Washington, D.C. — A newly proposed bill, S.1582, aims to establish a comprehensive regulatory framework for payment stablecoins, defined as digital assets pegged to a fixed value (e.g., 1:1 with the U.S. dollar) and used for payments or settlements. The legislation imposes strict reserve, transparency, and compliance rules on issuers while distinguishing stablecoins from securities or commodities.
Key Requirements for Stablecoin Issuers
Restrict reserve usage: Reserves may only be used for redemptions or as collateral in approved transactions.
Disclose redemption policies: Issuers must publicly outline redemption procedures and publish monthly reports on circulating supply and reserve composition, certified by senior management and reviewed by an accounting firm.
Comply with anti-money laundering (AML) rules: Issuers must adhere to the Bank Secrecy Act, with the Financial Crimes Enforcement Network (FinCEN) crafting specific AML guidelines for digital assets. Executives convicted of financial crimes are barred from leadership roles.
Submit audited financials (if applicable): Issuers with over $50 billion in circulating stablecoins must file audited annual statements.
Federal vs. State Oversight
Federal system: Applies to banks, credit unions, and non-bank issuers with over $10 billion in stablecoins. The Office of the Comptroller of the Currency (OCC) oversees non-bank issuers, while federal banking regulators supervise others.
State system: Smaller issuers (under $10 billion) may opt for state regulation if deemed “substantially similar” to federal standards by the Treasury, Federal Reserve, and FDIC.
Enforcement powers: Regulators can halt stablecoin issuance for violations. In emergencies, the Federal Reserve or OCC may intervene in state-regulated cases.
Foreign Issuers Face Restrictions
For three years post-enactment, only U.S.-compliant issuers may operate domestically. Afterward, foreign issuers from “comparable” regulatory jurisdictions may qualify if they:
Can freeze transactions under U.S. legal orders.
Register with the OCC.
Hold sufficient reserves in U.S. financial institutions.
Bankruptcy Protections & Legal Status
Stablecoin holders gain priority claim status in issuer bankruptcies.
The bill excludes stablecoins from securities/commodities regulations and denies federal insurance coverage.
Related Topics:
- The Australian Exchange has requested the High Court to clarify its ruling on the legal application of crypto asset income products
- Nasdaq-listed company BTCS added 8.4 million Ether to the company’s liquidity pool
- Hong Kong has passed a stablecoin bill to establish a licensing system in response to global competition
