Key Takeaways
- U.S. state officially enacts ‘Cryptocurrency Protection Act’
- Governing bodies prohibited from accepting payments via CBDC
South Carolina Legislates CBDC Ban and Self-Custody Protection
Henry McMaster, South Carolina governor, signed the state bill S.163 on May 19, 2026, into legislation. The new law institutes a comprehensive regulatory framework for digital assets.
S.163 creates a new chapter 47 (Sections 34-47-10 through 34-47-70) in Title 34 of the State Code, which together establishes state-level legal protections for the utility, self-custody, and mining operations of virtual assets.
The law protects the use of crypto payments and self-custody wallets in the state of South Carolina and specifies the right not to be restricted by governments, state and local
Moreover, agencies of the state are banned from accepting or participating in demonstrations of central bank digital currencies (CBDCs). State law is being sorted out with regard to the licensing requirements of remittance provider and the securities applicability for miners, node operators, and staking service providers.
Right to Self-Management Protected and Discriminatory Taxation Prohibited
S.163, Section 34-47-30, delineates that “no one may restrict or prohibit the acceptance of digital assets as a means of payment for legitimate goods and services, and the use of hardware wallets and self-custody using self-hosted wallets.”
In line with this, federal or local governments have been banned from imposing additional taxes, withholding taxes, or other fees based merely on the fact that cryptocurrencies were used as means of payment.
This structure prevents additional taxation based just on the use of digital assets. However, taxes and fees imposed under the same conditions as transactions using U.S. dollars fiat currency are still as clearly stated as before.
Blanket Prohibition on State Agencies from Accepting CBDCs
The new protection law also includes provisions prohibiting central bank digital currencies (CBDCs).
S.163 bans any “governing body,” including state agencies, commissions, ministries, and local governments, from accepting and soliciting payments via CBDC.
Moreover, participation in CBDC demonstration experiments conducted by the Federal Reserve or federal government agencies is not allowed.
The definition of “CBDC” under the Act is limited to cryptocurrencies directly issued, processed, and verified by the Fed or federal agencies. Digital assets issued by private entities backed by fiat currency or U.S. Treasury bonds are excluded from the prohibition.
Consequently, dollar-pegged privately issued stablecoins are not included in the statute and do not affect their circulation within the state.
