This legislation, known as the "STABLE Act of 2025," aims to create a comprehensive regulatory framework for **payment stablecoins** within the United States. It defines a payment stablecoin as a digital asset designed for payment or settlement, denominated in a national currency, and obligated to maintain a stable value relative to a fixed amount of monetary value. The bill's primary purpose is to ensure the stability, integrity, and consumer protection within the growing stablecoin market. The bill makes it unlawful for any person other than a **permitted payment stablecoin issuer** to issue a payment stablecoin. Permitted issuers include subsidiaries of insured depository institutions, Federal qualified nonbank payment stablecoin issuers, and State qualified payment stablecoin issuers. These entities must undergo an approval process by their respective primary federal or state regulators, with specific timelines and grounds for denial or approval. A core provision requires all permitted issuers to maintain **reserves** backing their outstanding payment stablecoins on a **1 to 1 basis**. These reserves must consist of highly liquid assets, including United States currency, demand deposits at insured institutions, short-term Treasury bills, certain repurchase agreements, or shares in money market funds invested in these assets. The bill explicitly prohibits the rehypothecation or reuse of these reserves, except for specific obligations related to repurchase agreements. Permitted issuers must publicly disclose their redemption policy and procedures for timely redemption. They are also required to publish monthly reports detailing the amount and composition of their reserves, which must be examined by an independent registered public accounting firm. Senior officers must certify the accuracy of these reports, with severe criminal penalties for false certifications. The legislation mandates that primary federal regulators jointly establish tailored capital, liquidity, and risk management standards for permitted issuers. It also treats permitted issuers as financial institutions under the **Bank Secrecy Act**, requiring them to implement anti-money laundering and countering the financing of terrorism programs, retain transaction records, and report suspicious activity. Issuers must also comply with all U.S. sanctions administered by the Office of Foreign Assets Control. For **State qualified payment stablecoin issuers**, the bill allows states to regulate stablecoin issuance if their regulatory regimes are certified by the Secretary of the Treasury as meeting or exceeding federal standards. The Secretary has the authority to review and reject state certifications, with an appeal process to the U.S. Court of Appeals. This framework aims to balance federal oversight with state-level innovation. Crucially, the bill clarifies that **payment stablecoins are not backed by the full faith and credit of the United States** and are not subject to federal deposit or share insurance. Permitted issuers must clearly disclose this to consumers, and misrepresenting insured status carries significant penalties. The bill also prohibits permitted stablecoin issuers from paying interest or yield to stablecoin holders. To protect consumers, the bill regulates entities providing custodial or safekeeping services for payment stablecoins and their reserves. These service providers must segregate customer assets from their own, ensuring customer claims have priority in insolvency. The bill also imposes a two-year **moratorium on endogenously collateralized stablecoins** not in existence at the time of enactment, which are digital assets that rely solely on the value of another digital asset created by the same originator to maintain a fixed price. The bill directs federal regulators to assess and, if necessary, prescribe interoperability standards for stablecoin issuers. It also requires the Secretary of the Treasury to conduct studies on non-payment stablecoins and the broader impact of payment stablecoins on domestic and international finance. Finally, the legislation amends various securities acts to clarify that **regulated payment stablecoins are not securities**, thereby placing them under the purview of banking and financial regulators rather than securities regulators. The bill also affirms the authority of existing banking institutions to engage in permissible stablecoin-related activities, such as accepting deposits, using distributed ledgers, and providing custodial services. It directs federal banking agencies to review and amend existing regulations to clarify how regulated entities can participate in these activities without requiring them to hold excessive regulatory capital against custodied assets not owned by the entity.