Soon-to-be-retired U.S. Senate Banking Committee Pat Toomey earlier today introduced a legislation bill with the intent to “establish the first federal regulatory framework for payment stablecoins” and guide Congress towards a path for “sensible” regulation of cryptocurrencies.
The bill dubbed the Stablecoin TRUST Act — or Transparency of Reserves and Uniform Safe Transactions which comes a few weeks before the end of the 117th US congressional session, follows Toomey’s first introduced bill in April aimed at similar intent with stablecoins.
Toomey Hopes For Stablecoin Regulation
Stablecoins are a type of cryptocurrency pegged to the value of an underlying asset such as the U.S. dollar. According to Toomey in a press release, “Stablecoins are an exciting technological development that could transform money and payments.”
Toomey added, “By digitizing the U.S. dollar and making it available on a global, instant, and nearly cost-free basis, stablecoins could be widely used across the physical economy in a variety of ways.”
Core Components of The Bill
Should the bill get passed by Congress, non-state and non-bank institutions would be allowed to issue “payment stablecoins” as long as they obtain a federal license created by the U.S. Office of the Comptroller of the Currency (OCC) and also in as much as the stablecoins are backed up by “high-quality liquid assets.”
Stablecoins issuers must comply with the standardized disclosure requirements and provide attestations by certified accounting firms. The bill state’s essential clarity is needed, at a minimum, to ensure stablecoins that do not offer interest are not securities.
Holders or investors were also addressed in the bill stating that stablecoin holders are to have priority in the event of an issuer’s insolvency. Toomey said he hopes this framework lays the groundwork for his colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation.
“I’ve put forward a regulatory model that won’t undermine competition by favoring entrenched incumbents—for example, by limiting payment stablecoin issuance to insured depository institutions,” said Pat Toomey in the bill announcement. Adding, “this bill will also ensure the Federal Reserve, which has displayed significant skepticism about stablecoins, won’t be in a position to stop this activity.”
