The North Carolina General Assembly has taken a decisive step by successfully overriding Governor Roy Cooper’s veto of House Bill 690. This new legislation prohibits the acceptance of central bank digital currencies (CBDCs) as payment within the state and restricts participation in any Federal Reserve testing of CBDCs. This action is indicative of growing concerns in North Carolina regarding the implications of CBDCs on financial privacy and state sovereignty. The bill represents part of a larger, nationwide resistance to federal control over digital currencies.
Key Details of North Carolina’s Legislative Action
The pathway to the enactment of House Bill 690 has been marked by contention, reflecting sharp partisan divisions and varying concerns about North Carolina’s position in the evolving landscape of digital currencies. Initially, the bill garnered overwhelming support, passing in the North Carolina House of Representatives by a vote of 109-4, followed by a strong 39-5 approval in the Senate. However, the bill faced a significant obstacle when Governor Roy Cooper, a Democrat, vetoed it on July 5, citing the legislation as “premature, vague, and reactionary.” He argued for a cautious approach, suggesting that North Carolina should wait for federal guidelines and safeguards on digital asset transactions before implementing such legislation.
Despite the governor’s concerns, the Republican-dominated legislature quickly moved to override his veto. On September 9, the Senate passed the override with a narrow 27-17 vote, barely surpassing the required 60% majority. Earlier, the House had also voted to overturn the veto with a margin of 73-41. What stood out during the latest Senate vote was the absence of Senate Democrats who had previously supported the bill, as they now aligned with the governor’s stance.
Dan Spuller, the head of industry affairs at the Blockchain Association, criticized Governor Cooper’s veto, labeling it a missed opportunity to demonstrate strong state-level opposition to the Federal Reserve’s CBDC initiatives. He expressed his sentiment on X (formerly Twitter), asserting that the bill “should have never been vetoed.” According to Spuller, North Carolina’s stance represents crucial resistance to what critics perceive as federal overreach into the realm of digital currency.
Context of the National Debate on CBDCs
North Carolina’s legislative efforts are part of a larger national conversation regarding the future of CBDCs in the United States. The Federal Reserve has been investigating the implications of potentially issuing a CBDC, weighing the possible advantages—such as improved payment efficiency and enhanced financial inclusion—against concerns related to financial stability, privacy, and the traditional banking system’s integrity.
Federal Reserve Chair Jerome Powell has repeatedly emphasized that the central bank would only pursue the issuance of a CBDC with explicit approval from Congress and stated that any CBDCs would be issued through the existing banking framework rather than directly to consumers. However, these reassurances have failed to alleviate the concerns voiced by state officials, as demonstrated by North Carolina’s recent actions.
This unease reflects broader trends at the federal level, where the U.S. House of Representatives passed the CBDC Anti-Surveillance State Act in May. The Republican-backed legislation seeks to prevent the Federal Reserve from directly issuing a CBDC to individuals, addressing fears of increased government surveillance and potential infringement on financial privacy. Similarly, Senator Ted Cruz introduced a companion bill in the Senate, reinforcing the ongoing pushback against federal CBDC initiatives.
The Implications for State-Level Legislation
North Carolina’s legislation specifically prohibits the acceptance of CBDCs for state payments and bans any state involvement in future Federal Reserve CBDC testing programs. This assertive approach may serve as a catalyst for similar legislative actions across the United States, particularly in regions where skepticism regarding federal engagement in digital currencies is prevalent. As states navigate their positions on CBDCs, North Carolina’s actions may inspire others to adopt measures that assert their financial autonomy and preserve the privacy of their citizens in the digital age.