PIERRE, S.D. (KELO) — The governor has put her veto on a fourth bill that the South Dakota Legislature approved in the 2023 session.
The latest target is HB1193 that would make various changes in South Dakota’s commercial code.
Governor Kristi Noem specifically refers in the veto letter dated March 9 to wording that would define money but rules out cryptocurrency.
She also points out that the legislation would allow “Central Bank Digital Currencies” — CBDCs — to be treated as money.
The letter lists two objections.
“First, by expressly excluding cryptocurrencies as money, it would become more difficult to use cryptocurrency. By needlessly limiting this freedom, HB1193 would put South Dakota citizens at a business disadvantage,” it said.
Her second reason is that treating CBDCs as money “opens the door to the risk that the federal government could more easily adopt a CBDC, which then may become the only viable digital currency.”
The governor’s letter notes that a government-backed digital currency hasn’t been created at this time. “It would be imprudent to create regulations governing something that does not yet exist. More importantly, South Dakota should not open the door to a potential future overreach by the federal government,” the letter says.
The South Dakota Bankers Association and the Independent Community Bankers of South Dakota supported the bill’s passage. So did the South Dakota Retailers Association, the South Dakota Chamber of Commerce and Industry, the Sioux Falls Chamber and the South Dakota Trust Association.
Karl Adam is president of the South Dakota Bankers Association. “We’re disappointed. We disagree with the points that she stated in her veto message,” he told KELOLAND News.
Adam said virtual currencies aren’t defined as money because they aren’t physical items and can’t be possessed for lending purposes. But, he said, they are defined elsewhere in the legislation as a controllable electronic record, or CER.
Not allowing the legislation to go forward would disadvantage a person looking to obtain credit, according to Adam. That’s because, without the legislation, cryptocurrency wouldn’t be recognized as an asset that could be used to obtain credit, he said.
Carla Reyes, an assistant professor of law at Southern Methodist University, tweeted Friday morning that the veto was counter-productive. “If the goal of (the governor’s) veto was to make it easier to use #bticoin in commerce, the exact opposite was achieved. The Veto means bitcoin and cryptocurrencies are still general intangibles in South Dakota, which hurts its negotiability and transferability as a legal matter,” she said.
A group of legislators known as South Dakota Freedom Caucus has been trying to stop the bill and issued a statement Friday morning praising the governor’s attempt to block the legislation.
“At our urging, thousands of South Dakotans have called and written to the Governor warning her of the dangers of this legislation and she has truly listened to the voice of the people,” the statement said. “We will now focus on encouraging our colleagues in the legislature to uphold her veto and we call upon our citizens to once again make their voices heard on this issue. We stand ready to reconsider this legislation without the language that assaults our liberties at a later date.”
Overriding a veto requires a two-thirds majority in each chamber: 47 in the House and 24 in the Senate. The House had passed the bill 49-17 and the Senate 24-9.
KELOLAND has also requested comment from the bill’s prime sponsor, Republican Rep. Mike Stevens.
The bill reflected model language from the national Uniform Law Commission. South Dakota’s delegation includes a former University of South Dakota law dean, Thomas Geu, and six former or current state legislators who are lawyers: Michael DeMersseman of Rapid City, Republican Sen. Michael Diedrich, Marc Feinstein of Sioux Falls, Brian Gosch of Rapid City, Gene Lebrun of Rapid City and Republican Rep. Will Mortenson.
Noem in the veto letter stated that South Dakota shouldn’t rush to adopt the changes. “The uniform provisions may adjust as needed after other states experiment with this legislation,” her letter said.