DeSantis pushes ban on central bank digital currencies

It is in response to an increasing number of countries considering launching CBDCs.
Florida Gov. Ron DeSantis speaks during a news conference Tuesday, Feb. 21, 2023, on the campus of Palm Beach State College in Palm Beach Gardens, Fla. (AP Photo/Wilfredo Lee)

Gov. Ron DeSantis (R) proposed legislation to prohibit central bank digital currencies from being accepted in Florida, a move he said is needed to prevent a form of consumer surveillance and to protect consumer freedom.

It comes in response to an increasing number of countries looking into launching CBDCs, which are virtual money backed and issued by a central bank, such as the Federal Reserve or the Bank of Japan.

In a statement Monday, DeSantis said the legislation “will protect Florida consumers and businesses from the reckless adoption of a ‘centralized digital dollar’ which will stifle innovation and promote government-sanctioned surveillance. Florida will not side with economic central planners; we will not adopt policies that threaten personal economic freedom and security.”

The bill would update the state’s uniform commercial code to ban U.S. and foreign CBDCs. The uniform commercial code is a set of rules that governs commercial transactions and has been developed over decades to facilitate commerce between state jurisdictions. The code has been fully adopted by most states and serves as the basis for each of those jurisdictions’ commercial law.

Details of the bill include:

  • A prohibition on the use of a federally adopted CBDC as money within Florida’s UCC.
  • A prohibition of any CBDC issued by a foreign reserve or foreign-sanctioned central bank.
  • A call for like-minded states to join Florida in adopting similar prohibitions within their respective UCCs.

Other states are also moving to update their laws to deal with cryptocurrencies, with a particular concern among conservatives about those backed by federal governments.

In South Dakota, Gov. Kristi Noem (R) recently vetoed a bill she said would reduce a barrier for the U.S. to launch a CBDC. The veto came at the urging of the South Dakota Freedom Caucus, which celebrated her move. The Arizona Freedom Caucus supported killing similar legislation working its way through the legislature. Conservatives, including Glenn Beck, are targeting bills in 12 other states.

The CBDC issue has raised the hackles of conservative lawmakers, including DeSantis, a likely presidential contender. DeSantis’s moves are being closely watched by Republican voters as the Florida governor appears set to face former President Donald Trump for the nomination.

DeSantis likened the CBDC issue to his battle against the trend in investing that factors in non-financial factors, known as ESG, which stands for environmental, social and governance. He said companies and banks that engage in ESG investing undermine consumer freedom and choice, and he attributes ESG and CBDC to global elites, whom he insinuates hatched the ideas at meetings organized by groups such as the World Economic Forum, which takes place every year in Davos, Switzerland.

“A federally controlled Central Bank Digital Currency is the most recent way the Davos elites are attempting to backdoor woke ideology like Environmental, Social, and Governance (ESG) into the United States financial system, threatening individual privacy and economic freedom,” DeSantis said. “Unlike a decentralized digital currency, a CBDC is directly controlled and issued by the government to consumers, giving government bureaucrats the ability to see all consumer activity and the power to cut off access to goods and services for consumers.”

The bill Noem recently vetoed would have updated the state’s uniform commercial code, which she said would have given preference to a U.S. CBDC and essentially banned other cryptocurrencies such as Bitcoin — a move she said would make it easier for the federal government to block alternative forms of digital currency.

“South Dakota should not open the door to a potential future overreach by the federal government,” Noem said in a statement.

As of December, 114 countries are exploring a CBDC and 11 countries have fully launched a digital currency, according to the Atlantic Council, a foreign affairs think tank that tracks CBDCs.

“As cryptocurrencies and stablecoins have become more popular, the world’s central banks have realized that they need to provide an alternative—or let the future of money pass them by,” the think tank said on its CBDC tracker.

President Biden signed an executive order last year calling on the Federal Reserve to explore the possibility of launching a virtual dollar. Earlier this month, the U.S. Treasury said meetings among agencies working on the issue would pick up.