- An approved subsidiary of an insured depository institution and a licensed non-bank entity could be permitted to issue stablecoins.
- The draft stated that whoever violated the law would be fined and/or imprisoned.
The US Congress released the discussion draft of the 118th Congress First Session, highlighting the requirements for being a payment stablecoin issuer. The draft pointed out that the bill would later be enacted by the US Senate and House of Representatives.
Primarily, the draft intended to point out the minimum requirements necessary for considering the legal status of a stablecoin issuer. It has been declared that an approved subsidiary of an insured depository institution as well as a licensed non-bank entity could be permitted to issue stablecoins.
However, the draft provides a detailed sketch of the legal procedures the entities should overcome to become approved. The subsidiary seeking approval is supposed to file an application, by completely adhering to the laws.
In addition, while citing the course of action that the non-bank entities are required to undergo, the draft elucidated that the applicant is supposed to publish a notice in a circulating newspaper, after submitting the application.
Significantly, Congress invited public attention to the restrictions imposed on stablecoin issuers. It stated that:
It shall be unlawful for any person to engage in the business of issuing a payment stablecoin, directly or indirectly in the United States, through any means or instruments of transportation or communication in the United States, or to persons in the United States.
In addition, the draft notified the legal actions against the institutions or individuals who are found non-compliant with the bill. According to the law, whoever knowingly participates in the violation of the rule “shall be fined not more than $1,000,000, imprisoned for not 4 more than 5 years, or both.”