S.B. 298 Programmable Money Amendments: transcript

If you're ready, I'll proceed. I just wanna make sure we have, uh, c Catherine Austin Fitz, uh, want to have her join in part of the presentation, but I'll give a Brief. Looks like we do that Way. Thank you. There she is. Good to see you, Catherine. Uh, I'll let her introduce herself as, as she begins. But, so we have this notion of programmable money. And it's interesting, there's so much benefit in this, uh, technologically, uh, advanced society that we live. One of 'em is, is the opportunity to have different forms of currency. We have Utah has, has clarified in statute that, uh, uh, CBDC is not recognized as legal tender money, but programmable fe features are not limited. Government issued money, currency. They can also exist in privately held digital currencies or stable coins. But let me just back up. We all know that if we have a dollar, whether it's cash or are all in the bank, that that, that it's neutral, it's lawfully ours, we can decide how to use it. The rules that govern our behavior come from laws passed and enforce through due process, not from the money itself, but programmable money has unique characteristics in that you can actually put parameters around how that money is spent. This is something that's being used a lot, uh, in some of the foreign countries. I know it's, uh, uh, have, uh, used, uh, to track behavior, uh, and also can disqualify, uh, certain purchases or uses of the money, regardless of, of the legality of it, based upon the preferences of the one that's, that is programming the, the money. What we're trying to do here is not prevent this certainly, uh, this, it's going to come and we look at, uh, look at the, the largest hedge fund advisor has talked about. This is coming and there's, there's good and bad. We're trying to put some guardrails around to make sure that we're not, uh, inappropriately limiting or, uh, uh, distinguishing between all, all of those that use it and make sure we have, uh, an appropriate alternative, those that choose to drop on on this technology. And with that, I'll segue in. I'll, I'd like to turn it over my co-pilot here and, uh, uh, uh, and then if you'll bring it back to me.

Chair. Thank you. Yes, please. You may still be on Mute Me. There we go. Well, Let me take it off. Can you hear me now? Yes. Okay. Let's, let's do that.

Thank you, Senator Stratton. And thank you to the committee for the opportunity to address you. Um, why is this coming up now? Let me give let me just before you start, if you wouldn't mind, uh, give us your name and who you represent. My name is Catherine Alston Fitz. I am the publisher of the Solari Report. I have many decades in experience as an investment banker, uh, both on Wall Street and in the private markets. And I served as Assistant Secretary of Housing in the first Bush administration.

I currently, I am speaking to you from Florida. I, um, I'm a resident of the state of Tennessee, and I also spend, uh, approximately six months a year in the Netherlands.

Um, again, thank you for the opportunity to address the committee. In 2025, last year, Congress passed the Genius Act, which created a regulatory framework for stable coins, a form of digital money. Once the regulations are in place in late 2026 or early 2027, it is anticipated that stablecoin issuance is expected to grow significantly. Um, currently the digital money market is only, uh, or crypto distributed ledger money is approximately $4 trillion. But as stable coins begin to grow, we could see that grow dramatically. The house has passed an act called the CLARITY Act, which proposes a regulatory framework for digital assets. And the Senate has now responded with a working draft called the Responsible Innovation Act. It is anticipated that this legislation currently in negotiation will pass this coming summer when that is implemented, leaders in the financial markets have proposed that all securities will be traded with digital assets is issued on a distributed ledger. So once the Genius Act and the Clarity Act are both operational, it is likely that this market will go from 4 trillion to significantly into the hundreds of trillions of dollars of digital money issued privately on a distributed ledger. Digital money or assets that are issued on a distributed ledger can be integrated with both governmental or private systems that operate like a social credit system to become programmable money. I would also like to point out, it's important to note that congressional leaders have declined attempts over the last year to outlaw Central Bank digital currency, again, potentially another form of programmable money. Whether programmable money is issued by a central bank or issued as a stable coin or digital asset by private parties, it raises the risk of programmable money being used for surveillance or to compromise the sovereignty of the state. Its financial pools of assets, its enterprises and its citizens. Given this possibility, a prudent man would take steps now to ensure money issued on a distributed ledger can be used to benefit the state and its citizens, but cannot be used to compromise the sovereignty of the state its businesses or its citizens. SB 2 98 sponsored by Senator Stratton, is to design to accomplish this. Again, thank you for the opportunity to address the committee and to Utah's commitment to responsible financial innovation. Thank you. Back to you, Senator Stratton.

Thank you Chair. I, I think I'll leave at, at this point to the committee. I would again, uh, like to have the substitute adopted, but I'll, I'll leave it to the committee. I'll Apologize because I thought we were in public comment. That was part of his presentation. My Bad. I'll come back to the committee then

Yeah. So, um, this is both you, Senator Stratton and as well as your co-presenter. Um, this is, this is a world that I'm, I'm trying to understand, but as, as far as it, let's just say, um, the, um, Congress decides to make CDB or is it CBDC? Yeah. CDDC, uh, legal tender Central Bank digital currency. Yeah. Central Bank digital currency. If they, let's say they decide that now it is legal tender and we have this law, is there a conflict between their supremacy over currency and what is legal tender and what we would be doing in this bill as far as the guardrails that we'd be putting on it? I guess that's a question for both of you. 'cause this is that, that's the only thing I'm, I think I'm, I'm missing, it seems to me there would be a conflict, but I'm not certain. So

Thank you for the question. Let me just, uh, address it then I'll, I'll in invite, uh, Ms. Fitz to do so as well. One of the things, because of this is emerging and one, one reason it's important that we're having these discussions is that signals where we want to be as a state. It's a, it it is correct. We're, we're correct in, in saying that, that there is federal primacy on, on regulation. But if we have, if we have the things that we would like to have in place signaling, that helps form and inform that potential policy, obviously currently it is not recognized as legal tender. As you say, it may, the case may come, but this is, this is an area that we need to signal and weigh in as, as states on, on what we would do if there is a conflict. If that conflict does come, then, then we would have an opportunity at that point to, to amend. However, currently you could, you can see, I, I think, I think, uh, my copilot laid out the timeline very well. And it's important that we at least recognize and have a discussion on what we feel is important as, as, uh, as the legislative body here in this state. How, what would you like to add to that Spitz? Yeah,

So, so if the central bank issued a central bank digital currency, um, it could easily do so in a way that, um, no one is required to use it. So it wouldn't stop, uh, it shouldn't stop a Utah citizen from using a central bank digital currency. It should stop a situation where they don't have alternatives, particularly if the central bank digital currency, um, has criteria that they're uncomfortable using. So as long as citizens have options, it should not conflict with a central bank digital currency. The place where it would conflict with a central bank digital currency is if that, um, added social criteria that you specifically outlawed in the definition of programmable money. So if the Central bank digital currency tried to free somebody's accounts on the basis of their sex or their, um, their, for example, owning and carrying a firearm, so again, it comes back to, uh, it would, they adopt a social credit system in connection with the central bank digital currency, which violates the provisions in, um, in these amendments.

I, I, I, Mr. Chair, I, one follow up question, I gotta make sure I understand. So, the guardrails in this, is it not redefining c potential federal digital currency as not legal tender in our state? Is that what we'd be saying? And if so, how would the public be able to use it if the federal government decided Congress decided to make it legal tender? Because I, I, I think I heard you say that the public could still use it, but aren't we defining it as a state as not legal tender? Oh, that's a good point. That's a good point. So I, I think, you know, the, the goal of this legislation is to make sure citizens cannot be mandated to use programmable money that would restrict essentially their basic sovereignty and financial freedom. Yeah, I, and I agree with that, but okay. This is more problematic than on the, on the surface, but, okay. Okay. Thank you.

to adopt the sub Senator Stratton? Yes, If you would, please.

I make a motion that we delete entitle and body Senate bill 2 98 and replace it with Senate bill 2 98 for substitute.

just on the substitute motion? Yeah, I, I, I appreciate the, the, the question and, and what the intent of the bill is. It's, the intent of the bill is not to make Central Bank digital currency not available. It's to cons to put restraints around, guardrails around how, what, what, what is there. So that, that, I appreciate the question. Thank you.

Hi there, my name is Julius Hamilton. Um, this was a very spontaneous decision. I'm not an expert in this topic. I just thought it was interesting to be able to talk to lawmakers. Um, and I don't know, is it possible for me to just ask like a question about exactly the intention of this law?

Okay. I am personally interested in cryptocurrency. Um, but if I understand correctly, this law is somehow is is it excluding cryptocurrency from the sort of formal definition of money?

Okay. I mean, that, that is my question, essentially. Like, is it, is it trying

No, it does not, is the answer.

Hi, uh, my name's David Lichty. I'm an attorney here in Utah. I am a, I've grown up in from, from Provo live in Bountiful. Right now I'm working with Catherine, um, on, uh, the model legislation with solari, with the programmable money. Specifically to answer your question, currently in, um, in the, in the modified UCC in, uh, Utah, under Utah statutes currently c BDCs are, are prohibited as they're outside of the, the definition of, of, of, of money. We're we're that to, we're that to, um, so this bill expands, um, so that's, those are the government issued cbdc. And this one, this, um, will expand that to cover these privately issued, um, stable coins, um, tokenized deposits, that sort of a thing. And, and realistically, as Catherine's indicated, it's not, this is, um, stable coins. This is coming. It's going to, it's, it's, it's going to be coming. It's, it's, um, it's, it's a matter of putting these guardrails around how it's used. If the, if Congress were to indicate were to create cbdc, that would be, it would, it would preempt as, as the Senator Vickers indicated. Um, however, um, at that point, I think the, the legislature would have to reassess what exactly it means. Um, um, this is a different, this is a different but related, um, issue where it's we're moving towards these, these payment stable coins, these privately issued, um, digital currencies that can be, that can be mod, that can be restricted and, and, uh, programmed. Um, and, and that's, that's all I have to say. I think it, it's, it's a, it's an issue that, that needs to be clearly thought through. Discussed. Uh, how can we both enable the technology to, to make payments faster to, uh, en ensure these cross cross-border payments are made? Um, that how can it increase the, um, the efficacy of, of banking here in Utah and yet still protect individuals' rights to use the currencies they want as they want to, to still have cash, to still use cash, to still use, um, things, uh, to participate in this economy without being, uh, without being, um, restricted in ways that are not legal. That's

Yeah. Thank you. I'll make a motion that we pass the bill out with favor. Recommendation

Thank you chair? I, I do appreciate the motion. I, I would appreciate a positive response to the motion. I do wanna say that we need to be very intentional here. Recognize that, uh, there's, uh, this is a, a, it's like planting a brand new peach tree, and it needs to be trimmed and pruned and, and cared for. But, uh, we needed, this is a key space that we began to engage in the, in the conversation, work with our financial institutions. We have which one Utah has ha has a strong, strong banking and financial institution in the, in the free market. We, we continue to work with them as well as, uh, uh, make, make the, the changes that are needed. But I think it's in a good place right now. And so I'd appreciate the chance to continue the discussion. Thank you.

Yes, I vote. Aye. I'm sorry. I, uh, my coverage blinked out for a second.

Nay. I'm sorry. But only legislators vote.

Thank you, chair and committee. I appreciate the chance to be here. I this robust vetting. Thank you for all you're doing. Several, as I walked up, I says, good luck. Good luck, good luck. So, but I, I appreciate, Appreciate that. This, this is a major committee. Okay, so this, This is, yeah, I, I was, uh, The inside joke that just won't die Grateful, grateful to be here. Programmable money amendments. Uh, we a few years, uh, two or three years ago, there's a lot of discussion on CBDC, central Bank digital currency and, and the good and, and the challenges that that can present, uh, pro programmable money is the, the, the counterpart in the private sector. This is an area that's really emerging. Uh, and, and coming forward, this, the, the, I bring this bill, uh, to the legislature at this point because of that, that technology that is really on our doorstep. I, we, the bill itself has a implementation date, not in 2026, but 2027 to allow some tempering in us to work on this to make sure that we, uh, land where we want to. But it's important at this point that we get a stake in the ground and, and, and recognize the values. In essence, pro programmable money is, uh, different than, uh, what, what what we refer to now as, as an actual dollar that we would have in the bank in our wallet. Uh, we can spend that any way you want. The notion of programmable money is that you can pro program how it is spent, and so therefore you can control what could or could not be purchased with it. And, uh, what we're doing here in this legislation is seeking to place Utah values in this space, what we value, uh, and, uh, ensure that there's an alternative. I'm grateful for, for a good copilot here. I'm gonna let him introduce himself and, and, uh, explain a little bit more. But then, then chair, if you'll let me, uh, come back and then, then we will open it up, if that's okay. That'd be okay. We don't have a sub or anything. Okay, good. Go ahead and introduce yourself, by the way, chair. Yes. You know who the house sponsor is of this bill? I, I figured that out earlier. We haven't talked about that. Is that okay? I hope it is. I don't know. I just realized we've been so busy dealing with so many good house bills in the Senate that we're just trying to get things that, that's just fine. Thank, thank you. That's a lot of confidence and trust here, so, thank you. Go ahead.

Thank you. My name's David Lichty. I am an attorney. I live here in Utah. I am a, uh, a financial, uh, banking compliance background multiple years back in New York City, but I was born in, in Provo. I live in Bountiful now. Um, I am working with Solari Incorporated, which is an organization out of Tennessee. This we've, uh, solari has, uh, put together model legislation for this programmable money, um, issue, which is, uh, kind of at the forefront right now. Nationwide, uh, as, as a senator has indicated, uh, programmable money is a, it's a rapidly emerging technology in the financial world. Uh, it's, uh, money that comes with built in rules. Traditional money is neutral. It exists, is in cash and banking deposits, um, as banking deposits, as entries on a digital ledger. Uh, the, the rules surrounding the use of traditional money are found in the payment systems, uh, such as debit cards, online networks, uh, gift cards, that sort of thing. Venmo, um, the, the money needs an external third party system to direct it. The programmable money in it, in it itself is, is, is a digital money where the unit of value actually is programmable. Uh, it includes cryptocurrencies, central bank, digital currencies, payment, stable coins. Um, it's the, the, the big issue that with the, these, um, are the units of value, uh, as they can be programmed directly, for instance, to work only in certain places for certain to buy only certain items or to stop certain times to expire. The, um, there's an example of this with circle. Uh, so the, the, the, the national government, uh, passed the Genius Act this past summer, which creates this a, a framework for stable payment, stable coins, which are a type of programmable currency. Circle is, uh, circle technologies is, is has one of the, has the largest payment stable coin by, by, uh, um, by far by it, it's called USDC up until November. It was programmed such that you could not buy firearms with it at all, legally, illegally at all. So, uh, in, in November, they capitulated and changed that made it so that you can purchase firearms legally. But this is a sort of example that, that these, this programmable money can, can, uh, can be used. Um, the, the, the bill itself, it, it, it doesn't stifle innovation. It doesn't outlaw outlaw programmable money. It doesn't, um, it, it simply puts boundaries around it. Um, it, it, um, modifies, it, it it modifies the definition of money, which is already has in the, in the Commercial Code of Utah. It already ex central Bank digital currencies that are already excluded. This also excludes other forms of programmable money. Um, it describes the unlawful acts and practices with regard to programmable money makes it unlawful to require the use of programmable money without giving a non-digital alternative, um, free of charge. It, it makes it unlawful to deny a transaction on the, on a list of enumerated factors, including sex, race, ethnicity, political opinion, re, religion, medical history, purchase or browsing history, these sorts of things that, that are often used that we've seen in other countries get used in as, as social credit, social scores. Um, and Utah, with this bill, we're trying to get ahead of that to sort of put in place, um, guidelines that indicate what is and is not acceptable. The urgency of this is with the Genus Act and with the Senate Clarity Act, uh, moving into digital asset space. Um, these, the dis the, um, the adoption and normalization of these programmable payment, uh, type, uh, programmable mu forms of payment will just increase. Um, and, and if, if we wait until programmable money is deeply embedded in commerce, it could come much harder to establish these guardrails. Uh, we have an opportunity to act now, and, um, I, there Utah, we can welcome innovation without surrendering our fundamental freedoms and protections. Thank you.

Thank you. So in, in summation, the guardrails that we're putting around the pro programmable money, it shows that it's used, uh, in Utah. Those, if it's used in Utah, cannot carry embedded conditions that restrict lawful practices, discriminate among users or impose transaction level controls outside of duly enacted law, unless a neutral, lawful alternative form of payment remains available to, so, so individuals can retain meaningful choice in how they participate in commerce in the free market. So with that, uh, chair, we glad to yield.

Thanks, Mr. Chair. Just, uh, I'm curious, uh, and I'm sure there's an easy answer, but it's interesting in the bill, you, you talk about farming and manufactured homes. Why specifically those industries? I'm just curious, Do you wanna start with That?

Sure, sure. The, um, it, it essentially any type of agriculture, any type of, of, um, it, these are things, uh, that have, have, we've seen in other jurisdictions that have kind of have come under, under, under, under contra, under scrutiny. Um, the potential for that, uh, the potential for where a person lives, what they, what they do for, for their business, um, what their, what their employment is, um, is those are the, those are the specific reasons that I, as I understand it, you, could you point me? Go

Ahead. Okay. In fairness, that's in current code, but it just seemed interesting. It was associated with the bill here. Sorry. Thank you. What line is that on? Can you tell me? 4 92, is that 4 92? Yeah, it's in here several times.

So, um, if it's, so the, the, the, actually, actually the language of the, that we've introduced that this is, has, that, that Senator, Senator Stratton's introduced actually only start starts, um, other than certain in insertions. It starts on 8 74, line 8 74. Um, the other insertions, the other, the remaining language is, is language in the code. And, and unless it's specifically in what we've, um, that, that would be a question for those that have introduced it in the past. I'm not certain that manufactured homes is specifically specified in the portion that,

Yeah, I, I stated it's in current code, but it just seemed interesting. The two are mixed in there. So thanks for the answer. Thank

You. Sure. That's, that's just the commercial code.

Thank you, Mr. Chair. So the, the Fed now that was announced what year and a half, two years ago, does that fit into this? And, and how and where has that progressed? What's happening with that?

So, my understanding of the Fed Now system is, is simply, it's a, it's a quicker means of transacting with current traditional money. So it's, it's just a faster network to, um, make the exchanges happen between your bank account and mine rather than creating, uh, and as far as I understand, and, and I, I, my understanding is that it does not have a component, a tokenized deposit token, a a deposit. Essentially you can make a digital representation of your, of your banking deposits. JP Morgan has a JPMs coin that is, that allows it to be used as a programmable money. My understanding is the Fed now does not have that, but it's simply a quicker way of transacting money, um, with the underlying, with your underlying US dollars that are digital currency in your bank account.

Okay. Thank you.

Thank you. I, I actually have another question if we can go for it. Yeah. So I'm trying to understand, so this is a digital currency, so in the realm of Bitcoin type things, but that the issuer of the currency has the ability to place contractual restrictions on its use, is, am I understanding that correctly?

Correct. Bitcoin can also, Bitcoin is a sort of, uh, the, the difference. So bet Bitcoin and Ether are two different ways, different paradigms to look at Bitcoin. The majority of the rules are embedded in the actual code that's shared across the entire network. Um, in order to change that, there are few things that users can, can, um, I just, I'm just looking for real simple answer. I'm trying. So, so, well, that's like, that's the problem. So, so this is a digital currency mm-hmm. Where the issuer of the currency is embedding restrictions on how it's used. Is that right? That's, that's correct. Okay.

So, and is anybody doing this today? Is this, does this type of thing actually exists in the world? Is is a unicorn or is it something we've actually seen Senator,

It's in, thank you for the question. It's anticipated within the next, uh, many months, it'll be, be available. And what, again, what we're trying to do is place some guardrails around it.

You can see where, I can see where you're headed with this. I'm just, I'm just wondering why anybody would ever use that when there are alternatives that don't have restrictions. Why would, like, it's like me. If I, if I had a credit card, but I got charged 1% every time I used it, I wouldn't use that credit card. I would use someone a different one. Right? Well, The one where they're giving you lots of flights, line miles or whatever.

Yes. But yeah, the, uh, the, the, no, the notion is that, and again, that's why we postponed the implementation to 2027. This, you have some federal, uh, federal acts, the, the Genius Act, the Clarity Act that are working their way through as they work through, that's gonna put in place then the opportunity to move forward. But in it, it, it's, it's part of being, uh, proactive rather, rather than reactive. In, in what we're doing. It's a, it's a notion of let's establish as, as you look a again, as you look online, 8 75, part of what we're trying to do is certainly programmable money is allowed, but transactions for, for transactions, except you're offering a non-digital trade free of charge. So that means that we're, we're going to not limit art artificially in the private sector artificially according to, to, uh, a value system. That, that we have listed 8 81 through following, uh, uh, uh, those, those things have traditionally not taken place with, with, uh, our mode of, of payment and, and receipt.

Okay. Thank you. Mr, can I, may I add That, that that's, I think that answers my question.

Thank you, Mr. Vice Chair. Uh, I'd like to make a motion that we pass with the favorable recommendation SB 2 98, second substitute programmable money amendments. Would like to speak to That Sounds like a good bill.

You for the consideration. I'll waive Okay. Uh,

Yes, I, I will. In, in the underlying bill we have, we're dealing with what is referred to as programmable money. And, uh, for example, if you have a dollar today, whether it's in cash or your wallet or money or bank account, that dollar is neutral. You can spend it as you wish. Programmable money is a different, it is a digital money that can be designed to follow building instructions. Uh, those instructions can limit how it's used and, and enable surveillance and transactions so forth. For example, the money could be coded so it can only be spent on certain categories of goods or, uh, at certain locations. This is an emerging area and, and what the substitute does, uh, we, in the underlying there was, there was criminal penalties if, uh, for, for and some real teeth there. And also, uh, it, the bill would take effect, uh, the, the normal cadence of bills that are passed this year. What this substitute does is it takes the teeth out and extends the implementation date for a year. So we have an opportunity to continue to work on this and, and, and allow it to get in place. The reason important we put the stake in the ground now is we want to have some, some banks, some, some guide guidance and direction and reflection of what we value here as a, as a state, uh, uh, that we're not going to allow discrimination or, or seclusion based on a policy or a desire. And number one. Number two, that if you're going to use programmable money, you also have to have an option to use non programmable money in, in, in your area. So that's the substitute in its context in the bill as well. Thank

Thank you. I will, uh, yield to questions or a motion.

Thank you. I'll waive summation and, and move that third substitute SB 2 98. Second substitute. Thank you. 2 98 Program of money amendments. Be read for the third time.

Thank you Mr. President. This is a bill. We had a good discussion last night, but what we're dealing with is programmable money is, is, is a resource that can be used and programmed according to spending. And the challenge in this space, it's new and emerging issue that we have that's going to really heat up over the next 18 to 24 months. We want to get out ahead of this and establish the values that we place that we're not going to use this for. Uh, we're not gonna use this as leverage for ideologies or, or, or, or, uh, political, uh, efforts and, and preferences. But it, what the bill does is it, it is, it, it states, if you're going to use that, you have to be able to use an alternative as well so that you can, you can, uh, transact, transact the businesses and, and the issues that are needed as, as desired in the traditional way. With that, be glad to answer any questions.

Senator Vickers Baldry Lewin Brammer Bus Cullimore Escamia Fillmore Aye. Grover Harper Kins Ipson Johnson Wan McKay Mikel Aye. Milner Musselman Owens Pitcher Hilum Rebi Sandal Stevenson Stevenson Stratton Vicar Weiler Wilson Winterton.

Thank you Mr. Speaker. The this bill establishes, uh, guardrails for programmable money that, uh, may contain built-in rules restricting how it may be used. So, uh, a couple years ago, my, my good friend from Utah County and our, our current congressman, uh, uh, who was former, our former Senator Kennedy, he, uh, they, uh, clarified that CBDC is not recognized as currency in our state. Uh, this bill ensures that money in our, uh, digital, digital assets or digital currency, uh, in our state, cannot be used to discriminate based on political opinions, religious beliefs, medical history, lawful or lawful ownership of a firearm. It prevents an issuer from using ESG standards and diversity programming, uh, compliance as a basis for failing or restricting a transaction. And, uh, this has been worked on with, with our, our, uh, our state auditor who, or our state treasurer, excuse me, Marlo Oaks who supports it. Thank you.

Uh, thank you Mr. Speaker. Motion to encircle SB 2 2 6, fatal motor Vehicle accidents.