S1582-119

3. Issuance and treatment of payment stablecoins It shall be unlawful for any person other than a permitted payment stablecoin issuer to issue a payment stablecoin in the United States. 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. 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. The Secretary of the Treasury may issue regulations providing safe harbors from subsection (a) that are— consistent with the purposes of the Act; limited in scope; and apply to a de minimis volume of transactions, as determined by the Secretary of the Treasury. If the Secretary of the Treasury determines that unusual and exigent circumstances exist, the Secretary may provide limited safe harbors from subsection (a). 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. Consistent with section 13, the Secretary of the Treasury shall issue regulations to implement this section, including regulations to define terms. 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. 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. 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. A payment stablecoin that is not issued by a permitted payment stablecoin issuer shall not be— treated as cash or as a cash equivalent for accounting purposes; 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 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. This section shall not apply to— 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; 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 to any transaction by means of a software or hardware wallet that facilitates an individual's own custody of digital assets. 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.

4. Requirements for issuing payment stablecoins A permitted payment stablecoin issuer shall— 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— United States coins and currency (including Federal Reserve notes) or money standing to the credit of an account with a Federal Reserve Bank; 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; Treasury bills, notes, or bonds— with a remaining maturity of 93 days or less; or issued with a maturity of 93 days or less; 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; 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— tri-party; centrally cleared through a clearing agency registered with the Securities and Exchange Commission; or bilateral with a counterparty that the issuer has determined to be adequately creditworthy even in the event of severe market stress; 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); 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 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; publicly disclose the issuer’s redemption policy, which shall— 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 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 publish the monthly composition of the issuer’s reserves on the website of the issuer, containing— the total number of outstanding payment stablecoins issued by the issuer; and the amount and composition of the reserves described in subparagraph (A), including the average tenor and geographic location of custody of each category of reserve instruments. 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— satisfying margin obligations in connection with investments in permitted reserves under clauses (iv) and (v) of paragraph (1)(A); satisfying obligations associated with the use, receipt, or provision of standard custodial services; or 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— the repurchase agreements are cleared by a clearing agency registered with the Securities and Exchange Commission; or the permitted payment stablecoin issuer receives the prior approval of its primary Federal payment stablecoin regulator or State payment stablecoin regulator, as applicable. A permitted payment stablecoin issuer shall, each month, have the information disclosed in the previous month-end report required under paragraph (1)(D) examined by a registered public accounting firm. Each month, the Chief Executive Officer and Chief Financial Officer of a permitted payment stablecoin issuer shall submit a certification as to the accuracy of the monthly report to, as applicable— the primary Federal payment stablecoin regulator of the permitted payment stablecoin issuer; or the State payment stablecoin regulator of the permitted payment stablecoin issuer. 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. 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— capital requirements applicable to permitted payment stablecoin issuers that— are tailored to the business model and risk profile of permitted payment stablecoin issuers; do not exceed requirements that are sufficient to ensure the ongoing operations of permitted payment stablecoin issuers; and 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; the liquidity standard under paragraph (1)(A); reserve asset diversification, including deposit concentration at banking institutions, and interest rate risk management standards applicable to permitted payment stablecoin issuers that— are tailored to the business model and risk profile of permitted payment stablecoin issuers; and do not exceed standards that are sufficient to ensure the ongoing operations of permitted payment stablecoin issuers; and appropriate operational, compliance, and information technology risk management principles-based requirements and standards, including Bank Secrecy Act and sanctions compliance standards, that— are tailored to the business model and risk profile of permitted payment stablecoin issuers; and are consistent with applicable law. Nothing in this paragraph shall be construed to limit— 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 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. 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)). 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. 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). 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. 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— maintenance of an effective anti-money laundering program, which shall include appropriate risk assessments and designation of an officer to supervise the program; retention of appropriate records; monitoring and reporting of any suspicious transaction relevant to a possible violation of law or regulation; technical capabilities, policies, and procedures to block, freeze, and reject specific or impermissible transactions that violate Federal or State laws, rules, or regulations; 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 maintenance of an effective economic sanctions compliance program, including verification of sanctions lists, consistent with Federal law. The Secretary of the Treasury shall adopt rules, tailored to the size and complexity of permitted payment stablecoin issuers, to implement subparagraph (A). 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. The Secretary of the Treasury— 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 is not required to notify any permitted payment stablecoin issuer of any intended action described in clause (i) prior to taking such action. 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. 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). 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. A permitted payment stablecoin issuer may only— issue payment stablecoins; redeem payment stablecoins; manage related reserves, including purchasing, selling, and holding reserve assets or providing custodial services for reserve assets, consistent with State and Federal law; provide custodial or safekeeping services for payment stablecoins, required reserves, or private keys of payment stablecoins, consistent with this Act; and undertake other activities that directly support any of the activities described in clauses (i) through (iv). 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. 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. 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. A permitted payment stablecoin issuer may not— 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 market a payment stablecoin in such a way that a reasonable person would perceive the payment stablecoin to be— legal tender, as described in section 5103 of title 31, United States Code; issued by the United States; or guaranteed or approved by the Government of the United States. 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). 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. A registered public accounting firm shall perform an audit of the annual financial statements described in clause (i). 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. 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. Each permitted payment stablecoin issuer required to prepare an audited annual financial statement under subparagraph (A) shall— make such audited financial statements publicly available on the website of the permitted payment stablecoin issuer; and submit such audited financial statements annually to their primary Federal payment stablecoin regulator. 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. 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. In this paragraph: The term financial activities— 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 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. 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)). 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— 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; 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— used to target, personalize, or rank advertising or other content; sold to any third party; or shared with non-affiliates; and the public company and the affiliates of the public company will comply with the tying prohibitions under paragraph (8). The prohibition under clause (i) against the sharing of consumer information shall not apply to sharing of such information— to comply with Federal, State, or local laws, rules, and other applicable legal requirements; to comply with a properly authorized civil, criminal, or regulatory investigation, subpoena, or summons by a Federal, State, or local authority; or to respond to judicial process or a government regulatory authority having jurisdiction over the public company. 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— 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; 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— used to target, personalize, or rank advertising or other content; sold to any third party; or shared with non-affiliates; except the public company and the affiliates of the public company will comply with the tying prohibitions under paragraph (8). The prohibition under clause (i) against the sharing of consumer information shall not apply to sharing of such information— to comply with Federal, State, or local laws, rules, and other applicable legal requirements; to comply with a properly authorized civil, criminal, or regulatory investigation, subpoena, or summons by a Federal, State, or local authority; or to respond to judicial process or a government regulatory authority having jurisdiction over the public company. 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. 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. 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. 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). Section 324(b) of the Revised Statutes (12 U.S.C. 1(b)) is amended by adding at the end the following: The Comptroller of the Currency shall, in coordination with other relevant regulators 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. 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. 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. 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). 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). 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). 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). 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— 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 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). 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— the State-level regulatory regime has materially changed from the prior certification or there has been a significant change in circumstances; and 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. 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— make such changes as may be necessary to ensure the State-level regulatory regime meets or exceeds the standards described in subsection (a); and resubmit the initial certification or recertification. 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. 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. 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). 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). 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. 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— 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 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. 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— 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 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. 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. The primary Federal payment stablecoin regulator shall consider the following exclusive criteria in determining whether to issue a waiver under this paragraph: The capital maintained by the State qualified payment stablecoin issuer. The past operations and examination history of the State qualified payment stablecoin issuer. The experience of the State payment stablecoin regulator in supervising payment stablecoin and digital asset activities. The supervisory framework, including regulations and guidance, of the State qualified payment stablecoin issuer with respect to payment stablecoins and digital assets. 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. 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. 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. 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. 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. 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. 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. 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— a common or substantially overlapping originating cause; or the same statement or publication. 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. 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— an officer of a payment stablecoin issuer; or a director of a payment stablecoin issuer. 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. 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. 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. 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. 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. Nothing in this Act shall be construed— as expanding the authority of the Board with respect to the services the Board can make directly available to the public; or 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. (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. .

6. Supervision and enforcement with respect to Federal qualified payment stablecoin issuers and subsidiaries of insured depository institutions 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. Each permitted payment stablecoin issuer described in paragraph (1) shall, upon request, submit to the appropriate primary Federal payment stablecoin regulator a report on— the financial condition of the permitted payment stablecoin issuer; the systems of the permitted payment stablecoin issuer for monitoring and controlling financial and operating risks; compliance by the permitted payment stablecoin issuer (and any subsidiary thereof) with this Act; and 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. The appropriate primary Federal payment stablecoin regulator shall examine a permitted payment stablecoin issuer described in paragraph (1) in order to assess— the nature of the operations and financial condition of the permitted payment stablecoin issuer; the financial, operational, technological, and other risks associated within the permitted payment stablecoin issuer that may pose a threat to— the safety and soundness of the permitted payment stablecoin issuer; or the stability of the financial system of the United States; and the systems of the permitted payment stablecoin issuer for monitoring and controlling the risks described in subparagraph (B). 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. 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. 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. 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— this Act or any regulation or order issued under this Act; or 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. 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— cease and desist from such violation or practice; or take affirmative action to correct the conditions resulting from any such violation or practice. 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— 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 the institution-affiliated party has knowingly committed a violation of any provision of subchapter II of chapter 53 of title 31, United States Code. 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. 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. 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. 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. Unless otherwise specified in this Act, the civil money penalties for violations of this Act consist of the following: 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. 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. 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. 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. 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. Notwithstanding anything in this subsection to the contrary, this subsection shall not apply to a State qualified payment stablecoin issuer. 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.

11. Treatment of payment stablecoin issuers in insolvency proceedings 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— 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; 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 the priority under paragraph (1) shall not apply to claims other than those arising directly from the holding of payment stablecoins. Section 101 of title 11, United States Code, is amended by adding after paragraph (40B) the following: The terms payment stablecoin and permitted payment stablecoin issuer have the meanings given those terms in section 2 of the GENIUS Act. Section 362 of title 11, United States Code, is amended— in subsection (a)— in paragraph (7), by striking and; in paragraph (8), by striking the period and inserting ; and; and by adding at the end the following: 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. in subsection (d)— in paragraph (3)(B)(ii), by striking or at the end; in paragraph (4)(B), by striking the period at the end and inserting ; or; and by inserting after paragraph (4) the following: 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. Section 507 of title 11, United States Code, is amended— in subsection (a), in the matter preceding paragraph (1), by striking The following and inserting Subject to subsection (e), the following; and by adding at the end the following: 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. Section 541(b) of title 11, United States Code, is amended— in paragraph (9), in the matter following subparagraph (B), by striking or at the end; in paragraph (10)(C), by striking the period and inserting ; or; and by inserting after paragraph (10) the following: 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. Section 1109 of title 11, United States Code, is amended by adding at the end the following: 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. In accordance with otherwise applicable law, an insolvency proceeding with respect to a permitted payment stablecoin issuer shall occur as follows: 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. 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. The primary Federal payment stablecoin regulators shall perform a study of the potential insolvency proceedings of permitted payment stablecoin issuers, including an examination of— existing gaps in the bankruptcy laws and rules for permitted payment stablecoin issuers; the ability of payment stablecoin holders to be paid out in full in the event a permitted payment stablecoin issuer is insolvent; and the utility of orderly insolvency administration regimes and whether any additional authorities are needed to implement such regimes. 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. (40C) The terms payment stablecoin and permitted payment stablecoin issuer have the meanings given those terms in section 2 of the GENIUS Act. . (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 (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. . (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. . (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. . (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. .

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.