by Mike Maharrey, Gold Seek:
The Utah legislature overwhelmingly approved a bill that would expressly exclude a central bank digital currency (CBDC) from the state’s definition of money, creating potentially significant roadblocks to its use as such in the state.
Rep. Tyler Clancy was the primary sponsor of HB164. Sen. Michael Kennedy ran the bill on the Senate side.
The proposed law would specify that “a central bank digital currency is not specie legal tender and is not legal tender in the state,” effectively excluding CBDC from the state’s definition of money under the Utah Specie Legal Tender Act.
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HB164 would also change the definition of money under the state’s Uniform Commercial Code (UCC) to specify that “Money does not include a central bank digital currency.”
On Feb. 9, the Utah Senate passed HB164 by a 27-1 vote. The House previously approved the measure by a vote of 68-0. The bill now moves to Gov. Spencer Cox’s desk for his consideration. He will have 20 days from the date the legislature adjourns for the session to sign or veto HB164. If he takes no action, the bill will become law without his signature.
The legislation defines central bank digital currency as “a digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States Federal Reserve System, a federal agency, a foreign government, a foreign central bank, or a foreign reserve system, that is made directly available to a consumer by such entities, or processed or validated directly by such entities.”
The UCC is a set of uniformly adopted state laws governing commercial transactions in the U.S. According to the Uniform Law Commission, “Because 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 ‘the backbone of American commerce.’”
Similar legislation has already been signed as law in Indiana and Florida
How Could This Impact the Implementation of a CBDC?
It remains unclear how changing the definition of money in the U.S. would play out in practice against a CBDC if the federal government attempts to implement one.
Passage would, as noted by one opponent of the legislation, put a CBDC “into the bucket of ‘general intangibles’” – rather than money, and wouldn’t ban its use completely.
But it could potentially gum up the works and make it difficult for the government to fully implement a CBDC.
Opponents of the strategy and supporters of CBDC 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.”
That’s what they said when California legalized medical marijuana in 1996. It didn’t quite turn out that way.
In the ramp-up to the 1996 vote on Proposition 215, 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 a wave of state cannabis legalization efforts. As of today, despite ongoing federal prohibition, 38 states have legalized what the federal government claims to prohibit. Ultimately, the federal government will most likely be forced to back down, even if just to save face. It has become impossible to fully enforce its federal prohibition over this massive state and individual resistance.
