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Gulf Today
4 days ago
- Business
- Gulf Today
Behind a Texas bill, a push to make gold ‘functional money'
Trevor Bach, Tribune News Service More than 50 years after the United States abandoned the gold standard, Texas lawmakers are moving to bring precious metals into everyday use. The new legislation, House Bill 1056, aims to give Texans the ability, likely through a mobile app or debit card system, to use gold and silver they hold in the state's bullion depository to purchase groceries or other standard items. The bill would also recognise gold and silver as legal tender in Texas, with the caveat that the state's recognition must also align with currency laws laid out in the US Constitution. 'In short, this bill makes gold and silver functional money in Texas,' Rep. Mark Dorazio, R-San Antonio, the main driving force behind the effort, said during one 2024 presentation. 'It has to be functional, it has to be practical and it has to be usable.' After picking up major amendments in the Senate aimed at ensuring the legislation complies with existing laws — most notably, the Senate nixed language from an earlier version that sought to establish an entirely new digital currency based on the metals — the proposal cleared both legislative chambers late last week, and was sent to the governor's desk on Sunday. Governor Greg Abbott does not appear to have indicated whether he intends to sign the bill. In a statement, Abbott's press secretary, Andrew Mahaleris, said the governor 'will thoughtfully review any legislation sent to his desk.' Dorazio and state Sen. Bryan Hughes, R-Mineola, who authored a companion bill in that chamber, did not respond to requests for comment. This year's gold and silver legislative push comes roughly a decade after Texas created the country's first state-run precious metals depository — and as Republican lawmakers around the country are pushing more broadly to move away from dependence on fiat currency, or money issued and backed by a central government. To date legislators in at least 11 states, including Utah, Oklahoma, Kansas, Arizona and West Virginia, have introduced bills that declare gold and silver as legal tender, or move for taxation exemptions on the metals, although many of those efforts have failed to become law. State and federal lawmakers, including in Texas, have also been pushing to expand the viability of cryptocurrency, including with government-held reserves. Texas' highest-profile piece of crypto-related legislation this year, Senate Bill 21, which would create a state reserve of bitcoin and potentially other cryptocurrencies controlled by the state comptroller, is now likely to become law after formally advancing through the state legislature on Sunday. 'Bitcoin doesn't need Texas,' Brian Morgenstern, a policy adviser for the Texas Blockchain Council, the state's leading crypto lobbying group, recently argued in an interview with The News. 'Texas and the United States need bitcoin, because it's this modern phenomenon that is an outstanding asset.' The anti-fiat movement generally argues that alternative currencies offer a hedge against inflation and a greater degree of autonomy, because standard-issue currency is theoretically vulnerable to government manipulation. While such concerns have been lingering for decades, more recently they've taken on a more heated pitch. Many see an inflection point amid rising inflation, ballooning federal debt, and a US dollar that recently slid to its lowest value in three years — all of which raise questions about the currency's central role in global finance. 'How am I supposed to buy groceries?' While several states have pushed for the legalisation of gold and silver, those efforts still left the metals functionally unusable, Dorazio has argued, because they didn't include a mechanism for making purchases. 'How am I supposed to go to the grocery store and buy groceries? How am I supposed to put gas in my car with a gold bar?' he said last year. 'Today it's an impossibility. You just can't do it.' HB 1056 aims to solve that problem by enabling the state comptroller to 'establish or authorise one or more electronic systems' for consumers and vendors to make and receive payments with their precious metals held in the state depository. The comptroller would also have the ability to contract the work to third parties and charge associated fees. The current version of the bill focuses on laying the groundwork for such a system without mandating that anyone — including merchants — actually take part. But setting up a functional Texas metals transaction operation would still likely cost tens of millions of dollars and likely prove extremely logistically challenging, including by requiring potential reconfigurations of the state's bullion depository in order to ensure the assets can be accounted for. In addition to many elected Texas Democrats and residents — some who were bewildered as the measure advanced through the legislature — fiscal watchdogs have opposed the bill because of the associated costs. Meanwhile, banking groups that include the Texas Bankers Association and Independent Bankers Association of Texas (IBAT), have raised objections over its lack of consumer protections.
USA Today
28-01-2025
- Business
- USA Today
What would a strategic bitcoin reserve look like in Texas? Two lawmakers have ideas.
What would a strategic bitcoin reserve look like in Texas? Two lawmakers have ideas. Show Caption Hide Caption What does the future of the cryptocurrency market look like under Trump 2.0? The president-elect promised to make America the 'crypto capital of the planet.' As the Trump administration explores a U.S. cryptocurrency stockpile, two Texas bills filed this session are looking to be at the forefront of establishing a strategic bitcoin reserve for the state. The two bills, one filed by state Rep. Giovanni Capriglione, R-Southlake, and the other by Sen. Charles Schwertner, R-Georgetown, seek to establish a strategic reserve for the cryptocurrency in the state, allowing corporations and individuals to donate or use bitcoin as a form of payment. Last Thursday, President Donald Trump ordered the creation of a crypto task force to explore new regulations and what a U.S. cryptocurrency stockpile would look like. Instead of waiting on the federal government to establish a nationwide reserve, at least eight states, including Texas, have taken matters into their own hands. Through the bills, the state wouldn't necessarily outright buy bitcoin using taxpayer funds. The bills would, however, create the reserve to be used in emergency situations, for government philanthropic spending and more at the discretion of the Legislature and comptroller. 'The beauty of a Texas strategic bitcoin reserve (through these bills) is it's primarily driven by donations, and there's really no risk to the Texas taxpayer. It's only a net positive,' said Lee Bratcher, founder and president of Texas Blockchain Council. What would Texas' bitcoin reserve bills do? While the two bills differ in practice, they both create a strategic reserve for the state to hold the cryptocurrency. They would also allow corporations and Texas residents to donate bitcoin to the state and possibly use it as a form of payment to state agencies. Major takeaways from House Bill 1598, filed by Capriglione in December: Establishes a strategic bitcoin reserve for Texas. Allows the state to accept bitcoin in the form of donations from corporations or Texas residents. Would be separate from the state's general fund and would be in the custody and discretion of the comptroller. Minimum five-year holding period for the funds. Bans hostile foreign entities from donating. Allows the comptroller the option to tell some state agencies they can accept bitcoin as a form of payment. 'At the end of the day, there's no reason not to,' Capriglione told the American-Statesman. 'Bitcoin has shown that it is easy to use. It's become popular. It's become effective. It's a way to provide independence for individuals to be able to make payments, and it's successful. So why not? Why not allow individuals to have a state accept bitcoin as a form of payment?' Major takeaways from Senate Bill 778, filed by Schwertner in January: Establishes a strategic bitcoin reserve for Texas. Allows the state to accept bitcoin in the form of donations from corporations or Texas residents. Bans hostile foreign entities from donating. Would be separate from the state's general fund and would be in the custody of the comptroller. Allows the Legislature to direct the comptroller on how to use, access or report the funds. No minimum holding period. Allows the Legislature to direct the purchasing of bitcoin up to 1% of the general fund. Creates an advisory oversight committee. 'It's a well thought-out way of dipping our toe into digital assets and the digital economy,' Schwertner said. 'From a state perspective, I think it sends a very important message that we support financial solvency and stewardship at the federal level, because we do it here in Texas regarding a balanced budget.' Alan Orwick, co-founder of Quai Network and CEO of blockchain development company Dominant Strategies, told the American-Statesman he prefers Capriglione's bill, as he thinks outright purchasing bitcoin is risky. He said a more gradual approach is needed. Schwertner's bill would allow the Legislature the option to purchase bitcoin but does not outright direct the purchase of the cryptocurrency. 'It could lead to that sort of rush on bitcoin and provide more scrutiny if we're outright buying bitcoin. … I'm not to say that the Senate approach is completely off the table in terms of the buying, but I do think more of a gradual change from the donations and fees compared to the outright buying,' Orwick said. The major differences that Bratcher noticed between the two bills is the minimum holding periods and whether the state would outright purchase bitcoin. Bratcher said the council doesn't have a preference on the two bills but thinks the state needs to be at the forefront of establishing a bitcoin reserve to hedge inflation and support the state's economy. He told the American-Statesman he likes to think of the cryptocurrency industry like the invention of the microchip by Texas Instruments in 1958. 'The microchip was invented in Texas by engineers at Texas Instruments, but it was monetized in California,' Bratcher said. 'We want the economic benefit, the tax revenue, the job creation, the investment that will come with this, the digital asset and the wave of digital innovation that's coming through a digital asset reserve, to accrue and to benefit Texans. Not that we don't want that for the rest of the United States, but we want to primarily be working for the benefit of Texans.' Is it risky? How does this differ from a federal stockpile? The discussion of a federal crypto stockpile has been growing in recent years. Though once skeptical of cryptocurrencies, Trump outlined his intent to create a reserve on the campaign trail and fulfilled a piece of that promise by setting up the task force last week. His administration argues that holding bitcoin could hedge against inflation and a weakening dollar. He said in July, 'For too long, our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin.' More: President Trump: Executive order part of plan to make U.S. 'crypto capital of the planet' According to crypto tracking firm Arkham Intelligence, the U.S. owns nearly $20 billion worth of bitcoin obtained through legal seizures. U.S. Sen. Cynthia Lummis, R-Wyoming, has argued heavily in favor of establishing a federal reserve, which would probably involve the federal government purchasing bitcoin, though an ideal amount is undetermined. She introduced a bill that would have acquired, over time, 1 million bitcoins to hold for at least 20 years. Some financial analysts have spoken against a federal cryptocurrency reserve, saying buying and stockpiling bitcoin and other crypto could be too risky or at the detriment of residents and taxpayers. Orwick said he thinks the state-by-state approach to building reserves is more beneficial because a national policy could cause a run on bitcoin and would make it more volatile. Bratcher, however, said he believes a national reserve would be beneficial and is necessary going into the future. Many financial services institutions, such as BlackRock and Fidelity, have started getting involved in cryptocurrency trading, which he said de-risks it for states and the federal government. He thinks states such as Texas filing bills like those from Capriglione and Schwertner would send a message to the federal government. 'Now that the industry is more well-known, more respected, there's policy and regulatory guardrails against things that happened in the past in the digital asset industry that consumers were injured by; those guardrails have come up in a stronger way,' Bratcher said. 'I think it's very much de-risked for state governments and for the federal government to get involved and take advantage of this innovation.' Capriglione said that since the state now has guardrails and safeguards surrounding cryptocurrency trading — thanks in part to a bill he authored that was signed into law by Gov. Greg Abbott in 2023 — the risks have decreased. He said the time to establish a reserve for Texas is now. 'It all has to go together. It has to be liquid, has to be safe, and it has to be valuable,' Capriglione said. 'It has to have some sort of regulation to make sure that the public feels confident in holding those assets, and it has to have sophisticated partners and individuals who see the value of it and have been allowing it to be used in really significant transactions.'
