# Lummis-Gillibrand Payment Stablecoin Act Summary
This bill creates a federal regulatory framework for payment stablecoins—digital currencies designed to maintain a stable value relative to the U.S. dollar. Only two types of entities may issue them: state-chartered non-depository trust companies (limited to $10 billion in outstanding stablecoins) and federally or state-chartered depository institutions (banks). Algorithmic stablecoins, which adjust supply based on demand rather than being backed by reserves, are prohibited entirely.
Payment stablecoin issuers must maintain 100 percent reserves backing all outstanding coins using safe assets like U.S. Treasury bills, cash, or demand deposits. They face strict regulations including monthly public disclosure of their backing assets, one-business-day redemption requirements, and restrictions on how reserves can be used. The Federal Reserve and banking regulators oversee safety, soundness, and financial stability. The bill also gives the FDIC authority to take over failed issuers and protect customers similar to traditional bank deposit insurance, though stablecoins are explicitly not government-guaranteed.
The legislation applies nationwide and has extraterritorial effect on foreign issuers serving U.S. customers. It becomes effective 540 days after enactment or 90 days after the Federal Reserve issues final rules, whichever comes first. Existing stablecoin issuers operating before May 2024 receive priority approval consideration. The bill imposes civil penalties up to $100,000 daily for violations and provides the Federal Reserve with rulemaking authority to establish detailed capital, operational, and risk management standards for these new financial institutions.
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