SB1095

THE CONTEXT: According to the Federal Reserve, a CBDC is generally defined as a digital liability of a central bank that is widely available to the public. In the United States, Federal Reserve notes are the only type of central bank money available to the public.

WHAT THE BILL DID: The final vetoed version would prohibit a federally recognized CBDC from being: a) used as legal tender; or b) the subject or medium of payment of any contract, security or other similar instrument in this state, including contracts relating to commercial transactions, prohibit transfers made by an escrow agent from an escrow account from being settled or backed by federally recognized CBDC, and excludes a federally recognized CBDC from the definition of money relating to the Uniform Commercial Code and from the definition of legal tender.

WHY IT MATTERED: The practical reason for this bill was to set a clear legal boundary for central bank digital currency instead of leaving the conduct unaddressed. It would prohibit a federally recognized CBDC from being: a) used as legal tender; or b) the subject or medium of payment of any contract, security or other similar instrument in this state, including contracts relating to commercial transactions, and would also prohibit transfers made by an escrow agent from an escrow account from being settled or backed by federally recognized CBDC, rather than leave the current rule unchanged.