The governor of North Carolina has defied state lawmakers by vetoing an anti-central bank digital currency (CBDC) bill that was passed with near-unanimous support in the House and Senate.
Last week, Governor Roy Cooper announced that he had vetoed House bill (HB) 690, also known as the No Central Bank Digital Currency Payments to State bill.
Introduced in April 2023, the bill seeks to ban state authorities in North Carolina from dealing in CBDC, should one be issued by the federal government.
Explaining his decision, Cooper said the federal government is committed to ensuring that safeguards are put in place to protect the freedom of consumers and businesses to transact, or not transact, in digital assets.
He, therefore, urged state lawmakers to “wait and see” what proposals the federal government puts forward before enacting new legislation of their own.
“This legislation is premature, vague and reactionary, and proposes an end result on important monetary decisions that haven’t even been made yet,” said Cooper.
“Instead of this bill, the legislature should have passed a budget to provide more funding for cybersecurity threats that actually exist now."
Near-unanimous, bipartisan support
Last month, as covered by Vixio, North Carolina’s House of Representatives voted 109-4 in favour of the bill and the Senate voted 39-5 in favour.
North Carolina is a Republican stronghold: the Republican majority in the House is currently 71-49; and the Republican majority in the Senate is 50-30.
However, in a quirk of US politics, North Carolina has elected Democrat Roy Cooper to lead the state in the last two gubernatorial elections.
In 2020, Cooper took 51.5 percent of the vote, while his Republican opponent took 47 percent. In 2016, Cooper took 49 percent of the vote, while his Republican opponent took 48.8 percent.
The House and Senate lean heavily Republican thanks to voters outside the state’s densely populated urban centres (such as Charlotte, Raleigh and Greensboro), where residents tend to vote Democrat.
This allows the gubernatorial elections to be closely contested, while many seats in the legislature are Republican safe seats.
However, party politics should not have affected the enactment of HB 690, given that the bill received near-unanimous support from lawmakers on both sides of the aisle.
The show must go on
North Carolina lawmakers who spoke with Vixio said that when a state bill receives this level of cross-party support, it can and will be enacted despite the governor’s veto.
Representative Harry Warren (R) said the veto can be overridden by a two-thirds vote in both the House and the Senate — a margin that was already comfortably achieved in previous votes.
“At that point, the bill would become law without the governor’s signature,” said Warren.
Warren is one of eight Republican lawmakers who sponsored the bill. Speaking with Vixio, he also responded directly to Cooper’s claim that the bill is “premature, vague and reactionary”.
“The bill is proactive and preventative: not premature,” he said. “The language is concise and clear; there is nothing vague about it.
“It is, however, in reaction to the federal government and global interest in the concept of central bank digital currency.”
Warren said he sponsored the bill to protect the privacy of individuals and to uphold their right to control their own assets.
Representative Jeff McNeely (R), another sponsor of the bill, also described the proposed legislation as “proactive, not reactive”.
He added that the bill will stay in its current form when it returns to the legislature to override the governor’s veto.
“This will give North Carolina precedence by legislation to defend itself, in case of a legal challenge,” he said.
CBDC resistance in other states
Last month, Louisiana became the fifth US state to enact legislation banning the use of CBDC, following in the footsteps of Florida, Alabama, Indiana and South Dakota.
Other US states currently considering legislation to ban or limit the use of CBDC include Hawaii, Nebraska, Utah, Wisconsin, Oklahoma, Tennessee, Missouri and New Hampshire.