Florida’s Legislative Proposal: Potential Implications on Bitcoin

It is reported that last week, Florida passed a legislative proposal aimed at prohibiting the use of the National Central Bank Digital Currency (CBDC) as currency in its state. However, it is said that this move may accidentally prohibit Bitcoin, as the bill defines CBDC as a “directly verified” digital currency by foreign governments, but Bitcoin has been recognized as legal tender by El Salvador, “Verifying” in a non-technical sense (it is not yet clear whether El Salvador’s central bank or other government agencies operate fully verified Bitcoin nodes), but according to Wyman Duggan, a member of the Florida House of Representatives who supports the bill, they do not intend to ban Bitcoin together with CBDC, and if necessary, they may amend the bill. “. （blockworks）

Florida bill prohibiting CBDC or accidentally banning Bitcoin

The state of Florida recently passed a legislative proposal that seeks to prohibit the use of the National Central Bank Digital Currency (CBDC) as a currency within its borders. However, the bill’s wording appears to have unintended consequences, potentially prohibiting the use of other digital currencies such as Bitcoin, which has been recognized as legal tender in El Salvador. This article delves deeper into the implications of Florida’s legislative proposal on Bitcoin.

Overview of Florida’s Legislative Proposal

Florida’s legislative proposal aims to prohibit the use of CBDC as currency within the state. The bill defines CBDC as a “directly verified” digital currency by foreign governments. The legislation is intended to prevent any foreign government from attempting to establish its currency as legal tender in the state. The bill defines the term “verified” as any digital currency that has been subject to an analysis by a foreign government and found to be secure and trustworthy.

Potential Implications on Bitcoin

Although the legislative proposal’s primary target is CBDC, the bill’s wording may affect Bitcoin inadvertently. This is because Bitcoin has been recognized as legal tender in El Salvador, making it a “verified” currency in a non-technical sense. It also remains unclear whether El Salvador’s central bank or other government agencies operate fully verified Bitcoin nodes.
According to Wyman Duggan, a member of the Florida House of Representatives who supports the bill, they do not intend to ban Bitcoin together with CBDC. If necessary, they may amend the bill to ensure that Bitcoin is not impacted. However, until the bill is amended to make its distinction between CBDC and Bitcoin clear, the uncertainty surrounding the matter remains.

The Implications of the Bill’s Wording

The term “directly verified” in the bill’s definition of CBDC introduces the need for foreign government validation to verify any digital currency. This requirement may serve as a barrier to entry for many digital currencies, including Bitcoin, as it may not comply with the standard set by foreign governments.
The bill may hinder the ability of small businesses and individuals to adopt digital currencies, including Bitcoin. These entities may have difficulties meeting the requirements and standards set by foreign governments, thus failing to use digital currency as a means of transaction.

Conclusion

Florida’s recent legislative proposal targeting CBDC may have unintended implications for Bitcoin. The bill’s definition of “directly verified” may exclude several digital currencies, including Bitcoin, from being used in the state. Although the bill’s supporters have indicated that they will not ban Bitcoin along with CBDC, the distinction needs to be made clear in the legislation. Until then, small businesses and individuals may have difficulties adopting digital currencies.

FAQs

1. What is CBDC?
CBDC stands for Central Bank Digital Currency. It is a digital form of fiat money and is issued and regulated by a country’s central bank.
2. How has Bitcoin been recognized as legal tender in El Salvador?
In June 2021, the Legislative Assembly of El Salvador passed a bill that made Bitcoin a legal tender in the country, alongside the US dollar. The law went into effect on September 7, 2021.
3. How might the legislative proposal impact small businesses looking to adopt digital currency in Florida?
The requirements set by the bill, such as the need for foreign government validation, may serve as a barrier to entry for small businesses looking to adopt digital currencies. These requirements may be difficult for small businesses to meet, thus affecting their ability to use digital currencies as a means of transaction.