119-s394

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 394 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 394

 To provide for the regulation of payment stablecoins, and for other 
 purposes.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 February 4, 2025

Mr. Hagerty (for himself, Mr. Scott of South Carolina, Mrs. Gillibrand, 
and Ms. Lummis) introduced the following bill; which was read twice and 
 referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

 A BILL

 To provide for the regulation of payment stablecoins, and for other 
 purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Guiding and Establishing National 
Innovation for U.S. Stablecoins of 2025'' or the ``GENIUS Act of 
2025''.

SEC. 2. DEFINITIONS.

 In this Act:

    (1) Bank secrecy act.--The term ``Bank Secrecy Act'' 
 means--
        (A) section 21 of the Federal Deposit Insurance Act 
 (12 U.S.C. 1829b);
        (B) chapter 2 of title I of Public Law 91-508 (12 
 U.S.C. 1951 et seq.); and
            (C) subchapter II of chapter 53 of title 31, United 
 States Code.

    (2) Board.--The term ``Board'' means the Board of Governors 
 of the Federal Reserve System.

    (3) Comptroller.--The term ``Comptroller'' means the 
 Comptroller of the Currency.

    (4) Comptroller-regulated entity.--The term ``Comptroller-
 regulated entity'' means any Federal qualified nonbank payment 
 stablecoin issuer that is subject to regulation and supervision 
 exclusively by the Comptroller, pursuant to 

section 4

    (a)

    (7) .

    (5) Corporation.--The term ``Corporation'' means the 
 Federal Deposit Insurance Corporation.

    (6) Digital asset.--The term ``digital asset'' means any 
 digital representation of value which is recorded on a 
 cryptographically-secured distributed ledger.

    (7) Distributed ledger.--The term ``distributed ledger'' 
 means technology where data is shared across a network that 
 creates a public digital ledger of verified transactions or 
 information among network participants and the data is linked 
 using cryptography to maintain the integrity of the public 
 ledger and execute other functions.

    (8) Federal qualified nonbank payment stablecoin issuer.--
 The term ``Federal qualified nonbank payment stablecoin 
 issuer'' means a nonbank entity approved by the primary Federal 
 payment stablecoin regulator, pursuant to 

section 5, to issue 
 payment stablecoins.

    (9) Institution-affiliated party.--With respect to a 
 permitted payment stablecoin issuer, the term ``institution-
 affiliated party'' means any director, officer, employee, or 
 person in control of, or agent for, the permitted payment 
 stablecoin issuer.

    (10) Insured depository institution.--The term ``insured 
 depository institution'' means--
        (A) an insured depository institution, as defined 
 in 

section 3 of the Federal Deposit Insurance Act (12 
 U.S.C. 1813); and
        (B) an insured credit union, as defined in 

section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

    (11) Monetary value.--The term ``monetary value'' means a 
 national currency or deposit (as defined under 

Section 3 of the 
 Federal Deposit Insurance Act) denominated in a national 
 currency.

    (12) National currency.--The term ``national currency'' 
 means a Federal Reserve note (as the term is used in the first 
 undesignated paragraph of 

section 16 of the Federal Reserve Act 
 (12 U.S.C. 411)), money issued by a central bank, and money 
 issued by an intergovernmental organization pursuant to an 
 agreement by 1 or more governments.

    (13) Nonbank entity.--The term ``nonbank entity'' means a 
 person that is not an insured depository institution or 
 subsidiary of an insured depository institution.

    (14) Payment stablecoin.--The term ``payment stablecoin''--
        (A) means a digital asset--
            (i) that is or is designed to be used as a 
 means of payment or settlement; and
            (ii) the issuer of which--
            (I) is obligated to convert, 
 redeem, or repurchase for a fixed 
 amount of monetary value; and
            (II) represents it will maintain or 
 creates the reasonable expectation that 
 it will maintain a stable value 
 relative to the value of a fixed amount 
 of monetary value; and
        (B) that is not--
            (i) a national currency; or
            (ii) a security issued by an investment 
 company registered under 

section 8

    (a) of the 
 Investment Company Act of 1940 (15 U.S.C. 80a-
 8

    (a) ).

    (15) Permitted payment stablecoin issuer.--The term 
 ``permitted payment stablecoin issuer'' means--
        (A) a subsidiary of an insured depository 
 institution that has been approved to issue payment 
 stablecoins under 

section 5;
        (B) a Federal qualified nonbank payment stablecoin 
 issuer that has been approved to issue payment 
 stablecoins under 

section 5; or
            (C) a State qualified payment stablecoin issuer.

    (16) Person.--The term ``person'' means an individual, 
 partnership, company, corporation, association (incorporated or 
 unincorporated), trust, estate, cooperative organization, or 
 other entity.

    (17) Primary federal payment stablecoin regulator.--
        (A) In general.--The term ``primary Federal payment 
 stablecoin regulator'' means--
            (i) with respect to an insured depository 
 institution (other than an insured credit 
 union) or a subsidiary of an insured depository 
 institution (other than an insured credit 
 union), the appropriate Federal banking agency 
 of such insured depository institution (as 
 defined under 

section 3 of the Federal Deposit 
 Insurance Act (12 U.S.C. 1813));
            (ii) with respect to an insured credit 
 union or a subsidiary of an insured credit 
 union, the National Credit Union 
 Administration;
            (iii) with respect to a Federal qualified 
 nonbank payment stablecoin issuer that is not a 
 national bank, the Comptroller; and
            (iv) with respect to any entity chartered 
 by the Comptroller, the Comptroller.
        (B) Primary federal payment stablecoin 
 regulators.--The term ``primary Federal payment 
 stablecoin regulators'' means the Comptroller, the 
 Board, the Corporation, and the National Credit Union 
 Administration.

    (18) 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).

    (19) State.--The term ``State'' means each of the several 
 States, the District of Columbia, and each territory of the 
 United States.

    (20) State qualified payment stablecoin issuer.--The term 
 ``State qualified payment stablecoin issuer'' means an entity 
 that--
        (A) is legally established and approved to issue 
 payment stablecoins by a State payment stablecoin 
 regulator; and
        (B) issues a payment stablecoin in compliance with 
 the requirements under 

section 4.

    (21) 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.

    (22) State regulated depository institution.--The term 
 ``State regulated 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) ).

    (23) Subsidiary of an insured credit union.--With respect 
 to an insured credit union, the term ``subsidiary of an insured 
 credit union'' means--
        (A) an organization providing services to the 
 insured credit union that are associated with the 
 routine operations of credit unions, as described under 
 

section 107

    (7)
            (I) of the Federal Credit Union Act (12 
 U.S.C. 1757

    (7)
            (I) ); and
        (B) a credit union service organization, as such 
 term is used under part 712 of title 12, Code of 
 Federal Regulations, with respect to which the insured 
 credit union has an ownership interest or to which the 
 insured credit union has extended a loan.

SEC. 3. LIMITATION ON WHO MAY ISSUE A PAYMENT STABLECOIN.

 It shall be unlawful for any person other than a permitted payment 
stablecoin issuer to issue a payment stablecoin in the United States.

SEC. 4. REQUIREMENTS FOR ISSUING PAYMENT STABLECOINS.

    (a) Standards for the Issuance of Payment Stablecoins.--

    (1) In general.--Permitted payment stablecoin issuers 
 shall--
        (A) maintain reserves backing the issuer's payment 
 stablecoins outstanding on an at least 1 to 1 basis, 
 with reserves comprising--
            (i) United States coins and currency 
 (including Federal reserve notes);
            (ii) funds held as demand deposits (or 
 other deposits that may be withdrawn upon 
 request at any time) at insured depository 
 institutions, regulated foreign depository 
 institutions, or insured shares at insured 
 depository institutions, subject to limitations 
 established by the Corporation and the National 
 Credit Union Administration, respectively, to 
 address safety and soundness risks of such 
 insured depository institutions;
            (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) repurchase agreements with a maturity 
 of 7 days or less that are backed by Treasury 
 bills with a maturity of 90 days or less;
            (v) reverse repurchase agreements with a 
 maturity of 7 days or less that are 
 collateralized by Treasury notes, bills, or 
 bonds on an overnight basis, subject to 
 overcollateralization in line with standard 
 market terms, that are--
            (I) tri-party;
            (II) centrally cleared through a 
 clearing house; or
            (III) bilateral with a counterparty 
 that the issuer has determined to be 
 adequately creditworthy even in the 
 event of severe market stress;
            (vi) money market funds, invested solely in 
 underlying assets described in clauses
            (i) through
            (iv) of subparagraph
        (A) ; or
            (vii) Central Bank reserve deposits;
        (B) publicly disclose the issuer's redemption 
 policy;
            (C) establish procedures for timely redemption of 
 outstanding payment stablecoins; and
            (D) publish the monthly composition of the issuer's 
 reserves on the website of the issuer, containing--
            (i) the total number of outstanding payment 
 stablecoins issued by the issuer; and
            (ii) the amount and composition of the 
 reserves described under subparagraph
        (A) .

    (2) Prohibition on rehypothecation.--Reserves described 
 under paragraph

    (1)
        (A) may not be pledged, rehypothecated, or 
 reused, except for the purpose of creating liquidity to meet 
 reasonable expectations of requests to redeem payment 
 stablecoins, such that reserves in the form of Treasury bills 
 may be pledged as collateral for repurchase agreements with a 
 maturity of 90 days or less, provided that either--
        (A) the repurchase agreements are cleared by a 
 central clearing counterparty that is approved by the 
 primary Federal or State payment stablecoin regulator; 
 or
        (B) the permitted payment stablecoin issuer 
 receives the prior approval of the primary Federal or 
 State payment stablecoin regulator.

    (3) Monthly certification; examination of reports by 
 registered public accounting firm.--
        (A) In general.--A permitted payment stablecoin 
 issuer shall, each month, have the information 
 disclosed in the previous month-end report required 
 under paragraph

    (1)
            (D) examined by a registered public 
 accounting firm.
        (B) Certification.--Each month, the Chief Executive 
 Officer and Chief Financial Officer of a permitted 
 payment stablecoin issuer shall submit a certification 
 as to the accuracy of the monthly report to--
            (i) the primary Federal payment stablecoin 
 regulator; or
            (ii) in the case of a State qualified 
 payment stablecoin issuer, to the State payment 
 stablecoin regulator.
            (C) Criminal penalty.--Any person who submits a 
 certification required under subparagraph
        (B) knowing 
 that such certification is false shall be subject to 
 the criminal penalties set forth under 

section 1350
            (c) of title 18, United States Code.

    (4) Capital, liquidity, and risk management requirements.--
        (A) In general.--The primary Federal payment 
 stablecoin regulators shall, jointly, or in the case of 
 a State qualified payment stablecoin issuer, the State 
 payment stablecoin regulator shall, issue--
            (i) capital requirements applicable to 
 permitted payment stablecoin issuers, which may 
 not exceed what is sufficient to ensure the 
 permitted payment stablecoin issuer's ongoing 
 operations;
            (ii) appropriate liquidity and interest 
 rate risk management standards applicable to 
 permitted payment stablecoin issuers, which may 
 not exceed what is sufficient to ensure the 
 financial integrity of the permitted payment 
 stablecoin issuer and the ability of the issuer 
 to meet the financial obligations of the 
 issuer, including redemptions; and
            (iii) appropriate operational, compliance, 
 and information technology risk management 
 standards, including Bank Secrecy Act and 
 sanctions compliance, tailored to the business 
 model and risk profile of the permitted payment 
 stablecoin issuer, consistent with other legal 
 authorities.
        (B) Rule of construction.--Nothing in this 
 paragraph shall be construed to limit--
            (i) the authority of the primary Federal 
 regulators, in prescribing standards under this 
 paragraph, to tailor or differentiate among 
 issuers on an individual basis or by category, 
 taking into consideration their capital 
 structure, riskiness, complexity, financial 
 activities (including financial activities of 
 their subsidiaries), size, and any other risk 
 related factors that the primary Federal 
 regulator determines appropriate; or
            (ii) the supervisory, regulatory, or 
 enforcement authority of an appropriate Federal 
 banking agency to further the safe and sound 
 operation of an institution under the 
 supervision of the appropriate Federal banking 
 agency.
            (C) Applicability of existing capital standards.--
 With respect to the promulgation of rules under 
 subsection

    (a)

    (1)
        (A) , 

section 171 of the Financial 
 Stability Act of 2010 (12 U.S.C. 5371

    (a)

    (1)
        (A) ) shall 
 not apply.

    (5) Treatment under the bank secrecy act.--A permitted 
 payment stablecoin issuer shall be treated as a financial 
 institution for purposes of the Bank Secrecy Act.

    (6) Limitation on 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 and holding reserve assets);
            (iv) provide custodial or safekeeping 
 services for payment stablecoins, required 
 reserves, or private keys of payment 
 stablecoins; and
            (v) undertake other functions that directly 
 support the work of issuing and redeeming 
 payment stablecoins.
        (B) Rule of construction.--Nothing in subparagraph
        (A) shall prevent a permitted stablecoin issuer from 
 engaging in non-stablecoin activities that are 
 explicitly allowed by the relevant regulator.

    (7) Regulation by the comptroller.--
        (A) In general.--A Federal qualified nonbank 
 payment stablecoin issuer shall be regulated and 
 supervised exclusively by the Comptroller, which shall 
 have authority, in coordination with other relevant 
 regulators, to issue such regulations and orders as 
 necessary to ensure the safety and soundness of the 
 issuers, consistent with the provisions of this Act.
        (B) 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 nonbank payment 
 stablecoin issuers.--The Comptroller of the Currency shall, in 
 coordination with other relevant regulators, issue such 
 regulations and orders as necessary to ensure the safety and 
 soundness of any nonbank entity approved by the Comptroller to 
 issue payment stablecoins.''.

    (b) State-Level Regulatory Regimes.--

    (1) Option for state-level regulatory regime.--
 Notwithstanding the Federal regulatory framework established 
 under subsection

    (a) , a stablecoin issuer with a total market 
 capitalization of not more than $10,000,000,000 may opt for 
 regulation under a State-level regulatory regime, provided that 
 the State-level regulatory regime is substantially similar to 
 the Federal regulatory framework under that subsection.

    (2) Review.--State regulators shall review State-level 
 regulatory regimes according to criteria the State regulators 
 establish for determining whether a State-level regulatory 
 regime is substantially similar to the Federal regulatory 
 framework under subsection

    (a) .

    (3) Certification.--
        (A) Initial certification.--Subject to subparagraph
        (B) , not later than 1 year after the date of enactment 
 of this Act, State regulators shall submit to the 
 Secretary of the Treasury an initial certification that 
 their State-level regulatory regime meets the criteria 
 for substantial similarity under paragraph

    (2) .
        (B) Form of certification.--The initial 
 certification required under subparagraph
        (A) shall 
 contain, in a form prescribed by the Secretary of the 
 Treasury, an attestation that the State-level 
 regulatory regime meets the criteria for substantial 
 similarity under paragraph

    (2) .
            (C) Annual recertification.--Not later than a date 
 to be determined by the Secretary each year, the State 
 shall submit to the Secretary of the Treasury an 
 additional certification that confirms the accuracy of 
 initial certification submitted under subparagraph
        (A) .

    (4) Not substantially similar.--
        (A) In general.--If a State regulator does not 
 submit a certification under paragraph

    (3) , then a 
 payment stablecoin issuer operating under this 
 subsection shall be subject to the Federal regulatory 
 framework as described in subsection
            (c) , 
 notwithstanding the market capitalization threshold 
 therein.
        (B) Treasury review.--The Secretary of the Treasury 
 may reject a certification under paragraph

    (3) if the 
 Secretary determines that the State-level regulatory 
 regime is not substantially similar to the Federal 
 regulatory framework under subsection

    (a) , and the 
 payment stablecoin issuer shall be subject to the 
 Federal regulatory framework as described in subsection
            (c) , notwithstanding the market capitalization 
 threshold therein.
            (C) Appellate review.--A payment stablecoin issuer 
 may challenge the determination of the State regulator 
 or the Secretary of the Treasury under this paragraph 
 in the United States District Court for the District of 
 Columbia.

    (5) 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

    (3) .
            (c) Transition to Federal Regulation.--

    (1) Depository institution.--A State-regulated depository 
 institution that has been approved as a payment stablecoin 
 issuer with a market capitalization of more than 
 $10,000,000,000 shall--
        (A) not later than 360 days after reaching such 
 market capitalization, transition to regulation under 
 the Federal regulatory framework of the Board; or
        (B) beginning on the date of reaching such market 
 capitalization, cease issuing new stablecoins until the 
 State-regulated stablecoin issuer is under the 
 $10,000,000,000 market capitalization threshold.

    (2) Other institutions.--A State qualified payment 
 stablecoin issuer not described in paragraph

    (1) with a market 
 capitalization of more than $10,000,000,000 shall--
        (A) not later than 360 days after reaching such 
 market capitalization, transition to regulation under 
 the regulatory framework of the Comptroller; or
        (B) beginning on the date of reaching such market 
 capitalization, cease issuing new stablecoins until the 
 State-regulated stablecoin issuer is under the 
 $10,000,000,000 market capitalization threshold.

    (3) Conditional approval.--Upon filing an application with 
 the appropriate Federal regulator, a State qualified payment 
 stablecoin issuer shall be deemed conditionally approved, 
 pending final approval or denial of the application.

    (4) Waiver.--The applicable Federal regulator may waive the 
 requirement under paragraph

    (1) or

    (2) to permit a State 
 qualified payment stablecoin issuer to remain under a State-
 level regulatory regime.
            (d) Rulemaking.--

    (1) In general.--The primary Federal payment stablecoin 
 regulators and State payment stablecoin regulators may issue 
 such orders and regulations as may be necessary to administer 
 and carry out the requirements of this section, including to 
 establish conditions, and to prevent evasions thereof.

    (2) Joint issuance of regulation.--All regulations issued 
 to carry out this section shall be issued jointly by the 
 primary Federal payment stablecoin regulators, if not issued by 
 a State payment stablecoin regulator.

    (3) Rulemaking deadline.--Not later than the end of the 
 180-day period beginning on the date of enactment of this Act, 
 the Federal payment stablecoin regulators shall issue 
 regulations to carry out this section.

SEC. 5. APPROVAL OF SUBSIDIARIES OF INSURED DEPOSITORY INSTITUTIONS AND 
 FEDERAL QUALIFIED NONBANK PAYMENT STABLECOIN ISSUERS.

    (a) Application.--

    (1) In general.--The primary Federal payment stablecoin 
 regulator shall receive, review, and approve applications from 
 any insured depository institution that seeks to issue payment 
 stablecoins through a subsidiary and any nonbank entity that 
 seeks to issue payment stablecoins. The primary Federal payment 
 stablecoin regulator shall establish a process for the 
 licensing and regulation of these entities.

    (2) Authority to issue regulations and process 
 applications.--The primary Federal payment stablecoin 
 regulators shall, before the effective date described in 
 

section 16--
        (A) issue regulations to carry out this section; 
 and
        (B) pursuant to the regulations described in 
 subparagraph
        (A) , accept and process applications under 
 this Act.

    (3) Mandatory approval process.--The primary Federal 
 payment stablecoin regulator shall, upon receipt of a complete 
 application, evaluate and make a determination on each 
 application based on the criteria established under this Act.

    (b) Evaluation of Applications.--A 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 ability of the applicant (or, in the case of an 
applicant that is an insured depository institution, the subsidiary of 
the applicant), based on the financial condition and resources, to meet 
the requirements set forth in 

section 4.
            (d) Timing for Decision; Grounds for Denial.--

    (1) Timing.--The primary Federal payment stablecoin 
 regulator shall render a decision on an application no later 
 than 120 days after informing the applicant that the 
 application is complete.

    (2) Denial of application.--
        (A) Grounds for denial.--The primary Federal 
 payment stablecoin regulator shall only deny a 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) .
        (B) Explanation required.--If the 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, 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 primary Federal payment 
 stablecoin regulator shall notify the applicant 
 of the final determination of the Comptroller, 
 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 the 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) Report on Pending Applications.--The Comptroller shall annually 
report to Congress on the applications that have been pending for 6 
months or longer since the date of the initial application filed under 
subsection

    (a) where the applicant has been informed that the 
application remains incomplete, including providing documentation on 
the status of the application and why the application has not yet been 
approved.

    (f) Rulemaking.--The Comptroller shall issue rules necessary for 
the regulation of the issuance of payment stablecoins, but may not 
impose requirements inconsistent with the requirements specified under 

section 4.

SEC. 6. SUPERVISION AND ENFORCEMENT WITH RESPECT TO SUBSIDIARIES OF 
 INSURED DEPOSITORY INSTITUTIONS AND COMPTROLLER-REGULATED 
 ENTITIES.

    (a) Supervision.--

    (1) Subsidiary of an insured depository institution.--
        (A) In general.--Each permitted payment stablecoin 
 issuer that is a subsidiary of an insured depository 
 institution shall be subject to supervision by the 
 primary Federal payment stablecoin regulator in the 
 same manner as such insured depository institution.
        (B) Gramm-Leach-Bliley act.--For purposes of title 
 V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et 
 seq.) each permitted payment stablecoin issuer that is 
 a subsidiary of an insured depository institution shall 
 be deemed a financial institution.

    (2) Comptroller-regulated entities.--
        (A) Submission of reports.--Each Comptroller-
 regulated entity shall, upon request, submit reports to 
 the Comptroller as to--
            (i) the financial condition of the 
 Comptroller-regulated entity, systems for 
 monitoring and controlling financial and 
 operating risks; and
            (ii) compliance by the Comptroller-
 regulated entity (and any subsidiary thereof) 
 with this Act.
        (B) Examinations.--The Comptroller may make 
 examinations of a Comptroller-regulated entity and each 
 subsidiary of such entity in order to inform the 
 Comptroller of--
            (i) the nature of the operations and 
 financial condition of the Comptroller-
 regulated entity;
            (ii) the financial, operational, and other 
 risks within the Comptroller-regulated entity 
 that may pose a threat to--
            (I) the safety and soundness of the 
 Comptroller-regulated entity; or
            (II) the stability of the financial 
 system of the United States; and
            (iii) the systems of the Comptroller-
 regulated entity for monitoring and controlling 
 the risks described in clause
            (ii) .
            (C) Requirements for efficiency.--
            (i) Use of existing reports.--In 
 supervising and examining a Comptroller-
 regulated entity, the Comptroller shall, to the 
 fullest extent possible, use existing reports 
 and other supervisory information.
            (ii) Avoidance of duplication.--The 
 Comptroller shall, to the fullest extent 
 possible, avoid duplication of examination 
 activities, reporting requirements, and 
 requests for information in carrying out this 
 Act with respect to a Comptroller-regulated 
 entity.
            (iii) Consideration of burden.--The 
 Comptroller shall, with respect to any 
 examination or request for the submission of a 
 report under this paragraph, only request 
 examinations and reports at a cadence and in a 
 format that is similar to those required for 
 similarly situated Comptroller-regulated 
 entities.

    (b) Enforcement.--

    (1) Suspension or revocation of registration.--The primary 
 Federal payment stablecoin regulator may prohibit a permitted 
 payment stablecoin issuer from issuing payment stablecoins, if 
 the primary Federal payment stablecoin regulator determines 
 that such permitted payment stablecoin issuer, or an 
 institution-affiliated party of the permitted payment 
 stablecoin issuer, is--
        (A) materially violating or has materially violated 
 this Act or any regulation or order issued under this 
 Act; or
        (B) materially violating or has materially violated 
 any condition imposed in writing by the primary Federal 
 payment stablecoin regulator in connection with a 
 written agreement entered into between the permitted 
 payment stablecoin issuer and the primary Federal 
 payment stablecoin regulator.

    (2) Cease-and-desist proceedings.--If the primary Federal 
 payment stablecoin regulator has reasonable cause to believe 
 that a permitted payment stablecoin issuer or any institution-
 affiliated party of a permitted payment stablecoin issuer is 
 violating, has violated, or is attempting to violate this Act, 
 any regulation or order issued under this Act, or any written 
 agreement entered into with the primary Federal payment 
 stablecoin regulator or condition imposed in writing by the 
 primary Federal payment stablecoin regulator in connection with 
 any application or other request, the primary Federal payment 
 stablecoin regulator may, by provisions that are mandatory or 
 otherwise, order the permitted payment stablecoin issuer or 
 institution-affiliated party of the permitted payment 
 stablecoin issuer to--
        (A) cease and desist from such violation or 
 practice; 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 may remove an institution-
 affiliated party of a permitted payment stablecoin issuer from 
 their position or office or prohibit further participation in 
 the affairs of the permitted payment stablecoin issuer or all 
 permitted payment stablecoin issuers by such institution-
 affiliated party, if the primary Federal payment stablecoin 
 regulator determines that--
        (A) the institution-affiliated party has, directly 
 or indirectly, committed a violation or attempted 
 violation of this Act or any regulation or order issued 
 under this Act; or
        (B) the institution-affiliated party has committed 
 a violation of any provision of subchapter II of 
 chapter 53 of title 31, United States Code.

    (4) Procedures.--
        (A) In general.--If the primary Federal payment 
 stablecoin regulator identifies a violation or 
 attempted violation of this Act or makes a 
 determination under paragraph

    (1) ,

    (2) , or

    (3) , the 
 primary Federal payment stablecoin regulator shall 
 comply with the procedures set forth in subsections

    (b) and

    (e) of sections 8 of the Federal Deposit Insurance 
 Act (12 U.S.C. 1818).
        (B) Judicial review.--A person aggrieved by a final 
 action under this subsection may obtain judicial review 
 of such action exclusively as provided in 

section 8

    (h) of the Federal Deposit Insurance Act (12 U.S.C. 
 1818

    (h) ).
            (C) Injunction.--The primary Federal payment 
 stablecoin regulator may, in the discretion of the 
 regulator, follow the procedures provided in 

section 8
            (i) (1) of the Federal Deposit Insurance Act (12 U.S.C. 
 1818
            (i) (1) ) for judicial enforcement of any effective 
 and outstanding notice or order issued under this 
 subsection.
            (D) Temporary cease-and-desist proceedings.--If the 
 primary Federal payment stablecoin regulator determines 
 that a violation or attempted violation of this Act or 
 an action with respect to which a determination was 
 made under paragraph

    (1) ,

    (2) , or

    (3) , or the 
 continuation thereof, is likely to cause insolvency or 
 significant dissipation of assets or earnings of a 
 permitted payment stablecoin issuer, or is likely to 
 weaken the condition of the permitted payment 
 stablecoin issuer or otherwise prejudice the interests 
 of the customers of the permitted payment stablecoin 
 issuer prior to the completion the proceedings 
 conducted under this paragraph, the primary Federal 
 payment stablecoin regulator may follow the procedures 
 provided in 

section 8
            (c) of the Federal Deposit 
 Insurance Act (12 U.S.C. 1818
            (c) ) to issue a temporary 
 cease-and-desist order.

    (5) Civil money penalties.--
        (A) Failure to be approved.--Any person who issues 
 a United States dollar-denominated payment stablecoin 
 and who is not a permitted payment stablecoin issuer, 
 and any institution-affiliated party of such a person 
 who knowingly participates is issuing such a payment 
 stablecoin, shall be liable for a civil penalty of not 
 more than $100,000 for each day during which such 
 payment stablecoins are issued.
        (B) First tier.--Except as provided in subparagraph
        (A) , a permitted payment stablecoin issuer or 
 institution-affiliated party of such permitted payment 
 stablecoin issuer that materially violates this Act or 
 any regulation or order issued under this Act, or that 
 materially violates any condition imposed in writing by 
 the primary Federal payment stablecoin regulator in 
 connection with a written agreement entered into 
 between the permitted payment stablecoin issuer and the 
 primary Federal payment stablecoin regulator, shall be 
 liable for a civil penalty of up to $100,000 for each 
 day during which the violation continues.
            (C) Second tier.--Except as provided in 
 subparagraph
        (A) , and in addition to the penalties 
 described under subparagraph
        (B) , a permitted payment 
 stablecoin issuer or institution-affiliated party of 
 such permitted payment stablecoin issuer who knowingly 
 participates in a violation of any provision of this 
 Act, or any regulation or order issued thereunder, is 
 liable for a civil penalty of up to an additional 
 $100,000 for each day during which the violation 
 continues.
            (D) Procedure.--Any penalty imposed under this 
 paragraph may be assessed and collected by the primary 
 Federal payment stablecoin regulator pursuant to the 
 procedures set forth in 

section 8
            (i) (2) of the Federal 
 Deposit Insurance Act (12 U.S.C. 1818
            (i) (2) ).
        (E) Notice and orders after separation from 
 service.--The resignation, termination of employment or 
 participation, or separation of an institution-
 affiliated party (including a separation caused by the 
 closing of a permitted payment stablecoin issuer) shall 
 not affect the jurisdiction and authority of the 
 primary Federal payment stablecoin regulator to issue 
 any notice or order and proceed under this subsection 
 against any such party, if such notice or order is 
 served before the end of the 6-year period beginning on 
 the date such party ceased to be an institution-
 affiliated party with respect to such permitted payment 
 stablecoin issuer.

    (6) Non-applicability to a state qualified payment 
 stablecoin issuer.--This subsection shall not apply to a State 
 qualified payment stablecoin issuer.

SEC. 7. STATE QUALIFIED PAYMENT STABLECOIN ISSUERS.

    (a) In General.--A State payment stablecoin regulator shall have 
supervisory, examination, and enforcement authority over a State 
qualified payment stablecoin issuer of such State.

    (b) Authority To Enter Into Agreements With the Board.--A State 
payment stablecoin regulator may enter into a memorandum of 
understanding with the Board, by mutual agreement, under which the 
Board may carry out the supervision, examination, and enforcement 
authority with respect to the State qualified payment stablecoin 
issuers of such State.
            (c) Sharing of Information.--A State payment stablecoin regulator 
and the Board shall share information on an ongoing basis with respect 
to a State qualified payment stablecoin issuer of such State, including 
a copy of the initial application and any accompanying documents.
            (d) Rulemaking.--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 a State qualified 
payment stablecoin issuers.

    (e) Enforcement Authority in Exigent Circumstances.--

    (1) Board.--
        (A) In general.--Subject to subparagraph
            (C) , in 
 exigent circumstances, the Board may, after not less 
 than 5 days 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 that are exigent in 
 nature.
        (B) Rulemaking.--Not later than the end of the 180-
 day period beginning on the date of enactment of this 
 Act, the Board shall issue rules to set forth those 
 exigent circumstances in which the Board may act under 
 this paragraph.
            (C) Limitations.--If 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 
 stablecoin issuer, the Board may impose such 
 restrictions as the Board determines to be necessary to 
 address such risk. Such restrictions 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) the payment of dividends by the State 
 qualified payment stablecoin issuer;
            (ii) 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
            (iii) 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 State qualified payment 
 stablecoin issuer, or any affiliate 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) , in 
 exigent circumstances, the Comptroller shall, after not 
 less than 5 days prior written notice to the applicable 
 State payment stablecoin regulator, take an enforcement 
 action against a Comptroller-regulated entity or an 
 institution-affiliated party of such entity for 
 violations of this Act.
        (B) Rulemaking.--Not later than the end of the 180-
 day period beginning on the date of enactment of this 
 Act, the Comptroller shall issue rules to set forth 
 those exigent circumstances in which the Comptroller 
 may act under this paragraph.
            (C) Limitations.--If the Comptroller determines 
 that there is reasonable cause to believe that the 
 continuation by a Comptroller-regulated entity of any 
 activity constitutes a serious risk to the financial 
 safety, soundness, or stability of the stablecoin 
 issuer, the Comptroller shall impose such restrictions 
 as the Comptroller determines to be necessary to 
 address such risk. Such restrictions 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) the payment of dividends by the 
 Comptroller-regulated entity;
            (ii) transactions between the Comptroller-
 regulated entity, a holding company, and the 
 subsidiaries or affiliates of either the 
 Comptroller-regulated entity or the holding 
 company; and
            (iii) any activities of the Comptroller-
 regulated entity 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 Comptroller-regulated entity.
            (D) Review of directive.--
            (i) Administrative review.--
            (I) In general.--After a directive 
 described in subparagraph
            (C) is 
 issued, the Comptroller-regulated 
 entity, or any affiliate of the 
 Comptroller-regulated entity subject to 
 the directive, may object and present 
 to the Comptroller, 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 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) Gramm-Leach-Bliley Act.--For purposes of title V of the Gramm-
Leach-Bliley Act (15 U.S.C. 6801 et seq.) a State qualified payment 
stablecoin issuer is deemed a financial institution.

    (g) Effect on State Law.--

    (1) Host state law.--The consumer protection laws that 
 generally apply to the operation of a payment stablecoin issuer 
 of the Host State apply to the activities conducted in the Host 
 State by an out-of-State State qualified payment stablecoin 
 issuer to the same extent as those requirements apply to the 
 activities conducted in the Host State by an out-of-State 
 Federal qualified nonbank 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 payment stablecoin issuer shall govern the activities of 
 the payment stablecoin issuer conducted in the Host State.

SEC. 8. CUSTOMER PROTECTION.

    (a) In General.--A person may only engage in the business of 
providing custodial or safekeeping services for permitted payment 
stablecoins or private keys of permitted payment stablecoins, if the 
person--

    (1) is subject to--
        (A) supervision or regulation by a primary Federal 
 payment stablecoin regulator or a primary financial 
 regulatory agency described under subparagraph
        (B) or
            (C) of 

section 2

    (12) of the Dodd-Frank Wall Street 
 Reform and Consumer Protection Act (12 U.S.C. 
 5301

    (12) ); or
        (B) supervision by a State bank supervisor, as 
 defined under 

section 3 of the Federal Deposit 
 Insurance Act (12 U.S.C. 1813) or a State credit union 
 supervisor, as defined under 

section 6003 of the Anti-
 Money Laundering Act of 2020, and such state bank 
 supervisor or state credit union supervisor makes 
 available to the Board such information as the Board 
 determines necessary and relevant to the categories of 
 information under subsection
            (d) ; and

    (2) complies with the segregation requirements under 
 subsection

    (b) , unless such person complies with similar 
 requirements as required by a primary Federal payment 
 stablecoin regulator, the Securities and Exchange Commission, 
 or the Commodity Futures Trading Commission.

    (b) Segregation Requirement.--A person described in subsection

    (a) shall--

    (1) treat and deal with the payment stablecoins, private 
 keys, cash, and other property of a person for whom or on whose 
 behalf the person receives, acquires, or holds payment 
 stablecoins, private keys, cash, and other property 
 (hereinafter in this section referred to as the ``customer'') 
 as belonging to such customer; and

    (2) take such steps as are appropriate to protect the 
 payment stablecoins, private keys, cash, and other property of 
 a customer from the claims of creditors of the person.
            (c) Commingling Prohibited.--

    (1) In general.--Payment stablecoins, cash, and other 
 property of a customer shall be separately accounted for by a 
 person described in subsection

    (a) and shall not be commingled 
 with the funds of the person.

    (2) Exception.--Notwithstanding paragraph

    (1) --
        (A) the payment stablecoins, cash, and other 
 property of a customer may, for convenience, be 
 commingled and deposited in an omnibus account holding 
 the payment stablecoins, cash, and other property of 
 more than 1 customer at an insured depository 
 institution or trust company;
        (B) such share of the payment stablecoins, cash, 
 and other property of the customer that shall be 
 necessary to transfer, adjust, or settle a transaction 
 or transfer of assets may be withdrawn and applied to 
 such purposes, including the payment of commissions, 
 taxes, storage, and other charges lawfully accruing in 
 connection with the provision of services by a person 
 described in subsection

    (a) ; and
            (C) in accordance with such terms and conditions as 
 the Board may prescribe by rule, regulation, or order, 
 any customer payment stablecoin, cash, and other 
 property described in this subsection may be commingled 
 and deposited in customer accounts with payment 
 stablecoins, cash, and other property received by the 
 person and required by the Board to be separately 
 accounted for, treated, and dealt with as belonging to 
 customers.
            (d) Regulatory Information.--A person described under subsection

    (a) shall submit to the applicable primary 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. 9. TREATMENT OF INSOLVENT PAYMENT STABLECOIN ISSUERS.

    (a) In General.--In any insolvency proceeding, including any 
proceeding under title 11, United States Code, or any insolvency 
proceeding by a primary Federal payment stablecoin regulator or a State 
banking supervisor with respect to a payment stablecoin issuer, the 
claim of a person holding payment stablecoins issued by the payment 
stablecoin issuer shall have priority over all other claims against the 
payment stablecoin issuer.

    (b) Priority in Bankruptcy Proceedings.--

Section 507 of title 11, 
United States Code, is amended--

    (1) in subsection

    (a) , 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) , any claim of a person holding 
payment stablecoins, as defined in 

section 2 of the Guiding and 
Establishing National Innovation for U.S. Stablecoins of 2025, issued 
by a debtor shall have first priority over any other claim against the 
debtor under this title.''.
            (c) Debtor.--A payment stablecoin issuer that is not a depository 
institution (as defined in 

section 3 of the Federal Deposit Insurance 
Act (12 U.S.C. 1813)) may be considered a debtor under title 11, United 
States Code.

SEC. 10. INTEROPERABILITY STANDARDS.

 The primary Federal payment stablecoin regulators, in consultation 
with the National Institute of Standards and Technology, other relevant 
standard setting organizations, and State governments, shall assess 
and, if necessary, may, pursuant to 

section 553 of title 5 and in a 
manner consistent with the National Technology Transfer and Advancement 
Act of 1995 (Public Law 104-113), prescribe standards for payment 
stablecoin issuers to promote compatibility and interoperability.

SEC. 11. STUDY ON ENDOGENOUSLY COLLATERALIZED STABLECOINS.

    (a) Study by Treasury.--

    (1) Study.--The Secretary of the Treasury, in consultation 
 with the Board, the Comptroller, the Corporation, and the 
 Securities and Exchange Commission, shall carry out a study of 
 endogenously collateralized stablecoins.

    (2) Report.--Not later than 365 days after the date of the 
 enactment of this Act, the Secretary shall provide to the 
 Committee on Financial Services of the House of Representatives 
 and the Committee on Banking, Housing, and Urban Affairs of the 
 Senate a report that contains all findings made in carrying out 
 the study under 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) nature of reserve compositions;
        (E) types of algorithms being employed;
        (F) governance structure, including aspects of 
 decentralization;
        (G) nature of public promotion and advertising; and
        (H) clarity and availability of consumer notices 
 disclosures.

    (b) Endogenously Collateralized Stablecoin Defined.--In this 
section, the term ``endogenously collateralized stablecoin'' means any 
digital asset--

    (1) in which its originator has represented will be 
 converted, redeemed, or repurchased for a fixed amount of 
 monetary value; and

    (2) that relies solely on the value of another digital 
 asset created or maintained by the same originator to maintain 
 the fixed price.

SEC. 12. REPORTS.

    (a) Rulemaking Status.--Not later than 6 months after the date of 
enactment of this Act, the primary Federal payment stablecoin 
regulators shall provide a status update on the development of the 
rulemaking under this Act to the Committee on Financial Services of the 
House of Representatives and the Committee on Banking, Housing, and 
Urban Affairs of the Senate.

    (b) Annual Reporting Requirement.--Beginning on the date that is 1 
year after the date of enactment of this Act, and annually thereafter, 
the Board and Comptroller 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 on the status of the payment 
stablecoin industry, including--

    (1) an overview of trends in payment stablecoin activities;

    (2) a summary of the number of applications for 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.
            (c) FSOC Report.--The Financial Stability Oversight Council shall 
incorporate the findings in the report under subsection

    (b) into the 
annual report of the Council required under 

section 112

    (a)

    (2)
        (N) of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 
5322).

SEC. 13. AUTHORITY OF BANKING INSTITUTIONS.

    (a) Rule of Construction.--Nothing in this Act may be construed to 
limit the authority of a depository institution, Federal credit union, 
State credit union, or trust company to engage in activities 
permissible pursuant to applicable State and Federal law, including--

    (1) accepting or receiving deposits and issuing digital 
 assets that represent deposits;

    (2) utilizing a distributed ledger for the books and 
 records of the entity and to affect intrabank transfers; and

    (3) providing custodial services for payment stablecoins, 
 private keys of payment stablecoins, or reserves backing 
 payment stablecoins.

    (b) Treatment of Custody Activities.--The appropriate Federal 
banking agency (as defined under 

section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813)), the National Credit Union 
Administration (in the case of a credit union), and the Securities and 
Exchange Commission may not require a depository institution, national 
bank, Federal credit union, State credit union, or trust company, or 
any affiliate thereof--

    (1) to include assets held in custody as a liability on any 
 financial statement or balance sheet, including payment 
 stablecoin custody or safekeeping activities;

    (2) to hold additional regulatory capital against assets in 
 custody or safekeeping, except as necessary to mitigate against 
 operational risks inherent with the custody or safekeeping 
 services, as determined by--
        (A) the appropriate Federal banking agency;
        (B) the National Credit Union Administration (in 
 the case of a credit union);
            (C) a State bank supervisor (as defined under 
 

section 3 of the Federal Deposit Insurance Act (12 
 U.S.C. 1813)); or
            (D) a State credit union supervisor (as defined 
 under 

section 6003 of the Anti-Money Laundering Act of 
 2020);

    (3) to recognize a liability for any obligations related to 
 activities or services performed for digital assets that the 
 entity does not own if that liability would exceed the expense 
 recognized in the income statement as a result of the 
 corresponding obligation.
            (c) === Definitions. ===
-In this section:

    (1) Depository institution.--The term ``depository 
 institution'' has the meaning given that term under 

section 3 
 of the Federal Deposit Insurance Act (12 U.S.C. 1813).

    (2) Credit union terms.--The terms ``Federal credit union'' 
 and ``State credit union'' have the meaning given those terms, 
 respectively, under 

section 101 of the Federal Credit Union 
 Act.

SEC. 14. AMENDMENTS TO CLARIFY THAT PAYMENT STABLECOINS ARE NOT 
 SECURITIES OR COMMODITIES.

    (a) Investment Advisers Act of 1940.--

Section 202

    (a)

    (18) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-2

    (a)

    (18) ) is amended by 
adding at the end the following: ``The term `security' does not include 
a payment stablecoin issued by a permitted payment stablecoin issuer, 
as such terms are defined, respectively, in 

section 2 of the Clarity 
for Payment Stablecoins Act of 2023.''.

    (b) Investment Company Act of 1940.--

Section 2

    (a)

    (36) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2

    (a)

    (36) ) is amended by 
adding at the end the following: ``The term `security' does not include 
a payment stablecoin issued by a permitted payment stablecoin issuer, 
as such terms are defined, respectively, in 

section 2 of the Clarity 
for Payment Stablecoins Act of 2023.''.
            (c) Securities Act of 1933.--

Section 2

    (a)

    (1) of the Securities Act 
of 1933 (15 U.S.C. 77b

    (a)

    (1) ) is amended by adding at the end the 
following: ``The term `security' does not include a payment stablecoin 
issued by a permitted payment stablecoin issuer, as such terms are 
defined, respectively, in 

section 2 of the Clarity for Payment 
Stablecoins Act of 2023.''.
            (d) Securities Exchange Act of 1934.--

Section 3

    (a)

    (10) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c

    (a)

    (10) ) is amended by 
adding at the end the following: ``The term `security' does not include 
a payment stablecoin issued by a permitted payment stablecoin issuer, 
as such terms are defined, respectively, in 

section 2 of the Clarity 
for Payment Stablecoins Act of 2023.''.

    (e) Securities Investor Protection Act of 1970.--

Section 16

    (14) of 
the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll

    (14) ) is 
amended by adding at the end the following: ``The term `security' does 
not include a payment stablecoin issued by a permitted payment 
stablecoin issuer, as such terms are defined, respectively, in 

section 2 of the Clarity for Payment Stablecoins Act of 2023.''.

SEC. 15. RECIPROCITY FOR STABLECOINS ISSUED IN OVERSEAS JURISDICTIONS.

 The Federal Reserve, in collaboration with the Secretary of the 
Treasury, shall create and implement reciprocal arrangements or other 
bilateral agreements between the United States and jurisdictions with 
substantially similar payment stablecoin regulatory regimes to 
facilitate international transactions and interoperability with United 
States dollar-denominated stablecoins issued overseas.

SEC. 16. EFFECTIVE DATE.

    (a) In General.--This Act shall take effect on the earlier of--

    (1) 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.

    (b) Notice to Congress.--The primary Federal payment stablecoin 
regulators shall notify Congress upon beginning to process applications 
under this Act.
            (c) 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 described under subsection

    (a) , 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 nonbank entity with an application pending to become 
 a Comptroller-regulated entity on that effective date.
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