Treatment of Payment Stablecoin Issuers in Insolvency Proceedings
Section 11 · Sec. 11 ·
What this chapter is about
This part says what happens if a coin maker fails. Holders of its coins are paid first from the backing. The law adds new lines to the bankruptcy code. It also lets a court allow payouts while a case runs. Watchdogs may speak in the case.
The document says “shall”Who acts: CongressHow: statuteSec. 11 in the PDF
What the document says
“the claim of a person holding payment stablecoins issued by the permitted payment stablecoin issuer shall have priority, on a ratable basis with the claims of other persons holding such payment stablecoins, over the claims of the permitted payment stablecoin issuer and any other holder of claims against the permitted payment stablecoin issuer, with respect to required payment stablecoin reserves”
Subsection (a). The priority applies in any insolvency proceeding of a permitted payment stablecoin issuer under Federal or State law, including one administered by a State payment stablecoin regulator, and is subject to the new section 507(e) of title 11 that subsection (d) adds. Holders rank ratably among themselves. Under paragraph (2) a holder is deemed to hold a claim notwithstanding the definition of claim in section 101(5) of title 11, and under paragraph (3) the priority does not extend to claims other than those arising directly from holding stablecoins.
What the document actually says
“the claim of a person holding payment stablecoins issued by the permitted payment stablecoin issuer shall have priority, on a ratable basis with the claims of other persons holding such payment stablecoins, over the claims of the permitted payment stablecoin issuer and any other holder of claims against the permitted payment stablecoin issuer, with respect to required payment stablecoin reserves”
That sentence, in plain words
People who hold the coins are paid first from the backing. They share it in line with what each one holds. Everyone else comes after them.
What this is about
This holds in any case where a maker fails. It covers state cases too. Only claims from holding a coin get this place in line.
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.
The document says “is amended”Who acts: CongressHow: statuteSec. 11 in the PDF
What the document says
“Section 101 of title 11, United States Code, is amended by adding after paragraph (40B) the following: "(40C) The terms `payment stablecoin' and `permitted payment stablecoin issuer' have the meanings given those terms in section 2 of the GENIUS Act.".”
Subsection (b). The amendment carries the two definitions from section 2 of this Act into title 11 of the United States Code, so that the other amendments the section makes have terms to work with.
What the document actually says
“Section 101 of title 11, United States Code, is amended by adding after paragraph (40B) the following: "(40C) The terms `payment stablecoin' and `permitted payment stablecoin issuer' have the meanings given those terms in section 2 of the GENIUS Act.".”
That sentence, in plain words
Two words from this law are added to the bankruptcy code. They keep the meaning this law gives them.
What this is about
The bankruptcy code is the law on firms that fail. It is not part of this site. The words added here let the rest of this part work.
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.
The document says “is amended”Who acts: CongressHow: statuteSec. 11 in the PDF
What the document says
“"(9) the redemption of payment stablecoins issued by the permitted payment stablecoin issuer, from payment stablecoin reserves required to be maintained under section 4 of the GENIUS Act."”
Subsection (c)(1). The words are added as a new paragraph (9) of section 362(a) of title 11, United States Code. What section 362(a) provides for the acts already listed there is not recorded here, because title 11 is not indexed on this site.
What the document actually says
“"(9) the redemption of payment stablecoins issued by the permitted payment stablecoin issuer, from payment stablecoin reserves required to be maintained under section 4 of the GENIUS Act."”
That sentence, in plain words
This adds one line to a list in the bankruptcy code. The line is about handing coins back for money. The money comes from the backing this law requires.
What this is about
When a firm files, some acts against it stop at once. That freeze is called the automatic stay. This line joins the list of acts it covers.
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.
The document says “is amended”Who acts: bankruptcy courtsHow: statuteSec. 11 in the PDF
What the document says
“with respect to the redemption of payment stablecoins held by a person, if the court finds, subject to the motion and attestation of the permitted payment stablecoin issuer, which shall be filed on the petition date or as soon as practicable thereafter, there are payment stablecoin reserves available for distribution on a ratable basis to similarly situated payment stablecoin holders”
Subsection (c)(2). The words are added as a new paragraph (5) of section 362(d) of title 11, United States Code. The court is to use best efforts to enter a final order beginning distributions not later than 14 days after the date of the required hearing. The issuer's motion and attestation are filed on the petition date or as soon as practicable after it.
What the document actually says
“with respect to the redemption of payment stablecoins held by a person, if the court finds, subject to the motion and attestation of the permitted payment stablecoin issuer, which shall be filed on the petition date or as soon as practicable thereafter, there are payment stablecoin reserves available for distribution on a ratable basis to similarly situated payment stablecoin holders”
That sentence, in plain words
A court can let payouts start while a case runs. The maker must first file a motion and a sworn statement. The court must find there is backing to share out.
What this is about
Holders in the same spot share the backing in equal steps. The court should aim to order payouts within 14 days of the hearing.
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.
The document says “is amended”Who acts: CongressHow: statuteSec. 11 in the PDF
What the document says
“any such remaining claim arising from a person's holding of a payment stablecoin issued by the permitted payment stablecoin issuer shall be a claim against the estate and shall have first priority over any other claim, including over any expenses and claims that have priority under that subsection”
Subsection (d). The words are added as a new subsection (e) of section 507 of title 11, United States Code, and section 507(a) is made subject to it. The new priority applies where a holder cannot redeem all outstanding claims from the required reserves, and it runs to the extent that compliance with section 4 of this Act would have required additional reserves to be maintained for holders.
What the document actually says
“any such remaining claim arising from a person's holding of a payment stablecoin issued by the permitted payment stablecoin issuer shall be a claim against the estate and shall have first priority over any other claim, including over any expenses and claims that have priority under that subsection”
That sentence, in plain words
A holder may not get all their money from the backing. What is left over becomes a claim on the rest of the firm. That claim comes before every other one.
What this is about
This reaches only as far as the backing should have gone. Part 4 sets how much backing a maker must hold. The gap is what this covers.
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.
The document says “is amended”Who acts: CongressHow: statuteSec. 11 in the PDF
What the document says
“"(11) required payment stablecoin reserves under section 4 of the GENIUS Act, provided that notwithstanding the exclusion of such reserves from the property of the estate, section 362 of this title shall apply to such reserves."”
Subsection (e). The words are added as a new paragraph (11) of section 541(b) of title 11, United States Code. The proviso keeps section 362 of title 11, the automatic stay, applicable to the reserves even though they sit outside the estate.
What the document actually says
“"(11) required payment stablecoin reserves under section 4 of the GENIUS Act, provided that notwithstanding the exclusion of such reserves from the property of the estate, section 362 of this title shall apply to such reserves."”
That sentence, in plain words
The backing this law requires is not part of the failed firm's pot. Even so, the freeze on acts still covers it.
What this is about
In a bankruptcy the firm's property forms a pot. It is split among those owed money. The backing is kept out of that pot.
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.
The document says “is amended”Who acts: Office of the Comptroller of the Currency, State payment stablecoin regulatorsHow: statuteSec. 11 in the PDF
What the document says
“"(c) The Comptroller of the Currency or State payment stablecoin regulator (as defined in section 2 of the GENIUS Act) shall raise, and shall appear and be heard on, any issue, including the protection of customers, in a case under this chapter in which the debtor is a permitted payment stablecoin issuer."”
Subsection (f). The words are added as a new subsection (c) of section 1109 of title 11, United States Code. The right and duty to be heard is stated broadly, and the protection of customers is named as an example of the issues covered.
What the document actually says
“"(c) The Comptroller of the Currency or State payment stablecoin regulator (as defined in section 2 of the GENIUS Act) shall raise, and shall appear and be heard on, any issue, including the protection of customers, in a case under this chapter in which the debtor is a permitted payment stablecoin issuer."”
That sentence, in plain words
A watchdog must speak up in one of these cases. It may raise any issue. Protecting customers is named as one.
What this is about
This applies when the failed firm is a cleared coin maker. Either a federal office or the state watchdog takes part. The court must hear them.
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.
The document says “shall”Who acts: Federal Deposit Insurance Corporation, National Credit Union Administration, State payment stablecoin regulatorsHow: statuteSec. 11 in the PDF
What the document says
“(1) A depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) shall be resolved by the Federal Deposit Insurance Corporation, National Credit Union Administration, or State payment stablecoin regulator, as applicable.”
Subsection (g). A depository institution is resolved by one of the three bodies named, as applicable. A subsidiary of a depository institution, or a nonbank entity, may instead be a debtor under title 11 of the United States Code. The subsection opens by saying that this is in accordance with otherwise applicable law.
What the document actually says
“(1) A depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) shall be resolved by the Federal Deposit Insurance Corporation, National Credit Union Administration, or State payment stablecoin regulator, as applicable.”
That sentence, in plain words
A bank that fails is wound up by an agency. Which one depends on the kind of bank. A state watchdog may do it instead.
What this is about
A firm that is not a bank goes to a bankruptcy court. So can a bank arm. Which path a maker takes depends on what it is.
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.
The document says “shall”Who acts: primary Federal payment stablecoin regulatorsHow: statuteSec. 11 in the PDF
What the document says
“The primary Federal payment stablecoin regulators shall perform a study of the potential insolvency proceedings of permitted payment stablecoin issuers, including an examination of-- (A) existing gaps in the bankruptcy laws and rules for permitted payment stablecoin issuers”
Subsection (h). Three subjects are named: gaps in the bankruptcy laws and rules for these issuers, the ability of holders to be paid out in full where an issuer is insolvent, and the utility of orderly insolvency administration regimes and whether further authorities are needed. A report with all findings and any legislative recommendations is due to the two named committees within three years of enactment.
What the document actually says
“The primary Federal payment stablecoin regulators shall perform a study of the potential insolvency proceedings of permitted payment stablecoin issuers, including an examination of-- (A) existing gaps in the bankruptcy laws and rules for permitted payment stablecoin issuers”
That sentence, in plain words
The federal watchdogs must study what happens when a maker fails. One thing they look at is gaps in the law on failed firms.
What this is about
They also ask if holders would get all their money. They ask if a better wind up path is needed. A report is due in three years.
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.
Guiding and Establishing National Innovation for U.S. Stablecoins Act, Public Law 119-27, sec. 11, 139 Stat. 457 (2025). https://www.govinfo.gov/content/pkg/PLAW-119publ27/html/PLAW-119publ27.htm
This page
“Treatment of Payment Stablecoin Issuers in Insolvency Proceedings,” Guiding and Establishing National Innovation for U.S. Stablecoins Act, section 11. Read the Mandate, https://readthemandate.org/guiding-establishing-national-innovation-u-s/section-11/ (retrieved August 26, 2026).
Cite the document when the claim is about what the document says. Cite this page when the indexing, the wording or the record of what has happened is what is being relied on.
What This Page Covers, and What It Leaves Out
Each distinct thing the section does: the priority of a stablecoin holder's claim to required reserves, the deeming of a holder as holding a claim, the limit on that priority, the two new terms added to the bankruptcy code, the addition of redemption to the automatic stay and the new ground for relief from it, the new first priority in section 507, the exclusion of required reserves from the estate, the right of the Comptroller or a State regulator to appear, how existing insolvency law applies, and the study and report on insolvency proceedings.
The mechanical amendments that strike an 'or' or a period and insert a semicolon, so that new paragraphs can be added to a list, are not recorded one by one. They are recorded only through the paragraphs they make room for.
Most of the section works by amending title 11 of the United States Code, the bankruptcy code, which is not indexed on this site. The words this Act inserts are recorded here. What title 11 said before this Act, and what it says once the amendments are applied, are not.
