In response to financial privacy concerns, Missouri’s SB 194 implements legal measures that prohibit the use of digital currencies issued by central banks.
On December 1, the Missouri Senate introduced SB 194, which proposes the prohibition of central bank digital currencies (CBDCs) as legal tender within the state. The law aims to prevent public entities from adopting or utilizing CBDCs and to modify the definition of “money” under the Uniform Commercial Code to exclude these digital currencies.
SB 194, which was sponsored by Senator Brattin, defines numerous provisions that influence Missouri’s financial policies. One of these provisions mandates that the State Treasurer maintain gold and silver reserves that are equivalent to at least 1% of all state funds. Additionally, it is capable of decreasing the tax liability associated with gold and silver.
“protects from state income tax the part of a taxpayer’s federal adjusted gross income that is part of their capital gain from selling or exchanging gold and silver.”
The bill expressly prohibits public entities from participating in any experiments or pilot programs related to CBDCs conducted by the Federal Reserve or other federal agencies, in addition to addressing precious metals. Some state legislators are increasingly concerned about the potential impact of CBDCs on state sovereignty, monetary policy, and financial privacy. This posture is indicative of this.
A significant legal change is the modification of the Uniform Commercial Code’s definition of “money” to exclude CBDCs. This modification has the potential to significantly affect commercial transactions, contracts, and financial instruments in Missouri, thereby restricting the legal recognition and enforceability of CBDC-based transactions.
Missouri’s legislature contemplated measures concerning digital currencies earlier in 2024. House Bill 2780, which was introduced in February, was intended to prevent public entities from accepting or utilizing CBDCs. It was enacted by the House in April with significant support. In addition, the Senate evaluated companion legislation, including SB 1352, which suggests a consistent legislative emphasis on the regulation of digital currencies at the state level.
Missouri’s legislative actions are taking place in the context of broader national and global discussions regarding the regulation and adoption of CBDCs. Although some individuals perceive CBDCs as a development in digital payment systems that has the potential to improve financial inclusion and efficiency, others have expressed apprehensions regarding centralized control, privacy concerns, and the potential effect on traditional banking systems.
Missouri is among the states that are actively examining the role of government-issued digital currencies in their economies by introducing SB 194.
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