Lummis-Gillibrand Payment Stablecoin Act

# Summary of the Lummis-Gillibrand Payment Stablecoin Act This proposed federal law establishes a comprehensive regulatory framework for payment stablecoin issuers in the United States. The key provisions include: 1. **Regulatory Structure**: Creates two main categories of regulated entities: - Non-depository stablecoin issuers (regulated by the Federal Reserve Board) - Depository stablecoin issuers (regulated by the Comptroller of the Currency and State bank supervisors) 2. **Core Requirements**: - Full reserves requirement (100% backing by eligible assets) - Capital requirements for depository issuers - Mandatory custody of reserves in segregated accounts - Strict operational standards for reserve management - Detailed reporting requirements 3. **Enforcement Mechanisms**: - Civil penalties up to $100,000 per day for violations - Prohibition on participation by convicted individuals for financial crimes - Cease-and-desist proceedings for violations - Removal authority for institution-affiliated parties 4. **Receivership and Bankruptcy Provisions**: - Detailed process for receivership (Federal Deposit Insurance Corporation as receiver) - Special treatment for qualified financial contracts - Bridge payment stablecoin issuer mechanism to maintain services during resolution - Subrogation rights for the Corporation 5. **Interoperability Standards**: - Requires the Federal Reserve to establish standards for payment system compatibility 6. **Transitional Provisions**: - Priority for existing stablecoin issuers (chartered before May 1, 2024) - 1-year transition period for compliance - "Deemed approved" status for existing institutions meeting certain criteria 7. **Key Definitions**: - Defines "payment stablecoin" as a digital asset representing a claim on a specific amount of fiat currency - Specifies eligible reserve assets (cash, government securities, etc.) - Defines "institution-affiliated party" for enforcement purposes The law aims to provide consumer protection while enabling stablecoin innovation within a regulatory framework that treats stablecoin issuers similarly to banks, with specific recognition of the digital nature of these assets. It creates a comprehensive resolution framework to prevent systemic risk in the event of a stablecoin issuer failure.