According to the bills introduced by two Texas lawmakers, there must be an adequate reserve of gold for all digital currency units currently in circulation. Despite objections from some US lawmakers regarding introducing a central bank digital currency (CBDC), these lawmakers have proposed identical bills for establishing a state-based digital currency supported by gold.
On March 10, Senator Bryan Hughes and Representative Mark Dorazio introduced Senate Bill 2334 and House Bill 4903, respectively, which propose that a fractional equivalent amount of physical gold will back the state-based digital currency they are proposing.
The bills further state that each unit of the digital currency issued would represent a specific fraction of a troy ounce of gold held in trust.
As per the proposed bill, when an individual buys a specific quantity of digital currency, the comptroller will utilize the received funds to purchase an equivalent amount of gold. Subsequently, the purchaser will receive digital currency equal to the amount of gold purchased by the comptroller using the funds received from the purchaser. Moreover, the value of each unit of digital currency must be equivalent to the value of the relevant fraction of a troy ounce of gold at the moment of the transaction.
The proposed bill mandates the trustee to hold sufficient gold to enable the redemption in gold of all units of the digital currency that have been issued and are still outstanding for either money or gold. Additionally, the bill allows for establishing a fee that would cover the expenses of administering this chapter at any necessary rate. Despite neither bill being presented for a vote or passed yet, both bills specify that the act will be effective on September 1, 2023.
Several US Texas Lawmakers have opposed the introduction of a central bank digital currency (CBDC). In a press conference on March 20, Florida Governor Ron DeSantis argued that CBDCs would give more power to the government and enable them to access a direct view of all consumer activities. Similarly, Republican Senator Ted Cruz introduced a bill on March 21 to prevent the Fed from launching a “direct-to-consumer” CBDC. Cruz emphasized the importance of ensuring that US policy on digital currencies safeguards financial privacy, preserves the dollar’s dominance, and fosters innovation.