For some, Wednesday’s subcommittee on Senate File 2079 was an educational opportunity. For others, it was a matter of national security.
The proposed legislation, filed by Sen. Zach Nunn (R-Altoona), would prohibit state and political subdivisions of the state from accepting payment in the form of virtual currency.
Sen. Tony Bisignano (D-Des Moines) had an opportunity to provide opening thoughts but passed.
“I frankly do not understand any of this,” he said.
Carolann Jensen of the Board of Regents said their biggest concern was the bill’s definition of cash.
“It is very limited and we do accept foreign currency as payment for tuition,” she said. “We do convert it to United States currency before we deposit it, but we do not accept cryptocurrency at all.”
Daniel Stalder of Iowa League of Cities requested that political subdivisions be removed from the bill.
“Reason being any negative consequence that may arise out of this could be fixed and worked through and then bring political subdivisions into a more well-rounded plan in the future,” Stalder said.
Mike Rozenboom of the Iowa Bankers Association shared the same concern over the definition of cash, questioning if the bill would inadvertently exclude certain things such as ACH payments or wire transfers.
The definition of cash was a popular area of concern. Karen Austin of the Iowa State Treasurer’s Office said the legislation could instead talk about what is not allowed as opposed to trying to define it.
After public testimony, Bisignano asked why the legislature is putting forth the bill.
“I would like to hear more from state agencies like the treasurer, superintendent of banking and ask what their opinion is on this because I don’t pay any attention to it,” he said.
Sen. Roby Smith (R-Davenport) said Wyoming accepts bitcoin, calling it the most digital currency friendly state in the nation.
“There are states that are going this way,” he said. “I know that Rand Paul and Andrew Yang accept digital currency as far as donations. I do know that on the 1040 IRS tax return there are spots for digital currency if it’s owned. So, it seems like this is becoming more of a mainstay.”
Nunn arrived to the subcommittee in time to provide his thoughts on the bill.
“The concern is that we have a currency competing with a sovereign nation like the U.S. dollar,” he said. “Right now if you are a state entity and you were to receive payment, very few of them accept the euro as a form of payment. Now we’re looking at options to accept currency, and this is nationwide, not just for Iowa, cryptocurrencies or corporate-backed currencies could be acceptable forms of payment.
“We collectively should look at some of the challenges and concerns that come with this. Cryptocurrency like bitcoin, while not sovereign currency, is used for a myriad of different things. It’s highly untraceable and most often used in illicit or illegal activity.”
Nunn said understanding the value of the currency is difficult. In addition, being backed by a corporation leaves questions as to who bears the burden if the industry-backed currency crashes.
Finally, there are privacy concerns. Nunn noted that how the money is spent can easily be tracked. That information could then be given to advertisers.
The top concern, though, is who is left on the hook in the event the currency goes belly up.
“Ultimately it’ll be us as taxpayers,” Nunn said. “All I’m asking on this bill is how do we protect sovereign currency and what level of risk does the state of Iowa want to accept when it comes to other nontraditional forms of payment.”
There is overwhelming evidence that shows cryptocurrencies are used to sponsor terrorism, said Nunn, a military officer who serves in the U.S. Air Force.
Sen. Chris Cournoyer (R-LeClaire) said she understands the spirit of the bill is to protect taxpayers.
“I think I’d like to continue this conversation by making a recommendation to go forward with a possible amendment,” she said.