COLUMBIA, S.C. (Dec. 12, 2024) โ Bills introduced in the South Carolina House would expressly exclude a central bank digital currency (CBDC) from the definition of money under the Uniform Commercial Code (UCC), creating potentially significant roadblocks to its use as such in the Palmetto State.
Rep. Kathy Landing introduced House Bill 3304 (H3304). Under South Carolina’s UCC, โmoneyโ currently 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 H3304ย adds the term โdoes not include any central bank digital currencyโ to that definition.
The bill would also specifically prohibit any banking corporation operating in the state from offering any service, or approving or conducting any transaction, that involves central bank digital currency.
Rep. Bill Taylor introduced House Bill 3443 (H3442), The legislation would make the same change to the definition of money in the UCC but does not include the provisions barring banks from facilitating the use of CBDC.
Similar legislation has already been signed as law in Indiana, Florida, South Dakota, Tennessee, and Utah.
IN PRACTICE
While it remains unclear exactly how it would play out, removing a CBDC from the definition of money would throw up roadblocks if the federal government and its central bank try to implement one.
The UCC is a set of uniformly adopted state laws governing commercial transactions in the U.S. According to the Uniform Law Commission, โBecause the UCC has been universally adopted, businesses can enter into contracts with confidence that the terms will be enforced in the same way by the courts of every American jurisdiction. The resulting certainty of business relationships allows businesses to grow and the American economy to thrive. For this reason, the UCC has been called โthe backbone of American commerce.โโ
Passage of this bill would, as noted by one opponent of the legislation, put a CBDC โinto the bucket of โgeneral intangiblesโโ โ rather than money, and wouldnโt ban its use completely.
But it could still potentially gum up the works and make it difficult for the government to fully implement a CBDC.
Opponents of the strategy and supporters of CBDCs generally take the position that states canโt do anything to stop a CBDC, since โ according to their view โ under the supremacy clause โany federal law on this point will automatically override state law.โ
Weโve heard this song and dance on other issues before. Thatโs what they said before California legalized medical marijuana in 1996. It didnโt quite turn out that way.
โRoadblockโ is likely how this and other state-based strategies to oppose a CBDC will play out. This is part of James Madisonโs four-step blueprint for how states and individuals can stop federal programs. 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
But whether these roadblocks will have any impact or not requires more than just mere state legislation. As can be seen so far with issues, whether a federal program is implemented or not ultimately gets down to the willingness of the people to participate, or not.
CENTRAL BANK DIGITAL CURRENCIES (CBDC)
The difference between a central bank (government) digital currency and peer-to-peer electronic cash such as bitcoin is that the value of the former is created, backed, and controlled by the government, just like traditional fiat currency.
In fact, a CBDC is nothing more than the digital offspring of paper fiat money with all the negative characteristics that come with it.
At the root of the move toward government-run digital currency is โthe war on cash.โ The elimination of cash creates the potential for the government to track every transaction you make. Officials could even โturn offโ an individualโs ability to make purchases.
Economist Thorsten Polleit outlined the potential for Big Brother-like government control with the advent of a digital euro in 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 to the central bankโs website, there has been no decision on implementing a CBDC, but this pilot program reveals the idea is further along than most people realized.
While President Trump has promised not to implement a CBDC, itโs important to remember he wonโt hold office forever and we canโt count on the goodwill of politicians to protect our liberty. States need to take steps against a CBDC now instead of scrambling if things move forward in the future.
As Thomas Jefferson advised, โIt is better to keep the wolf out of the fold, than to trust to drawing his teeth and talons after he shall have entered.โ
WHATโS NEXT
H3304 was referred to the House Committee on Labor, Commerce and Industry. H3442 was referred to the House Committee on Judiciary. The bills must get a hearing and pass by a majority vote before moving forward in the legislative process.
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