§5904 Approval of subsidiaries of insured depository institutions and Federal qualified payment stablecoin issuers

Summary

Primary federal payment stablecoin regulators must take and review applications from insured banks that want to issue stablecoins through a subsidiary, and from certain nonbank entities, Federal branches, or uninsured national banks chartered by the Comptroller that want to be Federal qualified payment stablecoin issuers. The regulators must set up a licensing, rule-making, exam, and supervision process that focuses on safety and soundness, issue rules required under section 5913 before they start accepting applications, and then accept and process applications. When an application is “substantially complete,” the regulator must check it against factors like the applicant’s financial ability to meet the rules in section 5903, whether any officer has a felony for things like money laundering or fraud, the skill and honesty of leaders and owners (including their compliance history and ability to meet regulator conditions), the issuer’s redemption policy under section 5903(a)(1)(B), and any other safety-related factors. The regulator has 30 days to tell an applicant whether the filing is substantially complete and what’s missing, and must approve or deny a substantially complete application within 120 days. If the regulator does not decide in 120 days, the application is treated as approved. A regulator may only deny an application if the proposed activities would be unsafe or unsound; using an open, public, or decentralized network is not a valid reason to deny. If denied, the regulator must give a written explanation within 30 days with specific findings and ways to fix problems. The applicant can ask for a hearing within 30 days of denial; the hearing must be set within 30 days and a final decision issued within 60 days after the hearing. Denial does not stop someone from applying again. Regulators must tell Congress when they start processing applications and must yearly report on applications that have been incomplete and pending 180 days or more, explaining why. Regulators may waive the chapter’s requirements for up to 12 months from the law’s effective date for applicants with pending filings on that date. They must issue needed rules but cannot add requirements beyond section 5903. Federal approval of a permitted payment stablecoin issuer overrides state rules that would require a separate charter or license for that issuer, though States keep the power to charter, license, and supervise insured banks and credit unions and to supervise their subsidiaries. Within 180 days after approval, and every year after, each permitted issuer must certify to its regulator that it has anti-money-laundering and sanctions programs reasonably designed to stop money laundering and terrorist financing, consistent with the chapter; regulators must give those certifications to the Secretary of the Treasury on request. Failure to give the yearly certification can lead to revoking approval. Knowingly submitting a false certification can lead to criminal penalties under 18 U.S.C. 1001, and regulators may refer suspected false statements to the Attorney General or the state attorney general.