Not included in the welcome flurry of substantive committee activity this first Friday of the 2024 Session is Senate Bill 58, a 132-section monster that no legislator or reporter has fully read yet.
The Department of Labor and Regulation has requested SB 58 to “revise provisions regarding money transmission.” SB 58 adds 68 sections of entirely new code and strikes 64 sections. My rough count finds SB 58 repeals 9.485 words of statute and replaces them with 14,269 words, a bit more than a 50% inflation of the money transmission statues.
So for you Republicans looking for a reason not to read and figure out this bill, there’s a built-in conservative ground for objection: Governor Noem’s bureaucrats are trying to make the law books 50% bigger!
Amidst that code inflation is a definition of money, which the current money transmission chapter does not define (evidently, right now in South Dakota, money is like hard-core pornography: we know it when we see it!). SB 58 defines money as “a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments. Money does not include any central bank digital currency.” That definition gives us a chance to rally the crypto-mugwumps who canned the revision of the states commercial code last Session It also echoes the capitulation of the South Dakota Bankers Association to such noisy foolishness about the dangers of government-backed electro-money.
But that SB 58 definition also appears to exclude cryptocurrency or any other funny money that Bitcoiners, North Koreans, and other Sam Bankman-Fraudsters favor for their questionable dealings. Does that mean SB 58 would further sideline cryptocurrency from South Dakota commerce, or does it exclude the transmission of cryptocurrency from any regulation by the Department of Labor and Regulation?
If SB 58’s regulations tread too closely to the Bitcoiners or anyone else’s sacred cows, they need not worry; special interests need only lobby the state Division of Banking for an exemption, which Section 2(14) newly empowers the director to grant to anyone who the director thinks is serving the public interest and doesn’t need regulation.
The main thrust of SB 58 appears to be to get South Dakota more on board with NMLS, “the Nationwide Multistate Licensing System and Registry developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.” The current money transmission chapter only mentions participation in multistate processes in its last statute, added in 2022, which only says the director “may participate in multistate supervisory processes”. SB 58 Section 9 says the director “is authorized and encouraged to” “establish relationships or contracts with NMLS… utilize NMLS for all aspects of licensing… [and] utilize NMLS forms, processes, and functionalities” in implementing money transmission laws. NMLS says South Dakota’s Division of Banking has been working with them since 2015, but I suspect we’ll hear in committee why the division needs the additional encouragement and revision of SB 58.