Florida on Tuesday became the first U.S. state to outlaw the use of a federally adopted Central Bank Digital Currency (CBDC) as well as foreign CBDCs.
The legislation, signed into law by Republican Gov. Ron DeSantis, is intended to safeguard the financial freedom of Floridians from what he terms “government overreach” and “globalist efforts to adopt a worldwide digital currency.”
The bill, SB 7054, garnered strong bipartisan backing in the legislature and amends the definition of money in Florida’s Uniform Commercial Code to omit any CBDC. This comes on the heels of an executive order from the Biden administration in March 2022 that set the stage for exploring a federal CBDC.
The state of Maine is poised to do just the opposite under a bill from Rep. Stephen Moriarity (D-Cumberland), LD 91.
That bill would redefine money specifically to include government-backed CBDCs and exclude novel digital monetary technologies like Bitcoin.
CBDCs, unlike Bitcoin, would be directly controlled by the central government. Whereas Bitcoin is decentralized and permissionless, a CBDC would bestow vast power on the controlling government to censor transactions and surveil users spending patterns.
Despite no official announcement regarding a federal CBDC, the White House unveiled a framework for the “responsible development of digital assets” in September 2022, emphasizing the importance of a CBDC should it be considered in the national interest.
DeSantis is widely expected to enter the race for the 2024 Republican presidential nomination. His decision to launch a metaphorical first strike against CBDCs signals that the issue may become more prominent in American politics over the next year.
DeSantis slammed the Biden administration’s push for a centralized digital currency, warning that it would stifle innovation and enable government surveillance. He also expressed concerns that a federal CBDC could undermine community banks and credit unions, as the digital currency would be a direct liability of the Federal government, thus diminishing the lending capacity of the market.
“Biden’s Central Bank Digital Currency aims to increase government control over people’s finances, and we will not allow it. In Florida, we value personal freedom and won’t allow self-interested elites to chip away at our liberty,” DeSantis said in a statement.
The U.S. Federal Reserve would likely need Congressional approval to declare a CBDC as legal tender and issue it to Americans. As such, the legal ramifications of Florida’s legislation remain uncertain. But if more states adopt similar prohibitions against CBDCs, such state-level bans could present a tremendous obstacle to any interests backing the project.