December 21, 2022

Toomey Introduces Legislation to Guide Future Stablecoin Regulation

Stablecoin TRUST Act Would Promote Competition and Protect Consumers

Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) today introduced legislation that would establish the first federal regulatory framework for payment stablecoins and guide Congress towards a path for sensible regulation of cryptocurrencies.

“Stablecoins are an exciting technological development that could transform money and payments. 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,” said Ranking Member Toomey.

“I hope this framework lays the groundwork for my colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation. I’ve put forward a regulatory model that won’t undermine competition by favoring entrenched incumbents—for example, by limiting payment stablecoin issuance to insured depository institutions. 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.”

Throughout his tenure, Senator Toomey has been a strong advocate of free markets and innovation, including with respect to digital assets. In April 2022, Senator Toomey proposed the “Stablecoin Transparency of Reserves and Uniform Safe Transactions (TRUST) Act,” the first Senate bill to establish a comprehensive regulatory framework for payment stablecoins.

Following release of this draft legislation, several proposals to regulate stablecoins have been discussed. Few of these approaches would provide the regulatory flexibility for both state- and federally-chartered entities to engage in this activity. The Stablecoin TRUST Act recognizes the wide range of payments innovation occurring at the state level and avoids the regulatory conflict of interest that could emerge if the Federal Reserve, which may be authorized to issue a central bank digital currency, were to have unchecked power over stablecoins.

To read the full text of the bill, click here. To read a section-by-section summary of the bill, click here.

Key Components

·        Encourages competition by authorizing several types of regulated entities to issue payment stablecoins.

·        Enhances financial stability by requiring that all payment stablecoins are fully backed by high-quality liquid assets.

·        Establishes transparency by subjecting all payment stablecoin issuers to standardized disclosure requirements and attestations by registered accounting firms.

·        Provides much-needed clarity that, at a minimum, stablecoins that do not offer interest are not securities.

·        Protects consumers by clarifying that payment stablecoin holders would have priority in the event of an issuer’s insolvency.

·        Restores privacy protections to financial transactions involving stablecoins and other digital assets.

·        Preserves and builds upon the state-based regimes under which existing stablecoins are issued and regulated.

·        Authorizes the Office of the Comptroller of the Currency, the primary federal regulator of national banks, to establish a new federal license designed specifically for payment stablecoin issuers.


·        In August 2021, Ranking Member Toomey announced he was soliciting legislative proposals to ensure federal law supports the development of digital assets and its underlying technologies while protecting investors.

·        In December 2021, Ranking Member Toomey released a set of principles to lay the framework for forthcoming stablecoin legislation.

·        In April 2022, Ranking Member Toomey released a discussion draft of stablecoin legislation.