A soon-to-retire senator introduced a new stablecoin bill just weeks before the 117th session of the US Congress ended.
Republican Senator Pat Toomey, who is set to retire from U.S. Congress at the end of the term, has used one of his last few 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 U.S. Banking Committee — said the Stablecoin TRUST Act of 2022 would serve as a framework for stablecoin regulation for his fellow senators, who are looking to pass stablecoin legislation in 2023.
In a Dec. 21 statement, the senator called stablecoins an “exciting technological development that could transform money and payments,” adding:
“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.”
If passed by Congress, the bill would permit non-state and non-bank institutions to issue stablecoins, as long as they obtain a federal license created and issued by the U.S. Office of the Comptroller of the Currency (OCC), and as long as the stablecoins are backed up by “high-quality liquid assets.”
The stablecoin issuers must also comply with a new public disclosure standard, clearly outline redemption policies and provide regular attestations from authorized 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 otherwise act like an investment or advisory firm.
Investor protection is also well embedded into the bill, with it stating that in the event of an issuer’s insolvency, stablecoin holders will be the first to be reimbursed — which is perhaps the most notable difference between this bill and an earlier bill by Toomey that was introduced into Congress in April.
The bill also applies to “payment” stablecoins that the issuer can convert directly into fiat currency such as U.S. dollars, not commodity-like or algorithm-backed stablecoins.
Toomey said he hopes the latest bill will lay the groundwork for passing legislation next year that will protect customer funds “without stifling innovation.”
However, it remains to be seen how Toomey’s latest stablecoin will compete with his Stablecoin Transparency Act, which was introduced to Congress by his fellow Republican Senator Bill Hagerty on March 31.
The main difference between the two is that once the Stablecoin Transparency Act is enacted, stablecoin issuances will be classified as securities under U.S. securities law and will be required to establish fully secured repurchase agreements. 16 has announced that he will retire at the end of the January 1 legislative session. 3. Republican Senator Tim Scott will replace Toomey as a senior member of the Senate Banking Committee.
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