Texas lawmakers are proposing a gold-backed digital currency

Texas lawmakers are proposing a gold-backed digital currency

While some US regulators are proposing the introduction of a Federal Reserve-controlled Central Bank Digital Currency (CBDC) that could be manipulated like the dollar, Texas wants a digital currency that can be exchanged for physical gold and cash.

Senate Bill 2334, introduced by Senator Bryan Hughes, and House Bill 4903, introduced by Representative Mark Dorazio, together represent the first proposal for a national currency backed by gold rather than the dollar.

The gold standard… but with a crypto twist

The digital currency represents a fraction of a troy ounce of gold - Republican Senator Bryen Hughes filed Senate Bill 2334 proposing that the Texas Comptroller's Office create the asset whose value is represented by a fraction of a troy ounce of gold.

“The Comptroller shall establish a digital currency backed by gold such that each unit of digital currency issued represents a specified fraction of a troy ounce of gold held in trust.”

The auditor must also establish a means for holders of digital currencies to easily transfer or allocate them to others through any payment system.

Additionally, the Comptroller will act as trustee and trustee on behalf of digital currency holders and will “maintain sufficient gold to enable gold redemption for all units of digital currency that have been issued and not yet redeemed for money or gold.”

A gold-pegged stablecoin backed by the Texas government

According to the draft law, currency reserves must be backed 100% with gold. In order to prevent manipulation of the liquidity of the digital currency, the legislature has taken preventive measures. Although unlimited purchases are permitted, the comptroller must purchase an equal fractional amount of troy ounces of gold to ensure its support and stability and to avoid a possible imbalance between the supply and demand of the digital currency.

“[The controller should] purchase a fractional number of troy ounces of gold equal to the number of units of digital currency issued to the buyer and issue to the buyer a number of units of digital currency equal to the amount of gold the controller purchases with the money received from the buyer.”

So if a buyer wants to sell their coins, the controller or designated body must have an equal amount of cash to cover the funds.

Additionally, those who wish to exchange their coins for physical gold can do so through a designated agent and receive the equivalent in small gold coins or large bars.

“The Comptroller, or a person with whom the Comptroller has contracted, or a person acting as trustee for the purposes of this chapter, may administer the redemption of the digital currency for gold using bars or coins of standard sizes and may pay fractions in cash as necessary to facilitate the transaction.”

This would not be the first government-backed digital currency. Although the digital dollar is still far from implementation (and its issuance is not even secure yet), Miami and New York have already tested the issuance of their official tokens.

Things haven't gone very well, but this is at least a start. Unlike these currencies, whose value fluctuates, each Texas state token would have an equivalent value in gold, similar to, for example, the Digix Gold and Pax Gold tokens.

For now, the projects must be approved at committee hearings before becoming official law and receiving approval from the state Senate and House of Representatives. However, these projects demonstrate Texas' interest in returning to the gold standard, which boosted the U.S. economy and trade for several years.

.