[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8827 Introduced in House (IH)]
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116th CONGRESS
2d Session
H. R. 8827
To amend the Federal Deposit Insurance Act to provide for the
classification and regulation of stablecoins, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 30, 2020
Ms. Tlaib (for herself, Mr. Lynch, and Mr. Garcia of Illinois)
introduced the following bill; 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 stablecoins, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stablecoin Classification and
Regulation Act of 2020''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Article I, Section 8, Clause 5 of the United States
Constitution provides that Congress shall have the power ``to
coin money, regulate the value thereof, and of foreign coin,
and fix the standard of weights and measures''.
(2) Section 2A of the Federal Reserve Act (12 U.S.C. 225a)
provides that the mandate of the Board of Governors of the
Federal Reserve System is to ``promote effectively the goals of
maximum employment, stable prices, and moderate long-term
interest rates''.
(3) Section 21(a) of the Banking Act of 1933 (12 U.S.C.
378(a)) provides in part that:
``(a) After the expiration of one year after [June 16, 1933] it
shall be unlawful . . .
``(2) For any person, firm, corporation, association,
business trust, or other similar organization to engage, to any
extent whatever with others than his or its officers, agents or
employees, in the business of receiving deposits subject to
check or to repayment upon presentation of a pass book,
certificate of deposit, or other evidence of debt, or upon
request of the depositor, unless such person, firm,
corporation, association, business trust, or other similar
organization (A) shall be incorporated under, and authorized to
engage in such business by, the laws of the United States or of
any State, Territory, or District, and subjected, by the laws
of the United States, or of the State, Territory, or District
wherein located, to examination and regulation, or (B) shall be
permitted by the United States, any State, territory, or
district to engage in such business and shall be subjected by
the laws of the United States, or such State, territory, or
district to examination and regulations or, (C) shall submit to
periodic examination by the banking authority of the State
Territory, or District where such business is carried on and
shall make and publish periodic reports of its condition,
exhibiting in detail its resources and liabilities, 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 State, Territory, District in the
case of incorporated banking institutions engaged in such
business in the same locality.''.
(4) Section 3(l) of the Federal Deposit Insurance Act (12
U.S.C. 1813(l)) provides that under the Federal Deposit
Insurance Act, the term ``deposit'' means:
``(1) 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 credit, either conditionally or unconditionally, to a
commercial, checking, savings, time, or thrift account, or
which is evidenced by its certificate of deposit, thrift
certificate, investment certificate, certificate of
indebtedness, or other similar name, or a check or draft drawn
against a deposit account and certified by the bank or savings
association, or a letter of credit or a traveler's check on
which the bank or savings association is primarily liable:
Provided, That, without limiting the generality of the term
money or its equivalent, 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 liable, or for
a charge against a deposit account, or in settlement of checks,
drafts, or other instruments forwarded to such bank or savings
association for collection,
``(2) trust funds as defined in this Act received or held
by such bank or savings association, whether held in the trust
department or held or deposited in any other department of such
bank or savings association,
``(3) money received or held by a bank or savings
association, or the credit given for money or its equivalent
received or held by a bank or savings association, in the usual
course of business for a special or specific purpose,
regardless of the legal relationship thereby established,
including without being limited to, escrow funds, funds held as
security for an obligation due to the bank or savings
association or others (including funds held as dealers
reserves) or for securities loaned by the bank or savings
association, funds deposited by a debtor to meet maturing
obligations, funds deposited as advance payment on
subscriptions to United States Government securities, funds
held for distribution or purchase of securities, funds held to
meet its acceptances or letters of credit, and withheld taxes:
Provided, 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 association, or under condition that
the receipt thereof immediately reduces or extinguishes such an
indebtedness,
``(4) outstanding draft (including advice or authorization
to charge a bank's or a savings association's balance in
another bank or savings association), cashier's check, money
order, or other officer's check issued in the usual course of
business for any purpose, including without being limited to
those issued in payment for services, dividends, or purchases,
and
``(5) such other obligations of a bank or savings
association as the Board of Directors, after consultation with
the Comptroller of the Currency, and the Board of Governors of
the Federal Reserve System, shall find and prescribe by
regulation to be deposit liabilities by general usage, 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 deposit:
``(A) 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 State, unless--
``(i) such obligation would be a deposit if
it were carried on the books and records of the
depository institution, and would be payable
at, an office located in any State; and
``(ii) the contract evidencing the
obligation provides by express terms, and not
by implication, for payment at an office of the
depository institution located in any State;
``(B) any international banking facility deposit,
including an international banking facility time
deposit, 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 System; and
``(C) any liability of an insured depository
institution that arises under an annuity contract, the
income of which is tax deferred under section 72 of the
Internal Revenue Code of 1986.''.
(5) Section 1(a) of the Federal Deposit Insurance Act (12
U.S.C. 1811(a)) provides that the Federal Deposit Insurance
Corporation was established for the purpose of ``insur[ing] . .
. the deposits of all banks . . . which are entitled to the
benefits of insurance'' under the Federal Deposit Insurance
Act.
SEC. 3. REGULATION OF STABLECOINS.
(a) Definitions.--Section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813) is amended--
(1) in subsection (l)--
(A) in paragraph (4), by striking ``and'' at the
end;
(B) by redesignating paragraph (5) as paragraph
(6); and
(C) by inserting after paragraph (4) the following:
``(5) stablecoins issued by such bank or savings
association; and'';
(2) by adding at the end the following:
``(aa) Definitions Related to Stablecoins.--
``(1) Stablecoin.--The term `stablecoin' means any
cryptocurrency or other privately-issued digital financial
instrument that--
``(A) is directly or indirectly distributed to
investors, financial institutions, or the general
public;
``(B) is--
``(i) denominated in United States dollars
or pegged to the United States dollar; or
``(ii) denominated in or pegged to another
national or state currency; and
``(C) is issued--
``(i) with a fixed nominal redemption
value;
``(ii) 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 fixed; or
``(iii) in such a manner that, regardless
of intent, 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 fixed.
``(2) Nominal redemption value.--
``(A) In general.--With respect to a stablecoin,
the term` nominal redemption value' means the value at
which the stablecoin can readily be converted into
United States dollars, or any other national or state
currency, or a functional monetary equivalent, on
demand, at the time of issuance, or otherwise accepted
in payment or to satisfy debts denominated in United
States dollars or any other national or state currency.
``(B) Treatment of instruments pegged to the united
states dollar.--For purposes of subparagraph (A), 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
dollars, on demand, at the time of issuance shall be
calculated using the express or implied pegged rate for
such conversion at the time of issuance.
``(C) Treatment of instruments denominated in or
pegged to another national or state currency.--For
purposes of subparagraph (A), 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
dollars, on demand, at the time of issuance shall be
calculated using the express or implied exchange rate
for such conversion at the time of issuance.
``(D) Functional monetary equivalent defined.--For
purposes of this Act and any Act enacted after the date
of enactment of this subsection, the term `functional
monetary equivalent' means--
``(i) deposits, as defined under section 3
of the Federal Deposit Insurance Act;
``(ii) e-money and money transmitter
balances;
``(iii) other stablecoins; and
``(iv) any other financial instrument
issued for the purpose of circulating as money,
making payments, or satisfying debts
denominated in United States dollars or any
other national or state currency.''.
(b) Regulations.--The Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.) is amended by adding at the end the following:
``SEC. 52. STABLECOINS.
``(a) Issuing Stablecoins.--
``(1) 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 System.
``(2) Limitation on stablecoin-related commercial
activities.--It shall be unlawful for any person to issue a
stablecoin or stablecoin-related product, to provide any
stablecoin-related service, or otherwise engage in any
stablecoin-related commercial activity, including activity
involving stablecoins issued by other persons, without
obtaining written approval in advance, and on an ongoing basis,
from the appropriate Federal banking agency, the Corporation,
and the Board of Governors of the Federal Reserve System.
``(3) Notice and approval requirements.--Any person issuing
a stablecoin shall--
``(A) notify the appropriate Federal banking
agency, the Corporation, and the Board of Governors of
the Federal Reserve System of the person's intent to
issue the stablecoin at least 6 months prior to the
date of issuance;
``(B) obtain written approval from the appropriate
Federal banking agency, the Corporation, and the Board
of Governors of the Federal Reserve System prior to
issuing any stablecoin or stablecoin-related product,
providing any stablecoin-related services, or otherwise
engaging in any stablecoin-related commercial activity,
including activity involving stablecoins issued by
other persons; and
``(C) provide ongoing analysis to the Board of
Governors of the Federal Reserve System, the Financial
Stability Oversight Council, and the Office of Finance
Research on any potential systemic impacts or monetary
policy implications of the stablecoin.
``(4) 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 (3)(B)--
``(A) the Board of Governors of the Federal Reserve
System shall provide the institution with a master
account at the Federal Reserve System; and
``(B) the institution shall be eligible to receive
all benefits and access to services associated with
such account.
``(b) Requirement To Maintain Fixed Value.--Any issuer of a
stablecoin shall take all possible actions to ensure that, at no point
over the life of the stablecoin, the redemption value of the stablecoin
does not drop below the nominal redemption value of the stablecoin.
``(c) Ability To Redeem Stablecoins.--
``(1) In general.--Any issuer of stablecoins shall maintain
the ability to immediately redeem all outstanding stablecoins
at their nominal redemption value, upon demand, in United
States dollars.
``(2) Requirement to maintain collateral for uninsured
stablecoin amounts.--
``(A) 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 issuer, and such reserves shall serve as
collateral for such stablecoins.
``(B) Exception for insured deposits.--Subparagraph
(A) shall not apply with respect to the value of any
outstanding stablecoins that the issuer of the
stablecoins knows are insured deposits.
``(3) Penalties.--If the issuer of a stablecoin fails to
immediately redeem an outstanding stablecoin, upon demand, in
United States dollars (or if the appropriate Federal banking
agency determines that the issuer does not have the ability to
immediately redeem all outstanding stablecoins, upon demand, in
United States dollars) the appropriate Federal banking agency
shall penalize the issuer, which may include--
``(A) the revocation of deposit insurance provided
under this Act;
``(B) the revocation of the issuer's membership in
the Federal Reserve System;
``(C) the revocation of the issuer's Federal
charter; and
``(D) such lesser penalty as the agency determines
appropriate.
``(d) Products and Services Related to Stablecoins.--
``(1) Disclosures.--Any person offering or providing a
product or service with respect to a stablecoin, regardless of
whether such person is the issuer of the stablecoin, shall
clearly disclosure--
``(A) whether the person is the original issuer of
the stablecoin; and
``(B) if the person is the original issuer of the
stablecoin, whether--
``(i) the stablecoin is being held as an
insured deposit; or
``(ii) the stablecoin is fully
collateralized by reserves maintained at a
Federal reserve bank.
``(2) 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 System.
``(e) Prioritization Under Deposit Insurance.--With respect to a
depositor, for purposes of determining whether a deposit is an insured
deposit, the Corporation shall first include deposits that are not
stablecoins.
``(f) Oversight by Federal Banking Agencies.--
``(1) In general.--The appropriate Federal banking agency
shall have general regulatory authority over an insured
depository institution's business activities related to
stablecoins, including all existing regulatory powers that the
agency has with respect to the institution's business
activities related to other deposits
``(2) Capital adequacy rules.--The Federal banking agencies
shall promulgate rules and standards regarding the capital
adequacy, leverage, liquidity, and permitted activities of
stablecoin issuers and other persons engaged in stablecoin-
related activities.
``(3) Effect on other rules.--To the extent a person is
subject to capital adequacy, liquidity, and other rules issued
under this section, the appropriate Federal banking agency may
provide exceptions or exemptions from similar rules issued
pursuant to other provisions of law, if the agency determines
such exceptions or exemptions are appropriate, taking into
account the activities of such person.
``(g) Rule of Construction.--Nothing in this section may be
construed as removing any jurisdictional or regulatory authority of any
Federal agency.''.
(c) Banking Act of 1933.--Section 21 of the Banking Act of 1933 (12
U.S.C. 378) is amended--
(1) in subsection (a)--
(A) in paragraph (1), by inserting after ``to any
extent whatever in the business of'' the following:
``issuing stablecoins or''; and
(B) in paragraph (2), by inserting after
``officers, agents or employees, in the business of''
the following: ``issuing stablecoins or'';
(2) by redesignating subsection (b) as subsection (c); and
(3) by inserting after subsection (a) the following:
``(b) For the purposes of subsection (a), the term `stablecoin' has
the meaning given that term under section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).''.
(d) Rulemaking.--Not later than the end of the 3-month period
beginning on the date of enactment of this Act, the Board of Governors
of the Federal Reserve System, the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation shall issue rules to carry out
this Act and the amendments made by this Act.
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