Sec. 4. Requirements for issuing payment stablecoins
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Permitted payment stablecoin issuers shall— maintain reserves backing the issuer’s payment stablecoins outstanding on an at least 1 to 1 basis, with reserves comprising— United States coins and currency (including Federal reserve notes); funds held as demand deposits (or other deposits that may be withdrawn upon request at any time) at insured depository institutions, regulated foreign depository institutions, or insured shares at insured depository institutions,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;
Treasury bills, notes, or bonds— with a remaining maturity of 93 days or less; or issued with a maturity of 93 days or less; repurchase agreements with a maturity of 7 days or less that are backed by Treasury bills with a maturity of 90 days or less; reverse repurchase agreements with a maturity of 7 days or less that are collateralized by Treasury notes, bills, or bonds on an overnight basis, subject to overcollateralization in line with standard market terms, that are— tri-party; centrally cleared through a clearing house; or bilateral with a counterparty that the issuer has determined to be adequately creditworthy even in the event of severe market stress; money market funds, invested solely in underlying assets described in clauses
(i)through
(iv)of subparagraph (A); or Central Bank reserve deposits; publicly disclose the issuer’s redemption policy; establish procedures for timely redemption of outstanding payment stablecoins; and publish the monthly composition of the issuer’s reserves on the website of the issuer, containing— the total number of outstanding payment stablecoins issued by the issuer; and the amount and composition of the reserves described under subparagraph (A). 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— the repurchase agreements are cleared by a central clearing counterparty that is approved by the primary Federal or State payment stablecoin regulator; or the permitted payment stablecoin issuer receives the prior approval of the primary Federal or State payment stablecoin regulator. 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. 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— the primary Federal payment stablecoin regulator; or in the case of a State qualified payment stablecoin issuer, to the State payment stablecoin regulator. 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. The primary Federal payment stablecoin regulators shall, jointly, or in the case of a State qualified payment stablecoin issuer, the State payment stablecoin regulator shall, issue— 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; appropriate liquidity and interest rate risk management standards 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 appropriate operational, compliance, and information technology risk management standards, including Bank Secrecy Act and sanctions compliance, tailored to the business model and risk profile of the permitted payment stablecoin issuer, consistent with other legal authorities. Nothing in this paragraph shall be construed to limit— the authority of the primary Federal regulators, in prescribing standards under this paragraph, to tailor or differentiate among issuers on an individual basis or by category, taking into consideration their capital structure, riskiness, complexity, financial activities (including financial activities of their subsidiaries), size, and any other risk related factors that the primary Federal regulator determines appropriate; or the supervisory, regulatory, or enforcement authority of an appropriate Federal banking agency to further the safe and sound operation of an institution under the supervision of the appropriate Federal banking agency. With respect to the promulgation of rules under subsection (a)(1)(A), section 171 of the Financial Stability Act of 2010 ( 12 U.S.C. 5371(a)(1)(A) ) shall not apply. A permitted payment stablecoin issuer shall be treated as a financial institution for purposes of the Bank Secrecy Act. 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, required reserves, or private keys of payment stablecoins; and undertake other functions that directly support the work of issuing and redeeming payment stablecoins. Nothing in subparagraph
(A)shall prevent a permitted stablecoin issuer from engaging in non-stablecoin activities that are explicitly allowed by the relevant regulator. A Federal qualified nonbank payment stablecoin issuer shall be regulated and supervised exclusively by the Comptroller, which shall have authority, in coordination with other relevant regulators, to issue such regulations and orders as necessary to ensure the safety and soundness of the issuers, consistent with the provisions of this Act. Section 324(b) of the Revised Statutes ( 12 U.S.C. 1(b) ) is amended by adding at the end the following: The Comptroller of the Currency shall, in coordination with other relevant regulators, issue such regulations and orders as necessary to ensure the safety and soundness of any nonbank entity approved by the Comptroller to issue payment stablecoins. . Notwithstanding the Federal regulatory framework established under subsection (a), a stablecoin issuer with a total market capitalization 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 that subsection. State regulators shall review State-level regulatory regimes according to criteria the State regulators establish for determining whether a State-level regulatory regime is substantially similar to the Federal regulatory framework under subsection (a). Subject to subparagraph (B), not later than 1 year after the date of enactment of this Act, State regulators shall submit to the Secretary of the Treasury an initial certification that their State-level regulatory regime meets the criteria for substantial similarity under paragraph (2). The initial certification required under subparagraph
(A)shall contain, in a form prescribed by the Secretary of the Treasury, an attestation that the State-level regulatory regime meets the criteria for substantial similarity under paragraph (2). Not later than a date to be determined by the Secretary each year, the State shall submit to the Secretary of the Treasury an additional certification that confirms the accuracy of initial certification submitted under subparagraph (A). If a State regulator does not submit a certification under paragraph (3), then a payment stablecoin issuer operating under this subsection shall be subject to the Federal regulatory framework as described in subsection (c), notwithstanding the market capitalization threshold therein. The Secretary of the Treasury may reject a certification under paragraph
(3)if the Secretary determines that the State-level regulatory regime is not substantially similar to the Federal regulatory framework under subsection (a), and the payment stablecoin issuer shall be subject to the Federal regulatory framework as described in subsection (c), notwithstanding the market capitalization threshold therein. A payment stablecoin issuer may challenge the determination of the State regulator or the Secretary of the Treasury under this paragraph in the United States District Court for the District of Columbia. 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 (3). A State-regulated depository institution that has been approved as a payment stablecoin issuer with a market capitalization of more than $10,000,000,000 shall— not later than 360 days after reaching such market capitalization, transition to regulation under the Federal regulatory framework of the Board; or beginning on the date of reaching such market capitalization, cease issuing new stablecoins until the State-regulated stablecoin issuer is under the $10,000,000,000 market capitalization threshold. A State qualified payment stablecoin issuer not described in paragraph
(1)with a market capitalization of more than $10,000,000,000 shall— not later than 360 days after reaching such market capitalization, transition to regulation under the regulatory framework of the Comptroller; or beginning on the date of reaching such market capitalization, cease issuing new stablecoins until the State-regulated stablecoin issuer is under the $10,000,000,000 market capitalization threshold. Upon filing an application with the appropriate Federal regulator, a State qualified payment stablecoin issuer shall be deemed conditionally approved, pending final approval or denial of the application. The applicable Federal regulator may waive the requirement under paragraph
(1)or
(2)to permit a State qualified payment stablecoin issuer to remain under a State-level regulatory regime. The primary Federal payment stablecoin regulators and State 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. All regulations issued to carry out this section shall be issued jointly by the primary Federal payment stablecoin regulators, if not issued by a State payment stablecoin regulator. 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.
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