The North Carolina General Assembly has successfully overridden Governor Roy Cooper’s veto of House Bill 690, a legislative move that bans the state from accepting central bank digital currencies (CBDCs) as payment and from participating in any Federal Reserve testing of CBDCs.
This decisive action reflects North Carolina’s growing concern over CBDCs’ potential implications for financial privacy and state sovereignty. It is part of a broader national resistance to federal control over digital currencies.
North Carolina’s Bill: 60% Majority Vote To Legislate CBDCs
The legislative journey to pass House Bill 690 has been contentious. It shows the deep partisan divides and concerns over the state’s role in the digital currency landscape.
The bill was initially passed by the North Carolina House of Representatives in a resounding 109-4 vote and by the Senate in a 39-5 vote. However, it faced an unexpected hurdle when Governor Roy Cooper, a Democrat, vetoed it on July 5.
Cooper described the bill as “premature, vague, and reactionary,” arguing that North Carolina should await the outcomes of federal efforts to establish standards and safeguards for digital asset transactions before enacting such legislation.
Despite Governor Cooper’s concerns, the Republican-majority legislature moved swiftly to challenge the veto.
On September 9, the Senate voted 27-17 to override Cooper’s veto, just surpassing the required 60% majority. This followed a prior vote in early August by the House, which also successfully overturned the veto with a 73-41 margin.
Notably, the latest Senate vote revealed a stark partisan shift; none of the Senate Democrats who had initially supported the bill stood by it during the override, aligning instead with the governor’s position.
Dan Spuller, head of industry affairs at the Blockchain Association, criticized Governor Cooper’s veto, suggesting it was a missed opportunity to signal strong opposition to the Federal Reserve’s exploration of CBDCs.
Spuller emphasized on X (formerly Twitter) that the bill “should have never been vetoed,”
His stance stressed on the importance of state-level resistance to what he and other critics view as federal overreach in digital currency.
National Context: A Federal-Level Root Problem
North Carolina’s stance is part of a broader national debate on the future of CBDCs in the United States. The Federal Reserve has been exploring the potential issuance of a CBDC, examining both the benefits and risks such a system could entail.
In a recent report, the Federal Reserve outlined possible advantages, such as increased payment efficiency and bolstered financial inclusion, but also acknowledged significant concerns, including risks to financial stability, privacy, and the role of the banking system.
Federal Reserve Chair Jerome Powell has repeatedly stated that the Fed would only proceed with explicit congressional approval and would issue CBDCs through the existing banking system rather than directly to consumers.
Powell’s assurances, however, have not quelled state-level apprehensions, as evidenced by North Carolina’s latest legislative actions.
This sentiment echoes moves at the federal level, where the U.S. House of Representatives passed the CBDC Anti-Surveillance State Act in May.
This Republican-led bill aims to prevent the Federal Reserve from issuing a CBDC directly to individuals, a measure introduced to counter fears of increased government surveillance and loss of financial privacy.
Senator Ted Cruz subsequently introduced a companion bill in the Senate, further reflecting the ongoing resistance to federal CBDC initiatives.
This legislation bans the acceptance of CBDCs for state payments and explicitly prohibits any state involvement in future Federal Reserve CBDC testing programs.
This North Carolina approach could inspire similar legislative efforts across the country, especially in regions where skepticism toward federal involvement in digital currencies runs high.
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