Texas lawmakers propose gold-backed state digital currency

Two Texas lawmakers, Senator Bryan Hughes and Representative Mark Dorazio, have introduced identical bills proposing the creation of a state-based digital currency backed by gold. Each unit of the proposed digital currency would represent a fractional equivalent amount of physical gold held in trust.

The bills, Senate Bill 2334 and House Bill 4903, outline the process for purchasing the proposed digital currency. Once a person purchases a certain amount of digital currency, the comptroller would use the money received to buy an equivalent amount of gold. The purchaser would then receive digital currency equal to the amount of gold purchased by the comptroller. The value of a unit of digital currency must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of the transaction.

According to the bills, 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 also state that a fee might be established “at any rate necessary” to cover the costs of administering this chapter.

While the bills have yet to be passed or presented for a vote, they are set to take effect on September 1, 2023. This move comes despite objections from several U.S. lawmakers who are against the introduction of a central bank digital currency (CBDC).

Florida Governor Ron DeSantis recently expressed concerns about CBDCs, stating that they would grant “more power” to the government and provide them “with a direct view of all consumer activities.” Similarly, Republican Senator Ted Cruz introduced a bill to block the Fed from launching a “direct-to-consumer” CBDC, arguing that it is “more important than ever” to ensure U.S. policy on digital currencies protects financial privacy, maintains the dollar’s dominance, and cultivates innovation.

The idea of a state-backed digital currency is not new, with countries such as China and Sweden already testing their own versions of CBDCs. However, the introduction of a gold-backed digital currency by a U.S. state is a unique move. It is unclear how the proposed digital currency would be regulated or how it would affect the current financial system in Texas.

Gold has historically been considered a safe-haven asset and a store of value during times of economic uncertainty. The proposed gold-backed digital currency could provide Texans with an alternative to traditional fiat currencies and may appeal to those who are skeptical of the government’s ability to manage the monetary system. However, it remains to be seen whether the proposed digital currency will gain widespread adoption and whether other states will follow Texas’ lead in introducing their own digital currencies backed by precious metals or other assets.


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Silvergate Bank Voluntary Liquidation Sparks Controversy in Crypto Industry

The voluntary liquidation of Silvergate Bank, a crypto-friendly bank, has caused a stir in the crypto industry, with many sharing their thoughts about the bank’s troubles and the broader impact of its collapse on crypto. Some United States lawmakers have taken the opportunity to criticize the crypto industry, labeling it as a “risky, volatile sector” that “spreads risk across the financial system.” Senator Elizabeth Warren called for regulators to “step up against crypto risk,” while Senator Sherrod Brown expressed concern that banks that get involved with crypto are putting the financial system at risk.

However, these remarks have faced criticism from the community, with some arguing that it was not a crypto problem, but rather a fractional-reserve banking issue. Silvergate held far more in-demand deposits compared to cash on hand, which led to its collapse.

Several companies have used the recent announcement from Silvergate to reiterate their lack of or now-severed ties with the firm. Binance CEO Changpeng Zhao assured customers on Twitter that the crypto exchange does not have assets stored with Silvergate, while peer exchange Coinbase also assured its followers that no customer funds were held by the bank.

Nic Carter, co-founder of venture firm Castle Island and crypto intelligence firm Coin Metrics, suggested that the government was responsible for “hastening the collapse” of Silvergate by launching investigations and legal attacks on it. He referred to “Operation Choke Point 2.0,” which he claims is a sophisticated, widespread crackdown against the crypto industry. CEO of financial services firm Lumida, Ram Ahluwalia, had a similar take, arguing that Silvergate faced a bank run after a senator’s letter had undermined public trust in the firm. He claimed that “Silvergate was denied due process.”

Some believe that the collapse of Silvergate won’t necessarily hurt the crypto industry, but proposed changes to tax laws could exacerbate the exodus of crypto firms from the U.S. With Silvergate winding down, some have also asked where crypto firms will turn to now. Coinbase, which previously accepted payments via Silvergate, announced that it would facilitate institutional client cash transactions for its prime customers with its other banking partner, Signature Bank. However, Signature Bank announced in December that it intended to reduce its exposure to the crypto sector by reducing deposits from clients holding digital assets. To further reduce its crypto exposure, Signature Bank imposed a minimum transaction limit of $100,000 on transactions it would process through the SWIFT payment system on behalf of crypto exchange Binance.


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Elizabeth Warren Is Trying To Limit Financial Inclusion

If you’re a member of the Bitcoin community, whether self-proclaimed or working with an entity such as Bitcoin Magazine, you should be well-experienced with the chaotic nature of the narratives and politics around Bitcoin — and the sweepingly ignorant inclusion with “cryptocurrencies” in general.

Bitcoin has become the favorite target for champions of Environmental, Social, and Corporate Governance (ESG) narratives, namely Bitcoin’s energy use and environmental impact. Now, Nic Carter has quashed that conversation. Swiftly and effectively, Nic has done an exemplary job at defending the energy sector and miners with his silver tongue and numerically-inclined mind, especially with his piece “The Frustrating, Maddening, All-Consuming Bitcoin Energy Debate.”

Politicians had seemingly not learned via observation as institutional investors got a flood of aggressive rebuttals by bitcoiners — both investors and politicians alike — that were backed by more fact and data than any of the detractors had been capable of providing. Yet now Senator Elizabeth Warren is confident enough to think that she can succeed at condemning Bitcoin where the rest have failed. Well, she’s wrong.

Now, let me clarify. This is not a piece that has the intent of tarnishing Senator Warren’s career or reputation or what-have-you. I don’t care about the senator, personally. However, I want there to be some form of rebuttal to the flood of narratives and claims against Bitcoin that are literally, factually incorrect. The best way to provide some correction to Senator Warren and her peers is to address these claims directly. I’m not a fan of passive-aggressive responses when it comes to education. I prefer to face the challenges head-on.

Firstly, Senator Warren made the already infamous claim that Bitcoin “puts the system at the whims of some shadowy faceless group of super coders and miners, which doesn’t sound better to me.” So how, exactly, would we describe our current banking system? Arguably in a similar manner, just without the “super coders” aspect, considering that much of the banking and financial system does not operate on any level of public transparency, especially when compared to the Bitcoin network.

Senator Warren, your defense of the legacy financial system is a direct affront to financial inclusion, individual property rights and freedoms. You cannot support a system that provides such strong barriers to entry that 6% of our own citizens don’t have bank accounts. That’s 14 million Americans! And, on top of that, we have rules that state that you literally have to be rich in order to invest in assets that are likely to appreciate in value. Our own rules state that you can’t allow your money to earn a significant yield unless you are already rich. How absolutely asinine is this? This directly excludes the vast majority of the U.S. populace.

I personally don’t like how Senator Warren aimed to significantly diminish the fantastic work that the Bitcoin core developers have done throughout Bitcoin’s 13-year life by referring to them as “shadowy super coders.” How many networks can tout a 99.98% uptime while handling consistent growth and implementing upgrades without having to take the network down? Oh, and you know, all while securing nearly $750 billion worth of users’ savings, investments, daily income and spending (shout out to El Salvador). The fact that many of these developers prefer to operate under pseudonyms and avatars simply points to how radical the legacy financial system is in defending the hill it is so intent to die upon. These folks are so concerned with an aggressive riposte from the incumbents that they lean on anonymity while working on financial inclusion for the world.

To go a bit further, thanks to the Bitcoin network’s simplistic functioning at the base layer, an entity by the name of Strike, captained by Bitcoin’s Champion of the People, Jack Mallers, has now brought a functionality to money transmission that will shift paradigms on all types of trade the world over. Instantaneous money transmission, globally, for virtually zero fees. You can send money from anywhere in the United States to any location in the world for a mere pittance. Prepare the viking funeral for companies like Western Union who would’ve charged 30% in fees to do this. Not to mention dragged their big, fat, fiat clown-feet sending that money in a “timely manner.”

Even excluding the revolutionary work that Jack and Strike are doing, the amount of transparent data that is available on the Bitcoin network — its transactions, the value of those transactions, the numbers of active users, etc. — is absolutely unparalleled.

Ask any one of the cancerous number of banks that exist across the country to provide this kind of data to you and they’ll laugh you right out of the building while trying to convince you to dig your own grave in debt.

Secondly, iBtcoin promotes financial inclusion. Banks do not. I’ve already touched on the inclusion via remittances and the ease-of-use of apps like Strike. But if anyone wants to get some bitcoin, they can buy it from an individual that’s willing to sell (peer-to-peer), which can be done over the Lightning Network with Strike or via services like LocalBitcoins — no bank account necessary. Bitcoin promotes saving and even revives saving as a wealth accumulation strategy. Inflationary monetary policy does not.

Cue The Fiat Champ: Jerome “Jay Pow” Powell

Watch: Fed Chair Jerome Powell on YouTube.

Jay. Good ‘ol Jerome Powell. My man. Where would bitcoin be if not for your flaccid response to an economic climate that is your job to reel-in? You do realize that as you endlessly print money for the sake of keeping zombie corporations afloat you end up stifling innovation? Were Blockbuster allowed to receive mulligan-money do you think Netflix would have been allowed to prosper as it did? How many more jobs resulted from Netflix upheaving Blockbuster? Oh, and how many more patients got served thanks to Blockbuster liquidating locations into the hands of Jason Williams (founder and former President & CEO of FastMed)? The inflation stimulated by the Federal Reserve has utterly dissolved that process of creative destruction, resulting in what we now know as “stagflation.” Where nothing improves, because everyone is incentivized to just sit, play nice and not cause a ruckus.

The American Dream was sold as: work hard, work towards your dreams and passions, save money, accumulate wealth, buy your own home and raise a family. The Federal Reserve has systematically destroyed the American dream via a middleman hack by inserting itself between the Constitutional dollar and the American citizen. Thanks to the antics of this central bank (that hasn’t been audited by an external entity since the 1950s, by the way), the ungodly amount of inflation that has occurred has caused average cost of living, home prices and investment asset valuations to break free from Earth’s gravity while average income has remained flat.

So, Senator Warren, I invite you to engage in an intellectually honest conversation around Bitcoin and its value propositions. There are many. And I am not expecting the learning and understanding to come easy; there are a multitude of complex mechanisms at play here. Bitcoin makes plays on SHA-256 encryption, Metcalfe’s Law, Maslow’s Hierarchy, the Kardashev Scale, Pareto Distribution (shoutout to Aaron S), the Law of Diminishing Returns, the Law of Big Numbers and the list goes on and on. Bitcoin is blurring the lines between technology and asset, physical and digital, “real money” and “magic internet money.”

All of the Bitcoin Bulls that stand before you today started out once as Bitcoin critics. In my opinion you can’t become a bull without questioning every single aspect of Bitcoin and its operations.

To that effect, I think I can speak for all Bitcoiners in saying: bring on the challenge. If you’re willing and capable of engaging in honest dialogue, we have individuals that will answer any and all questions you have, professionally and respectfully. On top of that, we also have a library of eloquent writers that have put together a number of tomes that are well worth the read.

For your ease, I have provided a brief list that I personally recommend:

  • “The New Confessions of an Economic Hitman” by John Perkins
  • “The Psychology of Money” by Morgan Housel
  • “The Price of Tomorrow” by Jeff Booth
  • “Layered Money” by Nik Bahtia
  • “Fed Up” by Danielle DiMartino Booth

So, all I ask is one thing: engage with us. There are many reasons why nearly 20% of Americans have entrusted their hard-earned cash with Bitcoin. It would behoove all to at least do your own research (DYOR) and at least start looking. Because I can promise you one thing: Bitcoin adoption is not about to slow down.

I am confident that you’ll come to a similar conclusion.

This is a guest post by Mike Hobart . Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.


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This Is What Needs To Happen To Secure DeFi and Crypto-Friendly Regulations, According to US Lawmaker

US Representative for North Carolina Ted Budd (R-NC) says that the US can adopt crypto-friendly regulations amid fear of the evolution of blockchain and decentralized finance (DeFi).

In an interview on the Maker Speaker Series sponsored by DeFi protocol MakerDAO, the US lawmaker says that some of his colleagues in the House Financial Services Committee are concerned that emerging financial technologies could hurt America’s sovereignty, destabilize the dollar and pose threats to national security.



“Some in the House that sit not too far from me on the House Financial Services Committee that would call this blockchain basically a financial 911. I totally disagree with that. I think we need to be very open to this. We need to make the US the place where this flourishes and this develops. 

It’s a new technology. It’s going to evolve and I’d rather it evolve here in the US than in Singapore or in Estonia or somewhere else, not those nations but other nations that could be hostile to us.

I’d rather it be on our shores, and so we have a regulatory framework where people can expect what the future’s going to look like and they can develop within inside that framework.”

The legislator also says that MakerDAO, which maintains and regulates the stablecoin Dai (DAI), and the crypto community should engage with regulators in the industry.

“I would encourage your members to know their legislators in the House, particularly in the US House since it’s a stablecoin and it’s a matter of US currency. Know those that are on the Financial Services Committee – I’m one of them – and know their members of congress.

Maybe you can meet at one of their district offices and call their district director. Ask to set up a meeting. Call their scheduler and ask to get on their calendar for 15 minutes and just propose it.

If you can explain it really clearly, ask how they think about these things, propose the questions ahead of time. We’re pretty accessible. Or even talk to the staff member. If they are on financial services, they’ll have a staff member dedicated to all things financial services. If they’re not, they have somebody on their staff that covers those issues.”

Budd urges stakeholders to reach out to lawmakers, who play a role in policy creation. 

All interests sort of flow through DC because of the regulatory frameworks that come out of this place, out of the laws that come out of this place. But there’s also a lot of relationships that go along with this. So make a trip to DC, get on here, get on the calendars, have a meeting like this.”

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The Infrastructure Bill Shows Why Bitcoiners Need To Be Politically Active

This is simply the latest development that shows the lack of understanding amongst policy makers.

The Senate procedural vote held late Wednesday night was a big step forward in the difficult process of brokering such a large infrastructure package in Congress. This is, however, the very first step for the package, and requires a few more hurdles before it reaches President Biden’s desk for an official signing to become law.

Naturally, the actual text of the bill was not released prior to this procedural vote, which means that one can only surmise what the circulating draft language from various fact sheets could mean for bitcoin holders, miners, and related companies.

The fact that all of us in this industry are trying to interpret what the broad and vague language could mean for bitcoiners is indicative of two things in particular — the senators, and their staffers, are highly uneducated on both bitcoin and on the innovative and tenacious nature of bitcoiners.

This should be a wake-up call for bitcoiners to bring their education and fiery passion for a bitcoin standard beyond the 280-character limit on Twitter and into the legislative halls.

While we do not know what the future of our American government will look like, we do have to navigate the current legacy system while we actively lay the groundwork for a new monetary system rooted in proof-of-work.

Bitcoiners are some of the most knowledgeable individuals on economic principles and theories today, but they are also some of the most reserved individuals to educate those who make decisions that directly affect our lives and the U.S. economy.

I urge bitcoiners to shed the laissez-faire attitude to government and to instead become Bitcoin champions in their communities, and with their local representatives.

Immediately contact your Senator to share your concerns with the proposed infrastructure bills (both the $1 trillion physical package, and the $3.5 trillion budget reconciliation), and be sure to reference both specific issues with the language and state your concerns about the cost to the taxpayer.

Worth noting — the $3.5 trillion budget reconciliation bill will be difficult to pass and is already receiving pushback from both Senate and House members.

We all know that this bill will not be the last attempt to milk bitcoiners for additional sources of revenue to support federal or state programs, but it could be one of the last with minimal advocacy and pushback from bitcoiners.

Bitcoiners have jumped in the lifeboat, but we must now survive the waves of misinformation about inflation and our floundering U.S. dollar. The most peaceful and bright future relies upon immense education about bitcoin and how it is the solution to these unfeasible spending packages. This education needs to be shared at city council meetings, county supervisor meetings, state house legislative sessions, churches, and beyond.

Federal Outreach:

  • Search for your senator’s name on senate.gov and go to their website to contact their district and/or capitol office.
  • The most effective strategy is to cite specific line items from the bill once the text is released. But this may be difficult considering the speed at which the legislation could move so be sure to at least urge your senator to reconsider support for the proposed legislation until considerable changes are made.
  • Additionally, once this bill leaves the Senate it will go to the House; do the same form of advocacy ahead of time, by reaching out about your concerns now. Search for your representative on house.gov and go to their website to contact their district and/or capitol office.

This is a guest post by Trystine Payfer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC, Inc. or Bitcoin Magazine.


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Law Decoded: Crypto on the rise, Big Tech on notice, Dec. 11–18

Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law. Law Decoded will be going on a break next week for the holidays but will return in the new year. 

Editor’s note

As the holidays loom, Bitcoin has been shattering all-time highs. For reasons why, consult Cointelegraph’s markets coverage. I honestly never know. Maybe with the act of Christmas shopping taking place behind the computer, people have turned to Coinbase instead of Amazon. Or maybe the threat of the Treasury demanding reports from exchanges interacting with self-hosted wallets has people trying to move as much fiat into crypto and then off of exchanges as possible.

In broader legal news, we may well be entering a new era of trust-busting in tech. Major names like Amazon, Facebook, Apple and Google have been on thin ice for a long time, but new laws on competition in the EU and new antitrust suits and investigations in the U.S. this past week are the culmination of long-term concerns from lawmakers and regulators.

The relationship between government attitude towards those colossal tech firms and crypto is, as always, an open question. It has always struck me that, particularly on issues of consumer data use and monopolistic practices, the great majority of the crypto industry benefits from lawmakers scrutinizing the huge platforms. Open-source software distributed across nodes avoids such problems using tools that are technological rather than legal.