[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1582 Enrolled Bill (ENR)]
S.1582
One Hundred Nineteenth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Friday,
the third day of January, two thousand and twenty five
An Act
To provide for the regulation of payment stablecoins, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Guiding and Establishing National
Innovation for U.S. Stablecoins Act'' or the ``GENIUS Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Appropriate federal banking agency.--The term ``appropriate
Federal banking agency'' has the meaning given that term in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
(2) Bank secrecy act.--The term ``Bank Secrecy Act'' means--
(A) section 21 of the Federal Deposit Insurance Act (12
U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12 U.S.C.
1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United States
Code.
(3) Board.--The term ``Board'' means the Board of Governors of
the Federal Reserve System.
(4) Comptroller.--The term ``Comptroller'' means the Office of
the Comptroller of the Currency.
(5) Corporation.--The term ``Corporation'' means the Federal
Deposit Insurance Corporation.
(6) Digital asset.--The term ``digital asset'' means any
digital representation of value that is recorded on a
cryptographically secured distributed ledger.
(7) Digital asset service provider.--The term ``digital asset
service provider''--
(A) means a person that, for compensation or profit,
engages in the business in the United States (including on
behalf of customers or users in the United States) of--
(i) exchanging digital assets for monetary value;
(ii) exchanging digital assets for other digital
assets;
(iii) transferring digital assets to a third party;
(iv) acting as a digital asset custodian; or
(v) participating in financial services relating to
digital asset issuance; and
(B) does not include--
(i) a distributed ledger protocol;
(ii) developing, operating, or engaging in the business
of developing distributed ledger protocols or self-
custodial software interfaces;
(iii) an immutable and self-custodial software
interface;
(iv) developing, operating, or engaging in the business
of validating transactions or operating a distributed
ledger; or
(v) participating in a liquidity pool or other similar
mechanism for the provisioning of liquidity for peer-to-
peer transactions.
(8) Distributed ledger.--The term ``distributed ledger'' means
technology in which data is shared across a network that creates a
public digital ledger of verified transactions or information among
network participants and cryptography is used to link the data to
maintain the integrity of the public ledger and execute other
functions.
(9) Distributed ledger protocol.--The term ``distributed ledger
protocol'' means publicly available and accessible executable
software deployed to a distributed ledger, including smart
contracts or networks of smart contracts.
(10) Federal branch.--The term ``Federal branch'' has the
meaning given that term in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
(11) Federal qualified payment stablecoin issuer.--The term
``Federal qualified payment stablecoin issuer'' means--
(A) a nonbank entity, other than a State qualified payment
stablecoin issuer, approved by the Comptroller, pursuant to
section 5, to issue payment stablecoins;
(B) an uninsured national bank--
(i) that is chartered by the Comptroller, pursuant to
title LXII of the Revised Statutes; and
(ii) that is approved by the Comptroller, pursuant to
section 5, to issue payment stablecoins; and
(C) a Federal branch that is approved by the Comptroller,
pursuant to section 5, to issue payment stablecoins.
(12) Foreign payment stablecoin issuer.--The term ``foreign
payment stablecoin issuer'' means an issuer of a payment stablecoin
that is--
(A) organized under the laws of or domiciled in a foreign
country, a territory of the United States, Puerto Rico, Guam,
American Samoa, or the Virgin Islands; and
(B) not a permitted payment stablecoin issuer.
(13) Institution-affiliated party.--With respect to a permitted
payment stablecoin issuer, the term ``institution-affiliated
party'' means any director, officer, employee, or controlling
stockholder of the permitted payment stablecoin issuer.
(14) Insured credit union.--The term ``insured credit union''
has the meaning given that term in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(15) Insured depository institution.--The term ``insured
depository institution'' means--
(A) an insured depository institution, as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813); and
(B) an insured credit union.
(16) Lawful order.--The term ``lawful order'' means any final
and valid writ, process, order, rule, decree, command, or other
requirement issued or promulgated under Federal law, issued by a
court of competent jurisdiction or by an authorized Federal agency
pursuant to its statutory authority, that--
(A) requires a person to seize, freeze, burn, or prevent
the transfer of payment stablecoins issued by the person;
(B) specifies the payment stablecoins or accounts subject
to blocking with reasonable particularity; and
(C) is subject to judicial or administrative review or
appeal as provided by law.
(17) Monetary value.--The term ``monetary value'' means a
national currency or deposit (as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)) denominated in a
national currency.
(18) Money.--The term ``money''--
(A) means a medium of exchange currently authorized or
adopted by a domestic or foreign government; and
(B) includes a monetary unit of account established by an
intergovernmental organization or by agreement between 2 or
more countries.
(19) National currency.--The term ``national currency'' means
each of the following:
(A) A Federal Reserve note (as the term is used in the
first undesignated paragraph of section 16 of the Federal
Reserve Act (12 U.S.C. 411)).
(B) Money standing to the credit of an account with a
Federal Reserve Bank.
(C) Money issued by a foreign central bank.
(D) Money issued by an intergovernmental organization
pursuant to an agreement by 2 or more governments.
(20) Nonbank entity.--The term ``nonbank entity'' means a
person that is not a depository institution or subsidiary of a
depository institution.
(21) Offer.--The term ``offer'' means to make available for
purchase, sale, or exchange.
(22) Payment stablecoin.--The term ``payment stablecoin''--
(A) means a digital asset--
(i) that is, or is designed to be, used as a means of
payment or settlement; and
(ii) the issuer of which--
(I) is obligated to convert, redeem, or repurchase
for a fixed amount of monetary value, not including a
digital asset denominated in a fixed amount of monetary
value; and
(II) represents that such issuer will maintain, or
create the reasonable expectation that it will
maintain, a stable value relative to the value of a
fixed amount of monetary value; and
(B) does not include a digital asset that--
(i) is a national currency;
(ii) is a deposit (as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)), including
a deposit recorded using distributed ledger technology; or
(iii) is a security, as defined in section 2 of the
Securities Act of 1933 (15 U.S.C. 77b), section 3 of the
Securities Exchange Act of 1934 (15 U.S.C. 78c), or section
2 of the Investment Company Act of 1940 (15 U.S.C. 80a-2),
except that, for the avoidance of doubt, no bond, note,
evidence of indebtedness, or investment contract that was
issued by a permitted payment stablecoin issuer shall
qualify as a security solely by virtue of its satisfying
the conditions described in subparagraph (A), consistent
with section 17 of this Act.
(23) Permitted payment stablecoin issuer.--The term ``permitted
payment stablecoin issuer'' means a person formed in the United
States that is--
(A) a subsidiary of an insured depository institution that
has been approved to issue payment stablecoins under section 5;
(B) a Federal qualified payment stablecoin issuer; or
(C) a State qualified payment stablecoin issuer.
(24) Person.--The term ``person'' means an individual,
partnership, company, corporation, association, trust, estate,
cooperative organization, or other business entity, incorporated or
unincorporated.
(25) Primary federal payment stablecoin regulator.--The term
``primary Federal payment stablecoin regulator'' means--
(A) with respect to a subsidiary of an insured depository
institution (other than an insured credit union), the
appropriate Federal banking agency of such insured depository
institution;
(B) with respect to an insured credit union or a subsidiary
of an insured credit union, the National Credit Union
Administration;
(C) with respect to a State chartered depository
institution not specified under subparagraph (A), the
Corporation, the Comptroller, or the Board; and
(D) with respect to a Federal qualified payment stablecoin
issuer, the Comptroller.
(26) Registered public accounting firm.--The term ``registered
public accounting firm'' has the meaning given that term under
section 2 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201).
(27) Stablecoin certification review committee.--The term
``Stablecoin Certification Review Committee'' means the committee
of that name and having the functions as provided in this Act--
(A) of which--
(i) the Secretary of the Treasury shall serve as Chair;
and
(ii) the Chair of the Board (or the Vice Chair for
Supervision, as delegated by the Chair of the Board), and
the Chair of the Corporation shall serve as members; and
(B) which, unless otherwise specified in this Act, shall
act by \2/3\ vote of its members at any meeting called by the
Chair or by unanimous written consent.
(28) State.--The term ``State'' means each of the several
States of the United States, the District of Columbia, and each
territory of the United States.
(29) State chartered depository institution.--The term ``State
chartered depository institution'' has the meaning given the term
``State depository institution'' in section 3(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(c)).
(30) State payment stablecoin regulator.--The term ``State
payment stablecoin regulator'' means a State agency that has
primary regulatory and supervisory authority in such State over
entities that issue payment stablecoins.
(31) State qualified payment stablecoin issuer.--The term
``State qualified payment stablecoin issuer'' means an entity
that--
(A) is legally established under the laws of a State and
approved to issue payment stablecoins by a State payment
stablecoin regulator; and
(B) is not an uninsured national bank chartered by the
Comptroller pursuant to title LXII of the Revised Statutes, a
Federal branch, an insured depository institution, or a
subsidiary of such national bank, Federal branch, or insured
depository institution.
(32) Subsidiary.--The term ``subsidiary'' has the meaning given
that term in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813).
(33) Subsidiary of an insured credit union.--With respect to an
insured credit union, the term ``subsidiary of an insured credit
union'' means--
(A) an organization providing services to the insured
credit union that are associated with the routine operations of
credit unions, as described in section 107(7)(I) of the Federal
Credit Union Act (12 U.S.C. 1757(7)(I));
(B) a credit union service organization, as such term is
used under part 712 of title 12, Code of Federal Regulations,
with respect to which the insured credit union has an ownership
interest or to which the insured credit union has extended a
loan; and
(C) a subsidiary of a State chartered insured credit union
authorized under State law.
SEC. 3. ISSUANCE AND TREATMENT OF PAYMENT STABLECOINS.
(a) Limitation on Issuers.--It shall be unlawful for any person
other than a permitted payment stablecoin issuer to issue a payment
stablecoin in the United States.
(b) Prohibition on Offers or Sales.--
(1) In general.--Except as provided in subsection (c) and
section 18, beginning on the date that is 3 years after the date of
enactment of this Act, it shall be unlawful for a digital asset
service provider to offer or sell a payment stablecoin to a person
in the United States, unless the payment stablecoin is issued by a
permitted payment stablecoin issuer.
(2) Foreign payment stablecoin issuers.--It shall be unlawful
for any digital asset service provider to offer, sell, or otherwise
make available in the United States a payment stablecoin issued by
a foreign payment stablecoin issuer unless the foreign payment
stablecoin issuer has the technological capability to comply, and
will comply, with the terms of any lawful order and any reciprocal
arrangement pursuant to section 18.
(c) Limited Safe Harbors.--
(1) In general.--The Secretary of the Treasury may issue
regulations providing safe harbors from subsection (a) that are--
(A) consistent with the purposes of the Act;
(B) limited in scope; and
(C) apply to a de minimis volume of transactions, as
determined by the Secretary of the Treasury.
(2) Unusual and exigent circumstances.--
(A) In general.--If the Secretary of the Treasury
determines that unusual and exigent circumstances exist, the
Secretary may provide limited safe harbors from subsection (a).
(B) Justification.--Prior to issuing a limited safe harbor
under this paragraph, the Secretary of the Treasury shall
submit to the chairs and ranking members of the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
a justification for the determination of the unusual and
exigent circumstances, which may be contained in a classified
annex, as applicable.
(d) Rulemaking.--Consistent with section 13, the Secretary of the
Treasury shall issue regulations to implement this section, including
regulations to define terms.
(e) Extraterritorial Effect.--This section is intended to have
extraterritorial effect if conduct involves the offer or sale of a
payment stablecoin to a person located in the United States.
(f) Penalty for Violation.--
(1) In general.--Whoever knowingly participates in a violation
of subsection (a) shall be fined not more than $1,000,000 for each
such violation, imprisoned for not more than 5 years, or both.
(2) Referral to attorney general.--If a primary Federal payment
stablecoin regulator has reason to believe that any person has
knowingly violated subsection (a), the primary Federal payment
stablecoin regulator may refer the matter to the Attorney General.
(g) Treatment.--A payment stablecoin that is not issued by a
permitted payment stablecoin issuer shall not be--
(1) treated as cash or as a cash equivalent for accounting
purposes;
(2) eligible as cash or as a cash equivalent margin and
collateral for futures commission merchants, derivative clearing
organizations, broker-dealers, registered clearing agencies, and
swap dealers; or
(3) acceptable as a settlement asset to facilitate wholesale
payments between banking organizations or by a payment
infrastructure to facilitate exchange and settlement among banking
organizations.
(h) Rules of Construction.--
(1) Exempt transactions.--This section shall not apply to--
(A) the direct transfer of digital assets between 2
individuals acting on their own behalf and for their own lawful
purposes, without the involvement of an intermediary;
(B) to any transaction involving the receipt of digital
assets by an individual between an account owned by the
individual in the United States and an account owned by the
individual abroad that are offered by the same parent company;
or
(C) to any transaction by means of a software or hardware
wallet that facilitates an individual's own custody of digital
assets.
(2) Treasury authority.--Nothing in this Act shall alter the
existing authority of the Secretary of the Treasury to block,
restrict, or limit transactions involving payment stablecoins that
reference or are denominated in United States dollars that are
subject to the jurisdiction of the United States.
SEC. 4. REQUIREMENTS FOR ISSUING PAYMENT STABLECOINS.
(a) Standards for the Issuance of Payment Stablecoins.--
(1) In general.--A permitted payment stablecoin issuer shall--
(A) maintain identifiable reserves backing the outstanding
payment stablecoins of the permitted payment stablecoin issuer
on an at least 1 to 1 basis, with reserves comprising--
(i) United States coins and currency (including Federal
Reserve notes) or money standing to the credit of an
account with a Federal Reserve Bank;
(ii) funds held as demand deposits (or other deposits
that may be withdrawn upon request at any time) or insured
shares at an insured depository institution (including any
foreign branches or agents, including correspondent banks,
of an insured depository institution), subject to
limitations established by the Corporation and the National
Credit Union Administration, as applicable, to address
safety and soundness risks of such insured depository
institution;
(iii) Treasury bills, notes, or bonds--
(I) with a remaining maturity of 93 days or less;
or
(II) issued with a maturity of 93 days or less;
(iv) money received under repurchase agreements, with
the permitted payment stablecoin issuer acting as a seller
of securities and with an overnight maturity, that are
backed by Treasury bills with a maturity of 93 days or
less;
(v) reverse repurchase agreements, with the permitted
payment stablecoin issuer acting as a purchaser of
securities and with an overnight maturity, that are
collateralized by Treasury notes, bills, or bonds on an
overnight basis, subject to overcollateralization in line
with standard market terms, that are--
(I) tri-party;
(II) centrally cleared through a clearing agency
registered with the Securities and Exchange Commission;
or
(III) bilateral with a counterparty that the issuer
has determined to be adequately creditworthy even in
the event of severe market stress;
(vi) securities issued by an investment company
registered under section 8(a) of the Investment Company Act
of 1940 (15 U.S.C. 80a-8(a)), or other registered
Government money market fund, and that are invested solely
in underlying assets described in clauses (i) through (v);
(vii) any other similarly liquid Federal Government-
issued asset approved by the primary Federal payment
stablecoin regulator, in consultation with the State
payment stablecoin regulator, if applicable, of the
permitted payment stablecoin issuer; or
(viii) any reserve described in clause (i) through
(iii) or clause (vi) through (vii) in tokenized form,
provided that such reserves comply with all applicable laws
and regulations;
(B) publicly disclose the issuer's redemption policy, which
shall--
(i) establish clear and conspicuous procedures for
timely redemption of outstanding payment stablecoins,
provided that any discretionary limitations on timely
redemptions can only be imposed by a State qualified
payment stablecoin regulator, the Corporation, the
Comptroller, or the Board, consistent with section 7; and
(ii) publicly, clearly, and conspicuously disclose in
plain language all fees associated with purchasing or
redeeming the payment stablecoins, provided that such fees
can only be changed upon not less than 7 days' prior notice
to consumers; and
(C) publish the monthly composition of the issuer's
reserves on the website of the issuer, containing--
(i) the total number of outstanding payment stablecoins
issued by the issuer; and
(ii) the amount and composition of the reserves
described in subparagraph (A), including the average tenor
and geographic location of custody of each category of
reserve instruments.
(2) Prohibition on rehypothecation.--Reserves required under
paragraph (1)(A) may not be pledged, rehypothecated, or reused by
the permitted payment stablecoin issuer, either directly or
indirectly, except for the purpose of--
(A) satisfying margin obligations in connection with
investments in permitted reserves under clauses (iv) and (v) of
paragraph (1)(A);
(B) satisfying obligations associated with the use,
receipt, or provision of standard custodial services; or
(C) creating liquidity to meet reasonable expectations of
requests to redeem payment stablecoins, such that reserves in
the form of Treasury bills may be sold as purchased securities
for repurchase agreements with a maturity of 93 days or less,
provided that either--
(i) the repurchase agreements are cleared by a clearing
agency registered with the Securities and Exchange
Commission; or
(ii) the permitted payment stablecoin issuer receives
the prior approval of its primary Federal payment
stablecoin regulator or State payment stablecoin regulator,
as applicable.
(3) Monthly certification; examination of reports by registered
public accounting firm.--
(A) In general.--A permitted payment stablecoin issuer
shall, each month, have the information disclosed in the
previous month-end report required under paragraph (1)(D)
examined by a registered public accounting firm.
(B) Certification.--Each month, the Chief Executive Officer
and Chief Financial Officer of a permitted payment stablecoin
issuer shall submit a certification as to the accuracy of the
monthly report to, as applicable--
(i) the primary Federal payment stablecoin regulator of
the permitted payment stablecoin issuer; or
(ii) the State payment stablecoin regulator of the
permitted payment stablecoin issuer.
(C) Criminal penalty.--Any person who submits a
certification required under subparagraph (B) knowing that such
certification is false shall be subject to the same criminal
penalties as those set forth under section 1350(c) of title 18,
United States Code.
(4) Capital, liquidity, and risk management requirements.--
(A) In general.--The primary Federal payment stablecoin
regulators shall, or in the case of a State qualified payment
stablecoin issuer, the State payment stablecoin regulator
shall, consistent with section 13, issue regulations
implementing--
(i) capital requirements applicable to permitted
payment stablecoin issuers that--
(I) are tailored to the business model and risk
profile of permitted payment stablecoin issuers;
(II) do not exceed requirements that are sufficient
to ensure the ongoing operations of permitted payment
stablecoin issuers; and
(III) in the case of the primary Federal payment
stablecoin regulators, if the primary Federal payment
stablecoin regulators determine that a capital buffer
is necessary to ensure the ongoing operations of
permitted payment stablecoin issuers, may include
capital buffers that are tailored to the business model
and risk profile of permitted payment stablecoin
issuers;
(ii) the liquidity standard under paragraph (1)(A);
(iii) reserve asset diversification, including deposit
concentration at banking institutions, and interest rate
risk management standards applicable to permitted payment
stablecoin issuers that--
(I) are tailored to the business model and risk
profile of permitted payment stablecoin issuers; and
(II) do not exceed standards that are sufficient to
ensure the ongoing operations of permitted payment
stablecoin issuers; and
(iv) appropriate operational, compliance, and
information technology risk management principles-based
requirements and standards, including Bank Secrecy Act and
sanctions compliance standards, that--
(I) are tailored to the business model and risk
profile of permitted payment stablecoin issuers; and
(II) are consistent with applicable law.
(B) Rule of construction.--Nothing in this paragraph shall
be construed to limit--
(i) the authority of the primary Federal payment
stablecoin regulators, in prescribing standards under this
paragraph, to tailor or differentiate among issuers on an
individual basis or by category, taking into consideration
the capital structure, business model risk profile,
complexity, financial activities (including financial
activities of subsidiaries), size, and any other risk-
related factors of permitted payment stablecoin issuers
that a primary Federal payment stablecoin regulator
determines appropriate, provided that such tailoring or
differentiation occurs without respect to whether a
permitted payment stablecoin issuer is regulated by a State
payment stablecoin regulator; or
(ii) any supervisory, regulatory, or enforcement
authority of a primary Federal payment stablecoin regulator
to further the safe and sound operation of an institution
for which the primary Federal payment stablecoin regulator
is the appropriate regulator.
(C) Applicability of existing capital standards.--
(i) Definition.--In this subparagraph, the term
``depository institution holding company'' has the meaning
given that term under section 171(a)(3) of the Financial
Stability Act of 2010 (12 U.S.C. 5371(a)(3)).
(ii) Applicability of financial stability act.--With
respect to the promulgation of rules under subparagraph (A)
and clauses (iii) and (iv) of this subparagraph, section
171 of the Financial Stability Act of 2010 (12 U.S.C. 5371)
shall not apply.
(iii) Rules relating to leverage capital requirements
or risk-based capital requirements.--Any rule issued by an
appropriate Federal banking agency that imposes, on a
consolidated basis, a leverage capital requirement or risk-
based capital requirement with respect to an insured
depository institution or depository institution holding
company shall provide that, for purposes of such leverage
capital requirement or risk-based capital requirement, any
insured depository institution or depository institution
holding company that includes, on a consolidated basis, a
permitted payment stablecoin issuer, shall not be required
to hold, with respect to such permitted payment stablecoin
issuer and its assets and operations, any amount of
regulatory capital in excess of the capital that such
permitted payment stablecoin issuer must maintain under the
capital requirements issued pursuant to subparagraph
(A)(i).
(iv) Modifications.--Not later than the earlier of the
rulemaking deadline under section 13 or the date on which
the Federal payment stablecoin regulators issue regulations
to carry out this section, each appropriate Federal banking
agency shall amend or otherwise modify any regulation of
the appropriate Federal banking agency described in clause
(iii) so that such regulation, as amended or otherwise
modified, complies with clause (iii) of this subparagraph.
(5) Treatment under the bank secrecy act and sanctions laws.--
(A) In general.--A permitted payment stablecoin issuer
shall be treated as a financial institution for purposes of the
Bank Secrecy Act, and as such, shall be subject to all Federal
laws applicable to a financial institution located in the
United States relating to economic sanctions, prevention of
money laundering, customer identification, and due diligence,
including--
(i) maintenance of an effective anti-money laundering
program, which shall include appropriate risk assessments
and designation of an officer to supervise the program;
(ii) retention of appropriate records;
(iii) monitoring and reporting of any suspicious
transaction relevant to a possible violation of law or
regulation;
(iv) technical capabilities, policies, and procedures
to block, freeze, and reject specific or impermissible
transactions that violate Federal or State laws, rules, or
regulations;
(v) maintenance of an effective customer identification
program, including identification and verification of
account holders with the permitted payment stablecoin
issuer, high-value transactions, and appropriate enhanced
due diligence; and
(vi) maintenance of an effective economic sanctions
compliance program, including verification of sanctions
lists, consistent with Federal law.
(B) Rulemaking.--The Secretary of the Treasury shall adopt
rules, tailored to the size and complexity of permitted payment
stablecoin issuers, to implement subparagraph (A).
(C) Reservation of authority.--Nothing in this Act shall
restrict the authority of the Secretary of the Treasury to
implement, administer, and enforce the provisions of subchapter
II of chapter 53 of title 31, United States Code.
(6) Coordination with permitted payment stablecoin issuers with
respect to blocking of property and technological capabilities to
comply with lawful orders.--
(A) In general.--The Secretary of the Treasury--
(i) shall, to the best of the Secretary's ability,
coordinate with a permitted payment stablecoin issuer
before taking any action to block and prohibit transactions
in property and interests in property of a foreign person
to ensure that the permitted payment stablecoin issuer is
able to effectively block a payment stablecoin of the
foreign person upon issuance of the payment stablecoin; and
(ii) is not required to notify any permitted payment
stablecoin issuer of any intended action described in
clause (i) prior to taking such action.
(B) Compliance with lawful orders.--A permitted payment
stablecoin issuer may issue payment stablecoins only if the
issuer has the technological capability to comply, and will
comply, with the terms of any lawful order.
(C) Report required.--Not later than 1 year after the date
of enactment of this Act, the Attorney General and the
Secretary of the Treasury shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
a report, which may include a classified annex if applicable,
on the coordination with permitted payment stablecoin issuers
required under subparagraph (A).
(D) Rule of construction.--Nothing in this paragraph shall
be construed to alter or affect the authority of State payment
stablecoin regulators with respect to the offer of foreign-
issued digital assets that are issued within a foreign
jurisdiction.
(7) Limitation on payment stablecoin activities.--
(A) In general.--A permitted payment stablecoin issuer may
only--
(i) issue payment stablecoins;
(ii) redeem payment stablecoins;
(iii) manage related reserves, including purchasing,
selling, and holding reserve assets or providing custodial
services for reserve assets, consistent with State and
Federal law;
(iv) provide custodial or safekeeping services for
payment stablecoins, required reserves, or private keys of
payment stablecoins, consistent with this Act; and
(v) undertake other activities that directly support
any of the activities described in clauses (i) through
(iv).
(B) Rule of construction.--Nothing in subparagraph (A)
shall limit a permitted payment stablecoin issuer from engaging
in payment stablecoin activities or digital asset service
provider activities specified by this Act, and activities
incidental thereto, that are authorized by the primary Federal
payment stablecoin regulator or the State payment stablecoin
regulator, as applicable, consistent with all other Federal and
State laws, provided that the claims of payment stablecoin
holders rank senior to any potential claims of non-stablecoin
creditors with respect to the reserve assets, consistent with
section 11.
(8) Prohibition on tying.--
(A) In general.--A permitted payment stablecoin issuer may
not provide services to a customer on the condition that the
customer obtain an additional paid product or service from the
permitted payment stablecoin issuer, or any of its
subsidiaries, or agree to not obtain an additional product or
service from a competitor.
(B) Regulations.--The Board may issue such regulations as
are necessary to carry out this paragraph, and, in consultation
with other relevant primary Federal payment stablecoin
regulators, may by regulation or order, permit such exceptions
to subparagraph (A) as the Board considers will not be contrary
to the purpose of this Act.
(9) Prohibition on the use of deceptive names.--
(A) In general.--A permitted payment stablecoin issuer may
not--
(i) use any combination of terms relating to the United
States Government, including ``United States'', ``United
States Government'', and ``USG'' in the name of a payment
stablecoin; or
(ii) market a payment stablecoin in such a way that a
reasonable person would perceive the payment stablecoin to
be--
(I) legal tender, as described in section 5103 of
title 31, United States Code;
(II) issued by the United States; or
(III) guaranteed or approved by the Government of
the United States.
(B) Pegged stablecoins.--Abbreviations directly relating to
the currency to which a payment stablecoin is pegged, such as
``USD'', are not subject to the prohibitions in subparagraph
(A).
(10) Audits and reports.--
(A) Annual financial statement.--
(i) In general.--A permitted payment stablecoin issuer
with more than $50,000,000,000 in consolidated total
outstanding issuance, that is not subject to the reporting
requirements under section 13(a) or 15(d) of the Securities
and Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)), shall
prepare, in accordance with generally accepted accounting
principles, an annual financial statement, which shall
include the disclosure of any related party transactions,
as defined by such generally accepted accounting
principles.
(ii) Auditor.--A registered public accounting firm
shall perform an audit of the annual financial statements
described in clause (i).
(iii) Standards.--An audit described in clause (ii)
shall be conducted in accordance with all applicable
auditing standards established by the Public Company
Accounting Oversight Board, including those relating to
auditor independence, internal controls, and related party
transactions.
(iv) Rule of construction.--Nothing in this
subparagraph shall be construed to limit, alter, or expand
the jurisdiction of the Public Company Accounting Oversight
Board over permitted payment stablecoin issuers or
registered public accounting firms.
(B) Public disclosure and submission to federal
regulators.--Each permitted payment stablecoin issuer required
to prepare an audited annual financial statement under
subparagraph (A) shall--
(i) make such audited financial statements publicly
available on the website of the permitted payment
stablecoin issuer; and
(ii) submit such audited financial statements annually
to their primary Federal payment stablecoin regulator.
(C) Consultation.--The primary Federal payment stablecoin
regulators may consult with the Public Company Accounting
Oversight Board to determine best practices for determining
audit oversight and to detect fraud, material misstatements,
and other financial misrepresentations that could mislead
permitted payment stablecoin holders.
(11) Prohibition on interest.--No permitted payment stablecoin
issuer or foreign payment stablecoin issuer shall pay the holder of
any payment stablecoin any form of interest or yield (whether in
cash, tokens, or other consideration) solely in connection with the
holding, use, or retention of such payment stablecoin.
(12) Non-financial services public companies.--
(A) Definitions.--In this paragraph:
(i) Financial activities.--The term ``financial
activities''--
(I) has the meaning given that term in section 4(k)
of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)); and
(II) for the avoidance of doubt, includes those
activities described in subparagraphs (A) and (B) of
section 2(7) and section 4(a)(7)(A) of this Act.
(ii) Public company.--The term ``public company'' means
an issuer that is required to file reports under section
13(a) or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(a), 78o(d)).
(B) Prohibition.--
(i) In general.--A public company that is not
predominantly engaged in 1 or more financial activities,
and its wholly or majority owned subsidiaries or
affiliates, may not issue a payment stablecoin unless the
public company obtains a unanimous vote of the Stablecoin
Certification Review Committee finding that--
(I) it will not pose a material risk to the safety
and soundness of the United States banking system, the
financial stability of the United States, or the
Deposit Insurance Fund;
(II) the public company will comply with data use
limitations providing that, unless the public company
receives consent from the consumer, nonpublic personal
information obtained from stablecoin transaction data
may not be--
(aa) used to target, personalize, or rank
advertising or other content;
(bb) sold to any third party; or
(cc) shared with non-affiliates; and
(III) the public company and the affiliates of the
public company will comply with the tying prohibitions
under paragraph (8).
(ii) Exception.--The prohibition under clause (i)
against the sharing of consumer information shall not apply
to sharing of such information--
(I) to comply with Federal, State, or local laws,
rules, and other applicable legal requirements;
(II) to comply with a properly authorized civil,
criminal, or regulatory investigation, subpoena, or
summons by a Federal, State, or local authority; or
(III) to respond to judicial process or a
government regulatory authority having jurisdiction
over the public company.
(C) Extension of prohibition.--
(i) In general.--Any company not domiciled in the
United States or its Territories that is not predominantly
engaged in 1 or more financial activities, may not issue a
payment stablecoin unless the public company obtains a
unanimous vote of the Stablecoin Certification Review
Committee finding that--
(I) it will not pose a material risk to the safety
and soundness of the United States banking system, the
financial stability of the United States, or the
Deposit Insurance Fund;
(II) the public company will comply with data use
limitations providing that, unless the public company
receives consent from the consumer, nonpublic personal
information obtained from stablecoin transaction data
may not be--
(aa) used to target, personalize, or rank
advertising or other content;
(bb) sold to any third party; or
(cc) shared with non-affiliates; except
(III) the public company and the affiliates of the
public company will comply with the tying prohibitions
under paragraph (8).
(ii) Exception.--The prohibition under clause (i)
against the sharing of consumer information shall not apply
to sharing of such information--
(I) to comply with Federal, State, or local laws,
rules, and other applicable legal requirements;
(II) to comply with a properly authorized civil,
criminal, or regulatory investigation, subpoena, or
summons by a Federal, State, or local authority; or
(III) to respond to judicial process or a
government regulatory authority having jurisdiction
over the public company.
(D) Rulemaking.--Not later than 1 year after the date of
enactment of this Act, the Stablecoin Certification Review
Committee shall issue an interpretive rule clarifying the
application of this paragraph.
(13) Eligibility.--Nothing in this Act shall be construed as
expanding or contracting legal eligibility to receive services
available from a Federal Reserve bank or to make deposits with a
Federal Reserve bank, in each case pursuant to the Federal Reserve
Act.
(14) Rule of construction.--Compliance with this section does
not alter or affect any additional requirement of a State payment
stablecoin regulator that may apply relating to the offering of
payment stablecoins.
(b) Regulation by the Comptroller.--
(1) In general.--Notwithstanding section 5136C of the Revised
Statutes (12 U.S.C. 25b), section 6 of the Home Owners' Loan Act
(12 U.S.C. 1465), or any applicable State law relating to licensing
and supervision, a Federal qualified payment stablecoin issuer
approved by the Comptroller pursuant to section 5 of this Act shall
be licensed, regulated, examined, and supervised exclusively by the
Comptroller, which shall have authority, in coordination with other
relevant primary Federal payment stablecoin regulators and State
payment stablecoin regulators, to issue such regulations and orders
as necessary to ensure financial stability and implement subsection
(a).
(2) Conforming amendment.--Section 324(b) of the Revised
Statutes (12 U.S.C. 1(b)) is amended by adding at the end the
following:
``(3) Regulation of federal qualified payment stablecoin
issuers.--The Comptroller of the Currency shall, in coordination
with other relevant regulators and consistent with section 13 of
the GENIUS Act, issue such regulations and orders as necessary to
ensure financial stability and implement section 4(a) of that
Act.''.
(c) State-level Regulatory Regimes.--
(1) Option for state-level regulatory regime.--Notwithstanding
the Federal regulatory framework established under this Act, a
State qualified payment stablecoin issuer with a consolidated total
outstanding issuance of not more than $10,000,000,000 may opt for
regulation under a State-level regulatory regime, provided that the
State-level regulatory regime is substantially similar to the
Federal regulatory framework under this Act.
(2) Principles.--The Secretary of the Treasury shall, through
notice and comment rulemaking, establish broad-based principles for
determining whether a State-level regulatory regime is
substantially similar to the Federal regulatory framework under
this Act.
(3) Review.--State payment stablecoin regulators shall review
State-level regulatory regimes according to the principles
established by the Secretary of the Treasury under paragraph (2)
and for the purposes of establishing any necessary cooperative
agreements to implement section 7(f).
(4) Certification.--
(A) Initial certification.--Subject to subparagraph (B),
not later than 1 year after the effective date of this Act, a
State payment stablecoin regulator shall submit to the
Stablecoin Certification Review Committee an initial
certification that the State-level regulatory regime meets the
criteria for substantial similarity established pursuant to
paragraph (2).
(B) Form of certification.--The initial certification
required under subparagraph (A) shall contain, in a form
prescribed by the Stablecoin Certification Review Committee, an
attestation that the State-level regulatory regime meets the
criteria for substantial similarity established pursuant to
paragraph (2).
(C) Annual recertification.--Not later than a date to be
determined by the Secretary of the Treasury each year, a State
payment stablecoin regulator shall submit to the Stablecoin
Certification Review Committee an additional certification that
confirms the accuracy of the initial certification submitted
under subparagraph (A).
(5) Certification review.--
(A) In general.--Not later than 30 days after the date on
which a State payment stablecoin regulator submits an initial
certification or a recertification under paragraph (4), the
Stablecoin Certification Review Committee shall--
(i) approve such certification if the Committee
unanimously determines that the State-level regulatory
regime meets or exceeds the standards and requirements
described in subsection (a); or
(ii) deny such certification and provide the State
payment stablecoin regulator with a written explanation of
the denial, describing the reasoned basis for the denial
with sufficient detail to enable the State payment
stablecoin regulator and State-level regulatory regime to
make any changes necessary to meet or exceed the standards
and requirements described in subsection (a).
(B) Recertifications.--With respect to any recertification
certification submitted by a State payment stablecoin regulator
under paragraph (4), the Stablecoin Certification Review
Committee shall only deny the recertification if--
(i) the State-level regulatory regime has materially
changed from the prior certification or there has been a
significant change in circumstances; and
(ii) the material change in the regime or significant
change in circumstances described in clause (i) is such
that the State-level regulatory regime will not promote the
safe and sound operation of State qualified payment
stablecoin issuers under its supervision.
(C) Opportunity to cure.--
(i) In general.--With respect to a denial described
under subparagraph (A) or (B), the Stablecoin Certification
Review Committee shall provide the State payment stablecoin
regulator with not less than 180 days from the date on
which the State payment stablecoin regulator is notified of
such denial to--
(I) make such changes as may be necessary to ensure
the State-level regulatory regime meets or exceeds the
standards described in subsection (a); and
(II) resubmit the initial certification or
recertification.
(ii) Denial.--If, after a State payment stablecoin
regulator resubmits an initial certification or
recertification under clause (i), the Stablecoin
Certification Review Committee again determines that the
initial certification or recertification shall result in a
denial, the Stablecoin Certification Review Committee
shall, not later than 30 days after such determination,
provide the State payment stablecoin regulator with a
written explanation for the determination.
(D) Appeal of denial.--A State payment stablecoin regulator
in receipt of a denial under subparagraph (C)(ii) may appeal
the denial to the United States Court of Appeals for the
District of Columbia Circuit.
(E) Right to resubmit.--A State payment stablecoin
regulator in receipt of a denial under this paragraph shall not
be prohibited from resubmitting a new certification under
paragraph (4).
(6) List.--The Secretary of the Treasury shall publish and
maintain in the Federal Register and on the website of the
Department of the Treasury a list of States that have submitted
initial certifications and recertifications under paragraph (4).
(7) Expedited certifications of existing regulatory regimes.--
The Stablecoin Certification Review Committee shall take all
necessary steps to endeavor that, with respect to a State that,
within 180 days of the date of enactment of this Act, has in effect
a prudential regulatory regime (including regulations and guidance)
for the supervision of digital assets or payment stablecoins, the
certification process under this paragraph with respect to that
regime occurs on an expedited timeline after the effective date of
this Act.
(d) Transition to Federal Oversight.--
(1) Depository institution.--A State chartered depository
institution that is a State qualified payment stablecoin issuer
with a payment stablecoin with a consolidated total outstanding
issuance of more than $10,000,000,000 shall--
(A) not later than 360 days after the payment stablecoin
reaches such threshold, transition to the Federal regulatory
framework of the primary Federal payment stablecoin regulator
of the State chartered depository institution, which shall be
administered by the State payment stablecoin regulator of the
State chartered depository institution and the primary Federal
payment stablecoin regulator acting jointly; or
(B) beginning on the date the payment stablecoin reaches
such threshold, cease issuing new payment stablecoins until the
payment stablecoin is under the $10,000,000,000 consolidated
total outstanding issuance threshold.
(2) Other institutions.--A State qualified payment stablecoin
issuer not described in paragraph (1) with a payment stablecoin
with a consolidated total outstanding issuance of more than
$10,000,000,000 shall--
(A) not later than 360 days after the payment stablecoin
reaches such threshold, transition to the Federal regulatory
framework under subsection (a) administered by the relevant
State payment stablecoin regulator and the Comptroller, acting
in coordination; or
(B) beginning on the date the payment stablecoin reaches
such threshold, cease issuing new payment stablecoins until the
payment stablecoin is under the $10,000,000,000 consolidated
total outstanding issuance threshold.
(3) Waiver.--
(A) In general.--Notwithstanding paragraphs (1) and (2),
the applicable primary Federal payment stablecoin regulator may
permit a State qualified payment stablecoin issuer with a
payment stablecoin with a consolidated total outstanding
issuance of more than $10,000,000,000 to remain solely
supervised by a State payment stablecoin regulator.
(B) Criteria for waiver.--The primary Federal payment
stablecoin regulator shall consider the following exclusive
criteria in determining whether to issue a waiver under this
paragraph:
(i) The capital maintained by the State qualified
payment stablecoin issuer.
(ii) The past operations and examination history of the
State qualified payment stablecoin issuer.
(iii) The experience of the State payment stablecoin
regulator in supervising payment stablecoin and digital
asset activities.
(iv) The supervisory framework, including regulations
and guidance, of the State qualified payment stablecoin
issuer with respect to payment stablecoins and digital
assets.
(C) Rule of construction.--
(i) Federal oversight.--A State qualified payment
stablecoin issuer subject to Federal oversight under
paragraph (1) or (2) of this subsection that does not
receive a waiver under this paragraph shall continue to be
supervised by the State payment stablecoin regulator of the
State qualified payment stablecoin issuer jointly with the
primary Federal payment stablecoin regulator. Nothing in
this subsection shall require the State qualified payment
stablecoin issuer to convert to a Federal charter.
(ii) State oversight.--A State qualified payment
stablecoin issuer supervised by a State payment stablecoin
regulator that has established a prudential regulatory
regime (including regulations and guidance) for the
supervision of digital assets or payment stablecoins before
the 90-day period ending on the date of enactment of this
Act that has been certified pursuant to subsection (c) and
has approved 1 or more issuers to issue payment stablecoins
under the supervision of such State payment stablecoin
regulator, shall be presumptively approved for a waiver
under this paragraph, unless the Federal payment stablecoin
regulator finds, by clear and convincing evidence, that the
requirements of subparagraph (B) are not substantially met
with respect to that issuer or that the issuer poses
significant safety and soundness risks to the financial
system of the United States.
(e) Misrepresentation of Insured Status.--
(1) In general.--Payment stablecoins shall not be backed by the
full faith and credit of the United States, guaranteed by the
United States Government, subject to deposit insurance by the
Federal Deposit Insurance Corporation, or subject to share
insurance by the National Credit Union Administration.
(2) Misrepresentation of insured status.--
(A) In general.--It shall be unlawful to represent that
payment stablecoins are backed by the full faith and credit of
the United States, guaranteed by the United States Government,
or subject to Federal deposit insurance or Federal share
insurance.
(B) Penalty.--A violation of subparagraph (A) shall be
considered a violation of section 18(a)(4) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(a)(4)) or section 709 of
title 18, United States Code, as applicable.
(3) Marketing.--
(A) In general.--It shall be unlawful to market a product
in the United States as a payment stablecoin unless the product
is issued pursuant to this Act.
(B) Penalty.--Whoever knowingly and willfully participates
in a violation of subparagraph (A) shall be fined by the
Department of the Treasury not more than $500,000 for each such
violation.
(C) Determination of the number of violations.--For
purposes of determining the number of violations for which to
impose penalties under subparagraph (B), separate acts of
noncompliance are a single violation when the acts are the
result of--
(i) a common or substantially overlapping originating
cause; or
(ii) the same statement or publication.
(D) Referral to secretary of the treasury.--If a Federal
payment stablecoin regulator has reason to believe that any
person has knowingly and willfully violated subparagraph (A),
the Federal payment stablecoin regulator shall refer the matter
to the Secretary of the Treasury.
(f) Officers or Directors Convicted of Certain Felonies.--
(1) In general.--No individual who has been convicted of a
felony offense involving insider trading, embezzlement, cybercrime,
money laundering, financing of terrorism, or financial fraud may
serve as--
(A) an officer of a payment stablecoin issuer; or
(B) a director of a payment stablecoin issuer.
(2) Penalty.--
(A) In general.--Whoever knowingly participates in a
violation of paragraph (1) shall be fined not more than
$1,000,000 for each such violation, imprisoned for not more
than 5 years, or both.
(B) Referral to attorney general.--If a Federal payment
stablecoin regulator has reason to believe that any person has
knowingly violated paragraph (1), the Federal payment
stablecoin regulator shall refer the matter to the Attorney
General.
(g) Clarification Relating to Federal Savings Association
Reserves.--A Federal savings association established under the Home
Owners' Loan Act (12 U.S.C. 1461 et seq.) that holds a reserve that
satisfies the requirements of section 4(a)(1) shall not be required to
satisfy the qualified thrift lender test under section 10(m) of the
Home Owners' Loan Act (12 U.S.C. 1467a(m)) with respect to such reserve
assets.
(h) Rulemaking.--
(1) In general.--Consistent with section 13, the primary
Federal payment stablecoin regulators shall, and State payment
stablecoin regulators may, issue such regulations relating to
permitted payment stablecoin issuers as may be necessary to
establish a payment stablecoin regulatory framework necessary to
administer and carry out the requirements of this section,
including to establish conditions, and to prevent evasion thereof.
(2) Coordinated issuance of regulations.--All regulations
issued to carry out this section shall be issued in coordination by
the primary Federal payment stablecoin regulators, if not issued by
a State payment stablecoin regulator.
(i) Rules of Construction.--Nothing in this Act shall be
construed--
(1) as expanding the authority of the Board with respect to the
services the Board can make directly available to the public; or
(2) to limit or prevent the continued application of applicable
ethics statutes and regulations administered by the Office of
Government Ethics, or the ethics rules of the Senate and the House
of Representatives, including section 208 of title 18, United
States Code, and sections 2635.702 and 2635.802 of title 5, Code of
Federal Regulations. For the avoidance of doubt, existing Office of
Government Ethics laws and the ethics rules of the Senate and the
House of Representatives prohibit any member of Congress or senior
executive branch official from issuing a payment stablecoin during
their time in public service. For the purposes of this paragraph,
an employee described in section 202 of title 18, United States
Code, shall be deemed an executive branch employee for purposes of
complying with section 208 of that title.
SEC. 5. APPROVAL OF SUBSIDIARIES OF INSURED DEPOSITORY INSTITUTIONS AND
FEDERAL QUALIFIED PAYMENT STABLECOIN ISSUERS.
(a) Application.--
(1) In general.--Each primary Federal payment stablecoin
regulator shall--
(A) receive, review, and consider for approval applications
from any insured depository institution that seeks to issue
payment stablecoins through a subsidiary and any nonbank
entity, Federal branch, or uninsured national bank that is
chartered by the Comptroller pursuant to title LXII of the
Revised Statutes, and that seeks to issue payment stablecoins
as a Federal qualified payment stablecoin issuer; and
(B) establish a process and framework for the licensing,
regulation, examination, and supervision of such entities that
prioritizes the safety and soundness of such entities.
(2) Authority to issue regulations and process applications.--
The primary Federal payment stablecoin regulators shall, before the
date described in section 13--
(A) issue regulations consistent with that section to carry
out this section; and
(B) pursuant to the regulations described in subparagraph
(A), accept and process applications described in paragraph
(1).
(3) Mandatory approval process.--A primary Federal payment
stablecoin regulator shall, upon receipt of a substantially
complete application received under paragraph (1), evaluate and
make a determination on each application based on the criteria
established under this Act.
(b) Evaluation of Applications.--A substantially complete
application received under subsection (a) shall be evaluated by the
primary Federal payment stablecoin regulator using the factors
described in subsection (c).
(c) Factors to Be Considered.--The factors described in this
subsection are the following:
(1) The ability of the applicant (or, in the case of an
applicant that is an insured depository institution, the subsidiary
of the applicant), based on financial condition and resources, to
meet the requirements set forth under section 4.
(2) Whether an individual who has been convicted of a felony
offense involving insider trading, embezzlement, cybercrime, money
laundering, financing of terrorism, or financial fraud is serving
as an officer or director of the applicant.
(3) The competence, experience, and integrity of the officers,
directors, and principal shareholders of the applicant, its
subsidiaries, and parent company, including--
(A) the record of those officers, directors, and principal
shareholders of compliance with laws and regulations; and
(B) the ability of those officers, directors, and principal
shareholders to fulfill any commitments to, and any conditions
imposed by, their primary Federal payment stablecoin regulator
in connection with the application at issue and any prior
applications.
(4) Whether the redemption policy of the applicant meets the
standards under section 4(a)(1)(B).
(5) Any other factors established by the primary Federal
payment stablecoin regulator that are necessary to ensure the
safety and soundness of the permitted payment stablecoin issuer.
(d) Timing for Decision; Grounds for Denial.--
(1) Timing for decisions on applications.--
(A) In general.--Not later than 120 days after receiving a
substantially complete application under subsection (a), a
primary Federal payment stablecoin regulator shall render a
decision on the application.
(B) Substantially complete.--
(i) In general.--For purposes of subparagraph (A), an
application shall be considered substantially complete if
the application contains sufficient information for the
primary Federal payment stablecoin regulator to render a
decision on whether the applicant satisfies the factors
described in subsection (c).
(ii) Notification.--Not later than 30 days after
receiving an application under subsection (a), a primary
Federal payment stablecoin regulator shall notify the
applicant as to whether the primary Federal payment
stablecoin regulator considers the application to be
substantially complete and, if the application is not
substantially complete, the additional information the
applicant shall provide in order for the application to be
considered substantially complete.
(iii) Material change in circumstances.--An application
considered substantially complete under this subparagraph
remains substantially complete unless there is a material
change in circumstances that requires the primary Federal
payment stablecoin regulator to treat the application as a
new application.
(2) Denial of application.--
(A) Grounds for denial.--
(i) In general.--A primary Federal payment stablecoin
regulator shall only deny a substantially complete
application received under subsection (a) if the regulator
determines that the activities of the applicant would be
unsafe or unsound based on the factors described in
subsection (c).
(ii) Issuance on open, public, or decentralized network
not ground for denial.--The issuance of a payment
stablecoin on an open, public, or decentralized network
shall not be a valid ground for denial of an application
received under subsection (a).
(B) Explanation required.--If a primary Federal payment
stablecoin regulator denies a complete application received
under subsection (a), not later than 30 days after the date of
such denial, the regulator shall provide the applicant with
written notice explaining the denial with specificity,
including all findings made by the regulator with respect to
all identified material shortcomings in the application,
including actionable recommendations on how the applicant could
address the identified material shortcomings.
(C) Opportunity for hearing; final determination.--
(i) In general.--Not later than 30 days after the date
of receipt of any notice of the denial of an application
under this section, the applicant may request, in writing,
an opportunity for a written or oral hearing before the
primary Federal payment stablecoin regulator to appeal the
denial.
(ii) Timing.--Upon receipt of a timely request under
clause (i), the primary Federal payment stablecoin
regulator shall notice a time (not later than 30 days after
the date of receipt of the request) and place at which the
applicant may appear, personally or through counsel, to
submit written materials or provide oral testimony and oral
argument.
(iii) Final determination.--Not later than 60 days
after the date of a hearing under this subparagraph, the
applicable primary Federal payment stablecoin regulator
shall notify the applicant of a final determination, which
shall contain a statement of the basis for that
determination, with specific findings.
(iv) Notice if no hearing.--If an applicant does not
make a timely request for a hearing under this
subparagraph, the primary Federal payment stablecoin
regulator shall notify the applicant, not later than 10
days after the date by which the applicant may request a
hearing under this subparagraph, in writing, that the
denial of the application is a final determination of the
primary Federal payment stablecoin regulator.
(3) Failure to render a decision.--If a primary Federal payment
stablecoin regulator fails to render a decision on a complete
application within the time period specified in paragraph (1), the
application shall be deemed approved.
(4) Right to reapply.--The denial of an application under this
section shall not prohibit the applicant from filing a subsequent
application.
(e) Reports on Pending Applications.--Each primary Federal payment
stablecoin regulator shall--
(1) notify Congress upon beginning to process applications
under this Act; and
(2) annually report to Congress on the applications that have
been pending for 180 days or more since the date the initial
application was filed and for which the applicant has been informed
that the application remains incomplete, including documentation on
the status of such applications and why such applications have not
yet been approved.
(f) Safe Harbor for Pending Applications.--The primary Federal
payment stablecoin regulators may waive the application of the
requirements of this Act for a period not to exceed 12 months beginning
on the effective date of this Act, with respect to--
(1) a subsidiary of an insured depository institution, if the
insured depository institution has an application pending for the
subsidiary to become a permitted payment stablecoin issuer on that
effective date; or
(2) a Federal qualified payment stablecoin issuer with a
pending application on that effective date.
(g) Rulemaking.--Consistent with section 13, the primary Federal
payment stablecoin regulators shall issue rules necessary for the
regulation of the issuance of payment stablecoins, but may not impose
requirements in addition to the requirements specified under section 4.
(h) Relation to Other Licensing Requirements.--The provisions of
this section supersede and preempt any State requirement for a charter,
license, or other authorization to do business with respect to a
Federal qualified payment stablecoin issuer or subsidiary of an insured
depository institution or credit union that is approved under this
section to be a permitted payment stablecoin issuer. Nothing in this
subsection shall preempt or supersede the authority of a State to
charter, license, supervise, or regulate an insured depository
institution or credit union chartered in such State or to supervise a
subsidiary of such insured depository institution or credit union that
is approved under this section to be a permitted payment stablecoin
issuer.
(i) Certification Required.--
(1) In general.--Not later than 180 days after the approval of
an application, and on an annual basis thereafter, each permitted
payment stablecoin issuer shall submit to its primary Federal
payment stablecoin regulator, or in the case of a State qualified
payment stablecoin issuer its State payment stablecoin regulator, a
certification that the issuer has implemented anti-money laundering
and economic sanctions compliance programs that are reasonably
designed to prevent the permitted payment stablecoin issuer from
facilitating money laundering, in particular, facilitating money
laundering for cartels and organizations designated as foreign
terrorist organizations under section 219 of the Immigration and
Nationality Act (8 U.S.C. 1189) and the financing of terrorist
activities, consistent with the requirements of this Act.
(2) Availability of certifications.--Federal payment stablecoin
regulators and State payment stablecoin regulators shall make
certifications described in paragraph (1) available to the
Secretary of Treasury upon request.
(3) Penalties.--
(A) Approval revocation.--The primary Federal payment
stablecoin regulator or State payment stablecoin regulator of a
permitted payment stablecoin issuer that does not submit a
certification pursuant to paragraph (1) may revoke the approval
of the payment stablecoin issuer under this section.
(B) Criminal penalty.--
(i) In general.--Any person that knowingly submits a
certification pursuant to paragraph (1) that is false shall
be subject to the criminal penalties set forth under
section 1001 of title 18, United States Code.
(ii) Referral to attorney general.--If a Federal
payment stablecoin regulator or State payment stablecoin
regulator has reason to believe that any person has
knowingly violated paragraph (1), the applicable regulator
may refer the matter to the Attorney General or to the
attorney general of the payment stablecoin issuer's host
State.
SEC. 6. SUPERVISION AND ENFORCEMENT WITH RESPECT TO FEDERAL QUALIFIED
PAYMENT STABLECOIN ISSUERS AND SUBSIDIARIES OF INSURED DEPOSITORY
INSTITUTIONS.
(a) Supervision.--
(1) In general.--Each permitted payment stablecoin issuer that
is not a State qualified payment stablecoin issuer with a payment
stablecoin with a consolidated total outstanding issuance of less
than $10,000,000,000 shall be subject to supervision by the
appropriate primary Federal payment stablecoin regulator.
(2) Submission of reports.--Each permitted payment stablecoin
issuer described in paragraph (1) shall, upon request, submit to
the appropriate primary Federal payment stablecoin regulator a
report on--
(A) the financial condition of the permitted payment
stablecoin issuer;
(B) the systems of the permitted payment stablecoin issuer
for monitoring and controlling financial and operating risks;
(C) compliance by the permitted payment stablecoin issuer
(and any subsidiary thereof) with this Act; and
(D) the compliance of the Federal qualified nonbank payment
stablecoin issuer with the requirements of the Bank Secrecy Act
and with laws authorizing the imposition of sanctions and
implemented by the Secretary of the Treasury.
(3) Examinations.--The appropriate primary Federal payment
stablecoin regulator shall examine a permitted payment stablecoin
issuer described in paragraph (1) in order to assess--
(A) the nature of the operations and financial condition of
the permitted payment stablecoin issuer;
(B) the financial, operational, technological, and other
risks associated within the permitted payment stablecoin issuer
that may pose a threat to--
(i) the safety and soundness of the permitted payment
stablecoin issuer; or
(ii) the stability of the financial system of the
United States; and
(C) the systems of the permitted payment stablecoin issuer
for monitoring and controlling the risks described in
subparagraph (B).
(4) Requirements for efficiency.--
(A) Use of existing reports.--In supervising and examining
a permitted payment stablecoin issuer under this subsection, a
primary Federal payment stablecoin regulator shall, to the
fullest extent possible, use existing reports and other
supervisory information.
(B) Avoidance of duplication.--A primary Federal payment
stablecoin regulator shall, to the fullest extent possible,
avoid duplication of examination activities, reporting
requirements, and requests for information in carrying out this
subsection with respect to a permitted payment stablecoin
issuer.
(C) Consideration of burden.--A primary Federal payment
stablecoin regulator shall, with respect to any examination or
request for the submission of a report under this subsection,
only request examinations and reports at a cadence and in a
format that is similar to that required for similarly situated
entities regulated by the primary Federal payment stablecoin
regulator.
(b) Enforcement.--
(1) Suspension or revocation of registration.--The primary
Federal payment stablecoin regulator of a permitted payment
stablecoin issuer that is not a State qualified payment stablecoin
issuer with a payment stablecoin with a consolidated total
outstanding issuance of less than $10,000,000,000 may prohibit the
permitted payment stablecoin issuer from issuing payment
stablecoins, if the primary Federal payment stablecoin regulator
determines that such permitted payment stablecoin issuer, or an
institution-affiliated party of the permitted payment stablecoin
issuer is willfully or recklessly violating or has willfully or
recklessly violated--
(A) this Act or any regulation or order issued under this
Act; or
(B) any condition imposed in writing by the primary Federal
payment stablecoin regulator in connection with a written
agreement entered into between the permitted payment stablecoin
issuer and the primary Federal payment stablecoin regulator.
(2) Cease-and-desist proceedings.--If the primary Federal
payment stablecoin regulator of a permitted payment stablecoin
issuer that is not a State qualified payment stablecoin issuer with
a payment stablecoin with a consolidated total outstanding issuance
of less than $10,000,000,000 has reasonable cause to believe that
the permitted payment stablecoin issuer or any institution-
affiliated party of the permitted payment stablecoin issuer is
violating, has violated, or is attempting to violate this Act, any
regulation or order issued under this Act, or any written agreement
entered into with the primary Federal payment stablecoin regulator
or condition imposed in writing by the primary Federal payment
stablecoin regulator in connection with any application or other
request, the primary Federal payment stablecoin regulator may, by
provisions that are mandatory or otherwise, order the permitted
payment stablecoin issuer or institution-affiliated party of the
permitted payment stablecoin issuer to--
(A) cease and desist from such violation or practice; or
(B) take affirmative action to correct the conditions
resulting from any such violation or practice.
(3) Removal and prohibition authority.--The primary Federal
payment stablecoin regulator of a permitted payment stablecoin
issuer that is not a State qualified payment stablecoin issuer may
remove an institution-affiliated party of the permitted payment
stablecoin issuer from the position or office of that institution-
affiliated party or prohibit further participation in the affairs
of the permitted payment stablecoin issuer or of all such permitted
payment stablecoin issuers by that institution-affiliated party, if
the primary Federal payment stablecoin regulator determines that--
(A) the institution-affiliated party has knowingly
committed a violation or attempted violation of this Act or any
regulation or order issued under this Act; or
(B) the institution-affiliated party has knowingly
committed a violation of any provision of subchapter II of
chapter 53 of title 31, United States Code.
(4) Procedures.--
(A) In general.--If a primary Federal payment stablecoin
regulator identifies a violation or attempted violation of this
Act or makes a determination under paragraph (1), (2), or (3),
the primary Federal payment stablecoin regulator shall comply
with the procedures set forth in subsections (b) and (e) of
section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818)
or subsections (e) and (g) of section 206 the Federal Credit
Union Act (12 U.S.C. 1786(e) and (g)), as applicable.
(B) Judicial review.--A person aggrieved by a final action
under this subsection may obtain judicial review of such action
exclusively as provided in section 8(h) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(h)) or section 206(j) of the
Federal Credit Union Act (12 U.S.C. 1786(j)), as applicable.
(C) Injunction.--A primary Federal payment stablecoin
regulator may, at the discretion of the regulator, follow the
procedures provided in section 8(i)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(i)(1)) or section 206(k)(1) of
the Federal Credit Union Act (12 U.S.C. 1786(k)(1)), as
applicable, for judicial enforcement of any effective and
outstanding notice or order issued under this subsection.
(D) Temporary cease-and-desist proceedings.--If a primary
Federal payment stablecoin regulator determines that a
violation or attempted violation of this Act or an action with
respect to which a determination was made under paragraph (1),
(2), or (3), or the continuation thereof, is likely to cause
insolvency or significant dissipation of assets or earnings of
a permitted payment stablecoin issuer, or is likely to weaken
the condition of the permitted payment stablecoin issuer or
otherwise prejudice the interests of the customers of the
permitted payment stablecoin issuer prior to the completion of
the proceedings conducted under this paragraph, the primary
Federal payment stablecoin regulator may follow the procedures
provided in section 8(c) of the Federal Deposit Insurance Act
(12 U.S.C. 1818(c)) or section 206(f) of the Federal Credit
Union Act (12 U.S.C. 1786(f)), as applicable, to issue a
temporary cease and desist order.
(5) Civil money penalties.--Unless otherwise specified in this
Act, the civil money penalties for violations of this Act consist
of the following:
(A) Failure to be approved.--Any person that issues a
United States dollar-denominated payment stablecoin in
violation of section 3, and any institution-affiliated party of
such a person who knowingly participates in issuing such a
payment stablecoin, shall be liable for a civil penalty of not
more than $100,000 for each day during which such payment
stablecoins are issued.
(B) First tier.--Except as provided in subparagraph (A), a
permitted payment stablecoin issuer or institution-affiliated
party of such permitted payment stablecoin issuer that
materially violates this Act or any regulation or order issued
under this Act, or that materially violates any condition
imposed in writing by the appropriate primary Federal payment
stablecoin regulator in connection with a written agreement
entered into between the permitted payment stablecoin issuer
and that primary Federal payment stablecoin regulator, shall be
liable for a civil penalty of not more than $100,000 for each
day during which the violation continues.
(C) Second tier.--Except as provided in subparagraph (A),
and in addition to the penalties described in subparagraph (B),
a permitted payment stablecoin issuer or institution-affiliated
party of such permitted payment stablecoin issuer who knowingly
participates in a violation of any provision of this Act, or
any regulation or order issued under this Act, shall be liable
for a civil penalty of not more than an additional $100,000 for
each day during which the violation continues.
(D) Procedure.--Any penalty imposed under this paragraph
may be assessed and collected by the appropriate primary
Federal payment stablecoin regulator pursuant to the procedures
set forth in section 8(i)(2) of the Federal Deposit Insurance
Act (12 U.S.C. 1818(i)(2)) or section 206(k)(2) of the Federal
Credit Union Act (12 U.S.C. 1786(k)(2)), as applicable.
(E) Notice and orders after separation from service.--The
resignation, termination of employment or participation, or
separation of an institution-affiliated party (including a
separation caused by the closing of a permitted payment
stablecoin issuer) shall not affect the jurisdiction and
authority of a primary Federal payment stablecoin regulator to
issue any notice or order and proceed under this subsection
against any such party, if such notice or order is served
before the end of the 6-year period beginning on the date on
which such party ceased to be an institution-affiliated party
with respect to such permitted payment stablecoin issuer.
(6) Non-applicability to a state qualified payment stablecoin
issuer.--Notwithstanding anything in this subsection to the
contrary, this subsection shall not apply to a State qualified
payment stablecoin issuer.
(c) Rule of Construction.--Nothing in this Act may be construed to
modify or otherwise affect any right or remedy under any Federal
consumer financial law, including 12 U.S.C. 5515 and 15 U.S.C. 41 et
seq.
SEC. 7. STATE QUALIFIED PAYMENT STABLECOIN ISSUERS.
(a) In General.--A State payment stablecoin regulator shall have
supervisory, examination, and enforcement authority over all State
qualified payment stablecoin issuers of such State.
(b) Authority To Enter Into Agreements With the Board.--A State
payment stablecoin regulator may enter into a memorandum of
understanding with the Board, by mutual agreement, under which the
Board may participate in the supervision, examination, and enforcement
of this Act with respect to the State qualified payment stablecoin
issuers of such State.
(c) Sharing of Information.--A State payment stablecoin regulator
and the Board shall share information on an ongoing basis with respect
to a State qualified payment stablecoin issuer of such State, including
a copy of the initial application and any accompanying documents.
(d) Rulemaking.--A State payment stablecoin regulator may issue
orders and rules under section 4 applicable to State qualified payment
stablecoin issuers to the same extent as the primary Federal payment
stablecoin regulators issue orders and rules under section 4 applicable
to permitted payment stablecoin issuers that are not State qualified
payment stablecoin issuers.
(e) Enforcement Authority in Unusual and Exigent Circumstances.--
(1) Board.--
(A) In general.--Subject to subparagraph (C), under unusual
and exigent circumstances that the Board determines to exist,
the Board may, after not less than 48 hours' prior written
notice to the applicable State payment stablecoin regulator,
take an enforcement action against a State qualified payment
stablecoin issuer or an institution-affiliated party of such
issuer for violations of this Act during such unusual and
exigent circumstances.
(B) Rulemaking.--Consistent with section 13, the Board
shall issue rules to set forth the unusual and exigent
circumstances in which the Board may act under this paragraph.
(C) Limitations.--If, after unusual and exigent
circumstances are determined to exist pursuant to subparagraph
(A), the Board determines that there is reasonable cause to
believe that the continuation by a State qualified payment
stablecoin issuer of any activity constitutes a serious risk to
the financial safety, soundness, or stability of the State
qualified payment stablecoin issuer, the Board may impose such
restrictions as the Board determines to be necessary to address
such risk during such unusual and exigent circumstances, which
may include limitations on redemptions of payment stablecoins,
and which shall be issued in the form of a directive, with the
effect of a cease and desist order that has become final, to
the State qualified payment stablecoin issuer and any of its
affiliates, limiting--
(i) transactions between the State qualified payment
stablecoin issuer, a holding company, and the subsidiaries
or affiliates of either the State qualified payment
stablecoin issuer or the holding company; and
(ii) any activities of the State qualified payment
stablecoin issuer that might create a serious risk that the
liabilities of a holding company and the affiliates of the
holding company may be imposed on the State qualified
payment stablecoin issuer.
(D) Review of directive.--
(i) Administrative review.--
(I) In general.--After a directive described in
subparagraph (C) is issued, the applicable State
qualified payment stablecoin issuer, or any
institution-affiliated party of the State qualified
payment stablecoin issuer subject to the directive, may
object and present to the Board, in writing, the
reasons why the directive should be modified or
rescinded.
(II) Automatic lapse of directive.--If, after 10
days after the receipt of a response described in
subclause (I), the Board does not affirm, modify, or
rescind the directive, the directive shall
automatically lapse.
(ii) Judicial review.--
(I) In general.--If the Board affirms or modifies a
directive pursuant to clause (i), any affected party
may immediately thereafter petition the United States
district court for the district in which the main
office of the affected party is located, or in the
United States District Court for the District of
Columbia, to stay, modify, terminate, or set aside the
directive.
(II) Relief for extraordinary cause.--Upon a
showing of extraordinary cause, an affected party may
petition for relief under subclause (I) without first
pursuing or exhausting the administrative remedies
under clause (i).
(2) Comptroller.--
(A) In general.--Subject to subparagraph (C), under unusual
and exigent circumstances determined to exist by the
Comptroller, the Comptroller shall, after not less than 48
hours' prior written notice to the applicable State payment
stablecoin regulator, take an enforcement action against a
State qualified payment stablecoin issuer that is a nonbank
entity for violations of this Act.
(B) Rulemaking.--Consistent with section 13, the
Comptroller shall issue rules to set forth the unusual and
exigent circumstances in which the Comptroller may act under
this paragraph.
(C) Limitations.--If, after unusual and exigent
circumstances are determined to exist under subparagraph (A),
the Comptroller determines that there is reasonable cause to
believe that the continuation of any activity by a State
qualified payment stablecoin issuer that is a nonbank entity
constitutes a serious risk to the financial safety, soundness,
or stability of the State qualified payment stablecoin issuer
that is a nonbank entity, the Comptroller shall impose such
restrictions as the Comptroller determines to be necessary to
address such risk during such unusual and exigent
circumstances, which may include limitations on redemption of
payment stablecoins, and which shall be issued in the form of a
directive, with the effect of a cease and desist order that has
become final, to the State qualified payment stablecoin issuer
that is a nonbank entity and any of its affiliates, limiting--
(i) transactions between the State qualified payment
stablecoin issuer, a holding company, and the subsidiaries
or affiliates of either the State qualified payment
stablecoin issuer or the holding company; and
(ii) any activities of the State qualified payment
stablecoin issuer that might create a serious risk that the
liabilities of a holding company and the affiliates of the
holding company may be imposed on the State qualified
payment stablecoin issuer.
(D) Review of directive.--
(i) Administrative review.--
(I) In general.--After a directive described in
subparagraph (C) is issued, the applicable Federal
qualified payment stablecoin issuer, or any
institution-affiliated party of the Federal qualified
payment stablecoin issuer subject to the directive, may
object and present to the Comptroller, in writing, the
reasons that the directive should be modified or
rescinded.
(II) Automatic lapse of directive.--If, after 10
days after the receipt of a response described in
subclause (I), the Comptroller does not affirm, modify,
or rescind the directive, the directive shall
automatically lapse.
(ii) Judicial review.--
(I) In general.--If the Comptroller affirms or
modifies a directive pursuant to clause (i), any
affected party may immediately thereafter petition the
United States district court for the district in which
the main office of the affected party is located, or in
the United States District Court for the District of
Columbia, to stay, modify, terminate, or set aside the
directive.
(II) Relief for extraordinary cause.--Upon a
showing of extraordinary cause, an affected party may
petition for relief under subclause (I) without first
pursuing or exhausting the administrative remedies
under clause (i).
(f) Effect on State Law.--
(1) Host state law.--Notwithstanding any other provision of
law, the laws of a host State, including laws relating to consumer
protection, shall only apply to the activities conducted in the
host State by an out-of-State State qualified payment stablecoin
issuer to the same extent as such laws apply to the activities
conducted in the host State by an out-of-State Federal qualified
payment stablecoin issuer.
(2) Home state law.--If any host State law is determined not to
apply under paragraph (1), the laws of the home State of the State
qualified payment stablecoin issuer shall govern the activities of
the permitted payment stablecoin issuer conducted in the host
State.
(3) Applicability.--
(A) In general.--This subsection shall only apply to an
out-of-State State qualified payment stablecoin issuer
chartered, licensed, or otherwise authorized to do business by
a State that has a certification in place pursuant to section
4(c) of this Act.
(B) Exclusion.--The laws applicable to an out-of-State
qualified payment stablecoin issuer under paragraph (1) exclude
host State laws governing the chartering, licensure, or other
authorization to do business in the host State as a permitted
payment stablecoin issuer pursuant to this Act.
(4) Rule of construction.--Except for State laws relating to
the chartering, licensure, or other authorization to do business as
a permitted payment stablecoin issuer, nothing in this Act shall
preempt State consumer protection laws, including common law, and
the remedies available thereunder.
SEC. 8. ANTI-MONEY LAUNDERING PROTECTIONS.
(a) Payment Stablecoins Issued by a Foreign Payment Stablecoin
Issuer.--
(1) In general.--A payment stablecoin that is issued by a
foreign payment stablecoin issuer may not be publicly offered,
sold, or otherwise made available for trading in the United States
by a digital asset service provider unless the foreign payment
stablecoin issuer has the technological capability to comply and
complies with the terms of any lawful order.
(2) Enforcement.--
(A) Authority.--The Secretary of the Treasury shall have
the authority to designate any foreign issuer that publicly
offers, sells, or otherwise makes available a payment
stablecoin in violation of paragraph (1) as noncompliant.
(B) Designation as noncompliant.--Not later than 30 days
after the Department of the Treasury has identified a foreign
payment stablecoin issuer of any payment stablecoin trading in
the United States that is in violation of paragraph (1), the
Secretary of the Treasury, in coordination with relevant
Federal agencies, may, pursuant to the authority under
subparagraph (A), designate the foreign payment stablecoin
issuer as noncompliant and notify the foreign payment
stablecoin issuer in writing of the designation.
(3) Appeal.--A determination of noncompliance under this
subsection is subject to judicial review in the United States Court
of Appeals for the District of Columbia Circuit.
(b) Publication of Designation; Prohibition on Secondary Trading.--
(1) In general.--If a foreign payment stablecoin issuer does
not come into compliance with the lawful order within 30 days from
the date of issuance of the written notice described in subsection
(a), except as provided in subsection (c), the Secretary of the
Treasury shall--
(A) publish the determination of noncompliance in the
Federal Register, including a statement on the failure of the
foreign payment stablecoin issuer to comply with the lawful
order after the written notice; and
(B) issue a notification in the Federal Register
prohibiting digital asset service providers from facilitating
secondary trading of payment stablecoins issued by the foreign
payment stablecoin issuer in the United States.
(2) Effective date of prohibition.--The prohibition on
facilitation of secondary trading described in paragraph (1) shall
become effective on the date that is 30 days after the date of
issue of notification of the prohibition in the Federal Register.
(3) Expiration of prohibition.--
(A) In general.--The prohibition on facilitation of
secondary trading described in paragraph (1)(B) shall expire
upon the Secretary of the Treasury's determination that the
foreign payment stablecoin issuer is no longer noncompliant.
(B) Rulemaking.--Consistent with section 13, the Secretary
of the Treasury shall specify the criteria that a noncompliant
foreign issuer must meet for the Secretary of the Treasury to
determine that the foreign payment stablecoin issuer is no
longer noncompliant.
(C) Publication.--Upon a determination under subparagraph
(A), the Secretary of the Treasury shall publish the
determination in the Federal Register, including a statement
detailing how the foreign payment stablecoin issuer has met the
criteria described in subparagraph (B).
(4) Civil monetary penalties.--The Secretary of the Treasury
may impose a civil monetary penalty as follows:
(A) Digital asset service providers.--Any digital asset
service provider that knowingly violates a prohibition under
paragraph (1)(B) shall be subject to a civil monetary penalty
of not more than $100,000 per violation per day.
(B) Foreign payment stablecoin issuers.--Any foreign
payment stablecoin issuer that knowingly continues to publicly
offer a payment stablecoin in the United States after
publication of the determination of noncompliance under
paragraph (1)(A) shall be subject to a civil monetary penalty
of not more than $1,000,000 per violation per day, and the
Secretary of the Treasury may seek an injunction in a district
court of the United States to bar the foreign payment
stablecoin issuer from engaging in financial transactions in
the United States or with United States persons.
(C) Determination of the number of violations.--For
purposes of determining the number of violations for which to
impose a penalty under subparagraph (A) or (B), separate acts
of noncompliance are a single violation when the acts are the
result of a common or substantially overlapping originating
cause. Notwithstanding the foregoing, the Secretary of Treasury
may determine that multiple acts of noncompliance constitute
separate violations if such acts were the result of gross
negligence, a reckless disregard for, or a pattern of
indifference to, money laundering, financing of terrorism, or
sanctions evasion requirements.
(D) Commencement of civil actions.--The Secretary of the
Treasury may commence a civil action against a foreign payment
stablecoin issuer in a district court of the United States to--
(i) recover a civil monetary penalty assessed under
subparagraph (A) or (B);
(ii) seek an injunction to bar the foreign payment
stablecoin issuer from engaging in financial transactions
in the United States or with United States persons; or
(iii) seek an injunction to stop a digital asset
service provider from offering on the platform of the
digital asset service provider payment stablecoins issued
by the foreign payment stablecoin issuer.
(c) Waiver and Licensing Authority Exemptions.--
(1) In general.--The Secretary of the Treasury may offer a
waiver, general license, or specific license to any United States
person engaging in secondary trading described in subsection
(b)(1)(B) on a case-by-case basis if the Secretary determines
that--
(A) prohibiting secondary trading would adversely affect
the financial system of the United States; or
(B) the foreign payment stablecoin issuer is taking
tangible steps to remedy the failure to comply with the lawful
order that resulted in the noncompliance determination under
subsection (a).
(2) National security waiver.--The Secretary of the Treasury,
in consultation with the Director of National Intelligence and the
Secretary of State, may waive the application of the secondary
trading restrictions under subsection (b)(1)(B) if the Secretary of
the Treasury determines that the waiver is in the national security
interest of the United States.
(3) Waiver for intelligence and law enforcement activities.--
The head of a department or agency may waive the application of
this section with respect to--
(A) activities subject to the reporting requirements under
title V of the National Security Act of 1947 (50 U.S.C. 3091 et
seq.), or any authorized intelligence activities of the United
States; or
(B) activities necessary to carry out or assist law
enforcement activity of the United States.
(4) Report required.--Not later than 7 days after issuing a
waiver or a license under paragraph (1), (2), or (3), the Secretary
of the Treasury shall submit to the chairs and ranking members of
the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives, a report, which may include a classified annex, if
applicable, including the text of the waiver or license, as well as
the facts and circumstances justifying the waiver determination,
and provide a briefing on the report.
(d) Rule of Construction.--Nothing in this Act shall be construed
as altering the existing authority of the Secretary of the Treasury to
block, restrict, or limit transactions involving payment stablecoins
that reference or are denominated in United States dollars that are
subject to the jurisdiction of the United States.
SEC. 9. ANTI-MONEY LAUNDERING INNOVATION.
(a) Public Comment.--Beginning on the date that is 30 days after
the date of enactment of this Act, and for a period of 60 days
thereafter, the Secretary of the Treasury shall seek public comment to
identify innovative or novel methods, techniques, or strategies that
regulated financial institutions use, or have the potential to use, to
detect illicit activity, such as money laundering, involving digital
assets, including comments with respect to--
(1) application program interfaces;
(2) artificial intelligence;
(3) digital identify verification; and
(4) use of blockchain technology and monitoring.
(b) Treasury Research.--
(1) In general.--Upon completion of the public comment period
described in subsection (a), the Secretary of the Treasury shall
conduct research on the innovative or novel methods, techniques, or
strategies that regulated financial institutions use, or have the
potential to use, to detect illicit activity, such as money
laundering, involving digital assets that were identified in such
public comment period.
(2) Research factors.--With respect to each innovative or novel
method, technique, or strategy described in paragraph (1), the
Financial Crimes Enforcement Network shall evaluate and consider
the following factors against existing methods, techniques, or
strategies:
(A) Improvements in the ability of financial institutions
to detect illicit activity involving digital assets.
(B) Costs to regulated financial institutions.
(C) The amount and sensitivity of information that is
collected or reviewed.
(D) Privacy risks associated with the information that is
collected or reviewed.
(E) Operational challenges and efficiency considerations.
(F) Cybersecurity risks.
(G) Effectiveness of methods, techniques, or strategies at
mitigating illicit finance.
(c) Treasury Risk Assessment.--As part of the national strategy for
combating terrorist and other illicit financing required under sections
261 and 262 of the Countering America's Adversaries Through Sanctions
Act (Public Law 115-44; 131 Stat. 934), the Secretary of the Treasury
shall consider--
(1) the source of illicit activity, such as money laundering
and sanctions evasion involving digital assets;
(2) the effectiveness of and gaps in existing methods,
techniques, and strategies used by regulated financial institutions
in detecting illicit activity, such as money laundering, involving
digital assets;
(3) the impact of existing regulatory frameworks on the use and
development of innovative methods, techniques, or strategies by
regulated financial institutions; and
(4) any foreign jurisdictions that pose a high risk of
facilitating illicit activity through the use of digital assets to
obtain fiat currency.
(d) FinCEN Guidance or Rulemaking.--Not later than 3 years after
the date of enactment of this Act, the Financial Crimes Enforcement
Network shall issue public guidance and notice and comment rulemaking,
based on the results of the research and risk assessments required
under this section, relating to the following:
(1) The implementation of innovative or novel methods,
techniques, or strategies by regulated financial institutions to
detect illicit activity involving digital assets.
(2) Standards for payment stablecoin issuers to identify and
report illicit activity involving the payment stablecoin of a
permitted payment stablecoin issuer, including, fraud, cybercrime,
money laundering, financing of terrorism, sanctions evasion, or
insider trading.
(3) Standards for payment stablecoin issuers' systems and
practices to monitor transactions on blockchains, digital asset
mixing services, tumblers, or other similar services that mix
payment stablecoins in such a way as to make such transaction or
the identity of the transaction parties less identifiable.
(4) Tailored risk management standards for financial
institutions interacting with decentralized finance protocols.
(e) Recommendations and Report to Congress.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Secretary of the Treasury shall submit
to the chairs and ranking members of the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on--
(A) legislative and regulatory proposals to allow regulated
financial institutions to develop and implement novel and
innovative methods, techniques, or strategies to detect illicit
activity, such as money laundering and sanctions evasion,
involving digital assets;
(B) the results of the research and risk assessments
conducted pursuant to this section;
(C) efforts to support the ability of financial
institutions to implement novel and innovative methods,
techniques, or strategies to detect illicit activity, such as
money laundering and sanctions evasion, involving digital
assets;
(D) the extent to which transactions on distributed
ledgers, digital asset mixing services, tumblers, or other
similar services that mix payment stablecoins in such a way as
to make such transaction or the identity of the transaction
parties less identifiable may facilitate illicit activity; and
(E) legislative recommendations relating to the scope of
the term ``digital asset service provider'' and the application
of that term to decentralized finance.
(2) Classified annex.--A report under this section may include
a classified annex, if applicable.
(f) Rule of Construction.--Nothing in this section shall be
construed to limit the existing authority of the Secretary of the
Treasury or the primary Federal payment stablecoin regulators to, prior
to the submission of a report required under this section, use existing
exemptive authorities, the no-action letter process, or rulemaking
authorities in a manner that encourages regulated financial
institutions to adopt novel or innovative methods, techniques, or
strategies to detect illicit activity, such as money laundering,
involving digital assets.
SEC. 10. CUSTODY OF PAYMENT STABLECOIN RESERVE AND COLLATERAL.
(a) In General.--A person may only engage in the business of
providing custodial or safekeeping services for the payment stablecoin
reserve, the payment stablecoins used as collateral, or the private
keys used to issue permitted payment stablecoins if the person--
(1) is subject to--
(A) supervision or regulation by a primary Federal payment
stablecoin regulator or a primary financial regulatory agency
described under subparagraph (B) or (C) of section 2(12) of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (12
U.S.C. 5301(12)); or
(B) supervision by a State bank supervisor, as defined
under section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813), or a State credit union supervisor, as defined under
section 6003 of the Anti-Money Laundering Act of 2020 (31
U.S.C. 5311 note), and such State bank supervisor or State
credit union supervisor makes available to the Board such
information as the Board determines necessary and relevant to
the categories of information under subsection (d); and
(2) complies with the requirements under subsection (b), unless
such person holds such property in accordance with similar
requirements as required by a primary Federal payment stablecoin
regulator, the Securities and Exchange Commission, or the Commodity
Futures Trading Commission.
(b) Customer Property Requirement.--A person described in
subsection (a) shall, with respect to other property described in that
subsection--
(1) treat and deal with the payment stablecoins, private keys,
cash, and other property of a person for whom or on whose behalf
the person described in that subsection receives, acquires, or
holds payment stablecoins, private keys, cash, and other property
(hereinafter referred to in this section as the ``customer'') as
belonging to such customer and not as the property of such person;
and
(2) take such steps as are appropriate to protect the payment
stablecoins, private keys, cash, and other property of a customer
from the claims of creditors of the person.
(c) Commingling Prohibited.--
(1) In general.--Payment stablecoin reserves, payment
stablecoins, cash, and other property of a permitted payment
stablecoin issuer or customer shall be separately accounted for by
a person described in subsection (a) and shall be segregated from
and not be commingled with the assets of the person.
(2) Exceptions.--Notwithstanding paragraph (1) or subsection
(b)--
(A) the payment stablecoin reserves, payment stablecoins,
cash, and other property of a permitted payment stablecoin
issuer or customer may, for convenience, be commingled and
deposited in an omnibus account holding the payment stablecoin
reserves, payment stablecoins, cash, and other property of more
than 1 permitted payment stablecoin issuer or customer at a
State chartered depository institution, an insured depository
institution, national bank, or trust company, and any payment
stablecoin reserves in the form of cash held in the form of a
deposit liability at a depository institution shall not be
subject to any requirement relating to the separation of such
cash from the property of the applicable depository
institution;
(B) such share of the payment stablecoin reserves, payment
stablecoins, cash, and other property of the permitted payment
stablecoin issuer or customer that shall be necessary to
transfer, adjust, or settle a transaction or transfer of assets
may be withdrawn and applied to such purposes, including the
payment of commissions, taxes, storage, and other charges
lawfully accruing in connection with the provision of services
by a person described in subsection (a);
(C) in accordance with such terms and conditions as a
primary Federal payment stablecoin regulator may prescribe by
rule, regulation, or order, any payment stablecoin reserves,
payment stablecoins, cash, and other property described in this
subsection may be commingled and deposited in permitted payment
stablecoin issuer or customer accounts with payment stablecoin
reserves, payment stablecoins, cash, and other property
received by the person and required by the primary Federal
payment stablecoin regulator to be separately accounted for,
treated as, and dealt with as belonging to such permitted
payment stablecoin issuers or customers; or
(D) an insured depository institution that provides
custodial or safekeeping services for payment stablecoin
reserves shall be permitted to hold payment stablecoin reserves
in the form of cash on deposit provided such treatment is
consistent with Federal law.
(3) Customer priority.--With respect to payment stablecoins
held by a person described in subsection (a) for a customer, with
or without the segregation required under paragraph (1), the claims
of the customer against such person with respect to such payment
stablecoins shall have priority over the claims of any person other
than the claims of another customer with respect to payment
stablecoins held by such person described in subsection (a), unless
the customer expressly consents to the priority of such other
claim.
(d) Regulatory Information.--A person described under subsection
(a) shall submit to the applicable primary Federal payment stablecoin
regulator information concerning the person's business operations and
processes to protect customer assets, in such form and manner as the
primary regulator shall determine.
(e) Exclusion.--The requirements of this section shall not apply to
any person solely on the basis that such person engages in the business
of providing hardware or software to facilitate a customer's own
custody or safekeeping of the customer's payment stablecoins or private
keys.
SEC. 11. TREATMENT OF PAYMENT STABLECOIN ISSUERS IN INSOLVENCY
PROCEEDINGS.
(a) In General.--Subject to section 507(e) of title 11, United
States Code, as added by subsection (d), in any insolvency proceeding
of a permitted payment stablecoin issuer under Federal or State law,
including any proceeding under that title and any insolvency proceeding
administered by a State payment stablecoin regulator with respect to a
permitted payment stablecoin issuer--
(1) the claim of a person holding payment stablecoins issued by
the permitted payment stablecoin issuer shall have priority, on a
ratable basis with the claims of other persons holding such payment
stablecoins, over the claims of the permitted payment stablecoin
issuer and any other holder of claims against the permitted payment
stablecoin issuer, with respect to required payment stablecoin
reserves;
(2) notwithstanding any other provision of law, including the
definition of ``claim'' under section 101(5) of title 11, United
States Code, any person holding a payment stablecoin issued by the
permitted payment stablecoin issuer shall be deemed to hold a
claim; and
(3) the priority under paragraph (1) shall not apply to claims
other than those arising directly from the holding of payment
stablecoins.
(b) Definitions.--Section 101 of title 11, United States Code, is
amended by adding after paragraph (40B) the following:
``(40C) The terms `payment stablecoin' and `permitted payment
stablecoin issuer' have the meanings given those terms in section 2
of the GENIUS Act.''.
(c) Automatic Stay.--Section 362 of title 11, United States Code,
is amended--
(1) in subsection (a)--
(A) in paragraph (7), by striking ``and'';
(B) in paragraph (8), by striking the period and inserting
``; and''; and
(C) by adding at the end the following:
``(9) the redemption of payment stablecoins issued by the
permitted payment stablecoin issuer, from payment stablecoin
reserves required to be maintained under section 4 of the GENIUS
Act.''; and
(2) in subsection (d)--
(A) in paragraph (3)(B)(ii), by striking ``or'' at the end;
(B) in paragraph (4)(B), by striking the period at the end
and inserting ``; or''; and
(C) by inserting after paragraph (4) the following:
``(5) with respect to the redemption of payment stablecoins
held by a person, if the court finds, subject to the motion and
attestation of the permitted payment stablecoin issuer, which shall
be filed on the petition date or as soon as practicable thereafter,
there are payment stablecoin reserves available for distribution on
a ratable basis to similarly situated payment stablecoin holders,
provided that the court shall use best efforts to enter a final
order to begin distributions under this paragraph not later than 14
days after the date of the required hearing.''.
(d) Priority in Bankruptcy Proceedings.--Section 507 of title 11,
United States Code, is amended--
(1) in subsection (a), in the matter preceding paragraph (1),
by striking ``The following'' and inserting ``Subject to subsection
(e), the following''; and
(2) by adding at the end the following:
``(e) Notwithstanding subsection (a), if a payment stablecoin
holder is not able to redeem all outstanding payment stablecoin claims
from required payment stablecoin reserves maintained by the permitted
payment stablecoin issuer, any such remaining claim arising from a
person's holding of a payment stablecoin issued by the permitted
payment stablecoin issuer shall be a claim against the estate and shall
have first priority over any other claim, including over any expenses
and claims that have priority under that subsection, to the extent
compliance with section 4 of the GENIUS Act would have required
additional reserves to be maintained by the permitted payment
stablecoin issuer for payment stablecoin holders.''.
(e) Payment Stablecoin Reserves.--Section 541(b) of title 11,
United States Code, is amended--
(1) in paragraph (9), in the matter following subparagraph (B),
by striking ``or'' at the end;
(2) in paragraph (10)(C), by striking the period and inserting
``; or''; and
(3) by inserting after paragraph (10) the following:
``(11) required payment stablecoin reserves under section 4 of
the GENIUS Act, provided that notwithstanding the exclusion of such
reserves from the property of the estate, section 362 of this title
shall apply to such reserves.''.
(f) Intervention.--Section 1109 of title 11, United States Code, is
amended by adding at the end the following:
``(c) The Comptroller of the Currency or State payment stablecoin
regulator (as defined in section 2 of the GENIUS Act) shall raise, and
shall appear and be heard on, any issue, including the protection of
customers, in a case under this chapter in which the debtor is a
permitted payment stablecoin issuer.''.
(g) Application of Existing Insolvency Law.--In accordance with
otherwise applicable law, an insolvency proceeding with respect to a
permitted payment stablecoin issuer shall occur as follows:
(1) A depository institution (as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)) shall be resolved
by the Federal Deposit Insurance Corporation, National Credit Union
Administration, or State payment stablecoin regulator, as
applicable.
(2) A subsidiary of a depository institution (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) or
a nonbank entity may be considered a debtor under title 11, United
States Code.
(h) Study by Primary Federal Payment Stablecoin Regulators.--
(1) Study required.--The primary Federal payment stablecoin
regulators shall perform a study of the potential insolvency
proceedings of permitted payment stablecoin issuers, including an
examination of--
(A) existing gaps in the bankruptcy laws and rules for
permitted payment stablecoin issuers;
(B) the ability of payment stablecoin holders to be paid
out in full in the event a permitted payment stablecoin issuer
is insolvent; and
(C) the utility of orderly insolvency administration
regimes and whether any additional authorities are needed to
implement such regimes.
(2) Report.--Not later than 3 years after the date of enactment
of this Act, the primary Federal payment stablecoin regulators
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of
the House of Representatives a report that contains all findings of
the study under paragraph (1), including any legislative
recommendations.
SEC. 12. INTEROPERABILITY STANDARDS.
The primary Federal payment stablecoin regulators, in consultation
with the National Institute of Standards and Technology, other relevant
standard-setting organizations, and State bank and credit union
regulators, shall assess and, if necessary, may, pursuant to section
553 of title 5, United States Code, and in a manner consistent with the
National Technology Transfer and Advancement Act of 1995 (Public Law
104-113), prescribe standards for permitted payment stablecoin issuers
to promote compatibility and interoperability with--
(1) other permitted payment stablecoin issuers; and
(2) the broader digital finance ecosystem, including accepted
communications protocols and blockchains, permissioned or public.
SEC. 13. RULEMAKING.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, each primary Federal payment stablecoin regulator, the
Secretary of the Treasury, and each State payment stablecoin regulator
shall promulgate regulations to carry out this Act through appropriate
notice and comment rulemaking.
(b) Coordination.--Federal payment stablecoin regulators, the
Secretary of the Treasury, and State payment stablecoin regulators
should coordinate, as appropriate, on the issuance of any regulations
to implement this Act.
(c) Report Required.--Not later than 180 days after the effective
date of this Act, each Federal banking agency shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives a
report that confirms and describes the regulations promulgated to carry
out this Act.
SEC. 14. STUDY ON NON-PAYMENT STABLECOINS.
(a) Study by Treasury.--
(1) Study.--The Secretary of the Treasury, in consultation with
the Board, the Comptroller, the Corporation, the Securities and
Exchange Commission, and the Commodity Futures Trading Commission
shall carry out a study of non-payment stablecoins, including
endogenously collateralized payment stablecoins.
(2) Report.--Not later than 365 days after the date of the
enactment of this Act, the Secretary of the Treasury shall provide
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives a report that contains all findings made in
carrying out the study under paragraph (1), including an analysis
of--
(A) the categories of non-payment stablecoins, including
the benefits and risks of technological design features;
(B) the participants in non-payment stablecoin
arrangements;
(C) utilization and potential utilization of non-payment
stablecoins;
(D) the nature of reserve compositions;
(E) types of algorithms being employed;
(F) governance structure, including aspects of
decentralization;
(G) the nature of public promotion and advertising; and
(H) the clarity and availability of consumer notices
disclosures.
(3) Classified annex.--A report under this section may include
a classified annex, if applicable.
(b) Endogenously Collateralized Payment Stablecoin Defined.--In
this section, the term ``endogenously collateralized payment
stablecoin'' means any digital asset--
(1) the originator of which has represented will be converted,
redeemed, or repurchased for a fixed amount of monetary value; and
(2) that relies solely on the value of another digital asset
created or maintained by the same originator to maintain the fixed
price.
SEC. 15. REPORTS.
(a) Annual Reporting Requirement.--Beginning on the date that is 1
year after the date of enactment of this Act, and annually thereafter,
the primary Federal payment stablecoin regulators, in consultation with
State payment stablecoin regulators, as necessary, shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate, the
Committee on Financial Services of the House of Representatives, and
the Director of the Office of Financial Research a report, which may
include a classified annex, if applicable, on the status of the payment
stablecoin industry, including--
(1) a summary of trends in payment stablecoin activities;
(2) a summary of the number of applications for approval as a
permitted payment stablecoin issuer under section 5, including
aggregate approvals and rejections of applications; and
(3) a description of the potential financial stability risks
posed to the safety and soundness of the broader financial system
by payment stablecoin activities.
(b) FSOC Report.--The Financial Stability Oversight Council shall
incorporate the findings in the report under subsection (a) into the
annual report of the Council required under section 112(a)(2)(N) of the
Financial Stability Act of 2010 (12 U.S.C. 5322(a)(2)(N)).
SEC. 16. AUTHORITY OF BANKING INSTITUTIONS.
(a) Rule of Construction.--Nothing in this Act may be construed to
limit the authority of a depository institution, Federal credit union,
State credit union, national bank, or trust company to engage in
activities permissible pursuant to applicable State and Federal law,
including--
(1) accepting or receiving deposits or shares (in the case of a
credit union), and issuing digital assets that represent those
deposits or shares;
(2) utilizing a distributed ledger for the books and records of
the entity and to effect intrabank transfers; and
(3) providing custodial services for payment stablecoins,
private keys of payment stablecoins, or reserves backing payment
stablecoins.
(b) Regulatory Review.--Entities regulated by the primary Federal
payment stablecoin regulators are authorized to engage in the payment
stablecoin activities and investments contemplated by this Act,
including acting as a principal or agent with respect to any payment
stablecoin and payment of fees to facilitate customer transactions. The
primary Federal payment stablecoin regulators shall review all existing
guidance and regulations, and if necessary, amend or promulgate new
regulations and guidance, to clarify that regulated entities are
authorized to engage in such activities and investments.
(c) Treatment of Custody Activities.--The appropriate Federal
banking agency, the National Credit Union Administration (in the case
of a credit union), and the Securities and Exchange Commission may not
require a depository institution, national bank, Federal credit union,
State credit union, or trust company, or any affiliate thereof--
(1) to include digital assets held in custody that are not
owned by the entity as a liability on the financial statement or
balance sheet of the entity, including payment stablecoin custody
or safekeeping activities; or
(2) to hold in custody or safekeeping regulatory capital
against digital assets and reserves backing such assets described
in section 4(a)(1)(A), except as necessary to mitigate against
operational risks inherent in custody or safekeeping services, as
determined by--
(A) the appropriate Federal banking agency;
(B) the National Credit Union Administration (in the case
of a credit union);
(C) a State bank supervisor; or
(D) a State credit union supervisor.
(d) State-chartered Depository Institutions.--
(1) In general.--A depository institution chartered under the
banking laws of a State, that has a subsidiary that is a permitted
payment stablecoin issuer, may engage in the business of money
transmission or provide custodial services through the permitted
payment stablecoin issuer in any State if such State-chartered
depository institution is--
(A) required by the laws or regulations of the home State
to establish and maintain adequate liquidity, and such
liquidity is regularly reassessed by the home State banking
supervisor to take into account any changes in the financial
condition and risk profile of the institution, including any
uninsured deposits maintained by such institution; and
(B) required by the laws or regulations of the home State
to establish and maintain adequate capital, and such capital is
regularly reassessed by the home State banking supervisor to
take into account any changes in the financial condition and
risk profile of the institution, including any uninsured
deposits maintained by such institution.
(2) Rule of construction.--Nothing in this section shall limit,
or be construed to limit, the authority of a host State bank
regulator, to perform examinations of a depository institution's
subsidiary permitted payment stablecoin issuer or activities
conducted through the permitted payment stablecoin issuer to ensure
compliance with host State consumer protection laws that the host
State bank regulator has specific jurisdiction to enforce, which
shall apply to such institution consistent with section 7(f).
(e) Definitions.--In this section:
(1) Home state.--The term ``home State'' means the State by
which the depository institution is chartered.
(2) Host state.--The term ``host State'' means a State in which
a depository institution establishes a branch, solicits customers,
or otherwise engages in business activities, other than the home
State.
SEC. 17. AMENDMENTS TO CLARIFY THAT PAYMENT STABLECOINS ARE NOT
SECURITIES OR COMMODITIES AND PERMITTED PAYMENT STABLECOIN
ISSUERS ARE NOT INVESTMENT COMPANIES.
(a) Investment Advisers Act of 1940.--Section 202(a)(18) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is amended by
adding at the end the following: ``The term `security' does not include
a payment stablecoin issued by a permitted payment stablecoin issuer,
as such terms are defined in section 2 of the GENIUS Act.''.
(b) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended
(1) in section 2(a)(36) of the Act (15 U.S.C. 80a-2(a)(36)), by
adding at the end the following: ``The term `security' does not
include a payment stablecoin issued by a permitted payment
stablecoin issuer, as such terms are defined in section 2 of the
GENIUS Act.''; and
(2) in section 3(c)(3) of the Act (15 U.S.C. 80a-3(c)(3)), by
inserting ``any permitted payment stablecoin issuer, as such term
is defined in section 2 of the GENIUS Act;'' after ``therefor;''.
(c) Securities Act of 1933.--Section 2(a)(1) of the Securities Act
of 1933 (15 U.S.C. 77b(a)(1)) is amended by adding at the end the
following: ``The term `security' does not include a payment stablecoin
issued by a permitted payment stablecoin issuer, as such terms are
defined in section 2 of the GENIUS Act.''.
(d) Securities Exchange Act of 1934.--Section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by
adding at the end the following: ``The term `security' does not include
a payment stablecoin issued by a permitted payment stablecoin issuer,
as such terms are defined in section 2 of the GENIUS Act.''.
(e) Securities Investor Protection Act of 1970.--Section 16(14) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
amended by adding at the end the following: ``The term `security' does
not include a payment stablecoin issued by a permitted payment
stablecoin issuer, as such terms are defined in section 2 of the GENIUS
Act.''.
(f) Commodity Exchange Act.--Section 1a(9) of the Commodity
Exchange Act (7 U.S.C. 1a(9)) is amended by adding at the end the
following: ``The term `commodity' does not include a payment stablecoin
issued by a permitted payment stablecoin issuer, as such terms are
defined in section 2 of the GENIUS Act.''.
SEC. 18. EXCEPTION FOR FOREIGN PAYMENT STABLECOIN ISSUERS AND
RECIPROCITY FOR PAYMENT STABLECOINS ISSUED IN OVERSEAS
JURISDICTIONS.
(a) In General.--The prohibitions under section 3 shall not apply
to a foreign payment stablecoin issuer if all of the following apply:
(1) The foreign payment stablecoin issuer is subject to
regulation and supervision by a foreign payment stablecoin
regulator of a foreign country, a territory of the United States,
Puerto Rico, Guam, American Samoa, or the Virgin Islands that has a
regulatory and supervisory regime with respect to payment
stablecoins that the Secretary of the Treasury determines, pursuant
to subsection (b), is comparable to the regulatory and supervisory
regime established under this Act, including, in particular, the
requirements under section 4(a).
(2) The foreign payment stablecoin issuer is registered with
the Comptroller pursuant to subsection (c).
(3) The foreign payment stablecoin issuer holds reserves in a
United States financial institution sufficient to meet liquidity
demands of United States customers, unless otherwise permitted
under a reciprocal arrangement established pursuant to subsection
(d).
(4) The foreign country in which the foreign payment stablecoin
issuer is domiciled and regulated is not subject to comprehensive
economic sanctions by the United States or in a jurisdiction that
the Secretary of the Treasury has determined to be a jurisdiction
of primary money laundering concern.
(b) Treasury Determination.--
(1) In general.--The Secretary of the Treasury may make a
determination as to whether a foreign country has a regulatory and
supervisory regime that is comparable to the requirements
established under this Act, including the requirements under
section 4(a). The Secretary of the Treasury may make such a
determination only upon a recommendation from each other member of
the Stablecoin Certification Review Committee. Prior to such
determination taking effect, the Secretary of the Treasury shall
publish in the Federal Register a justification for such
determination, including how the foreign country's regulatory and
supervisory regime is comparable to the requirements established
under this Act, including the requirements under section 4(a).
(2) Request.--A foreign payment stablecoin issuer or a foreign
payment stablecoin regulator may request from the Secretary of the
Treasury a determination under paragraph (1).
(3) Timing for determination.--If a foreign payment stablecoin
issuer or foreign payment stablecoin regulator requests a
determination under paragraph (2), the Secretary of the Treasury
shall render a decision on the determination not later than 210
days after the receipt of a substantially complete determination
request.
(4) Rescission of determination.--
(A) In general.--The Secretary of the Treasury may, in
consultation with the Federal payment stablecoin regulators,
rescind a determination made under paragraph (1), if the
Secretary determines that the regulatory regime of such foreign
country is no longer comparable to the requirements established
under this Act. Prior to such rescission taking effect, the
Secretary of the Treasury shall publish in the Federal Register
a justification for the rescission.
(B) Limited safe harbor.--If the Secretary of the Treasury
rescinds a determination pursuant to subparagraph (A), a
digital asset service provider shall have 90 days before the
offer or sale of a payment stablecoin issued by the foreign
payment stablecoin issuer that is the subject of the rescinded
determination shall be in violation of section 3.
(5) Public notice.--The Secretary of the Treasury shall keep
and make publicly available a current list of foreign countries for
which a determination under paragraph (1) has been made.
(6) Rulemaking.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury shall issue
such rules as may be required to carry out this section.
(c) Registration and Ongoing Monitoring.--
(1) Registration.--
(A) In general.--A foreign payment stablecoin issuer may
offer or sell payment stablecoins using a digital asset service
provider if the foreign payment stablecoin issuer is registered
with the Comptroller.
(B) Registration approval.--A registration of a foreign
payment stablecoin issuer filed in accordance with this section
shall be deemed approved on the date that is 30 days after the
date the Comptroller receives the registration, unless the
Comptroller notifies the foreign payment stablecoin issuer in
writing that such registration has been rejected.
(C) Standards for rejection.--In determining whether to
reject a foreign payment stablecoin issuer's registration, the
Comptroller shall consider
(i) the final determination of the Secretary of the
Treasury under this section;
(ii) the financial and managerial resources of the
United States operations of the foreign payment stablecoin
issuer;
(iii) whether the foreign payment stablecoin issuer
will provide adequate information to the Comptroller as the
Comptroller determines is necessary to determine compliance
with this Act;
(iv) whether the foreign payment stablecoin presents a
risk to the financial stability of the United States; and
(v) whether the foreign payment stablecoin issuer
presents illicit finance risks to the United States.
(D) Procedure for appeal.--If the Comptroller rejects a
registration, not later than 30 days after the date of receipt
of such rejection, the foreign payment stablecoin issuer may
appeal the rejection by notifying the Comptroller of the
request to appeal.
(E) Rulemaking.--Pursuant to section 13 of this Act, the
Comptroller shall issue rules relating to the standards for
approval of registration requests and the process for appealing
denials of such registration requests.
(F) Public notice.--The Comptroller shall keep and make
publicly available a current list of foreign payment stablecoin
issuer registrations that have been approved.
(2) Ongoing monitoring.--A foreign payment stablecoin issuer
shall
(A) be subject to reporting, supervision, and examination
requirements as determined by the Comptroller; and
(B) consent to United States jurisdiction relating to the
enforcement of this Act.
(3) Lack of compliance.--
(A) Comptroller action.--The Comptroller may, in
consultation with the Secretary of the Treasury, rescind
approval of a registration of a foreign payment stablecoin
issuer under this subsection if the Comptroller determines that
the foreign payment stablecoin issuer is not in compliance with
the requirements of this Act, including for maintaining
insufficient reserves or posing an illicit finance risk or
financial stability risk. Prior to such rescission taking
effect, the Comptroller shall publish in the Federal Register a
justification for the rescission.
(B) Secretary action.--The Secretary of the Treasury, in
consultation with the Comptroller, may revoke a registration of
a foreign payment stablecoin issuer under this subsection if
the Secretary determines that reasonable grounds exist for
concluding that the foreign payment stablecoin issuer presents
economic sanctions evasion, money laundering, or other illicit
finance risks, or, as applicable, violations, or facilitation
thereof.
(d) Reciprocity.--
(1) In general.--The Secretary of the Treasury may create and
implement reciprocal arrangements or other bilateral agreements
between the United States and jurisdictions with payment stablecoin
regulatory regimes that are comparable to the requirements
established under this Act. The Secretary of the Treasury shall
consider whether the jurisdiction's requirements for payment
stablecoin issuers include
(A) similar requirements to those under section 4(a);
(B) adequate anti-money laundering and counter-financing of
terrorism program and sanction compliance standards; and
(C) adequate supervisory and enforcement capacity to
facilitate international transactions and interoperability with
United States dollar-denominated payment stablecoins issued
overseas.
(2) Publication.--Not later than 90 days prior to the entry
into force of any arrangement or agreement under paragraph (1), the
Secretary of the Treasury shall publish the arrangement or
agreement in the Federal Register.
(3) Completion.--The Secretary of the Treasury should complete
the arrangements under this subsection not later than the date that
is 2 years after the date of enactment of this Act.
SEC. 19. DISCLOSURE RELATING TO PAYMENT STABLECOINS.
Section 13104(a)(3) of title 5, United States Code, is amended, in
the first sentence, by striking ``, or any deposits'' and inserting ``,
any payment stablecoins issued by a permitted payment stablecoin issuer
aggregating $5,000 or less held, or any deposits''.
SEC. 20. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall take effect on
the earlier of
(1) the date that is 18 months after the date of enactment of
this Act; or
(2) the date that is 120 days after the date on which the
primary Federal payment stablecoin regulators issue any final
regulations implementing this Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.