McMaster signs law banning Fed CBDC, protecting crypto

South Carolina Gov. Henry McMaster signed S.163 into law in mid-May 2026. The bill, filed as R131 and added as Chapter 47 to Title 34 of the South Carolina Code, took effect immediately upon signing.

The legislation passed the Senate 38-1 and the House 110-1. It bars state governing authorities, including boards, commissions, departments, agencies and political subdivisions, from accepting or requiring payments in a Federal Reserve central bank digital currency and from participating in federal CBDC pilot programs. The law defines a CBDC as a digital currency issued directly by the Federal Reserve or another federal agency and excludes privately issued, asset-backed stablecoins from that definition.

S.163 affirms that individuals and businesses may accept digital assets such as cryptocurrencies, stablecoins and non-fungible tokens for lawful goods and services. The law protects the use of self-hosted and hardware wallets for self-custody. It requires tax treatment of digital asset payments to be neutral compared with U.S. dollar transactions; merchants and consumers may not face additional taxes, withholdings or fees solely because a payment was made in digital assets rather than fiat currency.

The bill includes protections for crypto miners and blockchain operators. Mining sites located in industrially zoned areas are shielded from local sound restrictions that exceed those applied to other industrial businesses. Rezoning actions that affect miners must include proper notice and a public comment period. Operations that draw more than one megawatt of power must be able to provide power purchase agreements to the South Carolina Public Service Commission on request to demonstrate the ability to shed load during periods of grid stress.

S.163 removes the state money transmitter licensing requirement for certain activities tied to blockchain infrastructure, including digital asset mining, operating network nodes, developing blockchain software and running peer-to-peer digital asset exchanges that do not involve fiat currency or bank accounts. The law states that staking and mining-as-a-service arrangements are not securities under state law. The attorney general retains authority to pursue fraud or other unlawful conduct in these areas.

Lawmakers introduced the bill on Jan. 14, 2025. The Senate approved it in May 2025, the House passed it on May 5, 2026, the measure was ratified on May 14, 2026, and the governor signed it days later. The legislation builds on a Digital Assets Literacy Project established by the South Carolina State Treasurer’s Office in the 2022–2023 appropriations cycle.

South Carolina joins Texas and Florida in offering zoning relief, licensing exemptions and regulatory clarity designed to attract miners and other blockchain businesses. The state prohibition on accepting a Federal Reserve-issued CBDC mirrors language found in proposed federal bills but does not change federal law or the legal status of privately issued stablecoins; the law’s provisions apply at the state level to residents and businesses operating in South Carolina.