,i #aafth ,,congress #b;d ,session ,h4 ,r4 #hhbg ,,in ,,the ,,house ,,of ,,representatives ,november #cj1 #bjbj,ms4 ,tlaib 7for herself1 ,mr4 ,lynch1 and ,mr4 ,garca of ,illinois7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,federal ,deposit ,insurance ,act to provide for the classification and regulation of stablecoins1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,stablecoin ,classification and ,regulation ,act of #bjbj4 #b4 ,findings ,congress finds the following3 7#a7 ,article ,i1 ,section #h1 ,clause #e of the ,united ,states ,constitution provides that ,congress shall have the power to coin money1 regulate the value thereof1 and of foreign coin1 and fix the standard of weights and measures4 7#b7 ,section #b;,a of the ,federal ,reserve ,act 7#ab ,u4,s4,c4 #bbe;a7 provides that the mandate of the ,board of ,governors of the ,federal ,reserve ,system is to promote effectively the goals of maximum employment1 stable prices1 and moderate long-term interest rates4 7#c7 ,section #ba7;a7 of the ,banking ,act of #aicc 7#ab ,u4,s4,c4 #cgh7;a77 provides in part that3 7a7 ,after the expiration of one year after ,june #af1 #aicc it shall be unlawful ''' 7#b7 ,for any person1 firm1 corporation1 association1 business trust1 or other similar organization to engage1 to any extent whatever with others than his or its officers1 agents or employees1 in the business of receiving deposits subject to check or to repayment upon presentation of a pass book1 certificate of deposit1 or other evidence of debt1 or upon request of the depositor1 unless such person1 firm1 corporation1 association1 business trust1 or other similar organization 7,a7 shall be incorporated under1 and authorized to engage in such business by1 the laws of the ,united ,states or of any ,state1 ,territory1 or ,district1 and subjected1 by the laws of the ,united ,states1 or of the ,state1 ,territory1 or ,district wherein located1 to examination and regulation1 or 7,b7 shall be permitted by the ,united ,states1 any ,state1 territory1 or district to engage in such business and shall be subjected by the laws of the ,united ,states1 or such ,state1 territory1 or district to examination and regulations or1 7,c7 shall submit to periodic examination by the banking authority of the ,state ,territory1 or ,district where such business is carried on and shall make and publish periodic reports of its condition1 exhibiting in detail its resources and liabilities1 such examination and reports to be made and published at the same times and in the same manner and under the same conditions as required by the law of such ,state1 ,territory1 ,district in the case of incorporated banking institutions engaged in such business in the same locality4 4 7#d7 ,section #c7l7 of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7l77 provides that under the ,federal ,deposit ,insurance ,act1 the term deposit means3 7#a7 the unpaid balance of money or its equivalent received or held by a bank or savings association in the usual course of business and for which it has given or is obligated to give credit1 either conditionally or unconditionally1 to a commercial1 checking1 savings1 time1 or thrift account1 or which is evidenced by its certificate of deposit1 thrift certificate1 investment certificate1 certificate of indebtedness1 or other similar name1 or a check or draft drawn against a deposit account and certified by the bank or savings association1 or a letter of credit or a traveler's check on which the bank or savings association is primarily liable3 ,provided1 ,that1 without limiting the generality of the term money or its equivalent1 any such account or instrument must be regarded as evidencing the receipt of the equivalent of money when credited or issued in exchange for checks or drafts or for a promissory note upon which the person obtaining any such credit or instrument is primarily or secondarily liable1 or for a charge against a deposit account1 or in settlement of checks1 drafts1 or other instruments forwarded to such bank or savings association for collection1 7#b7 trust funds as defined in this ,act received or held by such bank or savings association1 whether held in the trust department or held or deposited in any other department of such bank or savings association1 7#c7 money received or held by a bank or savings association1 or the credit given for money or its equivalent received or held by a bank or savings association1 in the usual course of business for a special or specific purpose1 regardless of the legal relationship thereby established1 including without being limited to1 escrow funds1 funds held as security for an obligation due to the bank or savings association or others 7including funds held as dealers reserves7 or for securities loaned by the bank or savings association1 funds deposited by a debtor to meet maturing obligations1 funds deposited as advance payment on subscriptions to ,united ,states ,government securities1 funds held for distribution or purchase of securities1 funds held to meet its acceptances or letters of credit1 and withheld taxes3 ,provided1 ,that there shall not be included funds which are received by the bank or savings association for immediate application to the reduction of an indebtedness to the receiving bank or savings association1 or under condition that the receipt thereof immediately reduces or extinguishes such an indebtedness1 7#d7 outstanding draft 7including advice or authorization to charge a bank's or a savings association's balance in another bank or savings association71 cashier's check1 money order1 or other officer's check issued in the usual course of business for any purpose1 including without being limited to those issued in payment for services1 dividends1 or purchases1 and 7#e7 such other obligations of a bank or savings association as the ,board of ,directors1 after consultation with the ,comptroller of the ,currency1 and the ,board of ,governors of the ,federal ,reserve ,system1 shall find and prescribe by regulation to be deposit liabilities by general usage1 except that the following shall not be a deposit for any of the purposes of this ,act or be included as part of the total deposits or of an insured deposit3 7,a7 any obligation of a depository institution which is carried on the books and records of an office of such bank or savings association located outside of any ,state1 unless-- 7i7 such obligation would be a deposit if it were carried on the books and records of the depository institution1 and would be payable at1 an office located in any ,state2 and 7ii7 the contract evidencing the obligation provides by express terms1 and not by implication1 for payment at an office of the depository institution located in any ,state2 7,b7 any international banking facility deposit1 including an international banking facility time deposit1 as such term is from time to time defined by the ,board of ,governors of the ,federal ,reserve ,system in regulation ,d or any successor regulation issued by the ,board of ,governors of the ,federal ,reserve ,system2 and 7,c7 any liability of an insured depository institution that arises under an annuity contract1 the income of which is tax deferred under section #gb of the ,internal ,revenue ,code of #aihf4 4 7#e7 ,section #a7;a7 of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahaa7;a77 provides that the ,federal ,deposit ,insurance ,corporation was established for the purpose of insuring ''' the deposits of all banks ''' which are entitled to the benefits of insurance under the ,federal ,deposit ,insurance ,act4 #c4 ,regulation of stablecoins 7a7 ,definitions ,section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7 is amended-- 7#a7 in subsection 7l7-- 7,a7 in paragraph 7#d71 by striking and at the end2 7,b7 by redesignating paragraph 7#e7 as paragraph 7#f72 and 7,c7 by inserting after paragraph 7#d7 the following3 7#e7 stablecoins issued by such bank or savings association2 and 2 7#b7 by adding at the end the following3 7aa7 ,definitions related to stablecoins 7#a7 ,stablecoin ,the term stablecoin means any cryptocurrency or other privately-issued digital financial instrument that-- 7,a7 is directly or indirectly distributed to investors1 financial institutions1 or the general public2 7,b7 is-- 7i7 denominated in ,united ,states dollars or pegged to the ,united ,states dollar2 or 7ii7 denominated in or pegged to another national or state currency2 and 7,c7 is issued-- 7i7 with a fixed nominal redemption value2 7ii7 with the intent of establishing a reasonable expectation or belief among the general public that the instrument will retain a nominal redemption value that is so stable as to render the nominal redemption value effectively fixed2 or 7iii7 in such a manner that1 regardless of intent1 has the effect of creating a reasonable expectation or belief among the general public that the instrument will retain a nominal redemption value that is so stable as to render the nominal redemption value effectively fixed4 7#b7 ,nominal redemption value 7,a7 ,in general ,with respect to a stablecoin1 the term nominal redemption value means the value at which the stablecoin can readily be converted into ,united ,states dollars1 or any other national or state currency1 or a functional monetary equivalent1 on demand1 at the time of issuance1 or otherwise accepted in payment or to satisfy debts denominated in ,united ,states dollars or any other national or state currency4 7,b7 ,treatment of instruments pegged to the ,united ,states dollar ,for purposes of subparagraph 7,a71 the value at which a stablecoin that is pegged to the ,united ,states dollar or a functional monetary equivalent can readily be converted into ,united ,states dollars1 on demand1 at the time of issuance shall be calculated using the express or implied pegged rate for such conversion at the time of issuance4 7,c7 ,treatment of instruments denominated in or pegged to another national or state currency ,for purposes of subparagraph 7,a71 the value at which a stablecoin that is denominated in or pegged to another national or state currency or a functional monetary equivalent can readily be converted into ,united ,states dollars1 on demand1 at the time of issuance shall be calculated using the express or implied exchange rate for such conversion at the time of issuance4 7,d7 ,functional monetary equivalent defined ,for purposes of this ,act and any ,act enacted after the date of enactment of this subsection1 the term functional monetary equivalent means-- 7i7 deposits1 as defined under section #c of the ,federal ,deposit ,insurance ,act2 7ii7 e-money and money transmitter balances2 7iii7 other stablecoins2 and 7iv7 any other financial instrument issued for the purpose of circulating as money1 making payments1 or satisfying debts denominated in ,united ,states dollars or any other national or state currency4 4 7b7 ,regulations ,the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahaa et seq47 is amended by adding at the end the following3 #eb4 ,stablecoins 7a7 ,issuing stablecoins 7#a7 ,limitation on who may issue stablecoins ,it shall be unlawful for any person to issue a stablecoin other than an insured depository institution that is a member of the ,federal ,reserve ,system4 7#b7 ,limitation on stablecoin-related commercial activities ,it shall be unlawful for any person to issue a stablecoin or stablecoin-related product1 to provide any stablecoin-related service1 or otherwise engage in any stablecoin-related commercial activity1 including activity involving stablecoins issued by other persons1 without obtaining written approval in advance1 and on an ongoing basis1 from the appropriate ,federal banking agency1 the ,corporation1 and the ,board of ,governors of the ,federal ,reserve ,system4 7#c7 ,notice and approval requirements ,any person issuing a stablecoin shall-- 7,a7 notify the appropriate ,federal banking agency1 the ,corporation1 and the ,board of ,governors of the ,federal ,reserve ,system of the person's intent to issue the stablecoin at least #f months prior to the date of issuance2 7,b7 obtain written approval from the appropriate ,federal banking agency1 the ,corporation1 and the ,board of ,governors of the ,federal ,reserve ,system prior to issuing any stablecoin or stablecoin-related product1 providing any stablecoin-related services1 or otherwise engaging in any stablecoin-related commercial activity1 including activity involving stablecoins issued by other persons2 and 7,c7 provide ongoing analysis to the ,board of ,governors of the ,federal ,reserve ,system1 the ,financial ,stability ,oversight ,council1 and the ,office of ,finance ,research on any potential systemic impacts or monetary policy implications of the stablecoin4 7#d7 ,master account access ,with respect to an insured depository institution that is a member of the ,federal ,reserve ,system and that has obtained written approval described under paragraph 7#c77;,b7-- 7,a7 the ,board of ,governors of the ,federal ,reserve ,system shall provide the institution with a master account at the ,federal ,reserve ,system2 and 7,b7 the institution shall be eligible to receive all benefits and access to services associated with such account4 7b7 ,requirement ,to maintain fixed value ,any issuer of a stablecoin shall take all possible actions to ensure that1 at no point over the life of the stablecoin1 the redemption value of the stablecoin does not drop below the nominal redemption value of the stablecoin4 7c7 ,ability ,to redeem stablecoins 7#a7 ,in general ,any issuer of stablecoins shall maintain the ability to immediately redeem all outstanding stablecoins at their nominal redemption value1 upon demand1 in ,united ,states dollars4 7#b7 ,requirement to maintain collateral for uninsured stablecoin amounts 7,a7 ,in general ,any issuer of stablecoins shall deposit reserves with the applicable ,federal reserve bank in a segregated account in an amount equal to the nominal redemption value of all outstanding stablecoins issued by the issuer1 and such reserves shall serve as collateral for such stablecoins4 7,b7 ,exception for insured deposits ,subparagraph 7,a7 shall not apply with respect to the value of any outstanding stablecoins that the issuer of the stablecoins knows are insured deposits4 7#c7 ,penalties ,if the issuer of a stablecoin fails to immediately redeem an outstanding stablecoin1 upon demand1 in ,united ,states dollars 7or if the appropriate ,federal banking agency determines that the issuer does not have the ability to immediately redeem all outstanding stablecoins1 upon demand1 in ,united ,states dollars7 the appropriate ,federal banking agency shall penalize the issuer1 which may include-- 7,a7 the revocation of deposit insurance provided under this ,act2 7,b7 the revocation of the issuer's membership in the ,federal ,reserve ,system2 7,c7 the revocation of the issuer's ,federal charter2 and 7,d7 such lesser penalty as the agency determines appropriate4 7d7 ,products and services related to stablecoins 7#a7 ,disclosures ,any person offering or providing a product or service with respect to a stablecoin1 regardless of whether such person is the issuer of the stablecoin1 shall clearly disclosure-- 7,a7 whether the person is the original issuer of the stablecoin2 and 7,b7 if the person is the original issuer of the stablecoin1 whether-- 7i7 the stablecoin is being held as an insured deposit2 or 7ii7 the stablecoin is fully collateralized by reserves maintained at a ,federal reserve bank4 7#b7 ,use of the term dollar ,a person offering or providing a product or service with respect to a stablecoin may not use the term dollar or dollars to refer to stablecoin balances unless such reference is pre-approved by either the ,comptroller of the ,currency or the ,board of ,governors of the ,federal ,reserve ,system4 7e7 ,prioritization under deposit insurance ,with respect to a depositor1 for purposes of determining whether a deposit is an insured deposit1 the ,corporation shall first include deposits that are not stablecoins4 7f7 ,oversight by ,federal banking agencies 7#a7 ,in general ,the appropriate ,federal banking agency shall have general regulatory authority over an insured depository institution's business activities related to stablecoins1 including all existing regulatory powers that the agency has with respect to the institution's business activities related to other deposits 7#b7 ,capital adequacy rules ,the ,federal banking agencies shall promulgate rules and standards regarding the capital adequacy1 leverage1 liquidity1 and permitted activities of stablecoin issuers and other persons engaged in stablecoin-related activities4 7#c7 ,effect on other rules ,to the extent a person is subject to capital adequacy1 liquidity1 and other rules issued under this section1 the appropriate ,federal banking agency may provide exceptions or exemptions from similar rules issued pursuant to other provisions of law1 if the agency determines such exceptions or exemptions are appropriate1 taking into account the activities of such person4 7g7 ,rule of construction ,nothing in this section may be construed as removing any jurisdictional or regulatory authority of any ,federal agency4 4 7c7 ,banking ,act of #aicc ,section #ba of the ,banking ,act of #aicc 7#ab ,u4,s4,c4 #cgh7 is amended-- 7#a7 in subsection 7a7-- 7,a7 in paragraph 7#a71 by inserting after to any extent whatever in the business of the following3 issuing stablecoins or2 and 7,b7 in paragraph 7#b71 by inserting after officers1 agents or employees1 in the business of the following3 issuing stablecoins or2 7#b7 by redesignating subsection 7b7 as subsection 7c72 and 7#c7 by inserting after subsection 7a7 the following3 7b7 ,for the purposes of subsection 7a71 the term stablecoin has the meaning given that term under section #c of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac74 4 7d7 ,rulemaking ,not later than the end of the #c-month period beginning on the date of enactment of this ,act1 the ,board of ,governors of the ,federal ,reserve ,system1 the ,comptroller of the ,currency1 and the ,federal ,deposit ,insurance ,corporation shall issue rules to carry out this ,act and the amendments made by this ,act4