S.Amdt. 2241

SA 2241. Mr. HAGERTY (for himself, Mrs. Gillibrand, Mr. Scott of
South Carolina, and Ms. Lummis) submitted an amendment intended to be
proposed by him to the bill S. 1582, to provide for the regulation of
payment stablecoins, and for other purposes; which was ordered to lie
on the table; as follows:

On page 3, line 25, strike ``node''.
On page 9, line 23, insert ``is'' after ``that''.
On page 9, strike line 24 and all that follows through page
10, line 9, and insert the following:
(A) a subsidiary of an insured depository institution that
has been approved to issue payment stablecoins under section
5;
(B) a Federal qualified payment stablecoin issuer; or
(C) a State qualified payment stablecoin issuer.
On page 13, line 18, strike ``any'' and insert ``a''.
On page 13, line 24, strike ``person'' and insert ``digital
asset service provider''.
On page 14, line 5, strike ``or'' and insert ``and any''.
On page 14, line 18, strike ``If the Secretary'' and all
that follows through line 21, and insert the following:
(A) In general.--If the Secretary of the Treasury
determines that unusual and exigent circumstances exist, the
Secretary may provide limited safe harbors from subsection
(a).
(B) Justification.--Prior to issuing a limited safe harbor
under this paragraph, the Secretary of the Treasury shall
submit to the chairs and ranking members of the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives a justification for the determination of the
unusual and exigent circumstances, which may be contained in
a classified annex, as applicable.
On page 14, line 22, strike ``The'' and insert ``Consistent
with section 13, the''.
On page 14, line 23, strike ``may'' and insert ``shall''/
On page 14, line 25, strike ``statutory''.
On page 15, line 19, insert ``as'' before ``a cash
equivalent''.
On page 15, line 21, insert ``as'' before ``a cash
equivalent''.
On page 16, line 5, strike ``Rule'' and insert ``Rules''.
On page 16, strike lines 7 through 18 and insert the
following:
(1) Exempt transactions.--This section shall not apply to--
(A) the direct transfer of digital assets between 2
individuals acting on their own behalf and for their own
lawful purposes, without the involvement of an intermediary;
(B) to any transaction involving the receipt of digital
assets by an individual between an account owned by the
individual in the United States and an account owned by the
individual abroad that are offered by the same parent
company; or
(C) to any transaction by means of a software or hardware
wallet that facilitates an individual's own custody of
digital assets.
(2) Treasury authority.--Nothing in this Act shall alter
the existing authority of the Secretary of the Treasury to
block, restrict, or limit transactions involving payment
stablecoins that reference or are denominated in United
States dollars that are subject to the jurisdiction of the
United States.
On page 28, lines 17 and 18, strike ``, as applicable''.
On page 28, lines 20 and 21, strike ``and economic
sanctions compliance''.
On page 28, lines 22 and 23, strike ``, verification of
sanctions lists,''.
On page 28, line 24, strike ``programs'' and insert
``program''.
On page 29, line 4, strike ``policies'' and insert
``technical capabilities, policies,''.
On page 29, line 7, strike ``and''.
On page 29, line 13, strike the period and insert ``;
and''.
On page 29, between lines 13 and 14, insert the following:
(vi) maintenance of an effective economic sanctions
compliance program, including verification of sanctions
lists, consistent with Federal law.
On page 29, lines 14 and 15, strike ``Financial Crimes
Enforcement Network'' and insert ``Secretary of the
Treasury''.
On page 32, lines 21 and 22, strike ``and the amendments
made by that section''.
On page 32, strike lines 10 through 16 and insert the
following:
(B) Rule of construction.--Nothing in subparagraph (A)
shall limit a permitted payment stablecoin issuer from
engaging in payment stablecoin activities or digital asset
service provider activities specified by this Act, and
activities incidental thereto, that are authorized by the
primary Federal payment stablecoin regulator or the State
payment stablecoin regulator, as applicable, consistent with
all other
On page 33, line 15, strike ``A permitted'' and all that
follows through page 34, line 3, and insert the following:
(A) In general.--A permitted payment stablecoin issuer may
not--
(i) use any combination of terms relating to the United
States Government, including ``United States'', ``United
States Government'', and ``USG'', in the name of a payment
stablecoin; or
(ii) market a payment stablecoin in such a way that a
reasonable person would perceive the payment stablecoin to
be--

(I) legal tender, as described in section 5103 of title 31,
United States Code;
(II) issued by the United States; or
(III) guaranteed or approved by the Government of the
United States.

(B) Pegged stablecoins.--Abbreviations directly relating to
the currency to which a payment stablecoin is pegged, such as
``USD'', are not subject to the prohibitions in subparagraph
(A).
On page 36, strike lines 7 through 12 and insert the
following:
(11) Prohibition on interest.--No permitted payment
stablecoin issuer or foreign payment stablecoin issuer shall
pay the holder of any payment stablecoin any form of interest
or yield (whether in cash, tokens, or other consideration)
solely in connection with the holding, use, or retention of
such payment stablecoin.
On page 36, between lines 12 and 13, insert the following:
(12) Non-financial services public companies.--
(A) Definitions.--In this paragraph:
(i) Financial activities.--The term ``financial
activities''--

(I) has the meaning given that term in section 4(k) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)); and
(II) for the avoidance of doubt, includes those activities
described in subparagraphs (A) and (B) of section 2(7) and
section 4(a)(7)(A) of this Act.

(ii) Public company.--The term ``public company'' means an
issuer that is required to file reports under section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a), 78o(d)).
(B) Prohibition.--
(i) In general.--A public company that is not predominantly
engaged in 1 or more financial activities, and its wholly or
majority owned subsidiaries or affiliates, may not issue a
payment stablecoin unless the public company obtains a
unanimous vote of the Stablecoin Certification Review
Committee finding that--

(I) it will not pose a material risk to the safety and
soundness of the United States banking system, the financial
stability of the United States, or the Deposit Insurance
Fund;
(II) the public company will comply with data use
limitations providing that, unless the public company
receives consent from the consumer, nonpublic personal
information obtained from stablecoin transaction data may not
be--

(aa) used to target, personalize, or rank advertising or
other content;
(bb) sold to any third party; or
(cc) shared with non-affiliates; and

(III) the public company and the affiliates of the public
company will comply with the tying prohibitions under
paragraph (8).

(ii) Exception.--The prohibition under clause (i) against
the sharing of consumer information shall not apply to
sharing of such information--

(I) to comply with Federal, State, or local laws, rules,
and other applicable legal requirements;
(II) to comply with a properly authorized civil, criminal,
or regulatory investigation, subpoena, or summons by a
Federal, State, or local authority; or
(III) to respond to judicial process or a government
regulatory authority having jurisdiction over the public
company.

(C) Extension of prohibition.--
(i) In general.--Any company not domiciled in the United
States or its Territories that is not predominantly engaged
in 1 or more financial activities, may not issue a payment
stablecoin unless the public company obtains a unanimous vote
of the Stablecoin Certification Review Committee finding
that--

(I) it will not pose a material risk to the safety and
soundness of the United States banking system, the financial
stability of the United States, or the Deposit Insurance
Fund;
(II) the public company will comply with data use
limitations providing that, unless the public company
receives consent from the consumer, nonpublic personal
information obtained from stablecoin transaction data may not
be--

(aa) used to target, personalize, or rank advertising or
other content;
(bb) sold to any third party; or
(cc) shared with non-affiliates; except

(III) the public company and the affiliates of the public
company will comply with the tying prohibitions under
paragraph (8).

(ii) Exception.--The prohibition under clause (i) against
the sharing of consumer information shall not apply to
sharing of such information--

(I) to comply with Federal, State, or local laws, rules,
and other applicable legal requirements;
(II) to comply with a properly authorized civil, criminal,
or regulatory investigation, subpoena, or summons by a
Federal, State, or local authority; or

[[Page S3076]]

(III) to respond to judicial process or a government
regulatory authority having jurisdiction over the public
company.

(D) Rulemaking.--Not later than 1 year after the date of
enactment of this Act, the Stablecoin Certification Review
Committee shall issue an interpretive rule clarifying the
application of this paragraph.
(13) Eligibility.--Nothing in this Act shall be construed
as expanding or contracting legal eligibility to receive
services available from a Federal Reserve bank or to make
deposits with a Federal Reserve bank, in each case pursuant
to the Federal Reserve Act.
On page 36, line 13, strike ``(12)'' and insert ``(14)''.
On page 38, lines 2 and 3, strike ``that subsection'' and
insert ``this Act''.
On page 40, line 13, insert ``any'' after ``to''.
On page 43, line 1, insert ``(or the Vice Chair for
Supervision, as delegated by the Chair of the Board)'' after
``Board''.
On page 46, line 16, strike ``a''.
On page 46, line 17, strike ``stablecoin'' and insert
``stablecoins''.
On page 47, line 18, strike ``, provided that'' and all
that follows through line 25.
On page 49, line 6, strike ``may'' and insert ``shall''.
On page 51, lines 14 and 15, strike ``House of
Representatives and the Senate'' and insert ``Senate and the
House of Representatives''.
On page 51, lines 19 and 20, strike ``House of
Representatives and the Senate'' and insert ``Senate and the
House of Representatives''.
On page 51, line 22, strike ``product''.
On page 51, line 23, insert ``For the purposes of this
paragraph, an employee described in section 202 of title 18,
United States Code, shall be deemed an executive branch
employee for purposes of complying with section 208 of that
title.'' after ``public service.''.
On page 60, line 21, insert ``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.'' after
``stablecoin issuer.''.
On page 61, line 9, strike ``including,''.
On page 63, lines 22 and 23, strike ``to be'' and insert
``and''.
On page 64, line 9, strike ``with'' and insert ``within''.
On page 66, line 5, insert ``or recklessly'' after
``willfully'' each place it appears.
On page 73, strike lines 3 through 8 and insert the
following:
(c) Rule of Construction.--Nothing in this Act may be
construed to modify or otherwise affect any right or remedy
under any Federal consumer financial law, including 12 U.S.C.
5515 and 15 U.S.C. 41 et seq.
On page 81, lines 5 and 6, strike ``Unless otherwise
provided in this Act'' and insert ``Notwithstanding any other
provision of law''.
On page 82, lines 8 and 9, strike ``as specified in this
subsection'' and insert ``for State laws relating to the
chartering, licensure, or other authorization to do business
as a permitted payment stablecoin issuer''.
On page 82, line 13, strike ``Stablecoin'' and insert
``Stablecoins''.
On page 82, line 15, strike ``Payment'' and insert ``A
payment''.
On page 82, line 18, insert ``by a digital asset service
provider'' after ``United States''.
On page 83, lines 6 and 7, strike ``that is''.
On page 83, line 25, insert ``except as provided in
subsection (c)'' after ``(a),''.
On page 83, line 25, strike ``may'' and insert ``shall''.
On page 85, between lines 4 and 5, insert the following:
(C) Publication.--Upon a determination under subparagraph
(A), the Secretary of the Treasury shall publish the
determination in the Federal Register, including a statement
detailing how the foreign payment stablecoin issuer has met
the criteria described in subparagraph (B).
On page 86, line 9, insert ``Notwithstanding the foregoing,
the Secretary of Treasury may determine that multiple acts of
noncompliance constitute separate violations if such acts
were the result of gross negligence, a reckless disregard
for, or a pattern of indifference to, money laundering,
financing of terrorism, or sanctions evasion requirements.''
after ``cause.''.
On page 88, line 15, insert ``(2), or (3),'' after
``(1),''.
On page 88, lines 15 and 16, strike ``a report''.
On page 88, line 19, insert ``a report, which may include a
classified annex, if applicable,'' after ``House of
Representatives,''.
On page 88, between lines 22 and 23, insert the following:
(d) Rule of Construction.--Nothing in this Act shall be
construed as altering the existing authority of the Secretary
of the Treasury to block, restrict, or limit transactions
involving payment stablecoins that reference or are
denominated in United States dollars that are subject to the
jurisdiction of the United States.
On page 91, line 22, strike ``Best practices'' and insert
``Standards''.
On page 92, line 2, strike ``and'' and insert ``or''.
On page 92, line 3, strike ``Best practices'' and insert
``Standards''.
On page 92, between lines 9 and 10, insert the following:
(4) Tailored risk management standards for financial
institutions interacting with decentralized finance
protocols.
On page 92, line 11, strike ``Not later than'' and all that
follows through page 93, line 7, and insert the following:
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Secretary of the Treasury shall
submit to the chairs and ranking members of the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives a report on--
(A) legislative and regulatory proposals to allow regulated
financial institutions to develop and implement novel and
innovative methods, techniques, or strategies to detect
illicit activity, such as money laundering and sanctions
evasion, involving digital assets;
(B) the results of the research and risk assessments
conducted pursuant to this section;
(C) efforts to support the ability of financial
institutions to implement novel and innovative methods,
techniques, or strategies to detect illicit activity, such as
money laundering and sanctions evasion, involving digital
assets;
(D) the extent to which transactions on distributed
ledgers, digital asset mixing services, tumblers, or other
similar services that mix payment stablecoins in such a way
as to make such transaction or the identity of the
transaction parties less identifiable may facilitate illicit
activity; and
(E) legislative recommendations relating to the scope of
the term ``digital asset service provider'' and the
application of that term to decentralized finance.
(2) Classified annex.--A report under this section may
include a classified annex, if applicable.
On page 95, strike line 1 through 25 and insert the
following:
(b) Customer Property Requirement.--A person described in
subsection (a) shall, with respect to other property
described in that subsection--
(1) treat and deal with the payment stablecoins, private
keys, cash, and other property of a person for whom or on
whose behalf the person described in that subsection
receives, acquires, or holds payment stablecoins, private
keys, cash, and other property (hereinafter referred to in
this section as the ``customer'') as belonging to such
customer and not as the property of such person; and
(2) take such steps as are appropriate to protect the
payment stablecoins, private keys, cash, and other property
of a customer from the claims of creditors of the person.
On page 98, line 8, insert ``provided such treatment is
consistent with Federal law'' after ``deposit''.
On page 99, strike lines 6 through 18 and insert the
following:
(a) In General.--Subject to section 507(e) of title 11,
United States Code, as added by subsection (d), in any
insolvency proceeding of a permitted payment stablecoin
issuer under Federal or State law, including any proceeding
under that title and any insolvency proceeding administered
by a State payment stablecoin regulator with respect to a
permitted payment stablecoin issuer--
(1) the claim of a person holding payment stablecoins
issued by the permitted payment stablecoin issuer shall have
priority over the claims of the permitted payment stablecoin
issuer and any other creditor of the permitted payment
stablecoin issuer, with respect to required payment
stablecoin reserves;
(2) notwithstanding any other provision of law, including
the definition of ``claim'' under section 101(5) of title 11,
United States Code, any person holding a payment stablecoin
issued by the permitted payment stablecoin issuer shall be
deemed to hold a claim; and
(3) the priority under paragraph (1) shall not apply to
claims other than those arising directly from the holding of
payment stablecoins or required payment stablecoin reserves
maintained by the permitted payment stablecoin issuer.
On page 101, lines 16 and 17, strike ``of a person holding
payment stablecoin'' and insert ``arising from a person's
holding of a payment stablecoin''.
On page 103, between lines 7 and 8, insert the following:
(h) Study by Primary Federal Payment Stablecoin
Regulators.--
(1) Study required.--The primary Federal payment stablecoin
regulators shall perform a study of the potential insolvency
proceedings of permitted payment stablecoin issuers,
including an examination of--
(A) existing gaps in the bankruptcy laws and rules for
permitted payment stablecoin issuers;
(B) the ability of payment stablecoin holders to be paid
out in full in the event a permitted payment stablecoin
issuer is insolvent; and
(C) the utility of orderly insolvency administration
regimes and whether any additional authorities are needed to
implement such regimes.
(2) Report.--Not later than 3 years after the date of
enactment of this Act, the primary Federal payment stablecoin
regulators shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report
that contains all findings of the study under paragraph (1),
including any legislative recommendations.
On page 110, line 13, strike ``8'' and insert ``10''.

[[Page S3077]]

On page 113, line 8, insert a period at the end.
On page 114, between lines 11 and 12, insert the following:
(4) The foreign country in which the foreign payment
stablecoin issuer is domiciled and regulated is not subject
to comprehensive economic sanctions by the United States or
in a jurisdiction that the Secretary of the Treasury has
determined to be a jurisdiction of primary money laundering
concern.
On page 114, line 19, insert ``Prior to such determination
taking effect, the Secretary of the Treasury shall publish in
the Federal Register a justification for such determination,
including how the foreign country's regulatory and
supervisory regime is comparable to the requirements
established under this Act, including the requirements under
section 4(a). The Stablecoin Certification Review Committee
shall have not less than 7 days' notice of a determination
under this paragraph to reject such determination prior to
publication in the Federal Register. Such rejection shall be
published in the Federal Register.'' after ``section 4(a).''.
On page 115, line 13, insert ``Prior to such rescission
taking effect, the Secretary of the Treasury shall publish in
the Federal Register a justification for the rescission.''
after ``under this Act.''.
On page 118, line 22, insert ``Prior to such rescission
taking effect, the Comptroller shall publish in the Federal
Register a justification for the rescission.'' after
``financial stability risk.''.
On page 119, strike lines 9 through 19 and insert the
following:
(1) In general.--The Secretary of the Treasury may create
and implement reciprocal arrangements or other bilateral
agreements between the United States and jurisdictions with
payment stablecoin regulatory regimes that are comparable to
the requirements established under this Act. The Secretary of
the Treasury shall consider whether the jurisdiction's
requirements for payment stablecoin issuers include--
(A) similar requirements to those under section 4(a);
(B) adequate anti-money laundering and counter-financing of
terrorism program and sanction compliance standards; and
(C) adequate supervisory and enforcement capacity to
facilitate international transactions and interoperability
with United States dollar-denominated payment stablecoins
issued overseas.
On page 119, between lines 19 and 20, insert the following:
(2) Publication.--Not later than 90 days prior to the entry
into force of any arrangement or agreement under paragraph
(1), the Secretary of the Treasury shall publish the
arrangement or agreement in the Federal Register.
On page 119, in line 20, strike ``(2)'' and insert ``(3)''.
______