Florida Governor and U.S. Presidential hopeful Ron DeSantis proposed legislation on Monday to protect Floridians from the “weaponization of the financial sector” through a Central Bank Digital Currency (CBDC).
Florida Governor Ron DeSantis Proposes Legislation To Ban CBDCs
The Governor, who spoke from behind a podium with the words “Big Brother’s Digital Dollar” written over it, said the legislation seeks to protect consumers and businesses in the Sunshine State from federally-issued CBDCs.
It would prohibit the use of any digital currency created by the U.S. government or any other foreign government or sanctioned central bank as legal tender within Florida’s Uniform Commercial Code (UCC) – a standardized set of laws and regulations for transacting business in all 50 U.S. states.
CBDCs are digital currencies similar to stablecoins in a way that they are backed one-to-one by the value of a sovereign currency like the U.S. dollar, euro, or Chinese yuan. But unlike stablecoins, which are minted by private companies on a decentralized blockchain network, CBDCs are issued and controlled by the central bank of a country.
In his press conference, DeSantis criticized the Biden administration by claiming that the federal government’s efforts to introduce a centralized digital dollar were about preventing innovation and promoting “government-sanctioned” surveillance.
The Governor also took aim at the World Economic Forum, saying the group is attempting to introduce Environmental, Social, and Governance (ESG) investment strategies into the country’s financial system with a CBDC, threatening individual privacy and economic freedom in the United States.
ESG, or Environmental, Social, and Governance, often referred to as sustainable investing, or socially responsible investing (SRI), is a set of standards being implemented by governments across the world to make financial investments by businesses and individuals more equitable and environmentally friendly.
The Environmental criteria look into how a company is taking actions to protect the environment by making climate-conscious business decisions. Social criteria explore how the company manages relationships with its employees, suppliers, customers, and the community where it operates. Governance criteria examine a company’s leadership and management.
DeSantis called out President Biden’s executive order from last September demanding the Federal Reserve and Treasury Department to assess the risks and benefits of creating a central bank digital dollar. The Florida governor said a digital currency would diminish the role of community banks and credit unions as it would be the direct liability of the federal government and not a chartered financial institution, causing the market’s lending power to shrink and jeopardizing the country’s financial system.
The potential GOP Presidential candidate for the 2024 election also cited that, being an instrument that is directly controlled and issued by the government to consumers, a CBDC would give bureaucrats the ability to keep an eye on all consumer activity and wield the power to cut off their access to goods and services. A popular opinion among crypto maximalists that are against CBDCs.
Jimmy Patronis, Florida’s State Chief Finacial Officer, also echoed his Governor’s concern saying that with a CBDC, there would be no privacy and no rights. Patronis has urged Floridians to fight against the program to protect “freedom, liberty, and prosperity”.
DeSantis has called on other “like-minded states” to join Florida by adopting similar legislation to prohibit the use of CBDCs within their jurisdictions. The governor expects Texas to join the fight after he recently held discussions with the state’s lieutenant governor, Dan Patrick, on the matter.
U.S. Government Wants To Amend State Commercial Codes To Launch CBDC
Recently, South Dakota Governor Kristi Noem vetoed a bill amending various parts of the Uniform Commercial Code (UCC) to make it easier for the federal government to implement a CBDC in all 50 states. If passed, the bill would allow residents to use the government-controlled digital currency for specific commercial activities within a state without violating the Commercial Code.
Most notably, the bill does not consider cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) as electronic money. The legislation is under consideration in more than 20 states, including Arkansas, Montana, New Hampshire, North Dakota, Tennessee, Texas, and California.
Last month, Republican House Majority Whip Tom Emmer (R-MC) reintroduced legislation seeking to limit the Federal Reserve’s power to issue a CBDC directly to consumers. The ‘CBDC Anti-Surveillance State Act’ would require the Fed to develop a permissionless digital currency to ensure user privacy and also report to Congress about the status of its CBDC research and development program for transparency. An earlier iteration of the bill introduced in July 2022 did not pass.
However, the U.S. is lagging behind China and India when it comes to introducing a CBDC into the economy. Last week, the Federal Reserve announced that its FedNow instant payment service, often touted as a precursor to a digital dollar, would be launched in July 2023.
Fed Vice Chairman Lael Brainard indicated last May that although a CBDC would be the legal tender, its real-time payment system would perform almost the same function as a central bank-issued digital currency. FedNow is currently under a pilot program where participant banks need to undergo customer testing and certification processes.
On March 8, while testifying before the House Financial Services Committee, Fed Chairman Jerome Powell said that federal agencies are yet to agree on a national CBDC. The authorities involved are still in the early stages of experimenting with how a digital dollar would work and what would be the best and most efficient technology for implementing it.
The Federal Reserve is expected to launch the digital dollar by 2026.