South Dakota’s Governor Vetoed HB 1193 Bill on Money Definition

• The Governor of South Dakota vetoed the new proposal of changing the definition of money.
• The bill considers Central Bank Digital Currencies (CBDC) as money does not recognize any other digital asset as money.

The Governor of South Dakota, Kristi Noem, vetoed against the House Bill (HB) 1193 which adopts a definition of money that does not recognize cryptocurrency as money. Noem said the new proposal might affect the financial freedom of individuals. Notably, the bill includes Central Bank Digital Currencies (CBDC) as money.

According to Noem, the proposed bill will impact the country’s business growth as most nations are considering adopting digital currencies amid the US dollar’s dominance in the global economy. The governor vetoed the bill for two reasons; first, excluding cryptocurrency as money will affect the utilization of digital assets. 

And her second explanation is considering the CBDC as money will “Open the door to the risk that the federal government could more easily adopt a CBDC, which then may become the only viable digital currency.” According to the governor, “By needlessly limiting this freedom, HB 1193 would put South Dakota citizens at a business disadvantage.” 

HB 1193 is an act to amend the Uniform Civil Code (UCC) provisions. As per the proposed UCC amendment, “a medium of exchange that is currently authorized or adopted by a domestic or foreign government.” The amendment excluded digital assets from the definition of money (except CBDC). “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 it was authorized or adopted by the government.”

Noem’s decision is being appreciated by many, including a group of Republican state lawmakers among others. The South Dakota Freedom Caucus, extolled Noem’s decision by tweeting “We stand with you to uphold this veto and others.” Earlier, the Club for Growth, a US-based conservative organization, wrote Kristi Noem a letter urging her to veto the HB 1193 proposal.

Meanwhile, some associations like Independent Community Bankers of South Dakota and the South Dakota Bankers Association supported the bill’s passage. Karl Adam, the president of the South Dakota Bankers Association, disagreed with the reasons that the governor explained in her veto message. Adam explained that crypto assets couldn’t be treated as currency as they can’t be possessed for lending purposes.

On May 25, 2019, the government released a memorandum called “Virtual Currency Transmission in South Dakota” to address the money transmitters operating within the state. Any crypto firms that act as transmitters have to receive government approval to operate in South Dakota.

Crypto Market Headwinds

Currently, the crypto market is trading in a red streak due to the sudden downfall of Silicon Valley Bank (SVB) and Silvergate Bank on Friday. According to CNBC, the crypto market saw around $70 billion wiped out over the past 24 hours. At press time, Bitcoin was trading at $20,187, up by 2.50% in the past 24 hours.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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