[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 5340 Introduced in Senate (IS)]

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117th CONGRESS
  2d Session
                                S. 5340

  To provide a regulatory framework and consumer protections for the 
        issuance of payment stablecoins, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 21, 2022

  Mr. Toomey introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
  To provide a regulatory framework and consumer protections for the 
        issuance of payment 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 Transparency of Reserves 
and Uniform Safe Transactions Act of 2022'' or the ``Stablecoin TRUST 
Act of 2022''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency''--
                    (A) has the meaning given the term in section 3 of 
                the Federal Deposit Insurance Act (12 U.S.C. 1813); and
                    (B) includes the National Credit Union 
                Administration.
            (2) Deposit.--The term ``deposit'' has the meaning given 
        the term in section 3 of the Federal Deposit Insurance Act (12 
        U.S.C. 1813).
            (3) Digital asset.--The term ``digital asset'' means any 
        digital representation of value that is recorded on a 
        cryptographically secured distributed ledger.
            (4) Insured depository institution.--The term ``insured 
        depository institution'' has the meaning given the term in 
        section 3 of the Federal Deposit Insurance Act (12 U.S.C. 
        1813).
            (5) Level 1 high-quality liquid asset.--The term ``level 1 
        high-quality liquid asset'' means an asset described in section 
        249.20(a) of title 12, Code of Federal Regulations.
            (6) Money transmitting business.--The term ``money 
        transmitting business'' has the meaning given the term in 
        section 5330 of title 31, United States Code.
            (7) National limited payment stablecoin issuer.--The term 
        ``national limited payment stablecoin issuer'' means a person 
        that--
                    (A) issues payment stablecoins; and
                    (B) receives a license from, and becomes subject to 
                the regulatory standards established by, the Office of 
                the Comptroller of the Currency under section 5244A of 
                the Revised Statutes, as added by section 6 of this 
                Act.
            (8) Non-depository trust company.--The term ``non-
        depository trust company'' means a trust company that does not 
        receive deposits other than trust funds.
            (9) Payment stablecoin.--The term ``payment stablecoin'' 
        means a digital asset that--
                    (A) is designed to maintain a stable value relative 
                to a fiat currency or currencies;
                    (B) is convertible directly to fiat currency by the 
                issuer;
                    (C) is designed to be widely used as a medium of 
                exchange;
                    (D) is issued by a centralized entity;
                    (E) does not inherently pay interest to the holder; 
                and
                    (F) is recorded on a public distributed ledger.
            (10) Payment stablecoin issuer.--The term ``payment 
        stablecoin issuer'' means a person that issues a payment 
        stablecoin under section 3(b) of this Act.
            (11) Registered public accounting firm.--The term 
        ``registered public accounting firm'' has the meaning given the 
        term in section 2(a) of the Sarbanes-Oxley Act of 2002 (15 
        U.S.C. 7201(a)).
            (12) State banking supervisor.--The term ``State banking 
        supervisor'' means the commissioner, superintendent, or similar 
        official of a State who is responsible for the chartering, 
        regulation, and examination of depository institutions, trust 
        companies, money transmitting businesses, and similar entities 
        within the State.

SEC. 3. ISSUANCE OF PAYMENT STABLECOINS.

    (a) In General.--Except as provided in subsection (b), it shall be 
unlawful for any person to issue a payment stablecoin.
    (b) Exceptions.--Subsection (a) shall not apply to--
            (1) a money transmitting business, a non-depository trust 
        company, or any other person that is authorized by a State 
        banking supervisor to issue payment stablecoins;
            (2) a national limited payment stablecoin issuer;
            (3) a depository institution, as defined in section 
        19(b)(1) of the Federal Reserve Act (12 U.S.C 461(b)(1)); or
            (4) a national trust bank.
    (c) Joint Supervision.--
            (1) In general.--If a person is authorized by the 
        appropriate Federal banking agency and the applicable State 
        banking supervisor to issue payment stablecoins, the person 
        shall be jointly supervised by the appropriate Federal banking 
        agency and the State banking supervisor.
            (2) Depository institutions.--A depository institution 
        described in subsection (b)(3)--
                    (A) may become a member bank of the Federal Reserve 
                System or obtain deposit or share insurance; and
                    (B) shall not be required to satisfy subparagraph 
                (A) as a condition to operate.
    (d) Injunctive Relief.--The Comptroller of the Currency may bring 
an action in the appropriate district court of the United States or the 
court of any territory of the United States for the enforcement of this 
section and such courts shall have jurisdiction and power to order and 
require compliance herewith, including through injunctive relief.
    (e) Federal Reserve Accounts and Services.--Each Federal Reserve 
bank shall, upon application from a national limited payment stablecoin 
issuer or a payment stablecoin issuer that only engages in the business 
of issuing and redeeming payment stablecoins and engaging in activities 
incidental to such issuance or redemption--
            (1) establish and maintain an account for the payment 
        stablecoin issuer; and
            (2) provide to the payment stablecoin issuer--
                    (A) the services listed in section 11A(b) of the 
                Federal Reserve Act (12 U.S.C. 248a(b)); and
                    (B) a deposit account in accordance with the first 
                undesignated paragraph of section 13 of the Federal 
                Reserve Act (12 U.S.C. 342).

SEC. 4. DISCLOSURES, REDEMPTION POLICIES, ATTESTATIONS, AND PERMISSIBLE 
              ASSETS FOR PAYMENT STABLECOIN ISSUERS.

    (a) In General.--Any person described in section 3(b) that issues a 
payment stablecoin shall--
            (1) publicly disclose the assets backing the payment 
        stablecoin on a monthly basis;
            (2) adopt and publicly disclose policies for redeeming the 
        payment stablecoin, including whether redemption requests will 
        be met on demand or with a time lag;
            (3) undergo quarterly attestations by a registered public 
        accounting firm and publicly disclose the results; and
            (4) attest that the assets backing the payment stablecoin 
        do not materially diverge from those disclosed.
    (b) Filing of Disclosures.--Disclosures described in subsection (a) 
shall--
            (1) be filed with the Secretary of the Treasury; and
            (2) made publicly available on a Department of the Treasury 
        website on a form which shall include an executive summary not 
        longer than 1 page in length.
    (c) Rulemaking.--The Secretary of the Treasury may promulgate 
regulations under section 553 of title 5, United States Code, to 
develop a template form for ensuring that the disclosures described in 
subsection (a) are complete, clear, and understandable.
    (d) Permissible Assets.--Payment stablecoins issued by a payment 
stablecoin issuer shall be backed by assets--
            (1) with a market value equal to not less than 100 percent 
        of the par value of the payment stablecoins outstanding; and
            (2) that are--
                    (A) level 1 high-quality liquid assets, denominated 
                in United States dollars;
                    (B) United States coins and currency, as described 
                in section 5103 of title 31, United States Code; and
                    (C) any deposit with an insured depository 
                institution.

SEC. 5. EQUAL TREATMENT FOR DEPOSITORY INSTITUTIONS.

    (a) National Banking Associations.--Section 5136 of the Revised 
Statutes (12 U.S.C. 24) is amended by adding at the end the following:
            ``Twelfth. To issue payment stablecoins.''.
    (b) Segregation.--A depository institution, as defined in section 
19(b)(1) of the Federal Reserve Act (12 U.S.C. 461(b)(1))--
            (1) may segregate into a separate legal entity the issuance 
        of payment stablecoins and management of such payment 
        stablecoin reserve assets from other activities; and
            (2) that elects to segregate under paragraph (1), or which 
        only issues payment stablecoins or manages payment stablecoin 
        reserve assets--
                    (A) shall be subject to the same tailored 
                regulatory standards as a national limited payment 
                stablecoin issuer for that activity; and
                    (B) shall remain subject to regulation, 
                examination, and supervision by the same regulator as 
                the depository institution.

SEC. 6. NATIONAL LIMITED PAYMENT STABLECOIN ISSUERS.

    The Revised Statutes are amended by inserting after section 5244 
(12 U.S.C. 43) the following:

``SEC. 5244A. NATIONAL LIMITED PAYMENT STABLECOIN ISSUERS.

    ``(a) Application.--An entity may submit to the Comptroller of the 
Currency an application for a national limited payment stablecoin 
issuer license.
    ``(b) Authority.--A license for a national limited payment 
stablecoin issuer shall authorize the national limited payment 
stablecoin issuer to issue and redeem payment stablecoins and engage in 
any activities incidental to such issuance or redemption, including 
making a market in such payment stablecoin and holding and managing the 
reserve assets of such payment stablecoins.
    ``(c) Limitation on Other Activities.--A national limited payment 
stablecoin issuer shall not engage in any activities, such as making 
loans or other extensions of credit, other than those authorized by 
subsection (b).
    ``(d) Review.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        Comptroller of the Currency shall grant applications for 
        national limited payment stablecoin issuer licenses not later 
        than 90 days after the date on which the application is 
        submitted.
            ``(2) Considerations.--
                    ``(A) In general.--The Comptroller of the Currency 
                may deny an application for a license under this 
                subsection only if the Comptroller determines that the 
                activities of the applicant would be unsafe or unsound 
                based on the factors described in subparagraph (B).
                    ``(B) Factors.--The factors described in this 
                subparagraph are as follows:
                            ``(i) The financial condition and business 
                        plan of the applicant.
                            ``(ii) The general character and fitness of 
                        the management of the applicant.
                            ``(iii) The risks presented and the 
                        potential benefits that could be delivered to 
                        consumers.
            ``(3) Default.--If the Comptroller of the Currency fails to 
        approve or deny an application before the expiration of the 90-
        day period under paragraph (1), the application shall be deemed 
        to have been approved.
            ``(4) Response.--If the Comptroller of the Currency denies 
        an application under this section, the Comptroller shall 
        respond to the applicant with a detailed written explanation 
        for such denial.
    ``(e) Corporate Governance.--A national limited payment stablecoin 
issuer may elect, by designating in the bylaws of the issuer, to follow 
the corporate governance provisions of--
            ``(1) the law of the State in which the issuer is 
        incorporated;
            ``(2) the law of the State in which the main office of the 
        issuer is located;
            ``(3) chapter 1 of title 8 of the Delaware Code; or
            ``(4) the Model Business Corporation Act.
    ``(f) Supervision.--A license for a national limited payment 
stablecoin issuer shall permit supervision, examination, and regulation 
by the Comptroller of the Currency of only the legal entity that issues 
payment stablecoins.
    ``(g) Regulations.--The Office of the Comptroller of the Currency 
may establish only the following regulations, in accordance with 
section 553 of title 5, United States Code, for national limited 
payment stablecoin issuers:
            ``(1) Capital requirements which shall not exceed 6 months 
        of operating expenses.
            ``(2) Liquidity requirements.
            ``(3) Governance and risk-management requirements tailored 
        to the business model and risk profile of national limited 
        payment stablecoin issuers.
    ``(h) Enforcement.--If the Comptroller of the Currency determines 
that a national limited payment stablecoin issuer has violated the 
requirements of this subsection or any other applicable law (including 
regulations), the Comptroller of the Currency may issue a temporary 
order requiring the national limited payment stablecoin issuers to--
            ``(1) cease and desist from any such violation; and
            ``(2) take affirmative action to prevent or remedy such 
        violation.''.

SEC. 7. EXEMPTION FROM SECURITIES REQUIREMENTS.

    (a) Securities.--
            (1) Securities act of 1933.--Section 2(a)(1) of the 
        Securities Act of 1933 (15 U.S.C. 77b(a)(1)) is amended by 
        adding at the end the following: ``The term `security' does not 
        include a payment stablecoin, as that term is defined in 
        section 2 of the Stablecoin TRUST Act of 2022.''.
            (2) Securities exchange act of 1934.--Section 3(a)(10) of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is 
        amended by adding before the period at the end the following: 
        ``, and shall also not include a payment stablecoin, as that 
        term is defined in section 2 of the Stablecoin TRUST Act of 
        2022''.
            (3) Investment company act of 1940.--Section 2(a)(36) of 
        the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is 
        amended by adding at the end the following: ``The term 
        `security' does not include a payment stablecoin, as that term 
        is defined in section 2 of the Stablecoin TRUST Act of 2022.''.
            (4) Investment advisers act of 1940.--Section 202(a)(18) of 
        the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is 
        amended by adding at the end the following: ``The term 
        `security' does not include a payment stablecoin, as that term 
        is defined in section 2 of the Stablecoin TRUST Act of 2022.''.
    (b) Investment Company.--Section 3(c) of the Investment Company Act 
of 1940 (15 U.S.C. 80a-3(c)) is amended by adding at the end the 
following:
            ``(15) Any payment stablecoin issuer, as that term is 
        defined in section 2 of the Stablecoin TRUST Act of 2022.''.
    (c) Investment Adviser.--Section 202(a)(11) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)) is amended--
            (1) by striking ``;; (G)'' and inserting ``; (G)'';
            (2) by striking ``or (H)'' and inserting ``(H)''; and
            (3) by inserting ``; or (I) any payment stablecoin issuer, 
        defined in section 2 of the Stablecoin TRUST Act of 2022'' 
        before the period at the end.

SEC. 8. PRIVACY PROTECTIONS FOR DIGITAL ASSETS AND PAYMENT STABLECOIN 
              USERS.

    (a) Exemption From Reporting Requirements.--The Secretary of the 
Treasury may not collect or mandate the collection of nonpublic 
information about digital asset transactions unless the information 
is--
            (1) particularly described in a search warrant granted by a 
        judge upon a finding of probable cause that 1 or more of the 
        participants to the transaction committed or is committing a 
        crime; or
            (2) voluntarily provided by a customer of a financial 
        institution, business, or other third party and held for a 
        legitimate business purpose by that financial institution, 
        business, or third party.
    (b) Applicability of Other Laws.--A national limited payment 
stablecoin issuer shall be subject to title V of the Gramm-Leach-Bliley 
Act (15 U.S.C. 6801 et seq.).
    (c) Rule of Construction.--Nothing in this section may be construed 
to limit--
            (1) any duty to report taxable income;
            (2) any duty to disclose foreign account ownership; or
            (3) the ability of the Internal Revenue Service to conduct 
        investigations pursuant to a warrant or other regular legal 
        process.

SEC. 9. TREATMENT OF INSOLVENT PAYMENT STABLECOIN ISSUERS.

    In any insolvency proceeding, including any proceeding under title 
11, United States Code, or any insolvency proceeding by an appropriate 
Federal banking agency or a State banking supervisor with respect to a 
payment stablecoin issuer, a claim of a person holding payment 
stablecoins issued by the payment stablecoin issuer shall have priority 
over all other claims against the payment stablecoin issuer.

SEC. 10. RULES OF CONSTRUCTION.

    (a) Applicability to Other Instruments.--Nothing in sections 2 
through 6 may be construed as restricting activities involving 
instruments other than payment stablecoins.
    (b) Relation to State and Federal Authority.--Nothing in this Act 
may be construed as--
            (1) preventing a State banking supervisor from imposing 
        additional or stricter regulatory standards on a person 
        licensed by the State banking supervisor to issue payment 
        stablecoins;
            (2) superseding any requirement of State law relating to 
        money transmitting businesses operating in that State, other 
        than for payment stablecoin issuers; or
            (3) limiting the authority of an insured depository 
        institution to engage in activities permissible pursuant to 
        applicable State and Federal law, including accepting or 
        receiving deposits and issuing digital assets that represent 
        deposits.
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