Louisiana Takes Legislative Action to Ban Central Bank Digital Currencies and Regulate Mining Operations
Summary:
Louisiana has updated its laws to ban central bank digital currencies (CBDCs) and implement guidelines for digital asset mining and node operations. The law, effective from August 2024, restricts both the state and foreign entities' involvement in digital currency transactions and mining operations. The legislation also clarifies the roles of node operators. The future of a digital dollar in the US remains uncertain, as more states pass restrictive legislation and presidential contenders express their concerns. As per Cointelegraph Research, 110 countries are actively exploring or developing a CBDC.
Louisiana, a state in the US, has updated its laws to implement a ban on the utilization of central bank digital currencies (CBDCs) and establish guidelines for mining and node operations. The updated law will be put into effect as of August 2024. Referred to as the Blockchain Basics Act, the legal adjustments hinder Louisiana from engaging in experimental activities and accepting or mandating payments through a CBDC. However, the legislation does not disallow the usage of other forms of digital currencies. As the Act specifies, governmental bodies shall refrain from involvement in any experiments related to central bank digital currencies conducted by the Board of Governors. Furthermore, the state is establishing strict regulations over foreign-owned businesses associating with digital asset mining. Foreign entities are forbidden from purchasing or preserving any interest in mining activities involving digital assets within Louisiana. The mandate will become effective from August 1, 2024, giving foreign-controlled businesses currently involved in digital asset mining within the state a one-year grace period to completely disinvest. Noncompliance may result in hefty fines, possibly reaching up to $1 million or a quarter of the foreign entity's stake in the mining operation. Louisiana's revised law also sheds light on node operations and operators, along with their specific roles within a network. It emphasizes that while nodes are fundamental to uphold a blockchain, they lack the power to influence or dictate a transaction's result that is initiated by users. The Act defines a node as a computational tool that interacts with other devices or participants within a blockchain to maintain consensus and ensure the blockchain's integrity by generating and authenticating transaction blocks. It emphasizes that the node operator does not have the power to dictate transactions initiated by end users on blockchain protocol. The forecast of a digital dollar within the United States is becoming increasingly unclear. Like Louisiana, states including Florida and North Carolina have also made legislative changes to limit or prohibit CBDC use. Also, potential presidential candidates for the upcoming election have voiced concerns over CBDCs. Donald Trump has been vocal about his disapproval of CBDC, noting fears over governmental overreach and a potential increase in surveillance. Whereas, the Biden administration appears more open in terms of exploring CBDCs even in the face of legislative resistance from a group of US senators pushing a ban on introducing a digital dollar in the country. Cointelegraph Research data shows that about 110 countries are actively pursuing or developing a CBDC, with 39 countries taking it a step further, either by piloting or launching CBDC initiatives. The apprehension and skepticism of lawmakers fuel proposed regulations on cryptocurrencies in the US.
Published At
6/24/2024 9:20:00 PM
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