Senator Pat Toomey introduced a bill to regulate stablecoins

Published: 07.04.2022

Article reading time:
2 minutes.

Pennsylvania Senator Pat Toomey has introduced a new cryptocurrency regulation bill that lays the regulatory framework for stablecoins.

The document is called the Law on Transparency of Reserves and Unified Secure Transactions in Stablecoins. He proposes the introduction of a new concept of “payment stablecoin” – a token that can be exchanged for fiat currency at any time. The bill limits the backing of such stablecoins solely to “money and cash equivalents or high-quality Tier 1 liquid assets denominated in US dollars.”

It also provides for three different licensing regimes for companies issuing payment stablecoins: traditional banking licenses; license for companies issuing payment stablecoins; and a state money transfer license. It is under the latter license that the vast majority of cryptocurrency exchanges in the United States operate.

Pat Toomey proposes setting standards for the disclosure of stablecoin collateral, redemption policies, and regular reviews. The document does not mention an audit, but it proposes to exclude payment stablecoins from the term “security” so that they are not subject to regulation by the US Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).

Interestingly, the senator has not yet officially submitted the document for consideration. Instead, he is circulating it for public comment, which means the bill could change significantly.

Recall that recently a bill was submitted to the US Congress aimed at protecting the country from “the risks posed by the adoption of bitcoin in El Salvador.”