BISMARCK, N.D. (Feb. 11, 2025) – The North Dakota House passed a bill recognizing gold and silver as legal tender in the state while explicitly excluding central bank digital currency (CBDC). The measure would also eliminate taxes on gold and silver transactions and now moves to the Senate for further consideration.
Rep. Nathan Toman along with seven cosponsors filed House Bill 1441 (HB1441). Under the proposed law, “specie legal tender,” defined as “gold or silver specie issued by the United States or any other form of gold or silver specie,” would be legal tender in North Dakota.
In effect, under the law, gold and silver would be considered a valid medium of exchange for the payment of debts in the state.
On Feb. 10, the House passed HB1441 by a 61-30 vote – with 20 republicans joining all but one democrat in voting no.
The passage of HB1441 would make North Dakota the sixth state to recognize gold and silver as legal tender, as they always should have been doing. Utah led the way, reestablishing constitutional money in 2011. Wyoming, Oklahoma, Arkansas, and Louisiana have since joined.
IN PRACTICE
Practically speaking, this would allow North Dakota residents to use gold or silver as money rather than as mere investment vehicles.
Passage of HB1441 would represent a big first step against the fiat-based Federal Reserve system by creating a foundation to pull the rug out from under it on the state and local levels. In essence, it would set the stage for the people themselves to undermine the Federal Reserve monopoly by introducing competition into the monetary system.
The next step would be for people to start taking advantage of the status of gold and silver as money by using both as such instead of Federal Reserve notes.
The effect has been most dramatic in Utah where the Specie Legal Tender Act opened the door for the development of a robust gold and silver economy in the state. With some legal hurdles cleared away by the state’s legal tender law, the United Precious Metal Association (UPMA) in partnership with Alpine Gold Exchange set up the state’s first “gold bank.”
The Act has also led to the creation of the Goldback, a local, voluntary medium of exchange. Goldbacks are notes made from fractions of an ounce of physical gold. The company created a process that turns pure gold into a spendable physical form for small transactions.
New Hampshire also boasts a thriving gold and silver economy. While the state does not officially recognize bullion as legal tender, this has not deterred thousands of residents from using it in private transactions. Because there are no state tax barriers on precious metals, a favorable tax climate – combined with a population willing to embrace sound money – has positioned New Hampshire as another model for others to follow.
REMOVING TAXES
HB1441 declares, “The exchange, purchase, or sale of any type or form of specie legal tender may not give rise to any tax liability of any kind.”
This would effectively end the capital gains tax on gold and silver specie. This would take an important step toward treating gold and silver as money instead of commodities. Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.
Imagine if the IRS sent you a bill every time the dollar strengthened against the euro. That’s effectively what capital gains taxes on gold and silver do. As the precious metals prices go up due to the devaluation of the dollar, the government levies a tax on you. It is essentially a tax on the superior performance of gold and silver as money.
“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support of an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.
BACKGROUND
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Currently, all debts and taxes in most states are either paid with Federal Reserve Notes (dollars) which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury – very few of which have gold or silver in them.
The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat paper currency. Without the backing of gold or silver, the central bank can easily create money out of thin air.
This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.
State laws that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money.
CBDCs
HB1441 would officially exclude central bank digital currency (CBDC) as legal tender in the state.
In effect, CBDC would not be officially recognized for the payment of debts in the state, but the law wouldn’t stop people from voluntarily using it.
While it remains unclear exactly how it would play out, excluding CBDC as legal tender could throw up roadblocks if the federal government and its central bank try to implement one, gumming up the works and making it difficult for the government to fully implement a CBDC.
Opponents of the strategy and supporters of CBDCs generally take the position that states can’t do anything to stop a CBDC, since – according to their view – under the supremacy clause “any federal law on this point will automatically override state law.”
We’ve heard this song and dance on other issues before. That’s what they said before California legalized medical marijuana in 1996. It didn’t quite turn out that way.
“Roadblock” is likely how this and other state-based strategies to oppose a CBDC will play out. This is part of James Madison’s four-step blueprint for how states and individuals can stop federal programs. Madison said “a refusal to cooperate with officers of the union” along with “the embarrassments created by legislative devices,” would “oppose, in any State, difficulties not to be despised.”
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.
WHAT’S NEXT
HB1441 will move to the Senate for further consideration. Once it is referred to a Senate committee, it will need to get a hearing and pass by a majority vote before moving forward in the legislative process.
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