The state of South Dakota is looking to pass a bill that will redefine the characteristics of money, preventing cryptocurrencies, including Bitcoin, from becoming legal money.
Introduced by Mike Stevens, State Representative, under the title “An Act to amend provisions of the Uniform Commercial Code,” the bill was approved by an affirmative vote of 24 Senate members
According to the bill, only medium of exchange that received government approval or adoption can be considered money. Cryptocurrencies, under this definition, are not money since they were issued by individuals or organizations.
“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,” the bill highlighted.
Protect Bitcoin Holders
The bill quickly caught public attention after Dennis Porter, CEO & Co-Founder of Satoshi Action Fund, notified the breaking news on Twitter. He also noted that the state was pushing it in 21 other U.S. states.
The potential goal of this move, according to Porter, could be to create a safe path for CBDC adoption.
Porter and some crypto members warned that the proposal, if enacted, could pose a threat to cryptocurrency.
Is a CBDC Risk-Free?
Cryptocurrencies have emerged as a new investment trend around the world. However, the current digital currencies are not officially issued and recognized by governments, thereby are not protected by the governments when troubles happen.
In the midst of the urgent demand for solutions, central bank digital currency (CBDC) arose as one of the most accepted and practical options. However, putting CBDC to use in actual transactions is still a complicated and difficult process.
That explains why only a select number of nations have any real interest in launching this currency. When it comes to CBDCs, several countries are adopting a highly cautious strategy.
But the path toward totally replacing paper money with CBDC is quite challenging and requires a significant amount of time. The US, on the other hand, has stated in the past that the digital dollar is intended to coexist with fiat currency rather than entirely replace it.
The viability of a CBDC hinges not only on its design and infrastructure, but also, most clearly, on its acceptance by the general public.
Especially in the case when this is an alternative to fiat money, a mistake in the issuing process that results in the creation of a loophole can have unanticipated consequences.
Another issue that is brought up, which is also an urgent concern for the government, is the question of how to strike a balance between the variables linked to people’s privacy while simultaneously controlling the factors that pertain to transparency in CBDC transactions.
Evolution is Natural
The growing openness to the idea of decentralized currencies could be somewhat scary. Like pushing yourself out of a zone which has been around for five decades – the zone may not be safe, but its name is.
In 2021, El Salvador went down in the history of money when the country adopted Bitcoin as legal tender. The move made El Salvador a vanguard that stepped out of the zone and recognized the largest cryptocurrency money.
The case of El Salvador is not big enough to become a catalyst. Up to date, the question whether the country’s authorities fail or succeed with the bold move, remains in the future.
Meanwhile in other countries, the debates are ongoing. In the US, the controversies become more complex. But not all states in the U.S. have built a solid wall against crypto. Some states such as Texas, New Hampshire and Montana are known for their support for Bitcoin.
People are free to choose what they define money as but they are unable to stop evolution.