According to the Stablecoin TRUST Act, digital assets should be classified as “payment stablecoins,” free from numerous securities restrictions. Senator Pat Toomey, a member of the Senate Banking Committee, has prepared legislation that would provide a framework for stablecoins in the US.

Toomey unveils stablecoin bill granting OCC authority for payments charter https://t.co/rO4d1m17YZ by AmerBanker 2022-04-06 20:06:25

— Fintechbot (@FintechBot) April 6, 2022

The Stablecoins TRUST Act proposed that digital assets be designated as “payment stablecoins.” According to a draught released Wednesday, it is a convertible virtual currency used as a medium of exchange that can be redeemed for fiat by the issuer.

Notably, the bill recommended that such sales be free from securities rules by changing current legislation to ensure that a payment stablecoin is not included in the definition of “security.” The bill also recommended that stablecoin issuers be licensed by the Office of the Comptroller of the Currency, including national trust institutions and approved state-chartered trusts. Issuers would be obliged to back up their stablecoin reserves with cash and cash equivalents and level 1 high-quality liquid assets denominated in US dollars.

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Stablecoins were the subject of the draught bill, according to Toomey, because of their “potential, among other things, to speed up payments and automate transactions.” He went on to say:

“The proposed regulatory framework I’m announcing today will allow this crypto-innovation to thrive while protecting consumers and reducing possible dangers to the financial system from stablecoins.” As Congress continues to work on stablecoin regulation, I look forward to hearing from my colleagues and stakeholders on this legislation.”

Two senators urged President Biden to remove 25% tariffs on Ukrainian steel that were imposed under Trump https://t.co/qXrH7ySDtx via @bpolitics
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Dianne Feinstein, a California Democrat, and Pat Toomey, a Pennsylvania Republican, wrote to Biden in a letter dated Tuesday.

— Ophir Gottlieb (@OphirGottlieb) April 5, 2022

Stablecoins have previously been addressed by US lawmakers in both the House of Representatives and the Senate as a way to integrate them into the financial regulatory framework. Toomey proposed that stablecoin supply not be confined to insured depository institutions at a hearing on stablecoins in December. During a House hearing on digital assets in February, North Carolina Representative Patrick McHenry recommended a state-level regulatory framework on stablecoins in place of an entire federal law.