15 Questions and Answers on the U.S. Draft Stablecoin Bill
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15 Questions and Answers on the U.S. Draft Stablecoin Bill
Who can issue payment stablecoins? What are the core requirements for issuing payment stablecoins? What restrictions apply to foreign stablecoins entering the U.S. market?
Navigating Web3 tides with focused insightsBy KarenZ, Foresight News
This week, Bryan Steil, Chair of the U.S. House Subcommittee on Digital Assets, and French Hill, Chair of the House Committee on Financial Services, officially introduced the draft STABLE Act of 2025, establishing a framework for issuing and operating payment stablecoins in the United States. French Hill stated, "This bill is the culmination of months of collaboration with stakeholders and members from this Congress and the previous one."
This article walks you through the purpose of the bill, requirements for issuers and custodians, regulatory compliance, and more—via 15 frequently asked questions and answers.
Who Proposed It? What Is Its Purpose?
Who proposed the bill?
The draft legislation, formally known as the Stablecoin Transparency, Accountability, and Ledger Economy Act of 2025, was introduced by Representatives Bryan Steil and French Hill. Steil chairs the House Committee on House Administration and serves as Chairman of the House Financial Services Committee’s Crypto Subcommittee. French Hill is the newly appointed Chair of the House Committee on Financial Services.
Which types of stablecoins does it primarily regulate?
The bill aims to ensure transparency, accountability, issuance, and circulation of payment stablecoins; protect consumers; safeguard financial stability; prevent illicit financial activities; and promote the use of stablecoins within a better ledger-based economy through a comprehensive regulatory framework.
What is a Payment Stablecoin?
The bill defines a payment stablecoin as:
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A digital asset intended to serve as a means of payment or settlement;
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Priced in a national currency;
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An obligation by the issuer to redeem, repurchase, or exchange at par value in a fixed amount of fiat currency;
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Not itself national currency, nor a security issued by an investment company.
Stablecoin Issuance
Who can be authorized to issue payment stablecoins?
Only a “Permitted Payment Stablecoin Issuer” may issue stablecoins, including:
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Certified subsidiaries of insured depository institutions;
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Federally certified non-bank payment stablecoin issuers;
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State-certified payment stablecoin issuers.
What are the core requirements for issuing payment stablecoins?
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Reserve Requirements: Issuers must hold reserve assets equal to at least 100% of outstanding stablecoin liabilities (1:1 backing), consisting primarily of U.S. dollar cash, deposits at Federal Reserve Banks, demand deposits at insured depository institutions, short-term U.S. Treasury securities (maturing within 93 days), overnight repurchase agreements meeting specific conditions, and money market funds investing exclusively in the above assets.
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Redemption Policy: Publicly disclose redemption policies and establish procedures for timely redemptions.
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Transparency: Publish monthly reserve composition reports, subject to review by an independent registered public accounting firm, along with written certifications from the CEO and CFO.
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Penalties for False Certification:
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Willful Violations: Up to 20 years imprisonment and/or a $5 million fine;
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Negligent Violations: Up to 10 years imprisonment and/or a $1 million fine.
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Capital and Risk Management: Comply with capital, liquidity, and risk management requirements (including operational, compliance, IT, and cybersecurity risks) set by the primary federal payment stablecoin regulator.
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Business Restrictions: Activities limited primarily to issuing and redeeming stablecoins, managing related reserves, and providing custody services directly supporting these functions.
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Interest Prohibition: May not pay interest or yield to stablecoin holders.
Custody
What qualifications are required for custody providers?
Only financial institutions regulated at the federal or state level and meeting applicable standards (such as banks and trust companies) may provide relevant custody services.
What custody requirements does the bill impose?
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Customer assets must be segregated and cannot be commingled with the institution's own funds.
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Customer assets take priority over claims by the issuer's creditors.
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Customer assets may not be included on the institution’s balance sheet.
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Regular submission of custody operation procedures to regulators.
Regulation and Compliance
Who regulates stablecoin issuers?
The primary federal payment stablecoin regulators are the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA). Specifically:
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For insured depository institutions (excluding credit unions) and their subsidiaries: the appropriate federal banking agency;
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For insured credit unions and their subsidiaries: the NCUA;
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For federally certified non-bank payment stablecoin issuers: the OCC.
How can states establish their own stablecoin regulations?
State-qualified payment stablecoin issuers may only operate under the supervision of a state payment stablecoin regulator. State regulators may submit certification to the U.S. Department of the Treasury confirming that their regulatory regime meets or exceeds federal standards.
What rules apply to foreign stablecoin issuers?
The bill allows foreign-issued payment stablecoins to circulate in the U.S., but under strict conditions: the home jurisdiction’s regulatory regime must be deemed equivalent to U.S. standards, and the issuer must agree to comply with reporting and examination requirements determined by U.S. regulators. The Secretary of the Treasury will assess and coordinate international cooperation, and maintain a public list of qualifying jurisdictions.
For non-bank issuers, the determination rests with the OCC; for bank issuers or their subsidiaries, the Federal Reserve Board makes the determination.
What Are the Penalties for Violating the Act?
What penalties apply if a payment stablecoin issuer violates the STABLE Act?
Under the STABLE Act of 2025, permitted issuers (and their affiliates), as well as unlicensed entities, face severe penalties enforced by the relevant federal or state regulators:
1. Regulatory Enforcement Actions:
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Suspension or Revocation of Issuance Rights: If the primary federal payment stablecoin regulator determines that a permitted issuer or its institutional affiliate has materially violated the Act, it may prohibit further issuance of payment stablecoins.
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Cease-and-Desist Orders: If the regulator has reasonable grounds to believe that an issuer or affiliate is violating, has violated, or intends to violate the Act, regulations, orders, written agreements, or conditions, it may issue a cease-and-desist order requiring termination of the violation and corrective action.
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Removal and Prohibition from Participation: The regulator may remove an institutional affiliate of the issuer or bar them from future involvement with the issuer or any permitted issuer, if it finds that the affiliate directly or indirectly violated or attempted to violate the Act, regulations, or orders, or breached anti-money laundering laws under the U.S. Code.
2. Civil Penalties
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Unlicensed Issuance: Any entity that issues payment stablecoins without authorization—and any affiliate knowingly participating—faces civil penalties of up to $100,000 per day for each day the unlicensed stablecoin remains outstanding.
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Level One Violation: Permitted issuers or their affiliates that materially breach the Act, regulations, orders, or written agreements/conditions face daily civil penalties of up to $100,000.
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Level Two Violation: If a permitted issuer or affiliate knowingly participates in a violation of the Act or related regulations/orders, they may face an additional daily civil penalty of up to $100,000, on top of any Level One penalty.
3. Criminal Penalties
False Certification: If the CEO or CFO of an issuer submits a monthly reserve certification report containing material false statements, they may face criminal prosecution:
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Knowing falsity: Fine up to $1 million, imprisonment up to 10 years, or both;
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Willful submission of false reports: Fine up to $5 million, imprisonment up to 20 years, or both.
Misrepresentation of Insurance Status: Falsely claiming that a stablecoin is backed or insured by the U.S. government or by FDIC/NCUA will be prosecuted under existing laws.
Civil penalties: Up to $100,000 per day for unlicensed issuance or sale violations; up to $100,000 per day for material violations, with an additional $100,000 per day for knowing violations.
Criminal penalties: Up to $5 million fine and 20 years imprisonment for false certifications involving reserve fraud.
Regulatory actions: Suspension or revocation of issuance rights, cease-and-desist orders, removal of affiliates.
Misrepresentation penalties: Prosecution under federal law for false insurance claims.
Emergency measures: Temporary cease-and-desist orders may be issued in urgent situations.
Other Provisions
Are payment stablecoins considered securities?
The bill explicitly excludes payment stablecoins from the definition of “security.”
How is interoperability ensured?
Federal regulators will work with agencies such as the National Institute of Standards and Technology (NIST) to evaluate and potentially develop standards promoting compatibility and interoperability among payment stablecoins.
When will regulators issue implementing rules?
Within 180 days (approximately six months) of enactment, the primary federal payment stablecoin regulators must jointly issue final rules implementing the stablecoin issuance requirements.
When does the bill take effect?
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For any unlicensed issuer, issuing payment stablecoins becomes illegal immediately upon enactment of the bill.
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For intermediaries offering or selling payment stablecoins not issued by a “permitted issuer,” such activities will be prohibited starting two years after enactment—providing a longer transition period for market adaptation.
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The procedures for approving subsidiaries of insured depository institutions or non-bank entities to issue stablecoins will become effective on the earlier of:
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12 months after enactment; or
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120 days after the primary federal payment stablecoin regulator issues final regulations implementing Section 5.
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The ban on “endogenous collateral stablecoins” takes effect immediately upon enactment and lasts for two years.
Note: The draft bill has now been submitted to the House Committee on Financial Services and will undergo formal committee review and possible amendment next Wednesday (April 2). The committee will decide whether to advance it to a full House vote, reconcile differences with any Senate version, and ultimately send it to the President for signature after passage by both chambers.
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