Sen. Patrick Toomey, a leading US Banking Committee member, introduced a Stablecoin TRUST act for stablecoin issuers in the US.
The proposed Stablecoin TRUST act would implement disclosure and redemption requirements by the stablecoin issuers. It would also issue various regulatory rules for the issuers to follow.
The “Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022,” aka Stablecoin TRUST act, would be revolved around the companies that issue dollar-pegged cryptocurrencies.
US is looking for a more flexible stablecoin approach
The bill’s discussion draught would define a “payment stablecoin,” allowing insured depository institutions to issue payment stablecoins and handle state regulatory control of this section of the crypto business.
“Payment stablecoins” refers to a convertible cryptocurrency designed to maintain a stable value compared to a fiat currency. It refers to a coin convertible directly to a fiat currency by the issuing authority, intended as a medium of exchange, issued by a central authority, and recorded on a public ledger.
Under the act, the issuance of stablecoins is delegated to certain authorities. It would be against the law for anyone to issue a stablecoin.
The exceptional authorities include a money transmitting business authorized by a state bank authority, a national payment stablecoin issuer, and an insured depository institution.
The act also describes that any institution or individual that issues the stablecoin is obliged to follow specific guidelines. The issuer should disclose the assets backing the stablecoin publicly every month.
They should adopt disclosure policies for redeeming the payment stablecoin. The issuer should also go through quarterly attestations and disclose the results publicly.
According to the proposed law, payment stablecoins should not be categorized as securities, a distinction that Toomey believes would foster innovation in the field.
“I think it is extremely important to provide clarity over the definition of what in the digital asset constitutes security and what doesn’t.
The new act would provide a strategic flow and outline for the entire stablecoin network.