Texas lawmakers are throwing their weight behind the development of a gold-backed state digital currency despite the pushback from critics against the launch of a central bank digital currency (CBDC).
Bryan Hughes and Mark Dorazio submitted fresh bills to Texas’ lawmaking bodies on March 10, seeking to use gold as the underlying asset for the proposed digital currency. Both bills indicated that each unit of the digital currency would denote a fraction of a troy ounce of gold with a comptroller in charge of purchasing gold equivalent to the amount of digital currency bought by the user.
The bill notes that the comptroller of the proposed currency will hold the gold in trust for users and may rely on the Texas Bullion Depository for custodial services. The trustee is also saddled with the responsibility of maintaining enough gold to cater to the redemption of the digital currency.
“The comptroller, or a person with whom the comptroller has contracted, or a person serving as a trustee for purposes of this chapter, may manage redemption of the digital currency for gold by the use of bars or coins of standard sizes and may pay fractional remainders in cash as is necessary to facilitate the transaction,” the bill read.
Details obtained from the bill suggest that the comptroller will have the power to establish a fee for the issuance and redemption of digital currency. The comptroller also has the additional authority to determine the value of a unit of the digital currency, with another section noting that funds held by the comptroller will not be subject to any legislative appropriation.
While the bills are yet to undergo legislative scrutiny, both bills look to come into effect on September 1, 2023. However, analysts believe that the chances of the bills becoming law are slim, given the massive criticisms trailing the launch of a U.S. CBDC.
Leading the campaign against CBDCs are a handful of U.S. politicians like Ted Cruz and Ron DeSantis as they take swipes against claims that the Federal Reserve could be launching a digital dollar. DeSantis argued that a digital dollar would intrude on citizens’ privacy while giving the government wider surveillance powers against Americans.
Still undecided, but the race goes on
Although the U.S. government has not confirmed that it will pursue a CBDC, a White House document revealed that it is closely monitoring industry-related developments.
According to the report, the White House confirmed that the CBDC could offer the country’s financial system efficient and low-cost transactions and greater financial inclusivity. The White House noted that exploring a digital dollar would support the “continued centrality” of the country in international finance but warned of certain inherent risks.
Currently, the government has mandated the Office of Science and Technology Policy (OSTP) to conduct a technical evaluation of the viability of a digital dollar. While the U.S. opts for a cautious approach, CBDC development in other regions has moved at breakneck speeds, with China leading the pack.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: CBDCs and BSV
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