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Friday, February 3, 2023

Pat Toomey Stresses On Stablecoins

The U.S. Congress is expected to soon discuss a new bill, introduced by Senator Pat Toomey, that would regulate Stablecoins and reserve-backed digital currencies. The bill is a good sign for the cryptosphere, with many positive checkboxes from industry participants. Stablecoin issuers and purchasers would register with FinCEN similar to money service businesses (MSBs). This regulatory certainty is good for the entire cryptocurrency and stablecoin market.

Toomey is a republican senator from Pennsylvania and he introduced the bill in December. It’s called the “Stablecoin Regulatory Certainty Act” and would establish federal supervision of crypto assets used as legal tender within the United States.

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The proposed legislation would make sure that these cryptocurrencies adhere to regulations governing traditional money by requiring them to be fully collateralized at all times through approved financial institutions or exchanges licensed by the Federal Reserve System (FRS). This means that stablecoins and other “reserve-backed” cryptocurrencies are still subject to some form of centralized control over issuance, which may not sit well with those who believe such authority should be decentralized entirely among users themselves rather than placed in any hands whatsoever — even those sanctioned by FRS — but it does provide some degree of certainty regarding what will happen if something goes wrong with any given token issue or exchange operator under this framework.

Pat Toomey Focuses On Crypto

A major source of concern for the cryptosphere is how it will be regulated. The Bill would provide the SEC with new oversight powers over stablecoins, but only those that are deemed “covered securities,” or that are issued by a registered national security exchange or broker-dealer.

It also suggests a solution to a problem facing all cryptocurrencies—the difficulty in authenticating transactions. By using a blockchain-based system to confirm transactions and increase transparency, this bill could help solve this problem and make cryptocurrencies more acceptable in mainstream markets such as finance and retailing.

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The bill is also good news for stablecoins, which have been under increased scrutiny recently after Tether was accused of manipulating its currency’s value through dishonest accounting practices (a claim it denies). Stablecoins are expected to become increasingly popular among investors who want exposure to cryptocurrency without having the volatility associated with them—and now there may be regulation around these coins’ issuance and trading activity which could prove reassuring for interested parties.

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