South Dakota Gov. Kristi Noem (R) shot down a bill that would have recategorized the use of digital currency in her state following fears of the use of such a means of exchange by the Federal Reserve.
The governor vetoed a bill passed by the legislature that would have deemed digital currency created by the Federal Reserve as money but excluded cryptocurrencies.
The veto was especially interesting since the Federal Reserve has not created such a currency. However, the central bank is considering the creation of such a form of exchange.
The governor vetoed the bill, writing in her veto statement that she said that House Bill 1193 would open “the door to the risk that the federal government could more easily adopt” a digital currency, “which then may become the only viable digital currency.”
“More importantly, South Dakota should not open the door to a potential future overreach by the federal government,” she said.
South Dakota’s governor stated that the limitation of cryptocurrencies from the bill would create a “business disadvantage” and could restrict personal freedom. The governor wrote that “there is no reason South Dakota must adopt the changes” included in the vetoed bill.
She said that it would be “imprudent to create regulations governing something that does not yet exist.”
I VETOED HB 1193. This bill adopts a definition of ‘money’ to specifically exclude crypto like Bitcoin. And it opens the door to the risk that the federal government could adopt a Central Bank Digital Currency.
South Dakota will always stand for Economic Freedom. pic.twitter.com/yqN2mPPaLj
— Kristi Noem (@KristiNoem) March 10, 2023
The original bill was passed by large majorities in the state legislature, including 24-9 in South Dakota’s state Senate. Such a majority in both houses means that it could overturn the governor’s veto.
Governor Noem’s concern is directly related to the possibility that the Federal Reserve may create such a digital form of the American dollar. The Fed stated that it is considering the “potential benefits and risks” of the creation of what it terms a Central Bank Digital Currency.
In particular, critics of the creation of a so-called ‘digital dollar’ fear that it would be used as a means to intrude on personal freedom and could be used to block users depending on their purchase history. While a digital currency could block the sale of drugs or illicit items, it could also be used to restrict gun sales or political causes.