Crypto News: Senator Pat Toomey Introduces Stablecoin Transparency Legislation

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If the last year has taught investors anything about crypto, it’s that it can’t continue to grow without transparency. The crypto industry has undoubtedly taken a beating throughout 2022. A big reason for this has been the implosions of several large companies, which are sending bearish ripples through the market. Could these collapses have been avoided if the projects had been subjected to a higher level of openness? This is certainly a defensible position. Senator Pat Toomey seems to agree — and he’s making crypto news headlines for one last time in his political career. Specifically, Toomey is introducing his latest stablecoin bill to Congress.

After 11 years serving Pennsylvania, Senator Pat Toomey is nearing the end of his final term. Toomey has a long career behind him. However, one thing he will be noted for is his role as a major player in the early stages of Congressional crypto infrastructure. Toomey has been heavily involved in discussions around cryptocurrency. His bill, the Stablecoin TRUST Act, is the culmination of this involvement.

First introduced in April 2022, Toomey is showcasing a new extended version of the stablecoin TRUST Act this week in what will likely be the last bill of his career. Crypto ally Toomey is pushing the bill to expand transparency while ensuring the market is not hobbled. Indeed, Toomey has shown distrust of the Federal Reserve’s handling of crypto. In a press release, Toomey says the bill will ensure that the Fed, “which has shown significant skepticism of stablecoins, will not be able to stop this.” [market] activity.”

Crypto News: Stablecoin TRUST Act seeks to prevent further implosions

Toomey’s crypto news is a sign of what investors can expect to see in the upcoming session of Congress. Crypto is certainly a major concern for lawmakers, especially after the FTX fallout. The Stablecoin TRUST Act is one of the first crypto pieces of legislation to become law.

This bill comes as a lack of transparency for crypto projects is drawing scrutiny from investors. With no infrastructure, crypto projects have no incentive to be open about the reserves they hold. Stablecoins – cryptos that are held to an indexed value – rely heavily on their reserves to maintain their pegs. However, they are not encouraged to make this information public.

This led to a lot of controversy, such as the revelation that Tether (USDT-USD) reserves consisted largely of commercial paper rather than US dollars or another less volatile asset. Tether has since remedied this on its own, but there are plenty of other projects that aren’t transparent about their reserves. This can lead to disaster if reserves are not sufficiently liquid to meet client redemption needs – something investors know from watching FTX’s collapse.

If passed, the Stablecoin TRUST Act will remove the regulatory powers of the United States Securities & Exchange Commission (SEC) by labeling stablecoins as currencies rather than securities. Accordingly, the crypto rights will go to the Office of the Comptroller of the Currency (OCC). The law will then create a standard for public disclosure of reservations in an effort to maintain project transparency. The law hopes to make it easier to use stablecoins for payments without hindering the growth of the space.

As of the date of publication, Brenden Rearick did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Brenden Rearick is a financial news writer for InvestorPlace’s current market team. It primarily covers digital assets and tech stocks, with a focus on crypto and DeFi regulation.

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