HB 1-SPECIE AS LEGAL TENDER  4:45:08 PM CHAIR CARRICK announced that the final order of business would be HOUSE BILL NO. 1, "An Act relating to specie as legal tender in the state; and relating to borough and city sales and use taxes on specie." 4:46:11 PM REPRESENTATIVE MCCABE, as prime sponsor, reintroduced HB 1. He said that he appreciates a second hearing on the proposed legislation. He said that HB 1 is about constitutional fidelity and financial freedom. It would recognize gold and silver as legal tender in Alaska; this would be in alignment with Article 1 Section 10 of the United States (U.S.) Constitution. He said that the proposed legislation would protect Alaskans' rights to use "sound money." He said the legislation is about choice, not mandates, and nobody would be required to use gold or silver, but the legislation would affirm someone could. He noted that testifiers were available to address any questions from the committee. 4:47:45 PM REPRESENTATIVE STORY asked what consumer protections were in place. She said that she wanted to ensure that consumers can understand what they are getting and buying. She remarked that the Department of Commerce, Community & Economic Development (DCCED) reported that the State of Alaska (SOA) did not accept cryptocurrencies as a valid form of payment for any debts or obligations. She said that cryptocurrencies must first be converted to United States Dollars (USD). She asked how much notice would need to be given to consumers. REPRESENTATIVE MCCABE responded that HB 1 does not pertain to cryptocurrency but pertains to physical gold and other precious metals. He said that the consumer protections would be the same as with a USD. He said it falls to the consumer to make purchases from a vendor that is reputable. He said that Goldbacks had military level anti-counterfeit features built in. He said that online testimony could better address consumer protection. REPRESENTATIVE STORY said that when looking at specie, her understanding was that there were different values for the specie and it seemed to her that much like the USD, it fluctuates. She wondered how much education the public would need to understand these types of fluctuations. She asked for clarification about this. REPRESENTATIVE MCCABE said that U.S. Citizens were [accustomed to] a single currency. He said that some countries might use four or even five types of currency with different values, which requires negotiated rates. He said that when he went to Hong Kong, he negotiated between USD and Hong Kong Dollars. He said that he accepts or declines what the stated value is regarding a set price. He said that with HB 1, the price would be based on daily spot price of the precious metal. He said a merchant that accepted Goldbacks may have an application ("app"), a device, or even a set price. He said he had a conversation about this with Mr. Diaz that morning. Additionally, he said Mr. Hilton may be able to further speak about the issue. 4:52:25 PM LAWRENCE HILTON, General Counsel, United Precious Metals Association, proffered that Federal Statute requires the Treasurer of the United States to maintain equal purchasing power among all forms of the USD. However, there are five different kinds of dollars, each with different purchasing power. He said the Federal Government has not fulfilled its obligation to maintain parity. It has prompted states to step in and assert that these dollars are not equivalent. He said these types of dollars can include the Gold Dollar, Silver Dollar, Platinum Dollar, and Paper Dollar Federal Reserve Note. He said each has different purchasing power due to Federal Government's failure to uphold equal purchasing power. MR. HILTON, regarding the Goldback, said that it is a negotiable instrument redeemable for USD. What makes the Goldback unique th is its physical composition; it contains as little as 1/2000 of an ounce of gold, making it usable in everyday transactions. He said that thousands of merchants across the country accept Goldbacks for goods and services. MR. HILTON explained that Goldbacks include over a dozen security features to prevent counterfeit attempts. He said apps are available to determine value and authenticity as well. 4:55:10 PM REPRESENTATIVE STORY asked whether any changes were needed to HB 1 to address education and consumer protection. She further inquired whether the proposed bill contained protection mechanisms. REPRESENTATIVE MCCABE responded that he believes that the proposed legislation had all the consumer protection of any other piece of this type of legislation. He said that he believes that there were many things that were easier to counterfeit than Goldbacks, especially given the testimony regarding counterfeit measures. He said that someone who was educated and wanted to buy a Goldback would likely use apps and tools to determine pricing. He explained that a reputable seller is the best safeguard. 4:56:52 PM REPRESENTATIVE STORY said that she was specifically looking at language beginning on page 3, line 9, of the bill, regarding a prospective Joint Legislative Budget & Audit Committee study. 4:57:14 PM REPRESENTATIVE HOLLAND shared that recently while at Costco, he noticed someone selling gold bars, specifically bullion. He commented that generally Costco is a reputable place to make purchases and seeing gold for sale caught his attention given previous bill discussions. He added that gold was also available for purchase from the Costco and Amazon websites. He remarked that he found that gold is a commonly traded form of value, much like how one might buy postage stamps at Costco. He clarified that he was speaking to gold in legal tender form, not jewelry or collectibles. REPRESENTATIVE HOLLAND said that what intrigued him the most was learning about the availability of gold in this type of format. He asked at what point the purchase of gold as legal tender would get exempted from sales tax and noted the distinctions between gold purchased as tender as opposed to artistic, historic, or other value-based formats. He said that he saw some gold items resembling gold bills or cards and remarked on the formatting. 4:59:44 PM REPRESENTATIVE MCCABE remarked that given his time working as a legislator, this bill has been the most fun. He said that if someone went to a coin store and bought a pre-1950 Morgan Silver Dollar valued at $2,000-$3,000, then a sales tax would be expected. But if someone were to walk into a 7-Eleven convenience store and purchase one out of the till and offer a dollar bill in exchange, that would be an informal transaction. He emphasized the distinction of items being used for money and items being used for collection. 5:01:44 PM CHAIR CARRICK shared Representative Story's concerns regarding consumer protection. She asked whether HB 1 would add a layer of consumer protection that is not already in place for people currently making transactions with these types of items. She inquired that when something is classified as legal tender in a state, whether there would be any additional protection laws. REPRESENTATIVE MCCABE responded that he was not sure whether there is any kind of consumer protection for a $100 bill. He said that if one is familiar with Goldbacks, which would be assumed if a merchant accepts them, then there would be ways to tell whether it was authentic. When using a $100 bill, one could use a brown pen, he noted; however, most people don't carry a brown pen around. He reiterated that he believed Goldbacks have more consumer protections built in than do $100 dollar bills. REPRESENTATIVE MCCABE talked about the protections regarding the Costco gold bars; the protection was that it came from a reputable seller and it likely had the required qualifiers. CHAIR CARRICK said that a dollar right now, or forever stamp, would hold the same inherent value, regardless of when it would be used. She talked about price fluctuations and whether this would be a concern and how to avoid any potential lawsuits due to the new type of legal tender. REPRESENTATIVE MCCABE responded that he did not believe that this was a concern at all; he said it's no more of a concern than dollar bills. He speculated that what Chair Carrick may be getting at is whether the value of the Goldback goes down. He said that traditionally, gold has continued to track commodity prices in a fashion that the USD has not. He affirmed that market prices fluctuate and gave an example of purchases with a Goldback and USD in an environment of high inflation. 5:06:21 PM REPRESENTATIVE HIMSCHOOT commented that when finally doing a base student allocation (BSA) increase, maybe it could be issued in Goldbacks. She questioned what problem would be solved by HB 1. REPRESENTATIVE MCCABE responded that the problem being solved is allowing a mid-level investor, or someone who cannot afford to buy a $3,400, one-ounce gold coin, the ability to slowly accumulate Goldbacks. He spoke about investment growth given the opportunity to store precious metals as a value-holding agent. He said that it would be a means to fight inflation and a fiat currency. He talked about future repository opportunities to hedge against inflation of the USD. He described issues with the absence of a gold standard and the various countries and states that are making similar initiatives. REPRESENTATIVE HIMSCHOOT commented that if someone wanted to accumulate money slowly, Sound Money could be difficult due to a $200 membership fee. REPRESENTATIVE MCCABE commented that one doesn't need to be a member to buy a Goldback. 5:08:45 PM CHAIR CARRICK announced that HB 1 was held over.