Louisiana has made a big move by changing its laws to ban central bank digital currencies (CBDCs) and create rules for crypto miners and node operators. These changes are part of the Blockchain Basics Act and will start in August.
The new rules stop the state from using or testing CBDCs, but other digital currencies are still allowed. The Act clearly states, “A governing authority shall not participate in any test of central bank digital currency by the Board of Governor.”
The Act prohibits any governing authority in Louisiana from accepting or requiring payment using a CBDC. They also can’t participate in any CBDC tests by the Federal Reserve or federal agencies.
However, individuals and businesses are free to use digital assets to pay for legal goods and services, and they can self-custody digital assets using self-hosted or hardware wallets.
Source: The State of Louisiana
The Act allows home cryptocurrency mining as long as local noise ordinances are followed. Crypto mining businesses can operate in industrial-zoned areas if they comply with local ordinances. Operating a node to connect to a blockchain protocol or participate in staking is also permitted.
The Act does not prevent the attorney general from acting against fraud under the Unfair Trade Practices and Consumer Protection Law. It also does not exempt anyone from Louisiana Securities Law or other federal and state securities laws.
Foreign entities are restricted from owning crypto mining businesses. A “prohibited foreign party” includes citizens or agents of certain countries, foreign governments, and entities significantly controlled by these parties.
Related: Biden rehires former crypto adviser Carole House
Prohibited foreign parties must divest their interest in crypto mining within 365 days from August 1st. Failure to do so allows the attorney general to take legal action.
If the divestment is not completed, the attorney general can initiate court action. The court may order the sale of the mining business at a judicial sale, with proceeds distributed to lienholders in order of priority.
Other remedies include civil penalties up to $1 million or 25% of the fair market value of the prohibited foreign party’s interest, court costs, judicial interest on the judgment amount, and reasonable attorney fees.
Jai Hamid