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On May 19, South Carolina Governor Henry McMaster signed S. 163, establishing a regulatory framework for digital assets and cryptocurrency activities in the state. The law creates protections for the custody of digital assets, limits the role of central bank digital currencies (CBDCs), and clarifies the treatment of certain blockchain-related activities under South Carolina law. The law took effect immediately upon the Governor’s signature.
S. 163 addresses a broad range of digital asset activities, including digital asset payments, mining operations, and licensing requirements for blockchain participants. Specifically, the law:
- Bars state CBDC activity. State agencies and political subdivisions may not accept or require payments using a CBDC or participate in federal CBDC pilot programs.
- Protects digital asset use and custody. Individuals and businesses may accept digital assets for lawful goods and services, maintain self-custody through self-hosted or hardware wallets, and avoid additional taxes or charges based solely on using digital assets as payment.
- Limits restrictions on mining businesses. Political subdivisions may not impose certain zoning or noise restrictions on digital asset mining businesses in industrial zones unless those restrictions generally apply to other businesses in the area, and mining businesses must address certain electrical grid requirements.
- Creates licensing and securities-law exemptions Certain mining, node operation, software development, and digital-asset exchange activities do not require a money transmitter license, and businesses offering mining-as-a-service or staking-as-a-service are not offering securities under South Carolina law.
Putting It Into Practice: South Carolina’s enactment follows other recent state efforts to establish legal framework for digital assets (previously discussed here). Companies engaged in digital asset activities should continue to monitor state legislative developments and evaluate whether their licensing, compliance, and operational practices should be updated to account for evolving state requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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