Senator Patrik Toomey has introduced a special measure to finetune stablecoins in terms of transparency and security. This is the case for the Stablecoin Transparency of Reserves and Uniform Sale Transactions Act of 2022, also known as the TRUST Act. With this, the US is officially accepting stablecoins as a part of its banking and financial ecosystems. This makes the United States, the first western country to do so. The TRUST Act aims to regulate stablecoins
Stablecoins are cryptocurrencies that attempt to fix their market price to a reserve asset like gold or fiat currencies. They are popular for digital transactions that involve the conversion of virtual assets into real traditional ones, like the US Dollar. Tether, USD Coin, and Binance USD are among the most popular stablecoins tied to the United States'' fiat currency.
stablecoin issuers will need to obtain an official license that qualifies them as legit financial entities. Issuers may choose for the position of the Comptroller of the Currency (OCC) or a state money transmitter.
The stabilized coins will also need to establish a regular audit system and a clear structure of asset redemption policies. The TRUST Act provides detailed specifications on the asset that their stabilizedcoins will be tracked against.
The document also referred to the dollar-backed stablecoins as payment stablecoins. The TRUST Act clarifies that it only applies to these payment stablecoins.
According to the legislation, non-payment stablecoins will not impact (e.g., stablecoins backed by commodities or virtual currencies, or algorithmic stablecoins).
- Elizabeth Warren Expresses Concern Over Fidelitys Bitcoin Pension Plan
The increase comes after US President Joe Biden signed executive orders on the government''s oversight of the cryptocurrency industry.
Stablecoins had been under surveillance by the US government for a while now.
Many crypto-focused businesses in the United States are providing stablecoins that allow owners to facilitate quick payment, while reducing the transaction fee that is usually charged by banks.
Last year, reports said the US government was merely looking to regulate these relatively stable cryptocurrencies, which are still less affected by market fluctuations due to its unstable reserve asset.
The current market capitalization of stablecoins, according to CoinGecko, is over $188 billion (roughly Rs. 14,56,570 crore).
Stablecoins, a traditional payment method, was officially recognized earlier in April this year.
According to an official blog post, the government intends to legislate to bring stablecoins where they are used as a payment method within the payment regulatory perimeter, establishing conditions for stablecoins issuers and service providers to operate and invest in the United Kingdom.