US Senator Toomey introduces stablecoin bill at end of congressional session

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Republican Senator Pat Toomey, who is expected to retire from the US Congress at the end of his term, used one of his last weeks in office to introduce a new stablecoin bill, aimed at creating a regulatory framework for payout stablecoins.

Toomey, who is also a ranking member of the U.S. Banking Committee, said the December 21 bill, called the Stablecoin TRUST Act of 2022, would serve as a framework for stablecoin regulation for his fellow senators seeking to pass a stablecoin legislation in 2023.

In a statement, the senator called stablecoins an exciting technology development that could transform money and payments, adding:

By digitizing the US dollar and making it available on a global, instantaneous, and almost free basis, stablecoins could be widely used in the physical economy in a variety of ways.

If passed by Congress, the bill would allow non-state, non-bank institutions to issue stablecoins, provided they obtain a federal license created and issued by the U.S. Office of the Comptroller of the Currency ( OCC) and that the stablecoins are backed by high-quality liquid assets.

Stablecoin issuers must also comply with a new public disclosure standard, clearly define redemption policies, and provide regular certifications from chartered accounting firms.

The bill would exempt stablecoin issuers from U.S. securities laws, so long as they don’t offer interest-bearing products or services or act as an investment or advisory firm.

Investor protection is also well embedded in the bill, which states that in the event of an issuer’s insolvency, stablecoin holders will be the first to be reimbursed, which is perhaps the biggest difference. noticeable between this bill and Toomeys’ earlier bill that was introduced in Congress. in April 2022.

The bill would also only apply to payment stablecoins that can be directly converted to fiat by the issuer, such as the US dollar, and not to commodity-type or algorithm-backed stablecoins.

Related: Stablecoin Regulation in the US: A Beginner’s Guide

Toomey said he hopes the latest bill will lay the groundwork for his colleagues to pass legislation next year that protects customer funds “without impeding innovation,” the outgoing congressman said.

However, it remains to be seen how Toomeys’ latest stablecoin will compare to the Stablecoin Transparency Act, which was introduced in Congress by fellow Republican Senator Bill Hagerty on March 31, 2022.

A key difference between the two is that passage of the Stablecoin Transparency Act would categorize the issuance of stablecoins as securities under U.S. securities laws and fully collateralized securities repurchase agreements would have to be put in place. square.

Toomey announced in a December 16 speech to fellow senators that he would retire at the end of the session of Congress on January 3, 2023.

Republican Senator Tim Scott, whose views on the digital asset industry have yet to be made public, replaces Toomey as a member of the Senate Banking Committee Rankings.

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