The bill was introduced by the soon-to-retire senator just a few weeks before the end of the 117th US Congress session.
Republican Senator Pat Toomey, who is set to leave the United States Senate at the end of this term, has used one of his final weeks in office to introduce a new stablecoin bill aimed at creating a regulatory framework for “payment stablecoins.”
Toomey, who also serves as the Ranking Member of the United States Banking Committee, stated that the Stablecoin TRUST Act of 2022, which was introduced on December 21, would serve as a framework for stablecoin regulation for his fellow senators who plan to introduce stablecoin legislation in 2023.
In a statement, the senator called stablecoins an “exciting technological development that could transform money and payments,” adding that “stablecoins could be widely used across the physical economy in a variety of ways by digitising the US dollar and making it available on a global, instant, and nearly cost-free basis.”
If approved by Congress, the bill would allow non-state and non-bank institutions to issue stablecoins as long as they obtain a federal licence created and issued by the United States Office of the Comptroller of the Currency (OCC) and the stablecoins are backed up with “high-quality liquid assets.”
In addition, stablecoin issuers must follow a new public disclosure standard, outline redemption policies clearly, and provide regular attestations from authorised accounting firms.
Stablecoin issuers would be exempt from US securities laws if they did not offer interest-bearing products or services or otherwise act as an investment or advisory firm.
Investor protection is also well embedded in the bill, with it stating that in the event of an issuer’s insolvency, stablecoin holders will be the first to be reimbursed — perhaps the most significant difference between this bill and Toomey’s earlier bill, which was introduced in Congress in April 2022.
The bill would also apply only to “payment” stablecoins that can be directly converted to fiat by the issuer, such as the US Dollar, rather than commodity-like or algorithmically-backed stablecoins.
Toomey expressed hope that the latest bill would pave the way for his colleagues to pass legislation next year that would protect customer funds “without inhibiting innovation,” as the outgoing congressman put it.
However, it remains to be seen how Toomey’s latest stablecoin will fare against the Stablecoin Transparency Act, which was introduced in Congress on March 31, 2022 by fellow Republican Senator Bill Hagerty.
The Stablecoin Transparency Act, if passed, would classify the issuance of stablecoins as securities under US securities laws, necessitating the establishment of fully collateralized security repurchase agreements.
Toomey announced to his colleagues on December 16 that he will retire at the end of the Congressional session on January 3, 2023.
Toomey’s replacement as Ranking Member of the Senate Banking Committee is Republican Senator Tim Scott, whose views on the digital asset industry have not yet been made public.
