Reserves may not be pledged, rehypothecated or reused
What the document says“Reserves required under paragraph (1)(A) may not be pledged, rehypothecated, or reused by the permitted payment stablecoin issuer, either directly or indirectly, except for the purpose of-- (A) satisfying margin obligations in connection with investments in permitted reserves under clauses (iv) and (v) of paragraph (1)(A)”
Subsection (a)(2). The bar covers direct and indirect reuse. Three exceptions are named: margin obligations connected with the repurchase and reverse repurchase investments allowed as reserves, obligations associated with the use, receipt or provision of standard custodial services, and creating liquidity to meet reasonable expectations of redemption requests, where Treasury bills may be sold as purchased securities for repurchase agreements maturing within 93 days, either cleared by a registered clearing agency or with the prior approval of the issuer's regulator.
What the document actually says“Reserves required under paragraph (1)(A) may not be pledged, rehypothecated, or reused by the permitted payment stablecoin issuer, either directly or indirectly, except for the purpose of-- (A) satisfying margin obligations in connection with investments in permitted reserves under clauses (iv) and (v) of paragraph (1)(A)”
The maker may not lend out the assets that back the coins. It may not put them up as cover for its own deals. It may not do so through another firm either.
There are three ways out of this rule. One covers the cost of holding the assets. One covers the deals the law already allows. One lets the maker raise cash to pay people back.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.