Indiana Passes Law To Ban Central Bank Digital Currencies, Redefining The Definition Of ‘Money’

Receiving little to no attention at all, Indiana has banned central bank digital currencies for being transacted in the state, legally not considering it “money.”

Last week Florida and Governor Ron DeSantis passed an identical bill that also prohibits CBDCs in the state. SEE: Florida Governor Ron DeSantis Passes Bill Banning CBDCs In State, Encourages Others To Do The Same

Hoosier state Senate Bill 468 (SB468) was introduced in January by Sen. Chris Garten (R) and 11 other bipartisan cosponsors. It overwhelmingly passed 48-1-1 in February, 95 out 100 representatives in the house supported it but with new amendments added to it, and then passed unanimously again in the Senate minus several ‘no votes’ and absentees. Governor Eric Holcomb then signed the bill into law on May 5th.

The bill takes effect on July 1st, 2023.

A summary of the bill’s function is as follows:

Repeals the chapter in the UCC governing controllable electronic records. Amends the definition of “money” for purposes of Indiana’s Uniform Commercial Code (UCC) to specify that money: (1) is a medium of exchange that is not in an electronic form; and (2) does not include a central bank digital currency that is currently adopted, or that may be adopted, by the United States government, a foreign government, a foreign reserve, or a foreign sanctioned central bank.

Establishes a new chapter in the UCC that: (1) governs controllable electronic records; and (2) incorporates the provisions of the ULC’s amendments governing controllable electronic records. Provides that a “controllable electronic record” does not include an electronic record that is currently authorized or adopted by a domestic or foreign government and is not a medium of exchange that was 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 a government.

Establishes a new chapter in the UCC that: (1) addresses the validity, enforceability, and perfection of certain commercial transactions, including secured transactions, entered into before the effective date of the amendments on July 1, 2023; and (2) establishes July 1, 2025, as an “adjustment date” on or after which certain transactions must conform to the requirements of the amendments to remain valid, enforceable, or perfected.

Adds language to incorporate into Indiana’s UCC the Amendments to Uniform Commercial Code Article 9 (2018), as approved by the American Law Institute and the National Conference of Commissioners of Uniform State Laws. Provides, through the incorporation of these amendments, that the provisions in the UCC providing that restrictions on the transfer of property pledged as collateral are ineffective do not apply in the case of a security interest in an ownership interest in a general partnership, limited partnership, or limited liability company.

Furthermore, the bill text details how they define what “money” is:

“Money” means a medium of exchange that is currently authorized or adopted by a domestic or foreign government and is not in an electronic form. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more nations.

The term does not include a central bank digital currency that is currently adopted, or that may be adopted, by the United States government, a foreign government, a foreign reserve, or a foreign sanctioned central bank.

However, the bill in it’s original form prior to the amendments would have banned decentralized cryptocurrencies like Bitcoin or Ethereum in the state, but cleared the way for the adoption of a CBDC. ““The term [money] 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,” the original definition read.

But Schiff Gold says that “strong grassroots opposition” was able to influence a change in the legislature.

Schiff Gold adds: ‘And while the new definition does not include free-market cryptocurrencies in the definition of money, it doesn’t specifically exclude them either. As one policy analyst explained, SB468 is neutral about the use of private cryptocurrencies – they are neither regarded as money nor are they banned either. In effect, as passed, SB468 maintains the status quo as it related to free-market crypto.’

South Dakota Governor Kristi Noem vetoed a bill that would have allowed a CBDC but not considered crypto as money. She would rather ban decentralized cryptos as well but purportedly ban CBDCs.

Many states have had many similar bills slated to potentially pass that are identical to the vetoed bill by Noem and the original bill drafted by Hoosier state officials.

The Jon Birch Society warned of Indiana’s original bill in March, urging residents to oppose it. At the time, the Society wrote: “Furthermore, the bill’s authors have explicitly stated their intention to ban cryptocurrencies in favor of CBDCs, and that the bill was intended to accommodate “countries [that] might authorize or adopt [a] central bank digital currency or CBDC.””

Steven Weise of the Uniform Law Commission, explicitly made it clear that there is an agenda to wipe out competition of these cryptos and pave the way for CBDCs. Under the new amendments they wrote, “Bitcoin will not be money,” but “Central Bank Digital Currency, CBDC … could be money,” he said.

The revisions to Article I are very clear now that 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 … if the electronic asset, such as Bitcoin, existed before it was adopted by the government.

So Bitcoin, of course, exists today; it existed before El Salvador adopted it as its currency … so it will never be money for UCC purposes. The same for other kinds of crypto currencies.

Weise said in a Zoom call, clearly explaining that these changes were designed to facilitate a CBDC and ban other cryptos

Lena Petrova, CPA, noted: “More states are expected to join the initiative. Although it is likely that any laws enacted by states would be overridden by the supremacy clause if the federal government adopts a central bank digital currency, some experts believe that a strong opposition would delay, if not altogether stop, adoption of the digital dollar.”