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Texas lawmakers propose a gold-backed state digital currency

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Two Texas lawmakers have introduced identical bills for creating a state-based digital currency backed by gold, a move that comes despite objections from several United States lawmakers against introducing a central bank digital currency (CBDC).

Senator Bryan Hughes introduced Senate Bill 2334 on March 10, and Representative Mark Dorazio introduced House Bill 4903 on the same day, stating that a fractional equivalent amount of physical gold would back the proposed digital currency.

“Each unit of the digital currency issued represents a particular fraction of a troy ounce of gold held in trust,” the bills stated.

Text of one of the bills. Source: capitol.texas.gov

It was explained that once a person purchases a certain amount of digital currency, the comptroller would use that money received to buy an equivalent amount of gold.

The purchaser would then receive digital currency equal to the amount of gold that the comptroller purchases with the money received from the purchaser.

It was emphasized that the value of a unit of the digital currency must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of the transaction.

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“The trustee shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold,” the bill also stated.

It was added that a fee may be established “at any rate necessary” to cover the costs of administering this chapter.

Although neither of the bills have been passed or presented for a vote, both stated that this act will take “effect September 1, 2023.”

Several United States lawmakers have argued against the U.S introducing a US-backed CBDC in recent times.

Florida Governor Ron DeSantis stated in a March 20 press conference that CBDC’s would grant “more power” to the government, adding that it provides the government “with a direct view of all consumer activities.”

Meanwhile on March 21, Republican Senator Ted Cruz introduced a bill to block the Fed from launching a “direct-to-consumer” CBDC, stating that it’s “more important than ever” to ensure U.S. policy on digital currencies protects “financial privacy, maintains the dollar’s dominance and cultivates innovation.”

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