North Carolina Senate enacts anti-CBDC bill, overturning governor’s veto

The North Carolina Senate enacted an anti-CBDC bill, overturning the governor’s veto. The newly passed bill sought to prevent the state from participating in any CBDC testing. The Federal Reserve had assured stakeholders that rolling out the new central bank digital currency would be done within the permitted frameworks after getting approval.

The North Carolina Senate voted to enact an anti-central bank digital currency (CBDC) bill on Monday, September 10th. The majority of votes in the North Carolina Senate supported the anti-CBDC action in a bid to safeguard the public from the risks they perceive the Federal Reserve’s testing of the new digital assets pose.

North Carolina Senate impedes central bank digital currency testing

NC House overrides governor’s veto on legislation prohibiting North Carolina from participating in the Federal Reserve branch’s testing of any future central bank digital currency (CBDC). #ncga #ncpolhttps://t.co/yMgWnUhOu0

— Carolina Journal (@CarolinaJournal) August 1, 2024

On Monday, the Senate voted on House Bill 690. The bill aimed to overturn the Democrat Gov. Roy Cooper’s veto, which would allow the state to participate in the Federal Reserve’s branch testing of its digital assets.

Participation would allow the government to make payments to the state of North Carolina using the Central Bank Digital Currency. The senate vote concluded in a loss for the governor as senators voted 27-17 in favor of the House Bill 690. The House Bill 690 bill continued the anti-CBDC trend prevailing in the US after lawmakers passed the Central Bank Digital Currency Anti-Surveillance State Act in May.

Gov. Roy Cooper had previously vetoed the House Bill 690 on Friday, July 5th. In his statement, Governor Cooper criticized the bill as being “premature, vague and reactionary” despite it having serious impacts on the monetary policies of the state.

Cooper also stated that given that efforts were being made to promote security while ensuring standards were met; the Senate should have waited before taking action in such a manner. Cooper said that the Senate would have been better directing its efforts towards providing more funding to address existing cybersecurity threats.

House Bill 690 was introduced to North Carolina’s House on April 18th, 2023, and was tabled by the Senate after it passed through the House on May 3rd, 2023. The bill prevents the use of cryptocurrencies when making payments within North Carolina. The bill specifically targeted state agencies, explicitly outlining that no state agency would accept payments using cryptos. 

Federal Reserve maintains its stance on CBDCs

House Bill 690’s passing was done in light of the Federal Reserve continuing its cautionary stance on developing and issuing central bank digital currencies. The Federal Reserve had stated that it had not decided on whether to pursue the use of a CBDC. The Federal Reserve had, however, considered the idea of CBDC as evidenced by its report on the pros and cons of CBDCs. 

“This bill should have never been vetoed, and @NC_Governor  blew an opportunity to send a strong message to the @FederalReserve  that NC stands united against #CBDCs.”

–DanSpuller– Head of Industry Affairs, Blockchain Association.

Several industry figures supported the decision to ban CBDC payments in North Carolina, stating that the Federal Reserve should develop Central Bank Digital Currencies in a manner that aligns with the law while simultaneously protecting the users’ rights.

The support was in line with Federal Reserve Chair Jerome Powell’s previous declaration that any decisions and actions relating to CBDCs would be conducted after acquiring the proper approvals.