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(Kitco News) – As lawmakers in the United States introduce bills against the creation of a US dollar-based central bank digital currency (CBDC), Texas is choosing to go a different route with the creation of a state-issued gold. -backed digital currency.
Based on the text of Senate Bill 2334, which was introduced by state Sen. Brian Hughes (R), and House Bill 4903, which was introduced by state Rep. Mark Dorazio (R), lawmakers are seeking to establish a state regulator. Digital currency that is fully backed by gold and fully redeemable in cash or gold.
“The regulator shall establish a digital currency that will be backed by gold so that each unit of digital currency issued represents a fixed fraction of a troy ounce of gold held in trust,” the bills added, adding that if necessary, a private vendor could help establish the digital currency. Enroll to.
The regulator will also have to create a system that will allow citizens to use the new gold-backed digital currency for their daily transactions. “When establishing a digital currency the Comptroller shall establish a means to ensure that a person holding the digital currency can easily transfer or assign the digital currency to another person by electronic means.”
All gold reserves backing the digital currency shall be held in a trust with the Texas Bullion Depository controlled by the Comptroller or another entity designated by the Comptroller. The bills read, “Trustee shall maintain sufficient gold for gold redemption of all units of digital currency which have been issued and not yet redeemed for money or gold”.
There will be no limit to the amount of gold-backed digital currency that Texans can purchase. Upon purchase, the regulator must “buy and issue to the purchaser a fractional number of troy ounces of gold equal to the number of digital currency units issued to the purchaser. Digital currency equal to the amount of gold the regulator purchases with the money received from the purchaser.”
When someone holding a digital currency wants to redeem it for cash, all they have to do is present it to the regulator or a designated agent, who will then sell the gold held in the depository account equal to the redemption amount and transfer the funds to the redeemer, minus any fees. do
Holders can also choose to redeem digital currency for gold. The Comptroller or one of his designated agents may “conduct the redemption of digital currency for gold using bars or coins of standard size and provide fractional balances in cash as required to facilitate the transaction,” the bill said.
The value of each unit of digital currency will be determined at the time of a transaction and “shall be equal to the value of an appropriate fraction of a troy ounce of gold at the time of that transaction.”
And as a way to reassure fund investors who are worried about issues like bail-in, the bill clearly states that “proceeds from purchases of digital currencies, gold purchased under this chapter and proceeds from sales of gold in response to redemption requests are not available for legislative allocation. .”
All fees generated from the management of the Fund shall be deposited into an account established in the General Revenue Fund to assist in defraying expenses.
Both bills end with the line, “This Act shall take effect on September 1, 2023.” At the time of writing, neither bill has been assigned to a committee. To become official legislation, they must first receive a committee hearing, pass by a majority vote, and then be approved by a full vote by the state Senate and House.
Disclaimer: The views expressed in this article are those of the author and may not reflect those Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. NOR CAN THE AUTHOR GUARANTEE SUCH ACCURACY. This article is strictly for informational purposes only. This is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. And the author of this article does not accept responsibility for any loss and/or damage arising from the use of this publication.