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Noem's veto of HB 1193 raises question over definition of money

Bitcoin's price has risen sharply since earlier this month, when a split took place that created "bitcoin classic" and "bitcoin cash."
Manuel Romano
NurPhoto via Getty Images
Bitcoin's price has risen sharply since earlier this month, when a split took place that created "bitcoin classic" and "bitcoin cash."

Gov. Kristi Noem has vetoed House Bill 1193, a bill updating certain banking codes. The question on the minds of her and other bill opponents – what precisely is “money?"

HB 1193 is part of a nationwide effort to update each states Uniform Commercial Code, or UCC.

According to the Uniform Law Commission, it’s not a federal law, but rather a law uniformly adopted by each state to govern commercial transactions in the U.S.

Karl Adam is president of the South Dakota Banking Association. He said bills like this are needed to modernize the UCC to adapt to recent change in finance – namely the emergence of cryptocurrencies like bitcoin.

“Business certainty is extremely important, and by having Uniform Commercial Code – which has worked extremely well in states for decades – this update provides definitional language as it relates to digital assets,” Adam said.

Adam disagrees with the governor’s veto. He argues cryptocurrencies are not tangible assets, so they don’t fit into the conventional definition of “money.”

“This has been defined by the uniform law commissioners as a controllable electronic record – or a CER," Adam said. "So, what that means is if I’m going to my lender, wanting to buy land as an example and pledge my bitcoin as security, there’s no way to perfect that security interest in that bitcoin short of these amendments.”

Noem’s veto took issue with cryptocurrencies not being defined as “money” in this context. This veto was supported by members of the South Dakota Freedom Caucus, including Rep. Tina Mulally.

Mulally said it’s a question of economic freedom.

“It would state that any monies prior to a digital currency being enacted by a federal government would be null and void," Mulally said. "That would limit our ability as Americans to freely purchase and control how we spend our money.”

Mulally said the Freedom Caucus is grateful for the veto decision, and that the group hopes to have the votes to uphold the choice come Veto Day on March 27.

The bill need two-thirds support from each chamber to overturn the governor’s veto. It passed that threshold in both chambers during session.

C.J. Keene is a Rapid City-based journalist covering the legal system, education, and culture