The legislation bans state agencies from participating in or accepting central bank digital currencies (CBDCs), protects crypto self-custody rights, and prevents higher taxes on crypto transactions compared to US dollar payments. The law also provides protections for Bitcoin miners.
South Carolina Passes Major Pro-Crypto Rights Bill
South Carolina moved closer toward becoming one of the most crypto-friendly states in the United States after Governor Henry McMaster signed Senate Bill 163 into law. The legislation passed with overwhelming bipartisan support in both the state Senate and House of Representatives, and it introduces broad protections for cryptocurrency users, miners, and blockchain-related businesses while also taking a firm stance against central bank digital currencies (CBDCs).
SB 163’s history
One of the more stand-out aspects of the new law is its rejection of CBDCs at the state level. Under the legislation, South Carolina state agencies and political subdivisions are prohibited from accepting CBDCs as payment, requiring their use, or participating in any Federal Reserve-led digital currency pilot programs. Many lawmakers believe that government-issued digital currencies could increase financial surveillance and reduce individual financial privacy.
SB 163
The law also strengthens protections for crypto users by guaranteeing the right to self-custody digital assets. This means residents can legally use hardware wallets and self-hosted wallets without fear of government restrictions.
In addition to this, the legislation prevents authorities from imposing higher taxes on crypto transactions compared to similar payments made using US dollars. This creates a more level playing field for digital asset adoption.
Bitcoin mining operations also received protections under the new framework. The law limits the ability of local governments to target crypto mining businesses with special restrictions that do not apply to other industrial operations.
Municipalities are prohibited from introducing mining-specific noise regulations beyond existing environmental and pollution standards. Local governments also cannot abruptly change the zoning status of mining businesses without following proper notice and public comment procedures, while affected companies keep the right to challenge zoning decisions in court.
Beyond mining, the legislation removes several regulatory barriers for blockchain-related activities. Certain crypto operations, including node operation, mining, blockchain software development, and crypto-to-crypto trading, are now exempt from money transmitter licensing requirements. The law also clarifies that mining-as-a-service and staking-as-a-service providers should not automatically be classified as securities offerings.
South Carolina now joins a number of US states that are introducing pro-crypto legislation to attract blockchain innovation and investment. States like Kentucky, Oklahoma, Arkansas, Florida, Mississippi, Montana, North Dakota, Louisiana, and Arizona have all passed similar laws over the past few years.
