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Senate Bill 1296a – Distributed Ledger Technology

Senate Bill 1296a – Distributed Ledger Technology

Niklas Kleinworth
February 16, 2024

Bill Description: Senate Bill 1296 would prevent the state and local governments from imposing regulations that prevent the holding, verification, and use of distributed ledger technology.

Rating: +3

ANALYST NOTE: This legislation was previously known as the Bitcoin Protection Act. It has since been amended to expand its scope beyond Bitcoin to encompass digital ledger technology, more broadly. It also removed several controversial provisions related to Bitcoin mining and electricity ratemaking. Finally, it added needed details and clarified some provisions regarding zoning regulations. These modifications did not change the rating of the bill.

Does it increase barriers to entry into the market? Examples include occupational licensure, the minimum wage, and restrictions on home businesses. Conversely, does it remove barriers to entry into the market?

Senate Bill 1296 would prevent state and local governments from creating undue or discriminatory regulations that would effectively prohibit the use of distributed ledger technology (DLT) or its verification systems. These regulations cover several topics, including noise, zoning, and money transmission.

DLT depends on its decentralized network of users to independently verify transactions and preserve its store of value. Overly burdensome regulations of DLT users and DLT businesses will impede access to the market. This bill prevents undue regulations, preserving a low barrier to entry into the market.


Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

This legislation creates a new section that prevents state or local governments from imposing special taxes or collections that are solely based on the use of DLT as a method of payment. It preserves provisions in Idaho Code to allow the state to collect other taxes that may apply to DLT but are not specific to using it as a method of payment.

Historically, governments have used punitive taxes on alternative methods of payment to direct the market back to the use of the dollar. This legislation prevents special, discriminatory state-level taxes from being imposed on DLT.


Does it violate the spirit or the letter of either the United States Constitution or the Idaho Constitution? Examples include restrictions on speech, public assembly, the press, privacy, private property, or firearms. Conversely, does it restore or uphold the protections guaranteed in the U.S. Constitution or the Idaho Constitution?

Western tenets of natural rights, most famously expressed by John Locke, rank the right to own private property tantamount to the right to life and liberty. The spirit of the United States Constitution draws on these ideas more broadly in its construction. But provisions in the Fourth Amendment to the Constitution, as commonly argued, effectively protect  the right to maintain custody of and use DLT as well.

Distributed ledger technology, though digital in nature, is private property. This bill protects private property by guaranteeing individuals’ and businesses’ ability to verify, maintain self-custody of, and use the technology.

Provisions in SB 1296 that relate to money transmission also protect users from unwarranted government searches and seizures of DLT. The protection is vital and justified because, firstly, this technology is not money. Therefore it should not be subject to money transmission licenses, regardless of the value it communicates. Under the Constitution, Congress has the power to coin money. Presently, DLT is a way to exchange value but is not money under this definition.

Secondly, licenses to transmit money are being weaponized at the federal level to force those performing digital ledger technology verification to aid the government in warrantless financial surveillance of Americans. This style of surveillance is a common problem in the banking system but it is largely avoidable in the DLT ecosystem. Writing this technology out of Idaho’s money transmission code prevents this surveillance and unconstitutional regulation from taking hold at the state level.


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