Texas Lawmakers Propose State Digital Currency Backed By Gold

Texas legislators have introduced legislation to create a state-based digital currency backed by gold, despite the objections of several U.S. legislators to the introduction of a central bank digital currency (CBDC).

On March 10, Senator Bryan Hughes and Representative Mark Dorazio introduced Senate Bill 2334 and House Bill 4903, stating that an equivalent fractional quantity of physical gold would back the proposed digital currency.

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

The measure specifies that after an individual purchase a certain amount of digital currency, the comptroller would use the funds to purchase an equivalent quantity of gold. The purchaser would then receive digital currency equal to the amount of gold bought by the comptroller with the funds provided by the purchaser.

At the time of the transaction, the value of a unit of digital currency must be equal to the value of the appropriate fraction of a troy ounce of gold.

“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 states.

It was added that a levy could be imposed “at any rate necessary” to cover the administrative costs associated with this chapter.

Although neither bill has been ratified nor put to the vote, they both state that this act will go into effect on September 1, 2023.

Recently, some United States legislators have argued against the U.S. implementing a CBDC.

Governor Ron DeSantis of Florida stated at a press conference on March 20 that CBDCs would give the government more power and a direct view of all consumer activities.

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