Florida Legislature Moves to Regulate State's Use of Digital Currency

TALLAHASSEE, FL—A sweeping new bill would prohibit banks from dealing in digital currency without completing a comprehensive risk assessment to be approved by the Office of Financial Services. The measure builds on Gov. Ron DeSantis' ban on Florida's use of a federalized central bank digital currency.

SB 914, proposed by Republican Sen. Keith Perry, defines a digital trust business as an entity dealing in any sort of virtual currency exchange services. Virtual currency—such as Bitcoin or Cryptocurrency—is an electronic representation of money, accepted and utilized online.

The bill requires banks wishing to deal in digital trusts to fill out an application including fingerprints, photos, and financial statements of upper-level employees. Details on the customer base, marketability, and all past business ventures of the applicant must also be included. The Office of Financial Services has up to 120 days to approve the application.

"Digital currencies are starting to be more and more prevalent across the country, and I think Florida needs to be a leader in the way we handle it and the way we address it," Republican Sen. Jim Boyd told The Floridian, expressing his support for the bill. "So I think we'll develop good policy around the application of that process, and I think that's what our job is: to foster the type of environment that regulates it in the proper way,"

Last year, Gov. DeSantis signed a first-in-the-nation law blocking banks from utilizing a a federally adopted central bank digital currency (CBDC) by excluding it from Florida's definition of money. In 2022, President Biden issued an executive order creating a US CBDC. A central bank digital currency, unlike decentralized currencies like bitcoin, is directly controlled and issued by the government. This grants direct governmental oversight into consumer activity, causing critics to fear government supervision and a diminished role of community banks.

“The government and large credit card companies should not have the power to shut off access to your hard-earned money because they disagree with your politics,” DeSantis said. “Biden’s Central Bank Digital Currency aims to increase government control over people’s finances, and we will not allow it. In Florida, we value personal freedom and won’t allow self-interested elites to chip away at our liberty.”

Virtual currency is largely unregulated, leaving that market open to hackers, scams, and dramatic swings in monetary value. In 2022, an estimated 80 percent of Bitcoin investors lost money after the major crypto exchange company FTX crashed. FTX was found to have operated a fraud-ridden cryptocurrency exchange and crypto hedge fund.

SB 914 does not have a House companion bill, and has yet to see Committee.