Despite some US regulators suggesting a Central Bank Digital Currency (CBDC) controlled by the Federal Reserve that could be as manipulated as the dollar, Texas is proposing a state currency not backed by the dollar but by gold – a digital currency exchangeable for physical gold and cash.
The proposal, known as Senate Bill 2334 and House Bill 4903, is the first for a gold-backed state currency with its value represented by a fraction of a troy ounce of gold. Republican Senator Bryan Hughes submitted Senate Bill 2334 to propose that the Texas Comptroller create the asset, with the comptroller established as a trustee and fiduciary on behalf of digital currency holders. The comptroller must maintain sufficient gold to provide gold redemption for all units of the digital currency issued and not yet redeemed for money or gold. Additionally, currency reserves must be 100% backed in gold to prevent manipulation of the digital currency’s liquidity, and lawmakers have implemented preventive measures to avoid 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.
Unlike other government-backed digital currencies whose value fluctuates, each State of Texas token would have an equivalent value in gold, similar to what the Digix Gold Token and Pax Gold tokens do. The projects require approval at the Committee hearing before becoming official law and gaining State Senate and House approval. However, these projects show Texas’ interest in returning to the gold standard, which boosted the US economy and trade for several years.