Texas to issue a gold backed crypto?

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No idea if this bill has legs, but Texas surprises sometimes so who knows...

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Based on the text of Senate Bill 2334, which was introduced by state Senator Bryan Huges (R), and House Bill 4903, which was introduced by state Representative Mark Dorazio (R), the legislators are looking to require the state comptroller to establish a digital currency that is fully backed by gold and fully redeemable in cash or gold.

“The comptroller shall 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,” the bills state, adding that if needed, a private vendor can be enlisted to help establish the digital currency.

The comptroller would also be required to create a mechanism that would allow the new gold-backed digital currency to be used by citizens for their daily transactions. “In establishing the digital currency the comptroller shall establish a means to ensure that a person who holds the digital currency may readily transfer or assign the digital currency to any other person by electronic means.”

All gold reserves backing the digital currency would be held in a trust with the Texas Bullion Depository that is controlled by the comptroller or another entity appointed by the comptroller. “The trustee shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold,” the bills read.

There will be no limit on the amount of gold-backed digital currency that Texans can purchase. As soon as a purchase is made, the comptroller will be required to “buy a fractional number of troy ounces of gold equal to the number of units of the digital currency issued to the purchaser, and issue to the purchaser a number of units of the digital currency equal to the amount of gold that the comptroller purchases with the money received from the purchaser.”

When someone holding the digital currency wants to redeem it for cash, all they would need to do is present it to the comptroller or a designated agent, who will then sell gold held in the depository account equal to the redemption amount and transfer the funds to the redeemer, minus any fees.

Holders can also elect to redeem the digital currency for gold. The comptroller or one of its designated agents “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 necessary to facilitate the transaction,” the bill states.

The value of each unit of the digital currency will be determined at the time of a transaction and “must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of that transaction.”
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Texas has been crypto friendly for a while. It probably helps that the Texas government is housed in Austin which is the center of a tech industry boom.

This seems to just be a synergy between the State's crypto friendly business climate and the State's existing Gold repository.
 
It occurs to me that this gold backed crypto would be a digital form of Goldbacks.
 
The Texas legislature ends their current session in a week. The digital gold bill was added to the general calendar almost two weeks ago, but it is looking like there won't be sufficient time for the body to consider it and pass it this session as lawmakers seem to be preoccupied with the Texas-Mexico border and trans kid issues at the moment.

 
I'm all for backing a currency with gold, silver or any other commodity as long as the currency is redeemable in that commodity.

In addition to a currency that is backed by something, I think we also need state banks that are for in state transactions only. No interstate commerce allowed so the feds have no say in the matter. Private banking for private citizens with no reporting to federal agencies.
 
As expected, the Texas legislature's session ended without considering HB4903. Maybe it will be reintroduced next session.
 
As expected, the Texas legislature's session ended without considering HB4903. Maybe it will be reintroduced next session.
There's always a lot of stuff they don't get to.
....and in general, that's a very good thing.

One of the best things about Texas is that the Legislature only meets for 5 Months every other year. Just imagine how much stuff they could screw up if they were in session year round.
 
Seems like these days they are already in session continuously thanks to governors calling special sessions all the time, but yeah limited government is best government.
 
They need to issue 90% gold and silver bullion medals since issuing their own coinage is unlawful according to the CONUS. They would probably compete with Phils and Maples in a year or less as long as the product quality was good. I would buy it as long as it didn't have any sports logos.
 
This March, voters in the Texas Republican primary election will see on their ballots a proposition calling for the state government, utilizing its Texas Bullion Depository that began operations in 2018, to advance the use of gold and silver as legal tender.

The proposition reads as follows: “The Texas Legislature should establish authority within the Texas State Comptroller’s office to administer access to gold and silver through the Texas Bullion Depository for use as legal tender.”
...


Looks to be a measure to shore up political support for a 2025 reintroduction of 2023's HB4903 bill.
 
No idea if this bill has legs, but Texas surprises sometimes so who knows...

The gold depository they built - $25M? - is basically empty and unused. I believe the University of Texas - or was it some pension fund? - put there some gold but later took it out and sold it.
It seems that there are forces who support gold but there are also forces who oppose it. Or they believe in gold but don't have a clear strategy.
 
The gold depository they built - $25M? - is basically empty and unused. I believe the University of Texas - or was it some pension fund? - put there some gold but later took it out and sold it.
It seems that there are forces who support gold but there are also forces who oppose it. Or they believe in gold but don't have a clear strategy.

The Texas Bullion Repository was approved in 2015 and opened for business in 2018:


UTIMCO never did end up moving their gold holdings to the Texas repository. I'm assuming it never happened because they wanted to (and eventually did) sell the gold (per an email I received from UTIMCO when I asked them about it). The COMEX refused to allow the Texas repository into their system.

That said, I cannot find any reports that indicate how much bullion is vaulted there. Is it "basically empty and unused"? I have no idea. I can't find any info one way or the other to confirm or deny that claim.
 
The COMEX refused to allow the Texas repository into their system.
I don't understand, if they want to use it as Bullion Depository, who cares about the comex.
Why should the Comex allow the Texas Depository into their system in order for that building to be used as bullion depository?
 
UTIMCO <> Texas

UTIMCO wanted gold vaulted where they could trade it via Comex. Comex refused to bring Texas Bullion Repository into their vaulting network because of physical distance from Chicago IIRC.
 
UTIMCO wanted gold vaulted where they could trade it via Comex.
:oops:
Comex is a market for futures. It's not a spot market. If one wants to trade bullion one goes on a spot market.
So UTIMCO wanted to trade futures, and use the Texas BD as warehouse.
Comex says no, UTIMCO abandons the whole gold idea.

Seems to me they weren't serious about it in the first place...
 
UTIMCO wanted gold vaulted where they could trade it via Comex. Comex refused to bring Texas Bullion Repository into their vaulting network
Sorry but the more I think about it the more it doesn't make any sense to me

UTIMCO is not the owner/manager of Texas Bullion Depository. They are just one client of them.
Owner/manager of the BD is the state of Texas - probably through some subordinate company.
So one client of them wants the Depository to become a CME warehouse and the State of Texas says ok, let's give it a try?

The State of Texas advertised the BD - and justified the $25M expense - as a place where to deposit bullion, not as a CME warehouse.
And after they finished it they try to turn it into a CME warehouse?
At the request of one of their clients?

Why do they call it - misleadingly - Bullion Depository if they want to use it as a warehouse for a futures trading house?
Why not just call it Texan Comex Warehouse?


And they didn't think about the fact that turning it into a CME warehouse - acquiescing to the request of one of their clients - maybe they could scare away potential clients? Texan clients who don't want their metal inventories to be put into a place overseen by a Chicagoan company?
Of course they did.
That was the whole point of the Texas Bullion Depository: Your Texan metal vaulted on Texan ground, managed by Texans.


Last but not least, let's consider the cultural and political aspect, the optics so to speak.
We are talking about Texas, as in the most "autonomist" and "independentist" state in the USA.
The BD was proudly sold as a texan thing, look at us, we have our own bullion depository.
So after they built it, the State of Texas decides to put the Bullion Depository they were so proud of under the supervision of ... Chicago?
 
UTIMCO was never a client of the TBD. UTIMCO used to own a lot of physical gold warehoused in NYC. They decided not to move their gold when the TBD was established because they wanted to keep the gold where it could easily be sold if needed. UTIMCO is an institution that has to answer to various parties. It's not some goldbug dude with diamond hands.
 
UTIMCO was never a client of the TBD. UTIMCO used to own a lot of physical gold warehoused in NYC. They decided not to move their gold when the TBD was established because they wanted to keep the gold where it could easily be sold if needed. UTIMCO is an institution that has to answer to various parties. It's not some goldbug dude with diamond hands.
Good to know PM, thanks
although I wasn't doubting what you wrote about UTIMCO but rather the idea of the State of Texas trying to turn the Depository into a CME warehouse.

"Comex refused to bring Texas Bullion Repository into their vaulting network" means the owner - or the manager, but obviously with the permission of the owner - of the TBD asked the Comex to recognise the BD as one of their vault i.e. as a CME warehouse.

The State of Texas trying to turn their new Depository into a CME warehouse?
For the reasons listed above, I don't believe it.

On the other hand, if they did, that would explain why the Depository is currently under-utilised: the State of Texas has no clear idea about what to do with it.
 
Context...

October 2015:
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Along with ideas on the depository’s design, Hegar requested thoughts on whether the state should vie for membership in the Chicago Mercantile Exchange’s COMEX platform, where gold futures contracts are traded. The question is crucial to whether Texas will be able to achieve a widely reported declaration by Abbott’s office in June that Texas would “repatriate $1 billion of gold bullion from the Federal Reserve in New York to Texas.”

The gold bullion at issue is actually worth only $647 million and is owned by the University of Texas Investment Management Company, which oversees the assets of both the University of Texas and Texas A&M systems. UTIMCO currently pays about $647,000 a year to store the gold at the HSBC Bank headquarters in New York City, according to UT System spokeswoman Jenny LaCoste-Caputo.


June 2017:
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“The gold everyone talks about is actually about $800 million in gold investments that the University of Texas has held in a bank in New York,” Perryman says.

In order to invest and trade that amount of gold, it must be held by an institution that is a member of COMEX, a market that facilitates the buying, selling and transfer of gold bullion. The university’s assets are held in a COMEX member bank, but the new Texas depository is not a COMEX member, meaning the gold cannot be transferred to the Texas facility.

“As a practical matter, this is not Texas gold in the sense some people may think of it,” Perryman says. “It’s an investable asset of the University of Texas, and obviously, to be good stewards of the resources, they need to have the liquidity to hold a fixed asset of this nature. And to do that, you have to be a COMEX member.”
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September 2017:
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UTIMCO could be a Texas depository customer, but has placed two conditions on bringing its holdings to Texas. First, it mustn’t cost more to store gold in Texas than in New York; and second, the depository must be a member of COMEX, a metals exchange with standards that ensure the quality of all gold transferred between accounts. Based in the U.S. but used by traders around the globe, COMEX currently licenses eight vault facilities, all within 150 miles of New York City.
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November 2019:
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Matt Ferris, chairman of Lone Star Tangible Assets, the private company Texas tapped to operate the depository, ... has stated that the depository has not become a member of COMEX due to geography. The eight vaults licensed by COMEX are all within 150 miles of New York City, according to the Texas Comptroller’s website. That proximity means exchanges can happen quickly, boosting liquidity.
...


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I have looked before, but failed to find any reporting on how much business the TBD is actually doing. I'm guessing there is a public record somewhere since it is a State run operation, but I have not figured out where to find it. That said, the TBD did attract BullionStar (a Singapore based bullion dealer) to open doors in the USA across the street:


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Aside from all of that, the proposed legislation which is the topic of this thread would expand the use of the TBD with the State of Texas managing a fully allocated stack of gold backing a digital crypto token. It could be huge if it ever gets off the ground.
 
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Early voting is happening this week for the Republican and Democratic primaries. On the Republican ballot is proposition 7:
The Texas Legislature should establish authority within the Texas State Comptroller’s office to administer access to gold and silver through the Texas Bullion Depository for use as legal tender.

Mark Dorazio, author of HB4903 is asking Texans to vote for it:
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In my first session as a state representative, I filed legislation to make gold and silver legal tender and functional money in the state of Texas—able to be transacted with the modern convenience of a debit card. While we weren’t able to get it across the finish line, we made great progress on this important issue.

In December of last year, the National Association of Christian Lawmakers voted unanimously to make our bill model legislation for all fifty states, and while that is absolutely wonderful, I want Texas to lead.

The technology already exists today. For example, I am the proud owner of a Glint card. When I load money onto my Glint card, I am actually buying gold that is held in Switzerland, and the value that I have on the card is equal to the gold that I purchased.

If the price of gold goes up, so too does the value I have on the card. When I spend with a merchant, they are paid in U.S. dollars, and Glint liquidates the same value in gold from my holdings. However, in the meantime, the value being tied to gold has given me a hedge against inflation.

Unfortunately, as wonderful as the service is, there are a couple major problems with it. First, I want my gold and silver held right here in the United States. Second, there are tax and privacy implications because my Glint gold is considered an investment by the IRS. Every expenditure has a tax consequence and because of that, there is no privacy.

My legislation solves these problems. We already have the existing Texas Bullion Depository that would allow us to store our gold in our state. Second, this legislation meets the constitutional requirements of Article 1, Section 10 of the United States Constitution regarding legal tender and the federal government’s definition of “functional money”.

All of this means that when the value of a citizen’s gold goes up, it should be exempted from taxation—considered functional money and not as an investment. While this may end up being decided in the courts, I feel strongly based on existing judicial precedent such as Briscoe v Bank of Kentucky that the legislation would hold up to such judicial scrutiny.

By creating functional money, this legislation should prevent the privacy, compliance costs, and tax implications associated with the current Glint card.

I also want to take a moment to look at this from a 20,000-foot view and talk about why it’s important we get legislation like this in place now to protect our citizens in the future. There are two developments, moving at a rapid pace right this moment, that aim to drastically change the global economy and commerce moving forward. The first is the BRICS nations working hard to move away from the US dollar and ultimately to topple it from its position as the global reserve currency. If that happens, it’s going to mean bad things for the dollar and higher inflation destroying the livelihood of our citizens.

The second is the coordinated efforts at the World Economic Forum and in many nations around the world—including the United States—to create central bank digital currencies and move to a cashless society. Let’s make no mistake, this is about control. Every transaction you make will be monitored. Every unit of currency is ultimately able to be controlled by computer code.

You could be frozen out of your entire life savings in an instant. Maybe you “earned” a bad social credit score, and of course, with a few keystrokes they can also inflate the heck out of the digital currency, too.

I’ve spent the last forty years building a construction company from the ground up. I wake up early, and a lot of days I get in the dirt with my guys. These are the hard-working men who build America and just want to provide for their families. I’m watching as the inflation caused by our federal government continues to destroy paychecks and saving power for them and everyone else. I’m also looking to the future and have significant concerns about whether the same American Dream will be available to future generations or whether they will be saddled with inflation, surveillance, and control.

That protection of our citizens rights and the American Dream is what my legislation is really about. It does that by making gold and silver functional money that can be transacted with the convenience of a debit card. A vote in favor of Proposition 7 is a vote in favor of a piece of legislation like mine being enacted into Texas law. It’s a vote in favor of sound money, privacy, and the American Dream.
...

 
I’ve spent the last forty years building a construction company from the ground up. I wake up early, and a lot of days I get in the dirt with my guys. These are the hard-working men who build America and just want to provide for their families. I’m watching as the inflation caused by our federal government continues to destroy paychecks and saving power for them and everyone else. I’m also looking to the future and have significant concerns about whether the same American Dream will be available to future generations or whether they will be saddled with inflation, surveillance, and control.
🔥 I guess we need less career politicians and more politicians coming from the private sector...


The technology already exists today. For example, I am the proud owner of a Glint card. When I load money onto my Glint card, I am actually buying gold that is held in Switzerland, and the value that I have on the card is equal to the gold that I purchased.

When I spend with a merchant, they are paid in U.S. dollars, and Glint liquidates the same value in gold from my holdings. However, in the meantime, the value being tied to gold has given me a hedge against inflation.
Glint, interesting. I don't know them. Glint card enabling to spend your gold at point of sale. Wonderful.
They don't use blockchain, so technically speaking there is no gold-backed currency, but they fulfil the same task of gold-backed cryptos i.e. enabling gold to be used as everyday money within a digital society, so I'm all for it.
I miss regular independent audits of their metal stocks though.
 
Add a legalize weed amendment to the bill while they are at it?
 
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