House lawmakers are upholding a veto by Gov. Kristi Noem that updates the Uniform Commercial Code.
Opponents to updating the UCC say the bill excludes cryptocurrencies from the definition of money.
The updates actually give cryptocurrency legal standing and allow banks to use them as collateral for loans.
The updates are opposed by a conservative wing of the Republican party called the Freedom Caucus. Aaron Aylward is the chair of the group. He’s concerned the bill will disadvantage the asset in the future.
“The concern there is just the overall control with the federal government having such a stronghold on cryptocurrency. What it does is it starts to stifle out all these other—there’s a ton of different cryptocurrencies out there. It starts to stifle those," Aylward said. "We’ve even seen it over the last couple of years with the IRS, they’re starting to crack down those folks a lot more with their transactions. I just see that becoming more and more the case.”
Aylward is also concerned the bill paves the way for a Central Bank Digital Currency, something the Bahamas and Marshall Islands have done. That would mean direct banking with the fed.
Supporters of the UCC update say opposition is rooted in misunderstanding.
Updates are supported by the South Dakota Banking Association, Trust Association and Blockchain Industries. They say it does not establish a Central Bank Digital Currency. Other bankers say they would oppose the bill if it did. The language update allows businesses in the state to recognize the currency should a legal matter arise.
David Owen is with the South Dakota Chamber of Commerce. He’s disappointed the veto was upheld.
“The other thing that helped sustain the veto was the effective date was next year anyway. What we lose is a year to help the bankers get ready to put it into their systems. So, we lose some preparation time. Again, I think fear overcame fact on a complicated issue. That’s not rare.”
Both proponents and opponents to the UCC updates expect a form of the bill will eventually pass.
All four of Noem’s vetoes were upheld. The 2023 legislative session is over.
