H.R. 4766 — what changed

Bank Secrecy Act— The term “Bank Secrecy Act” means—

section 21 of the Federal Deposit Insurance Act (12 U.S.C. 1829b);

chapter 2 of title I of Public Law 91–508 (12 U.S.C. 1951 et seq.); and

subchapter II of chapter 53 of title 31, United States Code.

Board— The term “Board” means the Board of Governors of the Federal Reserve System.

Comptroller— The term “Comptroller” means the Comptroller of the Currency.

Corporation— The term “Corporation” means the Federal Deposit Insurance Corporation.

Digital asset— The term “digital asset” means any digital representation of value which is recorded on a cryptographically-secured distributed ledger.

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.

Federal qualified nonbank stablecoin issuer— The term “Federal qualified nonbank stablecoin issuer” means a nonbank entity approved by the primary Federal payment stablecoin regulator, pursuant to section 5, to issue payment stablecoins.

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.

Insured depository institution— The term “insured depository institution” means—

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

an insured credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

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.

National currency— The term “national currency” means a Federal Reserve note, (as the term is used in the first undesignated paragraph of section 16 of the Federal Reserve Act (12 U.S.C. 411)), money issued by a central bank, and money issued by an intergovernmental organization pursuant to an agreement by one or more governments.

Nonbank entity— The term “nonbank entity” means a person that is not an insured depository institution or subsidiary of an insured depository institution.

Permitted payment stablecoin issuer— The term “permitted payment stablecoin issuer” means—

a subsidiary of an insured depository institution that has been approved to issue payment stablecoins under section 5;

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

a State qualified payment stablecoin issuer.

Person— The term “person” means an individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity.

In general— The term “primary Federal payment stablecoin regulator” means—

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));

with respect to an insured credit union or a subsidiary of an insured credit union, the National Credit Union Administration;

with respect to a Federal qualified nonbank payment stablecoin issuer that is not a national bank, the Board; and

with respect to any entity chartered by the Comptroller, the Comptroller.

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.

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).

State— The term “State” means each of the several States, the District of Columbia, and each territory of the United States.

State qualified payment stablecoin issuer— The term “State qualified payment stablecoin issuer” means an entity that—

is legally established and approved to issue payment stablecoins by a State payment stablecoin regulator; and

issues a payment stablecoin in compliance with the requirements under section 4.

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.

Subsidiary of an insured credit union— With respect to an insured credit union, the term “subsidiary of an insured credit union” means—

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

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.

In general— Permitted payment stablecoin issuers shall—

maintain reserves backing the issuer’s payment stablecoins outstanding on an at least one to one basis, with reserves comprising—

United States coins and currency (including Federal reserve notes);

funds held as insured demand deposits or insured shares at insured depository institutions, subject to limitations established by the Corporation and the National Credit Union Administration, respectively, to address safety and soundness risks of such insured depository institutions;

Treasury bills with a maturity of 90 days or less;

publicly disclose the issuer’s redemption policy;

establish procedures for timely redemption of outstanding payment stablecoins; and

publish the monthly composition of the issuer’s reserves on the website of the issuer, containing—

the total number of outstanding payment stablecoins issued by the issuer; and

the amount and composition of the reserves described under subparagraph (A).

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—

the repurchase agreements are cleared by a central clearing counterparty that is approved by the primary Federal payment stablecoin regulator; or

the permitted payment stablecoin issuer receives the prior approval of the primary Federal payment stablecoin regulator.

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.

Certification— Each month, the Chief Executive Officer and Chief Financial Officer of a permitted payment stablecoin issuer shall submit an certification as to the accuracy of the monthly report to—

the primary Federal payment stablecoin regulator; or

in the case of a State qualified payment stablecoin issuer, to the State payment stablecoin regulator.

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.

Capital, liquidity, and risk management requirements— The primary Federal payment stablecoin regulators shall, jointly, issue—

capital requirements applicable to permitted payment stablecoin issuers, which may not exceed what is sufficient to ensure the permitted payment stablecoin issuer’s ongoing operations;

liquidity requirements applicable to permitted payment stablecoin issuers, which may not exceed what is sufficient to ensure the financial integrity of the permitted payment stablecoin issuer and the ability of the issuer to meet the financial obligations of the issuer, including redemptions; and

risk management requirements applicable to permitted payment stablecoin issuers, tailored to the business model and risk profile of the permitted payment stablecoin issuer.

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.

Limitation on activities— A permitted payment stablecoin issuer may only issue payment stablecoins, redeem payment stablecoins, manage related reserves (including purchasing and holding reserve assets), provide custodial or safekeeping services for payment stablecoins or private keys of payment stablecoins, and undertake other functions that directly support the work of issuing and redeeming payment stablecoins.

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

Joint issuance of regulation— All regulations issued to carry out this section shall be issued jointly by the primary Federal payment stablecoin regulators.

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.

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—

is subject to—

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

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

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.

Segregation requirement— A person described in subsection (a) shall—

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

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.

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.

Exception— Notwithstanding paragraph (1)—

the payment stablecoins, cash, and other property of a customer may, for convenience, be commingled and deposited in an omnibus account holding the payment stablecoins, cash, and other property of more than one customer at an insured depository institution or trust company;

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

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.

Regulatory information— A person described under subsection (a) shall submit to the Board information concerning the person’s business operations and processes to protect customer assets, in such form and manner as the Board shall determine.

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.