The Future of Money and Payments: A Look at the Stablecoin TRUST Act of 2022

Summary

On December 21, 2022, U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) introduced the Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022, also known as the Stablecoin TRUST Act of 2022. The bill aims to establish the first federal regulatory framework for payment stablecoins and guide Congress towards a path for sensible regulation of cryptocurrencies. According to Ranking Member Toomey, stablecoins are an exciting technological development that could transform money and payments by digitizing the U.S. dollar and making it available globally, instantly, and nearly cost-free. The bill aims to ensure these digital assets' safe and transparent issuance and provide oversight and regulation to prevent any unsafe or unsound practices.

Key Points

• Defines key terms such as "digital assets" and "payment stablecoin"
• Establishes regulatory standards for the issuing of payment stablecoins
• It gives power to the Office of the Comptroller of the Currency to issue a license to a "National Limited Payment Stablecoin issuer."
• Requires regular audits and reporting from payment stablecoin issuers
• Allows depository institutions to segregate the issuance of payment stablecoin and management of such payment stablecoin reserve assets from other activities, but must still be subject to the same regulatory standards as a national limited payment stablecoin issuer
• Ensures priority of claim for holders of payment stablecoins in case of an insolvency proceeding
• Limits the activities that National Limited Payment Stablecoin issuers can engage in, such as making loans or other extensions of credit
• Allows flexibility in corporate governance
• Maintains state banking supervisory authority and does not supersede any state law relating to money-transmitting businesses.

Regulation and Licensing

• Overview of regulatory and licensing requirements for Payment Stablecoin Issuers
• Authority of the Office of the Comptroller of the Currency
• Authority of Depository Institution in issuing payment stablecoin

Consumer Protection

• Ensuring safe and transparent issuance of Payment stablecoin
• Required reporting and audit requirements
• Priority of claim for holders in case of insolvency
• Limiting activities of National Limited Payment Stablecoin issuers.

Overall, the Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022, introduced by U.S. Senate Banking Committee Ranking Member Pat Toomey, aims to provide a comprehensive regulatory framework for payment stablecoins, a new and emerging technology that could transform money and payments. The bill builds on the principles and discussion draft released by Ranking Member Toomey throughout 2021 and 2022, in which he sought to ensure federal law supports the development of digital assets and their underlying technologies while protecting investors. The legislation aims to balance fostering innovation and promoting safety and stability in the financial system. It has the potential to provide a foundation for the growth and mainstream adoption of stablecoins.

The full text of the Stablecoin Transparency of Reserves and Uniform Safe Transactions Act of 2022, or the "Stablecoin TRUST Act of 2022," can be found on the U.S. Senate Banking Committee's website. Read the full text