H.R. 3633 - "Clarity in Payments Stablecoin Act of 2023"

07/22/25 10:52 AM

Legislation Overview

The enrolled version of H.R. 3633, the *Digital Asset Market Structure and Clarity Act of 2025*, establishes a comprehensive federal framework for regulating digital commodities and permitted payment stablecoins. It divides oversight between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), granting the CFTC primary authority over digital commodities and related intermediaries, while providing limited exemptions from SEC registration for certain blockchain-based token offerings. The bill defines key terms—such as “digital commodity,” “mature blockchain system,” and “decentralized governance system”—to clarify how digital assets fit within existing regulatory structures.

The legislation allows entities to raise up to $75 million annually through exempt offerings of digital commodities tied to mature blockchain systems, provided they meet specific disclosure and filing requirements. It also directs the SEC to modernize its rules for alternative trading systems (ATS) to accommodate digital assets and mandates the use of qualified custodians for customer assets. Importantly, it establishes clear guidelines for the issuance and oversight of permitted payment stablecoins, requiring they be fully backed by high-quality liquid assets and issued only by regulated entities.

In addition to its regulatory provisions, the bill initiates a series of federal studies on decentralized finance (DeFi), non-fungible tokens (NFTs), illicit finance, financial literacy, and foreign adversary involvement in digital markets. It codifies innovation offices within the SEC and CFTC to support responsible financial technology development. Overall, the Act seeks to balance market integrity, consumer protection, and innovation in the fast-growing digital asset ecosystem.

Key Components:

Enables Regulated Market Entry for Innovators
The bill allows fintech firms, de novo banks, and other regulated entities to lawfully issue permitted payment stablecoins under state or federal oversight—consistent with FSAC’s advocacy for lawful access to banking and payments infrastructure.

Creates a Dual Licensing Framework
By recognizing both state-chartered and federally licensed stablecoin issuers, the Act supports FSAC’s call for charter innovation and regulatory parity between federal and state frameworks.

Establishes Clear, Consistent Oversight
The legislation assigns supervisory authority to the CFTC and SEC based on asset type, promoting the clear, consistent supervision FSAC seeks for emerging financial institutions.

Supports Stablecoin Utility in Payments
By defining and authorizing “permitted payment stablecoins,” the Act affirms the legitimacy of stablecoins for payments and settlement, advancing FSAC’s goal of enabling innovation in lawful, secure financial services.

Ensures Risk-Based Regulation
Capital, redemption, reserve, and disclosure requirements are tailored to payment stablecoins and digital commodities, aligning with FSAC’s principle of responsible, risk-appropriate regulation.

Protects State Regulatory Authority
The bill preserves state powers by allowing state-licensed entities to operate nationally (with federal registration), reinforcing FSAC’s support for state-based pathways into the federal system.

Promotes Transparency and Public Trust
Disclosure rules, audit requirements, and studies on illicit finance and financial literacy align with FSAC’s mission to strengthen public awareness and trust in regulated financial innovation.

Encourages Ecosystem Development
Codifying SEC and CFTC innovation hubs and mandating regulatory engagement with blockchain technologies reflects FSAC’s vision for a collaborative, connected financial ecosystem.

Prevents Arbitrary Access Barriers
The Act’s preemption language avoids overly restrictive or inconsistent state rules, reinforcing FSAC’s call for fair access to federal infrastructure without arbitrary exclusion.

Differentiates Use Cases
The bill distinguishes between payment stablecoins and speculative digital assets, allowing appropriate regulation by function—a principle at the heart of FSAC’s functional regulatory approach.

Introduced

Summary of H.R. 3633 - "Clarity in Payments Stablecoin Act of 2023"

(119th Congress, 1st Session)

H.R. 3633, titled the “Clarity in Payments Stablecoin Act of 2023,” was introduced in the U.S. House of Representatives to establish a clear federal framework for the issuance, regulation, and oversight of payment stablecoins. Authored by Rep. Patrick McHenry and other co-sponsors, the bill seeks to address the growing prominence of stablecoins—digital assets designed to maintain a stable value by being backed by fiat currency or other liquid assets—within the broader financial system.

The bill’s core objective is to provide regulatory clarity and safeguard financial stability while promoting responsible innovation. To that end, H.R. 3633 creates a dual-path regulatory regime for payment stablecoin issuers: (1) entities may be licensed by state authorities with Federal Reserve Board registration, or (2) they may seek direct federal approval through a national licensing regime.

Title I – Federal and State Regulatory Framework

The bill allows both state and federal regulatory pathways for stablecoin issuers. A key innovation is that state-chartered payment stablecoin issuers can operate nationally if they register with the Federal Reserve Board, provided they meet specific eligibility requirements. These include capital adequacy, risk management, and clear redemption policies to maintain consumer protection and confidence.

National payment stablecoin issuers must apply for a license from the newly created Office of the Comptroller of the Currency (OCC) division dedicated to stablecoins. The OCC is authorized to set prudential standards, including permissible reserve assets, liquidity, disclosures, and operational resilience requirements.

Title II – Reserve Assets and Redemption Requirements

To preserve the stable value of payment stablecoins, the bill mandates that issuers maintain 1:1 reserves fully backed by high-quality liquid assets, such as U.S. dollars, Treasury bills, or central bank deposits. The bill explicitly prohibits the use of volatile or speculative instruments (e.g., cryptocurrencies) as reserve assets for payment stablecoins.

All issuers must establish robust redemption policies to ensure customers can convert stablecoins back into fiat currency on demand. These provisions aim to protect consumers and ensure confidence in stablecoin reliability, similar to deposit insurance principles.

Title III – Oversight and Supervision

Stablecoin issuers, whether state-licensed or federally licensed, are subject to federal supervision. The bill grants the Federal Reserve limited oversight authority for registered state-licensed issuers, ensuring consistency in systemic risk mitigation and market conduct. For federally licensed issuers, the OCC provides direct oversight and enforcement.

Furthermore, issuers must undergo regular examinations, provide detailed disclosures to the public and regulators, and comply with AML (anti-money laundering) and CFT (countering the financing of terrorism) rules. They must also adopt governance structures with clear accountability mechanisms and cybersecurity protocols.

Title IV – Prohibitions and Enforcement

The bill establishes penalties for noncompliance, including civil and criminal enforcement mechanisms for issuing unlicensed stablecoins or misrepresenting reserves. Only qualified entities—those meeting licensing and registration criteria—are permitted to issue payment stablecoins under this framework.

The legislation preempts state law only where it conflicts with or is less stringent than federal standards, striking a balance between federal oversight and state regulatory innovation.

Policy Rationale and Legislative Impact

The Clarity in Payments Stablecoin Act of 2023 reflects a bipartisan effort to build a cohesive national framework for a rapidly evolving digital financial sector. By balancing innovation with supervision, the bill aims to protect consumers, ensure monetary stability, and create a level playing field among emerging financial institutions.

Importantly, the bill distinguishes payment stablecoins from other digital assets by limiting its scope to tokens used for payment and settlement purposes, rather than investment or speculative use. This targeted approach seeks to preserve the utility of stablecoins in commerce while minimizing systemic risks.

The Act also ensures that entities like de novo banks, fintechs, and trust companies can lawfully participate in stablecoin issuance under a transparent, well-defined legal structure. This supports a broader goal of enabling access to the U.S. banking and payment system by secure, supervised financial innovators.

In conclusion, H.R. 3633 lays foundational legal groundwork for the responsible growth of stablecoin-based payment systems. It provides regulatory clarity, consumer protections, and operational guardrails essential to maintaining the integrity and competitiveness of the U.S. financial system in the digital age.

House Committees on Financial Services and Agriculture Amendment

Update: Key Changes in the Reported Version of H.R. 3633 – “Clarity in Payments Stablecoin Act of 2023”

The reported version of H.R. 3633, as amended and reported by the House Committees on Financial Services and Agriculture on June 23, 2025, introduces several significant changes to the original bill. These modifications aim to refine definitions, clarify regulatory jurisdictions, and enhance oversight mechanisms for digital commodities and payment stablecoins.

1. Refined Definitions and Scope

Digital Commodity: The term is now explicitly defined as a digital asset whose value is “intrinsically linked” to the use and functioning of a blockchain system. This definition excludes securities, derivatives, and stablecoins, thereby narrowing the scope to assets that derive their value from decentralized blockchain networks.

Mature Blockchain System: A new definition has been introduced, describing a blockchain system that is not controlled by any person or group under common control. This concept is crucial for determining the regulatory treatment of associated digital commodities.

Permitted Payment Stablecoin: The bill now defines this term to include digital assets used as a means of payment or settlement, denominated in national currency, and issued by entities subject to state or federal regulatory oversight. This definition ensures that only regulated entities can issue such stablecoins.

2. Clarification of Regulatory Jurisdictions

Commodity Futures Trading Commission (CFTC): The CFTC is granted primary authority over digital commodities and related intermediaries, including exchanges, brokers, and dealers. This jurisdiction covers the trading and market activities of digital commodities.

Securities and Exchange Commission (SEC): The SEC retains authority over primary market transactions involving investment contracts. However, the bill provides a limited exemption from SEC registration requirements for certain fundraising activities involving digital commodities on mature blockchains, subject to specific conditions.

3. Introduction of Exemptions and Reporting Requirements

Exemption for Investment Contracts: The bill introduces an exemption from the Securities Act of 1933’s registration requirements for offers of investment contracts involving digital commodities on mature blockchains. Issuers relying on this exemption must limit sales to $75 million over a 12-month period and file an offering statement with the SEC.

Reporting for Non-Mature Blockchains: Issuers of digital commodities related to non-mature blockchains are subject to additional reporting requirements. The SEC is directed to implement rules within 270 days of enactment to address these requirements and may limit such issuers' reliance on the exemption for fundraising.

4. Enhanced Oversight and Compliance Measures

Anti-Fraud Authority: The SEC is granted explicit anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions, ensuring investor protection and market integrity.

Alternative Trading Systems (ATS): The bill outlines eligibility and operational requirements for ATSs dealing with digital commodities and permitted payment stablecoins. It mandates the SEC to revise regulations to accommodate these systems within 270 days of enactment.

Custody and Recordkeeping: Provisions are included to modernize recordkeeping requirements and address the custody of digital assets by banking institutions, aligning with evolving market practices.

5. Studies and Reports

Decentralized Finance (DeFi): The bill mandates a study on DeFi activities, assessing their impact on financial markets and regulatory frameworks.

Non-Fungible Tokens (NFTs): A study is required to evaluate the characteristics and regulatory considerations of NFTs, recognizing their growing significance in digital asset markets.

Financial Literacy: The bill calls for a study on expanding financial literacy among digital commodity holders, aiming to enhance consumer understanding and responsible participation in digital asset markets.

House Passage

Update: Key Changes in the Enrolled Version of H.R. 3633 – “Digital Asset Market Clarity Act of 2025”

The enrolled version of H.R. 3633, passed by the House on July 17, 2025, introduces several refinements and additions to the regulatory framework for digital commodities and permitted payment stablecoins. These changes aim to enhance clarity, oversight, and innovation within the digital asset ecosystem.

1. Expanded Definitions and Clarifications

Decentralized Governance System: The Act defines this as a transparent, rules-based system allowing consensus among participants in the development and administration of a blockchain system, without centralized control. This includes legal entities that do not enforce centralized management structures.

Digital Commodity Affiliated Person: This term now encompasses individuals or entities with significant influence over a digital commodity issuer, such as founders, major stakeholders, or key executives.

2. Enhanced Regulatory Oversight

Dual Registration for Intermediaries: Entities acting as intermediaries in digital commodity transactions may be required to register with both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), ensuring comprehensive oversight.

Alternative Trading Systems (ATS): The SEC is mandated to revise regulations to permit national securities exchanges or their affiliates to operate ATSs for digital commodities and permitted payment stablecoins, facilitating broader market participation.

3. Strengthened Consumer Protections

Custody Requirements: Futures commission merchants are required to use qualified digital asset custodians for holding customer assets, enhancing asset security.

Disclosure Obligations: Brokers and dealers must provide clear disclosures regarding the treatment of customer assets, ensuring transparency and informed decision-making.

4. Promotion of Innovation and Education

Strategic Hubs: The Act establishes a Strategic Hub for Innovation and Financial Technology within the SEC and codifies LabCFTC within the CFTC, fostering innovation and regulatory engagement with emerging technologies.

Educational Initiatives: Provisions are included for developing educational materials to improve financial literacy among digital commodity holders, promoting responsible participation in digital asset markets.

5. Comprehensive Studies and Reports

Blockchain in Payments: A study is mandated to assess the potential benefits and risks of integrating blockchain technology into payment systems.

Illicit Use of Digital Assets: The Act calls for a study on the illicit use of digital assets, aiming to identify and mitigate associated risks.

Foreign Adversary Participation: A study is required to evaluate the involvement of foreign adversaries in digital asset markets, ensuring national security considerations are addressed.