The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the House Committee on Judiciary on March 30, 2023.
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March 30, 2023
9:35 a.m.
Conference Room 016 & Videoconference
To: Hawaii State Legislature, Committee on Judiciary
Senator Karl Rhoads, Chair
Senator Mike Gabbard, Vice Chair
From: Grassroot Institute of Hawaii
Joe Kent, Executive Vice President
RE: HB525 (2023) — RELATING TO THE UNIFORM COMMERCIAL CODE
Comments Only
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on HB525 (2023), which would among other things exclude from the definition of money cryptocurrencies that have not been “authorized and adopted” by a “domestic or foreign government.”
Buried on page 38 of this 197-page bill is the following language:
“Money” means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. [The term] “Money” includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more countries. “Money” does not include an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government.
This definition seems to exclude from the definition of “money” cryptocurrencies such as Bitcoin, which would presumably fit into the category of “an electronic record that is a medium of exchange.
The second part of this passage seems to be an attempt to get around the fact that the some governments — El Salvador and the Central African Republic — have already recognized Bitcoin as legal tender, but did so only after Bitcoin had already been operating in those countries without it being “authorized or adopted by the government.”
According to a recent report by the Council on Foreign Relations, “other countries have indicated a willingness to adopt various cryptocurrencies as legal tender” as well.[1]
For example, in November 2022, the prime minister of Saint Kitts and Nevis, in the West Indies, said Bitcoin Cash could become legal tender in his country in 2023. And the Swiss city of Lugano introduced plans last March to let citizens pay local taxes in Bitcoin and two other cryptocurrencies.
In addition, the CFR report said, a handful of other countries, such as Belaru and Singapore, have facilitated cryptocurrency ownership by private individuals through tax incentives.
Here in Hawaii, HB525 would pave the way for banks to use central bank digital currencies, or CBDCs,[2] but disallow the use of other cryptocurrencies.
This is a dubious distinction because throughout history, government-issued money has not had a good track record for preserving its value, as has been shown by the declining value of the U.S. dollar and of nearly every other government-created currency over the past century.[3]
Cryptocurrencies, at least in theory, serve as a check against fiat currencies, and for that reason, should not be excluded from the definition of “money.”
For this reason, we urge the committee to remove the portion of the definition that would exclude cryptocurrency.
In addition, this bill is extremely long and cryptic and arcane in its language. It should be condensed to a more reasonable length and rewritten to be more plain and clear to understand. This would allow for better vetting by lawmakers and the public.
Thank you for the opportunity to testify.
Sincerely,
Joe Kent
Executive Vice President
Grassroot Institute of Hawaii
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[1] Noah Berman, “What Does the Cryptocurrency Decline Mean for Bitcoin Countries?”, Council on Foreign Relations, Dec. 31, 2022.
[2] “What is central bank digital currency (CBDC)?,” McKinsey & Company, March 1, 2023.
[3] Mark Perry, “Chart of the Day,” American Enterprise Institute, May 19, 2021.
