---
kind: "section"
citation: "12 U.S.C. § 5904"
title: "12"
title_heading: "Banks and Banking"
number: "5904"
heading: "Approval of subsidiaries of insured depository institutions and Federal qualified payment stablecoin issuers"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5904"
units:
  - "Chapter 56 — Regulation of Payment Stablecoins"
---

# §5904. Approval of subsidiaries of insured depository institutions and Federal qualified payment stablecoin issuers

- (a) **Application—**
  - (1) **In general—** Each [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall—
    - (A) receive, review, and consider for approval applications from any [insured depository institution](/usc/12/5901.md?p=15) that seeks to issue [payment stablecoins](/usc/12/5901.md?p=22) through a [subsidiary](/usc/12/5901.md?p=32) and any [nonbank entity](/usc/12/5901.md?p=20), [Federal branch](/usc/12/5901.md?p=10), or uninsured national bank that is chartered by the [Comptroller](/usc/12/5901.md?p=4) pursuant to title LXII of the Revised Statutes, and that seeks to issue [payment stablecoins](/usc/12/5901.md?p=22) as a [Federal qualified payment stablecoin issuer](/usc/12/5901.md?p=11); and
    - (B) establish a process and framework for the licensing, regulation, examination, and supervision of such entities that prioritizes the safety and soundness of such entities.
  - (2) **Authority to issue regulations and process applications—** The [primary Federal payment stablecoin regulators](/usc/12/5901.md?p=25) shall, before the date described in [section 5913 of this title](/usc/12/5913.md)—
    - (A) issue regulations consistent with that section to carry out this section; and
    - (B) pursuant to the regulations described in [subparagraph (A)](#a-2-A), accept and process applications described in [paragraph (1)](#a-1).
  - (3) **Mandatory approval process—** A [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall, upon receipt of a substantially complete application received under [paragraph (1)](#a-1), evaluate and make a determination on each application based on the criteria established under this chapter.
- (b) **Evaluation of applications—** A substantially complete application received under [subsection (a)](#a) shall be evaluated by the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) using the factors described in [subsection (c)](#c).
- (c) **Factors to be considered—** The factors described in this subsection are the following:
  - (1) The ability of the applicant (or, in the case of an applicant that is an [insured depository institution](/usc/12/5901.md?p=15), the [subsidiary](/usc/12/5901.md?p=32) of the applicant), based on financial condition and resources, to meet the requirements set forth under [section 5903 of this title](/usc/12/5903.md).
  - (2) Whether an individual who has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, [money](/usc/12/5901.md?p=18) laundering, financing of terrorism, or financial fraud is serving as an officer or [director](/usc/12/5481.md?p=10) of the applicant.
  - (3) The competence, experience, and integrity of the officers, [directors](/usc/12/5481.md?p=10), and principal shareholders of the applicant, its [subsidiaries](/usc/12/5901.md?p=32), and parent company, including—
    - (A) the record of those officers, [directors](/usc/12/5481.md?p=10), and principal shareholders of compliance with laws and regulations; and
    - (B) the ability of those officers, [directors](/usc/12/5481.md?p=10), and principal shareholders to fulfill any commitments to, and any conditions imposed by, their [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) in connection with the application at issue and any prior applications.
  - (4) Whether the redemption policy of the applicant meets the standards under [section 5903(a)(1)(B) of this title](/usc/12/5903.md?p=a-1-B).
  - (5) Any other factors established by the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) that are necessary to ensure the safety and soundness of the [permitted payment stablecoin issuer](/usc/12/5901.md?p=23).
- (d) **Timing for decision; grounds for denial—**
  - (1) **Timing for decisions on applications—**
    - (A) **In general—** Not later than 120 days after receiving a substantially complete application under [subsection (a)](#a), a [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall render a decision on the application.
    - (B) **Substantially complete—**
      - (i) **In general—** For purposes of [subparagraph (A)](#d-1-A), an application shall be considered substantially complete if the application contains sufficient information for the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) to render a decision on whether the applicant satisfies the factors described in [subsection (c)](#c).
      - (ii) **Notification—** Not later than 30 days after receiving an application under [subsection (a)](#a), a [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall notify the applicant as to whether the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) considers the application to be substantially complete and, if the application is not substantially complete, the additional information the applicant shall provide in order for the application to be considered substantially complete.
      - (iii) **Material change in circumstances—** An application considered substantially complete under this subparagraph remains substantially complete unless there is a material change in circumstances that requires the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) to treat the application as a new application.
  - (2) **Denial of application—**
    - (A) **Grounds for denial—**
      - (i) **In general—** A [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall only deny a substantially complete application received under [subsection (a)](#a) if the regulator determines that the activities of the applicant would be unsafe or unsound based on the factors described in [subsection (c)](#c).
      - (ii) **Issuance on open, public, or decentralized network not ground for denial—** The issuance of a [payment stablecoin](/usc/12/5901.md?p=22) on an open, public, or decentralized network shall not be a valid ground for denial of an application received under [subsection (a)](#a).
    - (B) **Explanation required—** If a [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) denies a complete application received under [subsection (a)](#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](/usc/12/5901.md?p=25) to appeal the denial.
      - (ii) **Timing—** Upon receipt of a timely request under [clause (i)](#d-2-C-i), the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall notice a time (not later than 30 days after the date of receipt of the request) and place at which the applicant may appear, personally or through counsel, to submit written materials or provide oral testimony and oral argument.
      - (iii) **Final determination—** Not later than 60 days after the date of a hearing under this subparagraph, the applicable [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall notify the applicant of a final determination, which shall contain a statement of the basis for that determination, with specific findings.
      - (iv) **Notice if no hearing—** If an applicant does not make a timely request for a hearing under this subparagraph, the [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) 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](/usc/12/5901.md?p=25).
  - (3) **Failure to render a decision—** If a [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) fails to render a decision on a complete application within the time period specified in [paragraph (1)](#d-1), the application shall be deemed approved.
  - (4) **Right to reapply—** The denial of an application under this section shall not prohibit the applicant from filing a subsequent application.
- (e) **Reports on pending applications—** Each [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) shall—
  - (1) notify Congress upon beginning to process applications under this chapter; and
  - (2) annually report to Congress on the applications that have been pending for 180 days or more since the date the initial application was filed and for which the applicant has been informed that the application remains incomplete, including documentation on the status of such applications and why such applications have not yet been approved.
- (f) **Safe harbor for pending applications—** The [primary Federal payment stablecoin regulators](/usc/12/5901.md?p=25) may waive the application of the requirements of this chapter for a period not to exceed 12 months beginning on the effective date of this chapter, with respect to—
  - (1) a [subsidiary](/usc/12/5901.md?p=32) of an [insured depository institution](/usc/12/5901.md?p=15), if the [insured depository institution](/usc/12/5901.md?p=15) has an application pending for the [subsidiary](/usc/12/5901.md?p=32) to become a [permitted payment stablecoin issuer](/usc/12/5901.md?p=23) on that effective date; or
  - (2) a [Federal qualified payment stablecoin issuer](/usc/12/5901.md?p=11) with a pending application on that effective date.
- (g) **Rulemaking—** Consistent with [section 5913 of this title](/usc/12/5913.md), the [primary Federal payment stablecoin regulators](/usc/12/5901.md?p=25) shall issue rules necessary for the regulation of the issuance of [payment stablecoins](/usc/12/5901.md?p=22), but may not impose requirements in addition to the requirements specified under [section 5903 of this title](/usc/12/5903.md).
- (h) **Relation to other licensing requirements—** The provisions of this section supersede and preempt any [State](/usc/12/5901.md?p=28) requirement for a charter, license, or other authorization to do business with respect to a [Federal qualified payment stablecoin issuer](/usc/12/5901.md?p=11) or [subsidiary](/usc/12/5901.md?p=32) of an [insured depository institution](/usc/12/5901.md?p=15) or [credit](/usc/12/5481.md?p=7) union that is approved under this section to be a [permitted payment stablecoin issuer](/usc/12/5901.md?p=23). Nothing in this subsection shall preempt or supersede the authority of a [State](/usc/12/5901.md?p=28) to charter, license, supervise, or regulate an [insured depository institution](/usc/12/5901.md?p=15) or [credit](/usc/12/5481.md?p=7) union chartered in such [State](/usc/12/5901.md?p=28) or to supervise a [subsidiary](/usc/12/5901.md?p=32) of such [insured depository institution](/usc/12/5901.md?p=15) or [credit](/usc/12/5481.md?p=7) union that is approved under this section to be a [permitted payment stablecoin issuer](/usc/12/5901.md?p=23).
- (i) **Certification required—**
  - (1) **In general—** Not later than 180 days after the approval of an application, and on an annual basis thereafter, each [permitted payment stablecoin issuer](/usc/12/5901.md?p=23) shall submit to its [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25), or in the case of a [State qualified payment stablecoin issuer](/usc/12/5901.md?p=31) its [State payment stablecoin regulator](/usc/12/5901.md?p=30), a certification that the issuer has implemented anti-[money](/usc/12/5901.md?p=18) laundering and economic sanctions compliance programs that are reasonably designed to prevent the [permitted payment stablecoin issuer](/usc/12/5901.md?p=23) from facilitating [money](/usc/12/5901.md?p=18) laundering, in particular, facilitating [money](/usc/12/5901.md?p=18) laundering for cartels and organizations designated as foreign terrorist organizations under [section 1189 of title 8](/usc/8/1189.md) and the financing of terrorist activities, consistent with the requirements of this chapter.
  - (2) **Availability of certifications—** Federal [payment stablecoin](/usc/12/5901.md?p=22) regulators and [State payment stablecoin regulators](/usc/12/5901.md?p=30) shall make certifications described in [paragraph (1)](#i-1) available to the [Secretary](/usc/12/1715z–22a.md?p=4) of Treasury upon request.
  - (3) **Penalties—**
    - (A) **Approval revocation—** The [primary Federal payment stablecoin regulator](/usc/12/5901.md?p=25) or [State payment stablecoin regulator](/usc/12/5901.md?p=30) of a [permitted payment stablecoin issuer](/usc/12/5901.md?p=23) that does not submit a certification pursuant to [paragraph (1)](#i-1) may revoke the approval of the [payment stablecoin](/usc/12/5901.md?p=22) issuer under this section.
    - (B) **Criminal penalty—**
      - (i) **In general—** Any [person](/usc/12/5901.md?p=24) that knowingly submits a certification pursuant to [paragraph (1)](#i-1) that is false shall be subject to the criminal penalties set forth under [section 1001 of title 18](/usc/18/1001.md).
      - (ii) **Referral to Attorney General—** If a Federal [payment stablecoin](/usc/12/5901.md?p=22) regulator or [State payment stablecoin regulator](/usc/12/5901.md?p=30) has reason to believe that any [person](/usc/12/5901.md?p=24) has knowingly violated [paragraph (1)](#i-1), the applicable regulator may refer the matter to the Attorney General or to the attorney general of the [payment stablecoin](/usc/12/5901.md?p=22) issuer’s host [State](/usc/12/5901.md?p=28).

## Source credit

(Pub. L. 119–27, § 5, July 18, 2025, 139 Stat. 439.)

## Notes

### Delayed Effective Date of Section

For delayed effective date of section, see Effective Date note below.

### Editorial Notes

### References in Text

Title LXII of the Revised Statutes, referred to in subsec. (a)(1)(A), consists of R.S. §§ 5133 to 5244, which are classified to sections 16, 21, 22 to 24a, 25a, 25b, 26, 27, 29, 35 to 37, 39, 43, 52, 53, 55 to 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 141 to 144, 161, 164, 181, 182, 192 to 194, 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, sections 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables.

This chapter, referred to in subsecs. (a)(3), (e)(1), (f), and (i)(1), was in the original “this Act”, meaning Pub. L. 119–27, July 18, 2025, 139 Stat. 419, known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act and also as the GENIUS Act, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 5901 of this title and Tables.

For the effective date of this chapter, referred to in subsec. (f), see Effective Date note set out under section 5901 of this title.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section effective on the earlier of the date that is 18 months after July 18, 2025, or the date that is 120 days after the date on which the primary Federal payment stablecoin regulators issue any final regulations implementing Pub. L. 119–27, see section 20 of Pub. L. 119–27, set out as a note under section 5901 of this title.