Republican Senator Pat Toomey is making the most of his final days in Congress by introducing a new stablecoin bill that he hopes will serve as a framework for future stablecoin regulation.
According to a press release, he said, “I hope this framework lays the groundwork for my colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation. This bill will also ensure the Federal Reserve, which has displayed significant skepticism about stablecoins, won’t be in a position to stop this activity.”
The Essence of the Act
The Stablecoin TRUST Act, proposed by Senator Toomey, aims to remove stablecoin regulation from the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC). It also aims to exempt “payment stablecoins” from being classified as securities.
Under the act, a new federal license would be established for “payment stablecoin issuers,” which would be overseen by the Office of the Comptroller of the Currency (OCC), the agency responsible for regulating traditional banks and savings institutions.
Impact of the Act on Stablecoin Issuers and Holders
The proposed act would establish standardized public disclosure requirements for issuers of stablecoins, including the requirement that these assets must be backed by high-quality liquid assets.
For holders of stablecoins, the act would provide privacy protections by exempting new technologies, such as digital assets, from Bank Secrecy Act requirements and asserting that private transactions involving no intermediary or financial institution need not be reported.
How’s This Act Different from the Stablecoin Transparency Act?
The Stablecoin Transparency Act, which Republican Senator Bill Hagerty introduced in Congress on March 31, will be a test for Toomey’s latest stablecoin bill.
The main distinction between the two is that if the Stablecoin Transparency Act is approved, the issuance of stablecoins would be considered as a security under US securities laws. This would mean that fully collateralized security repurchase agreements would have to be set up.
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