Two Republican lawmakers from Texas, Senator Bryan Hughes and Representative Mark Dorazio, have recently introduced legislation to create a gold-backed digital currency. Through this bill (S.B. No. 2334), the state legislature is seeking to provide a viable alternative to a central bank digital currency (CBDC). Advocates of the gold standard have long seen the establishment of a gold-backed digital currency as beneficial to its citizens and those in support of the bill emphasize its ability to give Texans an option to by-pass a CBDC.

The bill stipulates that the newly proposed digital currency is backed by gold and that each unit issued would represent a fraction of a troy ounce of gold held in trust. For these reasons, the unit's value would remain the same regardless of local or global monetary and economic controls. A trustee will be appointed to the trust and, according to the bill, must maintain enough gold to back the total quantity of units that have yet to be redeemed either for money or gold.

The proposed gold-backed digital currency has received pushback from the U.S. Treasury Department who, thus far, has been against a return to the gold standard and any alternative digital currencies. In 2007, the Liberty Dollar headquarters and all its assets were seized by the Federal Bureau of Investigation, and the digital currency project e-gold by Gold & Silver Reserve Inc. was shut down by a federal grand jury. Even so, the gold-backed digital currency proposed in the Texas bill would be monitored and operated by the state government. This fact has not kept Texas from being the 14th out of 13 other states to attempt creating an alternative, gold-backed currency unsuccessfully.

The trust to hold the gold-backed digital currency will be maintained by the state's comptroller and certain money and deposits will be free from legislative appropriation. Additionally, the bill aims to give holders of the digital currency the freedom to transfer or assign it to any other person instantly and electronically. The full and ultimate success of the bill and the development of the gold-backed digital currency is yet to be seen, but for now, Texas lawmakers hope to use it to provide its citizens with a secure financial future.



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