Less than two weeks before the Pennsylvania senator is scheduled to retire, Sen. Pat Toomey, R-Pa., filed legislation that would create a federal framework for stablecoins and seeks to "direct Congress" toward future crypto legislation.
Tommey said in a statement:
“I’ve put forward a regulatory model that won’t undermine competition by favoring entrenched incumbents.”
Toomey is seen as a key player in shaping crypto policy and is the leading Republican on the Senate Banking Committee. "Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022" is the name of the new legislation introduced by the Pennsylvania politician.
The proposal would provide payment stablecoin producers a new government license. The law would let depository institutions, state-based money transmission firms, non-depository trust organizations, and national trust banks, in addition to other licensees, to issue payment stablecoins. Tommey continued:
“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.”
The Toomey plan would impose new, uniform public transparency standards for issuers and mandate that issuers completely back their payment stablecoins with "high-quality liquid assets." The assets that support the payment stablecoin, the redemption guidelines, and the attestations of public accounting firms would all be disclosed.
Toomey's measure is released as House Representatives have been working on their own stablecoin plan for months. The House Financial Services Committee's top legislators said they want to move a stablecoin measure through the next year.
The TRUST Act would establish that payment stablecoins are not securities and issuers are neither investment businesses or investment advisers by defining essential terminology including "digital asset," "payment stablecoin," "payment stablecoin issuer," and "national limited payment stablecoin issuer." The law also contains privacy protections, such as a statement that private transactions that don't involve a financial institution or an intermediary are exempt from reporting requirements.
After releasing a discussion draft on stablecoins in April, Toomey made his policy decision a few months later. He added:
“I hope this framework lays the groundwork for my colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation.”