States Propose Laws Limiting CBDC Definition as Money

CBDC definition as money has been rejected as several US states consider legislation that would halt it from being referred to as money.

Several states including Utah, South Carolina, South Dakota, and Tennessee have introduced legislation that would prohibit the use of the term “money” to refer to a central bank digital currency (CDC).

Excluding a CBDC definition of money could create significant obstacles for establishing a CBDC in the United States. It was on January 12 that State Senator Frank Niceley presented a bill to the Tennessee Senate for consideration.

The Uniform Commercial Code (UCC) recognizes money as a valid means of exchange in the state of Tennessee. His proposed legislation would add the phrase “do not include any CBDC Definition of money to the definition of digital currency.

The Uniform Commercial Code (UCC) governs commercial transactions in the United States through an all-encompassing collection of standardized laws. Through the provision of a uniform structure, it enables business dealings and transactions to take place across multiple states.

On January 4th, Representative Tyler Clancy presented House Bill 164 to the Utah House of Representatives for consideration. In the proposed legislation, central bank digital currency is defined as a digital form of money that is issued by government agencies such as the Federal Reserve of the United States of America, foreign governments, central banks, or reserve systems and is systemically accessible or verified by these entities.

The CBDC measure that is being proposed in Utah would indicate that “a central bank digital currency is not a specific legal tender in the state.” The Utah Specie Legal Tender Act and the state’s UCC would exclude CBDC from the definition of money used by the state.

On November 30, 2023, South Carolina State Senator Shane Martin submitted Senate Bill 861. As is the case in Tennessee, the Uniform Commercial Code of South Carolina defines money as an approved medium of trade.

The proposed law S861 would expand the CBDC Definition to include the phrase “does not include any central bank digital currency.” The head of the Senate Committee on Commerce and Energy in South Dakota requested the introduction of Senate Bill 58 on January 9.

The Department of Labor and Regulation made this request. The legislation adds that CBDC definition is not included in the definition of money in the state’s Uniform Commercial Code.

Florida has already signed into law legislation comparable to this one. Governor Ron DeSantis signed the bill that restricts the use of CBDCs within the state of Florida into law.

Furthermore, it prohibited the use of CBDCs issued by foreign governments and encouraged other states to adopt similar prohibitions through their commercial laws.