Clarity for Payment Stablecoins Act of 2023
This bill establishes a regulatory framework for payment stablecoins (digital assets which an issuer must redeem for a fixed monetary value).
Only permitted issuers are allowed to issue a payment stablecoin for use by U.S. persons. Permitted issuers must be a subsidiary of an insured depository institution, a federal-qualified nonbank payment stablecoin issuer, or a state-qualified payment stablecoin issuer. In general, permitted issuers must be regulated by the appropriate federal regulator, however, state-qualified issuers must be regulated by an appropriate state regulator.
Permitted issuers must maintain reserves backing the stablecoin on a one-to-one basis using assets as outlined by the bill, such as U.S. coins and currency or other assets regulators determine appropriate. Permitted issuers must also publicly disclose their redemption policy, establish redemption procedures, and publish on their website every month the details of the issuer's reserves.
The bill sets forth requirements for (1) the rehypothecation, or reusing, of such reserves; (2) providing custodial or safekeeping services for stablecoins or private keys; and (3) supervisory, examination, and enforcement authority over non-state qualified issuers.
In addition, the bill places a two-year moratorium on new endogenously collateralized stablecoins (i.e., stablecoins that rely on the value of another digital asset created or maintained by the same originator to maintain the fixed price).
Under the bill, permitted payment stablecoins are not considered securities under securities law.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4766 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 4766
To provide for the regulation of payment stablecoins, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 20, 2023
Mr. McHenry introduced the following bill; which was referred to the
Committee on Financial Services
_______________________________________________________________________
A BILL
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 ``Clarity for Payment Stablecoins Act
of 2023''.
SEC. 2. DEFINITIONS.
In this Act:
(1) 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.
(2) Board.--The term ``Board'' means the Board of Governors
of the Federal Reserve System.
(3) Comptroller.--The term ``Comptroller'' means the
Comptroller of the Currency.
(4) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(5) Digital asset.--The term ``digital asset'' means any
digital representation of value which is recorded on a
cryptographically-secured distributed ledger.
(6) Distributed ledger.--The term ``distributed ledger''
means technology where data is shared across a network that
creates a public digital ledger of verified transactions or
information among network participants and the data is linked
using cryptography to maintain the integrity of the public
ledger and execute other functions.
(7) Federal qualified nonbank stablecoin issuer.--The term
``Federal qualified nonbank stablecoin issuer'' means a nonbank
entity approved by the primary Federal payment stablecoin
regulator, pursuant to section 5, to issue payment stablecoins.
(8) Institution-affiliated party.--With respect to a
permitted payment stablecoin issuer, the term ``institution-
affiliated party'' means any director, officer, employee, or
person in control of, or agent for, the permitted payment
stablecoin issuer.
(9) 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, as defined in section
101 of the Federal Credit Union Act (12 U.S.C. 1752).
(10) Monetary value.--The term ``monetary value'' means a
national currency or deposit (as defined under Section 3 of the
Federal Deposit Insurance Act) denominated in a national
currency.
(11) National currency.--The term ``national currency''
means 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)), money issued by a central bank, and money
issued by an intergovernmental organization pursuant to an
agreement by one or more governments.
(12) Nonbank entity.--The term ``nonbank entity'' means a
person that is not an insured depository institution or
subsidiary of an insured depository institution.
(13) 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; and
(II) represents will maintain or
creates the reasonable expectation that
it will maintain a stable value
relative to the value of a fixed amount
of monetary value; and
(B) that is not--
(i) a national currency; or
(ii) a security issued by an investment
company registered under section 8(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-
8(a)).
(14) Permitted payment stablecoin issuer.--The term
``permitted payment stablecoin issuer'' means--
(A) a subsidiary of an insured depository
institution that has been approved to issue payment
stablecoins under section 5;
(B) a Federal qualified nonbank payment stablecoin
issuer that has been approved to issue payment
stablecoins under section 5; or
(C) a State qualified payment stablecoin issuer.
(15) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or
other entity.
(16) Primary federal payment stablecoin regulator.--
(A) In general.--The term ``primary Federal payment
stablecoin regulator'' means--
(i) with respect to an insured depository
institution (other than an insured credit
union) or a subsidiary of an insured depository
institution (other than an insured credit
union), the appropriate Federal banking agency
of such insured depository institution (as
defined under section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813));
(ii) with respect to an insured credit
union or a subsidiary of an insured credit
union, the National Credit Union
Administration;
(iii) with respect to a Federal qualified
nonbank payment stablecoin issuer that is not a
national bank, the Board; and
(iv) with respect to any entity chartered
by the Comptroller, the Comptroller.
(B) Primary federal payment stablecoin
regulators.--The term ``primary Federal payment
stablecoin regulators'' means the Comptroller, the
Board, the Corporation, and the National Credit Union
Administration.
(17) 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).
(18) State.--The term ``State'' means each of the several
States, the District of Columbia, and each territory of the
United States.
(19) State qualified payment stablecoin issuer.--The term
``State qualified payment stablecoin issuer'' means an entity
that--
(A) is legally established and approved to issue
payment stablecoins by a State payment stablecoin
regulator; and
(B) issues a payment stablecoin in compliance with
the requirements under section 4.
(20) 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.
(21) 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 under
section 107(7)(I) of the Federal Credit Union Act (12
U.S.C. 1757(7)(I)); and
(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.
SEC. 3. LIMITATION ON WHO MAY ISSUE A PAYMENT STABLECOIN.
It shall be unlawful for any person other than a permitted payment
stablecoin issuer to issue a payment stablecoin for use by any person
in the United States.
SEC. 4. REQUIREMENTS FOR ISSUING PAYMENT STABLECOINS.
(a) Standards for the Issuance of Payment Stablecoins.--
(1) In general.--Permitted payment stablecoin issuers
shall--
(A) maintain reserves backing the issuer's payment
stablecoins outstanding on an at least one to one
basis, with reserves comprising--
(i) United States coins and currency
(including Federal reserve notes);
(ii) funds held as insured demand deposits
or insured shares at insured depository
institutions, subject to limitations
established by the Corporation and the National
Credit Union Administration, respectively, to
address safety and soundness risks of such
insured depository institutions;
(iii) Treasury bills with a maturity of 90
days or less;
(iv) repurchase agreements with a maturity
of 7 days or less that are backed by Treasury
bills with a maturity of 90 days or less;
(v) central bank reserve deposits; or
(vi) such other assets as--
(I) the primary Federal payment
stablecoin regulator determines
appropriate; or
(II) in the case of a State
qualified payment stablecoin issuer,
the State payment stablecoin regulator
determines appropriate.
(B) publicly disclose the issuer's redemption
policy;
(C) establish procedures for timely redemption of
outstanding payment stablecoins; and
(D) 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 under subparagraph (A).
(2) Prohibition on rehypothecation.--Reserves described
under paragraph (1)(A) may not be pledged, rehypothecated, or
reused, except for the purpose of creating liquidity to meet
reasonable expectations of requests to redeem payment
stablecoins, such that reserves in the form of Treasury bills
may be pledged as collateral for repurchase agreements with a
maturity of 90 days or less, provided that either--
(A) the repurchase agreements are cleared by a
central clearing counterparty that is approved by the
primary Federal payment stablecoin regulator; or
(B) the permitted payment stablecoin issuer
receives the prior approval of the primary Federal
payment stablecoin regulator.
(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 an certification
as to the accuracy of the monthly report to--
(i) the primary Federal payment stablecoin
regulator; or
(ii) in the case of a State qualified
payment stablecoin issuer, to the State payment
stablecoin regulator.
(C) Criminal penalty.--Any person who submits a
certification required under subparagraph (B) knowing
that such certification is false shall be subject to
the criminal penalties set forth under section 1350(c)
of title 18, United States Code.
(4) Capital, liquidity, and risk management requirements.--
The primary Federal payment stablecoin regulators shall,
jointly, issue--
(A) capital requirements applicable to permitted
payment stablecoin issuers, which may not exceed what
is sufficient to ensure the permitted payment
stablecoin issuer's ongoing operations;
(B) liquidity requirements applicable to permitted
payment stablecoin issuers, which may not exceed what
is sufficient to ensure the financial integrity of the
permitted payment stablecoin issuer and the ability of
the issuer to meet the financial obligations of the
issuer, including redemptions; and
(C) risk management requirements applicable to
permitted payment stablecoin issuers, tailored to the
business model and risk profile of the permitted
payment stablecoin issuer.
(5) Treatment under the bank secrecy act.--A permitted
payment stablecoin issuer shall be treated as a financial
institution for purposes of the Bank Secrecy Act.
(6) Limitation on activities.--A permitted payment
stablecoin issuer may only issue payment stablecoins, redeem
payment stablecoins, manage related reserves (including
purchasing and holding reserve assets), provide custodial or
safekeeping services for payment stablecoins or private keys of
payment stablecoins, and undertake other functions that
directly support the work of issuing and redeeming payment
stablecoins.
(b) Rulemaking.--
(1) In general.--The primary Federal payment stablecoin
regulators may issue such orders and regulations as may be
necessary to administer and carry out the requirements of this
section, including to establish conditions, and to prevent
evasions thereof.
(2) Joint issuance of regulation.--All regulations issued
to carry out this section shall be issued jointly by the
primary Federal payment stablecoin regulators.
(3) Rulemaking deadline.--Not later than the end of the
180-day period beginning on the date of enactment of this Act,
the Federal payment stablecoin regulators shall issue
regulations to carry out this section.
SEC. 5. APPROVAL OF SUBSIDIARIES OF INSURED DEPOSITORY INSTITUTIONS AND
FEDERAL QUALIFIED NONBANK PAYMENT STABLECOIN ISSUERS.
(a) In General.--
(1) Application.--
(A) In general.--Any insured depository institution
that seeks to issue payment stablecoins through a
subsidiary and any nonbank entity (other than a State
qualified payment stablecoin issuer) that seeks to
issue payment stablecoins shall file an application
with the primary Federal payment stablecoin regulator.
(B) Timing.--With respect to an application filed
under this paragraph, the primary Federal payment
stablecoin regulator shall inform the applicant whether
the applicant has submitted a complete application
within 45 days of receiving the application.
(C) Completion of application.--With respect to an
application filed under this paragraph, once the
primary Federal payment stablecoin regulator has
informed the applicant that the application is
complete, such application shall be deemed to be
complete unless the primary Federal payment stablecoin
regulator determines that a significant change in
circumstances requires otherwise.
(2) Evaluation of applications.--A complete application
received under paragraph (1) shall be evaluated by the primary
Federal payment stablecoin regulator using the factors
described in paragraph (3).
(3) Factors to be considered.--The factors described in
this paragraph are the following:
(A) 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
the financial condition and resources, to meet the
requirements set forth in section 4.
(B) The general character and fitness of the
management of the applicant.
(C) The risks presented by the applicant and
benefits provided to consumers.
(4) Timing for decision; grounds for denial.--
(A) Timing.--The primary Federal payment stablecoin
regulator shall render a decision on an application no
later than 120 days after informing the applicant that
the application is complete.
(B) Denial of application.--
(i) Grounds for denial.--The primary
Federal payment stablecoin regulator may only
deny a complete application received under
paragraph (1) if the regulator determines that
the activities of the applicant would be unsafe
or unsound based on the factors described in
paragraph (3).
(ii) Explanation required.--If the primary
Federal payment stablecoin regulator denies a
complete application received under paragraph
(1), the regulator shall provide the applicant
with written notice explaining such denial,
including all findings made by the regulator
with respect to all identified material
shortcomings regarding the application,
including recommendations on how the applicant
could address the identified material
shortcomings.
(iii) 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 subsection, 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, 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 clause, the primary
Federal payment stablecoin regulator
shall notify the applicant of the final
determination of the primary Federal
payment stablecoin regulator, 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
clause, 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 clause, in
writing, that the denial of the
application is a final determination of
the regulator.
(C) Failure to render a decision.--If the primary
Federal payment stablecoin regulator fails to render a
decision on a complete application within the time
period specified in subparagraph (A), the application
shall be deemed approved.
(D) Right to reapply.--The denial of an application
under this subsection shall not prohibit the applicant
from filing a subsequent application.
(5) Report on pending applications.--Each primary Federal
payment stablecoin regulator shall annually report to Congress
on the applications that have been pending for 6 months or
longer since the date of the initial application filed under
paragraph (1) where the applicant has been informed that the
application remains incomplete, including providing
documentation on the status of the application and why the
application has not yet been approved.
(6) Rulemaking.--The primary Federal regulatory agencies
shall, jointly, issue rules necessary for the regulation of the
issuance of payment stablecoins, but may not impose
requirements inconsistent with the requirements specified under
section 4.
(b) Effective Date.--
(1) In general.--This section shall take effect on the
earlier of--
(A) 18 months after the date of enactment of this
Act; or
(B) the date that is 120 days after the date on
which the primary Federal payment stablecoin regulators
issue final regulations implementing this section.
(2) Authority to issue regulations and process
applications.--The primary Federal payment stablecoin
regulators may, before the effective date described under
paragraph (1)--
(A) issue regulations to carry out this section;
and
(B) pursuant to regulations described under
subparagraph (A), accept and process applications
described under this section.
(3) Notice to congress.--Each of the primary Federal
payment stablecoin regulators shall notify Congress once
beginning to process applications described under this section.
(4) Safe harbor for pending applications.--The primary
Federal payment stablecoin regulator may waive the application
of the requirements of this section for a period not to exceed
12 months beginning on the effective date described under
paragraph (1), with respect to--
(A) 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 the effective
date described under paragraph (1); or
(B) a nonbank entity with an application pending to
become a Federal qualified nonbank stablecoin issuer on
the effective date described under paragraph (1).
SEC. 6. SUPERVISION AND ENFORCEMENT WITH RESPECT TO SUBSIDIARIES OF
INSURED DEPOSITORY INSTITUTIONS AND FEDERAL QUALIFIED
NONBANK STABLECOIN ISSUERS.
(a) Supervision.--
(1) Subsidiary of an insured depository institution.--
(A) In general.--Each permitted payment stablecoin
issuer that is a subsidiary of an insured depository
institution shall be subject to supervision by the
primary Federal payment stablecoin regulator in the
same manner as such insured depository institution.
(B) Gramm-Leach-Bliley act.--For purposes of title
V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et
seq.) each permitted payment stablecoin issuer that is
a subsidiary of an insured depository institution shall
be deemed a financial institution.
(2) Federal qualified nonbank payment stablecoin issuer.--
(A) Submission of reports.--Each Federal qualified
nonbank payment stablecoin issuer shall, upon request,
submit reports to the primary Federal payment
stablecoin regulator as to--
(i) the Federal qualified nonbank payment
stablecoin issuer's financial condition,
systems for monitoring and controlling
financial and operating risks; and
(ii) compliance by the Federal qualified
nonbank payment stablecoin issuer (and any
subsidiary thereof) with this Act.
(B) Examinations.--The primary Federal payment
stablecoin regulator may make examinations of a Federal
qualified nonbank payment stablecoin issuer and each
subsidiary of a Federal qualified nonbank stablecoin
issuer in order to inform the regulator of--
(i) the nature of the operations and
financial condition of the Federal qualified
nonbank stablecoin issuer;
(ii) the financial, operational, and other
risks within the Federal qualified nonbank
stablecoin issuer that may pose a threat to--
(I) the safety and soundness of the
Federal qualified nonbank stablecoin
issuer; or
(II) the stability of the financial
system of the United States; and
(iii) the systems of the Federal qualified
nonbank payment stablecoin issuer for
monitoring and controlling the risks described
in clause (ii).
(C) Requirement to use existing reports.--In
supervising and examining a Federal qualified nonbank
payment stablecoin issuer, the primary Federal payment
stablecoin regulator shall, to the fullest extent
possible, use existing reports and other supervisory
information.
(D) Avoidance of duplication.--The 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 Act with respect to a
Federal qualified nonbank payment stablecoin issuer.
(E) Gramm-Leach-Bliley act.--For purposes of title
V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et
seq.) each Federal qualified nonbank stablecoin issuer
shall be deemed a financial institution.
(b) Enforcement.--
(1) Suspension or revocation of registration.--The primary
Federal payment stablecoin regulator may prohibit a 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--
(A) violating or has violated this Act or any
regulation or order issued under this Act; or
(B) violating or has violated 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 or a condition imposed in connection with any
application or other request.
(2) Cease-and-desist proceedings.--If the primary Federal
payment stablecoin regulator has reasonable cause to believe
that a permitted payment stablecoin issuer or any institution-
affiliated party of a 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;
(B) take affirmative action to correct the
conditions resulting from any such violation or
practice; or
(C) take such other action as the primary Federal
payment stablecoin regulator determines to be
appropriate.
(3) Removal and prohibition authority.--The primary Federal
payment stablecoin regulator may remove an institution-
affiliated party of a permitted payment stablecoin issuer from
their position or office or prohibit further participation in
the affairs of the permitted payment stablecoin issuer or all
permitted payment stablecoin issuers by such institution-
affiliated party, if the primary Federal payment stablecoin
regulator determines that--
(A) the institution-affiliated party has, directly
or indirectly, 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 committed
a violation of any provision of subchapter II of
chapter 53 of title 31, United States Code.
(4) Procedures.--
(A) In general.--If the 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 sections 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818).
(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)).
(C) Injunction.--The primary Federal payment
stablecoin regulator may, in 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)) for judicial enforcement of any effective
and outstanding notice or order issued under this
subsection.
(D) Temporary cease-and-desist proceedings.--If the
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 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)) to issue a temporary
cease-and-desist order.
(5) Civil money penalties.--
(A) Failure to be approved.--Any person who issues
a payment stablecoin and who is not a permitted payment
stablecoin issuer, and any institution-affiliated party
of such a person who knowingly participates is 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 violates this Act or any
regulation or order issued under this Act, or that
violates 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 or a
condition imposed in connection with any application or
other request, shall be liable for a civil penalty of
up to $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 under 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 thereunder, is
liable for a civil penalty of up to 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 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)).
(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 the
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 six-year period beginning
on the date 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.--This subsection shall not apply to a State
qualified payment stablecoin issuer.
SEC. 7. STATE QUALIFIED PAYMENT STABLECOIN ISSUERS.
(a) In General.--A State payment stablecoin regulator shall have
supervisory, examination, and enforcement authority over a State
qualified payment stablecoin issuer 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 carry out the supervision, examination, and enforcement
authority 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.--The Board shall 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 a State qualified payment stablecoin
issuers.
(e) Board Enforcement Authority in Exigent Circumstances.--
(1) In general.--In exigent circumstances, the Board may,
after no 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.
(2) Rulemaking.--Not later than the end of the 180-day
period beginning on the date of enactment of this Act, the
Board shall issue rules to set forth those exigent
circumstances in which the Board may act under this subsection.
(f) Gramm-Leach-Bliley Act.--For purposes of title V of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801 et seq.) a State qualified payment
stablecoin issuer is deemed a financial institution.
(g) Effect on State Law.--The provisions of this section do not
preempt any law of a State and do not supersede any State licensing
requirement.
SEC. 8. CUSTOMER PROTECTION.
(a) In General.--A person may only engage in the business of
providing custodial or safekeeping services for permitted payment
stablecoins or private keys of 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, 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 segregation requirements under
subsection (b), unless such person complies with similar
requirements as required by a primary Federal payment
stablecoin regulator, the Securities and Exchange Commission,
or the Commodity Futures Trading Commission.
(b) Segregation Requirement.--A person described in subsection (a)
shall--
(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 receives, acquires, or holds payment
stablecoins, private keys, cash, and other property
(hereinafter in this section referred to as the ``customer'')
as belonging to such customer; 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 stablecoins, cash, and other
property of a customer shall be separately accounted for by a
person described in subsection (a) and shall not be commingled
with the funds of the person.
(2) Exception.--Notwithstanding paragraph (1)--
(A) the payment stablecoins, cash, and other
property of a customer may, for convenience, be
commingled and deposited in an omnibus account holding
the payment stablecoins, cash, and other property of
more than one customer at an insured depository
institution or trust company;
(B) such share of the payment stablecoins, cash,
and other property of the 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); and
(C) in accordance with such terms and conditions as
the Board may prescribe by rule, regulation, or order,
any customer payment stablecoin, cash, and other
property described in this subsection may be commingled
and deposited in customer accounts with payment
stablecoins, cash, and other property received by the
person and required by the Board to be separately
accounted for, treated, and dealt with as belonging to
customers.
(d) Regulatory Information.--A person described under subsection
(a) shall submit to the Board information concerning the person's
business operations and processes to protect customer assets, in such
form and manner as the Board 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.
(f) Clarification.--The Board, the Comptroller, the Corporation,
the National Credit Union Administration, and the Financial Crimes
Enforcement Network shall make no rules, regulations, orders, or
guidance, or take any other administrative action, which would restrict
the ability of an individual to use digital assets for such
individual's own purposes or prohibit or otherwise restrict an
individual to use hardware or software to facilitate such individual's
own custody or safekeeping of such individual's digital assets.
SEC. 9. 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 governments, shall assess
and, if necessary, may, pursuant to section 553 of title 5 and in a
manner consistent with the National Technology Transfer and Advancement
Act of 1995 (Public Law 104-113), prescribe standards for payment
stablecoin issuers to promote compatibility and interoperability.
SEC. 10. MORATORIUM ON ENDOGENOUSLY COLLATERALIZED STABLECOINS.
(a) Moratorium.--During the 2-year period beginning on the date of
enactment of this Act, it shall be unlawful to issue, create, or
originate an endogenously collateralized stablecoin not in existence on
the date of enactment of this Act.
(b) Study by Treasury.--
(1) Study.--The Secretary of the Treasury, in consultation
with the Board, the Comptroller, the Corporation, and the
Securities and Exchange Commission, shall carry out a study of
endogenously collateralized stablecoins.
(2) Report.--Not later than 365 days after the date of the
enactment of this Act, the Secretary shall provide to the
Committee on Financial Services of the House of Representatives
and the Committee on Banking, Housing, and Urban Affairs of the
Senate a report that contains all findings made in carrying out
the study under subsection (a), 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) nature of reserve compositions;
(E) types of algorithms being employed;
(F) governance structure, including aspects of
decentralization;
(G) nature of public promotion and advertising; and
(H) clarity and availability of consumer notices
disclosures.
(c) Endogenously Collateralized Stablecoin Defined.--In this
section, the term ``endogenously collateralized stablecoin'' means any
digital asset--
(1) in which its originator 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. 11. REPORT ON RULEMAKING STATUS.
Not later than 6 months after the date of enactment of this Act,
the primary Federal payment stablecoin regulators shall provide a
status update on the development of the rulemaking under this Act to
the Committee on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of the Senate.
SEC. 12. 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, or trust company to engage in activities
permissible pursuant to applicable State and Federal law, including--
(1) accepting or receiving deposits and issuing digital
assets that represent deposits;
(2) utilizing a distributed ledger for the books and
records of the entity and to affect intrabank transfers; and
(3) providing custodial services for payment stablecoins,
private keys of payment stablecoins, or reserves backing
payment stablecoins.
(b) Treatment of Custody Activities.--The appropriate Federal
banking agency (as defined under section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)), 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 assets held in custody as a liability on any
financial statement or balance sheet, including payment
stablecoin custody or safekeeping activities;
(2) to hold additional regulatory capital against assets in
custody or safekeeping, except as necessary to mitigate against
operational risks inherent with the 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 (as defined under
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813)); or
(D) a State credit union supervisor (as defined
under section 6003 of the Anti-Money Laundering Act of
2020);
(3) to recognize a liability for any obligations related to
activities or services performed for digital assets that the
entity does not own if that liability would exceed the expense
recognized in the income statement as a result of the
corresponding obligation.
(c) Definitions.--In this section:
(1) Depository institution.--The terms ``depository
institution'' has the meaning given that term under section 3
of the Federal Deposit Insurance Act.
(2) Credit union terms.--The terms ``Federal credit union''
and ``State credit union'' have the meaning given those terms,
respectively, under section 101 of the Federal Credit Union
Act.
SEC. 13. CLARIFYING THAT PAYMENT STABLECOINS ARE NOT SECURITIES OR
COMMODITIES.
(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, respectively, in section 2 of the Clarity
for Payment Stablecoins Act of 2023.''.
(b) Investment Company Act of 1940.--Section 2(a)(36) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) 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, respectively, in section 2 of the Clarity
for Payment Stablecoins Act of 2023.''.
(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, respectively, in section 2 of the Clarity for Payment
Stablecoins Act of 2023.''.
(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, respectively, in section 2 of the Clarity
for Payment Stablecoins Act of 2023.''.
(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, respectively, in section
2 of the Clarity for Payment Stablecoins Act of 2023.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
Committee Consideration and Mark-up Session Held
Ordered to be Reported (Amended) by the Yeas and Nays: 34 - 16.
Reported (Amended) by the Committee on Financial Services. H. Rept. 118-492.
Reported (Amended) by the Committee on Financial Services. H. Rept. 118-492.
Placed on the Union Calendar, Calendar No. 408.
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