The state isn’t issuing currency or minting coins, private firms are — guess that’s OK.
Sounds like hair-splitting to me. I still believe it is illegal.
Swapping, or trading is discouraged by State and Federal Governments because it is near impossible to tax. Nevertheless, I suspect that would garner less attention from the Treasury Dept. than ‘printing money’. The last thing any person, business, state or local government wants is Treasury agents tearing their premises apart.