[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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