Citing overreach, Noem vetoes banking regulation bill
The bill would have “amended provisions of the Uniform Commercial Code.”
PIERRE, S.D. - HB 1193 is 113 pages long, and if it became law it would affect the banking transactions you make every day.
But the push to get that bill into law stalled on the last step, as a result of a veto by Governor Kristi Noem announced Friday.
“By defining ‘money’ in this proposed way, HB 1193 opens the door to the risk that the federal government could easily adopt a Central Bank Digital Currency, which then may become the only viable digital currency,” Noem said in a press release announcing the veto. “At this moment in time, such a government-backed electronic currency has not been created. 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 legislation passed with little initial opposition through both the House and the Senate.
Rep. Julie Auch (R-Yankton) spearheaded the effort to get the bill vetoed by Noem down the stretch.
“As soon as I went to the Senate and was turned down for any help in trying to get this bill “killed” in the Senate, I knew we had to work fast to get the governor to look into the possibility of vetoing this bill.”
Auch and other’s concerns goes a step farther than Noem’s. They fear that the legislation opens South Dakotans up to draconian currency regulations in the long term.
“This information inside of this bill, sets the means, and allows the state of South Dakota, the federal government, or the people in charge of our money to track your money,” Auch said. “If they don’t want you to have access your money five miles from your home, they can shut your money off.”
But South Dakota Bankers Association President Karl Adam says that’s not true.
“This was not done by the dark of night on a stone tablet,” Adam said. “The crypto world, legal experts, and the Uniformed Law Commission have been together in open forums putting this together for states to adopt.”
If the legislature decides to override Noem’s veto, it would make South Dakota the first state to pass the update to the Uniform Commercial Code (UCC). The UCC is legislation that is intended to be passed by all 50 states, so that standard practices regarding banking and money can by in sync across the country.
Legislation updating it is considered relatively routine. South Dakota has made a number of updates to the UCC in the last 20 years.
A letter given to Noem by lawmakers earlier this week urging the governor to veto the bill had enough signatures to uphold the veto.
But the bill’s proponents are hoping to flip some votes before then.
“It is a very important process to have in the background, when everybody is part of financial transactions,” said Sen. David Wheeler (R-Huron). “You don’t always know that with every day life with commercial transactions, there is this whole set of codes behind you that makes sure your transaction is easy to understand and can be easy for courts to apply if there is a dispute.”
Despite her concerns, Auch says she would be open to a different bill updating the UCC next year, but wants a more “palms up” process.
“It would take effect July of 2024 if implemented. We said to Noem, what is the rush? Let’s read the bill, and we can reconsider it next year.”
Lawmakers will return to Pierre for Veto Day on March 27th.
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