South Dakota gov’s veto of cryptocurrency regulations upheld

The South Dakota House of Representatives failed Monday to override Gov. Kristi Noem's recent veto of a bill that would have created government regulations for cryptocurrency use in the state.

The bill passed smoothly throughout the legislature, with Noem's veto last week upheld by a 37-30 vote.

Proponents had argued that the bill would have centralized different cryptocurrency systems through a government oversight commission, increasing transparency. But opponents saw the proposed regulations as a tool for potential government surveillance and overreach, and said they wanted more time to see how that legislation fares in other states.

Six other states have passed the updated Uniform Commercial Code, which requires tangible records of cryptocurrency exchanges in order for them to be considered money. National trading standards aim to regulate digital currency exchanges by adding transaction records, but Noem said such a step would take away the market freedoms of South Dakotans.

“It would be reckless to create regulations governing something that doesn't already exist. More importantly, South Dakota should not open the door to potential future overreach by the federal government," Noem said in a statement last week in vetoing the bill.

As similar bills emerge in other state legislatures, Republican counterparts like Gov. Ron DeSantis of Florida and US representative Tom emmer Minnesota have raised concerns about possible government surveillance akin to China's heavy-handed oversight of their markets. Suspicions about the regulation of a central bank digital currency arise a year after President Joe Biden's executive order to explore a digital currency owned by a federal bank. Biden's passing set off a flurry of misinformation, including claims that he would create a cashless society.

Proponents of the bill argued that those who believe the government would replace cryptocurrency companies with a federal system are wrong, and that the bill would have simply lumped together the federal government and digital currencies, which are currently unrecognized as money.

The bill's sponsor, House Republican Hugh Bartels, said he expects most of the country to approve such code updates amid the rise of various forms of cryptocurrency.

“The misconception is that this bill authorizes central bank digital currency,” Bartels said. "He's just setting up a way to do business with him."

The first most popular cryptocurrency, bitcoin, was launched over a decade ago. While it is primarily digital money, cryptocurrencies are not backed by any government institution.