119-s1582

[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.