Summary: Sen. Pat Toomey (R-Pa.), the ranking Republican in the U.S. Senate Banking Committee, is looking to make his stablecoin oversight bill a bipartisan effort by speaking with Democrats, he confirmed in a Thursday committee hearing.  Committee Chairman Sherrod Brown (D-Ohio) noted in the same hearing that he is one of those Democrats involved in discussions ...

Sen. Pat Toomey (R-Pa.), the ranking Republican in the U.S. Senate Banking Committee, is looking to make his stablecoin oversight bill a bipartisan effort by speaking with Democrats, he confirmed in a Thursday committee hearing. 

Committee Chairman Sherrod Brown (D-Ohio) noted in the same hearing that he is one of those Democrats involved in discussions with Toomey. 

"The first place where we should be able to find common ground, and I actually think in many cases are close, is to chart a path forward for clear and sensible regulations on stablecoins," Toomey said. 

Brown briefly spoke after Toomey at the hearing and mentioned that he and Toomey have different views about the intensity of regulations, but is willing to hash it out with Toomey. 

Toomey’s proposal demands that the reserves that back stablecoins are fully disclosed, so that it is clear and obvious that there are sufficient funds to back up the stablecoin. Toomey calls for the Office of the Comptroller of the Currency to regulate stablecoin issuers. 

Stablecoins are designed to maintain a steady value, usually equivalent to $1. In order to keep a steady value, stablecoins are backed by their reserves, which should in theory equal the amount of stablecoins in circulation. For example, if there are 1 million stablecoins by a specific issuer each worth $1, there should be $1 million worth of assets backing the stablecoins. 

The two largest stablecoins by market cap right now are Tether’s USDT and Circle Internet Financial’s USDC, which are backed by U.S. dollars. 

A call to action on stablecoin regulation has gained momentum in the past few months, following the Terra Network’s algorithmic stablecoin, UST, crash, losing its $1 peg and dropping to mere pennies in the course of a few days. Even U.S. secretary of the treasury Janet Yellen noted UST’s crash in a senate banking hearing shortly after the May 9 crash. 

Sen. Elizabeth Warren (D-Mass) said she plans to release a bill to regulate the crypto market and stop the scammers at the Thursday hearing. 

Author: Tyler Irvin