South Carolina Enacts Crypto-Friendly Legislation, Bans CBDCs

South Carolina Governor Henry McMaster has signed Senate Bill 163 into law, establishing one of the most crypto-friendly state-level frameworks in the United States. According to Cointelegraph, the legislation, which passed the Senate with a 38-1 vote and the House with a 110-1 vote, prohibits state agencies from accepting central bank digital currencies (CBDCs) and provides protections for cryptocurrency users and miners. The law also aims to remove regulatory barriers for businesses operating within the crypto space. The new law specifically prevents any state agency or political subdivision from accepting or requiring payment in CBDCs, as well as participating in Federal Reserve-led digital currency trials or pilot programs run by federal agencies. Additionally, it safeguards the rights of individuals to self-custody their cryptocurrencies, ensuring that governments cannot restrict the use of hardware and self-hosted wallets. The legislation also prohibits imposing higher taxes on cryptocurrency transactions compared to similar payments made in U.S. dollars. Bitcoin miners in South Carolina receive specific protections under the new law. Mining operations located in industrial zones cannot face restrictions that do not apply to other industrial activities in the same area. Furthermore, local governments are barred from setting mining-specific noise limits beyond existing general pollution regulations. The bill stipulates that any changes to the zoning of digital asset mining businesses must follow proper notice and comment procedures, and businesses have the right to appeal zoning changes in court. The legislation also exempts several activities from money transmitter licensing requirements, including mining, node operation, blockchain software development, and crypto-to-crypto trading. Providers of mining-as-a-service and staking-as-a-service are excluded from being classified as securities. South Carolina joins a growing list of states adopting pro-crypto stances. Kentucky, for instance, passed the Bitcoin Rights bill in March last year, ensuring self-custody rights and protecting mining operations from discriminatory local regulations. Other states such as Oklahoma, Arkansas, Florida, Mississippi, Montana, North Dakota, Louisiana, and Arizona have also enacted similar crypto-friendly legislation in recent years.