🏦 Title IV: Responsible Banking Innovation
Digital Asset Market Clarity Act — Bank & Credit Union Digital Asset Authority
⚠️ This analysis reflects the discussion draft as currently written. Provisions are subject to substantial change during committee markup and floor consideration.
📜 §401 Legislative Mechanism: Explicit Statutory Authority
Title IV grants banks and credit unions explicit statutory authority for 14 enumerated digital asset activities.
No prior approval or new licensing required — activities are deemed "financial in nature" (holding companies) or "business of banking" (national banks).
Key Trigger Language: "A [institution] may use a digital asset or distributed ledger system to perform, provide, or deliver any activity, function, product, or service that the [institution] is otherwise authorized by law to perform" — §401(b)–(f)
📋 14 Permitted Digital Asset Activities — §401(g)
✅ Allowed Stablecoin Rewards
- Transaction Rewards — Payments, transfers, conversions, settlements §404(b)(2)(A)
- Platform Usage — Wallet, account, app, protocol, network use §404(b)(2)(B)
- Loyalty Programs — Membership, promotional, subscription incentives §404(b)(2)(C)
- Merchant Rebates — Acceptance, settlement, acquiring activity rewards §404(b)(2)(D)
- Liquidity/Collateral — Providing liquidity or collateral rewards §404(b)(2)(E)
- Governance/Staking — Validation and ecosystem participation §404(b)(2)(F)
Activity-based rewards explicitly permitted
⛔ Prohibited Stablecoin Conduct
- Interest for Holding — No yield solely for holding stablecoins §404(b)(1)
- False FDIC Claims — Cannot claim stablecoin is insured/deposit §404(c)(1)
- Misleading Issuer Attribution — Cannot claim issuer pays when they don't §404(c)(2)
- "Risk-Free" Claims — Cannot compare to bank deposit interest §404(c)(3)
- Marketing Without Disclosure — Cannot advertise rewards without required disclosures §404(d)(3)
SEC + CFTC joint disclosure rules required within 360 days
🏛️ Coverage by Institution Type
| Institution | Authority Basis | Activities Permitted |
|---|---|---|
| Financial Holding Companies | Activities deemed "financial in nature" under BHC Act §4(k) | All 14 activities |
| National Banks | Activities deemed "business of banking" under 12 USC §24 | Activities 1–5 and 7–14 |
| Insured State Banks | Parity with national bank authority under FDIA §24 | Same as national banks |
| Federal Credit Unions | Authority under FCU Act §107(17) | All 14 activities |
| Insured Credit Unions | Same as federal credit unions, subject to state law | All 14 activities |
🎨 §401(j) NFT Carve-Out
Important: The banking authorities in Title IV do NOT apply to nonfungible assets. Banks wanting to offer NFT services would need separate authorization.
🏛️ Key Regulatory Mandates
📊 Portfolio Margining Rules (§402)
SEC + CFTC must jointly issue rules for cross-product margining across securities, swaps, futures, and digital commodities.
💰 Capital Requirements (§403)
Fed + OCC + FDIC must develop capital rules addressing netting agreements — deadline: 360 days.
📋 Disclosure Rules (§404(d))
SEC + CFTC must jointly issue stablecoin reward disclosure requirements — deadline: 360 days.
📈 Deposit Outflow Study (§404(e))
Fed + OCC + FDIC must report on stablecoin rewards' effect on bank deposits — deadline: 2 years.
💡 Analogy: Title IV tells banks: "You already know how to do custody, lending, and payments — you can do those same activities with digital assets using your existing charter." It's expanding the toolkit, not creating a new license.