Two Texas Legislators Propose a State-based Digital Currency Backed by Gold

CBDCs are a digitized mode of currencies that are issued as legal tender by the central bank of a country. To this end, lawmakers from Texas have presented a new bill that deals with a gold-backed state-level digital currency.

The bill mandates that the person who has the state digital currency must also carry an equal amount of gold in their reserves to back the cryptocurrency supply. This bill was introduced by two lawmakers from Texas who has presented identical bills on the topic.

These bills have detailed a new digital currency project that is used on the state level and is backed by gold reserves in equal proportions. This move has arrived at a time when some legislatures in US have talked about the loss of financial privacy with CBDCs.

The first bill in this instance was created by Senator Hughes under the name Senate Bill 2334 and it debut on 10 March. The second bill was presented by Representative Mark Dorazio as House Bill 4903 at the same time.

Gold Standard for Crypto Projects

Both bills have described a new state-level digital currency that uses a fractional amount of gold to back the total token supply. The inscription of the bills talked about backing each unit of the state digital currency project using a troy ounce of gold.

The total gold reserve for this project is to be held in a trust. It states that when new investors purchase a given amount of digital currency the comptroller of the project will use the purchase amount to acquire gold in equal proportions.

Later, the buyers will be able to receive the same amount of digital currency after the comptroller has purchased gold in exchange for fiat currency. Both bills have stated that the value of a digital currency is going to be as much as a troy ounce of gold market value when the transaction takes place.

The trust of the gold reserve is obliged to maintain enough reserves that can back all the units of purchased digital currency with a 1:1 ratio.

The bill has maintained that the trust of the gold reserve can administer an operating fee at any stage to cover administrative costs. At present, these bills are not put for a vote or officially presented.

However, the legislators have maintained that the bill will take effect in September this year. There are some political candidates and legislators such as Republican candidate and Florida governor Ron DeSantis that have issued reservations about a CBDC.

On the other hand, Senator Ted Cruz introduced a new bill on 21st March to impose a ban on the Federal government. This ban has specified an exodus on the “direct-to-consumer” CBDC project. He has claimed that the digitized dollar should ensure financial privacy, ensure global dominance of USD, and safeguard innovation.

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