Approval of subsidiaries of insured depository institutions and subsidiaries of nonbank entities

(a) In general (1) Application (A) In general The primary Federal payment stablecoin regulator shall receive, review, and consider for approval applications from any insured depository institution that seeks to issue payment stablecoins through a subsidiary and any nonbank entity that seeks to issue payment stablecoins through a subsidiary. (B) Sharing of information With respect to applications submitted by State-chartered insured depository institutions, the primary Federal payment stablecoin regulator shall share such applications with the relevant State bank or State credit union supervisor. (C) Completion of application (i) In general The primary Federal payment stablecoin regulator shall consider an application complete if such application contains sufficient information for the primary Federal payment stablecoin regulator to render a decision on whether the application meets the requirements set forth in section 4. (ii) Material change in circumstances An application described under clause (i) that is considered complete shall remain complete unless the primary Federal payment stablecoin regulator determines that a material change in circumstances requires otherwise. (2) Evaluation of applications A complete application received under paragraph (1) shall be evaluated by the primary Federal payment stablecoin regulator based on the ability of the subsidiary of the applicant to meet the requirements set forth in section 4. (3) Timing for decision; grounds for denial (A) Timing The primary Federal payment stablecoin regulator shall— (i) not later than 30 days after receiving the application— (I) inform the applicant whether the applicant has submitted a complete application; and (II) if the application is not complete, inform the applicant of the additional information the applicant must provide in order for the application to be considered complete; and (ii) not later than 120 days after informing the applicant that the application is complete, render a decision on an application. (B) Denial of application (i) Grounds for denial (I) In general The primary Federal payment stablecoin regulator may only deny a complete application received under paragraph (1) if the regulator determines that the activities of the applicant would be unsafe or unsound based on the ability of the subsidiary of the applicant to meet the requirements set forth in section 4. (II) Treatment of certain issuances The issuance of a payment stablecoin on an open, public, and decentralized network shall not be a valid ground for denial of an application received under paragraph (1). (ii) Explanation required If the primary Federal payment stablecoin regulator denies a complete application received under paragraph (1), the regulator shall, not later than 30 days after the date of such denial, provide the applicant with— (I) written notice explaining the denial with specificity, including all findings made by the regulator with respect to all identified material shortcomings in the application; and (II) actionable recommendations on how the applicant could address the identified material shortcomings. (iii) Opportunity for hearing; final determination (I) In general Not later than 30 days after the date of receipt of any notice of the denial of an application under this subsection, the applicant may request, in writing, an opportunity for a written or oral hearing before the primary Federal payment stablecoin regulator to appeal the denial. (II) Timing Upon receipt of a timely request, the primary Federal payment stablecoin regulator shall notice a time (not later than 30 days after the date of receipt of the request) and place at which the applicant may appear, personally or through counsel, to appeal the denial, to submit written materials, or to provide oral testimony and oral argument. (III) Final determination Not later than 60 days after the date of a hearing under this clause, the primary Federal payment stablecoin regulator shall notify the applicant of the final determination of the primary Federal payment stablecoin regulator with respect to the appeal, which shall contain a statement of the basis for such determination, with specific findings. (IV) Notice if no hearing If an applicant does not make a timely request for a hearing under this clause, the primary Federal payment stablecoin regulator shall notify the applicant, not later than 10 days after the date by which the applicant may request a hearing under this clause, in writing, that the denial of the application is a final determination of the primary Federal payment stablecoin regulator. (C) Failure to render a decision If the primary Federal payment stablecoin regulator fails to render a decision on a complete application within the time period specified in subparagraph (A), the application shall be deemed approved. (D) Right to reapply The denial of an application under this subsection shall not prohibit the applicant from filing a subsequent application. (4) Report on pending applications Each of the primary Federal payment stablecoin regulators shall annually report to Congress on— (A) the number of calendar days each applicant waited for either an approval or denial of an application under this subsection; (B) the number of calendar days each applicant with an outstanding application has waited for a decision; and (C) the number of applications that have been pending for 6 months or longer since the date of the initial application filed under paragraph (1) where the applicant has been informed that the application remains incomplete, including providing documentation on the status of the application and why the application has not yet been approved. (5) Rulemaking (A) In general Not later than 180 days after the date of enactment of this Act, the primary Federal payment stablecoin regulators shall, jointly, issue rules to carry out this section, which may only relate to the application process under this subsection and may not implement the requirements set forth in section 4. (B) Tailoring of rules The joint rulemaking required under subparagraph (A) shall be tailored so as to minimize any incremental burden placed on well capitalized and highly-rated insured depository institutions. (b) Effective date (1) In general This section shall take effect on the earlier of— (A) 12 months after the date of enactment of this Act; or (B) the date that is 120 days after the date on which the primary Federal payment stablecoin regulators issue final regulations implementing this section. (2) Notice to Congress Each of the primary Federal payment stablecoin regulators shall notify Congress upon receiving their first application. (c) Effect on State law for payment stablecoin issuers approved by Federal payment stablecoin regulators under this section The provisions of this section preempt any conflicting State law and supersede any State licensing requirement for any nonbank entity or subsidiary of an insured depository institution or credit union that is approved under this section to be a permitted payment stablecoin issuer.