US senator Toomey introduces stablecoin bill as congressional session wraps up

Republican Senator Pat Toomey, who is about to retire from U.S. Congress on the finish of the time period, has used one in every of his previous couple of weeks in workplace to introduce a brand new stablecoin bill, geared toward making a regulatory framework for “cost stablecoins.”

Toomey — who additionally serves as the Ranking Member of the U.S. Banking Committee — stated the Dec. 21 bill, known as the Stablecoin TRUST Act of 2022 would serve as a framework for stablecoin regulation for his fellow senators who wish to push out stablecoin laws in 2023.

In a press release, the senator known as stablecoins an “thrilling technological growth that might rework cash and funds,” including:

“By digitizing the U.S. greenback and making it obtainable on a worldwide, prompt, and almost cost-free foundation, stablecoins may very well be extensively used throughout the bodily economic system in a wide range of methods.”

If handed by Congress, the bill would allow non-state and non-bank establishments to concern stablecoins, so lengthy as they receive a federal license that’s created and issued by the U.S. Office of the Comptroller of the Currency (OCC) and that the stablecoins are backed up with “high-quality liquid property.”

The stablecoin issuers should additionally adjust to a brand new public disclosure normal, clearly define redemption insurance policies and supply common attestations from licensed accounting corporations.

The bill would exempt stablecoin issuers from U.S. securities legal guidelines, so lengthy as they don’t supply interest-bearing services or products or in any other case act like an funding or advisory agency.

Investor safety can be properly embedded into the bill, with it stating that within the occasion of an issuer’s insolvency, stablecoin holders would be the first to be reimbursed — which is maybe probably the most notable distinction between this bill and Toomey’s earlier bill that was launched into Congress in Apr. 2022.

The bill would additionally solely apply to “cost” stablecoins that may be instantly transformed to fiat by the issuer — such as the U.S. Dollar — not commodity-like or algorithmically-backed stablecoins.

Related: Stablecoin laws within the US: A newbie’s information

Toomey stated he hoped the newest bill would lay the groundwork for his colleagues to move laws subsequent 12 months which might safeguard buyer funds “with out inhibiting innovation,” the outgoing congressman stated.

However, it stays to be seen how Toomey’s newest stablecoin will stack up in opposition to the Stablecoin Transparency Act, which was launched into Congress by fellow Republican Senator Bill Hagerty on Mar. 31. 2022.

A key distinction between the 2 is that the passing of the Stablecoin Transparency Act would categorize the issuance of stablecoins as securities below U.S. securities legal guidelines and absolutely collateralized safety repurchase agreements would have to be set in place.

Toomey introduced in a Dec. 16 speech to his fellow senators he’ll retire on the finish of the Congressional session on Jan. 3. 2023.

Replacing Toomey as the Senate Banking Committee’s Ranking Member is Republican Senator Tim Scott, whose views on the digital asset business haven’t but been publicized.