Title 12, Banks and BankingRelease 119-110
§5904 Approval of Subsidiaries of Insured Depository Institutions and Federal Qualified Payment Stablecoin Issuers
Title 12 › CHAPTER 56 — REGULATION OF PAYMENT STABLECOINS › § 5904
Summary
Federal regulators must set up a process to accept, review, and decide on applications from banks that want to issue payment stablecoins through a subsidiary and from certain nonbank or special national bank entities that want to be federally qualified stablecoin issuers. The regulators must create rules, a licensing system, and ongoing supervision that focus on safety and soundness. They must decide each complete application within 120 days. Within 30 days of getting an application, the regulator must say if it is "substantially complete" and tell the applicant what more is needed. If the regulator misses the 120-day deadline, the application is automatically approved. Applications can only be denied if the regulator finds the applicant would be unsafe or unsound, based on factors like financial strength, whether key people have felony convictions for serious financial crimes, the honesty and experience of leaders and major owners, the issuer’s redemption policy, and any other safety measures the regulator requires. Issuing a stablecoin on an open, public, or decentralized network cannot be used as a reason to deny an application. If an application is denied, the regulator must give a written explanation within 30 days, with specific findings and steps the applicant can take. The applicant has 30 days to ask for a hearing. The hearing must be scheduled within 30 days, and a final decision must be issued within 60 days after the hearing. If no hearing is requested, the denial becomes final and the regulator must notify the applicant within 10 days. Applicants may reapply. Regulators must tell Congress when they start taking applications and must annually report on any applications that have been pending 180 days or more and are still incomplete. For up to 12 months from the law’s start, regulators may temporarily waive some rules for applicants with pending filings. Approved issuers must certify within 180 days of approval and once a year that they have anti-money laundering and sanctions programs designed to stop money laundering and terrorist financing (including groups listed under section 1189 of title 8). Those certifications must be shared with the Secretary of the Treasury on request. A regulator can revoke approval if a required certification is not filed. Knowingly filing a false certification is a crime under 18 U.S.C. 1001, and regulators may refer suspected violations to the Attorney General or the state attorney general.
Full Legal Text
Title 12, §5904
Banks and Banking, Source: USLM XML via OLRC
(a)Application
(1)In general
Each primary Federal payment stablecoin regulator shall—
(A)receive, review, and consider for approval applications from any insured depository institution that seeks to issue payment stablecoins through a subsidiary and any nonbank entity, Federal branch, or uninsured national bank that is chartered by the Comptroller pursuant to title LXII of the Revised Statutes, and that seeks to issue payment stablecoins as a Federal qualified payment stablecoin issuer; and
(B)establish a process and framework for the licensing, regulation, examination, and supervision of such entities that prioritizes the safety and soundness of such entities.
(2)Authority to issue regulations and process applications
The primary Federal payment stablecoin regulators shall, before the date described in section 5913 of this title—
(A)issue regulations consistent with that section to carry out this section; and
(B)pursuant to the regulations described in subparagraph (A), accept and process applications described in paragraph (1).
(3)Mandatory approval process
A primary Federal payment stablecoin regulator shall, upon receipt of a substantially complete application received under paragraph (1), evaluate and make a determination on each application based on the criteria established under this chapter.
(b)Evaluation of applications
A substantially complete application received under subsection (a) shall be evaluated by the primary Federal payment stablecoin regulator using the factors described in subsection (c).
(c)Factors to be considered
The factors described in this subsection are the following:
(1)The ability of the applicant (or, in the case of an applicant that is an insured depository institution, the subsidiary of the applicant), based on financial condition and resources, to meet the requirements set forth under section 5903 of this title.
(2)Whether an individual who has been convicted of a felony offense involving insider trading, embezzlement, cybercrime, money laundering, financing of terrorism, or financial fraud is serving as an officer or director of the applicant.
(3)The competence, experience, and integrity of the officers, directors, and principal shareholders of the applicant, its subsidiaries, and parent company, including—
(A)the record of those officers, directors, and principal shareholders of compliance with laws and regulations; and
(B)the ability of those officers, directors, and principal shareholders to fulfill any commitments to, and any conditions imposed by, their primary Federal payment stablecoin regulator in connection with the application at issue and any prior applications.
(4)Whether the redemption policy of the applicant meets the standards under section 5903(a)(1)(B) of this title.
(5)Any other factors established by the primary Federal payment stablecoin regulator that are necessary to ensure the safety and soundness of the permitted payment stablecoin issuer.
(d)Timing for decision; grounds for denial
(1)Timing for decisions on applications
(A)In general
Not later than 120 days after receiving a substantially complete application under subsection (a), a primary Federal payment stablecoin regulator shall render a decision on the application.
(B)Substantially complete
(i)In general
For purposes of subparagraph (A), an application shall be considered substantially complete if the application contains sufficient information for the primary Federal payment stablecoin regulator to render a decision on whether the applicant satisfies the factors described in subsection (c).
(ii)Notification
Not later than 30 days after receiving an application under subsection (a), a primary Federal payment stablecoin regulator shall notify the applicant as to whether the primary Federal payment stablecoin regulator considers the application to be substantially complete and, if the application is not substantially complete, the additional information the applicant shall provide in order for the application to be considered substantially complete.
(iii)Material change in circumstances
An application considered substantially complete under this subparagraph remains substantially complete unless there is a material change in circumstances that requires the primary Federal payment stablecoin regulator to treat the application as a new application.
(2)Denial of application
(A)Grounds for denial
(i)In general
A primary Federal payment stablecoin regulator shall only deny a substantially complete application received under subsection (a) if the regulator determines that the activities of the applicant would be unsafe or unsound based on the factors described in subsection (c).
(ii)Issuance on open, public, or decentralized network not ground for denial
The issuance of a payment stablecoin on an open, public, or decentralized network shall not be a valid ground for denial of an application received under subsection (a).
(B)Explanation required
If a primary Federal payment stablecoin regulator denies a complete application received under subsection (a), not later than 30 days after the date of such denial, the regulator shall provide the applicant with written notice explaining the denial with specificity, including all findings made by the regulator with respect to all identified material shortcomings in the application, including actionable recommendations on how the applicant could address the identified material shortcomings.
(C)Opportunity for hearing; final determination
(i)In general
Not later than 30 days after the date of receipt of any notice of the denial of an application under this section, the applicant may request, in writing, an opportunity for a written or oral hearing before the primary Federal payment stablecoin regulator to appeal the denial.
(ii)Timing
Upon receipt of a timely request under clause (i), the primary Federal payment stablecoin regulator shall notice a time (not later than 30 days after the date of receipt of the request) and place at which the applicant may appear, personally or through counsel, to submit written materials or provide oral testimony and oral argument.
(iii)Final determination
Not later than 60 days after the date of a hearing under this subparagraph, the applicable primary Federal payment stablecoin regulator shall notify the applicant of a final determination, which shall contain a statement of the basis for that determination, with specific findings.
(iv)Notice if no hearing
If an applicant does not make a timely request for a hearing under this subparagraph, the primary Federal payment stablecoin regulator shall notify the applicant, not later than 10 days after the date by which the applicant may request a hearing under this subparagraph, in writing, that the denial of the application is a final determination of the primary Federal payment stablecoin regulator.
(3)Failure to render a decision
If a primary Federal payment stablecoin regulator fails to render a decision on a complete application within the time period specified in paragraph (1), the application shall be deemed approved.
(4)Right to reapply
The denial of an application under this section shall not prohibit the applicant from filing a subsequent application.
(e)Reports on pending applications
Each primary Federal payment stablecoin regulator shall—
(1)notify Congress upon beginning to process applications under this chapter; and
(2)annually report to Congress on the applications that have been pending for 180 days or more since the date the initial application was filed and for which the applicant has been informed that the application remains incomplete, including documentation on the status of such applications and why such applications have not yet been approved.
(f)Safe harbor for pending applications
The primary Federal payment stablecoin regulators may waive the application of the requirements of this chapter for a period not to exceed 12 months beginning on the effective date of this chapter, with respect to—
(1)a subsidiary of an insured depository institution, if the insured depository institution has an application pending for the subsidiary to become a permitted payment stablecoin issuer on that effective date; or
(2)a Federal qualified payment stablecoin issuer with a pending application on that effective date.
(g)Rulemaking
Consistent with section 5913 of this title, the primary Federal payment stablecoin regulators shall issue rules necessary for the regulation of the issuance of payment stablecoins, but may not impose requirements in addition to the requirements specified under section 5903 of this title.
(h)Relation to other licensing requirements
The provisions of this section supersede and preempt any State requirement for a charter, license, or other authorization to do business with respect to a Federal qualified payment stablecoin issuer or subsidiary of an insured depository institution or credit union that is approved under this section to be a permitted payment stablecoin issuer. Nothing in this subsection shall preempt or supersede the authority of a State to charter, license, supervise, or regulate an insured depository institution or credit union chartered in such State or to supervise a subsidiary of such insured depository institution or credit union that is approved under this section to be a permitted payment stablecoin issuer.
(i)Certification required
(1)In general
Not later than 180 days after the approval of an application, and on an annual basis thereafter, each permitted payment stablecoin issuer shall submit to its primary Federal payment stablecoin regulator, or in the case of a State qualified payment stablecoin issuer its State payment stablecoin regulator, a certification that the issuer has implemented anti-money laundering and economic sanctions compliance programs that are reasonably designed to prevent the permitted payment stablecoin issuer from facilitating money laundering, in particular, facilitating money laundering for cartels and organizations designated as foreign terrorist organizations under section 1189 of title 8 and the financing of terrorist activities, consistent with the requirements of this chapter.
(2)Availability of certifications
Federal payment stablecoin regulators and State payment stablecoin regulators shall make certifications described in paragraph (1) available to the Secretary of Treasury upon request.
(3)Penalties
(A)Approval revocation
The primary Federal payment stablecoin regulator or State payment stablecoin regulator of a permitted payment stablecoin issuer that does not submit a certification pursuant to paragraph (1) may revoke the approval of the payment stablecoin issuer under this section.
(B)Criminal penalty
(i)In general
Any person that knowingly submits a certification pursuant to paragraph (1) that is false shall be subject to the criminal penalties set forth under section 1001 of title 18.
(ii)Referral to Attorney General
If a Federal payment stablecoin regulator or State payment stablecoin regulator has reason to believe that any person has knowingly violated paragraph (1), the applicable regulator may refer the matter to the Attorney General or to the attorney general of the payment stablecoin issuer’s host State.
Legislative History
Notes & Related Subsidiaries
Delayed
Effective Date
of SectionFor delayed
Effective Date
of section, see
Effective Date
note below.
Editorial Notes
References in Text
Title LXII of the Revised Statutes, referred to in subsec. (a)(1)(A), consists of R.S. §§ 5133 to 5244, which are classified to section 16, 21, 22 to 24a, 25a, 25b, 26, 27, 29, 35 to 37, 39, 43, 52, 53, 55 to 57, 59 to 62, 66, 71, 72 to 76, 81, 83 to 86, 90, 91, 93, 93a, 94, 141 to 144, 161, 164, 181, 182, 192 to 194, 196, 215c, 481 to 485, 501, 541, 548, and 582 of this title. See, also, section 8, 333, 334, 475, 656, 709, 1004, and 1005 of Title 18, Crimes and Criminal Procedure. For complete classification of R.S. §§ 5133 to 5244 to the Code, see Tables. This chapter, referred to in subsecs. (a)(3), (e)(1), (f), and (i)(1), was in the original “this Act”, meaning Pub. L. 119–27, July 18, 2025, 139 Stat. 419, known as the Guiding and Establishing National Innovation for U.S. Stablecoins Act and also as the GENIUS Act, which is classified principally to this chapter. For complete classification of this Act to the Code, see
Short Title
note set out under section 5901 of this title and Tables. For the
Effective Date
of this chapter, referred to in subsec. (f), see
Effective Date
note set out under section 5901 of this title.
Statutory Notes and Related Subsidiaries
Effective Date
Section effective on the earlier of the date that is 18 months after July 18, 2025, or the date that is 120 days after the date on which the primary Federal payment stablecoin regulators issue any final
Regulations
implementing Pub. L. 119–27, see section 20 of Pub. L. 119–27, set out as a note under section 5901 of this title.
Reference
Citations & Metadata
Citation
12 U.S.C. § 5904
Title 12, Banks and Banking
Last Updated
Sep 22, 2026
Release point: 119-110