Senator Wendy Rogers' new proposal to establish Bitcoin as legal tender may be problematic as the US Constitution does not allow the state to create its own legal tender.
Arizona state senator Wendy Rogers has issued the motion hoping to give Arizona power to make Bitcoin legal tender in the state. The bill, dubbed "SB 1341", could cause citizens to choose to receive their wages in Bitcoin and companies to use the cryptocurrency as they see fit.
Rogers was a controversial figure. After taking office in early 2021, she praised the conspiracy theorist group QAnon. It is not a proposal that deviates from the norm. Especially with what others are starting to accomplish across the US and overseas.
Will the US Constitution stop Rogers' new proposal?
The biggest obstacle that SB 1341 will undoubtedly face is the US Constitution, which currently does not allow states to create their own legal tender.
For those "strict constructionists" who believe that the US Constitution should be interpreted exactly as it is written. No need to refer to anything else. Kest is a simple "no" to Senator Rogers' proposal. On the other hand, "modernists" who see it more as a "living document" could argue why Arizona introducing its own legal tender is still within the limits of the Constitution.
For the sake of context, it is worth noting that the law in its current form only mentions "bitcoin" - not all cryptocurrencies. For SB 1341 to become law, it will have to pass through the Arizona Senate and the House of Representatives. It will then be signed by Arizona Governor Doug Ducey.
Unfortunately for Rogers, it will be nothing more than an uphill road. Especially considering that the US Constitution does not currently offer any laws or amendments that allow individual states to establish their own legal tender.
Congress will have the right (...) to mint coins, regulate their value and the value of foreign coins. And also establish standards for measures and weights (...).
Monetary Clause, Art. 1, Sect. 8, Cl. 5 | US Constitution
Under the Monetary Clause, the right to determine what is and is not "legal tender" is the exclusive competence of Congress. However, according to one New York lawyer, Senator Rogers' bill may not have as much impact in Arizona as intended. Preston Byrne, partner at Washington-based law firm Anderson Kill said:
The monetary clause means that the right to determine what is and is not 'legal tender' is the exclusive preserve of Congress.
Byrne advises a wide variety of tech companies. These include cryptocurrency miners and producers, developers of decentralized protocols, hedge funds, and other institutional investors.
According to Byrne, even if the bill becomes law in Arizona, it will not significantly affect bitcoin use in the state.
El Salvador is leading the way, but could Texas be next?
Currently, El Salvador's September decision to officially recognize Bitcoin as the country's legal tender alongside the US dollar makes this country the only country in the world to make cryptocurrency an official currency.
However, despite a landmark precedent, the country faces scrutiny from the International Monetary Fund (IMF). This institution urges El Salvador to reconsider its decision in light of the high risk presented to consumers.
However, adopting cryptocurrency as legal tender carries high risks to financial and market integrity, financial stability, and consumer protection. It can also create contingent liabilities.
The IMF began speaking out against the adoption of cryptocurrencies as legal tender as early as August 2021. In countries with stable inflation, strong currencies, and trustworthy institutions, there would be no incentive for families and businesses to buy or charge with cryptocurrencies. Especially considering their volatility.
Another potentially promising proposal may come from Texas. Republican real estate developer and current Texas governorate candidate Don Huffines recently stated that he would make Bitcoin "legal tender" if elected.
Last year, Rogers was appointed to the Blockchain and Cryptocurrency Study Committee. He says he will work there to make Arizona a cryptocurrency-friendly state. The committee aims to identify mechanisms by which cryptocurrencies can be integrated into the state's pre-existing financial infrastructure. It currently includes members from the Arizona State House and Senate and participants in the cryptocurrency industry.
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