Texas Gold Backed Digital Currency Approved
On May 2, a Texas House committee passed a bill to create 100% reserve gold and silver-backed transactional currencies. Enactment of this legislation would create an option for people to conduct business in sound money, set the stage to undermine the Federal Reserve’s monopoly on …
Texas House Advances Gold-Backed Digital Currency Bill
Texas has taken its first steps in order to approve a bill that would issue a 100% gold-backed digital currency. If enacted as law, the bill, which is being discussed by a Texas House committee, would create an electronic system for users to transact and pay with this digital currency and would also allow them to execute redemptions for the gold specie, or coins, backing it.
A Texas House committee has taken the first steps in the discussion of a bill that creates a digital currency 100% backed by gold specie. The bill, identified as HB4903, which was introduced on March 10 by Representative Mark Dorazio, has garnered the support of 42 sponsors and is ready to exit by the House State Affairs Committee to be voted on by the House.
The bill specifies that the comptroller of the state will “establish a digital currency that is backed by gold so that each unit of the digital currency issued represents a particular fraction of a troy ounce of gold held in trust.” In the same way, the state will have to design an electronic system to allow citizens to freely transact with this currency to make payments.
Custody and Redemptions
The bill, in its current state, establishes that the custody of the gold backing the digital currency will be provided by the Texas state comptroller, or can be assigned to a third party, which will have to maintain the same amount of gold as the issuance of the digital currency, making it a 100% backed digital currency.
Redemptions of the currency will be processed in gold specie or in money, with the comptroller of the state or a contracted third party managing these redemptions. The implementation of this bill would cost the state $25 million for a limited system, with a more functional transactions system costing up to $100 million, according to estimations.
However, the bill has managed to get grassroots support, evidenced by a 78-page document introduced on April 26, signed by several Texans calling for the approval of this sound money law.
Other states are also pursuing laws to establish alternatives to the U.S. dollar as a transactional and reserve currency. On April 11, Arkansas passed a bill that makes gold and silver legal tender, allowing its citizens to use gold specie to legally pay debts and obligations without having tax implications, and 23 more states are also involved in similar legislation.
Arkansas Makes Gold, Silver Legal Tender; 23 States Involved in Similar Legislation to Establish US Dollar Alternatives
A bill signed into law on April 11 has made gold and silver legal tender in the U.S. state of Arkansas, allowing citizens to use gold and silver coins to pay debts. The bill also clarifies that gold and silver “specie” (coins) will not be considered property for tax purposes, and transactions made with these precious metals will not result in tax duties.
Arkansas Embraces Gold and Silver as Legal Tender
The state of Arkansas has moved to make gold and silver function as legal tender in its territories. The “Arkansas Legal Tender Act,” signed by Arkansas Governor Sarah Huckabee Sanders on April 11, explicitly mentions that gold and silver “specie” (meaning any kind of bullion or coin containing these materials) can be used to pay for debts.
The act also specifies that “specie or legal tender shall not be characterized as personal property for taxation or regulatory purposes,” and that “the purchase, sale, or exchange of any type or form of specie shall not give rise to any tax liability.”
The law, which will enter into validity 90 days after its approval in the April 7 legislative session, makes Arkansas the fourth state to designate previously approved gold and silver coins as legal tender, behind Wyoming, Oklahoma, and Utah.
More States Moving to Approve U.S. Dollar Alternatives
23 states are currently developing regulations that will also allow their citizens to use gold and silver as legal tender, according to the Tenth Amendment Center, a federalism advocacy organization. Michael Marrahey, communications director for the Tenth Amendment Center, believes this is an initiative to undermine the powers of the U.S. Federal Reserve, noting that states are “nullifying the Fed on a state-by-state level.”
The theory behind this idea is that in a multicurrency environment, the better currency will be the one that prevails. In this sense, constitutional tender expert professor William Greene explains:
Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes).
The debate of making gold and silver legal tender comes from way back, with experts stating this possibility is enshrined in the U.S. Constitution, which states that “no state shall … make anything but gold and silver coin a tender in payment of debts.” Market analysts like Peter Schiff have predicted that a bull market for gold is coming, saying “it will be spectacular.”