Lame Duck Senator Leaves Stablecoin Bill Legacy

Sen. Pat Toomey formally introduced his stablecoin bill to the Senate floor as the 117th Congress wraps up work

article-image

Christopher Halloran/Shutterstock.com modified by Blockworks

share

Retiring Sen. Pat Toomey’s stablecoin bill, which seeks to establish significant regulatory guardrails for the crypto industry, hit the Senate floor Wednesday — eight months after the draft proposal was first crafted.

However, with the congressional session ending on Jan. 3 2023, the bill would have to be reintroduced by another senator next session to have any chance of becoming law. The two-term senator announced his retirement in 2020.

The Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022 (TRUST) would establish a new federal license aimed at issuers of payment stablecoins.

TRUST defines a payment stablecoin as being a digital asset that is directly convertible to fiat, widely used, recorded on a public ledger and issued by a centralized entity. 

The April draft version of TRUST preceded the collapse of stablecoin issuer Terra’s ecosystem, which caused billions of dollars in losses of investor funds based on a failed algorithmic design. But even then the bill limited stablecoin issuance to money-transmitting businesses, or holders of a state or federal license, including banks.

Nationally licensed payment stablecoins must be backed by “cash and cash equivalents or level 1 high-quality liquid assets denominated in United States dollars,” but they also become eligible Federal Reserve accounts and services, according to the newly introduced draft law.

The bill also aims while clarifying their status; they would not be considered securities if no interest is involved. 

“I’ve put forward a regulatory model that won’t undermine competition by favoring entrenched incumbents,” Toomey said in a statement. “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.”

The bill may serve as a model for similar legislation in the future, but will not be considered before the end of the congressional session on Jan. 3, 2023.

Should a similar bill pass, stablecoin issuers will be subjected to standardized disclosure requirements and attestation by registered accounting firms — historically obtained via lawsuits and legal settlements.

It would also attempt to bolster privacy protections to financial transactions involving stablecoins by mandating the US Treasury not be allowed to collect nonpublic information unless a warrant is issued by a judge.

TRUST follows more than 16 months of deliberation, discussion and the solicitation of legislative proposals in what Toomey has described as an attempt to shield investors from financial risk while laying the groundwork for stablecoin innovation.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Unlocked by Template.png

Research

RTK networks are critical to enabling a world of ubiquitous autonomous drones, vehicles, and industrial robots. We believe the GEOD token enables both a cost and product advantage for the GEODNET RTK network, which will allow it to out-compete multi-billion dollar incumbents Trimble and Hexagon.

article-image

As EIP-4844 “blobs” transform the economics of Ethereum layer-2s, a growing debate pits long-term scalability against immediate ETH value

article-image

Prosecutors argued that FTX co-founder Gary Wang cooperated in their case against former FTX CEO Sam Bankman-Fried

article-image

The two largest crypto exchanges respectively run the second- and sixth-largest Solana validators

article-image

MicroStrategy’s bitcoin buying has exploded — it now holds 1.7% of the asset’s circulating supply

article-image

The MiCA era will reward the prepared and punish the rest

article-image

The market is, presumably, confused about what a Trump win means for the social media company