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ARIZONA STATE SENATE
Fifty-Sixth Legislature, Second Regular Session
central bank digital currency; ban.
Purpose
Prohibits federally recognized central bank digital currency (CBDC) from being the subject or medium of payment of any contract, security or other similar instrument in Arizona and excludes CBDC from the definition of legal tender for the purposes of all Arizona Revised Statutes, including the Uniform Commercial Code.
Background
CBDC is generally defined as a digital liability of a central bank that is widely available to the general public (Federal Reserve). In 2022, President Joe Biden issued Executive Order 14067 which directed federal agencies to assess the technological infrastructure and capacity needs for a potential U.S. CBDC (E.O. 14067).
Arizona's Uniform Commercial Code regulates commercial and secured transactions in Arizona, including sales of goods, leases of personal property, negotiable instruments, bank deposits and collections, rights and obligations connected with fund transfers, letters of credit, investment securities and secured transactions. Under the Uniform Commercial Code, money is defined as a medium of exchange currently authorized or adopted by a domestic or foreign government, including a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries (A.R.S. Title 47).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Prohibits federally recognized CBDC from being:
a) used as legal tender; or
b) the subject or medium of payment of any contract, security or other similar instrument in Arizona, including contracts relating to commercial transactions.
2. Excludes federally recognized CBDC from the definition of money for the purposes of the Uniform Commercial Code.
3. Defines legal tender as any medium of exchange, including specie, that is authorized by the U.S. Constitution or U.S. Congress for the payment of debts, public charges, taxes and dues, except for federally recognized CBDC.
4. Defines specie as coins that have precious metal content.
5. Applies the definitions of legal tender and specie to all Arizona Revised Statutes.
6. Makes technical and conforming changes.
7. Becomes effective on the general effective date.
Prepared by Senate Research
February 7, 2024
MG/cs