Soon-to-Retire US Senator Pat Toomey submitted a bill This could pave the way for a more open stablecoin framework starting next year.
Entitled the Stablecoin TRUST Act, Toomey’s bill would allow several types of entities to act as stablecoin issuers, including depository institutions, state-based money transfer providers, and national trust banks. It also extends that privilege to entities with “a new federal license specifically designed for payment stablecoin issuers.”
The bill also establishes public disclosure requirements for entities issuing stablecoins. These issuers are required to disclose their redemption policy, indicate which assets are being used as collateral, and issue a certificate from their accounting firm.
Issuers will also be required to back their stablecoins with “high-quality liquid assets,” according to a draft bill published with today’s announcement.
A discussion draft of the Stablecoin TRUST Act was submitted in April, and the full bill was submitted on December 21st.
Toomey said the model aims to encourage competition by allowing companies other than insured depository institutions to issue stablecoins. He also said the bill would prevent the US Federal Reserve, known for its cautious stance on stablecoins, from blocking progress on future legislation.
Toomey plans to retire in the next few weeks. In light of that fact, Toomey clarified that the bill is intended to help other lawmakers pass the bill in his 2023. he said:
Stablecoins are an exciting technological development that has the potential to transform money and payments…I believe this framework will serve as the foundation for passing legislation next year that protects customer funds without stifling innovation. I hope you will.
A proposal submitted by other U.S. lawmakers this summer proposes stricter rules that would treat stablecoin issuers like banks. Such a proposal could limit the issuance of stablecoins by non-financial companies and could limit the ability of top stablecoin companies such as Tether and Circle to operate within the United States.
However, Toomey is known for its efforts to liberalize cryptography, so broader permissiveness in the Stablecoin TRUST Act is expected.
Toomey has been involved in other efforts in recent years to create more open cryptography. This summer, he embarked on an effort to allow tax exemptions for small cryptocurrency holders. In 2021, he voted against the controversial infrastructure bill. This was to extend the crypto broker rule to several other types of companies.
Toomey also advocated The December 21st bill seeks to reduce the number of Federal Reserve banks due to concerns about left-wing political affiliation.