A bill before the Judiciary Committee Wednesday morning would change the definition of “money” to exclude digital assets, like Bitcoin, and pave the way for the adoption of Central Bank Digital Currencies (CBDCs).
Rep. Stephen Moriarty (R-Portland)’s bill, LD 91, is a concept draft, so the specifics of the proposal won’t be available to voters until he introduces it to committee Wednesday morning.
The concept draft process is increasingly being used by lawmakers. As a result, the such concept bills don’t go through the standard transparency that attends legislation submitted normally. But the bill description suggests that LD 91, if it passes, would adopt the 2022 national amendments of the Uniform Commercial Code as written by the Uniform Law Commission.
In the draft legislation for the UCC, there is a provision that would redefine money to exclude digital assets that are not offered by the government:
“Money” means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization, or pursuant to an agreement between two or more countries. The term does not include an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government. (Draft amendment in bold.)
Although the draft legislation would exclude bitcoin and other digital assets from the legal definition of money, it would leave the door open for new digital assets offered by centralized governments.
International groups like the World Economic Forum (WEF) and the International Monetary Fund (IMF) have openly speculated about using a so-called Central Bank Digital Currency (CBDC) to manage the international economy and facilitate social engineering.
The Federal Reserve Bank of New York has also published a paper exploring how CBDCs could be used in the American financial system.
When South Dakota lawmakers were considering a similar proposal to adopt the 2022 UCC amendments, conservative and libertarian members of the state’s Freedom Caucus opposed the measure because it was viewed enabling the adoption of CBDCs.
In a summary document explaining the purpose of the amendment, the Uniform Law Commission directly addresses Bitcoin:
“The current definition of “money” in the UCC is sufficient to include a virtual (fiat) currency authorized or adopted by a government, whether token-based or deposit account-based. But that definition also may include a medium of exchange in an electronic record (such as Bitcoin) that existed and operated as a medium of exchange before it was authorized or adopted as a medium of exchange by a government. The amendments, however, exclude from “money” such an electronic record that existed and operated as a medium of exchange before it was authorized or adopted as a medium of exchange.”
In other words, the Uniform Law Commission is seeking to use the UCC to stymie bitcoin adoption at the same time it paves the way for a government-controlled electronic cash under a CBDC system.
One of the author’s of the draft UCC legislation, Steven Wiese, gave a video presentation regarding the proposal, portions of which were obtained by South Dakota lawmakers. In the video, Wiese makes the intention of the proposed rules explicit.
“Bitcoin will not be money, because even though the definition provides for electronic money… it says that an asset that is adopted by a government as its medium of exchange will not qualify as money under the UCC if the electronic asset, such as bitcoin, existed before it was adopted by the government,” Wiese said.
“Because it exists, it’ll never be money for UCC purposes,” he said.
On benefits to CBDCs of adopting the amendments, Wiese seemed almost gleeful.
“Some central governments are talking about creating what’s called central bank digital currency, C.B.D.C., it rolls off your tongue — that could be money,” he said.
Bitcoin has come under scrutiny by authoritarian governments because it allows for value to be transacted without a third-party intermediary — like a government agency or a major financial institution. Because of its resistance to censorship, bitcoin has been used by political dissidents, journalists, and humanitarian organizations working under hostile governments.
Bitcoin, which has a predetermined and immutable supply schedule, is seen by many as an alternative monetary system to the fiat U.S. dollar system. Whereas there will only ever be 21 million bitcoin in existence, the total supply of the U.S. dollar is dependent upon the whims of politicians, and there’s no end in sight to the money printing.
If authoritarian regimes hate or fear bitcoin because of the freedom it provides for users, they look favorably upon CBDCs for precisely the opposite reasons.
Most versions of CBDCs commonly theorized by centralized governments would be programmable. With programmable money, a government could determine how much money a user is allowed to spend, what they’re allowed to spend it on, and where. A CBDC could be programmed, for example, to limit a users spending in relation to carbon emissions or red meat consumption. Another commonly theorized programming option would be negative interest rates on checking and savings accounts, which would theoretically be used to encourage people to spend money and stimulate the economy.
Freedom advocates who have warned against the increasing slide toward CBDCs fear such technologies will one day be combined with a social credit system, like the one currently operated by the Communist Party in the People’s Republic of China, to control the behavior of citizens.
In addition to authoritarian governments, large financial institutions have also opposed bitcoin and other digital currencies in the past. According to Maine lobbyist records, Bank of America and the Maine Bankers association are both lobbying on LD 91.
Moriarity, the sponsor of LD 91, was not available Tuesday evening for an interview.