude a CBDC from the definition of money in South Dakota, and HB1161 would prohibit state agencies from accepting CBDC as a form of payment.
DEFINING MONEY
Under the South Dakota Uniform Commercial Code (UCC), โmoneyโ means โa 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.โ
HB1163 would add โThe term is not intended and cannot be construed to create or adopt a central bank digital currencyโ to that definition.
The House previously approved the measure by a 44-21 vote. Today, the Senate concurred with a vote of 27-6.
Similar legislation excluding CBDC from the definition of money has already been signed as law inย Indianaย andย Florida.
BANNING CBDC AS A FORM OF STATE PAYMENT
HB1161 would specifically bar payments to the state in CBDC.
โNeither the state nor any of its agencies or subdivisions may accept a central bank 5 digital currency, whether foreign or domestic, as payment for taxes, fees, tuition, 6 admission, the settlement of any account or debt, or any other purpose.โ
The proposed law would also require a person โengaging in the purchase or sale of any goods or services or trading in financial productsโ in South Dakota to accept another form of legal tender along with CBDC if they choose to take CBDC.
The House previously approved the measure by a 64-1 vote. The Senate concurred last week with a vote of 32-1.
This is similar toย an Alabama law passed in the 2023 legislative session.
N PRACTICE
In the spirit ofย James Madisonโs blueprint inย Federalist #46, the enactment of HB1161 and HB1163 would create โimpedimentsโ to the implementation of a CBDC in South Dakota. Madison said โa refusal to cooperate with officers of the unionโ along with โthe embarrassments created by legislative devices,โ would โoppose, in any State, difficulties not to be despised.โ
How such legislation will play out in practice against a CBDC, should the federal government attempt to implement one, is unknown.
Opponents of the legislationย generally take the position that states canโt doย anythingย to stop a CBDC, since โย according to their viewย โ under the supremacy clauseย โany federal law on this point will automatically override state law.โ
Weโve heard this song and dance on other issues before.
In the ramp-up to the 1996 vote on Proposition 215 in California, voters were repeatedly told that legalization of marijuana, even for limited medical purposes, was a fruitless effort, since, under the supremacy clause, any such state law would be automatically overridden by the Controlled Substances Act of 1970 (CSA). At best, opponents told Californians, the state would end up in a costly, and losing court effort.
But despite those warnings, Californians voted yes, setting in motion the massive state-level movement we see today, where a growing majority of states have legalized what the federal government prohibits. Ultimately, the federal government will likely have to back down, even if just to save face, because it has become impossible to fully enforce its federal prohibition over this massive state and individual resistance.
A similar scenario played out in response to the REAL ID Act of 2005. Theย national ID system still isnโt fully up and runningย more than 17 years after the โfinal deadlineโ for full implementation.
Why not?
Because a significant number of states decided not to participate, drug their feet, or in some cases, simply provide residents with a choice to opt out. Federal officials have confirmed that state-level roadblocks to implementation are the primary reason for the continuing delays.
โRoadblockโ is likely the way this legislation to oppose a CBDC could play out.ย Passage of either bill would put limits on the use of CBDC in the state, and HB1163’s provisions removing central bank digital currency from the definition of money would, as noted by one opponent of the legislation, put a CBDCย โinto the bucket of โgeneral intangiblesโโย โ rather than money, and wouldnโt ban its use completely.
But, as can be seen so far with issues like marijuana and the REAL ID Act, whether a federal program is implemented or not ultimately gets down to the number of roadblocks put up by states, and theย willingness of the people to participate, or not.
CENTRAL BANK DIGITAL CURRENCIES (CBDC)
Digital currencies exist as virtual banknotes or coins held in a digital wallet on your computer or smartphone. The difference between a central bank (government) digital currency and peer-to-peer electronic cash such as bitcoin is that the value of the digital currency is backed and controlled by the government, just like traditional fiat currency.
Government-issued digital currencies are sold on the promise of providing a safe, convenient, and more secure alternative to physical cash. Weโre also told it will help stop dangerous criminals who like the intractability of cash. But there is a darker side โ the promise of control.
At the root of the move toward government digital currency is โthe war on cash.โ The elimination of cash creates the potential for the government to track and even control consumer spending.
Imagine if there was no cash. It would be impossible to hide even the smallest transaction from the governmentโs eyes. Something as simple as your morning trip to Starbucks wouldnโt be a secret from government officials. Asย Bloombergย put itย in an article published when China launched a digital yuan pilot program in 2020, digital currency โoffers Chinaโs authorities a degree of control never possible with physical money.โ
The government could even โturn offโ an individualโs ability to make purchases.ย Bloombergย described just how much control a digital currency could give Chinese officials.
The PBOC has also indicated that it could put limits on the sizes of some transactions, or even require an appointment to make large ones. Some observers wonder whether payments could be linked to the emerging social-credit system, wherein citizens with exemplary behavior are โwhitelistedโ for privileges, while those with criminal and other infractions find themselves left out. โChinaโs goal is not to make payments more convenient but to replace cash, so it can keep closer tabs on people than it already does,โ argues Aaron Brown, a crypto investor who writes for Bloomberg Opinion.โ
Economist Thorsten Polleit outlined the potential for Big Brother-like government control with the advent of a digital euro inย an article published by the Mises Wire. As he put it, โthe path to becoming a surveillance state regime will accelerate considerablyโ if and when a digital currency is issued.
In 2022, the Federal Reserve released a โdiscussion paperโ examining the pros and cons of a potential US central bank digital dollar. According toย the central bankโs website, there has been no decision on implementing a digital currency, but this pilot program reveals the idea is further along than most people realized.
WHATโS NEXT
HB1161 and HB1163 will head to Gov. Kristi Noem’s desk, where she must sign or veto the bills within 5 days after transmission (excluding weekends and holidays), or they become law without her signature.
- Freedom Isn’t Granted: It’s Exercised and Defended - February 18, 2026
- Who’s in Charge? The Founders on Sovereignty - February 4, 2026
- Usurpation: Weapon to Destroy Freedom - January 25, 2026