State Senator Wendy Rogers’ new proposal to institute Bitcoin as legal tender may be problematic, as the U.S. Constitution does not permit a state to create its own legal tender.
Arizona State Senator Wendy Rogers has issued a proposal, hoping to allow Arizona the power to make Bitcoin a legal tender in the state. The bill, dubbed ‘SB 1341‘, could see citizens opting to receive their salaries in bitcoin, and companies could use bitcoin as they see fit.
While Rogers has been somewhat of a controversial figure, having taken office in early 2021, previously expressing praise for the conspiracy theory group, QAnon – it’s not an outlandish proposal to throw out there, given what others are starting to accomplish throughout the U.S. and abroad.
Will the U.S. Constitution Trump Rogers’ New Proposal?
The biggest hurdle that SB 1341 will undoubtedly face is the U.S. Constitution, which currently does not permit a state to create its own legal tender.
For those “strict constructionists” who believe that the U.S. Constitution should be interpreted exactly as it’s written, with nothing else needed to refer to, this is an easy “no” to Sen. Rogers’ proposal – whereas, “modernists” who consider it more of a “living document,” could make arguments as to why Arizona implementing its own legal tender is still within the confines of the Constitution.
For context, it’s worth noting that the bill in its current format, only mentions “bitcoin” – not all cryptocurrencies. For SB 1341 to become law, it will need to pass the Arizona Senate and House of Representatives, before going to Arizona Governor Doug Ducey to be signed.
Unfortunately for Rogers, it will be nothing short of an uphill battle, considering the U.S. Constitution currently doesn’t offer any provision(s) or amendment(s) that allow for individual states to institute their own legal tender.
“The Congress shall have Power…to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures…”The Coinage Clause, Art. 1, Sect. 8, Cl. 5 | U.S. Constitution
Pursuant to the Coinage Clause, the power to determine what is and what is not “legal tender” is an exclusive power of Congress. However, according to one New York lawyer, Sen. Rogers’ bill may not have as big of an impact in Arizona as intended.
“The Coinage Clause means that the power to determine what is and what isn’t ‘legal tender’ is the exclusive province of Congress,” said Preston Byrne, a partner at the Washington, D.C. law firm Anderson Kill. Byrne advises a diverse range of technology businesses, including cryptocurrency miners and stakers, decentralized protocol developers, hedge funds, and other institutional investors.
It is Byrne’s belief that even if the bill did become law in Arizona, it wouldn’t significantly impact bitcoin use in the state.
El Salvador Leads the Way, But Could Texas Be Next?
As it stands, El Salvador’s September decision to officially make bitcoin the country’s legal tender alongside the U.S. dollar makes the country the only one in the world that has made cryptocurrency its official currency.
However, despite the landmark precedent, the country is facing scrutiny from the International Monetary Fund (IMF), which is urging El Salvador to reconsider its decision in light of the large risks presented to consumers:
“The adoption of a cryptocurrency as legal tender, however, entails large risks for financial and market integrity, financial stability, and consumer protection. It also can create contingent liabilities.”
The IMF began speaking out against adopting cryptocurrencies as legal tender back in August 2021. In countries with stable inflation, a strong currency, and trustworthy institutions, there would be no incentive for families and businesses to buy or charge with crypto considering its volatility.
Another potentially promising proposal could come out of Texas, where Republican real estate developer and current candidate for Texas governor, Don Huffines, recently stated he would make bitcoin a ‘legal tender’ if he’s elected.
Last year, Rogers was appointed to the Blockchain and Cryptocurrency Study Committee, where she says she will work to help make Arizona a crypto-friendly state. The committee aims to determine the mechanisms by which cryptocurrencies can be integrated with the state’s pre-existing financial infrastructure. It currently includes members from the Arizona State House and Senate and crypto industry participants.
What do you think about this subject? Write to us and tell us!