- Texas is proposing a state currency backed by gold, unlike the dollar-controlled CBDC proposed by some US regulators.
- Senate Bill 2334 and House Bill 4903 propose a digital currency exchangeable for physical gold and cash, with its value represented by a fraction of a troy ounce of gold.
Texas is making a move toward returning to the gold standard by proposing a state currency backed by gold. Senate Bill 2334 and House Bill 4903 represent the first proposal for a state currency not backed by the dollar but by gold. This proposal was introduced by Republican Senator Bryan Hughes and Representative Mark Dorazio. The digital currency represents a fraction of a troy ounce of gold, and the Texas Comptroller would create the asset.
According to the proposal, the comptroller would establish a digital currency backed by gold, with each unit of the digital currency issued representing a particular fraction of a troy ounce of gold held in trust. The comptroller would act as a trustee and fiduciary on behalf of digital currency holders, maintaining sufficient gold to provide gold redemption for all units of the digital currency that have been issued and not yet redeemed for money or gold. Furthermore, the comptroller would establish a means for digital currency holders to easily transfer or assign it to others through any payment system.
The currency reserves must be 100% backed in gold, and to prevent manipulation of the digital currency’s liquidity, lawmakers implemented preventive measures. Although unlimited purchases are allowed, the comptroller must acquire the same fractional amount in troy ounces of gold to ensure its backing and stability, avoiding any possible imbalance in the supply and demand of the digital currency. Those who wish to exchange their coins for physical gold can do so through any designated agent, receiving the equivalent in small gold coins or large bars.
This would not be the first government-backed digital currency, but unlike these currencies, whose value fluctuates, each State of Texas token would have an equivalent value in gold. The digital dollar is still far from being implemented, and Miami and New York have already tested the issuance of their official tokens, but things have not gone very well. For now, the projects require approval at the Committee hearing before becoming official law and gaining State Senate and House approval.
Texas’s proposal for a state currency backed by gold shows the state’s interest in returning to the gold standard, which boosted the US economy and trade for several years. The project is still in its early stages, but it could provide a stable alternative to the US dollar and offer consumers greater transparency and accountability in their financial transactions.