Two Texas lawmakers have recently introduced identical bills to create a state-based digital currency backed by gold. The bills state that a fractional equivalent amount of physical gold would back the proposed digital currency, and the trustee must hold a sufficient amount of gold in reserve for all units of digital currency that have been issued and are still in circulation.
Details of the proposed digital currency
Senator Bryan Hughes introduced Senate Bill 2334 on March 10, with Representative Mark Dorazio introducing House Bill 4903 on the same day. The bills explain that once a person purchases a certain amount of digital currency, the comptroller would use the money received to buy an equivalent amount of gold. The purchaser would then receive digital currency equal to the amount of gold purchased by the comptroller.
The value of a unit of digital currency must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of the transaction. The bill states that a fee might be established “at any rate necessary” to cover the costs of administering this chapter.
Despite objections from several United States lawmakers against introducing a central bank digital currency (CBDC), the Texas bills propose a state-based digital currency backed by gold.
US lawmakers’ stance on CBDCs
Several United States lawmakers have recently argued against introducing a CBDC. Florida Governor Ron DeSantis stated in a March 20 press conference that CBDCs would grant “more power” to the government and provide the government “with a direct view of all consumer activities.”
Republican Senator Ted Cruz also recently 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.”
Although neither of the bills proposing a gold-backed state digital currency in Texas has been passed or presented for a vote, they state that the act will take “effect September 1, 2023.” This move is likely to have significant implications for the cryptocurrency world, particularly in light of the current debate on CBDCs. It remains to be seen whether other states will follow Texas’s lead and propose their own state-backed digital currencies.