Response to ND Banker’s Association

SD State Freedom Caucus Director, Jordan Mason

“Our main concern is the redefinition of money in a way that excludes effectively all other forms of digital currency - except a central bank digital currency.

We were first alerted to the issue in the House Judiciary Committee where Representative Scott Odenbach raised questions during the testimony, after his questions Representative Odenbach stated the following:

“Thank you. In just reading through this bill and my understanding of the purposes of the UCC, I have concerns that the intentions here, you know I think some would say maybe paving the way for some Central Bank Currency. This is serious business when you get into discussions about the money and the ability of free people to determine the means of exchange for their transactions. And when I hear words like ‘complete conformity,’ ‘controllable,’ you know I mean I get that in the context of the UCC, that’s one of the ideas, to have standardization to promote business relationships and contracts, but I think, when you have a bill that’s this size and hundreds and hundreds of pages, and the definitions, the redefinitions basically of ‘money’ that we see in here. I have serious concerns with it.”

That's when we started to dig in to really find out what the intentions and implications of this bill were.

House Bill 1193 is an update to the Uniform Commercial Code (UCC), which is produced by the Uniform Law Commission (ULC) and is being introduced in 21 states this year, with another 29 states expected to introduce it by next year as well. Specifically, under section 1 (24) of HB 1193, it states the following:
"'Money' means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries. 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 the medium of exchange was authorized or adopted by the government."

In effect, this redefines money in a manner that would no longer legally define or recognize crypto-currency, also referred to as a digital dollar or digital money, as money; but would define and recognize a central bank digital currency (CBDC).

We know for a fact that these amendments were written anticipating a CBDC to be implemented, because the ULC, author's of the legislation, stated such fact in their documentation. The Uniform Law Commission (ULC) who authored the bill, wrote in their final act and notes on the amendments, that "...there are indications that some countries might authorize or adopt intangible tokens as a medium of exchange and others might authorize or adopt deposit accounts with a central bank as money. (These tokens or accounts sometimes are referred to as central bank digital currency or CBDC.)"

Not only can we see this from the language in the bill itself, but according to the ULC's own documents and in their own words we know that "the amendments respond to market concerns about … security interests in electronic (fiat) money, such as central bank digital currencies," as stated "A Summary of the 2022 Amendments to the Uniform Commercial Code," and as Steven Weise explains in their video "UCC Amendments Part 1: Digital Assets," "bitcoin will not be money,” (~47:02 - 47:33) but “Central Bank Digital Currency, CBDC … could be money.” (~48:18 - 48:37)

Clips of that video:

“bitcoin will not be money,”
“Central Bank Digital Currency, CBDC … could be money.”

This would result in legitimizing a CBDC while simultaneously delegitimizing all other cryptocurrencies, which millions of dollars have been invested in and would have ripple effects throughout the market causing uncertainty.

Our concern over CBDC’s is shared by many and is central to the reasons Congressman Tom Emmer is bringing federal legislation, the CBDC Anti-Surveillance State Act, to restrict any U.S. CBDC. Others have discussed outright prohibiting a U.S. CBDC altogether. In short, a CBDC would allow a government, or similar authority, “to control the kinds of things people can buy, how much could be purchased at a single time or any number of other variables,” as described in Newsweek by Heartland Institute author Justin Haskins – and in the process would be “able to track digitally every single product or service that you buy or sell,” as Steve Forbes said, “the implications for privacy and freedom are frightening!” International Monetary Fund (IMF) Managing Director Bo Li last September described more in detail the level of individualized control a CBDC would allow, saying that, “by programming CBDC, those money can be precisely targeted for what kind of people can own and what kind of use this money can be utilized, for example for food.”

Now I understand from my colleagues in several other states, that the proponents of this legislation have slightly changed their talking points, trying to argue that cryptocurrency advocates supported all of the changes to the UCC. And it is true that some cryptocurrency advocates supported part of the changes in the UCC, specifically in areas that deal with standardizing the perfection standards of digital assets in relation to lending and other customary financial transactions. But let's be clear, supporting standardizing perfection of cryptocurrency for lending practices is not the same as supporting legally redefining cryptocurrency to not be considered money. Additionally, proponents of the UCC amendments argue that defining crypto-currency as money has no benefit and could even subject it to further regulation. For illustrative purposes, that is like saying that non-nation states don't have the imposition of dealing with the United Nations or any other international body, so places like Palestine, Tibet and others really don't get any benefit by being recognized as a country and they avoid undue regulations. Of course that's problematic if the sole purpose of the subject being discussed is being denied, such as a country being denied recognition as a country, or a currency, or a money, being denied being considered as money.

Ultimately, at the core of this legislation, it paves the way for a CBDC, as Rep. Odenbach testified in committee, and removes any other alternative digital currency, as former Rep. Isaac Latterall testified to. “Central Bank Digital Currencies Are About Control [and] They Should Be Stopped," as the Forbes article title by Norbert Michel says, because that “level of government control is not compatible with economic or political freedom." While such centralized control make sense in dictatorial countries like the People’s Republic of China, which is also rolling out their own CBDC, in our great nation that cherishes privacy, freedom and innovation like the United States – and in a state like South Dakota, which is known for our rugged individualism and personal liberties, a CBDC cannot coexist with those values.”