In a recent development, the North Carolina General Assembly has successfully overridden Governor Roy Cooper’s veto of House Bill 690, which prohibits the state from accepting central bank digital currencies (CBDCs) as payment and from participating in any Federal Reserve testing of CBDCs. This move reflects growing concerns over CBDCs’ impact on financial privacy and state sovereignty, as well as a broader national resistance to federal control over digital currencies. The legislative journey to pass House Bill 690 has been contentious, demonstrating 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 with a significant majority vote of 109-4 and by the Senate with a 39-5 vote. However, Governor Roy Cooper, a Democrat, vetoed it on July 5, citing concerns that the legislation was premature, vague, and reactionary. Despite the veto, the Republican-majority legislature swiftly challenged it and, on September 9, the Senate voted 27-17 to override Cooper’s veto, just surpassing the required 60% majority. The latest Senate vote revealed a stark partisan shift, with Senate Democrats who initially supported the bill aligning with the governor’s position. Industry experts criticized the veto, highlighting the missed opportunity to signal strong opposition to the Federal Reserve’s exploration of CBDCs.
North Carolina’s stance is part of a broader national debate on the future of CBDCs in the United States, as the Federal Reserve explores the potential issuance of a CBDC. While the Fed has outlined possible benefits of a CBDC, such as increased payment efficiency and financial inclusion, concerns remain about risks to financial stability, privacy, and the role of the banking system. Federal Reserve Chair Jerome Powell has emphasized that the Fed would only proceed with explicit congressional approval and would issue CBDCs through the existing banking system rather than directly to consumers. However, state-level apprehensions persist, as evidenced by North Carolina’s legislative actions and moves at the federal level to prevent direct issuance of CBDCs to individuals.
The legislation passed by North Carolina prohibits the acceptance of CBDCs for state payments and any state involvement in future Federal Reserve CBDC testing programs. This approach could serve as a model for similar legislative efforts across the country, especially in regions where skepticism toward federal involvement in digital currencies is high. Overall, North Carolina’s decisive action highlights the complex relationship between state and federal authorities in regulating and implementing digital currencies, as well as the ongoing debate over the impact of CBDCs on financial privacy and state sovereignty. As the CBDC landscape continues to evolve, state-level resistance to federal control may become a defining factor in shaping the future of digital currencies in the United States.
