The New ‘Trust Act’ Of The United States Includes Dollar-Pegged Stablecoins In The Financial System And Lists Rules.
• Senator Patrik Toomey of Pennsylvania introduced the bill.
• In the United States, there are rules for stable coin issuers.
• In April, the United Kingdom made stablecoins lawful.
Senator Patrik Toomey of the United States has proposed a new framework to improve the transparency and security of stablecoins. The Stablecoin Transparency of Reserves and Uniform Sale Transactions Act of 2022,
often known as the TRUST Act, is the name of this draught. Stablecoins are now formally accepted as part of the US banking and financial ecosystems. The United States is the first Western country to do so.
The Trust Act Attempts To Regulate Stablecoins In Order To Make Them More Useful For Everyday Transactions.
Stablecoins are cryptocurrencies whose market price is tied to a reserve asset such as gold or fiat currency. They are often used in digital transactions involving the conversion of virtual assets into “actual” traditional assets, such as the US Dollar. Tether, USD Coin, and Binance USD are three of the most popular stable coins linked to the US dollar.
Stablecoin issuers will be required to obtain an official license that qualifies them as legitimate financial companies under Senator Toomey’s TRUST Act. Issuers can seek licenses as the Comptroller of the Currency (OCC), a state money transmitter, or other roles similar to these.
Issuers of stablecoins will also need to put up a regular audit system and have a defined structure for asset redemption policies. The TRUST Act also requires issuers to submit detailed specifications on the asset against which their stablecoins will be anchored to the appropriate authorities.
The Dollar-Backed Stablecoin Are Referred To As “Payment Stablecoins” In The Text.
The TRUST Act makes it clear that it only applies to payment stablecoins. “Non-payment stablecoins (e.g., stablecoins backed by commodities or virtual currencies, or algorithmic stablecoins) are not affected by the legislation,” it says. The news follows the recent signing of executive orders by US President Joe Biden on government oversight of the bitcoin business.
The US authorities had been keeping an eye on stablecoins for some time. Many crypto-focused businesses in the United States produce stablecoins, which allow owners to make speedy payments while avoiding the transaction fees levied by banks.
Last year, allegations surfaced that the US government was considering regulating these comparatively stable cryptocurrencies, which are less influenced by market volatility because they are backed by a steady reserve asset.
Stablecoins have a market capitalization of around $188 billion, according to CoinGecko (roughly Rs. 14,56,570 crore). The United Kingdom recognized stablecoins as a legitimate means of payment in April of this year.
“The government aims to legislate to bring stablecoins — were used as a form of payment — within the payments regulatory perimeter, establishing conditions for stablecoins issuers and service providers to operate and invest in the UK,” according to an official blog post at the time.
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