Louisiana Shields Crypto, Rejects CBDC

In a landmark legislative move, the state of Louisiana has amended its laws to impose a ban on central bank digital currencies (CBDCs), establishing strict regulations for digital asset miners and node operators.

These new provisions, incorporated into the Blockchain Basics Act, are expected to take effect in August 2024.

Regulations on foreign ownership and node operation

The law expressly prohibits any state involvement in testing, accepting or soliciting payments made with CBDC, although it does not extend these prohibitions to other digital currencies. The legislation, formalized as House Bill 488, received bipartisan support in both the Louisiana House and Senate.

Led by Representative Mark Wright with support from Senator Jean-Paul Coussan, the bill seeks to achieve this goal ensure continuous access to cryptocurrencies like Bitcoinexplicitly limiting the use of CBDCs within the state.

Further tightening its regulatory framework, Louisiana has also implemented strict foreign ownership controls in the digital asset mining industry. Under the new law, foreign entities are prohibited from acquiring or maintaining stakes in digital asset mining operations across the state.

This regulation will come into force on August 1, 2024 and provides a period of one year for foreign-controlled companies currently engaged in mining activities to fully divest their interests.

Failure to comply could result in severe penalties, including fines of up to $1 million or 25% of the foreign entity’s stake in the mining operation. The revised legislation also sheds light on the role and definition of node operators within blockchain networks.

Node operators, recognized as computational devices that communicate with other devices to maintain consensus and blockchain integrity, play an essential role in the creation and validation of transaction blocks.

However, the act clarifies that these operators do not possess the authority to alter or decide the results of transactions initiated by users.

The national debate on CBDCs

The issue of the US digital dollar has become a controversial topic not only in state legislatures but also on the national political scene. Similar to Louisiana, other states, including Florida and North Carolina, have enacted laws to limit or completely ban the use of CBDCs.

This legislative trend reflects a broader national skepticism and caution about the potential implications of central bank-run digital currencies.

The debate on CBDCs has also permeated the US presidential campaign trail. Former President Donald Trump has expressed a strong stance against CBDCs, suggesting that they represent a form of government intervention and could potentially improve government surveillance capabilities.

The bill will take effect in August 2024

In a January campaign speech, Trump underlined his opposition by stating that he would “never allow the central bank to create a digital currency,” arguing that it would give the government “absolute control” over citizens’ financial activities. .

On the other hand, the current administration led by President Joe Biden seems more open to exploring the possibilities that CBDCs could offer.

However, this position has met with legislative resistance from several senators who support a ban on the introduction of a digital dollar in the United States, highlighting the deep divisions on this issue.

Global developments and implications

Internationally, the development of CBDCs is gaining traction, with at least 110 countries actively exploring or developing their own digital currencies.

Among these, 39 have moved to more mature stages, including pilot programs or full launches, indicating growing global interest in integrating digital currencies into financial systems.

As the debate over digital currencies continues to evolve, both in the United States and globally, actions taken by states like Louisiana could significantly influence the future landscape of digital financial transactions and the government’s role in managing new forms of money.

Source