Could the Lone Star State pave the way for a new kind of monetary freedom? A bold proposal currently being mulled over in the Texas Senate could see the creation of a state-backed digital currency, underpinned by actual gold and silver. This move presents an interesting blend of old-world, hard asset security with the technological advances of digital currency.
The proposed legislation would enable Texas to produce pure gold or silver coins based on weight and offer debit cards with values underpinned by these precious metals, as reported by various outlets.
More intriguingly, this proposed currency wouldn’t just be for Texans. Anyone across the globe could purchase gold or silver, start an account, and use it for legal purposes. The precious metals would be securely housed at the Texas Bullion Depository, and as the value of the gold or silver appreciates, so too would the account holder’s purchasing power.
According to reports, one of the motivations behind this proposal is to preemptively counter the concept of a federal digital dollar, which is being mulled over by the Biden administration.
Texas Republican state Senator Bryan Hughes, the brain behind this innovative proposal, framed it as a response to concerns over bank failures, inflation, and the potential creation of a federal Central Bank Digital Currency (CBDC).
Pointing out the recent weakening of the dollar, Hughes said, “We know that the dollar, of course, lost more value last year — in 2022 — than any year since 1980.” He believes this proposal serves as a countermeasure against inflation, a stand against federal control through a digital dollar, and an alternative payment method at a fundamental level.
A similar sentiment was echoed by Republican state Representative Mark Dorazio. His bill, similar to Hughes’s but in the House, did not pass, but he still firmly supports the idea as a defense mechanism against rampant inflation for Texans.
According to Hughes, “We’re talking about real gold and silver would have to back up every unit in this. So it’s a real currency, it’s not just believe it because the government says it’s good.”
Of course, the road to a gold and silver-backed digital currency is not without its critics and potential pitfalls. Steve Scurlock, the director of government relations for the Independent Bankers Association of Texas, noted that the arena of digital currency is a bit like the Wild West and requires significant thought on regulation and safety.
Yet, there’s excitement around the possibilities. Kevin Freeman, an investment expert, stated that if Texas can come up with a viable plan, it could become a leader in the digital currency market.
Indeed, the national conversation is turning towards the creation of a Central Bank Digital Currency (CBDC), something that has been acknowledged by the Biden administration’s White House Office of Science and Technology Policy.
Republican Senator Ted Cruz from Texas, however, has made his opposition clear, proposing legislation to halt any federal attempts to centralize or control cryptocurrency. As he put it, the focus should be on “empowering entrepreneurs, enabling innovation, and increasing individual freedom — not stifling it.”
Republican Senator Chuck Grassley of Iowa agreed, expressing concerns about government surveillance over individual transactions. He believes such critical policy should be formed by Congress, not government bureaucrats.
Ultimately, the Texas proposal is intriguing, as it combines the tangible security of gold and silver with the potential of digital currencies. This could present a new path for the monetary future, one in which individuals have greater control and governments are kept in check. Whether it will be successful remains to be seen, but it’s clear the Lone Star State is not afraid to pioneer new trails.
