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A week after delivering his farewell address on the floor of the U.S. Senate, outgoing Pennsylvania Sen. Pat Toomey has quietly introduced another piece of cryptocurrency legislation. The Stablecoin TRUST Act—a backronym for Transparency of Reserves and Uniform Safe Transactions—would establish a federal regulatory framework for "payment stablecoins," and is designed to guide Congress towards a path of "sensible regulation of cryptocurrencies."
The legislation is very similar to The TRUST Act that Toomey introduced in April, and is both the latest and likely last bill of several relating to digital assets that Sen. Toomey introduced or cosponsored in this last term.
“I hope this framework lays the groundwork for my colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation," he said in a press release. "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.”
Sen. Toomey's proposal would also take stablecoin regulation out of the hands of the Securities and Exchange Commission and the Commodities Futures Trading Commission (CFTC). The Stablecoin TRUST Act would prevent the classification of "payment stablecoins" as securities and exclude their issuers from being regulated as investment advisors or investment companies.
Instead, the act would create a new federal license for "payment stablecoin issuers" managed by the Office of the Comptroller of the Currency (OCC)—the agency charged with regulating traditional banks and savings institutions.
Toomey is bullish on the potential for stablecoins to transform existing, real-world financial transactions.
"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,” he said in the latest release, echoing his vision for the bill introduced in April, in which he noted that “while today stablecoins facilitate trading with cryptocurrencies, tomorrow stablecoins could be widely used in the physical economy."
For issuers, the act would standardize public disclosure requirements, including what is being used to back the stablecoin—which must be "high-quality liquid assets." For holders, privacy would be tantamount, excluding "new technologies like digital assets" from Bank Secrecy Act requirements and asserting that "private transactions not involving an intermediary or a financial institution do not need to be reported."
Cosponsors of The Stablecoin Trust Act include Democratic Sen. Elizabeth Warren of Massachusetts and fellow Republicans Sens. Cynthia Lummis of Wyoming and Thomas Tills of North Carolina.
Last week, while he joined the chorus of lawmakers calling for crypto regulation in the wake of the collapse of FTX, Sen. Toomey warned his colleagues in Congress that the disaster was not due to the fact that cryptocurrency was involved, but because those digital assets were poorly—or fraudulently—handled.
"The wrongful behavior that occurred here is not specific to the underlying asset; what appears to have happened here is a complete breakdown in the handling of those assets," he said in prepared remarks. "In our discussion of FTX today, I hope we are able to separate potentially illegal actions from perfectly lawful and innovative cryptocurrencies."
Sen. Toomey has also been critical of SEC commissioner Gary Gensler, recently disagreeing with the regulator's assertion that cryptocurrencies are securities. He has also introduced and cosponsored other crypto bills, such as the Virtual Currency Tax Fairness Act,
The senator announced his retirement from Congress in October 2020.