US lawmakers reluctant towards dollar-backed digital currency

US lawmakers reluctant towards dollar-backed digital currency

In the United States, the confusion regarding the frameworks for central bank digital currency (CBDC) in the United States has further accelerated after lawmakers suggested gold-backed digital currency. Additionally, they have shown reluctance towards a dollar-backed digital currency. 

A bill related to state currency, presented by Senator Bryan Hughes and Representative Mark Dorazio was the first proposal for a currency backed by gold or cash. Senate Bill 2334 presented by Bryan Hughes and House Bill 4903 was introduced by Representative Mark Dorazio. It’s the first instance when someone proposed the CBDC backed by gold not dollars.

According to reports, Republican party Senator Bryan Hughes proposed Bill 2334 demanding a gold exchange CBDC. The Texas lawmaker proposed that “The comptroller shall establish a digital currency 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”. For those who are not aware one troy ounce is equivalent to 31.1 grams. Judging the United States stands on a CBDC policy is very tough because of differences in opinions between intraparty and inter-party. 

As per the bill, reserves need to be fully backed by gold. Additionally, the Texas government has implemented regulations to protect the citizens from the manipulations of digital currency liquidity.  Despite the fact that there is no limit to the number of purchases, the comptroller is required to acquire the same fractional quantity in troy ounces of gold to protect the digital currency’s stability. Additionally, it will support and prevent any potential supply and demand imbalances.

According to the proposed bill, whenever a seller intends to trade their assets the controller or related authority must provide an equal amount of cash to back the funds, similarly, when someone wants to convert their coins into physical gold in the form of some small gold coins or bars. Some designated agents appointed by authorities will help in these transactions. However, this would not be the first government-backed digital currency. Before this Miami and New York already tested out the issuance of official tokens. 

It will be interesting to see when the bill will be presented in front of the Committee for examination. Additionally, this will also require the approval of the State Senate and House approval before becoming an official law. 

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