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Federal · Technology & finance
H.R. 3633Who regulates crypto—and what gets left outside
The Digital Asset Market Clarity Act would divide oversight of digital assets between the SEC and CFTC, add registration and customer-protection rules, and restrict a retail central-bank digital currency.
Senate vote queuedCloture scheduled · Sept. 15, 2026
The law, with a human translation.
Titles I–II · Digital commodity status
OFFICIAL LANGUAGE
The Act creates a framework for mature blockchain systems and secondary trading of digital assets offered through investment contracts.
PLAIN ENGLISH
Some crypto assets get a route from securities-style oversight toward commodity-style trading rules.
Titles III–IV · Market regulators
OFFICIAL LANGUAGE
The Act regulates digital commodity exchanges, brokers, and dealers and clarifies CFTC and SEC jurisdiction.
PLAIN ENGLISH
Crypto businesses get national registration lanes, with the CFTC overseeing commodity markets and the SEC retaining securities authority.
Title VI · Decentralized finance
OFFICIAL LANGUAGE
The text addresses non-controlling blockchain developers, decentralized finance, and Bank Secrecy Act treatment.
PLAIN ENGLISH
Some people publishing or supporting decentralized software may sit outside rules applied to financial middlemen.
⚑ Law-enforcement groups argue Section 604 could also shelter mixers or activity functioning like money transmission.
Title VII · Central-bank digital currency
OFFICIAL LANGUAGE
Federal reserve banks may not offer certain services directly to individuals or use a central bank digital currency for monetary policy.
PLAIN ENGLISH
The Fed could not offer a retail digital dollar directly to people or use one as a monetary-policy tool.
The bill is hundreds of pages and the Senate version materially changed the House approach.
Law-enforcement groups have warned that Section 604 may create broad exemptions for some mixers, decentralized systems, or non-controlling developers.
A cloture vote is a vote to advance debate—not final passage.
Read every word for yourself.
This is the complete adopted or enrolled document, reproduced from the official government source. Page and part labels follow the source file.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3633 Reported in Senate (RS)]
<DOC>
Calendar No. 423
119th CONGRESS
2d Session
H. R. 3633
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 18 (legislative day, September 16), 2025
Received; read twice and referred to the Committee on Banking,
Housing, and Urban Affairs
June 1, 2026
Reported by Mr. Scott of South Carolina, with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
AN ACT
To provide for a system of regulation of the offer and sale of digital
commodities by the Securities and Exchange Commission and the Commodity
Futures Trading Commission, to amend the Federal Reserve Act to
prohibit the Federal reserve banks from offering certain products or
services directly to an individual, to prohibit the use of central bank
digital currency for monetary policy, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLES; TABLE OF CONTENTS.</DELETED>
<DELETED> (a) Short Titles.--This Act may be cited as the ``Digital
Asset Market Clarity Act of 2025'' or the ``CLARITY Act of 2025'' and
the ``Anti-CBDC Surveillance State Act''.</DELETED>
<DELETED> (b) Table of Contents.--The table of contents for this Act
is as follows:</DELETED>
<DELETED>Sec. 1. Short titles; table of contents.
<DELETED>TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION
<DELETED>Sec. 101. Definitions under the Securities Act of 1933.
<DELETED>Sec. 102. Definitions under the Securities Exchange Act of
1934.
<DELETED>Sec. 103. Definitions under the Commodity Exchange Act.
<DELETED>Sec. 104. Definitions under this Act.
<DELETED>Sec. 105. Rulemakings.
<DELETED>Sec. 106. Expedited registration for digital commodity
exchanges, brokers, and dealers;
provisional status.
<DELETED>Sec. 107. Commodity Exchange Act and securities laws savings
provisions.
<DELETED>Sec. 108. Administrative requirements.
<DELETED>Sec. 109. Treatment of certain non-controlling blockchain
developers.
<DELETED>Sec. 110. Application of the Bank Secrecy Act.
<DELETED>Sec. 111. Rule of construction.
<DELETED>Sec. 112. Implementation.
<DELETED>TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
<DELETED>Sec. 201. Treatment of investment contract assets.
<DELETED>Sec. 202. Exempted primary transactions in digital
commodities.
<DELETED>Sec. 203. Treatment of secondary transactions in digital
commodities that originally involved
investment contracts.
<DELETED>Sec. 204. Requirements for offers and sales of digital
commodities by digital commodity related
persons and digital commodity affiliated
persons.
<DELETED>Sec. 205. Mature blockchain system requirements.
<DELETED>Sec. 206. Effective date.
<DELETED>TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES
AND EXCHANGE COMMISSION
<DELETED>Sec. 301. Treatment of digital commodities and permitted
payment stablecoins.
<DELETED>Sec. 302. Anti-fraud authority over permitted payment
stablecoins and certain digital commodity
transactions.
<DELETED>Sec. 303. Eligibility of alternative trading systems.
<DELETED>Sec. 304. Rulemaking for dual-registered entities.
<DELETED>Sec. 305. Modernization of recordkeeping requirements.
<DELETED>Sec. 306. Exemptive authority.
<DELETED>Sec. 307. Additional registrations with the Commodity Futures
Trading Commission.
<DELETED>Sec. 308. Exempting digital commodities from State securities
laws.
<DELETED>Sec. 309. Exclusion for decentralized finance activities.
<DELETED>Sec. 310. Treatment of custody activities by banking
institutions.
<DELETED>Sec. 311. Broker and dealer disclosures regarding the
treatment of assets.
<DELETED>Sec. 312. Digital commodity activities that are financial in
nature.
<DELETED>Sec. 313. Effective date; administration.
<DELETED>Sec. 314. Educational material requirements.
<DELETED>Sec. 315. Discretionary Surplus Fund.
<DELETED>TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT
THE COMMODITY FUTURES TRADING COMMISSION
<DELETED>Sec. 401. Commission jurisdiction over digital commodity
transactions.
<DELETED>Sec. 402. Requiring futures commission merchants to use
qualified digital asset custodians.
<DELETED>Sec. 403. Trading certification and approval for digital
commodities.
<DELETED>Sec. 404. Registration of digital commodity exchanges.
<DELETED>Sec. 405. Qualified digital asset custodians.
<DELETED>Sec. 406. Registration and regulation of digital commodity
brokers and dealers.
<DELETED>Sec. 407. Registration of associated persons.
<DELETED>Sec. 408. Registration of commodity pool operators and
commodity trading advisors.
<DELETED>Sec. 409. Exclusion for decentralized finance activities.
<DELETED>Sec. 410. Resources for implementation and enforcement.
<DELETED>Sec. 411. Requirements related to control persons.
<DELETED>Sec. 412. Other tradable assets.
<DELETED>Sec. 413. Conflict of interest rulemaking.
<DELETED>Sec. 414. Effective date.
<DELETED>Sec. 415. Sense of Congress.
<DELETED>TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
<DELETED>Sec. 501. Findings; sense of Congress.
<DELETED>Sec. 502. Strategic Hub for Innovation and Financial
Technology.
<DELETED>Sec. 503. Codification of LabCFTC.
<DELETED>Sec. 504. Study on decentralized finance.
<DELETED>Sec. 505. Study on non-fungible tokens.
<DELETED>Sec. 506. Study on expanding financial literacy amongst
digital commodity holders.
<DELETED>Sec. 507. Study on financial market infrastructure
improvements.
<DELETED>Sec. 508. Study on blockchain in payments.
<DELETED>Sec. 509. Study on illicit use of digital assets.
<DELETED>Sec. 510. GAO study on certain centralized intermediaries that
are primarily located in foreign
jurisdictions.
<DELETED>Sec. 511. Studies on foreign adversary participation.
<DELETED>Sec. 512. Conforming amendments.
<DELETED>TITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT
<DELETED>Sec. 601. Short title.
<DELETED>Sec. 602. Prohibition on Federal reserve banks relating to
certain products or services for
individuals and prohibition on directly
issuing a central bank digital currency.
<DELETED>Sec. 603. Prohibition on Federal reserve banks indirectly
issuing a central bank digital currency.
<DELETED>Sec. 604. Prohibition with respect to central bank digital
currency.
<DELETED>Sec. 605. Sense of Congress.
<DELETED>TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED
REGISTRATION</DELETED>
<DELETED>SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF
1933.</DELETED>
<DELETED> Section 2(a) of the Securities Act of 1933 (15 U.S.C.
77b(a)) is amended by adding at the end the following:</DELETED>
<DELETED> ``(20) Blockchain.--The term `blockchain' means--
</DELETED>
<DELETED> ``(A) any technology--</DELETED>
<DELETED> ``(i) where data is--</DELETED>
<DELETED> ``(I) shared across anetwork to create a distributed ledger
of independently verifiable
transactions or information among
network participants;</DELETED>
<DELETED> ``(II) linked using
cryptography to maintain the integrity
of the distributed ledger and to
execute other functions; and</DELETED>
<DELETED> ``(III) propagated among
network participants to reach consensus
on the state of the distributed ledger
and any other functions; and</DELETED>
<DELETED> ``(ii) composed of source code
that is publicly available; and</DELETED>
<DELETED> ``(B) any similar technology to the
technology described in subparagraph (A).</DELETED>
<DELETED> ``(21) Blockchain application.--The term
`blockchain application' means any executable software that is
deployed to a blockchain and composed of source code that is
publicly available, including a smart contract or any network
of smart contracts, or other similar technology.</DELETED>
<DELETED> ``(22) Blockchain protocol.--The term `blockchain
protocol' means publicly available source code of a blockchain
that is executed by the network participants of a blockchain to
facilitate its functioning, or other similar
technology.</DELETED>
<DELETED> ``(23) Blockchain system.--The term `blockchain
system' means any blockchain, together with its blockchain
protocol or any blockchain application or network of blockchain
applications.</DELETED>
<DELETED> ``(24) Decentralized governance system.--
</DELETED>
<DELETED> ``(A) In general.--The term `decentralized
governance system' means, with respect to a blockchain
system, any transparent, rules-based system permitting
persons to form consensus or reach agreement in the
development, provision, publication, maintenance, or
administration of such blockchain system, where
participation is not limited to, or under the effective
control of, any person or group of persons under common
control.</DELETED>
<DELETED> ``(B) Relationship of persons to
decentralized governance systems.--With respect to a
decentralized governance system, the decentralized
governance system and any persons participating in the
decentralized governance system shall be treated as
separate persons unless such persons are under common
control or acting pursuant to an agreement to act in
concert.</DELETED>
<DELETED> ``(C) Legal entities for decentralized
governance systems.--The term `decentralized governance
system' shall include a legal entity used to implement
the rules-based system described in subparagraph (A),
provided that the legal entity does not operate
pursuant to centralized management. For the purposes of
this subparagraph, the delegation of ministerial or
administrative authority at the direction of the
participants in a decentralized governance system shall
not be construed to be centralized
management.</DELETED>
<DELETED> ``(25) Digital asset.--The term `digital asset'
means any digital representation of value which is recorded on
a cryptographically-secured distributed ledger or other similar
technology.</DELETED>
<DELETED> ``(26) Digital commodity.--The term `digital
commodity' has the meaning given that term under section 1a of
the Commodity Exchange Act (7 U.S.C. 1a).</DELETED>
<DELETED> ``(27) Digital commodity affiliated person.--The
term `digital commodity affiliated person'--</DELETED>
<DELETED> ``(A) means a person (including a digital
commodity related person) that, with respect to any
digital commodity--</DELETED>
<DELETED> ``(i) acquires or has any right to
acquire 5 percent or more of the total
outstanding units of such digital commodity
from a digital commodity issuer or an agent or
underwriter thereof;</DELETED>
<DELETED> ``(ii) is a founder of the digital
commodity issuer; or</DELETED>
<DELETED> ``(iii) is an executive officer,
director, trustee, general partner, or person
serving in a similar capacity of the digital
commodity issuer or held such role at any point
in the previous 12-month period; and</DELETED>
<DELETED> ``(B) does not include a decentralized
governance system.</DELETED>
<DELETED> ``(28) Digital commodity issuer.--</DELETED>
<DELETED> ``(A) In general.--With respect to a
digital commodity, the term `digital commodity issuer'
means any person that--</DELETED>
<DELETED> ``(i) issues or causes to be
issued, or proposes to issue or cause to be
issued, a unit of such digital commodity to a
person; or</DELETED>
<DELETED> ``(ii) offers or sells a right to
a future issuance of a unit of such digital
commodity to a person.</DELETED>
<DELETED> ``(B) Prohibition on evasion.--It shall be
unlawful for any person to knowingly evade
classification as a `digital commodity issuer' and
facilitate an arrangement for the primary purpose of
effecting an offer, sale, distribution, or other
issuance of a digital commodity, including via any
arrangement involving the transfer of intellectual
property associated with the blockchain system to which
the digital commodity relates.</DELETED>
<DELETED> ``(29) Digital commodity related person.--
</DELETED>
<DELETED> ``(A) In general.--With respect to a
digital commodity issuer, the term `digital commodity
related person'--</DELETED>
<DELETED> ``(i) means a person--</DELETED>
<DELETED> ``(I) that is or was in
the previous 6-month period a promoter,
senior employee, advisory board member,
consultant, advisor, or person serving
in a similar capacity; or</DELETED>
<DELETED> ``(II) that acquires or
has any right to acquire 1 percent or
more of the total outstanding units of
such digital commodity from a digital
commodity issuer or an agent or
underwriter thereof; and</DELETED>
<DELETED> ``(ii) does not include a
decentralized governance system.</DELETED>
<DELETED> ``(B) Senior employee defined.--In this
paragraph and with respect to a digital commodity
issuer, the term `senior employee' means any employee
materially involved in the management of the digital
commodity issuer, including management of the
development of the blockchain system to which the
digital commodity relates.</DELETED>
<DELETED> ``(30) End user distribution.--</DELETED>
<DELETED> ``(A) In general.--The term `end user
distribution' means a distribution of a unit of a
digital commodity that--</DELETED>
<DELETED> ``(i) does not involve an exchange
of more than a nominal value of cash, property,
or other assets; and</DELETED>
<DELETED> ``(ii) is distributed in a broad
and equitable manner based on conditions
capable of being satisfied by any participant
in the blockchain system, including, as
incentive-based rewards--</DELETED>
<DELETED> ``(I) to users of the
digital commodity or any blockchain
system to which the digital commodity
relates;</DELETED>
<DELETED> ``(II) for activities
directly related to the operation of
the blockchain system, such as mining,
validating, staking, or other activity
directly tied to the operation of the
blockchain system; or</DELETED>
<DELETED> ``(III) to the existing
holders of another digital commodity,
in proportion to the total units of
such other digital commodity as are
held by each person.</DELETED>
<DELETED> ``(B) Protocol consensus participation.--
The term `end user distribution' includes the
following:</DELETED>
<DELETED> ``(i) Self staking.--The
distribution of a unit of a digital commodity
as a programmatic result of validating or
staking activity for a blockchain system's
consensus mechanism, including the staking of a
digital commodity and the operation of a node
or validator for such activity where the owner
of the staked digital commodity and operator of
the node or validator are the same person or
entity.</DELETED>
<DELETED> ``(ii) Self-custodial staking with
a third party.--The distribution of a unit of a
digital commodity as a programmatic result of
validating or staking activity for a blockchain
system's consensus mechanism, including the
staking of a digital commodity and the
operation of a node or validator for such
activity where--</DELETED>
<DELETED> ``(I) the owner of thestaked digital commodity and operator
of the node or validator for such
activity are different persons or
entities; and</DELETED>
<DELETED> ``(II) the operator of the
node or validator does not maintain
custody or control of the staked
digital commodity.</DELETED>
<DELETED> ``(iii) Custodial and ancillary
staking services.--Subject to the rules issued
pursuant to subparagraph (C), the provision of
custodial or ancillary staking services
enabling the owner of a digital commodity to
participate in validating or staking activity
for a blockchain system's consensus mechanism
that results in the programmatic distribution
of a unit of a digital commodity, provided that
such custodial or ancillary services are
exclusively administrative or ministerial in
nature.</DELETED>
<DELETED> ``(C) Rulemaking to define the custodial
and ancillary staking services.--Not later than 270
days after the date of the enactment of this paragraph,
the Commission shall issue rules defining the custodial
and ancillary staking services described in
subparagraph (B)(iii) that are exclusively
administrative or ministerial in nature, consistent
with what is necessary or appropriate for the public
interest or for the protection of investors.</DELETED>
<DELETED> ``(31) Mature blockchain system.--The term `mature
blockchain system' means a blockchain system, together with its
related digital commodity, that is not controlled by any person
or group of persons under common control.</DELETED>
<DELETED> ``(32) Permitted payment stablecoin.--The term
`permitted payment stablecoin' means a payment stablecoin (as
defined in section 2 of the GENIUS Act) issued by a permitted
payment stablecoin issuer.</DELETED>
<DELETED> ``(33) Permitted payment stablecoin issuer.--The
term `permitted payment stablecoin issuer' has the meaning
given that term in section 2 of the GENIUS Act.''.</DELETED>
<DELETED>SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF
1934.</DELETED>
<DELETED> Section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)) is amended--</DELETED>
<DELETED> (1) by redesignating the second paragraph (80)
(relating to funding portals) as paragraph (81); and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(82) Bank secrecy act.--The term `Bank Secrecy
Act' means--</DELETED>
<DELETED> ``(A) section 21 of the Federal Deposit
Insurance Act (12 U.S.C. 1829b);</DELETED>
<DELETED> ``(B) chapter 2 of title I of Public Law
91-508 (12 U.S.C. 1951 et seq.); and</DELETED>
<DELETED> ``(C) subchapter II of chapter 53 of title
31, United States Code.</DELETED>
<DELETED> ``(83) Additional digital commodity-related
terms.--</DELETED>
<DELETED> ``(A) Securities act of 1933.--The terms
`blockchain system', `decentralized governance system',
`digital asset', `digital commodity affiliated person',
`digital commodity issuer', `digital commodity related
person', `end user distribution', `mature blockchain
system', `permitted payment stablecoin', and `permitted
payment stablecoin issuer' have the meaning given those
terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).</DELETED>
<DELETED> ``(B) Commodity exchange act.--The terms
`digital commodity', `digital commodity broker',
`digital commodity dealer', `digital commodity
exchange', `decentralized finance messaging system',
and `decentralized finance trading protocol' have the
meaning given those terms, respectively, under section
1a of the Commodity Exchange Act (7 U.S.C.
1a).''.</DELETED>SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.
<DELETED> (a) In General.--Section 1a of the Commodity Exchange Act
(7 U.S.C. 1a) is amended--</DELETED>
<DELETED> (1) in paragraph (10)--</DELETED>
<DELETED> (A) in subparagraph (A)--</DELETED>
<DELETED> (i) by redesignating clauses (iii)
and (iv) as clauses (iv) and (v), respectively;
and</DELETED>
<DELETED> (ii) by inserting after clause
(ii) the following:</DELETED>
<DELETED> ``(iii) digital commodity;'';
and</DELETED>
<DELETED> (B) by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A)
the following:</DELETED>
<DELETED> ``(B) Exclusion.--For purposes of this
paragraph, the term `trading in commodity interests'
shall not include transacting in digital commodities
for the purpose of--</DELETED>
<DELETED> ``(i) acting as a digital
commodity custodian;</DELETED>
<DELETED> ``(ii) establishing, maintaining,
or managing inventory or payment instruments
for commercial purposes; or</DELETED>
<DELETED> ``(iii) maintaining or supporting
the operation of, or validating transactions
on, a blockchain system.'';</DELETED>
<DELETED> (2) in paragraph (11)--</DELETED>
<DELETED> (A) in subparagraph (A)(i)--</DELETED>
<DELETED> (i) by redesignating subclauses
(III) and (IV) as subclauses (IV) and (V),
respectively; and</DELETED>
<DELETED> (ii) by inserting after subclause
(II) the following:</DELETED>
<DELETED> ``(III) digital
commodity;''; and</DELETED>
<DELETED> (B) by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A)
the following:</DELETED>
<DELETED> ``(B) Exclusion.--For purposes of this
paragraph, the term `trading in commodity interests'
shall not include transacting in digital commodities
for the purpose of--</DELETED>
<DELETED> ``(i) acting as a digital
commodity custodian;</DELETED>
<DELETED> ``(ii) establishing, maintaining,
or managing inventory or payment instruments
for commercial purposes; or</DELETED>
<DELETED> ``(iii) maintaining or supporting
the operation of, or validating transactions
on, a blockchain system.'';</DELETED>
<DELETED> (3) in paragraph (12)(A)(i)--</DELETED>
<DELETED> (A) in subclause (II), by adding at the
end a semicolon;</DELETED>
<DELETED> (B) by redesignating subclauses (III) and
(IV) as subclauses (IV) and (V), respectively;
and</DELETED>
<DELETED> (C) by inserting after subclause (II) the
following:</DELETED>
<DELETED> ``(III) a digital
commodity;'';</DELETED>
<DELETED> (4) by redesignating paragraphs (16) through (51)
as paragraphs (17) through (52), respectively, and inserting
after paragraph (15) the following:</DELETED>
<DELETED> ``(16) Terms related to digital commodities.--
</DELETED>
<DELETED> ``(A) Associated person of a digital
commodity broker.--</DELETED>
<DELETED> ``(i) In general.--Except as
provided in clause (ii), the term `associated
person of a digital commodity broker' means a
person who is associated with a digital
commodity broker as a partner, officer,
employee, or agent (or any person occupying a
similar status or performing similar functions)
in any capacity that involves--</DELETED>
<DELETED> ``(I) the solicitation or
acceptance of an order for the purchase
or sale of a digital commodity;
or</DELETED>
<DELETED> ``(II) the supervision of
any person engaged in the solicitation
or acceptance of an order for the
purchase or sale of a digital
commodity.</DELETED>
<DELETED> ``(ii) Exclusion.--The term
`associated person of a digital commodity
broker' does not include any person associated
with a digital commodity broker the functions
of which are solely clerical or
ministerial.</DELETED>
<DELETED> ``(B) Associated person of a digital
commodity dealer.--</DELETED>
<DELETED> ``(i) In general.--Except as
provided in clause (ii), the term `associated
person of a digital commodity dealer' means a
person who is associated with a digital
commodity dealer as a partner, officer,
employee, or agent (or any person occupying a
similar status or performing similar functions)
in any capacity that involves--</DELETED>
<DELETED> ``(I) the solicitation or
acceptance of a contract for the
purchase or sale of a digital
commodity; or</DELETED>
<DELETED> ``(II) the supervision of
any person engaged in the solicitation
or acceptance of a contract for the
purchase or sale of a digital
commodity.</DELETED>
<DELETED> ``(ii) Exclusion.--The term
`associated person of a digital commodity
dealer' does not include any person associated
with a digital commodity dealer the functions
of which are solely clerical or
ministerial.</DELETED>
<DELETED> ``(C) Bank secrecy act.--The term `Bank
Secrecy Act' means--</DELETED>
<DELETED> ``(i) section 21 of the Federal
Deposit Insurance Act (12 U.S.C.
1829b);</DELETED>
<DELETED> ``(ii) chapter 2 of title I of
Public Law 91-508 (12 U.S.C. 1951 et seq.);
and</DELETED>
<DELETED> ``(iii) subchapter II of chapter
53 of title 31, United States Code.</DELETED>
<DELETED> ``(D) Decentralized finance messaging
system.--</DELETED>
<DELETED> ``(i) In general.--The term
`decentralized finance messaging system' means
a software application that provides a user
with the ability to create or submit an
instruction, communication, or message to a
decentralized finance trading protocol for the
purpose of executing a transaction by the
user.</DELETED>
<DELETED> ``(ii) Additional requirements.--
The term `decentralized finance messaging
system' does not include any system that
provides any person other than the user with
control over--</DELETED>
<DELETED> ``(I) the funds of the
user; or</DELETED>
<DELETED> ``(II) the execution of
the transaction of the user.</DELETED>
<DELETED> ``(E) Decentralized finance trading
protocol.--</DELETED>
<DELETED> ``(i) In general.--The term
`decentralized finance trading protocol' means
a blockchain system through which multiple
participants can execute a financial
transaction--</DELETED>
<DELETED> ``(I) in accordance with
an automated rule or algorithm that is
predetermined and non-discretionary;
and</DELETED>
<DELETED> ``(II) without reliance on
any other person to maintain control of
the digital assets of the user during
any part of the financial
transaction.</DELETED>
<DELETED> ``(ii) Exclusions.--</DELETED>
<DELETED> ``(I) In general.--The
term `decentralized finance trading
protocol' does not include a blockchain
system if--</DELETED>
<DELETED> ``(aa) a person or
group of persons under common
control or acting pursuant to
an agreement to act in concert
has the authority, directly or
indirectly, through any
contract, arrangement,
understanding, relationship, or
otherwise, to control or
materially alter the
functionality, operation, or
rules of consensus or agreement
of the blockchain system;
or</DELETED><DELETED> ``(bb) the
blockchain system does not
operate, execute, and enforce
its operations and transactions
based solely on pre-
established, transparent rules
encoded directly within the
source code of the blockchain
system.</DELETED>
<DELETED> ``(II) Special rule.--For
purposes of subclause (I), a
decentralized governance system shall
not be considered to be a person or a
group of persons under common control
or acting pursuant to an agreement to
act in concert.</DELETED>
<DELETED> ``(F) Digital commodity.--</DELETED>
<DELETED> ``(i) In general.--The term
`digital commodity' means a digital asset that
is intrinsically linked to a blockchain system,
and the value of which is derived from or is
reasonably expected to be derived from the use
of the blockchain system.</DELETED>
<DELETED> ``(ii) Relationship to a
blockchain system.--For purposes of this
subparagraph, a digital asset is intrinsically
linked to a blockchain system if the digital
asset is directly related to the functionality
or operation of the blockchain system or to the
activities or services for which the blockchain
system is created or utilized, including where
the digital asset is--</DELETED>
<DELETED> ``(I) issued or generated
by the programmatic functioning of the
blockchain system;</DELETED>
<DELETED> ``(II) used to transfer
value between participants in the
blockchain system;</DELETED>
<DELETED> ``(III) used to access the
activities or services of the
blockchain system;</DELETED>
<DELETED> ``(IV) used to participate
in the decentralized governance system
of the blockchain system;</DELETED>
<DELETED> ``(V) used or removed from
circulation in whole or in part to pay
fees or otherwise verify or validate
transactions on the blockchain
system;</DELETED>
<DELETED> ``(VI) used as payment or
incentive to participants in the
blockchain system to engage in the
activities of the blockchain system,
provide services to other participants
in the blockchain system, or otherwise
participate in the functionality of the
blockchain system; or</DELETED>
<DELETED> ``(VII) used as payment or
incentive to participants in the
blockchain system to validate
transactions, secure the blockchain
system, provide computational services,
maintain or distribute information, or
otherwise participate in the operations
of the blockchain system.</DELETED>
<DELETED> ``(iii) Exclusion.--The term
`digital commodity' does not include any of the
following:</DELETED>
<DELETED> ``(I) Security.--
</DELETED>
<DELETED> ``(aa) Any
security, other than a note, an
investment contract, or a
certificate of interest or
participation in any profit-
sharing agreement.</DELETED>
<DELETED> ``(bb) A note, an
investment contract, or a
certificate of interest or
participation in any profit-
sharing agreement that--
</DELETED>
<DELETED> ``(AA)
represents or gives the
holder an ownership
interest or other
interest in the
revenues, profits,
obligations, debts,
assets, or assets or
debts to be acquired of
the issuer of the
digital asset or
another person (other
than a decentralized
governance
system);</DELETED>
<DELETED> ``(BB)
makes the holder a
creditor of the issuer
of the digital asset or
another person;
or</DELETED>
<DELETED> ``(CC)
represents or gives the
holder the right to
receive interest or the
return of principal
from the issuer of the
digital asset or
another
person.</DELETED>
<DELETED> ``(II) Security
derivative.--A digital asset that,
based on its terms and other
characteristics, is, represents, or is
functionally equivalent to an
agreement, contract, or transaction
that is--</DELETED>
<DELETED> ``(aa) a security
future, as defined in section
2a of the Securities Act of
1933;</DELETED>
<DELETED> ``(bb) a security-
based swap, as defined in
section 2a of the Securities
Act of 1933;</DELETED>
<DELETED> ``(cc) a put,
call, straddle, option, or
privilege on any security,
certificate of deposit, or
group or index of securities
(including any interest therein
or based on the value thereof),
as defined in section 2a of the
Securities Act of 1933;
or</DELETED>
<DELETED> ``(dd) a put,
call, straddle, option, or
privilege on any security, as
defined in section 2a of the
Securities Act of
1933.</DELETED>
<DELETED> ``(III) Permitted payment
stablecoin.--A digital asset that is a
permitted payment stablecoin.</DELETED>
<DELETED> ``(IV) Banking deposit.--
</DELETED>
<DELETED> ``(aa) A deposit
(as defined under section 3 of
the Federal Deposit Insurance
Act (12 U.S.C. 1813)),
regardless of the technology
used to record the
deposit.</DELETED>
<DELETED> ``(bb) An account
(as defined in section 101 of
the Federal Credit Union Act
(12 U.S.C. 1752)), regardless
of the technology used to
record the account.</DELETED>
<DELETED> ``(V) Commodity.--A
digital asset that references,
represents an interest in, or is
functionally equivalent to--</DELETED>
<DELETED> ``(aa) an
agricultural
commodity;</DELETED>
<DELETED> ``(bb) an excluded
commodity, other than a
security; or</DELETED>
<DELETED> ``(cc) an exempt
commodity, other than the
digital commodity itself, as
shall be further defined by the
Commission.</DELETED>
<DELETED> ``(VI) Commodityderivative.--A digital asset that,
based on its terms and other
characteristics, is, represents, or is
functionally equivalent to an
agreement, contract, or transaction
that is--</DELETED>
<DELETED> ``(aa) a contract
of sale of a commodity for
future delivery or an option
thereon;</DELETED>
<DELETED> ``(bb) a security
futures product;</DELETED>
<DELETED> ``(cc) a
swap;</DELETED>
<DELETED> ``(dd) an
agreement, contract, or
transaction described in
section 2(c)(2)(C)(i) or
section
2(c)(2)(D)(i);</DELETED>
<DELETED> ``(ee) a commodity
option authorized under section
4c; or</DELETED>
<DELETED> ``(ff) a leverage
transaction authorized under
section 19.</DELETED>
<DELETED> ``(VII) Pooled investment
vehicle.--</DELETED>
<DELETED> ``(aa) In
general.--A digital asset not
described by subclause (I)
that, based on its terms and
other characteristics, is,
represents, or is functionally
equivalent to an interest in--
</DELETED>
<DELETED> ``(AA) a
commodity pool, as
defined in this Act;
or</DELETED>
<DELETED> ``(BB) a
pooled investment
vehicle.</DELETED>
<DELETED> ``(bb) Pooled
investment vehicle defined.--In
this subclause, the term
`pooled investment vehicle'
means--</DELETED>
<DELETED> ``(AA) any
investment company as
defined in section 3(a)
of the Investment
Company Act of 1940 (15
U.S.C. 80a-
3(a));</DELETED>
<DELETED> ``(BB) any
company (as defined in
section 2 of such Act
(15 U.S.C. 80a-2)) that
would be an investment
company under section
3(a) of such Act but
for the exclusions
provided from that
definition by section
3(c) of such Act, if
for purposes of this
subclause the company
were assumed to be an
issuer (as defined in
section 2 of such Act);
or</DELETED>
<DELETED> ``(CC) any
entity or person that
is not an investment
company but holds or
will hold assets other
than
securities.</DELETED>
<DELETED> ``(VIII) Good,
collectible, and other non-commodity
asset.--A digital asset that has value,
utility, or significance beyond its
mere existence as a digital asset,
including the digital equivalent of a
tangible or intangible good, such as--
</DELETED>
<DELETED> ``(aa) a work of
art, a musical composition, a
literary work, or other
intellectual
property;</DELETED>
<DELETED> ``(bb)
collectibles, merchandise,
virtual land, and video game
assets;</DELETED>
<DELETED> ``(cc) affinity,
rewards, or loyalty points,
including airline miles or
credit card points, that are
not primarily speculative in
nature; or</DELETED>
<DELETED> ``(dd) rights,
licenses, and
tickets.</DELETED>
<DELETED> ``(iv) Rule of construction.--No
presumption shall exist that a digital asset is
a security, nor shall a digital asset be
excluded from being a digital commodity
pursuant to clause (iii)(I), solely due to--
</DELETED>
<DELETED> ``(I) the digital asset
providing voting or economic rights
with respect to the blockchain system
to which the digital asset relates or
the decentralized governance system of
the blockchain system to which the
digital asset relates;</DELETED>
<DELETED> ``(II) the value of the
digital asset having the potential to
appreciate or depreciate in response to
the efforts, operations, or financial
performance of the blockchain system to
which the digital asset relates or the
decentralized governance system of the
blockchain system to which the digital
asset relates; or</DELETED>
<DELETED> ``(III) the value of the
digital asset appreciating or
depreciating due to the use of the
blockchain system to which the digital
asset relates or the decentralized
governance system of the blockchain
system to which the digital asset
relates.</DELETED>
<DELETED> ``(G) Digital commodity broker.--
</DELETED>
<DELETED> ``(i) In general.--The term
`digital commodity broker' means any person
who, as a regular business--</DELETED>
<DELETED> ``(I) is engaged in--
</DELETED>
<DELETED> ``(aa) soliciting
or accepting an order from a
customer for--</DELETED>
<DELETED> ``(AA) the
purchase or sale of a
digital commodity;
or</DELETED>
<DELETED> ``(BB) an
agreement, contract, or
transaction described
in section
2(c)(2)(D)(iv);
and</DELETED>
<DELETED> ``(bb) in
conjunction with the activities
in item (aa), accepts or
maintains control over--
</DELETED>
<DELETED> ``(AA) the
funds of any customer;
or</DELETED>
<DELETED> ``(BB) the
execution of any
transaction of a
customer;</DELETED>
<DELETED> ``(II) is engaged insoliciting or accepting orders from a
customer for the purchase or sale of a
unit of a digital commodity on or
subject to the rules of a registered
entity; or</DELETED>
<DELETED> ``(III) is registered with
the Commission as a digital commodity
broker.</DELETED>
<DELETED> ``(ii) Exceptions.--The term
`digital commodity broker' does not include a
person solely because the person--</DELETED>
<DELETED> ``(I) solicits or accepts
an order described in clause
(i)(I)(aa)(AA) from a customer who is
an eligible contract
participant;</DELETED>
<DELETED> ``(II) enters into 1 or
more digital commodity transactions
that are attributable or solely
incidental to making, sending,
receiving, or facilitating payments,
whether involving a payment service
provider or on a peer-to-peer basis;
or</DELETED>
<DELETED> ``(III) is a bank (as
defined under section 3(a) of the
Securities Exchange Act of 1934)
engaging in certain banking activities
with respect to a digital commodity in
the same or a similar manner as a bank
is excluded from the definition of a
broker under such section, as
determined by the Commission.</DELETED>
<DELETED> ``(iii) Further definition.--The
Commission, by rule or regulation, may exclude
from the term `digital commodity broker' any
person or class of persons if the Commission
determines that the rule or regulation will
effectuate the purposes of this Act.</DELETED>
<DELETED> ``(H) Digital commodity dealer.--
</DELETED>
<DELETED> ``(i) In general.--The term
`digital commodity dealer' means any person
who, as a regular business--</DELETED>
<DELETED> ``(I) is, or offers to be
a counterparty to a person for the
purchase or sale of a digital commodity
as a regular business, and in
conjunction with the activities,
accepts or maintains control over the
funds of any counterparty; or</DELETED>
<DELETED> ``(II) is registered with
the Commission as a digital commodity
dealer.</DELETED>
<DELETED> ``(ii) Exception.--The term
`digital commodity dealer' does not include a
person solely because the person--</DELETED>
<DELETED> ``(I) is or offers to be a
counterparty to a person who is an
eligible contract
participant;</DELETED>
<DELETED> ``(II) enters into a
digital commodity transaction with an
eligible contract
participant;</DELETED>
<DELETED> ``(III) enters into a
digital commodity transaction on or
through a registered digital commodity
exchange, with a registered digital
commodity broker, or through a
decentralized finance trading
protocol;</DELETED>
<DELETED> ``(IV) enters into a
digital commodity transaction for the
person's own account, either
individually or in a fiduciary
capacity, but not as a part of a
regular business;</DELETED>
<DELETED> ``(V) enters into 1 or
more digital commodity transactions
that are attributable or solely
incidental to making, sending,
receiving, or facilitating payments,
whether involving a payment service
provider or on a peer-to-peer basis;
or</DELETED>
<DELETED> ``(VI) is a bank (as
defined under section 3(a) of the
Securities Exchange Act of 1934)
engaging in certain banking activities
with respect to a digital commodity in
the same or a similar manner as a bank
is excluded from the definition of a
dealer under section 3(a)(5) of such
Act, as determined by the
Commission.</DELETED>
<DELETED> ``(iii) Further definition.--The
Commission, by rule or regulation, may exclude
from the term `digital commodity dealer' any
person or class of persons if the Commission
determines that the rule or regulation will
effectuate the purposes of this Act.</DELETED>
<DELETED> ``(I) Digital commodity exchange.--The
term `digital commodity exchange' means a trading
facility that offers or seeks to offer a cash or spot
market in at least 1 digital commodity.</DELETED>
<DELETED> ``(J) Mixed digital asset transaction.--
The term `mixed digital asset transaction' means a
transaction in which a digital commodity is traded for
a security.</DELETED>
<DELETED> ``(K) Terms defined under the securities
act of 1933.--The terms `blockchain system',
`decentralized governance system', `digital asset',
`digital commodity issuer', `digital commodity
affiliated person', `digital commodity related person',
`end user distribution', `mature blockchain system',
`permitted payment stablecoin', and `permitted payment
stablecoin issuer' have the meaning given those terms,
respectively, under section 2(a) of the Securities Act
of 1933 (15 U.S.C. 77b(a)).''; and</DELETED>
<DELETED> (5) in paragraph (41) (as so redesignated by
paragraph (4) of this subsection)--</DELETED>
<DELETED> (A) by striking ``and'' at the end of
subparagraph (E);</DELETED>
<DELETED> (B) by striking the period at the end of
subparagraph (F) and inserting ``; and''; and</DELETED>
<DELETED> (C) by adding at the end the
following:</DELETED>
<DELETED> ``(G) a digital commodity exchange
registered under section 5i.''.</DELETED>
<DELETED> (b) Conforming Amendments.--</DELETED>
<DELETED> (1) Each of the following provisions of law is
amended by striking ``1a(18)'' and inserting
``1a(19)'':</DELETED>
<DELETED> (A) Section 4s(h)(5)(A)(i) of the
Commodity Exchange Act (7 U.S.C.
6s(h)(5)(A)(i)).</DELETED>
<DELETED> (B) Section 5(e) of the Securities Act of
1933 (15 U.S.C. 77e(e)).</DELETED>
<DELETED> (C) Section 6(g)(5)(B) of the Securities
Exchange Act of 1934 (15 U.S.C.
78f(g)(5)(B)).</DELETED>
<DELETED> (D) Section 15F(h)(5)(A)(i) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-
10(h)(5)(A)(i)).</DELETED>
<DELETED> (2) Section 752 of the Wall Street Transparency
and Accountability Act of 2010 (15 U.S.C. 8325) is amended by
striking ``1a(39)'' and inserting ``1a(40)''.</DELETED>
<DELETED> (3) Section 4s(f)(1)(D) of the Commodity Exchange
Act (7 U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)''
and inserting ``1a(48)(A)''.</DELETED>
<DELETED> (4) Each of the following provisions of the
Commodity Exchange Act is amended by striking ``1a(47)(A)(v)''
and inserting ``1a(48)(A)(v)'':</DELETED>
<DELETED> (A) Section 4t(b)(1)(C) (7 U.S.C.
6t(b)(1)(C)).</DELETED>
<DELETED> (B) Section 5(d)(23) (7 U.S.C.
7(d)(23)).</DELETED>
<DELETED> (C) Section 5b(k)(3) (7 U.S.C. 7a-
1(k)(3)).</DELETED>
<DELETED> (D) Section 5h(f)(10)(A)(iii) (7 U.S.C.
7b-3(f)(10)(A)(iii)).</DELETED>
<DELETED> (5) Section 21(f)(4)(C) of the Commodity Exchange
Act (7 U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)''
and inserting ``1a(49)''.</DELETED>
<DELETED> (6) Section 403 of the Legal Certainty for Bank
Products Act of 2000 (7 U.S.C. 27a) is amended--</DELETED>
<DELETED> (A) in subsection (a)(2), by striking
``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)'';
and</DELETED>
<DELETED> (B) in each of subsections (b)(1) and
(c)(2), by striking ``1a(47)'' and inserting
``1a(48)''.</DELETED>
<DELETED> (7) Section 712 of the Wall Street Transparency
and Accountability Act of 2010 (15 U.S.C. 8302) is amended--
</DELETED>
<DELETED> (A) in subsection (a)(8), by striking
``1a(47)(D)'' each place it appears and inserting
``1a(48)(D)''; and</DELETED>
<DELETED> (B) in subsection (d)(1), by striking
``1a(47)(A)(v)'' each place it appears and inserting``1a(48)(A)(v)''.</DELETED>
<DELETED>SEC. 104. DEFINITIONS UNDER THIS ACT.</DELETED>
<DELETED> In this Act:</DELETED>
<DELETED> (1) Definitions under the commodity exchange
act.--The terms ``decentralized finance messaging system'',
``decentralized finance trading protocol'', ``digital
commodity'', ``digital commodity broker'', ``digital commodity
dealer'', ``digital commodity exchange'', and ``mixed digital
asset transaction'' have the meaning given those terms,
respectively, under section 1a of the Commodity Exchange Act (7
U.S.C. 1a).</DELETED>
<DELETED> (2) Definitions under the securities act of
1933.--The terms ``blockchain'', ``blockchain system'',
``blockchain protocol'', ``decentralized governance system'',
``digital asset'', ``digital commodity issuer'', ``end user
distribution'', ``mature blockchain system'', ``permitted
payment stablecoin'', and ``permitted payment stablecoin
issuer'' have the meaning given those terms, respectively,
under section 2(a) of the Securities Act of 1933 (15 U.S.C.
77b(a)).</DELETED>
<DELETED> (3) Definitions under the securities exchange act
of 1934.--The terms ``Bank Secrecy Act'', ``securities laws'',
and ``self-regulatory organization'' have the meaning given
those terms, respectively, under section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).</DELETED>
<DELETED>SEC. 105. RULEMAKINGS.</DELETED>
<DELETED> (a) Definitions.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly issue rules to
further define the following terms:</DELETED>
<DELETED> (1) The terms--</DELETED>
<DELETED> (A) ``blockchain'', ``blockchain
application'', ``blockchain system'', ``blockchain
protocol'', ``decentralized governance system'',
``digital commodity affiliated person'', ``digital
commodity issuer'', ``digital commodity related
person'', ``end user distribution'', and ``mature
blockchain system'', as defined under section 2(a) of
the Securities Act of 1933;</DELETED>
<DELETED> (B) ``unilateral authority'', as such term
is used in section 42 of the Securities Exchange Act of
1934 and section 1a of the Commodity Exchange Act;
and</DELETED>
<DELETED> (C) ``programmatic functioning'', as such
term is used in sections 4C of the Securities Act of
1933, section 42 of the Securities Exchange Act of
1934, and section 1a of the Commodity Exchange
Act.</DELETED>
<DELETED> (2) The terms ``digital commodity'',
``decentralized finance messaging system'', and ``decentralized
finance trading protocol'', as defined under section 1a of the
Commodity Exchange Act.</DELETED>
<DELETED> (b) Joint Rulemaking for Mixed Digital Asset
Transactions.--The Securities and Exchange Commission and the Commodity
Futures Trading Commission shall jointly issue rules applicable to
mixed digital asset transactions under this Act and the amendments made
by this Act, including by further defining such term.</DELETED>
<DELETED> (c) Protection of Self-Custody.--</DELETED>
<DELETED> (1) In general.--A United States individual shall
retain the right to--</DELETED>
<DELETED> (A) maintain a hardware wallet or software
wallet for the purpose of facilitating the individual's
own lawful custody of digital assets; and</DELETED>
<DELETED> (B) engage in direct, peer-to-peer
transactions in digital assets with another individual
or entity for the individual's own lawful purposes
using a hardware wallet or software wallet, if--
</DELETED>
<DELETED> (i) such other individual or
entity is not a financial institution (as
defined in section 5312 of title 31, United
States Code); and</DELETED>
<DELETED> (ii) the transactions do not
involve any property or interests in property
that are blocked pursuant to, or are otherwise
prohibited by, United States
sanctions.</DELETED>
<DELETED> (2) Application.--This subsection--</DELETED>
<DELETED> (A) applies solely to personal use by
individuals; and</DELETED>
<DELETED> (B) does not apply to individuals acting
in a custodial or fiduciary capacity for
others.</DELETED>
<DELETED> (3) Rule of construction.--Nothing in this
subsection shall be construed to limit the authority of the
Secretary of the Treasury, the Securities and Exchange
Commission, the Commodity Futures Trading Commission, the Board
of Governors of the Federal Reserve System, the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, or the
National Credit Union Administration to carry out any
enforcement action or special measure authorized under
applicable law, including--</DELETED>
<DELETED> (A) the Bank Secrecy Act, section 9714 of
the Combating Russian Money Laundering Act (31 U.S.C.
5318A note), and section 7213A of the Fentanyl
Sanctions Act (21 U.S.C. 2313a); or</DELETED>
<DELETED> (B) any other law relating to illicit
finance, money laundering, terrorism financing, or
United States sanctions.</DELETED>
<DELETED> (d) Joint Rulemaking, Procedures, or Guidance for
Delisting.--Not later than 180 days after the date of the enactment of
this Act, the Commodity Futures Trading Commission and the Securities
and Exchange Commission shall jointly issue rules, procedures, or
guidance (as determined appropriate by the Commissions) regarding the
process to delist an asset for trading under section 106 if the
Commissions determine that the listing is inconsistent with the
Commodity Exchange Act, the securities laws (including regulations
under those laws), or this Act.</DELETED>
<DELETED> (e) Joint Rules for Portfolio Margining Determinations.--
</DELETED>
<DELETED> (1) In general.--Not later than 360 days after the
date of the enactment of this Act, the Commodity Futures
Trading Commission and the Securities and Exchange Commission
shall jointly issue rules describing the process for persons
registered with either such Commission to seek a joint order or
determination with respect to margin, customer protection,
segregation, or other requirements as necessary to facilitate
portfolio margining of securities (including related extensions
of credit), security-based swaps, contracts for future
delivery, options on a contract for future delivery, swaps, and
digital commodities, or any subset thereof, in--</DELETED>
<DELETED> (A) a securities account carried by a
registered broker or dealer or a security-based swap
account carried by a registered security-based swap
dealer;</DELETED>
<DELETED> (B) a futures or cleared swap account
carried by a registered futures commission
merchant;</DELETED>
<DELETED> (C) a swap account carried by a swap
dealer; or</DELETED>
<DELETED> (D) a digital commodity account carried by
a registered digital commodity broker or digital
commodity dealer that is also registered in such other
capacity as is necessary to also carry the other
customer or counterparty positions being held in the
account.</DELETED>
<DELETED> (2) Process.--With respect to a joint order or
determination described in paragraph (1), the rules required to
be issued pursuant to paragraph (1) shall require--</DELETED>
<DELETED> (A) the joint order or determination to be
issued only if the order or determination is in the
public interest and provides for the appropriate
protection of customers;</DELETED>
<DELETED> (B) applicants to file a standard
application, in a form and manner determined by the
Securities and Exchange Commission and the Commodity
Futures Trading Commission, which shall include the
information necessary to make the joint order or
determination;</DELETED>
<DELETED> (C) the Securities and Exchange Commission
and the Commodity Futures Trading Commission to make a
final determination not later than 270 days after the
filing of a completed application;</DELETED>
<DELETED> (D) the Securities and Exchange Commission
and the Commodity Futures Trading Commission to
consider the public interest of the joint order or
determination through the solicitation of public
comments; and</DELETED>
<DELETED> (E) the Securities and Exchange Commission
and the Commodity Futures Trading Commission to consult
with other relevant foreign or domestic regulators,
including the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, and
the Office of the Comptroller of the Currency, as
appropriate.</DELETED>
<DELETED> (f) Capital Requirements to Address Netting Agreements.--
No later than 360 days following the date of enactment of this Act, the
Board of Governors of the Federal Reserve System, the Comptroller of
the Currency, and the Federal Deposit Insurance Corporation shall
develop risk-based and leverage capital requirements for insured
depository institutions, depository institution holding companies, and
nonbank financial companies supervised by the Board of Governors that
address netting agreements that provide for termination and close-out
netting across multiple types of financial transactions, consistent
with subsection (e), in the event of a counterparty's
default.</DELETED>
<DELETED>SEC. 106. EXPEDITED REGISTRATION FOR DIGITAL COMMODITYEXCHANGES, BROKERS, AND DEALERS; PROVISIONAL
STATUS.</DELETED>
<DELETED> (a) Registration.--</DELETED>
<DELETED> (1) In general.--Unless exempted from
registration, a person shall not act as a digital commodity
broker, digital commodity dealer, or digital commodity exchange
after the end of the 90-day period beginning on the date the
process described in paragraph (2) is adopted by the Commodity
Futures Trading Commission, unless, as the case may be, the
person is registered as a--</DELETED>
<DELETED> (A) digital commodity broker pursuant to
section 4u of the Commodity Exchange Act;</DELETED>
<DELETED> (B) digital commodity dealer pursuant to
section 4u of the Commodity Exchange Act; or</DELETED>
<DELETED> (C) digital commodity exchange pursuant to
section 5i of the Commodity Exchange Act.</DELETED>
<DELETED> (2) Expedited process.--Within 180 days after the
date of the enactment of this Act, the Commodity Futures
Trading Commission shall adopt, by rule, regulation, or order,
a process for expedited registration of persons required to be
registered pursuant to paragraph (1).</DELETED>
<DELETED> (b) Provisional Status.--</DELETED>
<DELETED> (1) In general.--A person who is registered in
accordance with subsection (a) of this section shall be in
provisional status until--</DELETED>
<DELETED> (A) in the case of a digital commodity
broker or dealer, 270 days after the final effective
date of the rulemakings required under section 4u of
the Commodity Exchange Act; or</DELETED>
<DELETED> (B) in the case of a digital commodity
exchange, 270 days after the final effective date of
the rulemakings required under section 5i of such
Act.</DELETED>
<DELETED> (2) Payment of fees.--A person in provisional
status shall pay all fees and penalties required under section
410.</DELETED>
<DELETED> (c) Operations Prior to Regulations.--</DELETED>
<DELETED> (1) Requirements.--A person in provisional status
shall be subject to the requirements of this section and the
Commodity Exchange Act and any rules or regulations promulgated
under this section or the Commodity Exchange Act, as
applicable.</DELETED>
<DELETED> (2) Listings.--</DELETED>
<DELETED> (A) In general.--Except as provided in
subparagraph (B), a person in provisional status may
continue to offer, solicit, trade, facilitate, execute,
clear, report, or otherwise deal in any digital asset
offered on or through the facilities of the person
before the date of registration under this section,
until such time as the joint rulemaking on definitions
required under section 105(a) is effective.</DELETED>
<DELETED> (B) Delisting.--Before the effective date
of the joint rulemaking on definitions under section
105(a), a person in provisional status shall cease
offering, soliciting, trading, facilitating, executing,
clearing, reporting, or otherwise dealing in any
digital asset required to be delisted pursuant to a
joint delisting process established under section
105(d).</DELETED>
<DELETED> (3) Exemptive authority.--In order to promote
responsible innovation and fair competition, or protect
customers, the Commodity Futures Trading Commission may exempt
any persons or class of persons registered pursuant to
subsection (a) and in provisional status pursuant to subsection
(b) from any requirements of this section or the Commodity
Exchange Act or any rules or regulations promulgated under this
section or the Commodity Exchange Act, as applicable.</DELETED>
<DELETED> (d) Customer Disclosure Before Registration.--</DELETED>
<DELETED> (1) In general.--Beginning 30 days after the date
of the enactment of this Act, any person acting as a digital
commodity exchange, digital commodity broker, or digital
commodity dealer shall disclose to the customers of the person
so acting, in the disclosure documents, offering documents, and
promotional material of the person so acting, in a prominent
manner, that the person is not registered with or regulated by
the Commodity Futures Trading Commission.</DELETED>
<DELETED> (2) Expiration.--Paragraph (1) of this subsection
shall not apply to any person who registers pursuant to
subsection (a).</DELETED>
<DELETED>SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
PROVISIONS.</DELETED>
<DELETED> (a) In General.--Nothing in this Act shall affect or apply
to, or be interpreted to affect or apply to--</DELETED>
<DELETED> (1) any agreement, contract, or transaction that
is subject to the Commodity Exchange Act as--</DELETED>
<DELETED> (A) a contract of sale of a commodity for
future delivery or an option on such a
contract;</DELETED>
<DELETED> (B) a swap;</DELETED>
<DELETED> (C) a security futures product;</DELETED>
<DELETED> (D) an option authorized under section 4c
of such Act;</DELETED>
<DELETED> (E) an agreement, contract, or transaction
described in section 2(c)(2)(C)(i) of such Act;
or</DELETED>
<DELETED> (F) a leverage transaction authorized
under section 19 of such Act;</DELETED>
<DELETED> (2) any agreement, contract, or transaction that
is subject to the securities laws as--</DELETED>
<DELETED> (A) a security-based swap;</DELETED>
<DELETED> (B) a security futures product;
or</DELETED>
<DELETED> (C) an option on or based on the value of
a security; or</DELETED>
<DELETED> (3) the activities of any person with respect to
any such agreement, contract, or transaction.</DELETED>
<DELETED> (b) Prohibitions on Spot Digital Commodity Entities.--
Nothing in this Act authorizes, or shall be interpreted to authorize, a
digital commodity exchange, digital commodity broker, or digital
commodity dealer to engage in any activities involving any transaction,
contract, or agreement described in subsection (a)(1), solely by virtue
of being registered as a digital commodity exchange, digital commodity
broker, or digital commodity dealer.</DELETED>
<DELETED> (c) Definitions.--In this section, each term shall have
the meaning provided in the Commodity Exchange Act or the regulations
prescribed under such Act.</DELETED>
<DELETED>SEC. 108. ADMINISTRATIVE REQUIREMENTS.</DELETED>
<DELETED> Section 4c(a) of the Commodity Exchange Act (7 U.S.C.
6c(a)) is amended--</DELETED>
<DELETED> (1) in paragraph (3)--</DELETED>
<DELETED> (A) in subparagraph (B), by striking
``or'' at the end;</DELETED>
<DELETED> (B) in subparagraph (C), by striking the
period and inserting ``; or''; and</DELETED>
<DELETED> (C) by adding at the end the
following:</DELETED>
<DELETED> ``(D) a contract of sale of a digital
commodity.'';</DELETED>
<DELETED> (2) in paragraph (4)--</DELETED>
<DELETED> (A) in subparagraph (A)--</DELETED>
<DELETED> (i) in clause (ii), by striking
``or'' at the end;</DELETED>
<DELETED> (ii) in clause (iii), by striking
the period and inserting ``; or'';
and</DELETED>
<DELETED> (iii) by adding at the end the
following:</DELETED>
<DELETED> ``(iv) a contract of sale of a
digital commodity.'';</DELETED>
<DELETED> (B) in subparagraph (B)--</DELETED>
<DELETED> (i) in clause (ii), by striking
``or'' at the end;</DELETED>
<DELETED> (ii) in clause (iii), by striking
the period and inserting ``; or'';
and</DELETED>
<DELETED> (iii) by adding at the end the
following:</DELETED>
<DELETED> ``(iv) a contract of sale of a
digital commodity.''; and</DELETED>
<DELETED> (C) in subparagraph (C)--</DELETED>
<DELETED> (i) in clause (ii), by striking
``or'' at the end;</DELETED>
<DELETED> (ii) by striking ``(iii) a swap,
provided however,'' and inserting the
following:</DELETED>
<DELETED> ``(iii) a swap; or</DELETED>
<DELETED> ``(iv) a contract of sale of a
digital commodity,</DELETED>
<DELETED>provided, however,''; and</DELETED>
<DELETED> (iii) by striking ``clauses (i),
(ii), or (iii)'' and insert ``any of clauses
(i) through (iv)''.</DELETED>
<DELETED>SEC. 109. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN
DEVELOPERS.</DELETED>
<DELETED> (a) In General.--Notwithstanding applicable law, a non-
controlling blockchain developer or provider of a blockchain service
shall not be treated as a money transmitter or as engaged in ``money
transmitting'' or, following the date of enactment of this Act, be
otherwise subject to any new registration requirement that is
substantially similar to the requirement that currently applies to
money transmitters, solely on the basis of--</DELETED>
<DELETED> (1) creating or publishing software to facilitate
the creation of, or provision of maintenance services to, a
blockchain or blockchain service;</DELETED><DELETED> (2) providing hardware or software to facilitate a
customer's own custody or safekeeping of the customer's digital
assets; or</DELETED>
<DELETED> (3) providing infrastructure support to maintain a
blockchain service.</DELETED>
<DELETED> (b) Rule of Construction.--Nothing in this section shall
be construed to affect whether a blockchain developer or provider of a
blockchain service is otherwise subject to classification or treatment
as a money transmitter, or as engaged in ``money transmitting'', under
applicable State or Federal law, including laws relating to anti-money
laundering or countering the financing of terrorism, based on conduct
outside the scope of subsection (a). Nothing in this section shall be
construed to affect whether a blockchain developer or provider of a
blockchain service is otherwise subject to classification or treatment
as a financial institution under the Bank Secrecy Act, this Act, or any
Act enacted after the date of enactment of this Act.</DELETED>
<DELETED> (c) Effect on Other Laws.--</DELETED>
<DELETED> (1) Intellectual property law.--Nothing in this
section shall be construed to limit or expand any law
pertaining to intellectual property.</DELETED>
<DELETED> (2) State law.--Nothing in this section shall be
construed to prevent any State from enforcing any State law
that is consistent with this section. No cause of action may be
brought and no liability may be imposed under any State or
local law that is inconsistent with this section.</DELETED>
<DELETED> (d) Definitions.--In this section:</DELETED>
<DELETED> (1) Blockchain developer.--The term ``blockchain
developer'' means any person or business that creates or
publishes software to facilitate the creation of, or provide
maintenance to, a blockchain or a blockchain service.</DELETED>
<DELETED> (2) Blockchain service.--The term ``blockchain
service'' means any information, transaction, or computing
service or system that provides or enables access to a
blockchain network by multiple users, including specifically a
service or system that enables users to send, receive,
exchange, or store digital assets described by blockchain
networks.</DELETED>
<DELETED> (3) Non-controlling blockchain developer or
provider of a blockchain service.--The term ``non-controlling
blockchain developer or provider of a blockchain service''
means a blockchain developer or provider of a blockchain
service that in the regular course of operations, does not have
the legal right or the unilateral and independent ability to
control, initiate upon demand, or effectuate transactions
involving digital assets that users are entitled to, without
the approval, consent, or direction of any other third
party.</DELETED>
<DELETED>SEC. 110. APPLICATION OF THE BANK SECRECY ACT.</DELETED>
<DELETED> (a) In General.--Section 5312(c)(1)(A) of title 31, United
States Code, is amended--</DELETED>
<DELETED> (1) by inserting ``digital commodity broker,
digital commodity dealer,'' after ``futures commission
merchant,''; and</DELETED>
<DELETED> (2) by inserting before the period the following:
``and any digital commodity exchange registered, or required to
register, under the Commodity Exchange Act which permits direct
customer access''.</DELETED>
<DELETED> (b) Bank Secrecy Act Requirements.--</DELETED>
<DELETED> (1) Regulations.--The Secretary of the Treasury,
acting through the Director of the Financial Crimes Enforcement
Network, and in consultation with Commodity Futures Trading
Commission, shall issue requirements consistent with the
requirements of futures commission merchants to apply the Bank
Secrecy Act to digital commodity brokers, digital commodity
dealers, and digital commodity exchanges that are tailored to
the size and complexity of such entities, including by
requiring each such entity to--</DELETED>
<DELETED> (A) establish and maintain an anti-money
laundering and countering the financing of terrorism
program, which shall include--</DELETED>
<DELETED> (i) an appropriate risk
assessment;</DELETED>
<DELETED> (ii) the development of internal
policies, procedures, and controls;</DELETED>
<DELETED> (iii) the designation of a
compliance officer;</DELETED>
<DELETED> (iv) an ongoing employee training
program; and</DELETED>
<DELETED> (v) an independent audit function
to test such program;</DELETED>
<DELETED> (B) retain appropriate records of
transactions;</DELETED>
<DELETED> (C) monitor and report suspicious
activity, which may include use of appropriate
distributed ledger analytics; and</DELETED>
<DELETED> (D) maintain an effective customer
identification program to identify and verify account
holders and carry out appropriate customer due
diligence.</DELETED>
<DELETED> (2) Compliance with sanctions.--A digital
commodity broker, digital commodity dealer, or digital
commodity exchange shall comply with all laws and regulations
related to United States sanctions administered by the Office
of Foreign Assets Control.</DELETED>
<DELETED>SEC. 111. RULE OF CONSTRUCTION.</DELETED>
<DELETED> Nothing in this Act, or the amendments made by this Act,
shall be construed to limit or prevent the continued application of
applicable ethics statutes and regulations administered by the Office
of Government Ethics, or the ethics rules of the Senate and the House
of Representatives, including section 208 of title 18, United States
Code, and sections 2635.702 and 2635.802 of title 5, Code of Federal
Regulations. For the avoidance of doubt, existing Office of Government
Ethics laws and the ethics rules of the Senate and the House of
Representatives prohibit any member of Congress or senior executive
branch official from issuing a digital commodity during their time in
public service. For the purposes of this section, an employee described
in section 202 of title 18, United States Code, shall be deemed an
executive branch employee for purposes of complying with section 208 of
that title.</DELETED>
<DELETED>SEC. 112. IMPLEMENTATION.</DELETED>
<DELETED> (a) Global Rulemaking Timeframe.--Unless otherwise
provided in this Act or an amendment made by this Act, the Commodity
Futures Trading Commission and the Securities and Exchange Commission,
or both, shall individually, and jointly where required, promulgate
rules and regulations required of each Commission under this Act or an
amendment made by this Act not later than 360 days after the date of
enactment of this Act.</DELETED>
<DELETED> (b) Rules and Registration Before Final Effective Dates.--
</DELETED>
<DELETED> (1) In general.--In order to prepare for the
implementation of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission may,
before any effective date provided in this Act--</DELETED>
<DELETED> (A) promulgate rules, regulations, or
orders permitted or required by this Act;</DELETED>
<DELETED> (B) conduct studies and prepare reports
and recommendations required by this Act;</DELETED>
<DELETED> (C) register persons under this Act;
and</DELETED>
<DELETED> (D) exempt persons, agreements, contracts,
or transactions from provisions of this Act, under the
terms contained in this Act.</DELETED>
<DELETED> (2) Limitation on effectiveness.--An action by the
Commodity Futures Trading Commission or the Securities and
Exchange Commission under paragraph (1) shall not become
effective before the effective date otherwise applicable to the
action under this Act.</DELETED>
<DELETED>TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES</DELETED>
<DELETED>SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.</DELETED>
<DELETED> (a) Securities Act of 1933.--Section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)), as amended by section 101,
is further amended--</DELETED>
<DELETED> (1) in paragraph (1), by adding at the end the
following: ``The term `investment contract' does not include an
investment contract asset.''; and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(36) The term `investment contract asset' means
a digital commodity--</DELETED>
<DELETED> ``(A) that can be exclusively possessed
and transferred, person to person, without necessary
reliance on an intermediary, and is recorded on a
blockchain; and</DELETED>
<DELETED> ``(B) sold or otherwise transferred, or
intended to be sold or otherwise transferred, pursuant
to an investment contract.''.</DELETED>
<DELETED> (b) Investment Advisers Act of 1940.--Section 202(a)(18)
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is
amended by adding at the end the following: ``The term `investment
contract' does not include an investment contract asset (as such term
is defined under section 2(a) of the Securities Act of
1933).''.</DELETED>
<DELETED> (c) Investment Company Act of 1940.--Section 2(a)(36) of
the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended
by adding at the end the following: ``The term `investment contract'
does not include an investment contract asset (as such term is defined
under section 2(a) of the Securities Act of 1933).''.</DELETED>
<DELETED> (d) Securities Exchange Act of 1934.--Section 3(a)(10) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended
by adding at the end the following: ``The term `investment contract'
does not include an investment contract asset (as such term is defined
under section 2(a) of the Securities Act of 1933).''.</DELETED>
<DELETED> (e) Securities Investor Protection Act of 1970.--Section16(14) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78lll(14)) is amended by adding at the end the following: ``The term
`investment contract' does not include an investment contract asset (as
such term is defined under section 2(a) of the Securities Act of
1933).''.</DELETED>
<DELETED>SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL
COMMODITIES.</DELETED>
<DELETED> (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a
et seq.) is amended--</DELETED>
<DELETED> (1) in section 4(a), by adding at the end the
following:</DELETED>
<DELETED> ``(8) the offer or sale of an investment contract
involving units of a digital commodity by its digital commodity
issuer (including all entities controlled by or under common
control with the issuer), if--</DELETED>
<DELETED> ``(A) the blockchain system to which the
digital commodity relates, together with the digital
commodity, is certified as a mature blockchain system
under section 42 of the Securities Exchange Act of 1934
or the issuer intends for the blockchain system to
which the digital commodity relates to be a mature
blockchain system by the later of--</DELETED>
<DELETED> ``(i) the date that is four years
after the first sale of the investment contract
involving a unit of such digital commodity in
reliance on the exemption provided under this
paragraph, subject to any extensions as may be
granted by the Commission; or</DELETED>
<DELETED> ``(ii) the date that is four years
after the effective date of this
paragraph;</DELETED>
<DELETED> ``(B) the sum of all cash and other
consideration to be received by the digital commodity
issuer in reliance on the exemption provided under this
paragraph, during the 12-month period preceding the
date of such offering, including the amount received in
such offering, is not more than $50,000,000 (as such
amount is annually adjusted by the Commission to
reflect the change in the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor);</DELETED>
<DELETED> ``(C) after the completion of the
transaction, a purchaser does not own more than 10
percent of the total amount of the outstanding units of
the digital commodity;</DELETED>
<DELETED> ``(D) the transaction does not involve the
offer or sale of an investment contract involving units
of a digital commodity by its digital commodity issuer
that--</DELETED>
<DELETED> ``(i) is not organized under the
laws of a State, a territory of the United
States, or the District of Columbia;</DELETED>
<DELETED> ``(ii) is a development stage
company that either--</DELETED>
<DELETED> ``(I) has no specific
business plan or purpose; or</DELETED>
<DELETED> ``(II) has indicated that
the business plan of the company is to
merge with or acquire an unidentified
company;</DELETED>
<DELETED> ``(iii) is an investment company,
as defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a-3), or is
excluded from the definition of investment
company by section 3(c) of that Act (15 U.S.C.
80a-3(b) or 80a-3(c));</DELETED>
<DELETED> ``(iv) is issuing fractional
undivided interests in oil or gas rights, or a
similar interest in other mineral
rights;</DELETED>
<DELETED> ``(v) is, or has been, subject to
any order of the Commission entered pursuant to
section 12(j) of the Securities Exchange Act of
1934 during the 5-year period before the filing
of the offering statement; or</DELETED>
<DELETED> ``(vi) is disqualified pursuant to
section 230.262 of title 17, Code of Federal
Regulations; and</DELETED>
<DELETED> ``(E) the issuer meets the requirements of
section 4B(b).''; and</DELETED>
<DELETED> (2) by inserting after section 4A the
following:</DELETED>
<DELETED>``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL
COMMODITY TRANSACTIONS.</DELETED>
<DELETED> ``(a) Commission Jurisdiction.--For the purposes of this
section:</DELETED>
<DELETED> ``(1) The Commission shall have jurisdiction and
enforcement authority with respect to disclosures described in
this section.</DELETED>
<DELETED> ``(2) Section 17 shall apply to a statement made
in an offering statement, disclosure, or report filed under
this section to the same extent as such section 17 applies to a
statement made in any other offering statement, disclosure, or
report filed under this Act.</DELETED>
<DELETED> ``(b) Requirements for Digital Commodity Issuers.--
</DELETED>
<DELETED> ``(1) Terms and conditions.--A digital commodity
issuer offering or selling an investment contract involving
units of a digital commodity in reliance on section 4(a)(8)
shall file with the Commission an offering statement and any
related documents, in such form and with such content as
prescribed by the Commission, including financial information,
a description of the issuer and the operations of the issuer,
the financial condition of the issuer, a description of the
plan of distribution of any unit of a digital commodity that is
to be offered as well as the intended use of the offering
proceeds, and a description of the development plan for the
blockchain system, and the related digital commodity, to become
a mature blockchain system, if such blockchain system is not
already certified as a mature blockchain system pursuant to
section 42 of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.).</DELETED>
<DELETED> ``(2) Information required for purchasers.--A
digital commodity issuer that has filed a statement under
paragraph (1) to offer and sell an investment contract
involving a unit of a digital commodity in reliance on section
4(a)(8) shall include in such statement the following
information:</DELETED>
<DELETED> ``(A) Maturity status.--Whether the
blockchain system to which the digital commodity
relates has been certified as a mature blockchain
system pursuant to section 42 of the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) and, where
such blockchain system is not so certified, a statement
of the digital commodity issuer's intent for the
blockchain system to which the digital commodity
relates to be a mature blockchain system within the
time period described in section 4(a)(8)(A).</DELETED>
<DELETED> ``(B) Source code.--The source code, or a
publicly accessible webpage displaying such source
code, for any blockchain system to which the digital
commodity relates, and whether the source code was
sourced from an external third party, whether there are
any existing external dependencies, and whether the
code underwent a third-party security audit, along with
material results of any such audit.</DELETED>
<DELETED> ``(C) Transaction history.--A description
of the steps necessary to independently access, search,
and verify the transaction history of any blockchain
system to which the digital commodity relates, to the
extent any such independent access, search, and
verification activities are technically feasible with
respect to such blockchain system.</DELETED>
<DELETED> ``(D) Digital commodity economics.--A
description of the purpose of any blockchain system to
which the digital commodity relates and the operation
of any such blockchain system, including--</DELETED>
<DELETED> ``(i) information explaining the
launch and supply process, including the number
of units of the digital commodity to be issued
in an initial allocation, the total number of
units of the digital commodity to be created,
the release schedule for the units of the
digital commodity, and the total number of
units of the digital commodity
outstanding;</DELETED>
<DELETED> ``(ii) information explaining the
technical requirements for holding, accessing,
and transferring the digital
commodity;</DELETED>
<DELETED> ``(iii) information on any
applicable consensus mechanism or process for
validating transactions, method of generating
or mining digital commodities, and any process
for burning or destroying units of the digital
commodity on the blockchain system;</DELETED>
<DELETED> ``(iv) an explanation of any
mechanism for driving value to the digital
commodity of such blockchain system;
and</DELETED>
<DELETED> ``(v) an explanation of governance
mechanisms for implementing changes to the
blockchain system or forming consensus among
holders of units of such digital
commodity.</DELETED>
<DELETED> ``(E) Plan of development.--The current
state and timeline for the development of anyblockchain system to which the digital commodity
relates, detailing how and when the blockchain system
is intended to be a mature blockchain system, if the
blockchain system is not yet certified as a mature
blockchain system, and the various roles that exist or
are intended to exist in connection with the blockchain
system, such as users, service providers, developers,
transaction validators, and governance participants,
including a discussion of any mechanisms by which
control or authority are exerted with respect to the
blockchain system or its related digital commodity, and
any critical operational dependencies of the blockchain
system or its related digital commodity.</DELETED>
<DELETED> ``(F) Ownership disclosures.--</DELETED>
<DELETED> ``(i) In general.--A list of all
persons who are digital commodity related
persons or digital commodity affiliated persons
who have been issued a unit of the digital
commodity by the digital commodity issuer or
have a right to a unit of the digital commodity
from the digital commodity issuer.</DELETED>
<DELETED> ``(ii) Confidentiality.--The
Commission shall keep each list described under
clause (i) confidential, consistent with what
is necessary or appropriate in the public
interest or for the protection of
investors.</DELETED>
<DELETED> ``(G) Risk factor disclosures.--A
description of the material risks surrounding ownership
of a unit of a digital commodity.</DELETED>
<DELETED> ``(3) Ongoing disclosure requirements for maturing
blockchain systems.--Subject to paragraph (5), the issuer of a
digital commodity related to a blockchain system that is not
yet certified as a mature blockchain system under section 42 of
the Securities Exchange Act of 1934 that has filed a statement
under paragraph (1) to offer and sell an investment contract
involving a unit of a digital commodity in reliance on section
4(a)(8) shall file the following with the Commission:</DELETED>
<DELETED> ``(A) Semiannual reports.--Every 6 months,
a report containing--</DELETED>
<DELETED> ``(i) an updated description of
the current state and timeline for the
development of the blockchain system to which
the digital commodity relates, showing how and
when the blockchain is intended to be a mature
blockchain system;</DELETED>
<DELETED> ``(ii) a description of the
efforts of the issuer and digital commodity
related persons in developing the blockchain
system to which the digital commodity
relates;</DELETED>
<DELETED> ``(iii) the amount of money raised
by the digital commodity issuer in reliance on
section 4(a)(8), how much of that money has
been spent, and the general categories of
activities for which that money has been spent
and amounts spent per category; and</DELETED>
<DELETED> ``(iv) financial statements, where
applicable.</DELETED>
<DELETED> ``(B) Current reports.--A current report
reflecting any material changes relevant to the
information previously reported to the Commission by
the digital commodity issuer, which shall be filed as
soon as practicable after the material change occurred,
in accordance with such rules as the Commission may
prescribe as necessary or appropriate in the public
interest or for the protection of investors.</DELETED>
<DELETED> ``(4) Rulemaking.--Not later than 360 days after
the date of the enactment of this section, the Commission shall
prescribe rules on requirements applicable to issuers of
digital commodities in reliance on section 4(a)(8).</DELETED>
<DELETED> ``(5) Termination of certain reporting
requirements; post-maturity reporting requirements.--</DELETED>
<DELETED> ``(A) In general.--The ongoing reporting
requirements under paragraph (3) shall not apply to a
digital commodity issuer 180 days after the end of the
covered fiscal year, if the information with respect to
the digital commodity and the blockchain system to
which it relates described in subparagraphs (A) through
(C) of paragraph (2) is made publicly available and the
disclosure requirements under subparagraph (C) of this
paragraph are satisfied.</DELETED>
<DELETED> ``(B) Covered fiscal year defined.--In
this paragraph, the term `covered fiscal year' means,
with respect to a digital commodity, the first fiscal
year of a digital commodity issuer in which the
blockchain system to which such digital commodity
relates is certified as a mature blockchain system
under section 42 of the Securities Exchange Act of
1934.</DELETED>
<DELETED> ``(C) Post-maturity reporting
requirements.--After the blockchain system to which a
digital commodity relates is certified as a mature
blockchain system under section 42 of the Securities
Exchange Act of 1934, any digital commodity issuer that
has filed a statement under paragraph (1) to offer and
sell an investment contract involving a unit of a
digital commodity in reliance on section 4(a)(8) and is
engaged in material ongoing efforts related to the
mature blockchain system shall disclose, in a manner
reasonably calculated to inform the public, and at such
frequency as the Commission may prescribe, by rule, a
description of such efforts, including--</DELETED>
<DELETED> ``(i) any participation in a
decentralized governance system of such
blockchain system;</DELETED>
<DELETED> ``(ii) any participation in
alterations or proposed alterations to the
functionality or operation of such blockchain
system;</DELETED>
<DELETED> ``(iii) the use or planned use of
any funds raised in reliance on section 4(a)(8)
or any rulemaking pursuant to section 202(c) of
the CLARITY Act of 2025 in such
efforts;</DELETED>
<DELETED> ``(iv) the amount of units of the
digital commodity, or rights thereto, owned and
controlled by such issuer and any use, sale,
trading, or other disposition thereof;
and</DELETED>
<DELETED> ``(v) any affiliations of such
issuer material to the efforts of such
issuer.</DELETED>
<DELETED> ``(D) Termination of and exemption from
post-maturity reporting requirements.--Not later than
270 days after the date of the enactment of this
section, the Commission shall issue rules--</DELETED>
<DELETED> ``(i) for terminating the
disclosure requirements described in
subparagraph (C) during the first fiscal year
in which the digital commodity issuer does not
engage in material ongoing efforts related to
the mature blockchain system; and</DELETED>
<DELETED> ``(ii) to, as is necessary or
appropriate in the public interest or for the
protection of investors, exempt a digital
commodity issuer from the requirements
described in subparagraph (C) where only a de
minimis amount of market activity involving the
digital commodity of such digital commodity
issuer is taking place.</DELETED>
<DELETED> ``(E) Rule of construction.--Nothing in
subparagraph (C) may be construed to make any digital
commodity described in such subparagraph a
security.</DELETED>
<DELETED> ``(c) Requirements for Intermediaries.--A person acting as
an intermediary in connection with the offer or sale of an investment
contract involving units of a digital commodity in reliance on section
4(a)(8) shall--</DELETED>
<DELETED> ``(1) register with the Commission as a broker or
dealer; and</DELETED>
<DELETED> ``(2) be a member of a national securities
association registered under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3).</DELETED>
<DELETED> ``(d) Disqualification Provisions.--The Commission shall
issue rules to apply the disqualification provisions under section
230.262 of title 17, Code of Federal Regulations, to the exemption
provided under section 4(a)(8).</DELETED>
<DELETED> ``(e) Failure To Mature.--</DELETED>
<DELETED> ``(1) In general.--Not later than 270 days after
the date of the enactment of this section, the Commission shall
issue rules applying such additional obligations and
disclosures for the digital commodity issuers, digital
commodity related persons, and digital commodity affiliated
persons of a blockchain system described under subsection
(b)(1) that does not become a mature blockchain system within
the time period described in section 4(a)(8)(A) as are
necessary or appropriate in the public interest or for the
protection of investors. Such obligations and disclosures shall
include the following:</DELETED>
<DELETED> ``(A) Disclosures.--Disclosures regarding
the following:</DELETED>
<DELETED> ``(i) Failure to mature.--A
detailed explanation of the reason that the
blockchain system has not become a mature
blockchain system within the time period
described in section 4(a)(8)(A).</DELETED>
<DELETED> ``(ii) Development plans.--The
future plans of development of the blockchain
system, including information required under
subsection (b)(3).</DELETED><DELETED> ``(iii) Risk factor disclosures.--
The material risks surrounding ownership of a
unit of a digital commodity that relates to a
blockchain system described under subsection
(b)(1) that has not become a mature blockchain
system within the time period described in
section 4(a)(8)(A).</DELETED>
<DELETED> ``(B) Obligations.--Transaction reporting
and beneficial ownership disclosure obligations
applicable to digital commodity related persons and
digital commodity affiliated persons of such blockchain
system.</DELETED>
<DELETED> ``(2) Qualification required.--The Commission may
not permit any additional reliance on an exempt offering for
the offer or sale of an investment contract involving a unit of
a digital commodity by the issuer of the digital commodity
related to a blockchain system described under subsection
(a)(1) that has not become a mature blockchain system within
the time period described in section 4(a)(8)(A) unless the
Commission has qualified any offering statement related to such
exempt offering.''.</DELETED>
<DELETED> (b) Additional Exemptions.--</DELETED>
<DELETED> (1) Certain registration requirements.--Section
12(g)(6) of the Securities Exchange Act of 1934 (15 U.S.C.
78l(g)(6)) is amended by striking ``under section 4(6)'' and
inserting ``under section 4(a)(6) or 4(a)(8)''.</DELETED>
<DELETED> (2) Exemption from state regulation.--Section
18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is
amended--</DELETED>
<DELETED> (A) in subparagraph (B), by striking
``section 4(4)'' and inserting ``section
4(a)(4)'';</DELETED>
<DELETED> (B) in subparagraph (C), by striking
``section 4(6)'' and inserting ``section
4(a)(6)'';</DELETED>
<DELETED> (C) in subparagraph (F)--</DELETED>
<DELETED> (i) by striking ``section 4(2)''
each place such term appears and inserting
``section 4(a)(2)''; and</DELETED>
<DELETED> (ii) by striking ``or'' at the
end;</DELETED>
<DELETED> (D) in subparagraph (G), by striking the
period and inserting ``; or''; and</DELETED>
<DELETED> (E) by adding at the end the
following:</DELETED>
<DELETED> ``(H) section 4(a)(8).''.</DELETED>
<DELETED> (c) Use of Other Exemptions.--</DELETED>
<DELETED> (1) Rule of construction.--Except as provided in
this subsection, nothing in this section or the amendments made
by this section may be construed as prohibiting the offer or
sale of an investment contract involving units of a digital
commodity in reliance on an exemption from registration under
the Securities Act of 1933, including as provided under section
3, 4(a), or 19 of the Securities Act of 1933, other than that
provided under section 4(a)(8) of the Securities Act of
1933.</DELETED>
<DELETED> (2) Rulemakings.--</DELETED>
<DELETED> (A) The Securities and Exchange Commission
may issue rules--</DELETED>
<DELETED> (i) to permit the issuer of a
digital commodity related to a blockchain
system described under section 4B(b)(1) of the
Securities Act of 1933 that has not become a
mature blockchain system within the time period
described in section 4(a)(8)(A) of such Act, or
the issuer of a digital commodity described in
subparagraph (B)(iii), to utilize an exempt
offering to offer or sell an investment
contract involving the digital commodity, if
the Commission qualifies any offering statement
related to such exempt offering; and</DELETED>
<DELETED> (ii) for the offer and sale of
investment contracts involving units of a
digital commodity by issuers that are not
organized under the laws of a State, a
territory of the United States, or the District
of Columbia.</DELETED>
<DELETED> (B) Not later than 270 days after the date
of the enactment of this section, the Securities and
Exchange Commission shall issue the following
rules:</DELETED>
<DELETED> (i) A rule requiring a digital
commodity issuer that last offered or sold an
investment contract involving units of a
digital commodity in reliance on an exemption
from registration under the Securities Act of
1933, including as provided under section 3,
4(a), or 19 of the Securities Act of 1933,
prior to the date of enactment of this Act, to
file a comparable set of disclosures to those
described under section 4B of the Securities
Act of 1933 as the Commission determines
appropriate based on the exemption, the
maturity of the blockchain system to which such
digital commodity relates, and any material
ongoing efforts of such digital commodity
issuer (provided that for blockchains certified
as a mature blockchain system under section 42
of the Securities Exchange Act of 1934, such
disclosures shall be comparable to those under
section 4B(b)(5)(C)), not later than the later
of--</DELETED>
<DELETED> (I) one year after the
effective date of this section;
or</DELETED>
<DELETED> (II) the date of any
secondary market sale of such digital
commodity made in reliance on section
203.</DELETED>
<DELETED> (ii) A rule requiring a digital
commodity issuer that offers or sells an
investment contract involving units of a
digital commodity in reliance on an exemption
from registration under the Securities Act of
1933, including as provided under section 3,
4(a), or 19 of the Securities Act of 1933,
other than that provided under section 4(a)(8)
of the Securities Act of 1933, on or after the
date of enactment of this Act, to file a
comparable set of disclosures to those
described under section 4B of the Securities
Act of 1933 as the Commission determines
appropriate based on the exemption, the
maturity of the blockchain system to which such
digital commodity relates, and any material
ongoing efforts of such digital commodity
issuer, prior to the date of any secondary
market sale of such digital commodity made in
reliance on section 203.</DELETED>
<DELETED> (iii) With respect to a digital
commodity where the digital commodity issuer is
required to file disclosures under clause (i)
or (ii) and where the blockchain system to
which the digital commodity relates is not
certified as a mature blockchain system
pursuant to section 42 of the Securities
Exchange Act of 1934 after the 4-year period
beginning on the date that the first such
disclosure is filed--</DELETED>
<DELETED> (I) a rule prohibiting the
offer or sale of an investment contract
involving units of the digital
commodity unless the Commission has
qualified any offering statement
related to such offer or sale, where
such offer or sale is permitted
pursuant to subparagraph (A)(i);
and</DELETED>
<DELETED> (II) a rule requiring the
digital commodity issuer to make
disclosures comparable to those
described in 4B(e)(1)(A) of the
Securities Act of 1933.</DELETED>
<DELETED> (iv) A rule permitting a successor
to a digital commodity issuer, or such other
appropriate person as designated by the
Commission, to make the disclosures required
under clause (i), where such issuer does not
make the required disclosures.</DELETED>
<DELETED>SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL
COMMODITIES THAT ORIGINALLY INVOLVED INVESTMENT
CONTRACTS.</DELETED>
<DELETED> (a) Secondary Market Treatment.--Notwithstanding any other
provision of law, the offer or sale of a digital commodity that
originally involved an investment contract by a person other than the
issuer of such digital commodity, or an agent or underwriter thereof,
shall be deemed not to be an offer or sale of such investment contract
between the issuer of the investment contract involving the digital
commodity, or an agent or underwriter thereof, and the purchaser of
such digital commodity under--</DELETED>
<DELETED> (1) the Securities Act of 1933 (15 U.S.C. 77a et
seq.);</DELETED>
<DELETED> (2) the Investment Advisers Act of 1940 (15 U.S.C.
80b-1 et seq.);</DELETED>
<DELETED> (3) the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.);</DELETED>
<DELETED> (4) the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.);</DELETED>
<DELETED> (5) the Securities Investor Protection Act of 1970(15 U.S.C. 78aaa et seq.); and</DELETED>
<DELETED> (6) any applicable provisions of State
law.</DELETED>
<DELETED> (b) End User Distributions Not an Offer or Sale of a
Security.--An end user distribution does not involve the offer or sale
of a security.</DELETED>
<DELETED> (c) Agent Defined.--In this section and with respect to a
digital commodity issuer, the term ``agent'' means any person directly
or indirectly controlled by the issuer or under direct or indirect
common control with the issuer.</DELETED>
<DELETED>SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL
COMMODITIES BY DIGITAL COMMODITY RELATED PERSONS AND
DIGITAL COMMODITY AFFILIATED PERSONS.</DELETED>
<DELETED> The Securities Act of 1933 (15 U.S.C. 77a et seq.), as
amended by section 202, is further amended by inserting after section
4B the following:</DELETED>
<DELETED>``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL
COMMODITIES BY DIGITAL COMMODITY RELATED PERSONS AND
DIGITAL COMMODITY AFFILIATED PERSONS.</DELETED>
<DELETED> ``(a) In General.--It shall be a violation of this Act for
a digital commodity affiliated person or a digital commodity related
person to offer or sell a digital commodity acquired directly from its
issuer, or an agent or underwriter thereof, pursuant to an investment
contract in reliance on section 4(a)(8) or another exemption under this
Act, other than as provided in this section.</DELETED>
<DELETED> ``(b) Commission Jurisdiction.--</DELETED>
<DELETED> ``(1) Where a digital commodity affiliated person
or a digital commodity related person offers or sells a digital
commodity acquired directly from its issuer, or an agent or
underwriter thereof, pursuant to an investment contract in
reliance on section 4(a)(8), or another exemption under this
Act, other than as provided in this section, such digital
commodity affiliated person or digital commodity related person
shall be considered an issuer of such investment
contract.</DELETED>
<DELETED> ``(2) For the purposes of this section, the
Commission shall have jurisdiction and enforcement authority
with respect to an offer or sale of a digital commodity
described in subsection (a).</DELETED>
<DELETED> ``(c) Restrictions on Digital Commodity Related Persons
and Digital Commodity Affiliated Persons.--</DELETED>
<DELETED> ``(1) Prior to being a mature blockchain system.--
Prior to the blockchain system to which a digital commodity
relates being certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934, units of the
digital commodity acquired by a digital commodity related
person or digital commodity affiliated person directly from its
issuer (or an agent or underwriter thereof) pursuant to an
investment contract in reliance on section 4(a)(8), or another
exemption under this Act, may be offered or sold by such
digital commodity related person or digital commodity
affiliated person if--</DELETED>
<DELETED> ``(A) reports with respect to such digital
commodity, where required under section 4B(b)(3) (or,
with respect to a digital commodity not issued in
reliance on section 4(a)(8), a comparable set of
reports where required by the Commission) have been
filed with the Commission;</DELETED>
<DELETED> ``(B) the digital commodity related person
or digital commodity affiliated person has held the
units for not less than 12 months; and</DELETED>
<DELETED> ``(C) the aggregate amount of the units of
the digital commodity offered or sold by the digital
commodity related person or digital commodity
affiliated person is--</DELETED>
<DELETED> ``(i) in any 12-month period, or
shorter period as the Commission may prescribe,
not less than 5 percent or greater than 20
percent of the total units of the digital
commodity acquired directly from its issuer (or
an agent or underwriter thereof) by the digital
commodity related person or digital commodity
affiliated person, as determined by the
Commission pursuant to paragraph (3);
and</DELETED>
<DELETED> ``(ii) an amount, as determined by
the Commission pursuant to paragraph (3), not
less than 30 percent or greater than 50 percent
of the total units of the digital commodity
acquired directly from its issuer (or an agent
or underwriter thereof) by the digital
commodity related person or digital commodity
affiliated person.</DELETED>
<DELETED> ``(2) After becoming a mature blockchain system.--
After the blockchain system to which a digital commodity
relates is certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934, units of the
digital commodity acquired by a digital commodity related
person or digital commodity affiliated person directly from its
issuer (or an agent or underwriter thereof) pursuant to an
investment contract in reliance on section 4(a)(8) or another
exemption under this Act, may be--</DELETED>
<DELETED> ``(A) offered or sold by a digital
commodity related person; or</DELETED>
<DELETED> ``(B) offered or sold by a digital
commodity affiliated person if--</DELETED>
<DELETED> ``(i) information described in
section 4B(b)(5)(C), where required (or, with
respect to a digital commodity not issued in
reliance on section 4(a)(8), a comparable set
of information, where required) is publicly
available;</DELETED>
<DELETED> ``(ii) the digital commodity
affiliated person has held the units for not
less than the earlier of--</DELETED>
<DELETED> ``(I) 12 months;
or</DELETED>
<DELETED> ``(II) 3 months following
the date on which the blockchain system
is certified as a mature blockchain
system under section 42 of the
Securities Exchange Act of 1934;
and</DELETED>
<DELETED> ``(iii) the aggregate amount of
the units of the digital commodity offered or
sold by the digital commodity affiliated person
in any 12-month period is an amount, as
determined by the Commission pursuant to
paragraph (3), not less than 5 percent or
greater than 10 percent of the total
outstanding amount of the digital
commodity.</DELETED>
<DELETED> ``(3) Rulemakings required.--Not later than 270
days after the date of the enactment of this section,
consistent with protecting investors, maintaining fair,
orderly, and efficient markets, and facilitating capital
formation, and to foster the development of mature blockchain
systems, the Commission, by rule, after notice and comment--
</DELETED>
<DELETED> ``(A) shall set the percentage amounts
described in paragraphs (1)(C)(i), (1)(C)(ii), and
(2)(B)(iii); and</DELETED>
<DELETED> ``(B) may provide an exemption from the
limitation described in paragraph (1)(C)(ii), if the
Commission requires any offer or sale pursuant to such
exemption of a digital commodity related to a
blockchain system that has failed to become a mature
blockchain system under this Act or any rule
promulgated hereunder to be accompanied by the
disclosures required under, as applicable, section
4B(e)(1)(A) or section 202(c)(2)(B)(iii)(II) of the
CLARITY Act of 2025.</DELETED>
<DELETED> ``(d) Rules of Construction.--For purposes of this
section, the use of a digital commodity in the programmatic functioning
of the blockchain system to which it relates is not an offer or sale of
a digital commodity.</DELETED>
<DELETED> ``(e) Manipulative and Deceptive Devices; Reporting.--
</DELETED>
<DELETED> ``(1) In general.--It shall be unlawful for any
digital commodity issuer, digital commodity related person, or
digital commodity affiliated person, directly or indirectly, by
the use of any means or instrumentality of interstate commerce
or of the mails, to use or employ, in connection with the
purchase or sale of any digital commodity, any manipulative or
deceptive device or contrivance in contravention of such rules
and regulations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.</DELETED>
<DELETED> ``(2) Affirmative defense.--Not later than 270
days after the date of the enactment of this section, the
Commission shall issue rules to implement paragraph (1),
including by providing any affirmative defenses to an
enforcement action thereunder as the Commission may prescribe
as necessary or appropriate in the public interest or for the
protection of investors.</DELETED>
<DELETED> ``(3) Reporting.--Not later than 270 days after
the date of the enactment of this section, the Commission shall
issue rules to prescribe such transaction reporting and
beneficial ownership disclosure obligations applicable to
digital commodity related persons and digital commodity
affiliated persons, as necessary or appropriate in the public
interest or for the protection of investors.</DELETED>
<DELETED> ``(4) Differentiation between persons.--In issuing
rules required under paragraphs (2) and (3), the Commission
shall differentiate between digital commodity related persons
and digital commodity affiliated persons, as necessary or
appropriate in the public interest or for the protection ofinvestors.</DELETED>
<DELETED> ``(f) Certain Units Received Prior to Enactment.--A unit
of a digital commodity received from the digital commodity issuer prior
to the date of the enactment of this section through an offer or sale
of an investment contract involving units of a digital commodity in
reliance on an exemption from registration under this Act, including as
provided under section 3, 4(a), or 19, may be offered or sold by a
digital commodity related person or digital commodity affiliated
person, if--</DELETED>
<DELETED> ``(1) the digital commodity issuer is no longer
engaged in material ongoing efforts related to the blockchain
system to which the digital commodity relates and the
blockchain system to which the digital commodity relates is
certified as a mature blockchain system under section 42 of the
Securities Exchange Act of 1934; or</DELETED>
<DELETED> ``(2) the appropriate disclosures required under
section 202(c)(2)(B) of the CLARITY Act of 2025 have been made
with the Commission.</DELETED>
<DELETED> ``(g) Rulemaking on Further Usage of Digital
Commodities.-- The Commission, consistent with protecting investors,
maintaining fair, orderly, and efficient markets, and facilitating
capital formation, as well as fostering the development of mature
blockchain systems, may, by rule, exempt unconditionally or on stated
terms or conditions, a digital commodity related person or a digital
commodity affiliated person, or any class thereof, from the
requirements of this section for the offer or sale of a digital
commodity, including for the purposes of promoting market
liquidity.''.</DELETED>
<DELETED>SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.</DELETED>
<DELETED> Title I of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) is amended by adding at the end the following:</DELETED>
<DELETED>``SEC. 42. MATURE BLOCKCHAIN SYSTEMS.</DELETED>
<DELETED> ``(a) Certification of Blockchain Systems.--</DELETED>
<DELETED> ``(1) Certification.--A digital commodity issuer,
digital commodity related person, digital commodity affiliated
person, decentralized governance system of the blockchain
system, or a registered digital commodity exchange, or any
other appropriate person as designated by the Commission, may
certify to the Commission that the blockchain system to which a
digital commodity relates is a mature blockchain
system.</DELETED>
<DELETED> ``(2) Filing requirements.--A certification
described under paragraph (1) shall be filed with the
Commission, and include such information that is reasonably
necessary to establish that the blockchain system is not
controlled by any person or group of persons under common
control, which may include information regarding--</DELETED>
<DELETED> ``(A) the operation of the blockchain
system;</DELETED>
<DELETED> ``(B) the functionality of the related
digital commodity;</DELETED>
<DELETED> ``(C) how the market value of the digital
commodity is substantially derived from the
programmatic functioning of such blockchain
system;</DELETED>
<DELETED> ``(D) any decentralized governance system
which relates to the blockchain system; and</DELETED>
<DELETED> ``(E) the current roles, if any, of the
digital commodity issuer, digital commodity affiliated
persons, and digital commodity related persons where
such roles are material to the development or operation
of such blockchain system or the decentralized
governance system of such blockchain system.</DELETED>
<DELETED> ``(3) Rebuttable presumption.--The Commission may
rebut a certification described under paragraph (1) with
respect to a blockchain system if the Commission, within 60
days of receiving such certification, determines that the
blockchain system is not a mature blockchain system.</DELETED>
<DELETED> ``(4) Certification review.--</DELETED>
<DELETED> ``(A) In general.--Any blockchain system
that relates to a digital commodity for which a
certification has been made under paragraph (1) shall
be considered a mature blockchain system 60 days after
the date on which the Commission receives a
certification under paragraph (1), unless the
Commission notifies the person who made the
certification within such time that the Commission is
staying the certification due to--</DELETED>
<DELETED> ``(i) an inadequate explanation by
the person making the certification;
or</DELETED>
<DELETED> ``(ii) any novel or complex issues
which require additional time to
consider.</DELETED>
<DELETED> ``(B) Public notice.--The Commission shall
make the following available to the public and provide
a copy to the Commodity Futures Trading
Commission:</DELETED>
<DELETED> ``(i) Each certification received
under paragraph (1).</DELETED>
<DELETED> ``(ii) Each stay of the Commission
under this subsection, and the reasons
therefor.</DELETED>
<DELETED> ``(iii) Any response from a person
making a certification under paragraph (1) to a
stay of the certification by the
Commission.</DELETED>
<DELETED> ``(C) Consolidation.--The Commission may
consolidate and treat as one submission multiple
certifications made under paragraph (1) for the same
blockchain system which relates to a digital commodity
which are received during the review period provided
under this paragraph.</DELETED>
<DELETED> ``(5) Stay of certification.--</DELETED>
<DELETED> ``(A) In general.--A notification by the
Commission pursuant to paragraph (4)(A) shall stay the
certification once for up to an additional 120 days
from the date of the notification.</DELETED>
<DELETED> ``(B) Public comment period.--Before the
end of the 60-day period described under paragraph
(4)(A), the Commission may begin a public comment
period of at least 30 days in conjunction with a stay
under this subsection.</DELETED>
<DELETED> ``(6) Disposition of certification.--A
certification made under paragraph (1) shall--</DELETED>
<DELETED> ``(A) become effective--</DELETED>
<DELETED> ``(i) upon the publication of a
notification from the Commission to the person
who made the certification that the Commission
does not object to the certification;
or</DELETED>
<DELETED> ``(ii) at the expiration of the
certification review period; and</DELETED>
<DELETED> ``(B) not become effective upon the
publication of a notification from the Commission to
the person who made the certification that the
Commission has rebutted the certification.</DELETED>
<DELETED> ``(7) Recertification.--With respect to a
blockchain system for which a certification has been rebutted
under this subsection, no person may make a certification under
paragraph (1) with respect to such blockchain system during the
90-day period beginning on the date of such rebuttal.</DELETED>
<DELETED> ``(8) Appeal of rebuttal.--</DELETED>
<DELETED> ``(A) In general.--If a certification is
rebutted under this section, the person making such
certification may appeal the decision to the United
States Court of Appeals for the District of Columbia,
not later than 60 days after the notice of rebuttal is
made.</DELETED>
<DELETED> ``(B) Review.--In an appeal under
subparagraph (A), the court shall have de novo review
of the determination to rebut the
certification.</DELETED>
<DELETED> ``(b) Maturity Criteria.--</DELETED>
<DELETED> ``(1) Sense of congress.--It is the sense of the
Congress that protecting investors, maintaining fair, orderly,
and efficient markets, and facilitating capital formation
necessitates establishing clear criteria for blockchain systems
to be deemed mature, as well as enabling the Commission to
develop, without prejudice to any such criteria codified in
statute, alternative criteria by which blockchain systems may
be considered not to be controlled by any person or group of
persons under common control in order to accommodate changes in
markets and technology.</DELETED>
<DELETED> ``(2) In general.--The Commission may issue rules
identifying conditions by which a blockchain system, together
with its related digital commodity, shall be considered a
mature blockchain system, consistent with the protection of
investors, maintenance of fair, orderly, and efficient markets,
and the facilitation of capital formation.</DELETED>
<DELETED> ``(3) Rules of construction.--</DELETED>
<DELETED> ``(A) Nothing in this subsection may be
construed to permit the Commission to impose additional
criteria to the criteria in subsection (c) for
certifying that a blockchain system is a mature
blockchain system pursuant to subsection (c).</DELETED>
<DELETED> ``(B) Nothing in this subsection or
subsection (c) may be construed to limit the
Commission's ability to identify alternative conditions
and criteria by which a blockchain system may be
considered a mature blockchain system.</DELETED>
<DELETED> ``(c) Deemed Mature.--</DELETED>
<DELETED> ``(1) In general.--Notwithstanding subsection (b),
for the purposes of subsection (a), a digital commodity issuer,
digital commodity related person, digital commodity affiliated
person, or decentralized governance system of the blockchain
system may establish that a blockchain system, together withits related digital commodity, is not controlled by any person
or group of persons under common control, if the blockchain
system, together with its related digital asset, meets the
requirements described in paragraph (2) or (3).</DELETED>
<DELETED> ``(2) Criteria for any blockchain system.--The
requirements described in this paragraph are the
following:</DELETED>
<DELETED> ``(A) System value.--</DELETED>
<DELETED> ``(i) Market value.--The digital
commodity has a value that is substantially
derived from the use and functioning of the
blockchain system.</DELETED>
<DELETED> ``(ii) Development of value
mechanism substantially completed.--Where the
digital commodity issuer has made public a
development plan describing how the digital
commodity's value is reasonably expected to be
derived from the programmatic functioning of
the blockchain system, the development of such
mechanisms has been substantially
completed.</DELETED>
<DELETED> ``(B) Functional system.--The blockchain
system allows network participants to engage in the
activities the blockchain system is intended to
provide, including--</DELETED>
<DELETED> ``(i) using, transmitting, or
storing value, or otherwise executing
transactions, on the blockchain
system;</DELETED>
<DELETED> ``(ii) deploying, executing, or
accessing software or services, or otherwise
offering or participating in services, deployed
on or integrated with the blockchain
system;</DELETED>
<DELETED> ``(iii) participating in the
consensus mechanism, transaction validation
process, or decentralized governance system of
the blockchain system; or</DELETED>
<DELETED> ``(iv) operating any client, node,
validator, or other form of computational
infrastructure with respect to the blockchain
system.</DELETED>
<DELETED> ``(C) Open and interoperable system.--The
blockchain system--</DELETED>
<DELETED> ``(i) is composed of source code
that is open source; and</DELETED>
<DELETED> ``(ii) does not restrict or
prohibit based on the exercise of unilateral
authority any person, other than a digital
commodity issuer, digital commodity related
person, or digital commodity affiliated person
from engaging in the activities the blockchain
system is intended to provide, including the
activities described in subparagraph
(B).</DELETED>
<DELETED> ``(D) Programmatic system.--The blockchain
system operates, executes, and enforces its operations
and transactions based solely on pre-established,
transparent rules encoded directly within the source
code of the blockchain system.</DELETED>
<DELETED> ``(E) System governance.--No person or
group of persons under common control--</DELETED>
<DELETED> ``(i) has the unilateral
authority, directly or indirectly, through any
contract, arrangement, understanding,
relationship, or otherwise, to control or
materially alter the functionality, operation,
or rules of consensus or agreement of the
blockchain system or its related digital
commodity; or</DELETED>
<DELETED> ``(ii) has the unilateral
authority to direct the voting, in the
aggregate, of 20 percent or more of the
outstanding voting power of such blockchain
system by means of a related digital commodity,
nodes or validators, a decentralized governance
system, or otherwise, in a blockchain system
which can be altered by a voting
system.</DELETED>
<DELETED> ``(F) Impartial system.--No person or
group of persons under common control possesses a
unique permission or privilege with respect to
functionality, operation, or rules of consensus or
agreement of the blockchain system or its related
digital commodity, unless such alteration--</DELETED>
<DELETED> ``(i) addresses errors, regular
maintenance, or cybersecurity risks of the
blockchain system that affect the programmatic
functioning of the blockchain system;
and</DELETED>
<DELETED> ``(ii) is adopted through the
consensus or agreement of a decentralized
governance system.</DELETED>
<DELETED> ``(G) Distributed ownership.--No digital
commodity issuer, digital commodity related person, or
digital commodity affiliated person beneficially owns,
in the aggregate, 20 percent or more of the total
amount of units of the digital commodity.</DELETED>
<DELETED> ``(3) Optional criteria for preexisting blockchain
systems.--The requirements described in this paragraph are that
the blockchain system--</DELETED>
<DELETED> ``(A) was created prior to the date of
enactment of this section;</DELETED>
<DELETED> ``(B) met the requirements of
subparagraphs (A) through (F) of paragraph (2) prior to
the date of enactment of this section; and</DELETED>
<DELETED> ``(C) at least 50 percent of the units of
the digital commodity related to the blockchain system
are held by persons other than the digital commodity
issuer, a digital commodity related person, or a
digital commodity affiliated person.</DELETED>
<DELETED> ``(d) Decentralized Governance System.--</DELETED>
<DELETED> ``(1) For the purposes of this section, a
decentralized governance system is not a `person' or a `group
of persons under common control'.</DELETED>
<DELETED> ``(2) A blockchain system, together with its
digital commodity, shall not be precluded from being considered
a mature blockchain system solely based on a functional,
administrative, clerical, or ministerial action of a
decentralized governance system, including any such action
taken by a person acting on behalf of and at the direction of
the decentralized governance system, as determined by the
Commission and consistent with the protection of investors,
maintenance of fair, orderly, and efficient markets, and the
facilitation of capital formation.</DELETED>
<DELETED> ``(e) Rulemaking.--Not more than 270 days after the date
of enactment of this section, the Commission shall issue rules to carry
out this section.''.</DELETED>
<DELETED>SEC. 206. EFFECTIVE DATE.</DELETED>
<DELETED> Unless otherwise provided in this title, this title and
the amendments made by this title shall take effect 360 days after the
date of enactment of this Act, except that, to the extent a provision
of this title requires a rulemaking, the provision shall take effect on
the later of--</DELETED>
<DELETED> (1) 360 days after the date of enactment of this
Act; or</DELETED>
<DELETED> (2) 60 days after the publication in the Federal
Register of the final rule implementing the
provision.</DELETED>
<DELETED>TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES
AND EXCHANGE COMMISSION</DELETED>
<DELETED>SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED
PAYMENT STABLECOINS.</DELETED>
<DELETED> (a) Securities Act of 1933.--Section 2(a)(1) of the
Securities Act of 1933 (15 U.S.C. 77b(a)(1)), as amended by the GENIUS
Act, is amended by striking the final sentence and inserting the
following: ``The term does not include a digital commodity or permitted
payment stablecoin.''.</DELETED>
<DELETED> (b) Securities Exchange Act of 1934.--Section 3(a)(10) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as amended by
the GENIUS Act, is amended by striking the final sentence and inserting
the following: ``The term does not include a digital commodity or
permitted payment stablecoin.''.</DELETED>
<DELETED> (c) Investment Advisers Act of 1940.--Section 202(a) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--
</DELETED>
<DELETED> (1) in paragraph (18), as amended by the GENIUS
Act, by striking the final sentence and inserting the
following: ``The term does not include a digital commodity or
permitted payment stablecoin.'';</DELETED>
<DELETED> (2) by redesignating the second paragraph (29)
(relating to commodity pools) as paragraph (31); and</DELETED>
<DELETED> (3) by adding at the end, the following:</DELETED>
<DELETED> ``(32) Digital commodity-related terms.--The terms
`digital commodity' and `permitted payment stablecoin' have the
meaning given those terms, respectively, under section 2(a) of
the Securities Act of 1933 (15 U.S.C. 77b(a)).''.</DELETED>
<DELETED> (d) Investment Company Act of 1940.--Section 2(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2) is amended--</DELETED>
<DELETED> (1) in paragraph (36), as amended by the GENIUS
Act, by striking the final sentence and inserting the
following: ``The term does not include a digital commodity or
permitted payment stablecoin.''; and</DELETED>
<DELETED> (2) by adding at the end, the following:</DELETED>
<DELETED> ``(55) Digital commodity-related terms.--The terms
`digital commodity' and `permitted payment stablecoin' have themeaning given those terms, respectively, under section 2(a) of
the Securities Act of 1933 (15 U.S.C. 77b(a)).''.</DELETED>
<DELETED> (e) Securities Investor Protection Act of 1970.--Section
16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll)
is amended--</DELETED>
<DELETED> (1) in paragraph (14), as amended by the GENIUS
Act, by striking the final sentence and inserting the
following: ``The term does not include a digital commodity or
permitted payment stablecoin, as such terms are defined,
respectively, under section 2(a) of the Securities Act of 1933
(15 U.S.C. 77b(a))''; and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(15) Treatment of permitted payment
stablecoins.--A permitted payment stablecoin, as defined in
section 2(a) of the Securities Act of 1933, shall not qualify
as `cash' and a claim for a permitted payment stablecoin shall
not qualify as a `claim for cash'.''.</DELETED>
<DELETED>SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT
STABLECOINS AND CERTAIN DIGITAL COMMODITY
TRANSACTIONS.</DELETED>
<DELETED> (a) In General.--Section 10 of the Securities Exchange Act
of 1934 (15 U.S.C. 78j) is amended--</DELETED>
<DELETED> (1) by moving subsection (c) so as to appear after
subsection (b);</DELETED>
<DELETED> (2) by inserting after subsection (c) the
following:</DELETED>
<DELETED> ``(d) To use or employ, in connection with the purchase or
sale of any permitted payment stablecoin or digital commodity, by or
through, as applicable, a broker, dealer, national securities exchange,
or an alternative trading system, any manipulative or deceptive device
or contrivance in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the public
interest or for the protection of investors.''; and</DELETED>
<DELETED> (3) by adding at the end the following: ``Rules
promulgated under subsection (b) that prohibit fraud,
manipulation, or insider trading (but not rules imposing or
specifying reporting or recordkeeping requirements, procedures,
or standards as prophylactic measures against fraud,
manipulation, or insider trading), and judicial precedents
decided under subsection (b) and rules promulgated thereunder
that prohibit fraud, manipulation, or insider trading, shall
apply with respect to permitted payment stablecoin and digital
commodity transactions engaged in by or through a broker or
dealer or through an alternative trading system or, as
applicable, a national securities exchange to the same extent
as they apply to securities transactions. Judicial precedents
decided under section 17(a) of the Securities Act of 1933 and
sections 9, 15, 16, 20, and 21A of this title, and judicial
precedents decided under applicable rules promulgated under
such sections, shall apply to permitted payment stablecoins and
digital commodities with respect to those circumstances in
which the permitted payment stablecoins and digital commodities
are, as applicable, brokered, traded, or custodied by or
through a broker or dealer or through an alternative trading
system or a national securities exchange to the same extent as
they apply to securities.''.</DELETED>
<DELETED> (b) Treatment of Permitted Payment Stablecoins.--Title I
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 6 the following:</DELETED>
<DELETED>``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT
STABLECOINS.</DELETED>
<DELETED> ``(a) Authority To Broker, Trade, and Custody Permitted
Payment Stablecoins.--Permitted payment stablecoins may be brokered,
traded, or custodied by a broker or dealer or through an alternative
trading system or national securities exchange.</DELETED>
<DELETED> ``(b) Commission Jurisdiction.--The Commission shall only
have jurisdiction over a transaction in a permitted payment stablecoin
with respect to those circumstances in which a permitted payment
stablecoin is brokered, traded, or custodied--</DELETED>
<DELETED> ``(1) by a broker or dealer;</DELETED>
<DELETED> ``(2) through a national securities exchange;
or</DELETED>
<DELETED> ``(3) through an alternative trading
system.</DELETED>
<DELETED> ``(c) Limitation.--Subsection (b) shall only apply to a
transaction described in subsection (b) for the purposes of regulating
the offer, execution, solicitation, or acceptance of a permitted
payment stablecoin in those circumstances in which the permitted
payment stablecoin is brokered, traded, or custodied--</DELETED>
<DELETED> ``(1) by a broker or dealer;</DELETED>
<DELETED> ``(2) through a national securities exchange;
or</DELETED>
<DELETED> ``(3) through an alternative trading
system.''.</DELETED>
<DELETED>SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING
SYSTEMS.</DELETED>
<DELETED> (a) In General.--Section 5 of the Securities Exchange Act
of 1934 (15 U.S.C. 78e) is amended--</DELETED>
<DELETED> (1) by striking ``It'' and inserting the
following:</DELETED>
<DELETED> ``(a) In General.--It''; and</DELETED>
<DELETED> (2) by adding at the end the following:</DELETED>
<DELETED> ``(b) Digital Commodity Protections.--</DELETED>
<DELETED> ``(1) In general.--The Commission may not preclude
a trading platform from operating pursuant to a covered
exemption to exchange registration under section 6 of this
title on the basis that the assets traded or to be traded on
such platform include--</DELETED>
<DELETED> ``(A) digital commodities or permitted
payment stablecoins; and</DELETED>
<DELETED> ``(B) securities.</DELETED>
<DELETED> ``(2) Covered exemption.--In this subsection, the
term `covered exemption' means an exemption--</DELETED>
<DELETED> ``(A) described in subsection (a)(2);
or</DELETED>
<DELETED> ``(B) with respect to any other rule of
the Commission relating to the definition of
`exchange'.''.</DELETED>
<DELETED> (b) Securities Exchange Act of 1934.--Section 3(a)(2) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by
adding at the end the following: ``Neither an alternative trading
system predominantly facilitating the trading of digital commodities,
permitted payment stablecoins, or both, relative to its securities
traded, nor a digital commodity exchange, is a `facility' of an
exchange.''.</DELETED>
<DELETED> (c) Rule of Construction.--Nothing in this section, the
amendments made by this section, or section 304 may be construed to--
</DELETED>
<DELETED> (1) prohibit a national securities exchange from
owning or operating any other type of alternative trading
system; or</DELETED>
<DELETED> (2) create a presumption that any other type of
alternative trading system owned or operated by a national
securities exchange is a facility of that exchange.</DELETED>
<DELETED>SEC. 304. RULEMAKING FOR DUAL-REGISTERED ENTITIES.</DELETED>
<DELETED> (a) Conflict of Interest Policies and Procedures.--Each
person or entity dual-registered with the Commodity Futures Trading
Commission as permitted under section 15(p) of the Securities Exchange
Act of 1934 shall establish, maintain, and, as applicable, enforce and
comply with written policies and procedures reasonably designed to
mitigate any conflicts of interest, including with respect to
transactions or arrangements with affiliates registered with the
Securities and Exchange Commission, taking into consideration the
nature of the business of such person or entity.</DELETED>
<DELETED> (b) Exemption From Duplicative, Conflicting, or Unduly
Burdensome Provisions.--The Securities and Exchange Commission shall
prescribe rules for a person or entity with multiple registrations,
where at least one such registration includes any dual registration
permitted under section 15(p) of the Securities Exchange Act of 1934,
to exempt the person or entity from duplicative, conflicting, or unduly
burdensome provisions of the Securities Exchange Act of 1934 and rules
thereunder, to the extent such an exemption would protect investors,
maintain fair, orderly, and efficient markets, and facilitate capital
formation.</DELETED>
<DELETED> (c) Implementing Organizations.--The Securities and
Exchange Commission shall require any registered national securities
association that has as a member a registered broker or registered
dealer that is registered with the Commodity Futures Trading Commission
as a digital commodity broker or digital commodity dealer as permitted
under section 15(p)(1) of the Securities Exchange Act of 1934 or
otherwise transacts in permitted payment stablecoins to revise such
rules as may be necessary to further the purposes of and compliance
with this section.</DELETED>
<DELETED> (d) Memorandum of Understanding.--The Securities and
Exchange Commission shall enter into a memorandum of understanding with
the Commodity Futures Trading Commission to ensure--</DELETED>
<DELETED> (1) non-duplicative supervision and enforcement
with respect to registrants of the Securities and Exchange
Commission dual-registered with the Commodity Futures Trading
Commission as permitted under section 15(p) of the Securities
Exchange Act of 1934; and</DELETED>
<DELETED> (2) appropriate information sharing between the
Commissions to further the purposes of and compliance with this
section, the Securities Exchange Act of 1934, and the Commodity
Exchange Act.</DELETED>
<DELETED> (e) Rule of Construction.--Nothing in this section shall
be construed to limit the anti-fraud, anti-manipulation, or false
reporting enforcement authorities of the Commodity Futures Trading
Commission with respect to a contract of sale of a commodity and
persons effecting such contracts.</DELETED>
<DELETED>SEC. 305. MODERNIZATION OF RECORDKEEPING
REQUIREMENTS.</DELETED><DELETED> (a) In General.--For purposes of books and records
requirements for brokers, dealers, transfer agents, national securities
exchanges under the Securities and Exchange Act of 1934 (15 U.S.C. 78a
et seq.), investment advisers under the Investment Advisers Act of 1940
(15 U.S.C. 80b-1 et seq.), and investment companies under the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), a person may,
consistent with any rules promulgated under subsection (b), utilize
records from a blockchain system.</DELETED>
<DELETED> (b) Revision of Rules.--Not later than 180 days after the
date of enactment of this Act, the Securities and Exchange Commission
shall issue and revise such rules as may be necessary to implement this
section.</DELETED>
<DELETED>SEC. 306. EXEMPTIVE AUTHORITY.</DELETED>
<DELETED> Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3)
is amended by striking ``by rule or regulation'' and inserting ``by
rule, regulation, or order''.</DELETED>
<DELETED>SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES
TRADING COMMISSION.</DELETED>
<DELETED> Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o) is amended by adding at the end the following:</DELETED>
<DELETED> ``(p) Additional Registrations With the Commodity Futures
Trading Commission.--</DELETED>
<DELETED> ``(1) Registered brokers and dealers.--A
registered broker or registered dealer shall be permitted to
maintain a registration with the Commodity Futures Trading
Commission as a digital commodity broker or digital commodity
dealer.</DELETED>
<DELETED> ``(2) National securities exchanges.--A national
securities exchange or affiliate thereof shall be permitted to
maintain a registration with the Commodity Futures Trading
Commission as a digital commodity exchange.</DELETED>
<DELETED> ``(3) Alternative trading systems.--An alternative
trading system, and the operator thereof, shall be permitted to
maintain a registration with the Commodity Futures Trading
Commission as a digital commodity exchange.</DELETED>
<DELETED> ``(4) Notice of application.--Any person or entity
described in paragraph (1) through (3) shall provide to the
Securities and Exchange Commission, at such time and in such
form and manner as the Securities and Exchange Commission shall
prescribe, notice of any application to register with the
Commodity Futures Trading Commission as a digital commodity
broker, digital commodity dealer, or digital commodity
exchange.''.</DELETED>
<DELETED>SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES
LAWS.</DELETED>
<DELETED> (a) Covered Security.--Section 18(b) of the Securities Act
of 1933 (15 U.S.C. 77r(b)) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(5) Exemption in connection with digital
commodities.--A digital commodity shall be treated as a covered
security.''.</DELETED>
<DELETED> (b) Rule of Construction.--Nothing in this section,
section 202, or the amendments made by such sections may be construed
to limit the existing authority described in section 18(c)(1) of the
Securities Act of 1933 (15 U.S.C. 77r(c)(1)) of a securities commission
(or any agency or office performing like functions) of any State with
respect to a covered security or any security.</DELETED>
<DELETED>SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE
ACTIVITIES.</DELETED>
<DELETED> The Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by inserting after section 15G the
following:</DELETED>
<DELETED>``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO
THIS ACT.</DELETED>
<DELETED> ``(a) In General.--Notwithstanding any other provision of
this Act, a person shall not be subject to this Act and the regulations
promulgated under this Act based on the person directly or indirectly
engaging in any of the following activities, whether singly or in
combination, in relation to the operation of a blockchain system or in
relation to a decentralized finance trading protocol:</DELETED>
<DELETED> ``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.</DELETED>
<DELETED> ``(2) Providing computational work, operating a
node or oracle service, or procuring, offering, or utilizing
network bandwidth, or providing other similar incidental
services.</DELETED>
<DELETED> ``(3) Providing a user-interface that enables a
user to read and access data about a blockchain
system.</DELETED>
<DELETED> ``(4) Developing, publishing, constituting,
administering, maintaining, or otherwise distributing a
blockchain system or a decentralized finance trading
protocol.</DELETED>
<DELETED> ``(5) Developing, publishing, constituting,
administering, maintaining, or otherwise distributing a
decentralized finance messaging system, or operating or
participating in a liquidity pool, for the purpose of executing
a spot contract for the purchase or sale of a digital commodity
in relation to a decentralized finance trading
protocol.</DELETED>
<DELETED> ``(6) Developing, publishing, constituting,
administering, maintaining, or otherwise distributing software
or systems that create or deploy hardware or software,
including wallets or other systems, facilitating an individual
user's own personal ability to keep, safeguard, or custody the
user's digital assets or related private keys.</DELETED>
<DELETED> ``(b) Exceptions.--Subsection (a) shall not apply to the
anti-fraud and anti-manipulation authorities of the
Commission.''.</DELETED>
<DELETED>SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING
INSTITUTIONS.</DELETED>
<DELETED> (a) Treatment of Custody Activities.--The appropriate
Federal banking agency, the National Credit Union Administration (in
the case of a credit union), and the Securities and Exchange Commission
may not require a depository institution, national bank, Federal credit
union, State credit union, trust company, broker, or dealer, or any
affiliate thereof (the ``entity'')--</DELETED>
<DELETED> (1) to include assets held in custody that are not
accounted for as assets of the entity as a liability on the
financial statement or balance sheet of the entity, including
digital commodity or permitted payment stablecoin custody or
safekeeping services; and</DELETED>
<DELETED> (2) to hold regulatory capital against assets,
including reserves backing such assets, in custody or
safekeeping, except as necessary to mitigate against
operational risks inherent with the custody or safekeeping
services, as determined by--</DELETED>
<DELETED> (A) the appropriate Federal banking
agency;</DELETED>
<DELETED> (B) the National Credit Union
Administration (in the case of a credit
union);</DELETED>
<DELETED> (C) a State bank supervisor;</DELETED>
<DELETED> (D) a State credit union supervisor (as
defined in section 6003 of the Anti-Money Laundering
Act of 2020 (31 U.S.C. 5311 note)); or</DELETED>
<DELETED> (E) the Securities and Exchange Commission
(in the case of a broker or dealer).</DELETED>
<DELETED> (b) Definitions.--In this section:</DELETED>
<DELETED> (1) Banking terms.--The terms ``appropriate
Federal banking agency'', ``depository institution'',
``national bank'', and ``State bank supervisor'' have the
meaning given those terms, respectively, under section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).</DELETED>
<DELETED> (2) Credit union terms.--The terms ``Federal
credit union'' and ``State credit union'' have the meaning
given those terms, respectively, under section 101 of the
Federal Credit Union Act (12 U.S.C. 1752).</DELETED>
<DELETED>SEC. 311. BROKER AND DEALER DISCLOSURES REGARDING THE
TREATMENT OF ASSETS.</DELETED>
<DELETED> (a) In General.--Not later than 270 days after the date of
the enactment of this Act, the Securities and Exchange Commission shall
issue rules requiring written disclosures regarding the treatment of
customer assets in the event of an insolvency, resolution, or
liquidation proceeding to be provided by a registered broker or dealer
to an investor before a digital commodity, a permitted payment
stablecoin, or an investment contract involving a unit of a digital
commodity is received, acquired, or held by the broker or dealer for
the account of the investor, which shall include, as necessary or
appropriate for the protection of investors--</DELETED>
<DELETED> (1) a description of the manner in which any
digital commodity, permitted payment stablecoin, or investment
contact involving a unit of a digital commodity received,
acquired, or held by the broker or dealer for the account of
such investor would be treated in an insolvency, resolution, or
liquidation proceeding with respect to the broker or dealer
under--</DELETED>
<DELETED> (A) title II of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5381 et
seq.);</DELETED>
<DELETED> (B) the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.); or</DELETED>
<DELETED> (C) as applicable, chapter 7 or chapter 11
of title 11, United States Code; and</DELETED>
<DELETED> (2) how the treatment described in paragraph (1)differs from the treatment of securities and cash received,
acquired, or held by the broker or dealer for the account of
such investor in the event of an insolvency, resolution, or
liquidation proceeding with respect to the broker or dealer
under each law described under subparagraph (A) through (C) of
paragraph (1).</DELETED>
<DELETED>SEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN
NATURE.</DELETED>
<DELETED> (a) Digital Commodity Activities That Are Financial in
Nature.--Section 4(k)(4) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)(4)) is amended--</DELETED>
<DELETED> (1) in subparagraph (A), by striking ``or
securities'' and inserting ``, securities, or digital
commodities''; and</DELETED>
<DELETED> (2) in subparagraph (E), by inserting ``or digital
commodities'' before the period at the end.</DELETED>
<DELETED> (b) National Bank Activity.--</DELETED>
<DELETED> (1) In general.--A national bank may use a digital
asset or blockchain system to perform, provide, or deliver any
activity, function, product, or service that the national bank
is otherwise authorized by law to perform, provide, or
deliver.</DELETED>
<DELETED> (2) Rule of construction.--Nothing in this
subsection may be construed to exempt a national bank's
performance, provision, or delivery of an activity, function,
product, or service from a requirement that would apply if the
activity were not performed, provided, or delivered using a
digital asset or blockchain system.</DELETED>
<DELETED> (c) Insured State Banks and Subsidiaries of Insured State
Banks.--For purposes of sections 24(a) and 24(d) of the Federal Deposit
Insurance Act (12 U.S.C. 1831a(a) and (d)), all of the activities
authorized for a national bank under subsection (b) that are principal
activities shall be permissible for an insured State bank and
subsidiary of an insured State bank.</DELETED>
<DELETED>SEC. 313. EFFECTIVE DATE; ADMINISTRATION.</DELETED>
<DELETED> Except as otherwise provided under this title, this title
and the amendments made by this title shall take effect 360 days after
the date of enactment of this Act, except that, to the extent a
provision of this title requires a rulemaking, the provision shall take
effect on the later of--</DELETED>
<DELETED> (1) 360 days after the date of enactment of this
Act; or</DELETED>
<DELETED> (2) 60 days after the publication in the Federal
Register of the final rule implementing the
provision.</DELETED>
<DELETED>SEC. 314. EDUCATIONAL MATERIAL REQUIREMENTS.</DELETED>
<DELETED> The Securities and Exchange Commission, in consultation
with the Commodity Futures Trading Commission, shall require any
registered entity that facilitates the trading of digital commodities
or investment contracts involving units of a digital commodity to
provide clear and accessible educational materials to the public,
including--</DELETED>
<DELETED> (1) an overview of how blockchain technology
functions;</DELETED>
<DELETED> (2) a description of common risks associated with
digital commodities;</DELETED>
<DELETED> (3) a description of the differences between
digital commodity markets and traditional financial
markets;</DELETED>
<DELETED> (4) information on reporting requirements related
to digital commodity transactions or investment contracts
involving units of a digital commodity; and</DELETED>
<DELETED> (5) guidance on recognizing fraudulent schemes and
instructions for reporting suspected fraud.</DELETED>
<DELETED>SEC. 315. DISCRETIONARY SURPLUS FUND.</DELETED>
<DELETED> (a) In General.--The dollar amount specified under section
7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is
reduced by $15,000,000.</DELETED>
<DELETED> (b) Effective Date.--The amendment made by subsection (a)
shall take effect on September 30, 2035.</DELETED>
<DELETED>TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT
THE COMMODITY FUTURES TRADING COMMISSION</DELETED>
<DELETED>SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY
TRANSACTIONS.</DELETED>
<DELETED> (a) Savings Clause.--Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(J) Except as expressly provided in this
Act, nothing in the CLARITY Act of 2025 shall affect or
apply to, or be interpreted to affect or apply to--
</DELETED>
<DELETED> ``(i) any agreement, contract, or
transaction that is subject to this Act as--
</DELETED>
<DELETED> ``(I) a contract of sale
of a commodity for future delivery or
an option on such a contract;</DELETED>
<DELETED> ``(II) a swap;</DELETED>
<DELETED> ``(III) a security futures
product;</DELETED>
<DELETED> ``(IV) an option
authorized under section 4c of this
Act;</DELETED>
<DELETED> ``(V) an agreement,
contract, or transaction described in
subparagraph (C)(i) or (D)(i) of
subsection (c)(2) of this section;
or</DELETED>
<DELETED> ``(VI) a leverage
transaction authorized under section
19; or</DELETED>
<DELETED> ``(ii) the activities of any
person with respect to any such an agreement,
contract, or transaction.''.</DELETED>
<DELETED> (b) Limitation on Authority Over Permitted Payment
Stablecoins.--Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C.
2(c)(1)) is amended--</DELETED>
<DELETED> (1) in subparagraph (F), by striking ``or'' at the
end;</DELETED>
<DELETED> (2) in subparagraph (G), by striking the period
and inserting ``; or''; and</DELETED>
<DELETED> (3) by adding at the end the following:</DELETED>
<DELETED> ``(H) permitted payment
stablecoins.''.</DELETED>
<DELETED> (c) Commission Jurisdiction Over Financing Agreements.--
Section 2(c)(2)(D) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(D))
is amended--</DELETED>
<DELETED> (1) in clause (ii)(I), by inserting after
``paragraph (1)'' the following: ``(other than an agreement,
contract, or transaction in a permitted payment stablecoin)'';
and</DELETED>
<DELETED> (2) by redesignating clause (iv) as clause (v) and
inserting after clause (iii) the following:</DELETED>
<DELETED> ``(iv) Agreements for margin
financing.--Notwithstanding clause (iii), a
digital commodity broker may, subject to the
requirements of section 4u(c)(2), offer to or
enter into an agreement for margin financing
with a customer for the purchase or sale of a
digital commodity, provided any purchase or
sale made pursuant to the agreement shall
result in the delivery of the digital commodity
into or from an account carried for the
customer by the digital commodity broker, as
determined by the Commission by rule or
regulation, based on commercial spot market
practices.''.</DELETED>
<DELETED> (d) Commission Authority Over Certain Digital Commodity
and Stablecoin Spot Transactions.--Section 2(c)(2) of the Commodity
Exchange Act (7 U.S.C. 2(c)(2)) is amended by adding at the end the
following:</DELETED>
<DELETED> ``(F) Commission jurisdiction with respect
to digital commodity transactions.--</DELETED>
<DELETED> ``(i) In general.--Subject to
sections 6d and 12(e), the Commission shall
have exclusive jurisdiction with respect to any
account, agreement, contract, or transaction
involving a contract of sale of a digital
commodity or tradable asset (as defined in
section 4x) in interstate commerce, including
in a digital commodity or tradable asset (as so
defined) cash or spot market, that is offered,
solicited, traded, facilitated, executed,
cleared, reported, or otherwise dealt in--
</DELETED>
<DELETED> ``(I) on or subject to the
rules of a registered entity or an
entity that is required to be
registered as a registered entity;
or</DELETED>
<DELETED> ``(II) by any other entity
registered, or required to be
registered, with the
Commission.</DELETED>
<DELETED> ``(ii) Limitations.--Clause (i)
shall not apply with respect to--</DELETED>
<DELETED> ``(I) custodial or
depository activities for a digital
commodity of an entity regulated by an
appropriate Federal banking agency or aState bank supervisor (within the
meaning of section 3 of the Federal
Deposit Insurance Act); or</DELETED>
<DELETED> ``(II) an offer or sale of
an investment contract involving a
digital commodity or of a securities
offer or sale involving a digital
commodity.</DELETED>
<DELETED> ``(iii) Mixed digital asset
transactions.--</DELETED>
<DELETED> ``(I) In general.--Clause
(i) shall not apply to a mixed digital
asset transaction.</DELETED>
<DELETED> ``(II) Reports on mixed
digital asset transactions.--A digital
commodity issuer, digital commodity
related person, digital commodity
affiliated person, or other person
registered with the Securities and
Exchange Commission that engages in a
mixed digital asset transaction, shall,
on request of the Commission, open to
inspection and examination by the
Commission all books and records
relating to the mixed digital asset
transaction, subject to the
confidentiality and disclosure
requirements of section 8.</DELETED>
<DELETED> ``(G) Agreements, contracts, and
transactions in stablecoins.--</DELETED>
<DELETED> ``(i) Treatment of permitted
payment stablecoins on commission-registered
entities.--Subject to clauses (ii) and (iii),
the Commission shall have jurisdiction over a
cash or spot agreement, contract, or
transaction in a permitted payment stablecoin
that is offered, offered to enter into, entered
into, executed, solicited, or accepted, or for
which the execution of is confirmed--</DELETED>
<DELETED> ``(I) on or subject to the
rules of a registered entity;
or</DELETED>
<DELETED> ``(II) by any other entity
registered with the
Commission.</DELETED>
<DELETED> ``(ii) Permitted payment
stablecoin transaction rules.--This Act shall
apply to a transaction described in clause (i)
only for the purpose of regulating the offer,
execution, solicitation, or acceptance of a
cash or spot permitted payment stablecoin
transaction on a registered entity or by any
other entity registered with the Commission, as
if the permitted payment stablecoin were a
digital commodity.</DELETED>
<DELETED> ``(iii) No authority over
permitted payment stablecoins.--Notwithstanding
clauses (i) and (ii), the Commission shall not
make a rule or regulation, impose a requirement
or obligation on a registered entity or other
entity registered with the Commission, or
impose a requirement or obligation on a
permitted payment stablecoin issuer, regarding
the operation of a permitted payment stablecoin
issuer or a permitted payment
stablecoin.''.</DELETED>
<DELETED> (e) Conforming Amendments.--The Commodity Exchange Act is
amended--</DELETED>
<DELETED> (1) in section 1a(9) (7 U.S.C. 1a(9)), as amended
by the GENIUS Act, by striking the second sentence;
and</DELETED>
<DELETED> (2) in section 2(a)(1)(A) (7 U.S.C. 2(a)(1)(A)),
in the 1st sentence, by inserting ``subparagraphs (F) and (G)
of subsection (c)(2) of this section or'' before ``section
19''.</DELETED>
<DELETED>SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE
QUALIFIED DIGITAL ASSET CUSTODIANS.</DELETED>
<DELETED> Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is
amended--</DELETED>
<DELETED> (1) in subsection (a)(2)--</DELETED>
<DELETED> (A) in the 1st proviso, by striking ``any
bank or trust company'' and inserting ``any bank, trust
company, or qualified digital asset custodian, as
applicable,''; and</DELETED>
<DELETED> (B) by inserting ``: Provided further,
That any such property that is a digital asset shall be
held in a qualified digital asset custodian'' before
the period at the end; and</DELETED>
<DELETED> (2) in subsection (f)(3)(A)(i), by striking ``any
bank or trust company'' and inserting ``any bank, trust
company, or qualified digital asset custodian''.</DELETED>
<DELETED>SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL
COMMODITIES.</DELETED>
<DELETED> Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2)
is amended--</DELETED>
<DELETED> (1) in subsection (a), by striking ``5(d) and
5b(c)(2)'' and inserting ``5(d), 5b(c)(2), and
5i(c)'';</DELETED>
<DELETED> (2) in subsection (b)--</DELETED>
<DELETED> (A) in each of paragraphs (1) and (2), by
inserting ``digital commodity exchange,'' before
``derivatives''; and</DELETED>
<DELETED> (B) in paragraph (3), by inserting
``digital commodity exchange,'' before ``derivatives''
each place it appears;</DELETED>
<DELETED> (3) in subsection (c)--</DELETED>
<DELETED> (A) in paragraph (2), by inserting ``or
participants'' before ``(in a'';</DELETED>
<DELETED> (B) in paragraph (4)(B), by striking
``1a(10)'' and inserting ``1a(9)''; and</DELETED>
<DELETED> (C) in paragraph (5), by adding at the end
the following:</DELETED>
<DELETED> ``(D) Special rules for digital commodity
contracts.--In certifying any new rule or rule
amendment, or listing any new contract or instrument,
in connection with a contract of sale of a commodity
for future delivery, option, swap, or other agreement,
contract, or transaction, that is based on or
references a digital commodity, a registered entity
shall make or rely on a certification under subsection
(d) for the digital commodity.''; and</DELETED>
<DELETED> (4) by inserting after subsection (c) the
following:</DELETED>
<DELETED> ``(d) Certifications for Digital Commodity Trading.--
</DELETED>
<DELETED> ``(1) In general.--Notwithstanding subsection (c),
for the purposes of listing or offering a digital commodity for
trading in a digital commodity cash or spot market, an eligible
entity shall submit a written certification to the Commission
that the digital commodity meets the requirements of this Act
(including the regulations prescribed under this
Act).</DELETED>
<DELETED> ``(2) Contents of the certification.--</DELETED>
<DELETED> ``(A) In general.--In making a written
certification under this paragraph, the eligible entity
shall furnish to the Commission an analysis of how the
digital commodity meets the requirements of section
5i(c)(3).</DELETED>
<DELETED> ``(B) Reliance on prior disclosures.--In
making a certification under this subsection, an
eligible entity may rely on the records and disclosures
of any relevant person registered with the Securities
and Exchange Commission or other State or Federal
agency.</DELETED>
<DELETED> ``(3) Modifications.--</DELETED>
<DELETED> ``(A) In general.--An eligible entity
shall modify a certification made under paragraph (1)
to--</DELETED>
<DELETED> ``(i) account for significant
changes in any information provided to the
Commission under paragraph (2)(A)(ii);
or</DELETED>
<DELETED> ``(ii) permit or restrict trading
in units of a digital commodity held by a
digital commodity related person or a digital
commodity affiliated person.</DELETED>
<DELETED> ``(B) Recertification.--Modifications
required by this subsection shall be subject to the
same disapproval and review process as a new
certification under paragraphs (4) and (5).</DELETED>
<DELETED> ``(4) Disapproval.--</DELETED>
<DELETED> ``(A) In general.--The written
certification described in paragraph (1) shall become
effective unless the Commission finds that the listing
of the digital commodity is inconsistent with the
requirements of this Act or the rules and regulations
prescribed under this Act.</DELETED>
<DELETED> ``(B) Analysis required.--The Commission
shall include, with any findings referred to in
subparagraph (A), a detailed analysis of the factors on
which the decision was based.</DELETED>
<DELETED> ``(C) Public findings.--The Commission
shall make public any disapproval decision, and any
related findings and analysis, made under this
paragraph.</DELETED>
<DELETED> ``(5) Review.--</DELETED>
<DELETED> ``(A) In general.--Unless the Commissionmakes a disapproval decision under paragraph (4), the
written certification described in paragraph (1) shall
become effective, pursuant to the certification by the
eligible entity and notice of the certification to the
public (in a manner determined by the Commission) on
the date that is--</DELETED>
<DELETED> ``(i) 20 business days after the
date the Commission receives the certification
(or such shorter period as determined by the
Commission by rule or regulation), in the case
of a digital commodity that has not been
certified under this section or for which a
certification is being modified under paragraph
(3); or</DELETED>
<DELETED> ``(ii) 1 business day after the
date the Commission receives the certification
(or such shorter period as determined by the
Commission by rule or regulation) for any
digital commodity that has been certified under
this section.</DELETED>
<DELETED> ``(B) Extensions.--The time for
consideration under subparagraph (A) may be extended
through notice to the eligible entity that there are
novel or complex issues that require additional time to
analyze, that the explanation by the submitting
eligible entity is inadequate, or of a potential
inconsistency with this Act--</DELETED>
<DELETED> ``(i) once, for 30 business days,
through written notice to the eligible entity
by the Commission; and</DELETED>
<DELETED> ``(ii) once, for an additional 30
business days, through written notice to the
eligible entity from the Commission that
includes a description of any deficiencies with
the certification, including any--</DELETED>
<DELETED> ``(I) novel or complex
issues which require additional time to
analyze;</DELETED>
<DELETED> ``(II) missing information
or inadequate explanations;
or</DELETED>
<DELETED> ``(III) potential
inconsistencies with this
Act.</DELETED>
<DELETED> ``(6) Prior approval before registration.--
</DELETED>
<DELETED> ``(A) In general.--A person applying for
registration with the Commission for the purposes of
listing or offering a digital commodity for trading in
a digital commodity cash or spot market may request
that the Commission grant prior approval for the person
to list or offer the digital commodity on being
registered with the Commission.</DELETED>
<DELETED> ``(B) Request for prior approval.--A
person seeking prior approval under subparagraph (A)
shall furnish the Commission with a written
certification that the digital commodity meets the
requirements of this Act (including the regulations
prescribed under this Act) and the information
described in paragraph (2).</DELETED>
<DELETED> ``(C) Deadline.--The Commission shall take
final action on a request for prior approval not later
than 90 business days after submission of the request,
unless the person submitting the request agrees to an
extension of the time limitation established under this
subparagraph.</DELETED>
<DELETED> ``(D) Disapproval.--</DELETED>
<DELETED> ``(i) In general.--The Commission
shall approve the listing of the digital
commodity unless the Commission finds that the
listing is inconsistent with this Act
(including any regulation prescribed under this
Act).</DELETED>
<DELETED> ``(ii) Analysis required.--The
Commission shall include, with any findings
made under clause (i), a detailed analysis of
the factors on which the decision is
based.</DELETED>
<DELETED> ``(iii) Public findings.--The
Commission shall make public any disapproval
decision, and any related findings and
analysis, made under this paragraph.</DELETED>
<DELETED> ``(7) Eligible entity defined.--In this
subsection, the term `eligible entity' means a registered
entity or group of registered entities acting
jointly.''.</DELETED>
<DELETED>SEC. 404. REGISTRATION OF DIGITAL COMMODITY
EXCHANGES.</DELETED>
<DELETED> The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 5h the following:</DELETED>
<DELETED>``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY
EXCHANGES.</DELETED>
<DELETED> ``(a) In General.--</DELETED>
<DELETED> ``(1) Registration.--</DELETED>
<DELETED> ``(A) In general.--A trading facility that
offers or seeks to offer a cash or spot market in at
least 1 digital commodity shall register with the
Commission as a digital commodity exchange.</DELETED>
<DELETED> ``(B) Application.--A person desiring to
register as a digital commodity exchange shall submit
to the Commission an application in such form and
containing such information as the Commission may
require for the purpose of making the determinations
required for approval.</DELETED>
<DELETED> ``(C) Exemptions.--A trading facility that
offers or seeks to offer a cash or spot market in at
least 1 digital commodity shall not be required to
register under this section if the trading facility--
</DELETED>
<DELETED> ``(i) permits no more than a de
minimis amount of trading activity, as the
Commission may determine by rule or regulation,
in a digital commodity; or</DELETED>
<DELETED> ``(ii) serves only customers in a
single State, territory, or possession of the
United States.</DELETED>
<DELETED> ``(2) Additional registrations.--</DELETED>
<DELETED> ``(A) With the commission.--In order to
foster the development of fair and orderly markets,
protect customers, and promote responsible innovation,
the Commission--</DELETED>
<DELETED> ``(i) shall prescribe rules to
exempt an entity registered with the Commission
under more than 1 section of this Act from
duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this
Act;</DELETED>
<DELETED> ``(ii) shall prescribe rules to
address conflicts of interests and activities
of the entity; and</DELETED>
<DELETED> ``(iii) may, after an analysis of
the risks and benefits, prescribe rules to
provide for portfolio margining.</DELETED>
<DELETED> ``(B) With a registered futures
association.--</DELETED>
<DELETED> ``(i) In general.--A registered
digital commodity exchange shall become and
remain a member of a registered futures
association and comply with rules related to
such activity, if the registered digital
commodity exchange accepts customer funds
required to be segregated under subsection
(d).</DELETED>
<DELETED> ``(ii) Rulemaking required.--The
Commission shall require any registered futures
association with a digital commodity exchange
as a member to provide such rules as may be
necessary to further compliance with subsection
(d), protect customers, and promote the public
interest.</DELETED>
<DELETED> ``(C) Registration required.--A person
required to be registered as a digital commodity
exchange under this section shall register with the
Commission as such regardless of whether the person is
registered with another State or Federal
regulator.</DELETED>
<DELETED> ``(b) Trading.--</DELETED>
<DELETED> ``(1) Prohibition on certain trading practices.--
</DELETED>
<DELETED> ``(A) Section 4b shall apply to any
agreement, contract, or transaction in a digital
commodity as if the agreement, contract, or transaction
were a contract of sale of a commodity for future
delivery.</DELETED>
<DELETED> ``(B) Section 4c shall apply to any
agreement, contract, or transaction in a digital
commodity as if the agreement, contract, or transaction
were a transaction involving the purchase or sale of a
commodity for future delivery.</DELETED>
<DELETED> ``(C) Section 4b-1 shall apply to any
agreement, contract, or transaction in a digital
commodity as if the agreement, contract, or transaction
were a contract of sale of a commodity for future
delivery.</DELETED>
<DELETED> ``(2) Prohibition on acting as a counterparty.--
</DELETED>
<DELETED> ``(A) In general.--A digital commodityexchange or any affiliate of such an exchange shall not
trade on or subject to the rules of the digital
commodity exchange for its own account.</DELETED>
<DELETED> ``(B) Exceptions.--Subject to any
conditions, requirements, or limitations imposed by the
Commission pursuant to subparagraph (C), a digital
commodity exchange may engage in trading on the
exchange so long as the trading is not solely for the
purpose of the profit of the exchange, including the
following:</DELETED>
<DELETED> ``(i) Customer direction.--A
transaction for, or entered into at the
direction of, or for the benefit of, an
unaffiliated customer.</DELETED>
<DELETED> ``(ii) Risk management.--A
transaction to manage the credit, market, and
liquidity risks associated with the digital
commodity business of the exchange.</DELETED>
<DELETED> ``(iii) Operational needs.--A
transaction related to the operational needs of
the business of the digital commodity exchange
or its affiliate.</DELETED>
<DELETED> ``(iv) Functional use.--A
transaction related to the functional operation
of a blockchain system.</DELETED>
<DELETED> ``(C) Rulemaking.--The Commission may, by
rule, establish conditions, requirements, or other
limitations on the activities of a digital commodity
exchange and its affiliate permitted pursuant to
subparagraph (B) that are necessary for the protection
of customers, the promotion of innovation, or the
maintenance of fair, orderly, and efficient
markets.</DELETED>
<DELETED> ``(D) Notice requirement.--In order for a
digital commodity exchange or any affiliate of a
digital commodity exchange to engage in trading on the
affiliated exchange pursuant to subsection (B), notice
must be given to the Commission that shall enumerate
how any proposed activity is consistent with the
exceptions in subsection (B) and the purposes of this
Act.</DELETED>
<DELETED> ``(c) Core Principles for Digital Commodity Exchanges.--
</DELETED>
<DELETED> ``(1) Compliance with core principles.--</DELETED>
<DELETED> ``(A) In general.--To be registered, and
maintain registration, as a digital commodity exchange,
a digital commodity exchange shall comply with--
</DELETED>
<DELETED> ``(i) the core principles
described in this subsection; and</DELETED>
<DELETED> ``(ii) any requirement that the
Commission may impose by rule or regulation
pursuant to section 8a(5).</DELETED>
<DELETED> ``(B) Reasonable discretion of a digital
commodity exchange.--Unless otherwise determined by the
Commission by rule or regulation, a digital commodity
exchange described in subparagraph (A) shall have
reasonable discretion in establishing the manner in
which the digital commodity exchange complies with the
core principles described in this subsection.</DELETED>
<DELETED> ``(2) Compliance with rules.--A digital commodity
exchange shall--</DELETED>
<DELETED> ``(A) establish and enforce compliance
with any rule of the digital commodity exchange,
including--</DELETED>
<DELETED> ``(i) the terms and conditions of
the trades traded or processed on or through
the digital commodity exchange; and</DELETED>
<DELETED> ``(ii) any limitation on access to
the digital commodity exchange;</DELETED>
<DELETED> ``(B) establish and enforce trading, trade
processing, and participation rules that will deter
abuses and have the capacity to detect, investigate,
and enforce those rules, including means--</DELETED>
<DELETED> ``(i) to provide market
participants with impartial access to the
market; and</DELETED>
<DELETED> ``(ii) to capture information that
may be used in establishing whether rule
violations have occurred; and</DELETED>
<DELETED> ``(C) establish rules governing the
operation of the exchange, including rules specifying
trading procedures to be used in entering and executing
orders traded or posted on the facility.</DELETED>
<DELETED> ``(3) Listing standards for digital commodities.--
</DELETED>
<DELETED> ``(A) In general.--A digital commodity
exchange shall establish policies and procedures to
permit trading in a digital commodity only if--
</DELETED>
<DELETED> ``(i) reports with respect to the
digital commodity required under, as
applicable, section 4B(b)(3) or 4B(b)(5)(C) of
the Securities Act of 1933 (or, with respect to
a digital commodity not issued in reliance on
section 4(a)(8) of the Securities Act of 1933,
a comparable set of reports, where required by
the Securities and Exchange Commission) have
been filed with the Securities and Exchange
Commission; or</DELETED>
<DELETED> ``(ii) such other similar
information as the Commission may, by rule or
regulation require, that is related to the
ongoing development plan of the blockchain
system and is able to be publicly ascertained,
has been provided to the public.</DELETED>
<DELETED> ``(B) Public information requirements.--
</DELETED>
<DELETED> ``(i) In general.--A digital
commodity exchange shall--</DELETED>
<DELETED> ``(I) permit trading in a
digital commodity only if the digital
commodity exchange reasonably
determines that the information
required by clause (ii) is correct,
current, and available to the public;
and</DELETED>
<DELETED> ``(II) establish policies
and procedures to determine that the
information provided pursuant to clause
(ii) is correct, current, and available
to the public.</DELETED>
<DELETED> ``(ii) Required information.--With
respect to a digital commodity and each
blockchain system to which the digital
commodity relates for which the digital
commodity exchange will make the digital
commodity available to the customers of the
digital commodity exchange, the following
information:</DELETED>
<DELETED> ``(I) Source code.--The
source code for any blockchain system
to which the digital commodity
relates.</DELETED>
<DELETED> ``(II) Transaction
history.--A description of the steps
necessary to independently access,
search, and verify the transaction
history of any blockchain system to
which the digital commodity relates, to
the extent any such independent access,
search, and verification activities are
technically feasible with respect to
the blockchain system.</DELETED>
<DELETED> ``(III) Digital commodity
economics.--A narrative description of
the purpose of any blockchain system to
which the digital commodity relates and
the operation of any such blockchain
system, including--</DELETED>
<DELETED> ``(aa) information
explaining the launch and
supply process, including the
number of digital assets to be
issued in an initial
allocation, the total number of
digital commodities to be
created, the release schedule
for the digital commodities,
and the total number of digital
commodities then
outstanding;</DELETED>
<DELETED> ``(bb) information
detailing any applicable
consensus mechanism or process
for validating transactions,
method of generating or mining
digital commodities, and any
process for burning or
destroying digital commodities
on the blockchain
system;</DELETED>
<DELETED> ``(cc) an
explanation of governance
mechanisms for implementing
changes to the blockchain
system or forming consensus
among holders of the digital
commodities; and</DELETED>
<DELETED> ``(dd) sufficient
information for a third partyto create a tool for verifying
the transaction history of the
digital asset.</DELETED>
<DELETED> ``(IV) Trading volume and
volatility.--The trading volume and
volatility of the digital commodity on
the exchange.</DELETED>
<DELETED> ``(V) Additional
information.--Such additional
information as the Commission may
determine by rule to be necessary for a
customer to understand the financial
and operational risks of a digital
commodity, and to be practically
feasible to provide.</DELETED>
<DELETED> ``(iii) Format.--The Commission
shall prescribe rules and regulations for the
standardization and simplification of
disclosures under clause (ii), including
requiring that disclosures--</DELETED>
<DELETED> ``(I) be
conspicuous;</DELETED>
<DELETED> ``(II) use plain language
comprehensible to customers;</DELETED>
<DELETED> ``(III) are not drafted in
a way that presumes the customer
already has a base knowledge,
familiarity, or understanding of the
basic terminology, operation, and
function of blockchain systems;
and</DELETED>
<DELETED> ``(IV) succinctly explain
the information that is required to be
communicated to the customer.</DELETED>
<DELETED> ``(iv) Reliance on previous
disclosures.--In complying with this
subparagraph, a digital commodity exchange may
rely on and make available to the public
relevant information publicly disclosed to the
Commission, the Securities and Exchange
Commission, or an appropriate Federal banking
agency.</DELETED>
<DELETED> ``(C) Digital commodities held by related
and digital commodity affiliated persons.--A digital
commodity exchange shall establish policies and
procedures designed to permit the trading of a unit of
a digital commodity acquired from the issuer and held
by a digital commodity affiliated person or a digital
commodity related person, only in accordance with the
requirements of section 4C of the Securities Act of
1933.</DELETED>
<DELETED> ``(4) Treatment of customer assets.--A digital
commodity exchange shall establish policies and procedures that
are designed to protect and ensure the safety of customer
money, assets, and property.</DELETED>
<DELETED> ``(5) Monitoring of trading and trade
processing.--</DELETED>
<DELETED> ``(A) In general.--A digital commodity
exchange shall provide a competitive, open, and
efficient market and mechanism for executing
transactions that protects the price discovery process
of trading on the exchange.</DELETED>
<DELETED> ``(B) Protection of markets and market
participants.--A digital commodity exchange shall
establish and enforce rules--</DELETED>
<DELETED> ``(i) to protect markets and
market participants from abusive practices
committed by any party, including abusive
practices committed by a party acting as an
agent for a participant; and</DELETED>
<DELETED> ``(ii) to promote fair and
equitable trading on the exchange.</DELETED>
<DELETED> ``(C) Trading procedures.--A digital
commodity exchange shall--</DELETED>
<DELETED> ``(i) establish and enforce rules
or terms and conditions defining, or
specifications detailing--</DELETED>
<DELETED> ``(I) trading procedures
to be used in entering and executing
orders traded on or through the
facilities of the digital commodity
exchange; and</DELETED>
<DELETED> ``(II) procedures for
trade processing of digital commodities
on or through the facilities of the
digital commodity exchange;
and</DELETED>
<DELETED> ``(ii) monitor trading in digital
commodities to prevent manipulation, price
distortion, and disruptions, through
surveillance, compliance, and disciplinary
practices and procedures, including methods for
conducting real-time monitoring of trading and
comprehensive and accurate trade
reconstructions.</DELETED>
<DELETED> ``(6) Ability to obtain information.--A digital
commodity exchange shall--</DELETED>
<DELETED> ``(A) establish and enforce rules that
will allow the facility to obtain any necessary
information to perform any of the functions described
in this section;</DELETED>
<DELETED> ``(B) provide the information to the
Commission on request; and</DELETED>
<DELETED> ``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.</DELETED>
<DELETED> ``(7) Emergency authority.--A digital commodity
exchange shall adopt rules to provide for the exercise of
emergency authority, in consultation or cooperation with the
Commission or a registered entity, as is necessary and
appropriate, including the authority to facilitate the
liquidation or transfer of open positions in any digital
commodity or to suspend or curtail trading in a digital
commodity.</DELETED>
<DELETED> ``(8) Timely publication of trading information.--
</DELETED>
<DELETED> ``(A) In general.--A digital commodity
exchange shall make public timely information on price,
trading volume, and other trading data on digital
commodities to the extent prescribed by the
Commission.</DELETED>
<DELETED> ``(B) Capacity of digital commodity
exchange.--A digital commodity exchange shall have the
capacity to electronically capture and transmit trade
information with respect to transactions executed on
the exchange.</DELETED>
<DELETED> ``(9) Recordkeeping and reporting.--</DELETED>
<DELETED> ``(A) In general.--A digital commodity
exchange shall--</DELETED>
<DELETED> ``(i) maintain records relating to
the business of the exchange, including a
complete audit trail, in a form and manner
acceptable to the Commission for a period of 5
years;</DELETED>
<DELETED> ``(ii) report to the Commission,
in a form and manner acceptable to the
Commission, such information as the Commission
determines to be necessary or appropriate for
the Commission to perform the duties of the
Commission under this Act; and</DELETED>
<DELETED> ``(iii) keep any such records of
digital commodities which relate to a security
open to inspection and examination by the
Securities and Exchange Commission.</DELETED>
<DELETED> ``(B) Information-sharing.--Subject to
section 8, and on request, the Commission shall share
information collected under subparagraph (A) with--
</DELETED>
<DELETED> ``(i) the Board;</DELETED>
<DELETED> ``(ii) the Securities and Exchange
Commission;</DELETED>
<DELETED> ``(iii) each appropriate Federal
banking agency;</DELETED>
<DELETED> ``(iv) each appropriate State bank
supervisor (within the meaning of section 3 of
the Federal Deposit Insurance Act);</DELETED>
<DELETED> ``(v) the Financial Stability
Oversight Council;</DELETED>
<DELETED> ``(vi) the Department of Justice;
and</DELETED>
<DELETED> ``(vii) any other person that the
Commission determines to be appropriate,
including--</DELETED>
<DELETED> ``(I) foreign financial
supervisors (including foreign futures
authorities);</DELETED>
<DELETED> ``(II) foreign central
banks; and</DELETED>
<DELETED> ``(III) foreign
ministries.</DELETED>
<DELETED> ``(C) Confidentiality agreement.--Before
the Commission may share information with any entity
described in subparagraph (B), the Commission shall
receive a written agreement from the entity stating
that the entity shall abide by the confidentiality
requirements described in section 8 relating to the
information on digital commodities that is
provided.</DELETED>
<DELETED> ``(D) Providing information.--A digital
commodity exchange shall provide to the Commission
(including any designee of the Commission) informationunder subparagraph (A) in such form and at such
frequency as is required by the Commission.</DELETED>
<DELETED> ``(10) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this Act, a digital
commodity exchange shall not--</DELETED>
<DELETED> ``(A) adopt any rules or take any actions
that result in any unreasonable restraint of trade;
or</DELETED>
<DELETED> ``(B) impose any material anticompetitive
burden on trading.</DELETED>
<DELETED> ``(11) Conflicts of interest.--The digital
commodity exchange shall establish and enforce rules--
</DELETED>
<DELETED> ``(A) to minimize conflicts of interest in
the decision making processes of the contract market;
and</DELETED>
<DELETED> ``(B) to establish a process for resolving
conflicts of interest referred to in subparagraph
(A).</DELETED>
<DELETED> ``(12) Financial resources.--</DELETED>
<DELETED> ``(A) In general.--A digital commodity
exchange shall have adequate financial, operational,
and managerial resources, as determined by the
Commission, to discharge each responsibility of the
digital commodity exchange.</DELETED>
<DELETED> ``(B) Minimum amount of financial
resources.--A digital commodity exchange shall possess
financial resources that, at a minimum, exceed the sum
of--</DELETED>
<DELETED> ``(i) the total amount that would
enable the digital commodity exchange to cover
the operating costs of the digital commodity
exchange for a 1-year period, as calculated on
a rolling basis; and</DELETED>
<DELETED> ``(ii) the total amount necessary
to meet the financial obligations of the
digital commodity exchange to all customers of
the digital commodity exchange.</DELETED>
<DELETED> ``(13) Disciplinary procedures.--A digital
commodity exchange shall establish and enforce disciplinary
procedures that authorize the digital commodity exchange to
discipline, suspend, or expel members or market participants
that violate the rules of the digital commodity exchange, or
similar methods for performing the same functions, including
delegation of the functions to third parties.</DELETED>
<DELETED> ``(14) Governance fitness standards.--</DELETED>
<DELETED> ``(A) Governance arrangements.--A digital
commodity exchange shall establish governance
arrangements that are transparent and designed to
permit consideration of the views of market
participants.</DELETED>
<DELETED> ``(B) Fitness standards.--A digital
commodity exchange shall establish and enforce
appropriate fitness standards for--</DELETED>
<DELETED> ``(i) officers and directors;
and</DELETED>
<DELETED> ``(ii) any individual or entity
with direct access to, or control of, customer
assets.</DELETED>
<DELETED> ``(15) System safeguards.--A digital commodity
exchange shall--</DELETED>
<DELETED> ``(A) establish and maintain a program of
risk analysis and oversight to identify and minimize
sources of operational and security risks, through the
development of appropriate controls and procedures, and
automated systems in accordance with industry
standards, that--</DELETED>
<DELETED> ``(i) are reliable and secure;
and</DELETED>
<DELETED> ``(ii) have adequate scalable
capacity;</DELETED>
<DELETED> ``(B) establish and maintain emergency
procedures, backup resources, and a plan for disaster
recovery that allow for--</DELETED>
<DELETED> ``(i) the timely recovery and
resumption of operations; and</DELETED>
<DELETED> ``(ii) the fulfillment of the
responsibilities and obligations of the digital
commodity exchange; and</DELETED>
<DELETED> ``(C) periodically conduct tests to verify
that the backup resources of the digital commodity
exchange are sufficient to ensure continued--</DELETED>
<DELETED> ``(i) order processing and trade
matching;</DELETED>
<DELETED> ``(ii) price reporting;</DELETED>
<DELETED> ``(iii) market surveillance;
and</DELETED>
<DELETED> ``(iv) maintenance of a
comprehensive and accurate audit
trail.</DELETED>
<DELETED> ``(d) Holding of Customer Assets.--</DELETED>
<DELETED> ``(1) In general.--A digital commodity exchange
shall hold customer money, assets, and property in a manner to
minimize the risk of loss to the customer or unreasonable delay
in customer access to the money, assets, and property of the
customer.</DELETED>
<DELETED> ``(2) Segregation of funds.--</DELETED>
<DELETED> ``(A) In general.--A digital commodity
exchange shall treat and deal with all money, assets,
and property that is received by the digital commodity
exchange, or accrues to a customer as the result of
trading in digital commodities, as belonging to the
customer.</DELETED>
<DELETED> ``(B) Commingling prohibited.--Money,
assets, and property described in subparagraph (A)
shall be separately accounted for and shall not be
commingled with the funds of the digital commodity
exchange or be used to margin, secure, or guarantee any
trades or accounts of any customer or person other than
the person for whom the same are held.</DELETED>
<DELETED> ``(C) Exceptions.--</DELETED>
<DELETED> ``(i) Use of funds.--</DELETED>
<DELETED> ``(I) In general.--
Notwithstanding subparagraph (A),
money, assets, and property described
in subparagraph (A) may, for
convenience, be commingled and
deposited in the same account or
accounts with any bank, trust company,
derivatives clearing organization, or
qualified digital asset
custodian.</DELETED>
<DELETED> ``(II) Withdrawal.--
Notwithstanding subparagraph (A), such
share of the money, assets, and
property described in subparagraph (A)
as in the normal course of business
shall be necessary to margin,
guarantee, secure, transfer, adjust, or
settle a contract of sale of a digital
commodity with a registered entity may
be withdrawn and applied to such
purposes, including the payment of
commissions, brokerage, interest,
taxes, storage, and other charges,
lawfully accruing in connection with
the contract.</DELETED>
<DELETED> ``(ii) Commission action.--
Notwithstanding subparagraph (A), in accordance
with such terms and conditions as the
Commission may prescribe by rule, regulation,
or order, any money, assets, or property of the
customers of a digital commodity exchange may
be commingled and deposited in customer
accounts with any other money, assets, or
property received by the digital commodity
exchange and required by the Commission to be
separately accounted for and treated and dealt
with as belonging to the customer of the
digital commodity exchange.</DELETED>
<DELETED> ``(3) Permitted investments.--Money described in
paragraph (2) may be invested in obligations of the United
States, in general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed as
to principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation
prescribe, and such investments shall be made in accordance
with such rules and regulations and subject to such conditions
as the Commission may prescribe.</DELETED>
<DELETED> ``(4) Customer protection during bankruptcy.--
</DELETED>
<DELETED> ``(A) Customer property.--All assets held
on behalf of a customer by a digital commodity
exchange, and all money, assets, and property of any
customer received by a digital commodity exchange for
trading or custody, or to facilitate, margin,
guarantee, or secure contracts of sale of a digital
commodity (including money, assets, or property
accruing to the customer as the result of the
transactions), shall be considered customer property
for purposes of section 761 of title 11, United States
Code.</DELETED>
<DELETED> ``(B) Transactions.--A transaction
involving the sale of a unit of a digital commodity
occurring on or subject to the rules of a digital
commodity exchange shall be considered a contract for
the purchase or sale of a commodity for future
delivery, on or subject to the rules of, a contract
market or board of trade for purposes of the definition
of `commodity contract' in section 761 of title 11,
United States Code.</DELETED><DELETED> ``(C) Exchanges.--A digital commodity
exchange shall be considered a futures commission
merchant for purposes of section 761 of title 11,
United States Code.</DELETED>
<DELETED> ``(D) Assets removed from segregation.--
Assets removed from segregation due to a customer
election under paragraph (6) shall not be considered
customer property for purposes of section 761 of title
11, United States Code.</DELETED>
<DELETED> ``(5) Misuse of customer property.--</DELETED>
<DELETED> ``(A) In general.--It shall be unlawful--
</DELETED>
<DELETED> ``(i) for any digital commodity
exchange that has received any customer money,
assets, or property for custody to dispose of,
or use any such money, assets, or property as
belonging to the digital commodity exchange or
any person other than a customer of the digital
commodity exchange; or</DELETED>
<DELETED> ``(ii) for any other person,
including any depository, other digital
commodity exchange, or digital asset custodian
that has received any customer money, assets,
or property for deposit, to hold, dispose of,
or use any such money, assets, or property, or
property, as belonging to the depositing
digital commodity exchange or any person other
than the customers of the digital commodity
exchange.</DELETED>
<DELETED> ``(B) Use further defined.--For purposes
of this section, `use' of a digital commodity includes
utilizing any unit of a digital asset to participate in
a blockchain service defined in paragraph (6) or a
decentralized governance system associated with the
digital commodity or the blockchain system to which the
digital commodity relates in any manner other than that
expressly directed by the customer from whom the unit
of a digital commodity was received.</DELETED>
<DELETED> ``(6) Participation in blockchain services.--
</DELETED>
<DELETED> ``(A) Use of funds.--A digital commodity
exchange (or a designee of a digital commodity
exchange) may use a unit of a digital commodity
belonging to a customer to provide a blockchain service
for a blockchain system to which the unit of the
digital commodity relates if--</DELETED>
<DELETED> ``(i) the customer expressly
permits the use, in writing to the digital
commodity exchange; and</DELETED>
<DELETED> ``(ii) the digital commodity
exchange complies with subparagraph
(B).</DELETED>
<DELETED> ``(B) Limitations.--</DELETED>
<DELETED> ``(i) In general.--The Commission
shall, by rule, establish notice and disclosure
requirements, and may, by rule, establish any
other limitations and rules related to a
permission provided under subparagraph (A) that
are reasonably necessary to protect customers,
including eligible contract participants, non-
eligible contract participants, or any other
class of customers.</DELETED>
<DELETED> ``(ii) Customer choice.--A digital
commodity exchange may not require a customer
to provide the permission referred to in
subparagraph (A) as a condition of doing
business on the exchange.</DELETED>
<DELETED> ``(C) Requirements.--The Commission may,
by rule, waive or modify the requirements of paragraph
(2) or subsection (h), to facilitate the use of a unit
of a digital commodity belonging to a customer to
provide a blockchain service.</DELETED>
<DELETED> ``(D) Blockchain service defined.--In this
paragraph, the term `blockchain service' means any
activity relating to validating transactions on a
blockchain system, providing security for a blockchain
system, or other similar activity, including protocol
consensus participation activities described in section
2(a)(30)(B) of the Securities Act of 1933, required for
the ongoing operation of a blockchain system.</DELETED>
<DELETED> ``(e) Market Access Requirements.--The Commission may, by
rule, impose any additional requirements related to the operations and
activities of the digital commodity exchange and an affiliated digital
commodity broker necessary to protect market participants, promote fair
and equitable trading on the digital commodity exchange, and promote
responsible innovation.</DELETED>
<DELETED> ``(f) Designation of Chief Compliance Officer.--</DELETED>
<DELETED> ``(1) In general.--A digital commodity exchange
shall designate an individual to serve as a chief compliance
officer.</DELETED>
<DELETED> ``(2) Duties.--The chief compliance officer
shall--</DELETED>
<DELETED> ``(A) report directly to the board or to
the senior officer of the exchange;</DELETED>
<DELETED> ``(B) review compliance with the core
principles in this subsection;</DELETED>
<DELETED> ``(C) in consultation with the board of
the exchange, a body performing a function similar to
that of a board, or the senior officer of the exchange,
resolve any conflicts of interest that may
arise;</DELETED>
<DELETED> ``(D) establish and administer the
policies and procedures required to be established
pursuant to this section;</DELETED>
<DELETED> ``(E) ensure compliance with this Act and
the rules and regulations issued under this Act,
including rules prescribed by the Commission pursuant
to this section; and</DELETED>
<DELETED> ``(F) establish procedures for the
remediation of noncompliance issues found during
compliance office reviews, look backs, internal or
external audit findings, self-reported errors, or
through validated complaints.</DELETED>
<DELETED> ``(3) Requirements for procedures.--In
establishing procedures under paragraph (2)(F), the chief
compliance officer shall design the procedures to establish the
handling, management response, remediation, retesting, and
closing of noncompliance issues.</DELETED>
<DELETED> ``(4) Annual reports.--</DELETED>
<DELETED> ``(A) In general.--In accordance with
rules prescribed by the Commission, the chief
compliance officer shall annually prepare and sign a
report that contains a description of--</DELETED>
<DELETED> ``(i) the compliance of the
digital commodity exchange with this Act;
and</DELETED>
<DELETED> ``(ii) the policies and
procedures, including the code of ethics and
conflicts of interest policies, of the digital
commodity exchange.</DELETED>
<DELETED> ``(B) Requirements.--The chief compliance
officer shall--</DELETED>
<DELETED> ``(i) submit each report described
in subparagraph (A) with the appropriate
financial report of the digital commodity
exchange that is required to be submitted to
the Commission pursuant to this section;
and</DELETED>
<DELETED> ``(ii) include in the report a
certification that, under penalty of law, the
report is accurate and complete.</DELETED>
<DELETED> ``(g) Appointment of Trustee.--</DELETED>
<DELETED> ``(1) In general.--If a proceeding under section
5e results in the suspension or revocation of the registration
of a digital commodity exchange, or if a digital commodity
exchange withdraws from registration, the Commission, on notice
to the digital commodity exchange, may apply to the appropriate
United States district court where the digital commodity
exchange is located for the appointment of a trustee.</DELETED>
<DELETED> ``(2) Assumption of jurisdiction.--If the
Commission applies for appointment of a trustee under paragraph
(1)--</DELETED>
<DELETED> ``(A) the court may take exclusive
jurisdiction over the digital commodity exchange and
the records and assets of the digital commodity
exchange, wherever located; and</DELETED>
<DELETED> ``(B) if the court takes jurisdiction
under subparagraph (A), the court shall appoint the
Commission, or a person designated by the Commission,
as trustee with power to take possession and continue
to operate or terminate the operations of the digital
commodity exchange in an orderly manner for the
protection of customers subject to such terms and
conditions as the court may prescribe.</DELETED>
<DELETED> ``(h) Qualified Digital Asset Custodian.--A digital
commodity exchange shall hold in a qualified digital asset custodian
each unit of a digital asset that is--</DELETED>
<DELETED> ``(1) the property of a customer of the digital
commodity exchange;</DELETED>
<DELETED> ``(2) required to be held by the digital commodity
exchange under subsection (c)(12) of this section; or</DELETED>
<DELETED> ``(3) otherwise so required by the Commission to
reasonably protect customers.</DELETED>
<DELETED> ``(i) Exemptions.--</DELETED>
<DELETED> ``(1) In general.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commission may (on its own initiative or on application of the
digital commodity exchange) exempt, either unconditionally or
on stated terms or conditions or for stated periods and either
retroactively or prospectively, or both, a digital commodity
exchange from the requirements of this Act, if the Commissiondetermines that--</DELETED>
<DELETED> ``(A) the exemption would be consistent
with the public interest and the purposes of this Act;
and</DELETED>
<DELETED> ``(B) the exemption will not have a
material adverse effect on the ability of the
Commission or the digital commodity exchange to
discharge regulatory or self-regulatory duties under
this Act.</DELETED>
<DELETED> ``(2) Foreign exchanges.--The Commission may
exempt, conditionally or unconditionally, a digital commodity
exchange from registration under this section if the Commission
finds that the digital commodity exchange is subject to
comparable, comprehensive supervision and regulation on a
consolidated basis by the appropriate governmental authorities
in the home country of the facility.</DELETED>
<DELETED> ``(j) Customer Defined.--In this section, the term
`customer' means any person that maintains an account for the trading
of digital commodities directly with a digital commodity exchange
(other than a person that is owned or controlled, directly or
indirectly, by the digital commodity exchange) for its own behalf or on
behalf of any other person.</DELETED>
<DELETED> ``(k) Federal Preemption.--Notwithstanding any other
provision of law, the Commission shall have exclusive jurisdiction over
any digital commodity exchange registered under this section with
respect to activities and transactions subject to this
Act.''.</DELETED>
<DELETED>SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.</DELETED>
<DELETED> The Commodity Exchange Act (7 U.S.C. 1 et seq.), as
amended by the preceding provisions of this Act, is amended by
inserting after section 5i the following:</DELETED>
<DELETED>``SEC. 5J. QUALIFIED DIGITAL ASSET CUSTODIANS.</DELETED>
<DELETED> ``(a) In General.--A person is a qualified digital asset
custodian for purposes of this Act if the person--</DELETED>
<DELETED> ``(1) holds digital assets on behalf of a person
registered under this Act or a customer of a person registered
under this Act; and</DELETED>
<DELETED> ``(2) is in compliance with subsections (b) and
(c).</DELETED>
<DELETED> ``(b) Supervision Requirement.--A person is in compliance
with this subsection if the person is subject to--</DELETED>
<DELETED> ``(1) supervision and examination for custody and
safekeeping of digital assets by an appropriate Federal banking
agency, the National Credit Union Administration, the
Commission, or the Securities and Exchange Commission;
or</DELETED>
<DELETED> ``(2) adequate supervision and appropriate
regulation for custody and safekeeping of digital assets by--
</DELETED>
<DELETED> ``(A) a State bank supervisor (within the
meaning of section 3 of the Federal Deposit Insurance
Act);</DELETED>
<DELETED> ``(B) a State officer, agency, or other
entity which has primary regulatory authority over
nondepository State trust companies;</DELETED>
<DELETED> ``(C) a State credit union supervisor, as
defined under section 6003 of the Anti-Money Laundering
Act of 2020; or</DELETED>
<DELETED> ``(D) an appropriate foreign governmental
authority in the home country of such person.</DELETED>
<DELETED> ``(c) Other Requirements.--A person shall be in compliance
with this subsection if:</DELETED>
<DELETED> ``(1) Not otherwise prohibited.--The person has
not been prohibited by its supervisor from engaging in an
activity with respect to the custody and safekeeping of digital
assets.</DELETED>
<DELETED> ``(2) Information sharing.--</DELETED>
<DELETED> ``(A) In general.--The person shares
information with the Commission on request and complies
with such requirements for periodic sharing of
information regarding customer accounts that the person
holds on behalf of an entity registered with the
Commission as the Commission determines by rule are
reasonably necessary to effectuate any of the
provisions, or to accomplish any of the purposes, of
this Act.</DELETED>
<DELETED> ``(B) Provision of information.--If the
person is subject to regulation and examination by an
appropriate Federal banking agency, the person may
satisfy any information request described in
subparagraph (A) by providing the Commission with a
detailed listing, in writing, of the digital assets of
a customer in the custody of, or use by, the
person.</DELETED>
<DELETED> ``(3) Rulemaking for cftc entities.--</DELETED>
<DELETED> ``(A) In general.--The Commission shall
prescribe rules to permit a person registered with the
Commission to be a qualified digital asset custodian in
compliance with this section.</DELETED>
<DELETED> ``(B) Content.--In prescribing the rules
under subparagraph (A), the Commission shall require a
person registered with the Commission to--</DELETED>
<DELETED> ``(i) implement requirement
consistent with the requirements in subsection
(d)(1);</DELETED>
<DELETED> ``(ii) establish sufficient system
safeguards;</DELETED>
<DELETED> ``(iii) prevent or mitigate
conflicts of interest, as appropriate;
and</DELETED>
<DELETED> ``(iv) establish separate
governance arrangements for the custodial
function of the entity.</DELETED>
<DELETED> ``(d) Adequate Supervision and Appropriate Regulation.--
</DELETED>
<DELETED> ``(1) In general.--For purposes of subsection (b),
the terms `adequate supervision' and `appropriate regulation'
mean such minimum standards for supervision and regulation as
are reasonably necessary to protect the digital assets held by
a person registered under this Act, including standards
relating to the licensing, examination, and supervisory
processes that require the person to, at a minimum--</DELETED>
<DELETED> ``(A) receive a review and evaluation of
ownership, character and fitness, conflicts of
interest, business model, financial statements, funding
resources, and policies and procedures of the
person;</DELETED>
<DELETED> ``(B) hold capital sufficient for the
financial integrity of the person;</DELETED>
<DELETED> ``(C) protect customer assets;</DELETED>
<DELETED> ``(D) establish and maintain books and
records regarding the business of the person;</DELETED>
<DELETED> ``(E) submit financial statements and
audited financial statements to the applicable
supervisor described in subsection (b);</DELETED>
<DELETED> ``(F) provide disclosures to the
applicable supervisor described in subsection (b)
regarding actions, proceedings, and other items as
determined by the supervisor;</DELETED>
<DELETED> ``(G) maintain and enforce policies and
procedures for compliance with applicable State and
Federal laws, including those related to anti-money
laundering and cybersecurity;</DELETED>
<DELETED> ``(H) establish a business continuity plan
to ensure functionality in cases of disruption;
and</DELETED>
<DELETED> ``(I) establish policies and procedures to
resolve complaints.</DELETED>
<DELETED> ``(2) Rulemaking with respect to definitions.--
</DELETED>
<DELETED> ``(A) In general.--For purposes of this
section, the Commission may, by rule, further define
the terms `adequate supervision' and `appropriate
regulation' as necessary and appropriate for the
protection of customers, and consistent with the
purposes of this Act.</DELETED>
<DELETED> ``(B) Existing digital asset custodians.--
A trust company operating as a digital asset custodian
before the effective date of a rulemaking under
subparagraph (A) is deemed subject to adequate
supervision and appropriate regulation if--</DELETED>
<DELETED> ``(i) the trust company is
expressly permitted by a State bank supervisor
to engage in the custody and safekeeping of
digital assets;</DELETED>
<DELETED> ``(ii) the State bank supervisor
has established licensing, examination, and
supervisory processes that require the trust
company to, at a minimum, meet the conditions
described in subparagraphs (A) through (I) of
paragraph (1); and</DELETED>
<DELETED> ``(iii) the trust company is in
good standing with its State bank
supervisor.</DELETED>
<DELETED> ``(C) Transition period for certain
custodians.--In implementing the rulemaking under
subparagraph (A), the Commission shall provide a
transition period of not less than 2 years for any
trust company that is deemed subject to adequate
supervision and appropriate regulation under
subparagraph (B) on the effective date of the
rulemaking.</DELETED>
<DELETED> ``(e) Authority to Temporarily Suspend Standards.--The
Commission may, by rule or order, temporarily suspend, in whole or in
part, any requirement imposed under, or any standard referred to in,
this section, or any requirement to utilize a qualified digital asset
custodian, if the Commission determines that the suspension would beconsistent with the public interest and the purposes of this
Act.''.</DELETED>
<DELETED>SEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY
BROKERS AND DEALERS.</DELETED>
<DELETED> The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 4t the following:</DELETED>
<DELETED>``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY
BROKERS AND DEALERS.</DELETED>
<DELETED> ``(a) Registration.--</DELETED>
<DELETED> ``(1) Requirement.--It shall be unlawful for any
person to act as a digital commodity broker or digital
commodity dealer unless the person is registered as such with
the Commission.</DELETED>
<DELETED> ``(2) Additional registration.--</DELETED>
<DELETED> ``(A) Rules.--In order to foster the
development of fair and orderly markets, protect
customers, and promote responsible innovation, the
Commission--</DELETED>
<DELETED> ``(i) shall prescribe rules to
exempt an entity registered with the Commission
under more than 1 section of this Act from
duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this
Act;</DELETED>
<DELETED> ``(ii) shall prescribe rules to
address conflicts of interests and the
activities of the entity; and</DELETED>
<DELETED> ``(iii) may after an analysis of
the risks and benefits, prescribe rules to
provide for portfolio margining.</DELETED>
<DELETED> ``(B) With membership in a registered
futures association.--Any person required to be
registered as a digital commodity broker or digital
commodity dealer under this section shall become and
remain a member of a registered futures
association.</DELETED>
<DELETED> ``(b) Requirements.--</DELETED>
<DELETED> ``(1) In general.--A person shall register as a
digital commodity broker or digital commodity dealer by filing
a registration application with the Commission.</DELETED>
<DELETED> ``(2) Contents.--</DELETED>
<DELETED> ``(A) In general.--The application shall
be made in such form and manner as is prescribed by the
Commission, and shall contain such information as the
Commission considers necessary concerning the business
in which the applicant is or will be engaged.</DELETED>
<DELETED> ``(B) Continual reporting.--A person that
is registered as a digital commodity broker or digital
commodity dealer shall continue to submit to the
Commission reports that contain such information
pertaining to the business of the person as the
Commission may require.</DELETED>
<DELETED> ``(3) Statutory disqualification.--Except to the
extent otherwise specifically provided by rule, regulation, or
order, it shall be unlawful for a digital commodity broker or
digital commodity dealer to permit any person who is associated
with a digital commodity broker or a digital commodity dealer
and who is subject to a statutory disqualification to effect or
be involved in effecting a contract of sale of a digital
commodity on behalf of the digital commodity broker or the
digital commodity dealer, respectively, if the digital
commodity broker or digital commodity dealer, respectively,
knew, or in the exercise of reasonable care should have known,
of the statutory disqualification.</DELETED>
<DELETED> ``(c) Rulemaking.--</DELETED>
<DELETED> ``(1) In general.--The Commission shall prescribe
such rules applicable to registered digital commodity brokers
and registered digital commodity dealers as are appropriate to
carry out this section, including rules in the public interest
that limit the activities of digital commodity brokers and
digital commodity dealers.</DELETED>
<DELETED> ``(2) Financing agreements.--</DELETED>
<DELETED> ``(A) In general.--The Commission shall
prescribe rules and regulations applicable to digital
commodity brokers or digital commodity dealers which
shall set forth minimum requirements related to
disclosure, recordkeeping, margin financing
arrangements, rehypothecation, capital, reporting,
business conduct, documentation, and supervision of
employees and agents, in connection with--</DELETED>
<DELETED> ``(i) an agreement described in
section 2(c)(2)(D)(iv); or</DELETED>
<DELETED> ``(ii) any other margined,
leveraged, or financing arrangement for the
purchase or sale of a digital commodity with an
eligible contract participant.</DELETED>
<DELETED> ``(B) Specific authority.--Except as
prohibited in section 2(c)(2)(G)(iii), the Commission
may also make, promulgate, and enforce such rules and
regulations as, in the judgment of the Commission, are
reasonably necessary to effectuate any of the
provisions of, or to accomplish any of the purposes of,
this Act in connection with an agreement referred to in
subparagraph (A) of this paragraph.</DELETED>
<DELETED> ``(d) Capital Requirements.--</DELETED>
<DELETED> ``(1) In general.--Each digital commodity broker
and digital commodity dealer shall meet such minimum capital
requirements as the Commission may prescribe to address the
risks associated with digital commodity trading and to ensure
that the digital commodity broker or digital commodity dealer,
respectively, is able, at all times, to--</DELETED>
<DELETED> ``(A) meet, and continue to meet the
obligations of such a registrant; and</DELETED>
<DELETED> ``(B) fulfill obligations to customers or
counterparties for any margined, leveraged, or financed
transactions.</DELETED>
<DELETED> ``(2) Futures commission merchants and other
dealers.--Each futures commission merchant, introducing broker,
digital commodity broker, digital commodity dealer, broker, and
dealer shall maintain sufficient capital to comply with the
stricter of any applicable capital requirements to which the
futures commission merchant, introducing broker, digital
commodity broker, digital commodity dealer, broker, or dealer,
respectively, is subject under this Act or the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).</DELETED>
<DELETED> ``(e) Reporting and Recordkeeping.--Each digital commodity
broker and digital commodity dealer--</DELETED>
<DELETED> ``(1) shall make such reports as are required by
the Commission by rule or regulation regarding the
transactions, positions, and financial condition of the digital
commodity broker or digital commodity dealer,
respectively;</DELETED>
<DELETED> ``(2) shall keep books and records in such form
and manner and for such period as may be prescribed by the
Commission by rule or regulation; and</DELETED>
<DELETED> ``(3) shall keep the books and records open to
inspection and examination by any representative of the
Commission.</DELETED>
<DELETED> ``(f) Daily Trading Records.--</DELETED>
<DELETED> ``(1) In general.--Each digital commodity broker
and digital commodity dealer shall maintain daily trading
records of the transactions of the digital commodity broker or
digital commodity dealer, respectively, and all related records
(including related forward or derivatives transactions) and
recorded communications, including electronic mail, instant
messages, and recordings of telephone calls, for such period as
the Commission may require by rule or regulation.</DELETED>
<DELETED> ``(2) Information requirements.--The daily trading
records shall include such information as the Commission shall
require by rule or regulation.</DELETED>
<DELETED> ``(3) Counterparty records.--Each digital
commodity broker and digital commodity dealer shall maintain
daily trading records for each customer or counterparty in a
manner and form that is identifiable with each digital
commodity transaction.</DELETED>
<DELETED> ``(4) Audit trail.--Each digital commodity broker
and digital commodity dealer shall maintain a complete audit
trail for conducting comprehensive and accurate trade
reconstructions.</DELETED>
<DELETED> ``(g) Business Conduct Standards.--</DELETED>
<DELETED> ``(1) In general.--Each digital commodity broker
and digital commodity dealer shall conform with such business
conduct standards as the Commission, by rule or regulation,
prescribes related to--</DELETED>
<DELETED> ``(A) fraud, manipulation, and other
abusive practices involving spot or margined,
leveraged, or financed digital commodity transactions
(including transactions that are offered but not
entered into);</DELETED>
<DELETED> ``(B) diligent supervision of the business
of the registered digital commodity broker or digital
commodity dealer, respectively; and</DELETED>
<DELETED> ``(C) such other matters as the Commission
deems appropriate.</DELETED>
<DELETED> ``(2) Business conduct requirements.--The
Commission shall, by rule, prescribe business conduct
requirements which--</DELETED>
<DELETED> ``(A) require disclosure by a registered
digital commodity broker and registered digital
commodity dealer to any counterparty to the transaction
(other than an eligible contract participant) of--
</DELETED>
<DELETED> ``(i) information about the
material risks and characteristics of the
digital commodity; and</DELETED>
<DELETED> ``(ii) information about the
material risks and characteristics of thetransaction;</DELETED>
<DELETED> ``(B) establish a duty for such a digital
commodity broker and such a digital commodity dealer to
communicate in a fair and balanced manner based on
principles of fair dealing and good faith;</DELETED>
<DELETED> ``(C) establish standards governing
digital commodity broker and digital commodity dealer
marketing and advertising, including testimonials and
endorsements; and</DELETED>
<DELETED> ``(D) establish such other standards and
requirements as the Commission may determine are
appropriate for the protection of customers.</DELETED>
<DELETED> ``(3) Prohibition on fraudulent practices.--It
shall be unlawful for a digital commodity broker or digital
commodity dealer to--</DELETED>
<DELETED> ``(A) employ any device, scheme, or
artifice to defraud any customer or
counterparty;</DELETED>
<DELETED> ``(B) engage in any transaction, practice,
or course of business that operates as a fraud or
deceit on any customer or counterparty; or</DELETED>
<DELETED> ``(C) engage in any act, practice, or
course of business that is fraudulent, deceptive, or
manipulative.</DELETED>
<DELETED> ``(h) Duties.--</DELETED>
<DELETED> ``(1) Risk management procedures.--Each digital
commodity broker and digital commodity dealer shall establish
robust and professional risk management systems adequate for
managing the day-to-day business of the digital commodity
broker or digital commodity dealer, respectively.</DELETED>
<DELETED> ``(2) Disclosure of general information.--Each
digital commodity broker and digital commodity dealer shall
disclose to the Commission information concerning--</DELETED>
<DELETED> ``(A) the terms and conditions of the
transactions of the digital commodity broker or digital
commodity dealer, respectively;</DELETED>
<DELETED> ``(B) the trading operations, mechanisms,
and practices of the digital commodity broker or
digital commodity dealer, respectively;</DELETED>
<DELETED> ``(C) financial integrity protections
relating to the activities of the digital commodity
broker or digital commodity dealer, respectively;
and</DELETED>
<DELETED> ``(D) other information relevant to
trading in digital commodities by the digital commodity
broker or digital commodity dealer,
respectively.</DELETED>
<DELETED> ``(3) Ability to obtain information.--Each digital
commodity broker and digital commodity dealer shall--</DELETED>
<DELETED> ``(A) establish and enforce internal
systems and procedures to obtain any necessary
information to perform any of the functions described
in this section; and</DELETED>
<DELETED> ``(B) provide the information to the
Commission, on request.</DELETED>
<DELETED> ``(4) Conflicts of interest.--Each digital
commodity broker and digital commodity dealer shall establish,
maintain, and enforce written policies and procedures
reasonably designed, taking into consideration the nature of
the business of the person, to mitigate any conflicts of
interest in transactions or arrangements with
affiliates.</DELETED>
<DELETED> ``(5) Antitrust considerations.--Unless necessary
or appropriate to achieve the purposes of this Act, a digital
commodity broker or digital commodity dealer shall not--
</DELETED>
<DELETED> ``(A) adopt any process or take any action
that results in any unreasonable restraint of trade;
or</DELETED>
<DELETED> ``(B) impose any material anticompetitive
burden on trading or clearing.</DELETED>
<DELETED> ``(i) Designation of Chief Compliance Officer.--</DELETED>
<DELETED> ``(1) In general.--Each digital commodity broker
and digital commodity dealer shall designate an individual to
serve as a chief compliance officer.</DELETED>
<DELETED> ``(2) Duties.--The chief compliance officer
shall--</DELETED>
<DELETED> ``(A) report directly to the board or to
the senior officer of the registered digital commodity
broker or registered digital commodity
dealer;</DELETED>
<DELETED> ``(B) review the compliance of the
registered digital commodity broker or registered
digital commodity dealer with respect to the registered
digital commodity broker and registered digital
commodity dealer requirements described in this
section;</DELETED>
<DELETED> ``(C) in consultation with the board of
directors, a body performing a function similar to the
board, or the senior officer of the organization,
resolve any conflicts of interest that may
arise;</DELETED>
<DELETED> ``(D) be responsible for administering
each policy and procedure that is required to be
established pursuant to this section;</DELETED>
<DELETED> ``(E) ensure compliance with this Act
(including regulations), including each rule prescribed
by the Commission under this section;</DELETED>
<DELETED> ``(F) establish procedures for the
remediation of noncompliance issues identified by the
chief compliance officer through any--</DELETED>
<DELETED> ``(i) compliance office
review;</DELETED>
<DELETED> ``(ii) look-back;</DELETED>
<DELETED> ``(iii) internal or external audit
finding;</DELETED>
<DELETED> ``(iv) self-reported error;
or</DELETED>
<DELETED> ``(v) validated complaint;
and</DELETED>
<DELETED> ``(G) establish and follow appropriate
procedures for the handling, management response,
remediation, retesting, and closing of noncompliance
issues.</DELETED>
<DELETED> ``(3) Annual reports.--</DELETED>
<DELETED> ``(A) In general.--In accordance with
rules prescribed by the Commission, the chief
compliance officer shall annually prepare and sign a
report that contains a description of--</DELETED>
<DELETED> ``(i) the compliance of the
registered digital commodity broker or
registered digital commodity dealer with this
Act (including regulations); and</DELETED>
<DELETED> ``(ii) each policy and procedure
of the registered digital commodity broker or
registered digital commodity dealer followed by
the chief compliance officer (including the
code of ethics and conflict of interest
policies).</DELETED>
<DELETED> ``(B) Requirements.--The chief compliance
officer shall ensure that a compliance report under
subparagraph (A)--</DELETED>
<DELETED> ``(i) accompanies each appropriate
financial report of the registered digital
commodity broker or registered digital
commodity dealer that is required to be
furnished to the Commission pursuant to this
section; and</DELETED>
<DELETED> ``(ii) includes a certification
that, under penalty of law, the compliance
report is accurate and complete.</DELETED>
<DELETED> ``(j) Segregation of Digital Commodities.--</DELETED>
<DELETED> ``(1) Holding of customer assets.--</DELETED>
<DELETED> ``(A) In general.--Each digital commodity
broker and digital commodity dealer shall hold customer
money, assets, and property in a manner to minimize the
risk of loss to the customer or unreasonable delay in
customer access to the money, assets, and property of
the customer.</DELETED>
<DELETED> ``(B) Qualified digital asset custodian.--
Each digital commodity broker and digital commodity
dealer shall hold in a qualified digital asset
custodian each unit of a digital asset that is--
</DELETED>
<DELETED> ``(i) the property of a customer
or counterparty of the digital commodity broker
or digital commodity dealer,
respectively;</DELETED>
<DELETED> ``(ii) required to be held by the
digital commodity broker or digital commodity
dealer under subsection (e); or</DELETED>
<DELETED> ``(iii) otherwise so required by
the Commission to reasonably protect customers
or promote the public interest.</DELETED>
<DELETED> ``(2) Segregation of funds.--</DELETED>
<DELETED> ``(A) In general.--Each digital commodity
broker and digital commodity dealer shall treat and
deal with all money, assets, and property that is
received by the digital commodity broker or digital
commodity dealer, or accrues to a customer as the
result of trading in digital commodities, as belonging
to the customer.</DELETED>
<DELETED> ``(B) Commingling prohibited.--</DELETED>
<DELETED> ``(i) In general.--Except as
provided in clause (ii), each digital commodity
broker and digital commodity dealer shall
separately account for money, assets, and
property of a digital commodity customer, and
shall not commingle any such money, assets, or
property with the funds of the digital
commodity broker or digital commodity dealer,respectively, or use any such money, assets, or
property to margin, secure, or guarantee any
trades or accounts of any customer or person
other than the person for whom the money,
assets, or property are held.</DELETED>
<DELETED> ``(ii) Exceptions.--</DELETED>
<DELETED> ``(I) Use of funds.--
</DELETED>
<DELETED> ``(aa) In
general.--A digital commodity
broker or digital commodity
dealer may, for convenience,
commingle and deposit in the
same account or accounts with
any bank, trust company,
derivatives clearing
organization, or qualified
digital asset custodian money,
assets, and property of
customers.</DELETED>
<DELETED> ``(bb)
Withdrawal.--The share of the
money, assets, and property
described in item (aa) as in
the normal course of business
shall be necessary to margin,
guarantee, secure, transfer,
adjust, or settle a contract of
sale of a digital commodity
with a registered entity may be
withdrawn and applied to such
purposes, including the payment
of commissions, brokerage,
interest, taxes, storage, and
other charges, lawfully
accruing in connection with the
contract.</DELETED>
<DELETED> ``(II) Commission
action.--In accordance with such terms
and conditions as the Commission may
prescribe by rule, regulation, or
order, any money, assets, or property
of the customers of a digital commodity
broker or digital commodity dealer may
be commingled and deposited in customer
accounts with any other money, assets,
or property received by the digital
commodity broker or digital commodity
dealer, respectively, and required by
the Commission to be separately
accounted for and treated and dealt
with as belonging to the customer of
the digital commodity broker or digital
commodity dealer,
respectively.</DELETED>
<DELETED> ``(3) Permitted investments.--Money described in
paragraph (2) may be invested in obligations of the United
States, in general obligations of any State or of any political
subdivision of a State, in obligations fully guaranteed as to
principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation
allow.</DELETED>
<DELETED> ``(4) Customer protection during bankruptcy.--
</DELETED>
<DELETED> ``(A) Customer property.--All money,
assets, or property described in paragraph (2) shall be
considered customer property for purposes of section
761 of title 11, United States Code.</DELETED>
<DELETED> ``(B) Transactions.--A transaction
involving a unit of a digital commodity occurring with
a digital commodity broker or digital commodity dealer
shall be considered a contract for the purchase or sale
of a commodity for future delivery, on or subject to
the rules of, a contract market or board of trade for
purposes of the definition of a `commodity contract' in
section 761 of title 11, United States Code.</DELETED>
<DELETED> ``(C) Brokers and dealers.--A digital
commodity broker and a digital commodity dealer shall
be considered a futures commission merchant for
purposes of section 761 of title 11, United States
Code.</DELETED>
<DELETED> ``(D) Assets removed from segregation.--
Assets removed from segregation due to a customer
election under paragraph (6) shall not be considered
customer property for purposes of section 761 of title
11, United States Code.</DELETED>
<DELETED> ``(5) Misuse of customer property.--</DELETED>
<DELETED> ``(A) In general.--It shall be unlawful--
</DELETED>
<DELETED> ``(i) for any digital commodity
broker or digital commodity dealer that has
received any customer money, assets, or
property for custody to dispose of, or use any
such money, assets, or property as belonging to
the digital commodity broker or digital
commodity dealer, respectively, or any person
other than a customer of the digital commodity
broker or digital commodity dealer,
respectively; or</DELETED>
<DELETED> ``(ii) for any other person,
including any depository, digital commodity
exchange, other digital commodity broker, other
digital commodity dealer, or digital commodity
custodian that has received any customer money,
assets, or property for deposit, to hold,
dispose of, or use any such money, assets, or
property, as belonging to the depositing
digital commodity broker or digital commodity
dealer or any person other than the customers
of the digital commodity broker or digital
commodity dealer, respectively.</DELETED>
<DELETED> ``(B) Use further defined.--For purposes
of this section, `use' of a digital commodity includes
utilizing any unit of a digital asset to participate in
a blockchain service defined in paragraph (6) or a
decentralized governance system associated with the
digital commodity or the blockchain system to which the
digital commodity relates in any manner other than that
expressly directed by the customer from whom the unit
of a digital commodity was received.</DELETED>
<DELETED> ``(6) Participation in blockchain services.--
</DELETED>
<DELETED> ``(A) Use of funds.--A digital commodity
broker or digital commodity dealer (or a designee of a
digital commodity broker or a digital commodity dealer)
may use a unit of a digital commodity belonging to a
customer to provide a blockchain service for a
blockchain system to which the unit of the digital
commodity relates if--</DELETED>
<DELETED> ``(i) the customer expressly
permits the use, in writing to the digital
commodity broker or digital commodity dealer,
as the case may be; and</DELETED>
<DELETED> ``(ii) the digital commodity
broker or the digital commodity dealer, as the
case may be, complies with subparagraph
(B).</DELETED>
<DELETED> ``(B) Limitations.--</DELETED>
<DELETED> ``(i) In general.--The Commission
shall, by rule, establish notice and disclosure
requirements, and may, by rule, establish any
other limitations and rules related to a
permission provided under subparagraph (A) that
are reasonably necessary to protect customers,
including eligible contract participants, non-
eligible contract participants, or any other
class of customers.</DELETED>
<DELETED> ``(ii) Customer choice.--A digital
commodity broker or digital commodity dealer
may not require a customer to provide the
permission referred to in subparagraph (A) as a
condition of doing business with the broker or
dealer.</DELETED>
<DELETED> ``(C) Requirements.--The Commission may,
by rule, waive or modify the requirements of paragraph
(2) or subsection (h), to facilitate the use of a unit
of a digital commodity belonging to a customer to
provide a blockchain service.</DELETED>
<DELETED> ``(D) Blockchain service defined.--In this
paragraph, the term `blockchain service' means any
activity relating to validating transactions on a
blockchain system, providing security for a blockchain
system, or other similar activity, including protocol
consensus participation activities described in section
2(a)(30)(B) of the Securities Act of 1933, required for
the ongoing operation of a blockchain system.</DELETED>
<DELETED> ``(k) Federal Preemption.--Notwithstanding any other
provision of law, the Commission shall have exclusive jurisdiction over
any digital commodity broker or digital commodity dealer registered
under this section with respect to activities subject to this
Act.</DELETED>
<DELETED> ``(l) Exemptions.--In order to promote responsible
innovation and fair competition, or protect customers, the Commission
may (on its own initiative or on application of the digital commodity
broker or digital commodity dealer) exempt, unconditionally or on
stated terms or conditions, or for stated periods, and retroactively or
prospectively, or both, a digital commodity broker or digital commodity
dealer from the requirements of this Act, if the Commission determines
that--</DELETED>
<DELETED> ``(1)(A) the exemption would be consistent with
the public interest and the purposes of this Act; and</DELETED><DELETED> ``(B) the exemption will not have a material
adverse effect on the ability of the Commission to discharge
regulatory duties under this Act; or</DELETED>
<DELETED> ``(2) the digital commodity broker or digital
commodity dealer is subject to comparable, comprehensive
supervision and regulation by the appropriate government
authorities in the home country of the digital commodity broker
or digital commodity dealer, respectively.''.</DELETED>
<DELETED>SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.</DELETED>
<DELETED> (a) In General.--Section 4k of the Commodity Exchange Act
(7 U.S.C. 6k) is amended--</DELETED>
<DELETED> (1) by redesignating subsections (4) through (6)
as subsections (5) through (7), respectively;</DELETED>
<DELETED> (2) by inserting after subsection (3) the
following:</DELETED>
<DELETED> ``(4) It shall be unlawful for any person to act as an
associated person of a digital commodity broker or an associated person
of a digital commodity dealer unless the person is registered with the
Commission under this Act and such registration shall not have expired,
been suspended (and the period of suspension has not expired), or been
revoked. It shall be unlawful for a digital commodity broker or a
digital commodity dealer to permit such a person to become or remain
associated with the digital commodity broker or digital commodity
dealer if the digital commodity broker or digital commodity dealer knew
or should have known that the person was not so registered or that the
registration had expired, been suspended (and the period of suspension
has not expired), or been revoked.''; and</DELETED>
<DELETED> (3) in subsection (5) (as so redesignated), by
striking ``or of a commodity trading advisor'' and inserting
``of a commodity trading advisor, of a digital commodity
broker, or of a digital commodity dealer''.</DELETED>
<DELETED> (b) Conforming Amendments.--The Commodity Exchange Act (7
U.S.C. 1a et seq.) is amended by striking ``section 4k(6)'' each place
it appears and inserting ``section 4k(7)''.</DELETED>
<DELETED>SEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND
COMMODITY TRADING ADVISORS.</DELETED>
<DELETED> (a) In General.--Section 4m(3) of the Commodity Exchange
Act (7 U.S.C. 6m(3)) is amended--</DELETED>
<DELETED> (1) in subparagraph (A)--</DELETED>
<DELETED> (A) by striking ``any commodity trading
advisor'' and inserting ``a commodity pool operator or
commodity trading advisor''; and</DELETED>
<DELETED> (B) by striking ``acting as a commodity
trading advisor'' and inserting ``acting as a commodity
pool operator or commodity trading advisor'';
and</DELETED>
<DELETED> (2) in subparagraph (C), by inserting ``digital
commodities,'' after ``physical commodities,''.</DELETED>
<DELETED> (b) Exemptive Authority.--Section 4m of such Act (7 U.S.C.
6m) is amended by adding at the end the following:</DELETED>
<DELETED> ``(4) Exemptive Authority.--The Commission shall
promulgate rules to provide appropriate exemptions for commodity pool
operators and commodity trading advisors, to provide relief from
duplicative, conflicting, or unduly burdensome requirements or to
promote responsible innovation, to the extent the exemptions foster the
development of fair and orderly cash or spot digital commodity markets,
are necessary or appropriate in the public interest, and are consistent
with the protection of customers.''.</DELETED>
<DELETED>SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE
ACTIVITIES.</DELETED>
<DELETED> The Commodity Exchange Act (7 U.S.C. 1 et seq.), as
amended by the preceding provisions of this Act, is amended by
inserting after section 4u the following:</DELETED>
<DELETED>``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO
THIS ACT.</DELETED>
<DELETED> ``(a) In General.--Notwithstanding any other provision of
this Act, a person shall not be subject to this Act and the regulations
promulgated under this Act based on the person directly or indirectly
engaging in any of the following activities, whether singly or in
combination, in relation to the operation of a blockchain system or in
relation to decentralized finance trading protocol:</DELETED>
<DELETED> ``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.</DELETED>
<DELETED> ``(2) Providing computational work, operating a
node or oracle service, or procuring, offering, or utilizing
network bandwidth, or other similar incidental
services.</DELETED>
<DELETED> ``(3) Providing a user-interface that enables a
user to read, and access data about a blockchain
system.</DELETED>
<DELETED> ``(4) Developing, publishing, or otherwise
distributing a blockchain system or a decentralized finance
messaging system.</DELETED>
<DELETED> ``(5) Constituting, administering, or maintaining
a decentralized finance messaging system or decentralized
finance trading protocol, or operating or participating in a
liquidity pool with respect thereto, for the purpose of
executing a spot transaction for the purchase or sale of a
digital commodity.</DELETED>
<DELETED> ``(6) Developing, publishing, constituting,
administering, maintaining, or otherwise distributing software
or systems that create or deploy hardware or software,
including wallets or other systems, facilitating an individual
user's own personal ability to keep, safeguard, or custody the
user's digital assets or related private keys.</DELETED>
<DELETED> ``(b) Exceptions.--Subsection (a) shall not be interpreted
to apply to the anti-fraud, anti-manipulation, or false reporting
enforcement authorities of the Commission.''.</DELETED>
<DELETED>SEC. 410. RESOURCES FOR IMPLEMENTATION AND
ENFORCEMENT.</DELETED>
<DELETED> (a) Collection of Fees.--</DELETED>
<DELETED> (1) In general.--The Commodity Futures Trading
Commission (in this section referred to as the ``Commission'')
shall charge and collect a fee from each person in provisional
status registered with the Commission pursuant to section 106,
on--</DELETED>
<DELETED> (A) the filing of the initial application
for registration; and</DELETED>
<DELETED> (B) an annual basis thereafter for
maintaining provisional status.</DELETED>
<DELETED> (2) Amount.--The fees authorized under paragraph
(1) may be collected and available for obligation only in the
amounts provided in advance in an appropriation Act.</DELETED>
<DELETED> (3) Authority to adjust fees.--Notwithstanding the
preceding provisions of this subsection, to promote fair
competition or innovation, the Commission, in its sole
discretion, may reduce or eliminate any fee otherwise required
to be paid by a small or medium filer under this
subsection.</DELETED>
<DELETED> (b) Fee Schedule.--</DELETED>
<DELETED> (1) In general.--The Commission shall publish in
the Federal Register a schedule of the fees to be charged and
collected under this section.</DELETED>
<DELETED> (2) Content.--The fee schedule for a fiscal year
shall include a written analysis of the estimate of the
Commission of the total costs of carrying out the functions of
the Commission under this Act during the fiscal year.</DELETED>
<DELETED> (3) Submission to congress.--Before publishing the
fee schedule for a fiscal year, the Commission shall submit a
copy of the fee schedule to the Committees on Agriculture and
on Appropriations of the House of Representatives and the
Committees on Agriculture, Nutrition, and Forestry and on
Appropriations of the Senate.</DELETED>
<DELETED> (4) Timing.--</DELETED>
<DELETED> (A) 1st fiscal year.--The Commission shall
publish the fee schedule for the fiscal year in which
this Act is enacted, within 30 days after the date of
the enactment of this Act.</DELETED>
<DELETED> (B) Subsequent fiscal years.--The
Commission shall publish the fee schedule for each
subsequent fiscal year, not less than 90 days before
the due date prescribed by the Commission for payment
of the annual fee for the fiscal year.</DELETED>
<DELETED> (c) Late Payment Penalty.--</DELETED>
<DELETED> (1) In general.--The Commission may impose a
penalty against a person that fails to pay an annual fee
charged under this section, within 30 days after the due date
prescribed by the Commission for payment of the fee.</DELETED>
<DELETED> (2) Amount.--The amount of the penalty shall be--
</DELETED>
<DELETED> (A) 5 percent of the amount of the fee
due, multiplied by</DELETED>
<DELETED> (B) the whole number of consecutive 30-day
periods that have elapsed since the due date.</DELETED>
<DELETED> (d) Reimbursement of Excess Fees.--To the extent that the
total amount of fees collected under this section during a fiscal year
that begins after the date of the enactment of this Act exceeds the
amount provided under subsection (a)(2) with respect to the fiscal
year, the Commission shall reimburse the excess amount to the persons
who have timely paid their annual fees, on a pro-rata basis that
excludes penalties, and shall do so within 60 days after the end of the
fiscal year.</DELETED>
<DELETED> (e) Deposit of Fees Into the Treasury.--All amounts
collected under this section shall be credited to the currently
applicable appropriation, account, or fund of the Commission as
discretionary offsetting collections, and shall be available for the
purposes authorized in subsection (f) only to the extent and in the
amounts provided in advance in appropriations Acts.</DELETED>
<DELETED> (f) Authorization of Appropriations.--In addition to
amounts otherwise authorized to be appropriated to the Commission,there is authorized to be appropriated to the Commission amounts
collected under this section to cover the costs of carrying out the
functions of the Commission under this Act.</DELETED>
<DELETED> (g) Expedited Hiring Authority.--</DELETED>
<DELETED> (1) Appointment authority.--The Chairman, pursuant
to section 6(a), may appoint individuals to a position
described in paragraph (2) of this subsection--</DELETED>
<DELETED> (A) in accordance with the statutes,
rules, and regulations governing appointments to
positions in the excepted service (as defined in
section 2103 of title 5, United States Code);
and</DELETED>
<DELETED> (B) without regard to any statute, rule,
or regulation governing appointments to positions in
the competitive service (as defined in section 2102 of
such title).</DELETED>
<DELETED> (2) Position described.--A position referred to in
subparagraph (1) is a position at the Commission that--
</DELETED>
<DELETED> (A) is in the competitive service (as
defined in section 2102 of such title); and</DELETED>
<DELETED> (B) requires specialized knowledge of
digital commodities markets, financial and capital
market formation or regulation, financial market
structures or surveillance, data collection or
analysis, or information technology, cybersecurity, or
system safeguards.</DELETED>
<DELETED> (3) Rule of construction.--The appointment of a
candidate to a position under this subsection shall not be
considered to cause the position to be converted from the
competitive service to the excepted service.</DELETED>
<DELETED> (h) Sunset.--The authorities provided by this section
shall expire at the end of the 4th fiscal year that begins after the
date of the enactment of this Act.</DELETED>
<DELETED>SEC. 411. REQUIREMENTS RELATED TO CONTROL PERSONS.</DELETED>
<DELETED> The Commodity Exchange Act (7 U.S.C. 1 et seq.), as
amended the preceding provisions of this Act, is amended by inserting
after section 4v the following:</DELETED>
<DELETED>``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL
PERSONS.</DELETED>
<DELETED> ``(a) Limitation.--It shall be unlawful for a blockchain
control person with respect to a blockchain system certified as a
mature blockchain system in accordance with section 42 of the
Securities Exchange Act of 1934 to sell a unit of a digital commodity
related to the blockchain system unless the person files notice with
the Commission, in a form and manner determined by the Commission, that
the person has or intends to obtain an authority described in
subsection (b)(1) with respect to the blockchain system, and complies
with rules adopted by the Commission that require--</DELETED>
<DELETED> ``(1) disclosure of information to the Commission
and the public about the material activities, as determined by
the Commission, of the blockchain control person; and</DELETED>
<DELETED> ``(2)(A) the use of a digital commodity broker to
effect the sale; or</DELETED>
<DELETED> ``(B) such other sales restrictions applicable to
the blockchain control person, or any affiliated blockchain
control person, to prevent manipulation and distortion of the
value of the digital commodity and promote further maturity of
the blockchain system to which the digital commodity
relates.</DELETED>
<DELETED> ``(b) Definitions.--In this section:</DELETED>
<DELETED> ``(1) Blockchain control person.--The term
`blockchain control person' means, with respect to a blockchain
system, any person or group of persons under common control,
other than a decentralized governance system, who--</DELETED>
<DELETED> ``(A) has the unilateral authority,
directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise,
to control or materially alter the functionality,
operation, or rules of consensus or agreement of the
blockchain system or its related digital commodity;
or</DELETED>
<DELETED> ``(B) has the unilateral authority to
direct the voting, in the aggregate, of 20 percent or
more of the outstanding voting power of the blockchain
system by means of a related digital commodity, nodes
or validators, a decentralized governance system, or
otherwise, in a blockchain system which can be altered
by a voting system.</DELETED>
<DELETED> ``(2) Affiliated blockchain control person.--The
term `affiliated blockchain control person' means any person
directly or indirectly controlling, controlled by, or under
common control with a blockchain control person, as the
Commission by rule or regulation, may determine will effectuate
the purposes of this section.''.</DELETED>
<DELETED>SEC. 412. OTHER TRADABLE ASSETS.</DELETED>
<DELETED> The Commodity Exchange Act (7 U.S.C. 1 et seq.), as
amended by the preceding provisions of this Act, is amended--</DELETED>
<DELETED> (1) by inserting after section 4w the
following:</DELETED>
<DELETED>``SEC. 4X. TRADING REQUIREMENTS FOR OTHER TRADABLE
ASSETS.</DELETED>
<DELETED> ``(a) Limitation.--A contract of sale of a tradable asset
shall not be offered, solicited, traded, facilitated, executed,
cleared, reported, or otherwise dealt in, on or subject to the rules of
a registered entity, or by any other entity registered with the
Commission, except in accordance with subsection (b).</DELETED>
<DELETED> ``(b) Requirements.--</DELETED>
<DELETED> ``(1) Treatment of tradable assets.--A contract of
sale of a tradable asset that is offered, solicited, traded,
facilitated, executed, cleared, reported, or otherwise dealt in
on or subject to the rules of a registered entity, or by any
other entity registered with the Commission, shall be treated
as a digital commodity for purposes of this Act.</DELETED>
<DELETED> ``(2) Additional rulemaking authority.--In
addition to the other requirements of this Act, the Commission
may, by rule or regulation, impose additional obligations on
any person registered under this Act offering, soliciting,
trading, facilitating, executing, clearing, reporting, or
otherwise dealing in a contract of sale of a tradable asset, or
class thereof, pursuant to paragraph (1) as are necessary for
the protection of customers, the promotion of innovation, and
the maintenance of fair, orderly, and efficient markets,
including additional obligations related to--</DELETED>
<DELETED> ``(A) disclosure;</DELETED>
<DELETED> ``(B) recordkeeping;</DELETED>
<DELETED> ``(C) capital;</DELETED>
<DELETED> ``(D) reporting;</DELETED>
<DELETED> ``(E) business conduct;</DELETED>
<DELETED> ``(F) documentation;</DELETED>
<DELETED> ``(G) supervision of employees;
and</DELETED>
<DELETED> ``(H) segregation.</DELETED>
<DELETED> ``(c) Tradable Asset Defined.--In this section, the term
`tradable asset' means a digital asset other than--</DELETED>
<DELETED> ``(1) a digital commodity that is treated as such
other than by reason of subsection (b)(1) of this section;
or</DELETED>
<DELETED> ``(2) a digital asset excluded from the definition
of digital commodity pursuant to subclause (I) through (VII) of
section 1a(16)(F)(iii).''; and</DELETED>
<DELETED> (2) by inserting after section 6d the
following:</DELETED>
<DELETED>``SEC. 6E. PROHIBITION ON TRADING CERTAIN DIGITAL
ASSETS.</DELETED>
<DELETED> ``(a) In General.--A contract of sale of a digital
commodity or tradable asset (as defined in section 4x) shall not be
offered, solicited, traded, facilitated, executed, cleared, reported,
or otherwise dealt in on or subject to the rules of a registered
entity, or by any other entity registered with the Commission, if the
primary purpose of the digital commodity or tradable asset is to be
used to--</DELETED>
<DELETED> ``(1) commit fraud or market
manipulation;</DELETED>
<DELETED> ``(2) further a scheme found in a final action by
a court of competent jurisdiction to be in violation of
campaign finance or government ethics laws; or</DELETED>
<DELETED> ``(3) engage in any other conduct that would
result in abusive practices or be disruptive to market
integrity.</DELETED>
<DELETED> ``(b) Guidance on Fraudulent, Manipulative, or Disruptive
Tradable Assets.--The Commission may, after public notice and comment,
issue guidance establishing criteria for determining if the primary
purpose of a digital commodity or tradable asset (as so defined) is to
be used to commit fraud or market manipulation, or engage in any other
conduct that would result in abusive practices or be disruptive to
market integrity.''.</DELETED>
<DELETED>SEC. 413. CONFLICT OF INTEREST RULEMAKING.</DELETED>
<DELETED> Not later than 360 days after the date of the enactment
of this Act, the Commodity Futures Trading Commission shall issue rules
establishing requirements for the identification, mitigation, and
resolution of conflicts of interest among and across registered
entities (within the meaning of the Commodity Exchange Act) and persons
required to be registered with the Commission, including conflicts of
interest related to vertically integrated market structures and their
varying responsibilities.</DELETED>
<DELETED>SEC. 414. EFFECTIVE DATE.</DELETED><DELETED> Unless otherwise provided in this title, this title and
the amendments made by this title shall take effect 270 days after the
date of the enactment of this Act.</DELETED>
<DELETED>SEC. 415. SENSE OF CONGRESS.</DELETED>
<DELETED> It is the sense of Congress that nothing in this Act or
any amendment made by this Act should be interpreted to authorize any
entity to regulate any commodity, other than a digital commodity, on
any spot market.</DELETED>
<DELETED>TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS</DELETED>
<DELETED>SEC. 501. FINDINGS; SENSE OF CONGRESS.</DELETED>
<DELETED> (a) Findings.--Congress finds the following:</DELETED>
<DELETED> (1) Entrepreneurs and innovators are building and
deploying this next generation of the internet.</DELETED>
<DELETED> (2) Digital commodity networks represent a new way
for people to join together and cooperate with one another to
undertake certain activities.</DELETED>
<DELETED> (3) Digital commodities have the potential to be
the foundational building blocks of these systems, aligning the
economic incentive for individuals to cooperate with one
another to achieve a common purpose.</DELETED>
<DELETED> (4) The digital commodity ecosystem has the
potential to grow our economy and improve everyday lives of
Americans by facilitating collaboration through the use of
technology to manage activities, allocate resources, and
facilitate decision making.</DELETED>
<DELETED> (5) Blockchain systems and the digital commodities
they empower provide control, enhance transparency, reduce
transaction costs, and increase efficiency if proper
protections are put in place for investors, consumers, our
financial system, and our national security.</DELETED>
<DELETED> (6) Blockchain technology facilitates new types of
network participation which businesses in the United States may
utilize in innovative ways.</DELETED>
<DELETED> (7) Other digital commodity companies are setting
up their operations outside of the United States, where
countries are establishing frameworks to embrace the potential
of blockchain technology and digital commodities and provide
safeguards for consumers.</DELETED>
<DELETED> (8) Digital commodities, despite the purported
anonymity, provide law enforcement with an exceptional tracing
tool to identify illicit activity and bring criminals to
justice.</DELETED>
<DELETED> (9) The Financial Services Committee of the House
of Representatives has held multiple hearings highlighting
various risks that digital commodities can pose to the
financial markets, consumers, and investors that must be
addressed as we seek to harness the benefits of these
innovations.</DELETED>
<DELETED> (b) Sense of Congress.--It is the sense of Congress that--
</DELETED>
<DELETED> (1) the United States should seek to prioritize
understanding the potential opportunities of the next
generation of the internet;</DELETED>
<DELETED> (2) the United States should seek to foster
advances in technology that have robust evidence indicating
they can improve our financial system and create more fair and
equitable access to financial services for everyday Americans
while protecting our financial system, investors, and
consumers;</DELETED>
<DELETED> (3) the United States must support the responsible
development of digital commodities and the underlying
technology in the United States or risk the shifting of the
development of such assets and technology outside of the United
States, to less regulated countries;</DELETED>
<DELETED> (4) Congress should consult with public and
private sector stakeholders to understand how to enact a
functional framework tailored to the specific risks and unique
benefits of different digital commodity-related activities,
distributed ledger technology, distributed networks, and mature
blockchain systems;</DELETED>
<DELETED> (5) Congress should enact a functional framework
tailored to the specific risks of different digital commodity-
related activities and unique benefits of distributed ledger
technology, distributed networks, and mature blockchain
systems; and</DELETED>
<DELETED> (6) consumers and market participants will benefit
from a framework for digital commodities consistent with
longstanding investor protections in securities and commodities
markets, yet tailored to the unique benefits and risks of the
digital commodity ecosystem.</DELETED>
<DELETED>SEC. 502. STRATEGIC HUB FOR INNOVATION AND FINANCIAL
TECHNOLOGY.</DELETED>
<DELETED> Section 4 of the Securities Exchange Act of 1934 (15
U.S.C. 78d) is amended by adding at the end the following:</DELETED>
<DELETED> ``(k) Strategic Hub for Innovation and Financial
Technology.--</DELETED>
<DELETED> ``(1) Establishment.--Not later than 180 days
after the date of the enactment of this subsection, the
Securities and Exchange Commission shall establish a committee
to be known as the Strategic Hub for Innovation and Financial
Technology (referred to in this subsection as the `FinHub') to
support engagement on emerging technologies in the financial
sector.</DELETED>
<DELETED> ``(2) Members.--The composition of FinHub shall be
determined by the Commission, drawing from relevant divisions
as appropriate, including the Division of Trading and Markets,
Division of Corporate Finance, and Division of Investment
Management.</DELETED>
<DELETED> ``(3) Responsibilities.--FinHub shall--</DELETED>
<DELETED> ``(A) serve as a resource for the
Commission on emerging financial technology
advancements;</DELETED>
<DELETED> ``(B) engage with market participants
working on emerging financial technologies;
and</DELETED>
<DELETED> ``(C) facilitate communication between the
Commission and businesses working in emerging financial
technology fields with information on the Commission,
its rules, and regulations.</DELETED>
<DELETED> ``(4) Report to the commission.--</DELETED>
<DELETED> ``(A) In general.--Not later than October
31 of each year after 2025, FinHub shall provide an
annual summary of its engagement activities to the
Commission, which shall be included in the Commission's
annual report to Congress.</DELETED>
<DELETED> ``(B) Confidentiality.--Each report
submitted under this paragraph shall not contain
confidential information.''.</DELETED>
<DELETED>SEC. 503. CODIFICATION OF LABCFTC.</DELETED>
<DELETED> (a) In General.--Section 18 of the Commodity Exchange Act
(7 U.S.C. 22) is amended by adding at the end the following:</DELETED>
<DELETED> ``(c) LabCFTC.--</DELETED>
<DELETED> ``(1) Establishment.--There is established in the
Commission LabCFTC.</DELETED>
<DELETED> ``(2) Purpose.--The purposes of LabCFTC are to--
</DELETED>
<DELETED> ``(A) promote responsible financial
technology innovation and fair competition for the
benefit of the American public;</DELETED>
<DELETED> ``(B) serve as an information platform to
inform the Commission about new financial technology
innovation; and</DELETED>
<DELETED> ``(C) provide outreach to financial
technology innovators to discuss their innovations and
the regulatory framework established by this Act and
the regulations promulgated thereunder.</DELETED>
<DELETED> ``(3) Director.--LabCFTC shall have a Director,
who shall be appointed by the Commission and serve at the
pleasure of the Commission. Notwithstanding section 2(a)(6)(A),
the Director shall report directly to the Commission and
perform such functions and duties as the Commission may
prescribe.</DELETED>
<DELETED> ``(4) Duties.--LabCFTC shall--</DELETED>
<DELETED> ``(A) advise the Commission with respect
to rulemakings or other agency or staff action
regarding financial technology;</DELETED>
<DELETED> ``(B) provide internal education and
training to the Commission regarding financial
technology;</DELETED>
<DELETED> ``(C) advise the Commission regarding
financial technology that would bolster the
Commission's oversight functions;</DELETED>
<DELETED> ``(D) engage with academia, students, and
professionals on financial technology issues, ideas,
and technology relevant to activities under this
Act;</DELETED>
<DELETED> ``(E) provide persons working in emerging
technology fields with information on the Commission,
its rules and regulations, and the role of a registered
futures association; and</DELETED>
<DELETED> ``(F) encourage persons working in
emerging technology fields to engage with the
Commission and obtain feedback from the Commission on
potential regulatory issues.</DELETED>
<DELETED> ``(5) Report to congress.--</DELETED>
<DELETED> ``(A) In general.--Not later than October
31 of each year after 2025, LabCFTC shall submit to the
Committee on Agriculture of the House of
Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate a report on its
activities.</DELETED>
<DELETED> ``(B) Contents.--Each report requiredunder paragraph (1) shall include--</DELETED>
<DELETED> ``(i) the total number of persons
that met with LabCFTC;</DELETED>
<DELETED> ``(ii) a summary of general issues
discussed during meetings with the
person;</DELETED>
<DELETED> ``(iii) information on steps
LabCFTC has taken to improve Commission
services, including responsiveness to the
concerns of persons;</DELETED>
<DELETED> ``(iv) recommendations made to the
Commission with respect to the regulations,
guidance, and orders of the Commission and such
legislative actions as may be appropriate;
and</DELETED>
<DELETED> ``(v) any other information
determined appropriate by the Director of
LabCFTC.</DELETED>
<DELETED> ``(C) Confidentiality.--A report under
paragraph (A) shall abide by the confidentiality
requirements in section 8.</DELETED>
<DELETED> ``(6) Records and engagement.--The Commission
shall--</DELETED>
<DELETED> ``(A) maintain systems of records to track
engagements with the public through LabCFTC;</DELETED>
<DELETED> ``(B) store communications and materials
received in connection with any such engagement in
accordance with Commission policies and procedures on
data retention and confidentiality; and</DELETED>
<DELETED> ``(C) take reasonable steps to protect any
confidential or proprietary information received
through LabCFTC engagement.''.</DELETED>
<DELETED> (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act
(7 U.S.C. 2(a)(6)(A)) is amended--</DELETED>
<DELETED> (1) by striking ``paragraph and in'' and inserting
``paragraph,''; and</DELETED>
<DELETED> (2) by inserting ``and section 18(c)(3),'' before
``the executive''.</DELETED>
<DELETED> (c) Effective Date.--The Commodity Futures Trading
Commission shall implement the amendments made by this section
(including complying with section 18(c)(7) of the Commodity Exchange
Act) within 180 days after the date of the enactment of this
Act.</DELETED>
<DELETED>SEC. 504. STUDY ON DECENTRALIZED FINANCE.</DELETED>
<DELETED> (a) In General.--The Commodity Futures Trading Commission,
the Securities and Exchange Commission, and the Secretary of the
Treasury shall jointly carry out a study on decentralized finance that
analyzes--</DELETED>
<DELETED> (1) the nature, size, role, and use of
decentralized finance blockchain applications;</DELETED>
<DELETED> (2) the operation of blockchain applications that
comprise decentralized finance;</DELETED>
<DELETED> (3) the interoperability of blockchain
applications and other blockchain systems;</DELETED>
<DELETED> (4) the interoperability of blockchain
applications and software-based systems, including websites and
wallets;</DELETED>
<DELETED> (5) the decentralized governance systems through
which blockchain applications may be developed, published,
constituted, administered, maintained, or otherwise
distributed, including--</DELETED>
<DELETED> (A) whether the systems enhance or detract
from--</DELETED>
<DELETED> (i) the decentralization of the
decentralized finance; and</DELETED>
<DELETED> (ii) the inherent benefits and
risks of the decentralized governance system;
and</DELETED>
<DELETED> (B) any procedures, requirements, or best
practices that would mitigate the risks identified in
subparagraph (A)(ii);</DELETED>
<DELETED> (6) the benefits of decentralized finance,
including--</DELETED>
<DELETED> (A) operational resilience and
availability of blockchain systems;</DELETED>
<DELETED> (B) interoperability of blockchain
systems;</DELETED>
<DELETED> (C) market competition and
innovation;</DELETED>
<DELETED> (D) transaction efficiency;</DELETED>
<DELETED> (E) transparency and traceability of
transactions; and</DELETED>
<DELETED> (F) disintermediation;</DELETED>
<DELETED> (7) the risks of decentralized finance,
including--</DELETED>
<DELETED> (A) pseudonymity of users and
transactions;</DELETED>
<DELETED> (B) disintermediation; and</DELETED>
<DELETED> (C) cybersecurity
vulnerabilities;</DELETED>
<DELETED> (8) the extent to which decentralized finance has
integrated with the traditional financial markets and any
potential risks or improvements to the stability of the
markets;</DELETED>
<DELETED> (9) how the levels of illicit activity in
decentralized finance compare with the levels of illicit
activity in traditional financial markets;</DELETED>
<DELETED> (10) methods for addressing illicit activity in
decentralized finance and traditional markets that are tailored
to the unique attributes of each;</DELETED>
<DELETED> (11) how decentralized finance may increase the
accessibility of cross-border transactions; and</DELETED>
<DELETED> (12) the feasibility of embedding self-executing
compliance and risk controls into decentralized
finance.</DELETED>
<DELETED> (b) Consultation.--In carrying out the study required
under subsection (a), the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall consult with the Secretary of
the Treasury on the factors described under paragraphs (7) through (10)
of subsection (a).</DELETED>
<DELETED> (c) Report.--Not later than 1 year after the date of
enactment of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly submit to the relevant
congressional committees a report that includes the results of the
study required by subsection (a).</DELETED>
<DELETED> (d) GAO Study.--The Comptroller General of the United
States shall--</DELETED>
<DELETED> (1) carry out a study on decentralized finance
that analyzes the information described under paragraphs (1)
through (12) of subsection (a); and</DELETED>
<DELETED> (2) not later than 1 year after the date of
enactment of this Act, submit to the relevant congressional
committees a report that includes the results of the study
required by paragraph (1).</DELETED>
<DELETED> (e) Definitions.--In this section:</DELETED>
<DELETED> (1) Decentralized finance.--</DELETED>
<DELETED> (A) In general.--The term ``decentralized
finance'' means blockchain applications (including
decentralized finance trading protocols and related
decentralized finance messaging systems) that allow
users to engage in financial transactions in a self-
directed manner so that a third-party intermediary does
not effectuate the transactions or take custody of
digital commodities of a user during any part of the
transactions.</DELETED>
<DELETED> (B) Relationship to excluded activities.--
The term ``decentralized finance'' shall not be
interpreted to limit or exclude any activity from the
activities described in section 15I(a) of the
Securities Exchange Act of 1934 or section 4v(a) of the
Commodity Exchange Act.</DELETED>
<DELETED> (2) Relevant congressional committees.--The term
``relevant congressional committees'' means--</DELETED>
<DELETED> (A) the Committees on Financial Services
and Agriculture of the House of Representatives;
and</DELETED>
<DELETED> (B) the Committees on Banking, Housing,
and Urban Affairs and Agriculture, Nutrition, and
Forestry of the Senate.</DELETED>
<DELETED>SEC. 505. STUDY ON NON-FUNGIBLE TOKENS.</DELETED>
<DELETED> (a) In General.--The Comptroller General of the United
States shall carry out a study of non-fungible tokens that analyzes--
</DELETED>
<DELETED> (1) the nature, size, role, purpose, and use of
non-fungible tokens;</DELETED>
<DELETED> (2) the similarities and differences between non-
fungible tokens and other digital commodities, including
digital commodities and permitted payment stablecoins, and how
the markets for those digital commodities intersect with each
other;</DELETED>
<DELETED> (3) how non-fungible tokens are minted by issuers
and subsequently administered to purchasers;</DELETED>
<DELETED> (4) how non-fungible tokens are stored after being
purchased by a consumer;</DELETED>
<DELETED> (5) the interoperability of non-fungible tokens
between different blockchain systems;</DELETED>
<DELETED> (6) the scalability of different non-fungible
tokens marketplaces;</DELETED>
<DELETED> (7) the benefits of non-fungible tokens, including
verifiable digital ownership;</DELETED>
<DELETED> (8) the risks of non-fungible tokens, including--
</DELETED>
<DELETED> (A) intellectual property
rights;</DELETED>
<DELETED> (B) cybersecurity risks; and</DELETED>
<DELETED> (C) market risks;</DELETED>
<DELETED> (9) whether and how non-fungible tokens haveintegrated with traditional marketplaces, including those for
music, real estate, gaming, events, and travel;</DELETED>
<DELETED> (10) whether and how non-fungible tokens can be
used to facilitate commerce or other activities through the
representation of documents, identification, contracts,
licenses, and other commercial, government, or personal
records;</DELETED>
<DELETED> (11) any potential risks to traditional markets
from such integration; and</DELETED>
<DELETED> (12) the levels and types of illicit activity in
non-fungible tokens markets.</DELETED>
<DELETED> (b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General, shall make publicly
available a report that includes the results of the study required by
subsection (a).</DELETED>
<DELETED>SEC. 506. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST
DIGITAL COMMODITY HOLDERS.</DELETED>
<DELETED> (a) In General.--The Commodity Futures Trading Commission
with the Securities and Exchange Commission shall jointly conduct a
study to identify--</DELETED>
<DELETED> (1) the existing level of financial literacy among
retail digital commodity holders, including subgroups of
investors identified by the Commodity Futures Trading
Commission with the Securities and Exchange
Commission;</DELETED>
<DELETED> (2) methods to improve the timing, content, and
format of financial literacy materials regarding digital
commodities provided by the Commodity Futures Trading
Commission and the Securities and Exchange
Commission;</DELETED>
<DELETED> (3) methods to improve coordination between the
Securities and Exchange Commission and the Commodity Futures
Trading Commission with other agencies, including the Financial
Literacy and Education Commission as well as nonprofit
organizations and State and local jurisdictions, to better
disseminate financial literacy materials;</DELETED>
<DELETED> (4) the efficacy of current financial literacy
efforts with a focus on rural communities and communities with
majority minority populations;</DELETED>
<DELETED> (5) the most useful and understandable relevant
information, including clear disclosures, that retail digital
commodity holders need to make informed financial decisions
before engaging with or purchasing a digital commodity or
service that is typically sold to retail investors of digital
commodities;</DELETED>
<DELETED> (6) the most effective public-private partnerships
in providing financial literacy regarding digital commodities
to consumers;</DELETED>
<DELETED> (7) the most relevant metrics to measure
successful improvement of the financial literacy of an
individual after engaging with financial literacy efforts;
and</DELETED>
<DELETED> (8) in consultation with the Financial Literacy
and Education Commission, a strategy (including to the extent
practicable, measurable goals and objectives) to increase
financial literacy of investors regarding digital
commodities.</DELETED>
<DELETED> (b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly submit a written
report on the study required by subsection (a) to the Committees on
Financial Services and on Agriculture of the House of Representatives
and the Committees on Banking, Housing, and Urban Affairs and on
Agriculture, Nutrition, and Forestry of the Senate.</DELETED>
<DELETED>SEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE
IMPROVEMENTS.</DELETED>
<DELETED> (a) In General.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly conduct a
study to assess whether additional guidance or rules are necessary to
facilitate the development of tokenized securities and derivatives
products, and to the extent such guidance or rules would foster the
development of fair and orderly financial markets, be necessary or
appropriate in the public interest, and be consistent with the
protection of investors and customers.</DELETED>
<DELETED> (b) Report.--</DELETED>
<DELETED> (1) Time limit.--Not later than 1 year after the
date of enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly submit to the relevant congressional committees a
report that includes the results of the study required by
subsection (a).</DELETED>
<DELETED> (2) Relevant congressional committees defined.--In
this section, the term ``relevant congressional committees''
means--</DELETED>
<DELETED> (A) the Committees on Financial Services
and on Agriculture of the House of Representatives;
and</DELETED>
<DELETED> (B) the Committees on Banking, Housing,
and Urban Affairs and on Agriculture, Nutrition, and
Forestry of the Senate.</DELETED>
<DELETED>SEC. 508. STUDY ON BLOCKCHAIN IN PAYMENTS.</DELETED>
<DELETED> (a) Study Required.--The Secretary of the Treasury shall
conduct a study on the potential use of blockchain technology by the
domestic private sector to address--</DELETED>
<DELETED> (1) fraud in payments;</DELETED>
<DELETED> (2) transaction costs and transaction
times;</DELETED>
<DELETED> (3) automated payments; and</DELETED>
<DELETED> (4) efficiency in commercial
transactions.</DELETED>
<DELETED> (b) Report to Congress.--Not later than one year after the
date of enactment of this Act, the Secretary shall submit a report to
the Committee on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of the Senate that
summarizes the findings of the study required under subsection
(a).</DELETED>
<DELETED> (c) Rule of Construction.--Nothing in this section shall
be construed to mandate the use of blockchain technology by any public
or private entity.</DELETED>
<DELETED>SEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.</DELETED>
<DELETED> (a) In General.--One year after the date of the enactment
of this Act, the Secretary of the Treasury, in consultation with the
Securities and Exchange Commission and the Commodity Futures Trading
Commission, shall conduct a comprehensive review of how Foreign
Terrorist Organizations and Transnational Criminal Syndicates utilize
digital assets in connection with illicit activities.</DELETED>
<DELETED> (b) Report.--Not later than 180 days after completing the
review under subsection (a), the Secretary of the Treasury shall issue
a report to the Committees on Agriculture and on Financial Services of
the House of Representatives and the Committees on Agriculture,
Nutrition, and Forestry and on Banking, Housing, and Urban Affairs of
the Senate on the findings of the Secretary, including--</DELETED>
<DELETED> (1) an assessment of how Foreign Terrorist
Organizations and Transnational Criminal Syndicates utilize
digital assets in connection with illicit activities;
and</DELETED>
<DELETED> (2) recommendations to assist the Securities and
Exchange Commission and the Commodity Futures Trading
Commission in strengthening compliance and enforcement of
digital assets-related entities registered with their
respective agencies.</DELETED>
<DELETED>SEC. 510. GAO STUDY ON CERTAIN CENTRALIZED INTERMEDIARIES THAT
ARE PRIMARILY LOCATED IN FOREIGN JURISDICTIONS.</DELETED>
<DELETED> (a) In General.--The Comptroller General of the United
States, in consultation with the Secretary of the Treasury, shall
conduct a study to--</DELETED>
<DELETED> (1) assess the risks posed by centralized
intermediaries that are primarily located in foreign
jurisdictions that provide services to U.S. persons without
regulatory requirements that are substantially similar to the
requirements of the Bank Secrecy Act; and</DELETED>
<DELETED> (2) provide any regulatory or legislative
recommendations to address these risks under paragraph
(1).</DELETED>
<DELETED> (b) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall issue a report to
Congress containing all findings and determinations made in carrying
out the study required under subsection (a).</DELETED>
<DELETED>SEC. 511. STUDIES ON FOREIGN ADVERSARY
PARTICIPATION.</DELETED>
<DELETED> (a) In General.--The Secretary of the Treasury, in
consultation with the Commodity Futures Trading Commission and the
Securities and Exchange Commission, shall, not later than 1 year after
date of the enactment of this section, conduct a study and submit a
report to the relevant congressional committees that--</DELETED>
<DELETED> (1) identifies any digital commodity registrants
which are owned by governments of foreign
adversaries;</DELETED>
<DELETED> (2) determines whether any governments of foreign
adversaries are collecting trading data about United States
persons in the digital commodity markets; and</DELETED>
<DELETED> (3) evaluates whether any proprietary intellectual
property of digital commodity registrants is being misused or
stolen by any governments of foreign adversaries.</DELETED>
<DELETED> (b) GAO Study and Report.--</DELETED>
<DELETED> (1) In general.--The Comptroller General shall,
not later than 1 year after date of the enactment of this
section, conduct a study and submit a report to the relevant
congressional committees that--</DELETED><DELETED> (A) identifies any digital commodity
registrants which are owned by governments of foreign
adversaries;</DELETED>
<DELETED> (B) determines whether any governments of
foreign adversaries are collecting trading data about
United States persons in the digital commodity markets;
and</DELETED>
<DELETED> (C) evaluates whether any proprietary
intellectual property of digital commodity registrants
is being misused or stolen by any governments of
foreign adversaries.</DELETED>
<DELETED> (c) Definitions.--In this section:</DELETED>
<DELETED> (1) Digital commodity registrant.--The term
``digital commodity registrant'' means any person required to
register as a digital commodity exchange, digital commodity
broker, or digital commodity dealer under the Commodity
Exchange Act.</DELETED>
<DELETED> (2) Foreign adversaries.--The term ``foreign
adversaries'' means the foreign governments and foreign non-
government persons determined by the Secretary of Commerce to
be foreign adversaries under section 7.4(a) of title 15, Code
of Federal Regulations.</DELETED>
<DELETED> (3) Relevant congressional committees.--The term
``relevant congressional committees'' means--</DELETED>
<DELETED> (A) the Committees on Financial Services
and Agriculture of the House of Representatives;
and</DELETED>
<DELETED> (B) the Committees on Banking, Housing,
and Urban Affairs and Agriculture, Nutrition, and
Forestry of the Senate.</DELETED>
<DELETED>SEC. 512. CONFORMING AMENDMENTS.</DELETED>
<DELETED> The GENIUS Act is amended--</DELETED>
<DELETED> (1) in section 2, by amending paragraph (7) to
read as follows:</DELETED>
<DELETED> ``(7) Digital asset service provider.--The term
`digital asset service provider' means any entity registered or
required to be registered with the Securities and Exchange
Commission or the Commodity Futures Trading
Commission.'';</DELETED>
<DELETED> (2) in section 4(a)--</DELETED>
<DELETED> (A) by amending paragraph (3) to read as
follows:</DELETED>
<DELETED> ``(3) Monthly certification; examination of
reports by registered public accounting firm.--</DELETED>
<DELETED> ``(A) In general.--A permitted payment
stablecoin issuer shall, each month, have the
information disclosed in the previous month-end report
required under paragraph (1)(C) examined by a
registered public accounting firm and such examination
shall be performed in accordance with standards for
attestation engagements issued or adopted by the
primary Federal payment stablecoin regulator or, in the
case of a State qualified payment stablecoin issuer,
the State payment stablecoin regulator.</DELETED>
<DELETED> ``(B) Certification.--Each month, the
Chief Executive Officer and Chief Financial Officer of
a permitted payment stablecoin issuer shall submit to,
as applicable, the primary Federal payment stablecoin
regulator or, in the case of a State qualified payment
stablecoin issuer, the State payment stablecoin
regulator, a certification that, based on such
officers' knowledge, the previous monthly report
required under paragraph (1)(C)--</DELETED>
<DELETED> ``(i) does not contain any untrue
statement of material fact or omit to state a
material fact necessary in order to make the
statements made, in light of the circumstances
under which such statements were made, not
misleading; and</DELETED>
<DELETED> ``(ii) fairly presented in all
material respects the information required
under paragraph (1)(C) for the period presented
in such report.</DELETED>
<DELETED> ``(C) Criminal penalty.--Any person who
submits a certification required under subparagraph (B)
knowing that such certification is false shall be
subject to the same criminal penalties as those set
forth under section 1350(c) of title 18, United States
Code.</DELETED>
<DELETED> ``(D) Internal controls over permitted
payment stablecoin issuer's requirements.--</DELETED>
<DELETED> ``(i) In general.--Management of a
permitted payment stablecoin issuer shall
establish and maintain an adequate internal
control structure and procedures for the
requirements under this paragraph and
paragraphs (1) and (2) in accordance with a
framework determined acceptable by the primary
Federal payment stablecoin regulator or, in the
case of a State qualified payment stablecoin
issuer, the State payment stablecoin
regulator.</DELETED>
<DELETED> ``(ii) Attestation report.--A
permitted payment stablecoin issuer shall
obtain an annual attestation report by an
independent registered public accounting firm
attesting to management's assertions concerning
the effectiveness of the internal control
structure and procedures for compliance with
the requirements described in this paragraph
and paragraphs (1) and (2). Such attestation
shall be made in accordance with standards for
attestation engagements issued or adopted by
the primary Federal payment stablecoin
regulator or, in the case of a State qualified
payment stablecoin issuer, the State payment
stablecoin regulator.''; and</DELETED>
<DELETED> (B) by amending paragraph (12) to read as
follows:</DELETED>
<DELETED> ``(12) Non-financial companies.--</DELETED>
<DELETED> ``(A) Prohibition on non-financial company
ownership.--It shall be unlawful for a company that
derives a majority of its revenues from activities that
are not financial activities to retain or acquire
control of a nonbank entity that is--</DELETED>
<DELETED> ``(i) a Federal qualified payment
stablecoin issuer; or</DELETED>
<DELETED> ``(ii) a State qualified payment
stablecoin issuer.</DELETED>
<DELETED> ``(B) Financial activities defined.--
</DELETED>
<DELETED> ``(i) In general.--In this
paragraph, the term `financial activities'
means--</DELETED>
<DELETED> ``(I) a financial
activity, within the meaning of section
4(k) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(k));</DELETED>
<DELETED> ``(II) issuing, redeeming,
providing custodial or safekeeping
services for, buying, selling, making a
market in, or managing a reserve for
payment stablecoins;</DELETED>
<DELETED> ``(III) providing
electronic wallet services for payment
stablecoins; or</DELETED>
<DELETED> ``(IV) an activity
determined by the Board to be a
financial activity pursuant to clause
(ii).</DELETED>
<DELETED> ``(ii) Establishing additional
financial activities.--Not later than 180 days
after the date of enactment of the CLARITY Act
of 2025, the Board, in consultation with the
Secretary of the Treasury and the Comptroller,
shall issue rules, consistent with the purposes
of this Act, to establish--</DELETED>
<DELETED> ``(I) a list of additional
activities that are financial
activities for purposes of clause (i),
including applicable digital asset
activities that are financial
activities; and</DELETED>
<DELETED> ``(II) a streamlined
procedure for a nonbank entity to
submit an activity to the Board for
purposes of the Board determining
whether such activity should be added
to the list of additional activities
that are financial activities for
purposes of clause (i).'';
and</DELETED>
<DELETED> (3) by adding at the end the following:</DELETED>
<DELETED>``SEC. 21. COMMODITY-BACKED PAYMENT STABLECOINS.</DELETED>
<DELETED> ``(a) Rule of Construction.--Nothing in this Act shall be
construed to prohibit or limit a commodity-backed payment stablecoin
issuer from issuing a commodity-backed payment stablecoin in accordance
with regulations established by a State commodity-backed payment
stablecoin regulator.</DELETED>
<DELETED> ``(b) Preservation of Federal Authority.--Nothing in this
section shall be construed to alter or limit the jurisdiction of the
Commodity Futures Trading Commission over any matter within the
Commission's authority under applicable law.</DELETED>
<DELETED> ``(c) Definitions.--For purposes of this
section:</DELETED>
<DELETED> ``(1) Commodity-backed payment stablecoin.--The
term `commodity-backed payment stablecoin' means a digitalasset--</DELETED>
<DELETED> ``(A) that is, or is designed to be, used
as a means of payment or settlement;</DELETED>
<DELETED> ``(B) that is denominated in a highly
liquid, publicly traded physical commodity, such as
gold;</DELETED>
<DELETED> ``(C) the issuer of which is obligated
to--</DELETED>
<DELETED> ``(i) convert, redeem, or
repurchase for a fixed amount of the
denominated highly liquid, publicly traded
physical commodity; and</DELETED>
<DELETED> ``(ii) custody or cause to be
custodied, for the benefit of the holders of
the payment stablecoin, an amount of the
physical commodity equal to or greater than the
total amount of outstanding payment
stablecoins, for the purpose of converting,
redeeming, or repurchasing the digital asset;
and</DELETED>
<DELETED> ``(D) that is not--</DELETED>
<DELETED> ``(i) a security issued by--
</DELETED>
<DELETED> ``(I) an investment
company registered under section 8(a)
of the Investment Company Act of 1940
(15 U.S.C. 80a-8(a)); or</DELETED>
<DELETED> ``(II) a person that would
be an investment company under the
Investment Company Act of 1940 but for
paragraphs (1) and (7) of section 3(c)
of that Act (15 U.S.C. 80a-
3(c));</DELETED>
<DELETED> ``(ii) a deposit (as defined under
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813)), regardless of the technology
used to record such deposit;</DELETED>
<DELETED> ``(iii) an account (as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1752)), regardless of the technology
used to record such account; or</DELETED>
<DELETED> ``(iv) an interest or
participation in a commodity pool (as defined
in section 1a(10) of the Commodity Exchange Act
(7 U.S.C. 1a)).</DELETED>
<DELETED> ``(2) Commodity-backed payment stablecoin
issuer.--The term `commodity-backed payment stablecoin issuer'
means--</DELETED>
<DELETED> ``(A) an entity that issues a commodity-
backed payment stablecoin; and</DELETED>
<DELETED> ``(B) an entity that is approved to issue
such commodity-backed payment stablecoins by a State
commodity-backed payment stablecoin
regulator.</DELETED>
<DELETED> ``(3) Physical commodity.--The term `physical
commodity' means any exempt commodity (as defined in section
1a(21) of the Commodity Exchange Act (7 U.S.C. 1a)) which can
be physically delivered.</DELETED>
<DELETED> ``(4) State commodity-backed payment stablecoin
regulator.--The term `State commodity-backed payment stablecoin
regulator' means a State agency that has primary regulatory and
supervisory authority over entities that issue commodity-backed
payment stablecoins in such State.</DELETED>
<DELETED>``SEC. 22. PROTECTION OF SELF-CUSTODY.</DELETED>
<DELETED> ``(a) In General.--A United States individual shall retain
the right to--</DELETED>
<DELETED> ``(1) maintain a hardware wallet or software
wallet for the purpose of facilitating the individual's own
lawful custody of digital assets; and</DELETED>
<DELETED> ``(2) engage in direct, peer-to-peer transactions
in digital assets with another individual or entity for the
individual's own lawful purposes using a hardware wallet or
software wallet, if--</DELETED>
<DELETED> ``(A) such other individual or entity is
not a financial institution (as defined in section 5312
of title 31, United States Code); and</DELETED>
<DELETED> ``(B) the transactions do not involve any
property or interests in property that are blocked
pursuant to, or are otherwise prohibited by, United
States sanctions.</DELETED>
<DELETED> ``(b) Application.--This section--</DELETED>
<DELETED> ``(1) applies solely to personal use by
individuals; and</DELETED>
<DELETED> ``(2) does not apply to individuals acting in a
custodial or fiduciary capacity for others.</DELETED>
<DELETED> ``(c) Rule of Construction.--Nothing in this section shall
be construed to limit the authority of the Secretary of the Treasury,
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, or the primary Federal payment stablecoin regulators to
carry out any enforcement action or special measure authorized under
applicable law, including--</DELETED>
<DELETED> ``(1) the Bank Secrecy Act, section 9714 of the
Combating Russian Money Laundering Act (31 U.S.C. 5318A note),
and section 7213A of the Fentanyl Sanctions Act (21 U.S.C.
2313a); or</DELETED>
<DELETED> ``(2) any other law relating to illicit finance,
money laundering, terrorism financing, or United States
sanctions.''.</DELETED>
<DELETED>TITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT</DELETED>
<DELETED>SEC. 601. SHORT TITLE.</DELETED>
<DELETED> This title may be cited as the ``Anti-CBDC Surveillance
State Act''.</DELETED>
<DELETED>SEC. 602. PROHIBITION ON FEDERAL RESERVE BANKS RELATING TO
CERTAIN PRODUCTS OR SERVICES FOR INDIVIDUALS AND
PROHIBITION ON DIRECTLY ISSUING A CENTRAL BANK DIGITAL
CURRENCY.</DELETED>
<DELETED> Section 16 of the Federal Reserve Act (12 U.S.C. 411 et
seq.) is amended by adding at the end the following new
paragraph:</DELETED>
<DELETED> ``(18)(A) A Federal reserve bank may not--</DELETED>
<DELETED> ``(i) offer financial products or services directly to an
individual;</DELETED>
<DELETED> ``(ii) maintain an account on behalf of an individual;
or</DELETED>
<DELETED> ``(iii) issue a central bank digital currency, or any
digital asset that is substantially similar under any other name or
label.</DELETED>
<DELETED> ``(B) In this paragraph, the term `central bank digital
currency' has the meaning given that term under section
10(11)(D).''.</DELETED>
<DELETED>SEC. 603. PROHIBITION ON FEDERAL RESERVE BANKS INDIRECTLY
ISSUING A CENTRAL BANK DIGITAL CURRENCY.</DELETED>
<DELETED> Section 16 of the Federal Reserve Act (12 U.S.C. 411 et
seq.), as amended by section 2, is further amended by adding at the end
the following paragraph:</DELETED>
<DELETED> ``(19)(A) A Federal reserve bank may not offer a central
bank digital currency, or any digital asset that is substantially
similar under any other name or label, indirectly to an individual
through a financial institution or other intermediary.</DELETED>
<DELETED> ``(B) In this paragraph, the term `central bank digital
currency' has the meaning given that term under section
10(11)(D).''.</DELETED>
<DELETED>SEC. 604. PROHIBITION WITH RESPECT TO CENTRAL BANK DIGITAL
CURRENCY.</DELETED>
<DELETED> Section 10 of the Federal Reserve Act (12 U.S.C. 241 et
seq.) is amended by inserting before paragraph (12) the
following:</DELETED>
<DELETED> ``(11) Prohibition with respect to central bank
digital currency.--</DELETED>
<DELETED> ``(A) In general.--The Board of Governors
of the Federal Reserve System may not test, study,
develop, create, or implement a central bank digital
currency, or any digital asset that is substantially
similar under any other name or label.</DELETED>
<DELETED> ``(B) Monetary policy.--The Board of
Governors of the Federal Reserve System and the Federal
Open Market Committee may not use a central bank
digital currency to implement monetary policy, or any
digital asset that is substantially similar under any
other name or label.</DELETED>
<DELETED> ``(C) Exception.--Subparagraph (A) and
sections 16(18)(A)(iii) and 16(19)(A) may not be
construed to prohibit any dollar-denominated currency
that is open, permissionless, and private, and fully
preserves the privacy protections of United States
coins and physical currency.</DELETED>
<DELETED> ``(D) Central bank digital currency
defined.--In this paragraph, the term `central bank
digital currency' means a form of digital money or
monetary value that is--</DELETED>
<DELETED> ``(i) denominated in the national
unit of account;</DELETED>
<DELETED> ``(ii) a direct liability of the
Federal Reserve System; and</DELETED>
<DELETED> ``(iii) widely available to the
general public.''.</DELETED>
<DELETED>SEC. 605. SENSE OF CONGRESS.</DELETED>
<DELETED> It is the sense of Congress that the Board of Governors ofthe Federal Reserve System currently does not have the authority to issue a central bank digital currency, or any digital asset that is substantially similar under any other name or label, and will not have such authority unless Congress grants it under Congress's Article 1 Section 8 powers.</DELETED>
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Digital Asset
Market Clarity Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.TITLE I--RESPONSIBLE SECURITIES INNOVATION
Sec. 101. Short title.
Sec. 102. Disclosure requirements for certain transactions involving
ancillary assets.
Sec. 103. Exemption and rulemaking for certain transactions involving
ancillary assets.
Sec. 104. Special disposition restrictions by related persons.
Sec. 105. Characteristics of network tokens.
Sec. 106. Exemptive authority.
Sec. 107. Modernization of recordkeeping requirements.
Sec. 108. Modernization of securities regulations for digital asset
activities.
Sec. 109. Insider trading with respect to ancillary asset transactions.
Sec. 110. Securities Investor Protection Corporation applicability.
Sec. 111. Investor and consumer protection enforcement.TITLE II--PROTECTING AGAINST ILLICIT FINANCE Sec. 201. Treatment under the Bank Secrecy Act and sanctions laws. Sec. 202. Digital asset examination standards. Sec. 203. Preventing Illicit Finance Through Partnership Act. Sec. 204. Financial Technology Protection Act. Sec. 205. Digital asset kiosks. Sec. 206. Study on illicit use of digital assets.
TITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE
Sec. 301. Rulemaking on application of existing securities intermediary
requirements and existing Bank Secrecy Act
requirements to non-decentralized finance
trading protocols.
Sec. 302. Illicit finance obligations for distributed ledger messaging
systems.
Sec. 303. Special measure relating to certain transmittals of funds.
Sec. 304. Offshore stablecoin report.
Sec. 305. Temporary hold for certain digital asset transactions.
Sec. 306. Voluntary cybersecurity program for decentralized finance
trading protocols.
Sec. 307. Amendments to monetary instrument definition.
Sec. 308. Risk management standards for digital asset intermediaries.
Sec. 309. Study on digital asset mixers and tumblers.
Sec. 310. GAO study on intermediaries in foreign jurisdictions.
Sec. 311. Studies on foreign adversary activities.
Sec. 312. Treasury study on cybersecurity standards.
Sec. 313. Studies on financial stability risks of decentralized finance
trading and credit in digital commodity
markets.TITLE IV--RESPONSIBLE BANKING INNOVATION
Sec. 401. Permissibility of digital asset activities.
Sec. 402. Joint rules for portfolio margining determinations.
Sec. 403. Capital requirements to address netting agreements.
Sec. 404. Prohibiting interest and yield on payment stablecoins.
Sec. 405. Expanded securities portfolio margin accounts under the
Securities Investor Protection Act of 1970.TITLE V--RESPONSIBLE REGULATORY INNOVATION
Sec. 501. CFTC-SEC Micro-Innovation Sandbox.
Sec. 502. International cooperation.
Sec. 503. Automated regulatory compliance study.
Sec. 504. Report on legislative recommendations.
Sec. 505. Tokenization of securities.
Sec. 506. Voluntary adoption of National Institute of Standards and
Technology post-quantum cryptography
standards.
Sec. 507. International coordination to combat digital asset illicit
finance.
Sec. 508. Annual report on foreign digital asset trading volume,
compliance with United States standards and
remediation actions.
Sec. 509. AI innovation labs.TITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION Sec. 601. Protecting software developers. Sec. 602. Safe harbor for nonfungible tokens. Sec. 603. Study on nonfungible tokens. Sec. 604. Blockchain Regulatory Certainty Act. Sec. 605. Keep Your Coins Act.
TITLE VII--PROTECTING CUSTOMER PROPERTY
Sec. 701. Customer property protections for ancillary assets and
digital commodities in bankruptcy.
Sec. 702. Insolvency safe harbor.TITLE VIII--CUSTOMER PROTECTION
Sec. 801. Educational materials.
Sec. 802. Savings clauses.
Sec. 803. Study on expanding financial literacy.
Sec. 804. Consultation with SIPC regarding mandatory broker-dealer
disclosures to investors concerning the
status of payment stablecoins and digital
commodities.TITLE IX--OTHER MATTERS Sec. 901. Joint Advisory Committee on Digital Assets. Sec. 902. Memorandum of understanding. Sec. 903. FinCEN appropriations. Sec. 904. Build Now Act. Sec. 905. Rulemakings. Sec. 906. Effective date.
SEC. 2. DEFINITIONS.
In this Act:
(1) Ancillary asset; ancillary asset originator; network
token.--The terms ``ancillary asset'', ``ancillary asset
originator'', and ``network token'' have the meanings given
those terms in section 4B(a) of the Securities Act of 1933, as
added by this Act.
(2) Bank secrecy act.--The term ``Bank Secrecy Act''
means--
(A) section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b);
(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
(C) subchapter II of chapter 53 of title 31, United
States Code.
(3) Commission.--Except where otherwise expressly provided,
the term ``Commission'' means the Securities and Exchange
Commission.
(4) Coordinated control.--With respect to any distributed
ledger system and a related ancillary asset, the term
``coordinated control'' has the meaning given the term by the
Commission pursuant to rules adopted under section 104(b).
(5) Decentralized governance system.--
(A) In general.--The term ``decentralized
governance system'' means, with respect to a
distributed ledger system, any transparent, rules-based
system permitting persons to form consensus or reach
agreement in the development, provision, publication,
maintenance, or administration of the distributed
ledger system, in which participation is not limited
to, or under the control of, any person or group of
persons under common control.
(B) Relationship of persons to decentralized
governance systems.--With respect to a decentralized
governance system, the decentralized governance system
and any persons participating in the decentralized
governance system shall be treated as separate persons
unless those persons are under common control or acting
pursuant to an agreement to act in concert.
(C) Legal entities for decentralized governance
systems.--The term ``decentralized governance system''
shall include a legal entity, including a decentralized
unincorporated nonprofit association or other entity
created pursuant to State law, used to implement the
rules-based system described in subparagraph (A),
provided that the legal entity does not operate
pursuant to centralized management. For the purposes of
this subparagraph, the delegation of ministerial or
administrative authority at the direction of the
participants in a decentralized governance system shall
not be construed to be centralized management.
(D) Rule of construction.--For purposes of this
Act, and the amendments made by this Act, a
decentralized governance system shall not be deemed to
be a person or a group of persons acting under common
control.
(6) Digital asset; digital asset service provider.--The
terms ``digital asset'' and ``digital asset service provider''
have the meanings given those terms in section 2 of the GENIUS
Act (12 U.S.C. 5901).
(7) Digital asset intermediary.--The term ``digital asset
intermediary'' means a person that is engaged in digital asset
activities and required by law to register with the Commodity
Futures Trading Commission or with the Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
(8) Digital commodity.--The term ``digital commodity'' has
the meaning given the term in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a), as added by this Act.
(9) Distributed ledger.--The term ``distributed ledger''
means technology--
(A) through which data is shared across a network
that creates a public digital ledger of verified
transactions or information among network participants;
and
(B) in which cryptography is used to link the data
described in subparagraph (A) to--
(i) maintain the integrity of the digital
ledger described in that subparagraph; and
(ii) execute other functions.
(10) Distributed ledger application.--The term
``distributed ledger application'' means executable software
that is deployed to and maintained on a distributed ledger and
composed of source code that is publicly available, including a
smart contract or any network of smart contracts, or other
similar technology.
(11) Distributed ledger protocol.--The term ``distributed
ledger protocol'' means publicly available source code of a
distributed ledger that is executed by the network participants
of a distributed ledger to facilitate its functioning, or other
similar technology.
(12) Distributed ledger system.--The term ``distributed
ledger system'' means a distributed ledger (together with its
distributed ledger protocol), a distributed ledger application,
or a network of distributed ledger applications.
(13) Related person.--The term ``related person'', with
respect to an ancillary asset originator or an ancillary
asset--
(A) means--
(i) any person that is, or within the
preceding 36-month period was--
(I) a founder or person serving in
a similar capacity with respect to the
ancillary asset originator; and
(II) a beneficial owner of not less
than 4 percent of the total amount of
outstanding units of an ancillary asset
associated with the ancillary asset
originator;
(ii) any person that is, or in the
preceding 12-month period was, an executive
officer, director, trustee, general partner,
owner of more than 10 percent of any class of
equity shares of the ancillary asset
originator, or person serving in a similar
capacity with respect to the ancillary asset
originator;
(iii) any person, or group of persons under
common control, that beneficially owns, or in
the preceding 6-month period owned, 10 percent
or more of the total amount of outstanding
units of the ancillary asset; and
(iv) any person, or group of persons under
common control, that beneficially owns, or in
the preceding 6-month period owned, covered
tokens (as that term is defined in section
104(a)) that equal not less than 2 percent of
the total amount of outstanding units of the
ancillary asset; and
(B) does not include a decentralized governance
system.
(14) Securities laws.--The term ``securities laws'' has the
meaning given the term in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
(15) Smart contract.--The term ``smart contract'' means a
self-executing contract or program that--
(A) is stored on a distributed ledger system; and
(B) automatically executes or enforces digital
asset transactions upon the occurrence of explicit,
pre-determined conditions encoded in the contract or
program, without intervention, other than to provide
data, by any entity or natural person.TITLE I--RESPONSIBLE SECURITIES INNOVATION
SEC. 101. SHORT TITLE.
This title may be cited as the ``Lummis-Gillibrand Responsible
Financial Innovation Act of 2026''.SEC. 102. DISCLOSURE REQUIREMENTS FOR CERTAIN TRANSACTIONS INVOLVING
ANCILLARY ASSETS.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended by inserting after section 4A (15 U.S.C. 77d-1) the
following:
``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS INVOLVING
ANCILLARY ASSETS.
``(a) Definitions.--In this section:
``(1) Ancillary asset.--The term `ancillary asset' means a
network token, the value of which is dependent upon the
entrepreneurial or managerial efforts of an ancillary asset
originator or a related person, as those concepts are further
specified by the Commission by regulation.
``(2) Ancillary asset originator.--
``(A) In general.--The term `ancillary asset
originator' means, with respect to a particular
ancillary asset, a person that (whether directly or
through 1 or more subsidiary or controlled entities)--
``(i) initially offers, sells, or
distributes the ancillary asset; or
``(ii) during the 12-month period beginning
on the date on which the ancillary asset is
initially offered, sold, or distributed,
controls or causes the initial offer, sale, or
distribution of that ancillary asset.
``(B) Joint and several liability.--For the
purposes of this paragraph, if the person that
initially offered, sold, or distributed an ancillary
asset (or otherwise sold, distributed, controlled, or
caused the initial offer, sale, or distribution of the
ancillary asset) did not receive the largest amount of
those ancillary assets distributed in the 12-month
period following the commencement of that offer, sale,
or distribution, then that person, solely for purposes
of subsection (c), shall be jointly and severally
considered to be an ancillary asset originator with
respect to that ancillary asset (with the person that
controlled such offer, sale, or distribution) along
with the person (including a person under direct or
indirect control of that person) that received the
largest amount of those ancillary assets in that
period, other than ancillary assets received--
``(i) in an intermediary capacity;
``(ii) solely through a gratuitous
distribution;
``(iii) through an offer, sale, or
distribution of a security to the public
registered under section 5; or
``(iv) otherwise in a broad and public
manner that the Commission determines, pursuant
to regulation, should not subject the person to
disclosure requirements under subsection (d).
``(C) Rulemaking.--Not later than 360 days after
the date of enactment of this section, the Commission
shall, after providing notice and the opportunity for
comment, issue rules regarding the circumstances under
which persons that are jointly and severally considered
an ancillary asset originator pursuant to subparagraph
(B) are responsible for furnishing the disclosures
required under subsection (d) on behalf of the
ancillary asset originator.
``(3) Certification covered party.--The term `certification
covered party' means--
``(A) an ancillary asset originator;
``(B) a subsidiary of the ancillary asset
originator;
``(C) a related person of the ancillary asset
originator; or
``(D) any entity that directly or indirectly
controls or is controlled by a common entity with the
ancillary asset originator.
``(4) Decentralized governance system; digital asset;
digital asset intermediary; related person; securities laws.--
The terms `decentralized governance system', `digital asset',
`digital asset intermediary', `related person', and `securities
laws' have the meanings given those terms in section 2 of the
Digital Asset Market Clarity Act.
``(5) Gratuitous distribution.--
``(A) In general.--The term `gratuitous
distribution'--
``(i) means a distribution of a network
token, including a distribution effected by an
agent or other service provider engaged solely
in an administrative or ministerial capacity,
in exchange for not more than a nominal value
of cash, property, services, or other assets in
a broad, equitable, and non-discretionary
manner; and
``(ii) includes, without limitation, the
mechanisms and methods of distribution
described in subparagraph (B).
``(B) Mechanisms and methods of distribution.--The
mechanisms and methods of distribution described in
this subparagraph are the following:
``(i) Self staking.--The distribution of a
unit of a network token, as a programmatic
result of validating or staking activity for a
distributed ledger system's consensus
mechanism, including the staking of a network
token, and the operation of a node, validator,
or substantially similar software for such
activity where the owner of the staked network
token and the operator of the node, validator,
or substantially similar software are the same
person or entity.
``(ii) Self-custodial staking with a third
party.--The distribution of a unit of a network
token, as a programmatic result of validating
or staking activity for a distributed ledger
system's consensus mechanism, including the
staking of a network token, and the operation
of a node, validator, or substantially similar
software for such activity in which--
``(I) the owner of the staked
network token, and operator of the
node, validator, or substantially
similar software for such activity are
different persons or entities; and
``(II) the operator of the node,
validator, or substantially similar
software does not maintain custody or
control of the staked network token.
``(iii) Liquid staking.--The distribution
of network tokens, as the issuance, transfer,
or redemption of liquid staking tokens
representing a pro rata interest in staked
network tokens, and their associated rewards,
provided that such tokens are issued as
administrative or ministerial receipts and are
not providing discretionary management
authority.
``(iv) Custodial and ancillary staking
services.--
``(I) In general.--Subject to the
rules issued pursuant to subclause
(II), the provision of custodial or
ancillary staking services enabling the
owner of a network token to participate
in validating or staking activity for a
distributed ledger system's consensus
mechanism that results in the
programmatic distribution of a unit of
a network token, provided that such
custodial or ancillary services are
exclusively administrative or
ministerial in nature.
``(II) Rulemaking to define the
custodial and ancillary staking
services.--The Commission shall issue
rules defining the custodial and
ancillary staking services described in
subclause (I) that are exclusively
administrative or ministerial in
nature, consistent with what is
necessary or appropriate for the public
interest or for the protection of
investors.
``(v) Programmatic and automated
distributions.--The automated, programmatic,
protocol-defined, or rules-based distribution
of network tokens achieved through the
transparent functioning of a distributed ledger
system, a distributed ledger, or distributed
ledger applications, in which--
``(I) distributions occur pursuant
to public, transparent, rules-based
parameters that are publicly available
and are accessible on a permissionless
basis, without individualized or real-
time negotiation with recipients;
``(II) recipients receive network
tokens as a direct, programmatic result
of objective, verifiable network
participation, consumption, or
contribution, including consensus
participation, data availability,
bandwidth, governance, or use and
interaction with the protocol orapplication;
``(III) the number of network
tokens received is proportionate to the
verifiable service, usage, or
contribution;
``(IV) any expected utility or
value of the network tokens arises
primarily from decentralized network
participation and market forces, rather
than the discretionary actions of any
single person or affiliated group; and
``(V) no person or group has
unilateral authority to alter,
restrict, or direct the issuance
parameters or distribution mechanisms
of the distributed ledger system, and
any modification occurs only through a
decentralized governance system.
``(vi) Technology-neutral clause.--The
distribution employing a mechanism, protocol,
or technology not specifically described in
clauses (i) through (v), without regard to
whether such mechanism, protocol, or technology
is in existence at the time of enactment of
this section, and without regard to terminology
or underlying technical framework, provided
such distribution meets the requirements
described in subparagraph (A)(i).
``(6) Investment company.--The term `investment company'
has the meaning given the term in section 3(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-3(a)).
``(7) Network token.--
``(A) In general.--The term `network token' means a
digital commodity that is intrinsically linked to a
distributed ledger system and that derives, or is
reasonably expected to derive, its value from the use
of such distributed ledger system, and, pursuant to the
Digital Asset Market Clarity Act and the amendments
made by the Digital Asset Market Clarity Act, is
treated as a non-security solely for purposes of the
securities laws.
``(B) Disqualifying financial rights.--The term
`network token' does not include any of the following:
``(i) Any security, consistent with the
categories of disqualifying financial rights
described in clause (ii).
``(ii) An investment contract or a
certificate of interest or participation in any
profit-sharing agreement that represents, gives
the holder, or is substantially economically or
functionally equivalent to, any of the
following, as the Commission shall establish by
rule:
``(I) A debt or equity interest, or
an option on a debt or equity interest,
in a person.
``(II) Liquidation rights with
respect to a person.
``(III) An entitlement to, or a
reasonable expectation of, an interest,
dividend, or other payment, or direct
or indirect transfer of value, from a
person (other than a decentralized
governance system).
``(IV) An express or implied
financial interest in (including a
limited partnership interest or
interest in intellectual property of),
or provided by, a person (other than a
decentralized governance system).
``(iii) Any interest that is, represents,
or is functionally equivalent to an interest in
an investment company or a company (as defined
in section 2 of the Investment Company Act of
1940 (15 U.S.C. 80a-2)) that would be an
investment company under section 3(a) of that
Act (15 U.S.C. 80a-3(a)) but for the exclusions
provided from that definition by section 3(c)
of that Act (15 U.S.C. 80a-3(c)).
``(iv) Any interest that is, represents, or
is functionally equivalent to an interest in
any entity or person that is not an investment
company but holds or will hold assets other
than securities.
``(C) Rule of construction.--A digital commodity--
``(i) shall be deemed to be intrinsically
linked to a distributed ledger system if the
digital commodity is directly related to the
functionality or operation of the distributed
ledger system or to the activities or services
for which the distributed ledger system is
created or utilized; and
``(ii) shall not be disqualified from being
deemed a network token due to the granting of
economic interests or voting capabilities with
respect to a distributed ledger system or its
decentralized governance system, as further
clarified by the Commission through the final
rules adopted under section 105 of the Lummis-
Gillibrand Responsible Financial Innovation Act
of 2026.
``(b) Treatment of Network Tokens and Transactions.--
``(1) In general.--The offer, sale, or distribution of an
ancillary asset by, or caused by, an ancillary asset
originator, including through an underwriter, shall be
considered to be an offer, sale, or distribution of an
investment contract involving an ancillary asset, except with
respect to a gratuitous distribution.
``(2) Treatment as non-security.--Except as provided in
this section, and subject to paragraph (3), a network token
shall be treated as a non-security, to the extent materially
consistent with the requirements and conditions of this
section, for purposes of --
``(A) section 2(a)(1);
``(B) section 3(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a));
``(C) section 2(a) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a));
``(D) section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a));
``(E) section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll); or
``(F) any applicable requirement of State law that
is functionally equivalent to the provisions described
in subparagraphs (A) through (E), including any
provision of State law that directly or indirectly
prohibits, limits, or imposes any conditions on the
use, offer, sale, transfer, or disposition of a network
token in a manner that is--
``(i) not substantially similar to
prohibitions, limitations, or conditions
imposed by that State relating to assets that
are commodities under the laws of that State;
and
``(ii) inconsistent with this section.
``(3) Secondary market treatment.--
``(A) In general.--Except as provided in this
section (including the limitation under subparagraph
(B)), and to the extent materially consistent with the
requirements and conditions of this section, the offer,
sale, or distribution of a network token by a person
shall be treated as not involving the offer, sale, or
distribution of a security under--
``(i) section 2(a)(1);
``(ii) the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.);
``(iii) the Investment Company Act of 1940
(15 U.S.C. 80a-1 et seq.);
``(iv) the Investment Advisers Act of 1940
(15 U.S.C. 80b-1 et seq.);
``(v) the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.); and
``(vi) any applicable requirement of State
law that is functionally equivalent to the
provisions described in clauses (i) through
(v), including any provision of State law that
directly or indirectly prohibits, limits, or
imposes any conditions on the use, offer, sale,
transfer, or disposition of a network token in
a manner that is--
``(I) not substantially similar to
prohibitions, limitations, or
conditions imposed by that State
relating to assets that are commodities
under the laws of that State; and
``(II) inconsistent with this
section.
``(B) Limitation.--Subparagraph (A) shall not apply
if the applicable network token is offered, sold, or
distributed pursuant to the offer, sale, or
distribution of a security by an ancillary asset
originator or underwriter.
``(4) Treatment of gratuitous distributions.--
``(A) In general.--A gratuitous distribution, by
itself, shall be presumed to not constitute an offer,
sale, or distribution of a security for the purposes
of--
``(i) section 2(a)(1);
``(ii) section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a));
``(iii) section 2(a) of the InvestmentCompany Act of 1940 (15 U.S.C. 80a-2(a));
``(iv) section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a));
``(v) section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll); or
``(vi) any applicable requirement of State
law, or any provision of State law that is
functionally equivalent to the provisions
described in clauses (i) through (v), including
any provision of State law that directly or
indirectly prohibits, limits, or imposes any
conditions on the use, offer, sale, transfer,
or disposition of a network token in a manner
that is--
``(I) not substantially similar to
prohibitions, limitations, or
conditions imposed by that State
relating to assets that are commodities
under the laws of that State; and
``(II) inconsistent with this
section.
``(B) Savings clause.--Nothing in this paragraph
may be construed to limit, impair, or otherwise affect
the anti-fraud or anti-manipulation authorities of the
Commission, the Commodity Futures Trading Commission,
or a State regulator.
``(5) Prior certification.--
``(A) Submission and default treatment.--
``(i) In general.--
``(I) Presumption.--For purposes of
this section, there shall be a
rebuttable presumption that a network
token, including a network token
distributed in the manner described in
paragraph (4), is an ancillary asset
unless the originator of that network
token, or a digital asset intermediary
(as provided under subsection (c)(4)),
submits to the Commission a completed
written certification, supported by
reasonable evidence, as defined by the
Commission, sufficient to demonstrate
that the network token is not an
ancillary asset.
``(II) Contents.--A certification
submitted under subclause (I) shall
include a statement in accordance with
subsection (d)(3)(B)(i).
``(ii) Notification.--The Commission shall
notify the Commodity Futures Trading Commission
of each certification made pursuant to clause
(i) and of any final agency action with respect
to that certification.
``(iii) Reciprocal notice.--The Commission
shall receive a copy of any certification and
supporting materials submitted to the Commodity
Futures Trading Commission under section 203(d)
of the Digital Commodity Intermediaries Act.
``(B) Automatic effectiveness.--A certification
submitted under subparagraph (A) by an originator or a
digital asset intermediary shall become effective upon
the earlier of--
``(i) the date on which the Commission
notifies the originator or digital asset
intermediary in writing that the Commission
does not object to the certification; or
``(ii) if the Commission has not issued a
rebuttal to the originator or digital asset
intermediary in accordance with subparagraph
(C), 60 days after the date on which the
originator or digital asset intermediary
submits the certification.
``(C) Commission denial.--
``(i) Authority to deny.--Subject to
clauses (ii) and (iii), the Commission may deny
a certification submitted under subparagraph
(A) by an originator or digital asset
intermediary only during the 60-day period
described in subparagraph (B)(ii) or upon
determining, based on reasonable evidence, that
a material change in circumstances has occurred
after the submission of the certification,
whether or not the certification has taken
effect.
``(ii) Notice of intent to deny.--If the
Commission intends to deny a certification
submitted under subparagraph (A), the
Commission shall--
``(I) either not later than 20
business days after the date on which
the certification is submitted, or
promptly after determining that a
material change in circumstances has
occurred, provide to the applicable
originator or digital asset
intermediary notice of the intent of
the Commission to deny that
certification; and
``(II) provide to the applicable
originator or digital asset
intermediary a 10-day period following
the provision of notice under subclause
(I) during which--
``(aa) interested persons
shall have an opportunity to
submit written data, views, and
arguments relating to that
certification; and
``(bb) the Commodity
Futures Trading Commission may,
at the discretion of the
Commodity Futures Trading
Commission, submit input
regarding whether the
applicable asset--
``(AA) satisfies
the requirements for
being considered an
ancillary asset; or
``(BB) includes any
disqualifying financial
right described in
subsection (a)(7)(B).
``(iii) Requirements after notice of
intent.--After the 10-day period described in
clause (ii)(II), the Commission shall--
``(I) upon request of the
applicable originator or digital asset
intermediary, provide an opportunity
for the oral presentation of data,
views, and arguments by certification
covered parties;
``(II) have a vote of the
Commission (which, notwithstanding
section 4A of the Securities Exchange
Act of 1934 (15 U.S.C. 78d-1), may not
be delegated to an employee or employee
board or to any individual
Commissioner) to deny the certification
after a finding that the applicable
asset--
``(aa) is an ancillary
asset; or
``(bb) includes any
disqualifying financial right
described in subsection
(a)(7)(B); and
``(III) notify the Commodity
Futures Trading Commission of each
denial made under subclause (II).
``(iv) Interested person.--For purposes of
this subparagraph, the term `interested person'
means, with respect to a network token--
``(I) the ancillary asset
originator with respect to that network
token (referred to in this clause as
`the originator');
``(II) a subsidiary of the
originator;
``(III) a related person of the
originator;
``(IV) any entity that directly or
indirectly controls or is controlled by
a common entity with the originator;
``(V) any broker or dealer (as
those terms are defined in section 3(a)
of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a))), or an exchange
registered pursuant to section 6 of
that Act (15 U.S.C. 78f), that operates
in connection with digital assets; or
``(VI) any person registered with
the Commodity Futures Trading
Commission that operates or proposes to
operate in connection with digital
assets.
``(D) Certification filed by digital asset
intermediary.--``(i) In general.--A certification
submitted by a digital asset intermediary under
this paragraph shall only become effective if--
``(I) the digital asset
intermediary has--
``(aa) conducted a
reasonable inquiry of publicly
available information,
appropriate under the
circumstances, regarding
whether the applicable
originator has engaged in
entrepreneurial and managerial
efforts with respect to the
applicable network token during
the most recent 180-day period,
or is likely to engage in those
efforts in the future; and
``(bb) concluded that the
efforts described in item (aa)
have not occurred or are not
reasonably likely to occur; and
``(II) subject to clause (ii), the
applicable originator has certified
that there is not (and, during the most
recent 180-day period, there has not
been) material, non-public information
regarding entrepreneurial or managerial
efforts with respect to the applicable
network token in the possession of the
originator or a related party.
``(ii) Limitation.--Clause (i)(II) shall
not be required if the applicable digital asset
intermediary, after a reasonable inquiry,
appropriate under the circumstances, determines
that the applicable originator, or any person
jointly and severally liable pursuant to
subsection (a)(2)(B), is not capable of
submitting the applicable certification.
``(E) Final agency action.--Denial under this
paragraph constitutes final agency action reviewable
under applicable law.
``(F) Tolling.--Any applicable period specified in
this paragraph may be tolled, for periods of not longer
than 60 days, during the 3-year period following the
effective date of the Digital Asset Market Clarity Act,
upon a showing in writing that the originator or
digital asset intermediary has not substantially
responded to a request for information from the
Commission within a reasonable time.
``(G) Withdrawal.--An originator or digital asset
intermediary may withdraw a certification submitted
under subparagraph (A) at any time before approval.
``(H) Designated commission office.--The Commission
shall designate an office that shall--
``(i) acknowledge receipt of certifications
submitted under subparagraph (A);
``(ii) support those seeking certification
under subparagraph (A) by providing guidance
regarding the mechanics of preparing and
submitting those certifications; and
``(iii) route certifications submitted
under subparagraph (A), together with any
associated comments or recommendations, to the
appropriate division or office of the
Commission for review.
``(I) Misstatements or omissions.--Any material
misstatement or omission to state a material fact,
including with respect to continuing compliance, in a
certification that has become effective under this
paragraph shall constitute grounds for the Commission,
consistent with the securities laws, to issue an order
denying, suspending, or revoking the effectiveness of
the certification and to pursue any appropriate
enforcement action.
``(c) Disclosure Requirements for Certain Transactions Involving
Ancillary Assets.--
``(1) Specified initial and periodic disclosure
requirements.--
``(A) In general.--An ancillary asset originator
shall be subject to the initial and periodic disclosure
requirements under subsection (d) upon the occurrence
of the earlier of the following:
``(i) Any offer, sale, or distribution of
an ancillary asset after the effective date of
the Digital Asset Market Clarity Act by, or
that is caused by, that ancillary asset
originator pursuant to--
``(I) Regulation Crypto, as adopted
pursuant to section 103 of the Lummis-
Gillibrand Responsible Financial
Innovation Act of 2026;
``(II) the filing of an effective
registration statement under this Act;
``(III) the filing of an offering
statement described in section 3(b)(2);
or
``(IV) an offering conducted
pursuant to section 4(a)(6).
``(ii)(I) The first secondary market offer,
sale, or distribution of an ancillary asset in
the United States after the effective date of
the Digital Asset Market Clarity Act that
constitutes a public offering, whether by the
ancillary asset originator or any other person.
``(II) For the purposes of subclause (I),
the term `public offering' shall be interpreted
consistent with the meaning of that term under
section 4(a)(2).
``(B) Exclusion.--Subparagraph (A) shall not apply
if--
``(i) the aggregate gross proceeds from the
offer, sale, or distribution of the applicable
ancillary asset (together with any related
assets sold in those offers, sales, or
distributions) were $5,000,000 or less
(adjusted for inflation) during the 12-month
period immediately following the date of the
first such offer, sale, or distribution; or
``(ii) the average daily aggregate value of
trading in the applicable ancillary asset in
all spot markets open to the public in the
United States for which trading volume is
generally available is $5,000,000 or less
(adjusted for inflation) during the 12-month
period (or such shorter period as the
Commission may determine) immediately following
the commencement of compliance with the
disclosure requirements under subsection (d)
(as determined pursuant to paragraph (2) of
this subsection), based on the knowledge of the
ancillary asset originator after due inquiry
(or, if the ancillary asset has not yet traded
on spot markets open to the public in the
United States, the trading volume is reasonably
expected to be $5,000,000 or less (adjusted for
inflation) during the 12-month period
immediately following the reporting date
specified by paragraph (2)).
``(C) Calculation.--For the purposes of this
paragraph, the calculation of daily aggregate value
shall be based on a reasonable calculation of public
data.
``(2) Commencement of compliance with specified initial and
periodic disclosure requirements.--
``(A) In general.--An ancillary asset originator
subject to the requirements of paragraph (1) shall
comply with the disclosure requirements under
subsection (d)--
``(i) before--
``(I) any initial offer, sale, or
distribution described in paragraph
(1)(A)(i); or
``(II) a secondary market offer,
sale, or distribution described in
paragraph (1)(A)(ii); and
``(ii) semiannually thereafter.
``(B) Exclusion.--The requirements of this
paragraph shall not apply to an offer, sale, or
distribution of an ancillary asset that occurs after
the effective date of the Digital Asset Market Clarity
Act if an ancillary asset originator has submitted a
certification under subsection (d)(3)(B) and the
Commission has not denied that certification within a
60-day period after the completion of the process under
that subsection.
``(3) Transition rule.--
``(A) In general.--An ancillary asset originator
that initially offered, sold, or distributed (or
otherwise controlled or caused the offer, sale, or
distribution of) a security involving an ancillary
asset before the effective date of the Digital Asset
Market Clarity Act shall comply with the periodic
disclosure requirements under subsection (d), if
applicable, beginning on the date that is 1 year after
that effective date.
``(B) Effect on certification.--An ancillary asset
originator, or any other certification covered party,
subject to this paragraph that meets the requirements
of subsection (d)(3) may furnish a certification as
provided in that subsection without complying with theperiodic disclosure requirements under subsection (d),
if the Commission has not denied that certification
within a 60-day period after the completion of the
process under that subsection.
``(C) Period of disclosures.--The disclosures
required under subparagraph (A) shall apply with
respect to the 3-year period preceding the effective
date described in that subparagraph.
``(4) Digital asset intermediaries.--
``(A) In general.--Other than as provided under
subparagraph (B), with respect to an ancillary asset
that is listed for trading on a digital asset
intermediary, that digital asset intermediary may, in
lieu of the applicable ancillary asset originator,
satisfy the requirements of subsection (d) in
accordance with such rules as the Commission shall
jointly adopt with the Commodity Futures Trading
Commission.
``(B) Allocation of disclosure responsibility.--
``(i) Originator filings.--A digital asset
intermediary may not satisfy the requirements
of subsection (d) in lieu of the applicable
ancillary asset originator, if--
``(I) the ancillary asset
originator is incorporated, organized,
or otherwise registered under the laws
of the United States or of any State;
and
``(II) the applicable ancillary
asset is--
``(aa) offered, sold, or
distributed after the effective
date of the Digital Asset
Market Clarity Act pursuant
to--
``(AA) an
investment contract
that is offered, sold,
or distributed pursuant
to Regulation Crypto,
as adopted pursuant to
section 103 of the
Lummis-Gillibrand
Responsible Financial
Innovation Act of 2026;
``(BB) the filing
of an effective
registration statement
under this Act (other
than a registration
statement on the form
described in section
239.31 or 239.33 of
title 17, Code of
Federal Regulations, or
the successor to either
such form);
``(CC) the filing
of an offering
statement described in
section 3(b)(2); or
``(DD) an offering
conducted pursuant to
section 4(a)(6); or
``(bb) first offered or
sold after the effective date
of the Digital Asset Market
Clarity Act in a transaction
described in paragraph
(1)(A)(ii).
``(ii) Commission determination.--
``(I) In general.--If, after
notice, comment, and the opportunity
for a hearing, the Commission
determines that it is in the public
interest or necessary for the
protection of investors, including with
respect to an ancillary asset
originator incorporated or organized in
a foreign jurisdiction, the Commission
may require an ancillary asset
originator, after a transition period,
to file the disclosures required under
subsection (d).
``(II) Extraterritorial effect.--
Subclause (I) shall apply
extraterritorially.
``(C) Standard of liability.--Notwithstanding any
other provision of this Act, it shall be unlawful for a
digital asset intermediary to file disclosures under
subsection (d) pursuant to this paragraph that contain
any material misstatement or omission to state a
material fact required to be stated therein, or
necessary to make the statements therein not
misleading, unless that digital asset intermediary did
not know (and, in the exercise of reasonable care,
could not have known) of that misstatement or omission.
``(5) Failure to comply.--Subject to the requirements of
this section, an ancillary asset shall not be listed for
trading on a digital asset intermediary if the Commission and
the Commodity Futures Trading Commission jointly find that the
ancillary asset originator that initially offered, sold, or
distributed the ancillary asset after the effective date of the
Digital Asset Market Clarity Act (or, if a digital asset
intermediary is satisfying the requirements of this subsection
in lieu of that ancillary asset originator in accordance with
paragraph (4), such digital asset intermediary) has materially
failed to furnish the required disclosures under this
subsection after a reasonable opportunity to cure, as provided
by joint rule of the Commission and the Commodity Futures
Trading Commission in a manner that is consistent with the
considerations under subsection (d)(5).
``(d) Specified Initial and Periodic Disclosure Requirements.--
``(1) In general.--
``(A) Furnishing of information.--An ancillary
asset originator that is subject to the requirements of
paragraph (1) or (3) of subsection (c), or a digital
asset intermediary acting in accordance with subsection
(c)(4), shall furnish to the Commission, in such form
as the Commission may prescribe by rule after providing
notice and the opportunity for comment, and until the
requirement terminates under paragraph (3) of this
subsection, the information described in paragraph (2)
of this subsection, to the extent that the information
is material and known, or reasonably knowable, to the
ancillary asset originator or digital asset
intermediary.
``(B) Requirements for rules.--A rule prescribed
under subparagraph (A) shall be reasonably tailored,
including by adjusting the scope, form, and content of
required disclosures, based on--
``(i) the size of the applicable ancillary
asset originator in accordance with section
108(a) of the Lummis-Gillibrand Responsible
Financial Innovation Act of 2026;
``(ii) the aggregate amount of ancillary
assets offered, sold, or distributed by the
applicable ancillary asset originator to the
public in the United States; and
``(iii) whether the applicable ancillary
asset and any related distributed ledger system
is subject to coordinated control, as defined
by the Commission pursuant to rules adopted
under section 104(b) of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026.
``(2) Categories of information.--The information required
under paragraph (1) shall include the following with respect to
the applicable ancillary asset originator and the related
ancillary asset:
``(A) Basic corporate information regarding the
ancillary asset originator and the ancillary asset
activities of the ancillary asset originator, which may
include the following items, as the Commission shall
determine by rule:
``(i) The experience of the ancillary asset
originator (or persons controlling the
ancillary asset originator) in developing
ancillary assets.
``(ii) If the ancillary asset originator
(or persons controlling the ancillary asset
originator) has previously distributed
ancillary assets, information on the subsequent
distribution history of those ancillary assets,
including price history, if the information is
publicly available.
``(iii) The activities that the ancillary
asset originator has taken in the relevant
disclosure period, and is projecting to take in
the 1-year period following the submission of
the disclosure, with respect to promoting the
use, value, or resale of the ancillary asset
(including any activity to facilitate the
creation or maintenance of a trading market for
the ancillary asset and any distributed ledger
system, application, or system that uses the
ancillary asset).``(iv) The anticipated cost of the
activities of the ancillary asset originator
described in clause (iii), whether the
ancillary asset originator has unencumbered,
liquid funds equal to that amount, and, if the
ancillary asset originator does not have those
funds, the anticipated plan of operations of
the ancillary asset originator for the portion
of time where those liquid funds are less than
the anticipated cost of the activities of the
ancillary asset originator.
``(v) The experience of the ancillary asset
originator with the use of a distributed ledger
system or distributed ledger technology.
``(vi) The identities and expertise of the
board of directors (or equivalent body) and
senior management of the ancillary asset
originator, the experience or functions of whom
are material to the development or value of the
ancillary asset, as well as any personnel
changes relating to the ancillary asset
originator during the period covered by the
disclosure.
``(vii) Financial statements of the
ancillary asset originator that are--
``(I) if the aggregate amount of
such ancillary assets offered, sold, or
distributed to the public does not
exceed $25,000,000 in gross proceeds,
reviewed by a public accountant that is
independent of the ancillary asset
originator; or
``(II) if the aggregate amount of
such ancillary assets offered, sold, or
distributed to the public exceeds
$25,000,000 in gross proceeds, audited
by a public accountant that is
independent of the ancillary asset
originator.
``(viii) A description of any legal
proceedings in which the ancillary asset
originator is engaged.
``(ix) Risk factors arising from the
activities of the ancillary asset originator
with respect to the ancillary asset, and not
generally applicable to other kinds of
ancillary assets, that may limit the utility or
liquidity of the ancillary asset, investor
demand with respect to the ancillary asset, or
the market price or value of the ancillary
asset.
``(x) Information relating to ownership of
the ancillary asset by--
``(I) persons owning not less than
10 percent of any class of equity
security or other ownership interest of
the ancillary asset originator; and
``(II) the board of directors (or
equivalent body) and senior management
of the ancillary asset originator, if
those individuals, in the aggregate,
own not less than 5 percent of the
ancillary asset.
``(xi) For any material transactions
involving the ancillary asset between the
ancillary asset originator and any related
person, a description, in the aggregate, of the
parties, the number of ancillary assets
involved, and a summary of any material
features of the transactions, including any
material terms or ongoing obligations.
``(xii) A summary, in the aggregate by
year, of transactions in ancillary assets
during the 4-year period preceding the
furnishing of the disclosure, by the ancillary
asset originator and persons that directly or
indirectly control the ancillary asset
originator.
``(xiii) Purchases or similar acquisitions
of ancillary assets by the ancillary asset
originator and affiliates of the ancillary
asset originator.
``(xiv) A statement, made in good faith,
from the chief financial officer of the
ancillary asset originator or equivalent
official, stating whether the ancillary asset
originator reasonably expects to maintain or
have the financial resources to continue
business as a going concern for the 12-month
period following the furnishing of the
disclosure, absent a change in circumstances.
``(xv) The current state and timeline for
the development of the distributed ledger
system to which the ancillary asset relates,
detailing if, how, and when the distributed
ledger system and the related ancillary asset
are intended to no longer be subject to
coordinated control, including by related
persons, if the distributed ledger system has
not yet received a certification under section
104(d) of the Lummis-Gillibrand Responsible
Financial Innovation Act of 2026.
``(B) Economic and technical information relating
to the ancillary asset, which may include the following
items, as the Commission shall determine by rule:
``(i) A general description of the
ancillary asset and the distributed ledger
system to which that ancillary asset relates,
including--
``(I) a plain-English description
of how the applicable distributed
ledger, distributed ledger system, or
distributed ledger application
functions;
``(II) the intended or known
functionality and uses of the ancillary
asset and any associated fees for use
or disposition of the ancillary asset;
``(III) the market for the
ancillary asset;
``(IV) other assets or services
that may compete with the ancillary
asset;
``(V) the total supply of the
ancillary asset or the manner and rate
of the ongoing production or creation
of the ancillary asset; and
``(VI) the governance and consensus
mechanism for the ancillary asset and
that distributed ledger system, if
applicable, including for validating
transactions and implementing changes
to the distributed ledger system, the
method of generating or mining
ancillary assets, and any process for
burning or destroying units of the
ancillary asset on a distributed ledger
system.
``(ii) If the ancillary asset originator
has offered, sold, or otherwise provided
ancillary assets to affiliates, investors,
employees, intermediaries, or resellers, a
description of the amount of assets offered,
sold, or otherwise provided to such persons and
a summary of any material resale restrictions
or other material obligations arising from
related contracts, agreements, or other
arrangements.
``(iii) If ancillary assets were
distributed by the ancillary asset originator
without charge or upon meeting certain
conditions, a description of the distributions,
in the aggregate, along with the identity of
any recipient that received more than 5 percent
of the total amount of ancillary assets
(calculated as a percentage of the total supply
of such asset at the time of distribution).
``(iv) The amount of ancillary assets owned
by the ancillary asset originator.
``(v) For the 12-month period following the
furnishing of the disclosure, a description of
the current state and anticipated timeline for
the development of the distributed ledger
system to which that ancillary asset relates,
including--
``(I) plans of the ancillary asset
originator to support (or to cease
supporting) the use or development of
the ancillary asset, including markets
for the ancillary asset and that
distributed ledger system;
``(II) the various roles that exist
or are intended to exist in connection
with any applicable distributed ledger,
distributed ledger system, or
distributed ledger application, such as
users, service providers, developers,
transaction validators, and governance
participants;
``(III) a discussion of any
mechanisms by which control orauthority are exerted with respect to
that distributed ledger system, if
applicable, or the related ancillary
asset; and
``(IV) any critical operational
dependencies of any applicable
distributed ledger, distributed ledger
system, or distributed ledger
application or of the related ancillary
asset.
``(vi) Risk factors that may materially
affect the liquidity of the ancillary asset,
investor demand with respect to the ancillary
asset, or the market price or value of the
ancillary asset.
``(vii) To the extent available to the
ancillary asset originator, the average daily
price for a constant unit of value of the
ancillary asset during the relevant reporting
period, as well as the 12-month high and low
prices for the ancillary asset, as calculated
based on the 3 exchanges with the largest
trading volume in that ancillary asset.
``(viii) If applicable, and subject to
cybersecurity best practices, information
relating to any external audit of the code and
functionality of the ancillary asset, including
the entity performing the audit and the
experience of the entity in conducting similar
audits.
``(ix) Information relating to custodial
services available for the ancillary asset.
``(x) Information on intellectual property
rights claimed or disputed relating to the
ancillary asset.
``(xi) A description of the technology
underlying the initial distribution and trading
of the ancillary asset, including the source
code for the ancillary asset, if applicable,
and technical requirements for holding,
accessing, and transferring the ancillary
asset.
``(xii) If applicable, a description of the
steps necessary to independently access,
search, and verify the transaction history of
the ancillary asset.
``(C) In addition to the information expressly
required to be included under subparagraphs (A) and
(B), the ancillary asset originator or digital asset
intermediary, as applicable, shall provide such further
material information, if any, as may be necessary to
ensure that the statements made in the disclosure are
not, in light of the circumstances under which the
statements are made, materially misleading.
``(3) Termination of requirements.--
``(A) Termination.--The obligation of an ancillary
asset originator to provide disclosures under paragraph
(1) shall terminate on the date that a certification
becomes effective under subparagraph (B), including
through an approval or deemed approval.
``(B) Certification.--
``(i) In general.--A certification covered
party may submit to the Commission a
certification, based on the knowledge of the
certification covered party after due inquiry
and supported by reasonable evidence, that
states--
``(I) that--
``(aa) during the 180-day
period preceding the date on
which the certification covered
party submits the
certification, and as of the
date of submission, no
certification covered party has
engaged in more than a nominal
level of entrepreneurial or
managerial efforts (as defined
by the Commission by rule),
which shall not, for the
purposes of this clause,
include providing
administrative services alone;
``(bb) any efforts
described in item (aa) were not
a primary factor in determining
the value of the related
ancillary asset (which may
include that any essential
promises made by the
certification covered party
have been fulfilled); and
``(cc) a certification is
effective under section 104(d)
of the Lummis-Gillibrand
Responsible Financial
Innovation Act of 2026;
``(II) in good faith that the
certification covered party does not
reasonably expect there to be any
efforts that would render the
certification covered party unable to
provide a new certification following
the date of the certification; and
``(III) that substantially all
material information that is reasonably
expected to contribute to the value of
the ancillary assets offered, sold, or
distributed to the public by the
ancillary asset originator is, and is
reasonably expected to remain,
available to the public.
``(ii) Change in circumstances.--
``(I) Effectiveness of the
certification.--A certification under
clause (i) shall remain effective until
the date on which any certification
covered party engages in
entrepreneurial or managerial efforts
that would render the certification
covered party unable to meet the
standards of the certification.
``(II) New disclosures required.--
On and after the date described in
subclause (I), the certification
covered party undertaking efforts
described in that subclause shall be
responsible for furnishing to the
Commission the disclosures required
under paragraph (1), including a
description of the change in
circumstances.
``(III) Periodic disclosures.--The
furnishing of disclosures pursuant to
subclause (II) shall restart the
schedule for periodic disclosures under
paragraph (1).
``(IV) Prior certifications.--A
certification submitted under clause
(i) before a change in circumstances
shall not be deemed false or misleading
solely by reason of subsequent
reengagement under this clause.
``(iii) Commission denial.--
``(I) In general.--The Commission
may deny a certification submitted
under clause (i) by a certification
covered party by--
``(aa) issuing a written
notice of objection to the
certification submitted under
clause (i) or upon determining
that more than a nominal level
of entrepreneurial or
managerial efforts has been
undertaken by any certification
covered party after the
submission of the
certification; and
``(bb) providing to the
certification covered party 10
days notice of the intent of
the Commission to deny that
certification, during which
period interested persons shall
have an opportunity to submit
written data, views, and
arguments relating to that
certification.
``(II) Requirements after notice of
intent.--After the 10-day period
described in subclause (I)(bb), the
Commission shall--
``(aa) upon request of the
certification covered party,
provide an opportunity for the
oral presentation of data,
views, and arguments by any
interested persons; and
``(bb) have a vote of the
Commission on whether to grantor deny the certification,
based on a finding as to
whether the applicable
ancillary asset meets the
standard for certification
under clause (i).
``(III) Final agency action.--
Denial under this clause constitutes
final agency action reviewable under
applicable law.
``(iv) Deemed approval.--If the Commission
fails to issue a written notice of objection or
non-objection within 90 days after submission
of a certification under clause (i), the
certification shall be deemed approved by the
Commission.
``(v) Withdrawal.--A certification covered
party may withdraw a certification submitted
under clause (i) at any time before that
certification is approved or denied.
``(vi) Designated commission office.--The
Commission shall designate an office that
shall--
``(I) acknowledge the receipt of
certifications submitted under clause
(i);
``(II) support certification
covered parties seeking certification
under clause (i) by providing guidance
regarding the mechanics of preparing
and submitting those certifications;
and
``(III) route certifications
submitted under clause (i), together
with any associated comments or
recommendations, to the appropriate
division or office of the Commission
for review.
``(vii) Advance review.--
``(I) In general.--A certification
covered party may submit a
certification under clause (i) before
the offer, sale, or distribution of a
network token.
``(II) Intended originator.--In
submitting for a certification for
advance review under subclause (I), a
certification covered party shall
identify the person intending to offer,
sell, or distribute the applicable
network token, and that person shall be
treated as the applicable ancillary
asset originator for the purposes of
this subparagraph.
``(viii) Tolling.--Any applicable period
specified in this subparagraph may be tolled,
for periods of not longer than 60 days, during
the 3-year period following the effective date
of the Digital Asset Market Clarity Act, upon a
showing in writing that the submitting
certification covered party has not
substantially responded to a request for
information from the Commission within a
reasonable time.
``(ix) Misstatements or omissions.--Any
material misstatement or omission to state a
material fact, including with respect to
continuing compliance, in a certification that
has become effective under this subparagraph
shall constitute grounds for the Commission,
consistent with the securities laws, to--
``(I) issue an order denying,
suspending, or revoking the
effectiveness of that certification;
and
``(II) pursue any appropriate
enforcement action.
``(4) Voluntary disclosure.--An ancillary asset originator
may voluntarily furnish to the Commission the information
required under this subsection if the ancillary asset
originator determines that it is reasonably likely that the
ancillary asset originator will become subject to the
requirements of paragraph (1) or (3) of subsection (c) in the
future.
``(5) Rulemaking considerations.--In adopting rules under
this subsection, the Commission shall--
``(A) require only such information as the
Commission finds to be necessary or appropriate to
protect investors, maintain fair, orderly, and
efficient markets, and facilitate capital formation,
innovation, and efficiency;
``(B) include in any final versions of those rules
a cost-benefit analysis evaluating the effects of any
such rule on innovation, efficiency, competition,
maintaining fair and orderly markets, and capital
formation, including the competitiveness of United
States market participants; and
``(C) act jointly with the Commodity Futures
Trading Commission to establish a process for
implementing the requirements of this subsection,
including with respect to listing and disclosures, that
is consistent and coordinated with the listing process
for digital asset intermediaries.
``(6) Limitations.--Rules adopted under this subsection
shall not require the inclusion of financial statements of an
ancillary asset originator, except with respect to the
disclosure of financial information under paragraph (2).
``(e) Exemptions.--The Commission may, by order, exempt an
ancillary asset originator or digital asset intermediary, or any class
of ancillary asset originators or digital asset intermediaries, from
specified requirements under subsection (d) if it is in the public
interest or for the protection of investors, consistent with the
purposes of this section and subject to such conditions as the
Commission determines necessary to protect investors and in the public
interest.
``(f) Confidential Treatment of Certain Information.--Subject to
Commission rules and procedures, an ancillary asset originator required
to furnish to the Commission disclosures under subsection (d), or a
digital asset intermediary furnishing those disclosures in lieu of such
an ancillary asset originator, may submit a request for confidential
treatment of information included in such disclosures pursuant to
procedures the Commission shall establish and that are modeled on or
identical to section 230.406 of title 17, Code of Federal Regulations,
or any successor regulation.
``(g) Effect of Failure to Comply.--The failure of an ancillary
asset originator or digital asset intermediary to comply with a
provision of this section shall not, by itself, cause an ancillary
asset offered, sold, or distributed by that ancillary asset originator
(or that the ancillary asset originator caused to be offered, sold, or
distributed) to be a security under any applicable law.
``(h) Liability for False or Misleading Statements.--
``(1) In general.--It shall be unlawful for an ancillary
asset originator, in any initial and periodic disclosure,
certification, or other document furnished under this section,
to make an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading.
``(2) Rule of construction.--Nothing in this subsection may
be construed as limiting the application of section 240.10b-5
of title 17, Code of Federal Regulations, or any successor
regulation, to false or misleading disclosure statements or
preventing any private right of action otherwise available
under the securities laws.
``(i) Special Disposition Restrictions by Related Persons.--
``(1) In general.--The Commission shall adopt rules,
consistent with section 104 of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026, establishing
limitations on the disposition of certain ancillary assets with
specified characteristics by related persons.
``(2) Considerations.--In adopting rules under paragraph
(1), the Commission shall consider what is necessary or
appropriate to protect investors, promote capital formation,
and maintain fair and orderly markets, which may include the
prevention of insider self-dealing or other abuses of a
privileged position.
``(j) Safe Harbor for Forward-Looking Statements.--In any action
against an ancillary asset originator or digital asset intermediary
arising under this Act that is based on an untrue statement of a
material fact or omission of a material fact necessary to make the
statement not misleading, no liability shall arise with respect to any
forward-looking statement (including any statement of plans,
objectives, projections, expectations, or assumptions concerning future
performance, financial position, development milestones, asset utility,
system adoption, or market conditions) made in an ancillary asset
disclosure, statement, or other document furnished pursuant to this
section, if the statement is--
``(1) identified as forward-looking; and
``(2) accompanied by meaningful cautionary language that
identifies important factors that could cause actual results to
differ materially.
``(k) Transactions Before Effective Date.--
``(1) Primary transactions.--Notwithstanding any other
provision of law, neither the Commission nor any private
plaintiff may initiate, pursue, or maintain any action, or an
appeal of an action, for a violation of section 5 or 12(a)(1)
of this Act arising from any offer, sale, or distribution of
ancillary assets occurring before the effective date of the
Digital Asset Market Clarity Act, provided that the ancillary
asset originator or a certification covered party complies with
any applicable requirements under subsection (c)(3).
``(2) Primary transactions related to fraud.--Nothing inparagraph (1) shall limit the ability of the Commission to
bring an action based on the anti-fraud or anti-manipulation
authorities of the Commission.
``(3) Secondary transactions.--Notwithstanding any other
provision of law, the offer, sale, or distribution of a network
token by a person occurring before the effective date of the
Digital Asset Market Clarity Act shall be treated as not
involving the offer, sale, or distribution of a security
under--
``(A) section 2(a)(1);
``(B) section 3(a) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a));
``(C) section 2(a) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a));
``(D) section 202(a) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a));
``(E) section 16 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78lll); or
``(F) any applicable requirement of State law that
is functionally equivalent to the provisions described
in subparagraphs (A) through (E), including any
provision of State law that directly or indirectly
prohibits, limits, or imposes any conditions on the
use, offer, sale, transfer, or disposition of a network
token in a manner that is--
``(i) not substantially similar to
prohibitions, limitations, or conditions
imposed by that State relating to assets that
are commodities under the laws of that State;
and
``(ii) inconsistent with this section.
``(4) No inference of liability.--Nothing in paragraph (1),
(2), or (3) may be construed as an admission, acknowledgment,
or inference of liability for any act, transaction, or conduct
occurring before the effective date of the Digital Asset Market
Clarity Act.
``(5) Rules of construction.--Nothing in this subsection
may be construed to--
``(A) impair vested rights or contractual
obligations lawfully established before the effective
date of the Digital Asset Market Clarity Act; or
``(B) limit the authority of the Commission to
bring an action against an ancillary asset originator
or a related person for securities fraud or
manipulation in connection with a statement, a
disclosure, or conduct by that ancillary asset
originator or related person, except that the
Commission may not exercise that authority to treat a
network token as a security or regulate secondary
market trading.
``(l) Rules of Construction.--Nothing in this section may be
construed to--
``(1) preclude the Commission from bringing an appropriate
action or entering into a settlement agreement relating to a
violation or alleged violation of this section;
``(2) permit compliance with this section to be used in any
administrative or judicial proceeding as evidence that an
ancillary asset is a security;
``(3) prohibit the offer, sale, or distribution of a
digital asset in reliance on an exemption from registration
under this Act, other than Regulation Crypto (as adopted
pursuant to section 103 of the Lummis-Gillibrand Responsible
Financial Innovation Act of 2026); or
``(4) require more than 1 person to furnish the disclosures
required under subsection (d), unless otherwise provided by the
Commission by rule.
``(m) Anti-Evasion.--
``(1) Anti-evasion.--The Commission may issue such
regulations as the Commission considers necessary or
appropriate in the public interest or for the protection of
investors to administer and prevent willful evasion of--
``(A) this section;
``(B) sections 103 and 104 of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026; and
``(C) with respect to an ancillary asset originator
and related persons, the securities laws amended by the
Lummis-Gillibrand Responsible Financial Innovation Act
of 2026.
``(2) Considerations.--In adopting rules under this
section--
``(A) the form, label, and written documentation of
an agreement, contract, or transaction, or an entity,
shall not be dispositive in determining whether the
agreement, contract, or transaction, or the entity, has
been entered into or structured to willfully evade the
requirements of this section;
``(B) the Commission may consider whether, based on
the totality of facts and circumstances, the principal
purpose of any arrangement, allocation of rights,
interposition of entities, or sequencing of steps is to
willfully circumvent the requirements of this section
or the restrictions set forth in section 104 of the
Lummis-Gillibrand Responsible Financial Innovation Act
of 2026, by satisfying the literal terms while
defeating the purpose and policy of this section;
``(C) for purposes of subparagraph (B), factors
that may be considered, without being dispositive, in
determining whether a principal purpose to willfully
circumvent this section exists may include--
``(i) removal of a disqualifying financial
right described in subsection (a)(7)(B) from
the instrument coupled with its re-introduction
through a substantially equivalent right held
by a related person or controlled vehicle,
including, by way of example, any nominally
independent foundation, decentralized
autonomous organization, laboratory, or similar
arrangement;
``(ii) circular or non-commercial flows of
value among related persons designed to
simulate network utility; and
``(iii) timing of steps designed to
trigger, accelerate, or delay certification or
termination of disclosure obligations without a
material change in circumstances relating to
the asset; and
``(D) the Commission shall provide that evasion
shall not have occurred if an agreement, contract, or
transaction is entered into for a legitimate business
purpose and is not structured with a principal purpose
of willfully circumventing the requirements of this
section.
``(n) Fiduciary Obligations.--
``(1) Fiduciary duties under state law.--Nothing in this
section, or in any rule issued under this section, may be
construed to limit, preempt, or otherwise affect any fiduciary
duty of an ancillary asset originator, or of any director,
officer, or controlling person of an ancillary asset
originator, arising under the laws of any State.
``(2) Preservation of fiduciary and other duties to
customers, clients, and shareholders.--Nothing in this section,
or in any rule issued under this section, may be construed to
limit, preempt, or otherwise affect any fiduciary duty that any
person owes to a customer, client, or shareholder under any
other provision of Federal or State law, including in
connection with the offer, sale, transfer, distribution, or
custody of an ancillary asset.
``(o) Savings Clause.--Except as provided by the Digital Asset
Market Clarity Act and the amendments made by that Act, nothing in this
section may be construed to limit the authority of the Commission under
the securities laws.''.
(b) Rulemaking.--Not later than 360 days after the date of
enactment of this Act, the Commission shall conduct a notice and
comment rulemaking as necessary or appropriate to carry out section 4B
of the Securities Act of 1933, as added by subsection (a).SEC. 103. EXEMPTION AND RULEMAKING FOR CERTAIN TRANSACTIONS INVOLVING
ANCILLARY ASSETS.
(a) Adoption of Regulation Crypto.--The Commission shall adopt
rules under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), which shall be
referred to collectively as ``Regulation Crypto'', to implement
subsections (b), (c), and (d) of this section.
(b) Exemption for Certain Transactions Involving Ancillary
Assets.--
(1) Exemption.--
(A) In general.--Rules adopted by the Commission
under this section shall provide that the registration
requirements of the Securities Act of 1933 (15 U.S.C.
77a et seq.) shall not apply to an offer, sale, or
distribution of an investment contract involving an
ancillary asset, if the offer, sale, or distribution
does not exceed the greater of--
(i) $50,000,000 in gross proceeds per
calendar year for a period of not longer than 4
years; or
(ii) 10 percent of the total dollar value
of those ancillary assets that are outstanding,
as of the date of that offer, sale, or
distribution.
(B) Continued application of certain provisions.--
Sections 12(a)(2) and 17 of the Securities Act of 1933
(15 U.S.C. 77l(a)(2), 77q) shall apply with respect to
an offer, sale, or distribution of an investment
contract involving an ancillary asset that is described
in subparagraph (A).
(2) Limitation.--An ancillary asset originator may not
raise more than $200,000,000 in total gross proceeds in
reliance on the rules adopted under subsection (a).
(3) Review and adjustment for inflation.--
(A) In general.--Not later than 2 years after the
date of enactment of this Act, and every 2 years
thereafter, the Commission shall--
(i) review the amounts described in
paragraphs (1)(A)(i) and (2);
(ii) adjust the amounts described in
paragraphs (1)(A)(i) and (2) to account for
inflation; and
(iii) increase the amounts described in
paragraphs (1)(A)(i) and (2) as the Commission
determines appropriate, if that action would be
in the public interest and consistent with the
protection of investors.
(B) Report.--If the Commission, after conducting a
review under subparagraph (A), determines not to
increase the amount described in paragraph (1)(A)(i) or
(2) (other than to adjust that amount for inflation, as
required under subparagraph (A)(ii) of this paragraph),
the Commission shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of
Representatives a report detailing the reasons that the
Commission did not increase that amount.
(c) Conditions for Exemption.--The following conditions shall apply
to the exemption provided under subsection (b):
(1) Initial disclosures.--Not later than 30 days before the
date on which the applicable ancillary asset originator, any
affiliate of the ancillary asset originator, or any underwriter
of an investment contract, offers, sells, or distributes an
ancillary asset in reliance on the rules adopted under
subsection (a), the ancillary asset originator shall furnish to
the Commission the disclosures required under section 4B(d) of
the Securities Act of 1933, as added by this Act, subject to
the periodic semiannual disclosure requirements of that
section.
(2) Coordinated control.--If the applicable ancillary asset
is reliant on a distributed ledger system that, together with
that ancillary asset, is subject to coordinated control,
including by related persons, the restrictions on disposition
under section 104 shall apply.
(3) Criteria.--The applicable ancillary asset originator
may not be--
(A) a company that is not organized under, and
subject to, the laws of a State or territory of the
United States or the District of Columbia;
(B) a development-stage company that either--
(i) has no specific business plan or
purpose; or
(ii) has indicated that the business plan
of the company is to merge with or acquire an
unidentified company;
(C) an investment company (as defined in section
3(a) of the Investment Company Act of 1940 (15 U.S.C.
80a-3(a))) or a company (as defined in section 2 of
that Act (15 U.S.C. 80a-2)) that would be an investment
company under section 3(a) of that Act (15 U.S.C. 80a-
3(a)) but for the exclusions provided from that
definition by section 3(c) of that Act (15 U.S.C. 80a-
3(c)), provided that, solely for the purposes of
evaluating eligibility to rely on the exemption
provided under subsection (b), an ancillary asset
originator shall not be deemed to be an investment
company solely by virtue of investing, reinvesting,
owning, holding, or trading ancillary assets, including
ancillary assets offered for sale by the ancillary
asset originator;
(D) a person issuing fractional undivided interests
in other commodities;
(E) a person that is or has been subject to any
order of the Commission entered pursuant to section
12(j) of the Securities Exchange Act of 1934 (15 U.S.C.
78l(j)) after the date of enactment of this Act and
during the 5-year period preceding the offer and sale;
(F) a person that is or has been disqualified
pursuant to section 230.506(d) of title 17, Code of
Federal Regulations, or any successor regulation,
unless waived by order of the Commission;
(G) a person that is or has been disqualified
pursuant to section 230.251 through 230.263 of title
17, Code of Federal Regulations (commonly referred to
as ``Regulation A''), or any successor regulations,
unless waived by order of the Commission; or
(H) a person convicted of a felony offense
involving insider trading, embezzlement, cybercrime,
money laundering, financing of terrorism, or financial
fraud, within the last 10 years.
(4) Furnishing notice of reliance.--The applicable
ancillary asset originator shall electronically furnish to the
Commission a notice of reliance on the rules adopted under
subsection (a) not fewer than 30 days before the date on which
the ancillary asset originator first offers, sells, or
distributes an ancillary asset in reliance on those rules,
which shall contain the following information:
(A) The name of the ancillary asset originator.
(B) A statement by a person duly authorized by the
ancillary asset originator that the conditions of those
rules are satisfied.
(C) The website where the summary documents of the
ancillary asset originator, if any, may be found and
made available for public consumption.
(D) An email address at which the ancillary asset
originator may be contacted.
(5) Public availability.--The Commission shall require that
the disclosures furnished to the Commission under section 4B(d)
of the Securities Act of 1933, as added by this Act, be made
publicly available in a manner that provides timely and
continuing access.
(6) Form and manner.--The disclosures furnished to the
Commission under section 4B(d) of the Securities Act of 1933,
as added by this Act, shall be prepared, furnished, and made
public in the form and manner prescribed by the Commission,
including through the use of electronic furnishing, web
posting, machine-readable formats, and plain-English legends,
as the Commission determines necessary or appropriate in the
public interest or for the protection of investors.
(d) Status Under Securities Laws.--
(1) In general.--A disclosure furnished under section 4B of
the Securities Act of 1933, as added by this Act, including an
initial or periodic disclosure furnished under subsection (d)
of such section 4B, and any other document furnished under the
rules adopted under subsection (a) of this section, shall be
deemed to be--
(A) a ``prospectus'' solely--
(i) for purposes of section 12(a)(2) of the
Securities Act of 1933 (15 U.S.C. 77l(a)(2));
and
(ii) with respect to the person that is the
purchasing party in a transaction made in
reliance on the rules adopted under subsection
(a); and
(B) a ``statement'' solely for purposes of--
(i) section 17(a) of the Securities Act of
1933 (15 U.S.C. 77q(a));
(ii) section 10(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78j(b)); and
(iii) section 240.10b-5 of title 17, Code
of Federal Regulations, or any successor
regulation.
(2) Registration statement.--
(A) In general.--A disclosure furnished under
section 4B of the Securities Act of 1933, as added by
this Act, including an initial or periodic disclosure
furnished under subsection (d) of such section 4B, or
any other document furnished pursuant to the rules
adopted under subsection (a), shall not be deemed to be
a ``registration statement'' for purposes of section 11of the Securities Act of 1933 (15 U.S.C. 77k) or to
have been filed under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
(B) Civil liability.--Liability under section
12(a)(2) of the Securities Act of 1933 (15 U.S.C.
77l(a)(2)) relating to a disclosure furnished under
section 4B of the Securities Act of 1933, as added by
this Act, including an initial or periodic disclosure
furnished under subsection (d) of such section 4B, or
any other document furnished pursuant to the rules
adopted under subsection (a), shall only apply to the
person making statements in that disclosure or other
document, and only a person that purchased an ancillary
asset in a transaction involving disclosures provided
pursuant to the rules adopted under subsection (a)
shall have a claim under such section 12(a)(2).
(3) Forward-looking statements.--In any action against an
ancillary asset originator under this title or the amendments
made by this title that is based on an untrue statement of a
material fact or omission of a material fact necessary to make
the statement not misleading, no liability shall arise with
respect to any forward-looking statement (including a statement
of plans, objectives, projections, expectations, or assumptions
concerning future performance, financial position, development
milestones, digital asset utility, system adoption, or market
conditions) made in a disclosure, statement, or other document
furnished pursuant to section 4B of the Securities Act of 1933,
as added by this Act, including an initial or periodic
disclosure furnished under subsection (d) of such section 4B,
or furnished under this section, if the statement is--
(A) identified as forward-looking; and
(B) accompanied by meaningful cautionary language
that identifies important factors that could cause
actual results to differ materially.SEC. 104. SPECIAL DISPOSITION RESTRICTIONS BY RELATED PERSONS.
(a) Definitions.--In this section:
(1) Certification covered party.--The term ``certification
covered party'' means, with respect to an ancillary asset--
(A) the ancillary asset originator;
(B) a subsidiary of the ancillary asset originator;
(C) a related person of the ancillary asset
originator; or
(D) any entity that directly or indirectly controls
or is controlled by a common entity with an ancillary
asset originator.
(2) Covered token.--The term ``covered token'' means any
unit of an ancillary asset that was acquired from the ancillary
asset originator with respect to that ancillary asset or an
agent or underwriter thereof.
(3) Distributed ledger control person.--The term
``distributed ledger control person'' means, with respect to a
distributed ledger system, any person or group of persons under
common control, other than a decentralized governance system,
that has the unilateral authority, directly or indirectly,
through any contract, arrangement, understanding, relationship,
or otherwise, to control or materially alter the functionality,
operation, or rules of consensus or agreement of the
distributed ledger system or a related ancillary asset.
(b) Coordinated Control.--
(1) In general.--The Commission shall adopt rules, based on
the criteria described in paragraph (2), to define the
circumstances under which a distributed ledger system, together
with a related ancillary asset, is considered to be under
coordinated control.
(2) Considerations.--In adopting rules under paragraph (1),
the Commission shall consider the following criteria as indicia
that a distributed ledger system described in that paragraph,
together with the related ancillary asset, is considered to be
under coordinated control:
(A) Open digital system.--The extent to which the
distributed ledger system is not--
(i) a distributed ledger, the protocol of
which is freely and publicly available;
(ii) a distributed ledger application the
source code of which is--
(I) freely and publicly available
via open-source code; and
(II) recorded on a distributed
ledger described in clause (i); or
(iii) an analogue to a distributed ledger
or distributed ledger application described in
clause (i) or (ii), as determined by the
Commission by rule or order.
(B) Permissionless and credibly neutral digital
system.--The extent to which a person or group of
persons under common control has--
(i) the unilateral authority, via operation
of the distributed ledger system, to restrict,
censor, or prohibit use of the distributed
ledger system, including any applicable system-
based user activity; or
(ii) private permissions, hard-coded
privileges, or similar capabilities granted by
the source code of the distributed ledger
system that provides preferential treatment
compared to other similarly situated persons.
(C) Distributed digital network.--The extent to
which a person or group of persons under common control
has beneficial ownership of, in the aggregate, more
than 49 percent of the total amount of outstanding
units of the ancillary asset or voting power with
respect to any governance system that relates to the
distributed ledger system.
(D) Autonomous distributed ledger system.--The
extent to which--
(i) the distributed ledger system has not
yet reached an autonomous state; and
(ii) a person or group of persons under
common control has the unilateral authority,
directly or indirectly, to alter or change the
functionality, operation, or rules of consensus
or agreement of the distributed ledger system.
(E) Economic independence.--The extent to which the
primary programmatic mechanisms of the distributed
ledger system that are intended to facilitate
substantial value accrual to the ancillary asset
through the functioning of the distributed ledger
system are not yet functional.
(3) Safe harbors.--
(A) In general.--The Commission shall establish
safe harbors under which a distributed ledger system,
together with a related ancillary asset, will not be
considered to be under coordinated control for the
purposes of section 103(c)(2).
(B) Decentralized governance systems.--
(i) In general.--For the purposes of this
section, a decentralized governance system
shall not be considered to be a person or a
group of persons under common control.
(ii) Distributed ledger systems.--For the
purposes of this section, a distributed ledger
system, together with any related ancillary
asset, shall not be precluded from being
considered to not be under coordinated control
solely based on a functional, administrative,
clerical, or ministerial action of a
decentralized governance system, including any
such action taken by a person acting on behalf
of and at the direction of that decentralized
governance system, as determined by the
Commission and consistent with the protection
of investors, maintenance of fair, orderly, and
efficient markets, and the facilitation of
capital formation.
(C) Emergency measures.--For the purposes of this
section, a pre-defined, temporary, rules-based
cybersecurity emergency measure that is exercised by an
incident response or security council exclusively in
response to a specific and documented cybersecurity
incident or imminent threat pursuant to publicly
disclosed, on-chain authorization mechanisms, that is
strictly limited in scope and duration solely to
address that cybersecurity incident or imminent threat,
and that is exercised without unilateral control by any
single person, shall not alone constitute common
control or an agreement to work in concert, if those
rules and mechanisms, including the procedures and
operational limits governing the emergency measure, are
disclosed in publicly available written documentation
reasonably available to the applicable Federal agency
by a decentralized autonomous organization or similar
legal entity sufficiently in advance of any exercise of
the emergency measure.
(D) Nonexclusive.--The safe harbors established
under subparagraphs (A), (B), and (C) shall not be
exclusive and the Commission shall consider such other
circumstances as the Commission finds in the public
interest or for the protection of investors.
(4) Evidence.--The Commission may, in adopting rules under
this subsection, require such certifications, third party
verifications, or other evidence as the Commission determines
necessary or appropriate to determine whether a distributed
ledger system is under coordinated control for the purposes of
section 103(c)(2).
(5) Rule of construction.--For purposes of this
subsection--
(A) the existence or termination of coordinated
control shall be determined independently of whether
entrepreneurial or managerial efforts described in
section 4B of the Securities Act of 1933, as added by
this Act, have been completed; and
(B) the elimination of coordinated control shall be
a prerequisite to the completion of efforts described
in subparagraph (A).
(c) Special Restrictions on Disposition.--The Commission shall
adopt rules that provide that, with respect to transactions involving
an ancillary asset for which disclosures are required pursuant to
section 4B(d) of the Securities Act of 1933, as added by this Act, when
a sale of that ancillary asset is made by a related person, the
following restrictions on that sale shall apply:
(1) Sales prior to certification.--If the covered token was
acquired after the effective date of this Act and principally
relies on a distributed ledger system, the covered token may be
sold by a related person before that distributed ledger system
is certified as not subject to coordinated control, pursuant to
subsection (d), if--
(A) with respect to that distributed ledger system,
the disclosures required pursuant to section 4B(d) of
the Securities Act of 1933, as added by this Act, have
been furnished;
(B) the holder of the covered token has held the
units for not less than 12 months; and
(C) the amount of covered tokens sold in any 12-
month period by the related person is--
(i) not greater than an amount to be
determined by the Commission pursuant to notice
and comment rulemaking not later than 360 days
after the date of enactment of this Act, which
rulemaking shall consider what is necessary or
appropriate in the public interest, including,
among other things, the protection of
investors, whether the action will promote
efficiency, competition, and capital formation,
and how to foster the development ofdistributed ledger systems that are not subject
to coordinated control; and
(ii) in no case equal to or greater than
the amount determined by the Commission
pursuant to the rulemaking described in
paragraph (2)(C).
(2) Sales after certification.--If the covered token was
acquired after the effective date of this Act and principally
relies on a distributed ledger system that is certified as not
subject to coordinated control pursuant to subsection (d), the
covered token may be sold by a related person, if--
(A) with respect to that distributed ledger system,
the disclosures required pursuant to section 4B(d) of
the Securities Act of 1933, as added by this Act, have
been furnished;
(B) the holder of the covered token has held the
units for not less than 6 months; and
(C) the amount of covered tokens sold in any 12-
month period by the related person is not greater than
an amount to be determined by the Commission pursuant
to rulemaking that shall not be less than 10 percent of
the total amount of outstanding units of such ancillary
assets.
(3) Sales of pre-existing covered tokens.--If the covered
token was acquired before the effective date of this Act and
principally relies on a distributed ledger system, the covered
token may be sold by a related person if--
(A) in the case that the distributed ledger system
has not been certified as not subject to coordinated
control pursuant to subsection (d)--
(i) the disclosures required pursuant to
section 4B(d) of the Securities Act of 1933, as
added by this Act, have been furnished; and
(ii) the holder of the covered token has
held the units for not less than 12 months; and
(B) in the case that the distributed ledger system
has been certified as not subject to coordinated
control pursuant to subsection (d), the holder of the
covered token has held the units for not less than 6
months.
(4) Limitations on transactions by distributed ledger
control persons.--If the holder of an ancillary asset that
principally relies on a distributed ledger system that has been
certified as not subject to coordinated control is a
distributed ledger control person with respect to that
distributed ledger system, that control person may resell that
ancillary asset if--
(A) that control person furnishes notice to the
Commission, in a form and manner determined by the
Commission, that the person has or intends to obtain an
authority described in subparagraph (B) with respect to
the distributed ledger system;
(B) that distributed ledger control person
furnishes disclosures to the Commission, in a form and
manner determined by the Commission, describing the
material activities, as determined by the Commission,
of the control person;
(C) with respect to that distributed ledger system,
disclosures have been furnished pursuant to section
4B(d) of the Securities Act of 1933, as added by this
Act; and
(D) that control person has satisfied such other
requirements applicable to that control person that may
be established by the Commission to prevent
manipulation or distortion of the value of the
ancillary asset, including resale restrictions
consistent with those applied to related persons that
are not control persons.
(d) Certification of Non-Control by Related Persons.--
(1) Submission.--With respect to an ancillary asset, a
certification covered party may furnish to the Commission a
written certification, in such form and manner as the
Commission may specify by rule consistent with subsection (b),
stating that the distributed ledger system is not under
coordinated control.
(2) Automatic effectiveness.--A certification furnished
under paragraph (1) shall become effective, and the distributed
ledger system shall be deemed not to be under coordinated
control, on the date that is the earlier of--
(A) the date on which the Commission notifies the
certification covered party in writing that the
Commission does not object to the certification; or
(B) if the Commission has not denied the
certification under paragraph (3), the date that is 90
days after the date on which the certification is
furnished, or such shorter period as the Commission may
determine by rule.
(3) Denial.--
(A) In general.--The Commission may deny a
certification furnished under paragraph (1)--
(i) only during the 90-day period beginning
on the date on which the certification is
furnished, or such shorter period as the
Commission may determine by rule, or upon
determining, based on reasonable evidence, that
a material change in circumstances has occurred
after the furnishing of the certification; and
(ii) by providing to the certification
covered party 10 days notice of the intent of
the Commission to deny that certification.
(B) Requirements after notice of intent.--After the
10-day period described in subparagraph (A)(ii), the
Commission shall--
(i) conduct a hearing; and
(ii) vote to deny the certification if
there is a finding that the applicable
ancillary asset does not meet the standard for
certification that the operations of the
distributed ledger system are not under such
coordinated control.
(C) Final agency action.--Denial under this
paragraph constitutes final agency action reviewable
under applicable law.
(4) Verification.--The Commission may, by rule, require
appropriate third-party verification of a certification
furnished under paragraph (1).
(e) Disgorgement.--
(1) In general.--Any profit realized by a related person
from the sale of an ancillary asset in violation of the
restrictions under subsection (c) shall inure to, and be
recoverable by, the holders of the ancillary asset,
irrespective of any intention of holding the asset.
(2) Enforcement.--An action to recover profit described in
paragraph (1)--
(A) may be instituted at law or in equity in any
court of competent jurisdiction of the United States
by--
(i) the applicable ancillary asset
originator;
(ii) the owner of any units of the
applicable ancillary asset; or
(iii) the owner of any units of the
applicable ancillary asset, in the name and on
behalf of the ancillary asset originator, if
the ancillary asset originator--
(I) fails or refuses to bring the
action within 60 days after a written
request by any owner of not less than 5
percent of the total amount of
outstanding units of that ancillary
asset; or
(II) fails to diligently prosecute
the action; and
(B) shall be brought not later than 2 years after
the date that profit was realized.
(f) Exemption From Disposition Restrictions.--The Commission shall
adopt rules that provide for the following exemptions from, or waivers
to, disposition restrictions described in subsection (c):
(1) Material hardship exemption.--
(A) In general.--Subject to subparagraph (B), the
Commission shall adopt rules and procedures to exempt
parties from related person restrictions with respect
to an ancillary asset where those restrictions conflict
with an obligation or requirement arising from one of
the following material hardships on a related person
with respect to the ancillary asset or the ancillary
asset originator:
(i) The death of the related person.
(ii) The bankruptcy or insolvency of the
related person.
(iii) The dissolution, merger, or
acquisition of a corporate person.
(iv) Tax liability relating to the receipt
of the applicable ancillary asset.
(v) Such other material hardships as may be
designated by the Commission.
(B) Requirements.--The rules and procedures adopted
under subparagraph (A) shall be designed to mitigate
the risk that parties may seek to structure holdings to
evade resale restrictions and exempt or waive the
application of resale restrictions only to the extent
necessary to address the identified material hardship.
(2) Liquidity provision exemption.--The Commission shall
adopt rules to exempt from disposition restrictions parties
buying or selling an ancillary asset through regular two-sided
bidding and offering for the purposes of providing market
liquidity, provided that such activities are not undertaken for
the purpose of evading the requirements of this section.
(3) Agency exemption.--The Commission shall adopt rules
that exempt a party acting as a custodian, trading platform,
broker, dealer or other agent from being treated as the ownerof customer or client assets or from being restricted in
facilitating sales on behalf of a customer or client if the
agent is otherwise determined to be a related person.
(4) Exchange-traded product and passive fund exemption.--
The Commission shall adopt rules to exempt from disposition
restrictions, as appropriate--
(A) exchange-traded products, the shares of which
are created and redeemed by authorized participants and
registered with the Commission; and
(B) passive pooled investment vehicles, whether or
not the shares of which are registered with the
Commission.
(g) Related Person Disclosure Requirements.--The Commission shall
adopt rules that provide for reporting to the Commission certain
information with respect to ancillary asset holdings or transactions
relating to ancillary assets by related persons, subject to the
disposition restrictions provided in subsection (c):
(1) Disclosure reports.--
(A) Disclosure of related person status.--Any
person, or group of persons under common control,
directly or indirectly, that acquire beneficial
ownership of 10 percent or more of the total amount of
outstanding units of any such ancillary asset, measured
as of the end of any calendar quarter, shall furnish
initial and continuing reports as determined by the
Commission.
(B) Sales of covered tokens by related person prior
to certification of non-control.--Quarterly reports
relating to the number of ancillary assets sold by a
related person in a form as required by the Commission.
(C) Sales of covered tokens by related person after
certification of non-control.--Quarterly reports
relating to the number of ancillary assets sold by a
related person that holds, at any point during the
applicable calendar quarter, in excess of 5 percent of
the total amount of outstanding units of such ancillary
asset in a form as required by the Commission.
(D) Sales of pre-existing covered tokens by related
person.--Quarterly reports relating to the number of
ancillary assets sold by a related person that holds in
excess of 5 percent of the total amount of outstanding
units of such ancillary asset in a form as required by
the Commission.
(2) Confidential treatment.--The Commission may provide for
confidential treatment of information provided under this
subsection, or may exempt certain related persons from the
requirement to furnish a report required under this subsection,
pursuant to procedures the Commission shall establish and that
are modeled on or identical to section 230.406 of title 17,
Code of Federal Regulations, or any successor regulation.
(3) Good-faith furnishing standard.--
(A) In general.--Any obligation to furnish
information under this section applies only to the
furnisher acting on its own behalf and is limited to
information that is material and known, or reasonably
knowable after due inquiry, to that furnisher.
(B) Reliance.--A furnisher described in
subparagraph (A) may reasonably rely on public sources
and third-party attestations where appropriate.
(C) Liability.--Furnishing in good faith pursuant
to this section shall not create liability for
information outside the furnisher's possession,
custody, or control, or for omissions of information
the furnisher could not reasonably obtain without
breaching legal privilege, contractual confidentiality,
or other applicable law.
(D) Other persons.--Any person other than the
furnisher may, in good faith and absent knowledge to
the contrary, presume that a report required under
paragraph (1) has been timely furnished.
(4) Life cycle event considerations.--The Commission shall
adopt rules establishing streamlined processes for the
following life cycle events:
(A) Successor disclosures in corporate
transactions.--The transfer of disclosure obligations
under this section to a successor entity in the event
of a merger, acquisition, or sale of substantially all
assets relating to the ancillary asset activities,
including a notice of succession.
(B) Cessation of work.--The cessation or suspension
of ongoing disclosure obligations under this section
where the ancillary asset originator or related person
no longer engages, and does not reasonably expect to
engage, in entrepreneurial or managerial efforts with
respect to the ancillary asset or its associated
distributed ledger system, including a notice of
cessation of work.
(C) Contractual termination.--The termination of
disclosure obligations under this section that attach
solely by virtue of a person's status as a related
person when a contractual arrangement with the
ancillary asset originator or distributed ledger system
has concluded, including a notice of cessation of
contractual relationship.
(h) Rule of Construction.--Nothing in this section may be construed
to--
(1) limit or impair the anti-fraud or anti-manipulation
authorities of the Commission; or
(2) preclude reliance on Regulation Crypto, as adopted
under section 103, or any other effective registration
statement or exemption from registration under the Securities
Act of 1933 (15 U.S.C. 77a et seq.), as amended by this Act.SEC. 105. CHARACTERISTICS OF NETWORK TOKENS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Commission shall adopt rules that provide that--
(1) a network token shall not be considered as providing a
disqualifying financial right under section 4B(a)(7)(B) of the
Securities Act of 1933, as added by this Act, if the market
value of the network token is primarily derived, or is
reasonably expected to be primarily derived, from a distributed
ledger system or from the broader adoption and use of such a
system, including where--
(A) the mechanisms of the distributed ledger system
collect, receive, accrue, or distribute consideration
from the functioning of the distributed ledger system;
(B) the network token provides governance
capabilities with respect to a distributed ledger
system or a decentralized governance system;
(C) the value of the network token appreciates or
depreciates due to the use of, or in response to the
efforts, operations, or financial performance of, the
distributed ledger system to which the network token
relates or its decentralized governance system; or
(D) for a network token that meets the definition
of an ancillary asset, the value of the network token
appreciates or depreciates due to the efforts of the
ancillary asset originator or related person; and
(2) participants in offers or sales of network tokens
providing financial interests described in paragraph (1) shall
not be precluded from relying on the exemption from
registration under section 4B(b) of the Securities Act of 1933,
as added by this Act.
(b) Effect of Rulings and Actions Before Date of Enactment.--
(1) In general.--If, before the date of enactment of this
Act, a court of the United States, in a non-appealable final
judgment, found that a digital asset transaction was not an
offer, sale, or distribution of a security, a digital asset
transferred pursuant to that offer, sale, or distribution shall
not be considered to be a security under any provision of law
described in subsection (b)(2) of section 4B of the Securities
Act of 1933, as added by this Act.
(2) Network tokens.--A network token shall not be
considered to be an ancillary asset, and shall not be
considered to be a security under any provision of law
described in subsection (b)(2) of section 4B of the Securities
Act of 1933, as added by this Act, if, on January 1, 2026, any
units of that network token were the principal asset of an
exchange-traded product--
(A) not registered under the Investment Company Act
of 1940 (15 U.S.C. 80a-1 et seq.); and
(B) the shares of which are listed and traded on a
national securities exchange registered under section 6
of the Securities Exchange Act of 1934 (15 U.S.C. 78f).SEC. 106. EXEMPTIVE AUTHORITY.
(a) Continued Applicability.--Nothing in this Act, or any amendment
made by this Act, may be construed to amend, limit, impair, or
otherwise affect the authority of the Commission to grant an exemption
pursuant to any provision of law that is in effect on the day before
the date of enactment of this Act, including pursuant to any of the
following:
(1) Section 28 of the Securities Act of 1933 (15 U.S.C.
77z-3).
(2) Section 36 of the Securities Exchange Act of 1934 (15
U.S.C. 78mm).
(3) Section 6(c) of the Investment Company Act of 1940 (15
U.S.C. 80a-6(c)).
(4) Section 206A of the Investment Advisers Act of 1940 (15
U.S.C. 80b-6a).
(5) Section 304(d) of the Trust Indenture Act of 1939 (15
U.S.C. 77ddd(d)).
(6) Section 4(g) of the Securities Investor Protection Act
of 1970 (15 U.S.C. 78ddd(g)).
(b) General Exemptive Authority.--Section 28 of the Securities Act
of 1933 (15 U.S.C. 77z-3) is amended, in the matter preceding the
matter relating to Schedule A--
(1) by striking ``by rule or regulation'' and inserting
``by rule, regulation, or order''; and
(2) by adding at the end the following: ``The Commission
shall, by rule or regulation, determine the procedures under
which an exemptive order under this section shall be granted
and may, in the sole discretion of the Commission, decline to
entertain any application for an order of exemption under this
section.''.SEC. 107. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.
The Commission shall adopt rules to modernize the recordkeeping
requirements under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.), and the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
seq.), including to facilitate the utilization of distributed ledger
records.SEC. 108. MODERNIZATION OF SECURITIES REGULATIONS FOR DIGITAL ASSET
ACTIVITIES.
(a) Tailoring of Existing Requirements.--The Commission shall--
(1) amend, rescind, replace, or supplement by rule, order,
guidance, exemptive relief, or any other appropriate action
(provided such action is consistent with chapter 5 of title 5,
United States Code, and other applicable law) each regulation,
form, interpretive statement, or other requirement within the
jurisdiction of the Commission that is not otherwise amended by
this Act (or required to be amended because of a provision of
this Act or an amendment made by this Act), to the extent that
such provision applies to any digital asset activity, including
any activity involving a security that is issued, recorded, or
transferred using distributed ledger technology, to the extent
that the provision is outdated, unnecessary, or unduly
burdensome in light of the unique technological characteristics
of digital assets or substantially similar technology, which
may include regulatory provisions governing--
(A) customer protection, including custody of
digital assets or substantially similar technology;
(B) transfer agent rules;
(C) books and records, or recordkeeping
requirements;
(D) clearance and settlement rules;
(E) broker-dealer, alternative trading system, and
exchange rules;
(F) issuer disclosure and ongoing reporting
requirements tailored to digital asset securities or
substantially similar technology involving securities;
and
(G) the use of vaults, digital asset receipts, or
receipts involving substantially similar technology,
vault tokens, or liquidity provider tokens; and
(2) in imposing future obligations as those obligations
relate to digital assets or substantially similar technology,
do so in a manner consistent with the requirements described in
paragraph (1).
(b) Rule of Construction.--Nothing in this section may be construed
to limit the authority of the Commission to pursue fraud, manipulation,
or deceptive practices involving digital assets or substantially
similar technology.
(c) Use of Existing Authority.--When considering, proposing,
adopting, or engaging in any rule or program or developing new rules or
programs, including those mandated or authorized under this Act, or any
amendment made by this Act, the activities of the Commission (which may
include the solicitation of data and other input from investors,
regulated entities, and market participants or the representatives of
any of those persons) shall be considered actions taken under
subsection (e) of section 19 of the Securities Act of 1933 (15 U.S.C.
77s) and shall be subject to subsection (f) of that section.
(d) Continued Applicability of State Consumer Protection Laws.--
Except as expressly provided by this Act, or an amendment made by this
Act, nothing in this Act (or in any such amendment) shall preempt any
State consumer protection law, including common law, or a remedy
available under any such law.
(e) Preemption for Exemptions and Digital Asset Activities Under
the Securities Act.--Section 18 of the Securities Act of 1933 (15
U.S.C. 77r) is amended--
(1) in subsection (b)--
(A) in paragraph (3)--
(i) in the paragraph heading, by inserting
``in qualified transactions or'' after
``sales'';
(ii) in the first sentence, by inserting
``in a qualified transaction or'' after ``the
security''; and
(iii) in the second sentence--
(I) by striking ``term `qualified
purchaser''' and inserting ``terms
`qualified transaction' and `qualified
purchaser''';
(II) by inserting ``and categories
of transactions, including secondary
transactions,'' after ``securities'';
and
(III) by inserting ``and with due
regard to the facilitation of capital
formation and the promotion of
innovation'' before the period at the
end; and
(B) in paragraph (4)--
(i) in subparagraph (A), by inserting ``or,
if the issuer is not required to file such
reports, where the Commission otherwise
determines, consistent with the public interest
and the protection of investors and with due
regard to the facilitation of capital formation
and the promotion of innovation'' before the
semicolon at the end;
(ii) in subparagraph (D)(ii), by inserting
``in a qualified transaction or'' after
``offered or sold'';
(iii) in subparagraph (F), by striking
``or'' at the end;
(iv) in subparagraph (G), by striking the
period at the end and inserting ``; or''; and
(v) by adding at the end the following:
``(H) Commission rules or regulations issued under
section 28, except that this subparagraph does not
apply to rules or regulations adopted before the date
of enactment of this subparagraph.''.
(f) Exempting Network Tokens From State Securities Laws.--
(1) In general.--Section 18(b) of the Securities Act of
1933 (15 U.S.C. 77r(b)) is amended by adding at the end the
following:
``(5) Exemption in connection with network tokens.--A
network token, as defined in section 4B(a), shall be treated as
a covered security.''.
(2) Rule of construction.--Nothing in this section, section
4B of the Securities Act of 1933 (as added by this Act), or the
amendments made by this section may be construed to limit the
authority (as of the day before the date of enactment of this
Act) described in section 18(c)(1) of the Securities Act of
1933 (15 U.S.C. 77r(c)(1)) of a securities commission (or any
agency or office performing like functions) of any State with
respect to a covered security or any security.
(g) Preemption for Ancillary Asset Activities Under the Securities
Act of 1933.--Section 18(b) of the Securities Act of 1933 (15 U.S.C.
77r(b)), as amended by subsection (f) is amended by adding at the end
the following:
``(6) Limitations on state law regarding ancillary
assets.--
``(A) Definitions.--In this paragraph, the term
`ancillary asset' has the meaning given the term in
section 4B(a).
``(B) Exemption in connection with ancillary
assets.--An ancillary asset offered, sold, or
distributed in reliance on Regulation Crypto, as
adopted under section 103 of the Lummis-Gillibrand
Responsible Financial Innovation Act of 2026, shall be
treated as a covered security.''.
(h) Preservation of Regulation Best Interest.--
(1) In general.--Subject to paragraph (2), nothing in this
Act, any amendment made by this Act, or any rule issued under
this Act or pursuant to any such amendment may be construed to
limit, preempt, or otherwise affect the obligations of a broker
or dealer registered with the Commission under section 15 of
the Securities Exchange Act of 1934 (15 U.S.C. 78o) or section
240.15l-1 of title 17, Code of Federal Regulations (commonly
known as ``Regulation Best Interest''), or any successor
regulation.
(2) Application.--Paragraph (1) shall not apply with
respect to any person registered with the Commodity Futures
Trading Commission.
(i) Preservation of Investment Adviser Fiduciary Duties.--Nothing
in this Act, any amendment made by this Act, or any rule issued under
this Act or pursuant to any such amendment may be construed to limit,
preempt, or otherwise affect the fiduciary duty that an investment
adviser (as defined in section 202 of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2)) owes to a client under section 206 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-6) or any other
provision of Federal or State law, including in connection with
investment advice regarding a digital commodity.SEC. 109. INSIDER TRADING WITH RESPECT TO ANCILLARY ASSET TRANSACTIONS.
(a) Definition.--In this section, the term ``distributed ledger
control person'' has the meaning given the term in section 104(a).
(b) Application of Securities Laws.--Any provision of the
securities laws, or any regulation issued under the securities laws,
including any duty that arises under the securities laws or under such
a regulation, that applies with respect to a person that purchases,
sells, or offers to sell a security, security-based swap, or security-
based swap agreement while in possession of material nonpublic
information, or communicates such information in connection with or in
the transaction, shall apply to any offer, sale, or purchase of a
security, security-based swap, or security-based swap agreement in
which an ancillary asset is offered, sold, or purchased, including any
offer, sale, or purchase conducted pursuant to Regulation Crypto, as
adopted pursuant to section 103, whether conducted by an ancillary
asset originator, a related person, or any other person.
(c) Rulemaking.--
(1) In general.--The Commission shall adopt rules to
implement subsection (b), which shall--
(A) include rules providing an affirmative defense
for an offer, sale, or purchase of an ancillary asset
made pursuant to a written plan adopted before the
applicable person became aware of material nonpublic
information, which shall be consistent with section
240.10b5-1 of title 17, Code of Federal Regulations, or
any successor regulation; and
(B) be interpreted and applied in a manner that is
consistent with, and may not be construed to expand or
contract, the principles of, and judicial precedent
interpreting (by the Supreme Court of the United
States), the securities laws and the regulations issued
under the securities laws, as those principles and that
judicial precedent are in effect, as of the day before
the date of enactment of this Act.
(2) Considerations.--In adopting rules under paragraph (1),
the Commission shall consider, subject to subsection (e),
whether, and under what circumstances, an offer, sale,
purchase, or communication should be addressed by those rules,
including by--
(A) a distributed ledger control person, any person
acting on behalf of, or in concert with, an ancillary
asset originator, related person, or distributed ledger
control person, or a person that obtained material
nonpublic information in the course of a relationship
of trust and confidence with an ancillary asset
originator or related person, where material nonpublic
information regarding an ancillary asset originator or
an ancillary asset was--
(i) obtained pursuant to or in breach of a
duty of trust or confidence;
(ii) deceptively obtained through theft,
bribery, misrepresentation, or espionage or in
violation of any Federal law protecting
computer data; or
(iii) obtained from an ancillary asset
originator or related person, the conduct of
which is described in subparagraph (B); or
(B) an ancillary asset originator or related person
that purchases, sells, or otherwise distributes an
ancillary asset, or communicates material nonpublic
information regarding an ancillary asset originator or
ancillary asset, while aware of material nonpublic
information that is required to be disclosed in any
disclosure furnished, or required to be furnished,
under section 4B of the Securities Act of 1933, as
added by this Act, or Regulation Crypto, as adopted
pursuant to section 103.
(d) Enforcement.--A violation of subsection (b), or any rule
adopted under subsection (c), shall be treated as a violation of the
securities laws and subject to the penalties under sections 21A and 32
of the Securities Exchange Act of 1934 (15 U.S.C. 78u-1, 78ff) and to
all other remedies available under the securities laws.
(e) Rule of Construction.--Consistent with section 4B(b)(3) of the
Securities Act of 1933, as added by this Act, nothing in this section
may be construed to apply the securities laws, or any regulation issued
under the securities laws (including any rule adopted under subsection
(c)), to any secondary market transaction in an ancillary asset that is
not otherwise a transaction in a security, security-based swap, or
security-based swap agreement.SEC. 110. SECURITIES INVESTOR PROTECTION CORPORATION APPLICABILITY.
Section 16(14) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78lll(14)) is amended by inserting after the second sentence
the following: ``The term `security' does not include a digital
commodity.''.SEC. 111. INVESTOR AND CONSUMER PROTECTION ENFORCEMENT.
(a) Preservation of Certain Rights, Authorities, Laws, and
Obligations.--Subject to subsection (b), nothing in this Act, any
amendment made by this Act, or any rule, requirement, or regulation
promulgated pursuant to this Act may be construed to prohibit, limit,
impair, or otherwise affect--
(1) any person from bringing a civil action to enforce any
private right of action for fraud, deceit, manipulation, or
deceptive practices, to the extent that such private right of
action is expressly provided for in this Act or an amendment
made by this Act, or is otherwise available under Federal law,
including with respect to conduct involving an ancillary asset,
network token, digital commodity, or any transaction,
disclosure, certification, notice, report, statement,
communication, or other document involving any such asset;
(2) except as expressly provided in this Act or an
amendment made by this Act, any Federal or State regulator,
acting within the scope of authority otherwise provided by law,
from bringing an administrative or civil enforcement action
under--
(A) the Commodity Exchange Act (7 U.S.C. 1 et
seq.), including the provisions of that Act that are
added by this Act and relate to digital commodities and
the jurisdiction of the Commodity Futures Trading
Commission;
(B) the Securities Act of 1933 (15 U.S.C. 77a et
seq.), as amended by this Act, the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.), as amended by this
Act, or the Investment Advisers Act of 1940 (15 U.S.C.
80b-1 et seq.);
(C) State commodities laws, subject to the
provisions of this Act, and the amendments made by this
Act, relating to the jurisdiction of the Commodity
Futures Trading Commission; or
(D) section 18(c)(1) of the Securities Act of 1933
(15 U.S.C. 77r(c)(1)), or any functionally equivalent
anti-fraud or anti-manipulation provision of State
securities law (including any State securities law with
respect to a security or a transaction in a security to
the extent enforcement of that anti-fraud or anti-
manipulation provision of State securities law is not
preempted by section 18 of the Securities Act of 1933
(15 U.S.C. 77r)), with respect to an investment
contract involving an ancillary asset, or other
transaction involving any such asset, for which this
Act or an amendment made by this Act expressly
preserves or provides for the application of anti-fraud
or anti-manipulation authority;
(3) except as expressly provided in this Act or an
amendment made by this Act, any generally applicable State law,
including a law relating to fraud, deceit, unfair or deceptive
acts or practices, consumer protection, banking, payments,
property, contracts, criminal law, or unlawful conduct or
practices, or the remedies available under any such law, with
respect to conduct involving a digital asset, ancillary asset,
network token, or digital commodity, or any transaction,
activity, person, or service involving any such asset, provided
that such law does not impose any licensing, registration,
qualification, or other requirement that is expressly
preempted, or otherwise expressly limited, by this Act or an
amendment made by this Act;
(4) the fiduciary obligations of an investment adviser, as
defined in section 202(a) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)), under section 206 of that Act (15
U.S.C. 80b-6), any rule or regulation issued under such section
206, or any other provision of Federal or State law, including
in connection with investment advice regarding a digital asset,
ancillary asset, network token, digital commodity, or
substantially similar technology; or
(5) any right or remedy under Federal consumer financial
law, including under section 1011 of the Consumer Financial
Protection Act of 2010 (12 U.S.C. 5491) or the Federal Trade
Commission Act (15 U.S.C. 41 et seq.), or authority under
Federal consumer financial law with respect to any person,
subject to the limitations under section 1027 of the Consumer
Financial Protection Act of 2010 (12 U.S.C. 5517), including
subsections (i) and (j) of such section 1027.
(b) Limitations and Rules of Construction.--Nothing in subsection
(a) may be construed to--
(1) preserve, create, or authorize any Federal or State
registration, licensing, qualification, or merit-review
requirement under State law with respect to an ancillary asset,
network token, digital commodity, transaction, person, or
activity, to the extent that such requirement is preempted or
otherwise limited by this Act or an amendment made by this Act;
(2) create, preserve, or authorize any private right of
action under Federal or State law with respect to an ancillary
asset, network token, digital commodity, or transaction
involving any such asset;
(3) permit any claim, action, proceeding, requirement,
liability, obligation, or remedy to be brought, maintained,
imposed, or enforced under Federal or State securities or
commodities law to the extent that such claim, action,
proceeding, requirement, liability, obligation, or remedy
depends upon, is predicated on, or would require a
determination that an ancillary asset, network token, digital
commodity, or any transaction, activity, person, or service
involving any such asset has a status or characterization under
Federal or State securities or commodities law that is contrary
to an express classification or treatment provided by this Act
or an amendment made by this Act;
(4) expand, contract, or otherwise alter the jurisdiction,
exclusive or otherwise, of the Commission, the Commodity
Futures Trading Commission, or any State regulator;
(5) limit, impair, or otherwise affect the treatment of any
asset, transaction, or interest as a covered security for
purposes of section 18 of the Securities Act of 1933 (15 U.S.C.
77r); or
(6) create any new private right of action under Federal or
State law, except that nothing in this paragraph may be
construed to limit, impair, or otherwise affect any private
right of action preserved under subsection (a)(1), expressly
provided in this Act or an amendment made by this Act, or
otherwise available under Federal law.TITLE II--PROTECTING AGAINST ILLICIT FINANCE
SEC. 201. TREATMENT UNDER THE BANK SECRECY ACT AND SANCTIONS LAWS.
(a) Amendment.--Section 5312(c)(1)(A) of title 31, United States
Code, is amended--
(1) by inserting ``digital commodity broker, digital
commodity dealer,'' after ``futures commission merchant,''; and
(2) by inserting before the period the following: ``and any
digital commodity exchange registered, or required to register,
under that Act that permits direct customer access''.
(b) Bank Secrecy Act Requirements.--
(1) Regulations.--The Secretary of the Treasury, acting
through the Director of the Financial Crimes Enforcement
Network, and in consultation with the Commodity Futures Trading
Commission, shall issue requirements consistent with the
requirements of futures commission merchants to apply the Bank
Secrecy Act to digital commodity brokers, digital commodity
dealers, and digital commodity exchanges that are tailored to
the size and complexity of such entities, including by
requiring each such entity to--
(A) establish and maintain an anti-money laundering
and countering the financing of terrorism program,
which shall include--
(i) an appropriate risk assessment;
(ii) the development of internal policies,
procedures, and controls;
(iii) the designation of a compliance
officer;
(iv) an ongoing employee training program;
and
(v) an independent audit function to test
such program;
(B) retain appropriate records of transactions;
(C) monitor and report suspicious activity, which
may include use of appropriate distributed ledger
analytics; and
(D) maintain an effective customer identification
program to identify and verify account holders and
carry out appropriate customer due diligence.
(2) Compliance with sanctions.--A digital commodity broker,
digital commodity dealer, or digital commodity exchange shall
comply with all laws and regulations related to United States
sanctions administered by the Office of Foreign Assets Control.
(c) Sense of Congress.--It is the sense of Congress that nothing in
this section shall limit the applicability of any law imposing or
authorizing the imposition of economic sanctions by the United States.SEC. 202. DIGITAL ASSET EXAMINATION STANDARDS.
(a) Definitions.--In this section:
(1) Federal functional regulator.--The term ``Federal
functional regulator'' has the meaning given the term in
section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
(2) Financial institution.--The term ``financial
institution'' has the meaning given the term in section
5312(a)(2) of title 31, United States Code.
(b) Examination and Review.--The Secretary of the Treasury, in
consultation with Federal functional regulators, shall establish,
coordinated to the extent feasible, risk-based examination standards to
assess financial institutions involved in the digital asset sector for
compliance with anti-money laundering and countering the financing of
terrorism requirements under the Bank Secrecy Act.SEC. 203. PREVENTING ILLICIT FINANCE THROUGH PARTNERSHIP ACT.
(a) Short Title.--This section may be cited as the ``Preventing
Illicit Finance Through Partnership Act''.
(b) Definitions.--In this section:
(1) Bank.--The term ``bank'' has the meaning given the term
in section 1010.100 of title 31, Code of Federal Regulations
(or any corresponding similar regulation).
(2) Certified or recognized information-sharing or
interdiction network.--The term ``certified or recognized
information-sharing or interdiction network'' means a real-
time, secure, public-private mechanism that--
(A) facilitates the detection, interdiction, and
prevention of illicit finance violations through rapid
information exchange between government and regulated
entities; and
(B) is--
(i) certified by the Secretary of the
Treasury for the purpose of supporting
interdiction and investigative actions
consistent with law enforcement or regulatory
authorities; or
(ii) recognized by the Secretary of the
Treasury as an existing (as of the day before
the date of enactment of this Act), effective
public-private partnership network that meets
standards for security, accountability, and
participation that are equivalent to the
standards that would be required by the
Secretary of the Treasury for certification
under clause (i).
(3) Covered agency.--The term ``covered agency'' means--
(A) the Department of Justice, including the
Federal Bureau of Investigation and the Drug
Enforcement Administration;
(B) the Department of the Treasury, including the
Financial Crimes Enforcement Network, the Internal
Revenue Service, and the Office of Foreign Assets
Control; and
(C) the Department of Homeland Security.
(4) Designated private sector entity.--The term
``designated private sector entity'' means a private sector
entity designated under subsection (d).
(5) Director.--The term ``Director'' means the Director of
the Financial Crimes Enforcement Network.
(6) Illicit finance violation.--The term ``illicit finance
violation'' means the illicit use of digital assets.
(7) Illicit use.--The term ``illicit use'' includes fraud,
money laundering, terrorist financing, the purchase and sale of
illicit goods, trafficking of fentanyl (including fentanyl
precursors and trade in other illicit drugs), sanctions
evasion, theft of funds, funding of illegal activities,
transactions relating to child sexual abuse material or elder
fraud abuse, and any other financial transaction involving the
proceeds of specified unlawful activity, as defined in section
1956(c) of title 18, United States Code.
(8) Money services business.--The term ``money services
business'' has the meaning given the term in section 1010.100
of title 31, Code of Federal Regulations (or any corresponding
similar regulation).
(c) Establishment of Program.--The Secretary of the Treasury shall
establish a pilot program under which covered agencies and designated
private sector entities securely share information focused on potential
illicit finance violations and threats and emerging risks relating to
illicit finance violations.
(d) Designation of Private Sector Entities.--
(1) Required action.--
(A) Initial companies.--Not later than 90 days
after the date of enactment of this Act, the Director
and the Secretary shall designate 10 private sector
entities that are money services businesses, 10 private
sector entities that are digital commodity brokers,
digital commodity dealers, or digital commodity
exchanges, and 10 private sector entities that are
banks to participate in the pilot program established
under subsection (c), if such entities agree and
volunteer to participate in the program.
(B) Biannual review.--Not less frequently than once
every 6 months, the Director shall review and, as
appropriate, replace the private sector entities
designated under this paragraph.
(C) Rule of construction.--Nothing in this section
may be construed as--
(i) requiring an entity to participate in
the pilot program established under this
section; or
(ii) enabling the Director to select an
entity to participate in the pilot program
without the consent of such entity.
(2) Optional designation.--In addition to the 30 private
sector entities designated under paragraph (1), the Director
may designate--
(A) 1 or more information sharing and analysis
centers to participate in the pilot program;
(B) 1 or more participants in a certified or
recognized information sharing or interdiction network;
or
(C) 1 or more private sector entities, as
appropriate, relating to a particular type of illicit
activity.
(e) Information Sharing With Private Sector Entities.--A covered
agency that initiates an investigation into a potential illicit finance
violation, or identifies a threat or emerging risk relating to an
illicit finance violation, may share with any designated private sector
entity such information about the investigation, threat, or emerging
risk as the covered agency determines is appropriate.
(f) Use of Information by Private Sector Entities.--Information
received by a designated private sector entity under this section may
not be used for any purpose other than identifying and reporting on
activities that may involve illicit finance violations or threats and
emerging risks relating to illicit finance violations, unless otherwise
prescribed by regulation or permitted by the covered agency sharing the
information.
(g) Means of Sharing Information.--The covered agencies and
designated private sector entities may share information about
potential illicit finance violations, or threats and emerging risks
relating to illicit finance violations, with each other--
(1) through a portal established by the Secretary of the
Treasury or a similar mechanism determined appropriate by the
Secretary of the Treasury;
(2) through secure email;
(3) at monthly meetings, which shall be facilitated by the
Secretary of the Treasury; or
(4) through a certified or recognized information-sharing
or interdiction network.
(h) Limitation on Liability.--A designated private sector entity
that transmits, receives, or shares information for the purposes of
identifying and reporting activities that may constitute illicit
finance violations, or threats and emerging risks relating to illicit
finance violations, shall not be liable to any person for such
disclosure or for any failure to provide notice of such disclosure to
the person who is the subject of such disclosure or any other person
identified in such disclosure.
(i) Sunset.--The pilot program established under subsection (c)
shall terminate on the date that is 5 years after the date of enactment
of this Act, unless made permanent through notice and comment
rulemaking by the Department of the Treasury.SEC. 204. FINANCIAL TECHNOLOGY PROTECTION ACT.
(a) Short Title.--This section may be cited as the ``Financial
Technology Protection Act''.
(b) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Committee on Agriculture, Nutrition, and
Forestry of the Senate;
(C) the Committee on Financial Services of the
House of Representatives; and
(D) the Committee on Agriculture of the House of
Representatives.
(2) Distributed ledger analytics company.--The term
``distributed ledger analytics company'' means any business
providing software, research, or other services (such as
tracing tools, geofencing, transaction screening, the
collection of business data, and sanctions screening) that--
(A) support private and public sector
investigations and risk management activities; and
(B) involve cryptographically secured distributed
ledgers or any similar technology or implementation.
(3) Emerging technologies.--The term ``emerging
technologies'' means the critical and emerging technology areas
listed in the Critical and Emerging Technologies List developed
by the Fast Track Action Subcommittee on Critical and Emerging
Technologies of the National Science and Technology Council,
including any updates to such list.
(4) Foreign terrorist organization.--The term ``foreign
terrorist organization'' means an organization that is
designated as a foreign terrorist organization under section
219 of the Immigration and Nationality Act (8 U.S.C. 1189).
(5) Illicit use.--The term ``illicit use'' includes fraud,
money laundering, terrorist financing, the purchase and sale of
illicit goods, trafficking of fentanyl (including fentanyl
precursors and trade in other illicit drugs), sanctions
evasion, theft of funds, funding of illegal activities,
transactions related to child sexual abuse material or elder
fraud abuse, and any other financial transaction involving the
proceeds of specified unlawful activity (as defined in section
1956(c) of title 18, United States Code).
(6) State sponsor of terrorism.--The term ``state sponsor
of terrorism'' means a country determined by the Secretary of
State to have repeatedly provided support for acts of
international terrorism under section 40 of the Arms Export
Control Act (22 U.S.C. 2780) or section 620A of the Foreign
Assistance Act of 1961 (22 U.S.C. 2371).
(7) Terrorist.--The term ``terrorist'' includes a person
carrying out domestic terrorism or international terrorism (as
such terms are defined, respectively, under section 2331 of
title 18, United States Code).
(8) Transnational organized crime.--The term
``transnational organized crime'' has the meaning given the
term in section 284 of title 10, United States Code.
(c) Independent Financial Technology Working Group to Combat
Terrorism, Narcotics Trafficking, and Illicit Financing.--
(1) Establishment.--There is established the Independent
Financial Technology Working Group to Combat Terrorism,
Narcotics Trafficking, and Illicit Financing (in this section
referred to as the ``Working Group'' ), which shall consist of
the following:
(A) The Secretary of the Treasury or their
designee, who shall serve as the chair of the Working
Group.
(B) A senior-level representative from each of the
following:
(i) The Department of the Treasury.
(ii) The Office of Terrorism and Financial
Intelligence.
(iii) The Internal Revenue Service.
(iv) The Department of Justice.
(v) The Federal Bureau of Investigation.
(vi) The Drug Enforcement Administration.
(vii) The Department of Homeland Security.
(viii) The United States Secret Service.
(ix) The Department of State.
(x) The Office of the Director of National
Intelligence.
(C) At least 5 individuals appointed by the
Secretary of the Treasury to represent the following:
(i) Digital asset companies.
(ii) Distributed ledger analytics
companies.
(iii) Financial institutions.
(iv) Institutions or organizations engaged
in research.
(v) Institutions or organizations focused
on individual privacy and civil liberties.
(D) Such additional individuals as the Secretary of
the Treasury may appoint as necessary to accomplish the
duties described in paragraph (2).
(2) Duties.--The Working Group shall--
(A) conduct research on the illicit use of digital
assets and other related emerging technologies,
including by terrorists, foreign terrorist
organizations, state sponsors of terrorism, and
transnational organized crime groups; and
(B) develop legislative and regulatory proposals to
improve anti-money laundering, counter-terrorist, and
other counter-illicit financing efforts in the United
States.
(3) Reports.--
(A) In general.--Not later than 1 year after the
date of enactment of this Act, and annually for the 3
years thereafter, the Working Group shall submit to the
Secretary of the Treasury, the heads of each agency
represented in the Working Group pursuant to paragraph
(1)(B), and the appropriate congressional committees a
report containing the findings and determinations made
by the Working Group in the previous year and any
legislative and regulatory proposals developed by the
Working Group.
(B) Final report.--Before the date on which the
Working Group terminates under paragraph (4)(A), the
Working Group shall submit to the appropriate
congressional committees a final report detailing the
findings, recommendations, and activities of the
Working Group, including any final results from the
research conducted by the Working Group.
(4) Sunset.--
(A) In general.--The Working Group shall terminate
on the later of--
(i) the date that is 4 years after the date
of enactment of this Act; or
(ii) the date on which the Working Group
completes any wind-up activities described in
subparagraph (B).
(B) Authority to wind up activities.--If there are
research, proposals, or other related activities of the
Working Group ongoing as of the date that is 4 years
after the date of enactment of this Act, the Working
Group may temporarily continue working in order to wind
up such activities.
(C) Return of appropriated funds.--On the date on
which the Working Group terminates under subparagraph
(A), any unobligated funds appropriated to carry out
this subsection shall be transferred to the Treasury.SEC. 205. DIGITAL ASSET KIOSKS.
(a) Registration.--Section 5330 of title 31, United States Code, is
amended--
(1) in subsection (d)--
(A) in paragraph (1)(A), by inserting ``, any
person who owns, operates, or manages a digital asset
kiosk in the United States or its territories,'' after
``similar instruments''; and
(B) by adding at the end the following:
``(3) Digital asset; digital asset address; digital asset
kiosk; digital asset kiosk operator.--The terms `digital
asset', `digital asset address', `digital asset kiosk', and
`digital asset kiosk operator' have the meanings given those
terms, respectively, in section 5337.''; and
(2) by adding at the end the following:
``(f) Registration of Digital Asset Kiosk Locations.--
``(1) In general.--Not later than 90 days after the
effective date of this subsection, and not less than once every
90 days thereafter, the Secretary of the Treasury shall require
digital asset kiosk operators to submit an updated list
containing the physical address of each digital asset kiosk
owned or operated by the digital asset kiosk operator.
``(2) Form and manner of registration.--Each submission by
a digital asset kiosk operator pursuant to paragraph (1) shall
include--
``(A) the legal name of the digital asset kiosk
operator;
``(B) any fictitious or trade name of the digital
asset kiosk operator;
``(C) the physical address of each digital asset
kiosk owned, operated, or managed by the digital asset
kiosk operator that is located in the United States or
the territories of the United States;
``(D) the start date of operation of each digital
asset kiosk;
``(E) the end date of operation of each digital
asset kiosk, if applicable; and
``(F) each digital asset address used by the
digital asset kiosk operator.
``(3) False and incomplete information.--The filing of
false or materially incomplete information in a submission
required under paragraph (1) shall be deemed a failure to
comply with the requirements of this subsection.''.
(b) Preventing Fraudulent Transactions at Digital Asset Kiosks.--
(1) In general.--Subchapter II of chapter 53 of title 31,
United States Code, is amended by adding at the end the
following:
``Sec. 5337. Digital asset kiosk fraud prevention
``(a) Definitions.--In this section:
``(1) Customer.--The term `customer' means any person that
purchases or sells digital assets through a digital asset
kiosk.
``(2) Distributed ledger analytics.--The term `distributed
ledger analytics' means the analysis of data from public
distributed ledgers, and associated transaction information, to
provide risk-specific information about digital asset
transactions and digital asset addresses.
``(3) Digital asset.--The term `digital asset' has the
meaning given the term in section 2 of the GENIUS Act (12
U.S.C. 5901).
``(4) Digital asset address.--The term `digital asset
address' means an alphanumeric identifier associated with a
digital asset wallet identifying the location to which a
digital asset purchased through a digital asset kiosk can be
sent or from which a digital asset sold through a digital asset
kiosk can be accessed.
``(5) Digital asset kiosk.--The term `digital asset kiosk'
means a stand-alone machine that is capable of accepting or
dispensing legal tender in exchange for digital assets.
``(6) Digital asset kiosk operator.--The term `digital
asset kiosk operator' means a person who owns, operates, or
manages a digital asset kiosk located in the United States or
its territories.
``(7) Digital asset kiosk transaction.--The term `digital
asset kiosk transaction' means the purchase or sale of digital
assets via a digital asset kiosk.
``(8) Digital asset wallet.--The term `digital asset
wallet' means a software application or other mechanism
providing a means for holding, storing, and transferring
digital assets.
``(9) FinCEN.--The term `FinCEN' means the Financial Crimes
Enforcement Network of the Department of the Treasury.
``(10) New customer.--The term `new customer,' with respect
to a digital asset kiosk operator, means a customer during the
14-day period beginning on the date of the first digital asset
kiosk transaction of the customer with the digital asset kiosk
operator.
``(11) Transaction hash.--The term `transaction hash' means
a unique identifier made up of a string of characters that act
as a record of and provide proof that a transaction was
verified and added to the distributed ledger.
``(b) Disclosures.--
``(1) In general.--Before entering into a digital asset
transaction with a customer, a digital asset kiosk operator
shall disclose in a clear, conspicuous, and easily readable
manner--
``(A) all relevant terms and conditions of the
digital asset kiosk transaction, including--
``(i) the amount of the digital asset kiosk
transaction;
``(ii) the type and nature of the digital
asset kiosk transaction;
``(iii) a warning that the digital asset
kiosk transaction is final, is not refundable,
and may not be reversed; and
``(iv) the type and amount of any fees or
other expenses paid by the customer;
``(B) a warning relating to consumer fraud
including--
``(i) that consumer fraud often starts with
contact from a stranger, and that the customer
should never send money to someone the customer
does not know;
``(ii) the most common types of fraudulent
schemes involving digital asset kiosks, such
as--
``(I) impersonation of a government
official or a bank representative;
``(II) threats of jail time or
financial penalties;
``(III) offers of a job or reward
in exchange for payment, or offers of
deals that seem too good to be true;
``(IV) claims of a frozen bank
account or credit card;
``(V) requests for donations to
charity or disaster relief; or
``(VI) payment to an individual the
customer has never met; and
``(iii) a statement that the customer
should contact law enforcement if they suspect
fraudulent activity, such as scams, including
contact information for a relevant law
enforcement or government agency.
``(2) Additional disclosures.--FinCEN may adopt rules
relating to additional disclosures required to be made to
customers prior to engaging in a transaction.
``(c) Acknowledgment of Disclosures.--Each time a customer uses a
digital asset kiosk, the digital asset kiosk operator shall ensure
acknowledgment of all disclosures required under subsection (b) via
confirmation of consent of the customer at the digital asset kiosk.
``(d) Receipts.--Upon completion of each digital asset kiosk
transaction, the digital asset kiosk operator shall provide the
customer with a receipt, which shall include the following information:
``(1) The name and contact information of the digital asset
kiosk operator, including a telephone number for a customer
service helpline.
``(2) The name of the customer.
``(3) The type, value, date, and precise time of the
digital asset kiosk transaction, transaction hash, and each
applicable digital asset address.
``(4) The amount of the digital asset kiosk transaction
expressed in United States dollars.
``(5) All fees charged.
``(6) A statement that the customer should contact law
enforcement if they suspect fraudulent activity, such as scams,
including contact information for a relevant law enforcement or
government agency.
``(7) The exchange rate applied.
``(8) Any additional information the digital asset kiosk
operator determines appropriate.
``(e) Physical Receipts Available.--A physical version of the
receipt required under subsection (d) shall be issued to the customer
at the time of the digital asset kiosk transaction, if the customer
opts for such a physical version of the receipt.
``(f) Anti-Fraud Policy.--
``(1) In general.--Each digital asset kiosk operator shall
establish, maintain, and implement a written anti-fraud policy
if required by, and consistent with, applicable State law in
those States where the digital asset kiosk operator is
licensed.
``(2) Federal standard.--A digital asset kiosk operator
operating in any State that does not require an anti-fraud
policy under paragraph (1) shall establish, maintain, and
implement an anti-fraud policy that, at a minimum, includes--
``(A) the identification and assessment of fraud-
related areas;
``(B) procedures and controls to protect against
risks identified under subparagraph (A);
``(C) allocation of responsibility for monitoringthe risks identified under subparagraph (A); and
``(D) procedures for the periodic evaluation and
revision of the anti fraud procedures, controls, and
monitoring mechanisms under subparagraphs (B) and (C).
``(g) Appointment of Compliance Officer.--Each digital asset kiosk
operator shall designate and employ a compliance officer who--
``(1) is qualified to coordinate and monitor compliance
with this section and all other applicable Federal and State
laws, rules, and regulations;
``(2) is employed full-time by the digital asset kiosk
operator;
``(3) is not the chief executive officer of the digital
asset kiosk operator; and
``(4) does not own or control more than 10 percent of any
interest in the digital asset kiosk operator.
``(h) Use of Distributed Ledger Analytics and Wallet Pinning.--
``(1) In general.--Each digital asset kiosk operator shall
use distributed ledger analytics to prevent sending a digital
asset to a digital asset wallet known to be affiliated with
fraudulent activity at the time of a digital asset kiosk
transaction and to detect transaction patterns indicative of
fraud or other illicit activities.
``(2) Wallet pinning.--Each digital asset kiosk operator
shall maintain restrictions that prevent more than 1 customer
of the digital asset kiosk operator from using the same digital
wallet address.
``(3) Compliance.--The Director of FinCEN may request
evidence from any digital asset kiosk operator to confirm
compliance with this subsection.
``(i) Confirmation Required Before New Customer Transactions.--
Before entering into a digital asset kiosk transaction valued at $500
or more with a new customer, the digital asset kiosk operator shall
obtain confirmation from the new customer that--
``(1) the new customer wishes to proceed with the digital
asset kiosk transaction; and
``(2) the new customer is not being fraudulently induced
into engaging in the transaction.
``(j) Holding Period.--No digital asset kiosk operator shall
execute a transaction on behalf of a new customer that sends digital
assets to a specific wallet address unless at least 72 hours have
elapsed since the initiation of the transaction by the new customer.
``(k) Transaction Limits With Respect to New Customers.--The
Secretary of the Treasury shall prescribe by regulation the threshold
amounts for reporting or limiting digital asset kiosk transactions,
including aggregate or single-day deposit and withdrawal limits, as the
Secretary determines are reasonably necessary to deter fraud and
illicit finance. Such regulations shall consider the unique risks and
functionalities of digital asset kiosks and may provide for exceptions,
adjustments, or exclusions as deemed appropriate by the Secretary.
``(l) Interim Transaction Limits.--Until the effective date of
regulations prescribed under subsection (k), a digital asset kiosk
operator shall not permit a new customer to conduct transactions
exceeding $3,500 in the aggregate within any 24-hour period.
``(m) Refunds.--A digital asset kiosk operator shall issue a refund
for a customer's transaction fees within 30 days if--
``(1) the customer was fraudulently induced into engaging
in the digital asset kiosk transaction; and
``(2) the customer files a complaint to the digital asset
kiosk operator, which includes--
``(A) the name, address, and phone number of the
customer;
``(B) the transaction hash of the digital asset
kiosk transaction or information sufficient to
establish the type, value, date, and time of the
digital asset kiosk transaction; and
``(C) a copy of a report to a State or local law
enforcement or government agency made not later than 30
days after the digital asset kiosk transaction.
``(n) Customer Service Helpline.--Each digital asset kiosk operator
shall provide live customer service during business hours, the phone
number for which is regularly monitored and displayed in a clear,
conspicuous, and easily readable manner upon each digital asset kiosk.
During non-business hours, the digital asset kiosk operator shall
maintain an alternative customer service system that may include an
automated chatbot, an online complaint reporting portal, or other
customer service mechanism.
``(o) Communications With Law Enforcement.--Each digital asset
kiosk operator performing business in the United States shall have a
dedicated method of contact, such as a phone number, email address, or
other contact method, for law enforcement and regulatory agencies to
contact the digital asset kiosk operator. This contact method shall be
displayed and available on the digital asset kiosk operator's website.
``(p) Civil Penalties and State Enforcement.--Any State regulator
may bring a civil action or other appropriate proceeding to enforce the
provisions of this section and may assess or collect civil penalties or
other remedies for violations of this section, as provided under
applicable State law.
``(q) Rule of Construction.--Nothing in this section may be
construed to prohibit a State from enacting a law, rule, or regulation
that provides greater protection to customers.''.
(2) Technical and conforming amendment.--The table of
sections for subchapter II of chapter 53 of title 31, United
States Code, is amended by adding at the end the following:
``5337. Digital asset kiosk fraud prevention.''.SEC. 206. STUDY ON ILLICIT USE OF DIGITAL ASSETS.
(a) Definitions.--In this section:
(1) Foreign terrorist organization.--The term ``foreign
terrorist organization'' means an organization that is
designated as a foreign terrorist organization under section
219 of the Immigration and Nationality Act (8 U.S.C. 1189).
(2) Transnational organized criminal.--The term
``transnational organized criminal'' means an individual who
participates in transnational organized crime, as defined in
section 284(i) of title 10, United States Code.
(b) Review.--Not later than 1 year after the date of enactment of
this Act, the Secretary of the Treasury, in consultation with the
Attorney General, shall conduct a comprehensive review of how foreign
terrorist organizations and transnational organized criminals utilize
digital assets in connection with illicit activities.
(c) Report.--Not later than 180 days after completing the review
under subsection (b), the Secretary of the Treasury shall submit to the
Committee on Agriculture, Nutrition, and Forestry and the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Agriculture and the Committee on Financial Services of the House of
Representatives a report on the findings of the Secretary, including--
(1) an assessment of how foreign terrorist organizations
and transnational organized criminals utilize digital assets in
connection with illicit activities; and
(2) recommendations to assist the Commission and the
Commodity Futures Trading Commission in strengthening
compliance and enforcement of digital assets-related entities
registered with their respective agencies.
(d) Additional Agencies.--The Secretary of the Treasury may, in the
sole discretion of the Secretary of the Treasury, solicit input for the
report required under subsection (c) from any or all of the Federal
functional regulators, as defined in section 509 of the Gramm-Leach-
Bliley Act (15 U.S.C. 6809), and the Commodity Futures Trading
Commission.
(e) Classified Annex.--The report required under subsection (c) may
include a classified annex, as appropriate.TITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE
SEC. 301. RULEMAKING ON APPLICATION OF EXISTING SECURITIES INTERMEDIARY
REQUIREMENTS AND EXISTING BANK SECRECY ACT REQUIREMENTS
TO NON-DECENTRALIZED FINANCE TRADING PROTOCOLS.
(a) Definitions.--In this section:
(1) Decentralized finance trading protocol.--The term
``decentralized finance trading protocol'' means a distributed
ledger system through which multiple participants can execute a
financial transaction--
(A) in accordance with an automated rule or
algorithm that is predetermined and non-discretionary;
and
(B) without reliance on a person other than the
user to maintain custody or control of any digital
assets subject to the financial transaction.
(2) Non-decentralized finance trading protocol.--
(A) In general.--The term ``non-decentralized
finance trading protocol'' means a decentralized
finance trading protocol that meets 1 or more of the
following:
(i) A person or group of persons under
common control, or acting pursuant to an
agreement, arrangement, or understanding to act
in concert, has the authority, directly or
indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, to
control or materially alter the functionality,
operation, or rules of consensus or agreement
of the decentralized finance trading protocol.
(ii) The decentralized finance trading
protocol does not operate, execute, and enforce
its operations and transactions based solely on
pre-established, transparent rules encoded
directly within the source code of the
distributed ledger system.
(iii) A person or group of persons under
common control, or acting pursuant to an
agreement, arrangement, or understanding to act
in concert, has the authority, via operation of
the decentralized finance trading protocol, to
restrict, censor, or prohibit the use of the
decentralized finance trading protocol,
including any applicable system-based user
activity.
(B) Special rule.--For purposes of subparagraph
(A), a decentralized governance system, solely by
virtue of the operation of the decentralized governance
system, shall not be considered to be a person or a
group of persons under common control or acting
pursuant to an agreement, arrangement, or understanding
to act in concert.
(C) Exclusions.--For purposes of this section,
participation in an incident-response or security
council, as described in subsection (f), shall not, by
itself, be deemed to constitute control of a non-
decentralized finance trading protocol.
(D) Scoping.--In implementing this section, the
Commission and the Department of the Treasury shall
construe the term ``non-decentralized finance trading
protocol'' in a manner consistent with section 15H of
the Securities Exchange Act of 1934, as added by
section 601.
(b) Rules.--
(1) In general.--The Commission, in consultation with the
Department of the Treasury, shall adopt tailored, clear, and
specific rules, after notice and comment, that clarify how a
person, or group of persons under common control, or acting
pursuant to an agreement, arrangement, or understanding to act
in concert, that controls a non-decentralized finance trading
protocol and is subject to the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.), as amended by this Act, shall comply
with applicable requirements under that Act, including with
respect to registration, conduct, disclosure, recordkeeping,
supervision, and other requirements under the securities laws.
(2) Requirements.--The rulemaking required under paragraph
(1) shall--
(A) ensure that the rules adopted pursuant to that
rulemaking are consistent with the purposes of the
securities laws, including the public interest, the
protection of investors, and the maintenance of fair
and orderly markets;
(B) protect the rights of software developers,
publishers, and users to create, publish, and use code
and software in a manner consistent with the First
Amendment to the Constitution of the United States;
(C) provide legal clarity for the development,
publication, and operation of distributed ledger
systems and the components therein in a manner
consistent with the purposes of this section; and
(D) result in, by operation of law, the application
and enforcement by the Department of the Treasury,
where applicable and pursuant to existing law, as in
effect on the day before the date of enactment of this
Act, of anti-money laundering and countering the
financing of terrorism requirements under the Bank
Secrecy Act and other Federal law with respect to any
person or group of persons that the Commission
determines, through that rulemaking, is required to
register, or comply as a registrant, under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.).
(3) Application.--
(A) In general.--Any person or group of persons
determined under this subsection to be required to
register, or comply as a registrant, under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
(referred to in this paragraph as the ``Exchange Act'')
shall be subject to that Act and the Bank Secrecy Act
to the extent applicable under existing law, as in
effect on the day before the date of enactment of this
Act, consistent with the treatment of similarly
situated participants under the Exchange Act.
(B) Rulemaking.--The Secretary of the Treasury, in
consultation with the Commission, shall adopt tailored,
clear, and specific rules, after providing notice and
the opportunity to comment, that define compliance with
obligations under the Bank Secrecy Act and other
Federal laws relating to anti-money laundering and
countering the financing of terrorism with respect to
any person, or group of persons under common control
(or acting pursuant to an agreement, arrangement, or
understanding to act in concert), that--
(i) controls the operation of a non-
decentralized finance trading protocol
identified in the rulemaking conducted under
paragraph (1);
(ii) is required to register, or comply as
a registrant, under the Exchange Act, as
determined in the rulemaking conducted under
paragraph (1); and
(iii) is caused to be treated as a
financial institution under the Bank Secrecy
Act pursuant to existing law, as in effect on
the day before the date of enactment of this
Act, as a result of registration or compliance
described in clause (ii).
(c) Activity-Based Application.--Rules adopted under subsection
(b)(1) shall require the Commission to determine the applicable
requirements only with respect to securities-related activities, based
on the functions performed by the controlling person or group of
persons, including brokerage, dealing, trading, execution, clearing, or
custody of securities, without regard to technological form,
distributed architecture, or purportedly decentralized
characterization.
(d) Rules of Construction.--
(1) Registration not required.--Nothing in this section,
nor any rule adopted under this section, may be construed to--
(A) require a distributed ledger system or any
software code to register with the Commission in its
own capacity; or
(B) prohibit the launch, deployment, or operation
of a distributed ledger system.
(2) No expansion of statutory authority.--Notwithstanding
any rulemaking required under subsection (b), and
notwithstanding any action the Commission or the Secretary of
the Treasury may take under that subsection, nothing in this
section, including any such rulemaking, may be construed to--
(A) expand or contract the statutory authority of
the Commission or the Department of the Treasury, as in
effect on the day before the date of enactment of this
Act, under the Bank Secrecy Act; or
(B) limit the use of the authority described in
subparagraph (A) to determine, pursuant to that
rulemaking, the applicability of existing statutory
requirements, as in effect on the day before the date
of enactment of this Act, to persons or activities
described in this section.
(3) No presumption of applicability.--Nothing in this
section may be construed to create a presumption that any
person or activity described in this section is or is not
subject to the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) or the Bank Secrecy Act absent a determination made
pursuant to a rulemaking required under this section.
(e) Preservation of Existing Authorities.--Nothing in this section
may be construed to--
(1) limit the authority of the Commission under the
securities laws to investigate violations, bring actions, or
issue subpoenas with respect to persons determined, pursuant to
rulemaking, to be subject to the securities laws under this
section; or
(2) limit the authority of the Secretary of the Treasuryunder the Bank Secrecy Act, including to investigate violations
or bring actions with respect to persons determined, pursuant
to rulemaking, to be subject to the Bank Secrecy Act.
(f) Non-Decentralized Finance Trading Protocols.--
(1) In general.--In adopting rules under subsection (b),
the Commission shall treat a decentralized governance system
and any person participating in the decentralized governance
system as separate persons unless such persons are under common
control or acting pursuant to an agreement, arrangement, or
understanding to act in concert.
(2) Emergency measures.--
(A) In general.--Pre-defined, temporary rules-based
cybersecurity emergency measures exercised by an
incident-response or security council exclusively in
response to a specific and documented cybersecurity
incident or imminent threat and pursuant to publicly
disclosed, on-chain authorization mechanisms, strictly
limited in scope and duration solely to address such
specific and documented cybersecurity incident or
imminent threat, and without unilateral control by any
single person, shall not, by themselves, constitute
common control or an agreement, arrangement, or
understanding to act in concert, provided that such
rules and authorities, including the procedures and
operational limits governing such emergency measures,
are disclosed in publicly available written
documentation reasonably available to the applicable
Federal regulator, by a decentralized governance system
or similar legal entity sufficiently in advance of any
exercise of such emergency powers.
(B) Prohibition.--The emergency measures described
in subparagraph (A) may not be used to implement
protocol upgrades, governance decisions, or economic
changes that are unrelated to the mitigation of the
applicable cybersecurity incident or imminent threat,
as described in that subparagraph.
(3) Standards.--The standards criteria for temporary rules-
based cybersecurity emergency measures under paragraph (2)
shall be established by rulemaking pursuant to subsection (b).SEC. 302. ILLICIT FINANCE OBLIGATIONS FOR DISTRIBUTED LEDGER MESSAGING
SYSTEMS.
(a) Definitions.--In this section:
(1) Distributed ledger messaging system.--The term
``distributed ledger messaging system''--
(A) means a web-hosted software application that
provides a user with the ability to create or submit an
instruction, communication, or message to a distributed
ledger application or decentralized finance trading
protocol for the purpose of executing a transaction by
the user; and
(B) does not include--
(i) a distributed ledger application;
(ii) a distributed ledger protocol;
(iii) a distributed ledger system;
(iv) a decentralized finance trading
protocol;
(v) any client, node, validator, or other
form of computational infrastructure with
respect to a distributed ledger system; or
(vi) any software or hardware wallet that
facilitates the custody of an individual of
their digital assets.
(2) United States sanction law.--The term ``United States
sanction law'' means any Federal law imposing, or authorizing
the imposition of, economic sanctions.
(b) Guidance.--Not later than 360 days after the date of enactment
of this Act, the Secretary of the Treasury shall issue guidance with
respect to the economic sanctions and anti-money laundering and
countering the financing of terrorism obligations, risk management
practices, or compliance considerations, applicable to a distributed
ledger messaging system that is owned or operated by a United States
person, as defined in any law imposing or authorizing the imposition of
economic sanctions, which may include--
(1) the use of commercially reasonable distributed ledger-
analytics screening measures, through industry-standard
distributed ledger-analytics tools, to identify wallet
addresses that are owned by sanctioned persons, involve
jurisdictions or financial institutions subject to United
States sanctions, or activity prohibited by United States
sanctions;
(2) blocking, rejecting, preventing the routing of, or
otherwise restricting attempted transactions prohibited by
United States sanction laws;
(3) blocking or restricting transactions that exhibit
indicators of ransomware activity, illicit finance typologies,
or any other pattern that presents a significant and
identifiable illicit finance risk based on a commercially
reasonable distributed ledger-analytics assessment to identify
transactions that involve ransomware activity and other illicit
finance activity; and
(4) implementing and maintaining risk-based measures,
consistent with applicable law, to identify, mitigate, and
address anti-money laundering and countering the financing of
terrorism risks, including--
(A) monitoring for risk indicators and limiting
exposure to illicit-finance risks, which may include
restricting, limiting, or otherwise mitigating exposure
to high-risk transactions; and
(B) complying, as applicable, with special measures
implemented by the Secretary of the Treasury under
section 5318A of title 31, United States Code.
(c) Enforcement and Penalties.--The Secretary of the Treasury and
any other Federal agency with relevant jurisdiction have the authority,
as applicable, to enforce this section using their existing
authorities, as of the day before the date of enactment of this Act,
under applicable law.
(d) Rules of Construction.--Nothing in this section may be
construed to--
(1) alter or amend any laws imposing or authorizing
imposition of economic sanctions by the United States,
including those that apply to United States persons that own or
operate a distributed ledger messaging system;
(2) expand or contract the applicability of--
(A) economic sanctions, anti-money laundering, or
any other illicit finance laws in effect as of the day
before the date of enactment of this Act to any person,
including any person that owns or operates a
distributed ledger messaging system; or
(B) the definition of a ``financial institution''
under applicable laws, which shall not apply to non-
controlling developers or providers as defined in
section 604(b)(3); or
(3) restrict the authority of the Secretary of the Treasury
to implement, administer, and enforce, including by imposing
civil money penalties, any law imposing or authorizing the
imposition of economic sanctions or any law to prevent money
laundering or illicit finance otherwise provided by Federal law
to the Secretary of the Treasury.SEC. 303. SPECIAL MEASURE RELATING TO CERTAIN TRANSMITTALS OF FUNDS.
Section 5318A of title 31, United States Code, is amended--
(1) in subsection (a)(2)(C), by striking ``subsection
(b)(5)'' and inserting ``paragraph (5) or (6) of subsection
(b)'' and
(2) in subsection (b), by adding at the end the following:
``(6) Special measure for certain transmittals of funds.--
If the Secretary of the Treasury finds that a jurisdiction
outside of the United States, 1 or more financial institutions
operating outside of the United States, or 1 or more classes of
transactions within, or involving, a jurisdiction outside of
the United States is of primary money laundering concern in
connection with illicit finance through the use of digital
assets, as defined in section 2 of the GENIUS Act (12 U.S.C.
5901), the Secretary may, by order, regulation, or otherwise as
permitted by law, prohibit, or impose conditions upon, certain
transmittals of funds (to be defined by the Secretary by
regulation) by any domestic financial institution or domestic
financial agency, if such transmittal of funds involves any
such institution, class of transaction, or type of account.''.SEC. 304. OFFSHORE STABLECOIN REPORT.
(a) Definitions.--In this section:
(1) Material volume of transactions.--The term ``material
volume of transactions'' means a sustained level of transaction
activity that is--
(A) publicly observable;
(B) exceeds de minimis usage over a 12-month
period; and
(C) is reasonably likely to affect the illicit
finance or national security risk exposure of the
United States.
(2) Payment stablecoin.--The term ``payment stablecoin''
has the meaning given the term in section 2 of the GENIUS Act
(12 U.S.C. 5901).
(3) United states-dependent offshore stablecoin.--The term
``United States-dependent offshore stablecoin'' means a payment
stablecoin--
(A) that is not issued by a permitted payment
stablecoin issuer or any foreign payment stablecoin
issuer registered with the Comptroller (as those terms
are defined in section 2 of the GENIUS Act (12 U.S.C.
5901));
(B) that is issued by a person operating outside of
the United States; and
(C) the value of which is supported or backed by a
reserve of assets that has a substantial nexus to the
United States, which may include--
(i) obligations of the United States,
including United States Treasury securities and
repurchase agreements backed by United States
Treasury securities and funds held as deposits
at any bank subject to the jurisdiction of the
United States;
(ii) deposits maintained at a banking
entity or insured depository institution
located in the United States, including
correspondent or payable-through accounts;
(iii) securities issued or guaranteed by
the United States or any agency or
instrumentality thereof; or
(iv) assets custodied, cleared, or settled
through payment, clearing, or settlement
systems located in the United States.
(b) Report.--Not later than June 30 of the second calendar year
that begins after the date of enactment of this Act, and every 4 years
thereafter for not more than 3 reports, the Secretary of the Treasury
shall submit to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives, and make available on the website of the Department of
the Treasury, a report assessing whether there is credible,
articulable, and publicly supportable evidence of significant illicit
finance threats or vulnerabilities associated with any United States-
dependent offshore stablecoin employed in a material volume of
transactions.
(c) Contents.--Each report required under subsection (b) shall
include--
(1) an assessment of the illicit finance risk of each
United States-dependent offshore stablecoin employed in a
material volume of transactions;
(2) an assessment of the controls employed by the issuers
of United States-dependent offshore stablecoins to address the
use of such stablecoins in illicit finance, as available;
(3) data and information regarding the volume of United
States-dependent offshore stablecoins assessed to be employed
in connection with illicit finance, as available;
(4) a general description of the relationships between
United States-dependent offshore stablecoins and the financial
system of the United States, including principal channels of
interaction; and
(5) such other information or analysis as the Secretary of
the Treasury deems relevant to assessing the illicit finance
risks of United States-dependent offshore stablecoins.
(d) Classified Annex.--Each report required under subsection (b)
shall be submitted in unclassified form, but may contain a classified
annex.
(e) National Strategy.--The reporting requirement under subsection
(b) may be met as part of the national strategy for combating terrorist
and other illicit financing required under sections 261 and 262 of the
Countering America's Adversaries Through Sanctions Act (Public Law 115-
44; 131 Stat. 934) for the reporting years.
(f) Rule of Construction.--Nothing in this section may be construed
to authorize--
(1) the disclosure of any information that is protected
from disclosure under Federal law; and
(2) the collection or use of any information other than
publicly available data or information lawfully obtained by the
Department of the Treasury under existing authorities, as of
the day before the date of enactment of this Act.SEC. 305. TEMPORARY HOLD FOR CERTAIN DIGITAL ASSET TRANSACTIONS.
(a) Definitions.--In this section:
(1) Covered agency.--The term ``covered agency'' means any
State or Federal law enforcement agency, including the
Department of the Treasury.
(2) Covered person.--The term ``covered person'' means a
person that is--
(A) a permitted payment stablecoin issuer;
(B) a foreign payment stablecoin issuer (as defined
in section 2 of the GENIUS Act (12 U.S.C. 5901))
registered with the Office of the Comptroller of the
Currency pursuant to section 18(c) of that Act (12
U.S.C. 5916(c)); or
(C) a digital asset service provider, as that term
is defined in section 2 of the GENIUS Act (12 U.S.C.
5901).
(3) Payment stablecoin; permitted payment stablecoin
issuer.--The terms ``payment stablecoin'' and ``permitted
payment stablecoin issuer'' have the meanings given those terms
in section 2 of the GENIUS Act (12 U.S.C. 5901).
(4) Qualified written request.--The term ``qualified
written request'' means a written communication issued by an
authorized official of a covered agency that--
(A) identifies a specific wallet, address, account,
or transaction reasonably suspected of being linked to
illicit activity;
(B) requests a covered person initiate an action
with respect to the specified wallet, address, account,
or transaction reasonably suspected of being linked to
illicit activity, including delaying the execution of a
transaction, conversion, or withdrawal involving
digital assets; and
(C) includes a designated agency contact.
(5) Temporary hold.--The term ``temporary hold'' means a
restriction applied by a covered person that delays execution
of a transaction, conversion, or withdrawal involving digital
assets for a reasonable period of time, not to exceed 30
calendar days, which may be extended for an additional 150
calendar days pursuant to a qualified written request.
(b) Protection From Private Causes of Action.--
(1) In general.--Any covered person that, in good faith and
in compliance with this section, or any person complying with a
temporary lawful order under subsection (c) that, voluntarily
implements a temporary hold shall not be held liable pursuant
to any Federal or State private right of action for
implementing the temporary hold, provided that--
(A) the covered person or other person, as
applicable--
(i) implements the temporary hold based on
a reasonable belief the transaction,
conversion, or withdrawal relates to a
violation or attempted violation of State or
Federal law; or
(ii) implements the temporary hold after
receiving a qualified written request from a
covered agency;
(B) the covered person--
(i) makes reasonable efforts to notify the
affected customer of the temporary hold;
(ii) reasonably determines that
notification would impede actual or potential
law enforcement efforts; or
(iii) receives a qualified written request
from a covered agency that requests
notification not be attempted; and
(C) the covered person notifies as soon as
reasonably practicable an appropriate State or Federal
law enforcement agency or the Federal Trade Commission,
provided that such notification is not required when
the covered person has received a qualified written
request from a covered agency.
(2) Documentation.--A covered person shall--
(A) maintain for the 3-year period following the
implementation of a temporary hold documentation of the
basis for applying a temporary hold; and
(B) make available the documentation described in
subparagraph (A) upon the request of a covered agency
or the Federal Trade Commission.
(c) Compliance With Temporary Lawful Orders.--A permitted payment
stablecoin issuer shall comply with any valid writ, process, order,
rule, decree, command, or other requirement issued or promulgated under
Federal law by a court of competent jurisdiction that--
(1) requires a person to freeze or prevent the transfer of
payment stablecoins;
(2) specifies the payment stablecoins or accounts subject
to blocking with reasonable particularity; and
(3) is subject to judicial or administrative review or
appeal, as provided by law.
(d) Rules of Construction.--Nothing in this section may be
construed to--
(1) compel or require any covered person to take action to
freeze, seize, or block digital assets that is not otherwise
required under existing Federal or State law, as in effect on
the day before the date of enactment of this Act;
(2) limit or alter the authority of any government agency,
including with respect to authority to pursue enforcement
actions;
(3) limit or affect the application of--
(A) section 5318(g)(3) of title 31, United States
Code, and any regulation requiring any financial
institution to report suspicious activity; or
(B) any lawful authority to seize or freeze assets
pursuant to a lawful order or sanctions designation; or
(4) limit the ability of a covered person to apply a
temporary hold to any wallet, address, account, or transaction
located outside the United States.
(e) Reporting.--The Attorney General and the Federal Trade
Commission may issue regulations or guidance relating to any
notification by covered persons pursuant to this section to the
Department of Justice and the Federal Trade Commission, respectively.SEC. 306. VOLUNTARY CYBERSECURITY PROGRAM FOR DECENTRALIZED FINANCE
TRADING PROTOCOLS.
(a) Definitions.--In this section:
(1) Covered activities.--The term ``covered activities''
means the activities described in section 15H(b) of the
Securities Exchange Act of 1934, as added by section 601.
(2) Decentralized finance trading protocol.--The term
``decentralized finance trading protocol'' has the meaning
given the term in section 15H(a) of the Securities Exchange Act
of 1934, as added by section 601.
(3) Director.--The term ``Director'' means the Director of
NIST.
(4) NIST.--The term ``NIST'' means the National Institute
of Standards and Technology.
(b) Establishment of Program.--The Director shall, in consultation
with the Commission and the Commodity Futures Trading Commission,
establish a voluntary program for the adoption by persons developing
decentralized finance trading protocols or engaging in covered
activities of applicable cybersecurity standards published by NIST.
(c) Development of Program Criteria.--
(1) Request for information.--The Director shall issue a
request for information in the Federal Register to gather input
from experts and industry stakeholders on--
(A) cybersecurity threats, vulnerabilities, and
risks to decentralized finance trading protocols;
(B) auditing and code security standards, including
best practices for code audits;
(C) consumer protection and code transparency best
practices on decentralized finance trading protocols;
and
(D) existing NIST standards, as of the day before
the date of enactment of this Act, and their
applicability to decentralized finance trading
protocols.
(2) Report.--The Director shall develop a report on the
software development of decentralized finance protocols to
assess technical input from paragraph (1).
(3) Publication of program criteria.--After evaluating
input provided under paragraph (1), the Director shall release
a special publication containing a detailed evaluation of
cybersecurity best practices and existing applicable standards,
as of the day before the date of enactment of this Act, for
decentralized finance trading protocols, to provide program
criteria to software developers and industry stakeholders under
the voluntary program, which shall include a summary of public
comments and responses as to how input was incorporated.
(4) Requests for revision.--
(A) In general.--After the Director publishes the
program criteria under paragraph (3), the Director
shall issue a request for comment in the Federal
Register to gather input on the workability of the
program.
(B) Petition.--The public may petition the Director
to reevaluate certain aspects of the program criteria
published under paragraph (3).
(5) Program updates.--As the technology underpinning
decentralized finance trading protocols evolves, the Director
shall update the special publication under paragraph (3) in
compliance with subsection (d).
(d) Program.--
(1) Application.--A person seeking evaluation of a
decentralized finance trading protocol or a covered activity
under the program established under subsection (b) shall submit
to the Director an application at such time and in such manner
as the Director considers appropriate for purposes of the
program.
(2) Review.--In carrying out the program established under
subsection (b), the Director shall review each application
submitted by a person under paragraph (1) of this subsection.
(3) Determination.--In carrying out a review under
paragraph (2) of an application regarding a decentralized
finance trading protocol or covered activity, the Director
shall determine whether the protocol or activity is in
compliance with existing applicable standards, frameworks, and
guidelines published by the Director under subsection (c).
(4) Notice.--For each determination made under paragraph
(3) pursuant to an application by a person of a decentralized
finance trading protocol or covered activity, the Director
shall transmit to the person a notice of the determination.
(e) Benefits of Program.--
(1) Display.--A person that receives notice under
subsection (d)(4) that the Director has determined that a
decentralized finance trading protocol or a covered activity
has adopted the applicable cybersecurity standards published by
NIST, the person may publicly display a designation, seal, or
other identifier issued by the Director.
(2) Treatment of adoption.--In adopting a regulation or
guidance relating to this section, a Federal agency shall
consider adoption of cybersecurity standards under the program
required by subsection (b) as evidence of good faith compliance
with the law.
(f) Rule of Construction Relating to Preemption.--Nothing in this
section may be construed to preempt any otherwise applicable provision
of law of a State.SEC. 307. AMENDMENTS TO MONETARY INSTRUMENT DEFINITION.
(a) Definitions.--In this section:
(1) Self-hosted wallet.--The term ``self-hosted wallet''
means a digital interface--
(A) that is used to secure and transfer digital
assets; and
(B) under which the owner of digital assets secured
and transferred under subparagraph (A) retains
independent control over those digital assets.
(2) United states sanction law.--The term ``United States
sanction law'' has the meaning given the term in section
302(a).
(b) Monetary Instruments.--Section 5312(a)(3)(D) of title 31,
United States Code, is amended by inserting ``, including digital
assets (as defined in section 2 of the GENIUS Act (12 U.S.C. 5901)), as
may be applicable,'' after ``value''.
(c) Treasury Risk Assessment.--As part of the national strategy for
combating terrorist and other illicit financing required under sections
261 and 262 of the Countering America's Adversaries Through Sanctions
Act (Public Law 115-44; 131 Stat. 934), the Secretary of the Treasury
shall consider--
(1) illicit activity, such as money laundering and
sanctions evasion, involving self-hosted wallets;
(2) the effectiveness of and gaps in existing (as of the
day before the date of enactment of this Act) methods,
techniques, and strategies used by regulated financial
institutions in detecting illicit activity, such as money
laundering, involving self-hosted wallets;
(3) any illicit actors, including nation state actors, that
pose a high risk of facilitating illicit activity through the
use of self-hosted wallets;
(4) the benefits of the use of self-hosted wallets to--
(A) enhance user privacy and civil liberties
through direct asset custody; and
(B) expand financial inclusion and access for
communities underserved by traditional financial
institutions;
(5) end user and counterparty risks associated with self-
hosted wallets, including consumer fraud, cybersecurity, and
identity verification;
(6) the use of hardware self-hosted wallets to smuggle
digital assets for financing cross-border illicit activity;
(7) the use of hardware self-hosted wallets for tax evasion
and asset concealment; and
(8) other considerations the Secretary may determine
appropriate.
(d) Guidance.--The Secretary of the Treasury may issue guidance for
financial institutions that transact with self-hosted wallets based on
the results of the research on benefits and risks required under
subsection (c), which shall not--
(1) require a regulated entity to collect, with respect to
any transaction, personally identifiable information about the
controller of a self-hosted wallet when the controller is not
both the customer of the regulated entity and a party to such
transaction, except as required by Federal law, including
United States sanctions laws and regulations or lawful process;
or
(2) be construed to hinder, restrict, or otherwise impair
the authority of any Federal agency to investigate, detect,
counteract, or prevent illegal activity.SEC. 308. RISK MANAGEMENT STANDARDS FOR DIGITAL ASSET INTERMEDIARIES.
(a) In General.--Before conducting trading activity (including
routing orders and executing trades) through a decentralized finance
trading protocol, a digital asset intermediary shall implement risk
management standards as described in subsection (b) with respect to
trading using that decentralized finance trading protocol.
(b) Requirements.--The risk management standards applicable to a
digital asset intermediary shall be comprised of the following:
(1) Conducting an effective risk analysis with respect to
the decentralized finance trading protocol, including--
(A) money laundering and sanctions evasion risks,
including whether trading will involve activity
relating to a primary money laundering concern;
(B) fraud and market manipulation;
(C) operational and cybersecurity risk, including
settlement; and
(D) implementing robust policies and procedures to
mitigate the risks identified under this paragraph.
(2) Disclosing the risks identified under paragraph (1)
using plain language to customers.
(3) Maintaining robust, risk-based capability to detect
market manipulation, fraud, money laundering, and sanctions
evasion occurring on the decentralized finance trading
protocol, which may include the use of alternative tools that
will properly target such risks, including distributed ledger
analytics tools.
(4) Implementing an effective risk-based procedure for
determining whether to execute, reject, or suspend an incoming
or outgoing transaction relating to the decentralized finance
trading protocol, as applicable, including a determination
based on suspected risk of money laundering, sanctions evasion,
fraud, or market manipulation.
(5) Consistent with this subsection, implementing other
reasonable standards which may be required by rule.
(c) Examinations.--
(1) Compliance.--The Commission or the Commodity Futures
Trading Commission, or other appropriate self-regulatory
organization, shall verify compliance with the requirements of
this section as part of a regular examination of the digital
asset intermediary at the frequency and under the conditions
otherwise provided by law or rule.
(2) Rule of construction.--Nothing in this section may be
construed to limit the authority of the Financial Crimes
Enforcement Network or the Office of Foreign Assets Control
from conducting examinations, investigations, or enforcement
actions relating to this section as otherwise provided by law.
(d) Rulemaking.--Rules shall be adopted to implement this section
as follows:
(1) The Department of the Treasury, in consultation with
the Commission and the Commodity Futures Trading Commission,
shall adopt rules to implement the money laundering and
sanctions evasion risk analysis standards of this section.
(2) The Commission and the Commodity Futures Trading
Commission shall adopt rules to implement this section other
than the provisions described in paragraph (1).
(3) Rules adopted under this paragraph shall be reasonably
tailored to the size of the applicable digital asset
intermediary and risks of the digital asset intermediary that
are reasonably knowable to the digital asset intermediary.SEC. 309. STUDY ON DIGITAL ASSET MIXERS AND TUMBLERS.
(a) Digital Asset Mixer and Tumbler Defined.--In this section, the
term ``digital asset mixer and tumbler'' means a smart contract, or set
of smart contracts, that obfuscate or eliminate the source or other
forms of identification of the holder of a digital asset, including by
pooling assets from different holders and redistributing those assets
among holders.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Secretary of the Treasury shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives a report that
analyzes the following issues:
(1) Current (as of the date on which the report is
submitted) typologies of digital asset mixers and tumblers and
historical transaction volume.
(2) Estimates of the percentage of transactions relating to
digital asset mixers and tumblers that are used by actors
engaged in illicit finance.
(3) Estimates of the reliance, and financial exposure, of
centralized exchanges and traditional financial institutions to
digital asset mixers and tumblers, and the extent to which
centralized exchanges and traditional financial institutions
are adequately implementing anti-money laundering and economic
sanctions compliance with respect to digital asset mixers and
tumblers.
(4) An assessment of potential non-illicit uses of mixers
and tumblers described in paragraph (1), including privacy
benefits.
(5) An analysis of regulatory approaches employed by other
jurisdictions relating to digital asset mixers and tumblers.
(6) Recommendations for legislation or regulation relating
to digital asset mixers and tumblers.SEC. 310. GAO STUDY ON INTERMEDIARIES IN FOREIGN JURISDICTIONS.
(a) In General.--The Comptroller General of the United States, in
consultation with the Secretary of the Treasury, shall conduct a study
to--
(1) assess the risks posed by digital asset intermediaries
that--
(A) are primarily located in foreign jurisdictions
that lack regulatory requirements that are
substantially similar to the requirements of the Bank
Secrecy Act; and
(B) provide services to United States persons; and
(2) provide any regulatory or legislative recommendations
to address the risks described in paragraph (1).
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall submit to
Congress a report containing all findings and determinations made in
carrying out the study required under subsection (a).SEC. 311. STUDIES ON FOREIGN ADVERSARY ACTIVITIES.
(a) Definitions.--In this section:
(1) Foreign adversary.--The term ``foreign adversary''
means a foreign government or foreign non-government person
determined by the Secretary of Commerce to be a foreign
adversary under section 791.4(a) of title 15, Code of Federal
Regulations, or any successor regulation.
(2) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Committee on Agriculture, Nutrition, and
Forestry of the Senate;
(C) the Select Committee on Intelligence of the
Senate;
(D) the Committee on Financial Services of the
House of Representatives;
(E) the Committee on Agriculture of the House of
Representatives; and
(F) the Permanent Select Committee on Intelligence
of the House of Representatives.
(b) Treasury Report.--Not later than 1 year after the date of
enactment of this Act, the Secretary of the Treasury, in consultation
with the Commodity Futures Trading Commission and the Commission, shall
conduct a study and submit a report to the relevant congressional
committees, which may include a classified annex, that--
(1) identifies any digital asset intermediary that is
controlled by a government of a foreign adversary, or by
individuals or entities acting at the direction of a foreign
adversary;
(2) determines whether any government of a foreign
adversary is collecting trading data about United States
persons in digital asset markets; and
(3) evaluates whether any proprietary intellectual property
of digital asset intermediaries is being misused or stolen by
any government of a foreign adversary.
(c) GAO Study and Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall conduct a study
and submit a report to the relevant congressional committees, which may
include a classified annex, that--
(1) identifies any digital asset intermediary that is owned
by a government of a foreign adversary, or by individuals or
entities acting at the direction of a foreign adversary;
(2) determines whether any government of a foreign
adversary is collecting trading data about United States
persons in digital asset markets; and
(3) evaluates whether any proprietary intellectual property
of digital asset intermediaries is being misused or stolen by
any government of a foreign adversary.SEC. 312. TREASURY STUDY ON CYBERSECURITY STANDARDS.
(a) Study.--The Secretary of the Treasury, in consultation with the
Director of the Cybersecurity and Infrastructure Security Agency, the
Director of the National Security Agency, and the Director of the
National Institute of Standards and Technology, shall conduct a study
on cybersecurity standards applicable to digital asset smart contracts,
custody, key management, and smart contract deployment.
(b) Report.--
(1) In general.--Not later than 365 days after the date of
enactment of this Act, the Secretary shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives a report containing--
(A) the findings of the study under subsection (a);
and
(B) any legislative recommendations.
(2) Classified annex.--The report under paragraph (1) may
include a classified annex, as appropriate.SEC. 313. STUDIES ON FINANCIAL STABILITY RISKS OF DECENTRALIZED FINANCE
TRADING AND CREDIT IN DIGITAL COMMODITY MARKETS.
Not later than 1 year after the date of enactment of this Act, and
every 4 years thereafter until 4 consecutive reports have been issued,
the Secretary of the Treasury, the Board of Governors of the Federal
Reserve System, the Commission, and the Commodity Futures Trading
Commission shall--
(1) conduct a study examining--
(A) the role of decentralized finance protocols in
the financial system, including--
(i) the functions of such protocols;
(ii) the use of such protocols to obtain
leverage or financing;
(iii) the effects of such protocols on the
pricing and trading of financial instruments,
including descriptions of any linkages between
such protocols and traditional financial
instrument; and
(iv) the types and volumes of financial
activity conducted through such protocols;
(B) the risks of decentralized finance protocols to
financial stability, fair and orderly markets, and
otherwise to the financial system of the United States,
which shall include a quantification of those risks, to
the extent possible;
(C) the strategies and guardrails regulators and
market participants have used and are using to mitigate
risks arising from the use of decentralized finance
protocols; and
(D) an assessment of whether the regulatory
framework adequately controls any risk with respect to
decentralized finance protocols;
(2) conduct a separate study examining the risks to
financial stability and orderly markets arising from the
extension and maintenance of credit with respect to digital
assets by digital asset service providers, including--
(A) the effect of gaps in the regulatory framework
for credit extended on digital assets, such as risks
arising from the extension and maintenance of credit on
digital assets; and
(B) the interconnections between leverage in the
market for digital assets and the financial system; and
(3) submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate, the Committee on Agriculture, Nutrition,
and Forestry of the Senate, the Committee on Financial Services
of the House of Representatives, and the Committee on
Agriculture of the House of Representatives a report on the
studies conducted under paragraphs (1) and (2), which--
(A) shall include legislative and regulatory
recommendations, as appropriate; and
(B) may include a classified annex.TITLE IV--RESPONSIBLE BANKING INNOVATION
SEC. 401. PERMISSIBILITY OF DIGITAL ASSET ACTIVITIES.
(a) Definitions.--In this section:
(1) Appropriate federal banking agency; state bank; state
bank supervisor; state member bank.--The terms ``appropriate
Federal banking agency'', ``State bank'', ``State bank
supervisor'', and ``State member bank'' have the meanings given
those terms in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813).
(2) Customer-driven transaction.--The term ``customer-
driven transaction''--
(A) means a transaction that is entered into for a
valid and independent business purpose of a customer;
and
(B) does not include a transaction, the principal
purpose of which is to deliver to a financial holding
company, insured State bank, national bank, or Federal
credit union assets that the financial holding company,
insured State bank, national bank, or Federal credit
union, respectively, could not invest in directly.
(3) Federal branch; state branch.--The terms ``Federal
branch'' and ``State branch'' have the meanings given those
terms in section 1(b) of the International Banking Act of 1978
(12 U.S.C. 3101).
(4) Federal credit union; insured credit union.--The terms
``Federal credit union'' and ``insured credit union'' have the
meanings given those terms in section 101 of the Federal Credit
Union Act (12 U.S.C. 1752).
(5) Financial holding company.--The term ``financial
holding company'' has the meaning given the term in section 2
of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).
(6) Financial subsidiary.--The term ``financial
subsidiary'' has the meaning given the term in section
5136A(g)(3) of the Revised Statutes (12 U.S.C. 24a).
(7) Insured state bank.--The term ``insured State bank''
means a State bank, the deposits of which are insured by the
Federal Deposit Insurance Corporation.
(8) National bank.--The term ``national bank'' means a
national banking association.
(b) Authorized Activities for Financial Holding Companies and
Financial Subsidiaries.--
(1) In general.--A financial holding company or financial
subsidiary may use a digital asset or distributed ledger system
to perform, provide, or deliver any activity, function,
product, or service that the financial holding company is
otherwise authorized by law to perform, provide, or deliver.
(2) Financial in nature.--The activities described in
subsection (g) are financial in nature, or incidental to a
financial activity, for purposes of section 4(k) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(k)) and section
5136A(b) of the Revised Statutes (12 U.S.C. 24a(b)).
(3) Rule of construction.--Nothing in this subsection may
be construed to exempt the performance, provision, or delivery
by a financial holding company or financial subsidiary of an
activity, function, product, or service from a requirement that
would apply if the activity were not performed, provided, or
delivered using a digital asset or distributed ledger system.
(c) Authorized Activities for National Banks.--
(1) In general.--
(A) Authorized activities.--A national bank may use
a digital asset or distributed ledger system to
perform, provide, or deliver any activity, function,
product, or service that the national bank is otherwise
authorized by law to perform, provide, or deliver.
(B) Branches of foreign banks.--
(i) Federal branches.--Consistent with
section 4(b) of the International Banking Act
of 1978 (12 U.S.C. 3102(b)), the activities
authorized for a national bank under
subparagraph (A) and paragraph (2) shall be
permissible for a Federal branch, subject to
any limitations that would apply to those
activities pursuant to the International
Banking Act of 1978 (12 U.S.C. 3101 et seq.) if
the activity were not performed, provided, or
delivered using a digital asset or distributed
ledger system.
(ii) Rule of construction for state
branches.--For the purposes of activities
engaged in by a State branch as principal under
section 7(h) of the International Banking Act
of 1978 (12 U.S.C. 3105(h)), the activities
authorized under clause (i) are permissible
activities of a Federal branch.
(2) Business of banking and other authorized activities.--
The activities described in subsection (g) are authorized as
part of the business of banking under the paragraph designated
as the ``Seventh'' of section 5136 of the Revised Statutes (12
U.S.C. 24) or under other applicable law.
(3) Rules of construction.--Nothing in this subsection may
be construed to--
(A) exempt the performance, provision, or delivery
by a national bank of an activity, function, product,
or service from a prohibition, restriction,
registration, limitation, or other requirement that
would apply if the activity were not performed,
provided, or delivered using a digital asset or
distributed ledger system by a national bank; or
(B) expand or contract the meaning of ``operations
are or have been required by the Comptroller of the
Currency to be limited to those of a trust company and
activities related thereto'', as that term is used in
section 5169(a) of the Revised Statutes (12 U.S.C.
27(a)).
(d) State Banks.--The activities authorized under subsection (c)
are permissible activities--
(1) of a national bank for purposes of activities of an
insured State bank and any subsidiary of an insured State bank
to engage in as principal under subsections (a) and (d) of
section 24 of the Federal Deposit Insurance Act (12 U.S.C.
1831a); and
(2) of a State member bank, and any subsidiary of a State
member bank, to engage in as principal.
(e) Authorized Activities for Federal Credit Unions.--
(1) In general.--A Federal credit union may use a digital
asset or distributed ledger system to perform, provide, or
deliver any activity, function, product, or service that the
Federal credit union is otherwise authorized by law to perform,
provide, or deliver.
(2) Business of credit unions.--The activities described in
subsection (g) are authorized as part of, or incidental to, the
authority necessary or requisite to carry on effectively the
business for which Federal credit unions are incorporated under
paragraph (17) of section 107 of the Federal Credit Union Act
(12 U.S.C. 1757(17)).
(3) Rule of construction.--Nothing in this subsection may
be construed to exempt the performance, provision, or delivery
by a Federal credit union of an activity, function, product, or
service from a requirement that would apply if the activity
were not performed, provided, or delivered using a digital
asset or distributed ledger system.
(f) Insured Credit Unions.--The activities authorized for a Federal
credit union under subsection (e)(1) shall be permissible for an
insured credit union, subject to authorization by applicable State law.
(g) Activities Described.--The activities described in this
subsection are--
(1) providing custodial, fiduciary, or safekeeping services
for digital assets;
(2) providing services related to custodial services for
digital assets, including staking, facilitating digital asset
lending, distributed ledger governance services, and advancing
funds for the purchase of digital assets or in respect of
distributions on digital assets;
(3) making loans collateralized by digital assets;
(4) engaging in payment activities involving digital
assets, including facilitating customer or principal payments
in connection with otherwise permissible activities;
(5) operating a node on a distributed ledger;
(6) providing self-custodial wallet software;
(7) engaging in derivatives transactions, including related
hedging activities, in a manner consistent with section 7.1030
of title 12, Code of Federal Regulations, as in effect as of
the date of enactment of this Act;
(8) providing brokerage services with respect to any
digital asset, including clearing and execution services,
whether alone or in combination with other permissible
activities;
(9) facilitating transactions in the secondary market for
all types of digital assets on the order of customers as a
riskless principal to the extent of engaging in a transaction
in which a company, after receiving an order to buy or sell a
digital asset from a customer, purchases or sells the digital
asset for its own account to offset a contemporaneous sale to
or purchase from the customer;
(10) holding as principal digital assets for which the
banking entity anticipates a reasonably foreseeable need to the
extent incidental to an otherwise permissible activity, which
shall include holding digital assets as principal in order to
pay fees arising from interactions with a distributed ledger
system or for the purposes of risk management, treasury
services, liquidity management or trade or margin settlement or
similar purposes, subject to the otherwise applicable
limitations on the activities of a banking entity pursuant to
section 13 of the Bank Holding Company Act of 1956 (12 U.S.C.
1851) and only to the extent that the terms and prohibitions of
that section apply to a transaction; and
(11) underwriting, dealing in, or making a market in
digital assets in customer-driven transactions, including
related hedging activities in connection with those customer-
driven transactions, subject to the otherwise applicable
limitations on the activities of a banking entity pursuant tosection 13 of the Bank Holding Company Act of 1956 (12 U.S.C.
1851) and only to the extent that the terms and prohibitions of
that section apply to a transaction.
(h) Other Requirements.--There shall be no other prior notice or
approval requirements to engage in the activities described in
subsections (b) through (g) of this section other than those required
under title LXII of the Revised Statutes, the Act entitled ``An Act to
place authority over the trust powers of national banks in the
Comptroller of the Currency'', approved September 28, 1962 (12 U.S.C.
92a et seq.), the Federal Reserve Act (12 U.S.C. 221 et seq.), or the
Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) and the
regulations promulgated under those Acts.
(i) Rule of Construction.--Nothing in this section may be construed
to--
(1) exclude other possible permissible activities that are
not activities described in subsection (g);
(2) imply that inclusion of an activity described in
subsection (g) means that the activity is otherwise
impermissible;
(3) limit the authority of an appropriate Federal banking
agency to determine that activities other than those activities
described in subsection (g) are permissible for a Federal
credit union or authorized as part of the business of banking,
or financial in nature, or incidental or complementary thereto,
or other applicable law, as applicable, through
interpretations, guidance, or rulemaking; or
(4) limit the authority of an appropriate Federal banking
agency, or a State bank supervisor, to supervise and take
enforcement action with respect to an insured depository
institution (or, to the extent applicable, a financial holding
company) engaging in a digital asset activity authorized by
this section that the appropriate Federal banking agency or
State bank supervisor, as applicable, determines, pursuant to
applicable law, to be an unsafe or unsound practice or a
violation of a law, rule, or regulation, or any condition
imposed in writing.
(j) Application.--The authorities described in this section shall
not apply to nonfungible assets.SEC. 402. JOINT RULES FOR PORTFOLIO MARGINING DETERMINATIONS.
(a) In General.--The Commodity Futures Trading Commission and the
Commission shall jointly issue rules to facilitate portfolio margining
of securities (including related extensions of credit), security-based
swaps, futures contracts for future delivery, options on futures
contracts for future delivery, swaps, and digital commodities, or any
subset thereof, for persons registered with either such Commission,
in--
(1) a securities account carried by a registered broker or
dealer or a security-based swap account carried by a registered
security-based swap dealer;
(2) a futures or cleared swap account carried by a
registered futures commission merchant;
(3) a swap account carried by a swap dealer; or
(4) a digital commodity account carried by a registered
digital commodity broker or digital commodity dealer that is
also registered in such other capacity as is necessary to also
carry the other customer or counterparty positions being held
in the account.
(b) Process.--The rules required to be jointly issued under
subsection (a) shall--
(1) describe the treatment of any account to which the
rules relate, and any assets that may be held therein, in a
proceeding under title 11, United States Code, the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.),
title II of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (12 U.S.C. 5381 et seq.), or any other
applicable insolvency law with respect to the person carrying
the account;
(2) be issued only if that issuance is in the public
interest and provides for the appropriate protection of
customers, including appropriate disclosures to each current
and potential customer concerning the treatment of any account
to which the rules relate, and any assets that may be held
therein, in a proceeding under title 11, United States Code,
the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.), title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (12 U.S.C. 5381 et seq.), or any other
applicable insolvency law with respect to the person carrying
the account;
(3) require the Commission and the Commodity Futures
Trading Commission to consider the public interest of, and the
protection of investors by, those rules through the
solicitation of public comments; and
(4) require the Commission and the Commodity Futures
Trading Commission to--
(A) consult with other relevant foreign or domestic
regulators, including the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the
Currency, and State bank supervisors, as appropriate;
and
(B) if the rules pertain to a securities account
carried by a registered broker or dealer that is a
member of the Securities Investor Protection
Corporation, consult with the Securities Investor
Protection Corporation.SEC. 403. CAPITAL REQUIREMENTS TO ADDRESS NETTING AGREEMENTS.
(a) Definitions.--In this section, the terms ``depository
institution holding company'' and ``insured depository institution''
have the meanings given those terms in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
(b) Capital Requirements.--Not later than 360 days after the date
of enactment of this Act, the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, and the Chair of the Federal
Deposit Insurance Corporation shall develop risk-based and leverage
capital requirements for insured depository institutions, depository
institution holding companies, and nonbank financial companies
supervised by the Board of Governors of the Federal Reserve System that
address netting agreements that provide for termination and close-out
netting across multiple types of financial transactions, consistent
with section 402, in the event of the default of a counterparty.SEC. 404. PROHIBITING INTEREST AND YIELD ON PAYMENT STABLECOINS.
(a) Definitions.--In this section:
(1) Affiliate.--The term ``affiliate'' means any entity
that controls, is controlled by, or is under common control
with another entity.
(2) Commissions.--The term ``Commissions'' means the
Commission and the Commodity Futures Trading Commission.
(3) Comptroller; foreign payment stablecoin issuer; payment
stablecoin; permitted payment stablecoin issuer.--The terms
``Comptroller'', ``foreign payment stablecoin issuer'',
``payment stablecoin'', and ``permitted payment stablecoin
issuer'' have the meanings given those terms in section 2 of
the GENIUS Act (12 U.S.C. 5901).
(4) Covered party.--The term ``covered party'' means any
digital asset service provider, together with all of its
affiliates, but in each case excluding any permitted payment
stablecoin issuer or foreign payment stablecoin issuer
registered with the Comptroller.
(5) Deposit.--The term ``deposit'' has the meaning given
the term in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813).
(6) Restricted recipient.--The term ``restricted
recipient'' means a United States person that is a customer or
user of a covered party.
(7) United states person.--The term ``United States
person'' means a person that is a resident of the United States
or is organized or incorporated under the laws of the United
States.
(b) Sense of Congress.--It is the sense of Congress that--
(1) depository institutions provide financial services that
are integral to the strength of the economy of the United
States and that the payment of consideration by digital asset
service providers to United States customers or users based on
their payment stablecoin balances in a manner that is
economically or functionally equivalent to the payment of
interest or yield on an interest-bearing bank deposit may
inhibit the key functions of depository institutions in the
economy of the United States; and
(2) payment stablecoins represent a significant innovation
in financial infrastructure that can strengthen the United
States payments system and the primacy of the United States
dollar and that activity-based rewards and incentives tied to
the use of payment stablecoins and participation in distributed
ledger systems are critical to enabling innovation,
competition, and consumer adoption.
(c) Prohibition on Interest and Yield.--
(1) In general.--No covered party shall, directly or
indirectly, pay any form of interest or yield (whether in cash,
tokens, or other consideration) to a restricted recipient--
(A) solely in connection with the holding of the
payment stablecoins of that restricted recipient; or
(B) on a payment stablecoin balance in a manner
that is economically or functionally equivalent to the
payment of interest or yield on an interest-bearing
bank deposit.
(2) Activity-based or transaction-based rewards and
incentives permitted.--
(A) In general.--The prohibition under paragraph
(1) shall not apply with respect to rewards or
incentives based on bona fide activities or bona fide
transactions that are not economically or functionally
equivalent to the payment of interest or yield on an
interest-bearing bank deposit pursuant to the
regulations promulgated under paragraph (3).
(B) Equivalence to bank deposits.--Except as
permitted under subparagraph (A), the prohibition under
paragraph (1) shall apply to the payment of interest or
yield (whether in cash, tokens, or other consideration)
by a covered party to a restricted recipient in
connection with a loyalty, promotional, subscription,
or incentive program that is economically or
functionally equivalent to the payment of interest or
yield on an interest-bearing bank deposit.
(3) Rulemaking.--
(A) In general.--Not later than 1 year after the
date of enactment of this Act, the Commissions and the
Secretary of the Treasury shall jointly promulgate
regulations through notice and comment rulemaking to
clarify the circumstances under which the prohibition
and permissible rewards and incentives in paragraphs
(1) and (2) shall apply. Such rulemaking shall include
a non-exhaustive list of permissible activity-based or
transaction-based rewards or incentives, including
payments to restricted recipients in connection with or
in compensation for any of the following, provided such
payments are not economically or functionally
equivalent to the payment of interest or yield on an
interest-bearing bank deposit:
(i) A transaction, payment, transfer,
conversion, remittance, or settlement activity,
including a rebate or incentive provided in
connection with the acceptance or use of a
payment stablecoin.
(ii) Providing liquidity for market-marking
activity, posting of collateral in connection
with trading, or otherwise putting assets at
credit or investment risk.
(iii) The use of any product or service,
including participation in governance,
validation, staking, or a loyalty, promotional,
subscription, or incentive program.
(B) Calculation by reference.--Payments to
restricted recipients of consideration, rewards, or
benefits that are permissible pursuant to paragraph (2)
and subparagraph (A) of this paragraph may be
calculated by reference to a balance, duration, tenure,
or any combination of the foregoing.
(4) Evasion.--It shall be unlawful for a covered party to
violate the prohibition under paragraph (1) or rules
promulgated pursuant to paragraph (3). A covered party may not
circumvent or evade such prohibition or rules. The Commissions
and the Secretary may jointly issue such rules as may be
necessary or appropriate to prevent circumvention or evasion of
the prohibition under paragraph (1) or the rules promulgated
pursuant to paragraph (3).
(5) Good faith reliance.--A covered party that structures a
program in good faith reliance on paragraphs (2) and (3) shall
not be subject to penalties if a subsequent rulemaking or
adjudication determines the program falls outside paragraphs
(2) and (3), provided--
(A) the covered party comes into compliance within
90 days of such determination; and
(B) the violation is not substantially similar to a
past violation by the covered party.
(d) Prohibition on Specified Representations.--
(1) Certain marketing practices.--No covered party shall
represent that--
(A) payment stablecoins are investment products,
deposits, backed by the full faith and credit of the
United States, guaranteed by the United States
Government, subject to deposit insurance by the Federal
Deposit Insurance Corporation, or subject to share
insurance by the National Credit Union Administration;
or
(B) any compensation (whether in cash, tokens, or
other consideration) paid to a restricted recipient in
connection with the holding, use, or retention of the
payment stablecoins of that restricted recipient is--
(i) paid or generated by the payment
stablecoin itself, a permitted payment
stablecoin issuer, or a foreign payment
stablecoin issuer registered with the
Comptroller;
(ii) risk-free or comparable to interest
paid on a deposit; or
(iii) offered, administered, or paid by a
person other than the covered party.
(2) Misleading.--No covered party shall omit material
information necessary to prevent any marketing, promotion, or
description described in this subsection from being misleading.
(e) Disclosures.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Commissions and the Secretary of the
Treasury shall jointly promulgate rules requiring clear and
conspicuous disclosure, in plain English, of any compensation
(whether in cash, tokens, or other consideration) paid by a
covered party in connection with the holding, use, or retention
of the payment stablecoins of a restricted recipient in a
manner that is consistent with subsection (d).
(2) Requirements.--In promulgating rules under paragraph
(1), the Commissions and the Secretary of the Treasury shall
require that any required disclosure of compensation described
in that paragraph, and any related term, representation, or
description--
(A) is presented in a clear, factual,
nonpromotional, and non-misleading manner;
(B) clearly identifies the circumstances under
which such compensation can be paid;
(C) clearly identifies the person or persons
responsible for offering, administering, and paying
such compensation, including whether such persons are
affiliated with the issuer of associated payment
stablecoins;
(D) outlines all material terms with respect to
such compensation; and
(E) includes a statement that payment stablecoins
are not investment products, deposits, backed by the
full faith and credit of the United States, guaranteed
by the United States Government, subject to deposit
insurance by the Federal Deposit Insurance Corporation,or subject to share insurance by the National Credit
Union Administration.
(3) Prohibition.--After the date on which the rules
promulgated under paragraph (1) become effective, no covered
party shall market the offering of compensation (whether in
cash, tokens, or other consideration) paid by such covered
party in connection with the holding, use, or retention of the
payment stablecoins of a restricted recipient unless the
covered party has provided the disclosures required under this
subsection.
(4) Satisfaction of requirement.--A covered party that
provides the disclosures required under this subsection shall
be deemed not to have made a representation that is prohibited
under subsection (d), provided that--
(A) any marketing, promotion, or description with
respect to the applicable compensation does not
contradict those disclosures; and
(B) those disclosures are presented in plain
English and in a clear and conspicuous manner.
(f) Penalty.--
(1) Civil monetary penalty.--Whoever knowingly and
willfully participates in a violation of subsection (c)(1),
(d)(1), (d)(2), or (e)(3), or rules issued under subsection
(c)(4), shall be subject to a civil monetary penalty by the
Department of the Treasury of not more than $5,000,000 for each
such violation.
(2) Determination of the number of violations.--For
purposes of determining the number of violations for this
subsection, separate acts of noncompliance are a single
violation when the acts are a result of--
(A) a common or substantially overlapping
originating cause; or
(B) the same statement or publication.
(g) Referral to Secretary of the Treasury.--If the Commission or
the Commodity Futures Trading Commission has reason to believe that any
covered party has knowingly and willfully violated subsection (c)(1),
(d)(1), (d)(2), or (e)(3), or rules issued under subsection (c)(4), the
Commission or the Commodity Futures Trading Commission, as applicable,
shall refer the matter to the Secretary of the Treasury.
(h) Report to Congress.--Not later than 2 years after the date of
enactment of this Act, the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the National Credit Union Administration, and the
Secretary of the Treasury shall jointly submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on payment
stablecoin activity that--
(1) analyzes and quantifies--
(A) the adoption of United States dollar-
denominated payment stablecoins and of other payment
stablecoins issued by permitted payment stablecoin
issuers and foreign payment stablecoin issuers
registered with the Comptroller;
(B) the effect of United States dollar-denominated
payment stablecoins on the average yields of, and
demand for, United States Treasury securities of
various durations;
(C) the effect of United States dollar-denominated
payment stablecoins on the use of the dollar in global
foreign exchange transactions, global foreign exchange
reserves, and global trade;
(D) the effect of United States dollar-denominated
payment stablecoins on increasing access to financial
services for unbanked and underbanked persons, both
domestically and globally;
(E) the effect of United States dollar-denominated
payment stablecoins on payment costs of consumers and
merchants; and
(F) the adoption of non-United States dollar-
denominated stablecoins, including foreign central bank
digital currencies, and their effect on the use of the
dollar in global foreign exchange transactions, global
foreign exchange reserves, and global trade;
(2) describes how compensation, if any, is paid by covered
parties to restricted recipients with respect to the payment
stablecoins of restricted recipients, including through
rewards, incentives, or similar programs; and
(3) analyzes and quantifies the effect of any compensation
described in paragraph (2) and the effect of prohibitions on
the payment of interest or yield by covered parties under this
Act and by issuers of payment stablecoins under section
4(a)(11) of the GENIUS Act (12 U.S.C. 5903(a)(11)) on--
(A) the volume, stickiness, composition, and
concentration of deposits at depository institutions,
including any deposit outflows from depository
institutions and the extent to which community banks
and credit unions are disproportionately affected
thereby;
(B) net interest margin accrued to depository
institutions;
(C) the average rate of interest paid to depositors
at depository institutions;
(D) consumer and business access to credit;
(E) financial arrangements between depository
institutions and digital asset service providers and
issuers of payment stablecoins; and
(F) the items described in paragraph (1).
(i) No Deeming of Payment of Interest or Yield.--For purposes of
this section, a covered party shall not be deemed to violate the
prohibition in subsection (c) solely because an unaffiliated third
party independently makes a payment with respect to a payment
stablecoin, unless the covered party directs or maintains significant
influence over the offering of such consideration and the offering of
such consideration would otherwise violate the prohibition in
subsection (c).
(j) Clarification of Scope and Regulatory Authority.--
(1) Compensation.--The prohibitions under subsections (c),
(d), and (e) shall only apply to compensation paid in
connection with a payment stablecoin or payment stablecoin
balance.
(2) Other assets.--Nothing in this section shall be
construed to authorize the Commissions or the Secretary of the
Treasury to regulate, restrict, or prohibit the payment of any
compensation paid in connection with any asset other than a
payment stablecoin.
(k) Non-applicability.--Nothing in this section shall--
(1) modify, alter, or extend prohibitions on the payment of
yield, interest, or consideration applicable to permitted
payment stablecoin issuers or foreign payment stablecoin
issuers, including under section 4(a)(11) of the GENIUS Act (12
U.S.C. 5903(a)(11)); or
(2) prohibit the disclosure by covered parties of truthful,
non-misleading factual information or any information otherwise
required by Federal law or regulation.SEC. 405. EXPANDED SECURITIES PORTFOLIO MARGIN ACCOUNTS UNDER THE
SECURITIES INVESTOR PROTECTION ACT OF 1970.
(a) Amendments.--The Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.) is amended--
(1) in section 9(a) (15 U.S.C. 78fff-3(a))--
(A) in paragraph (4), by striking ``and'' at the
end;
(B) in paragraph (5), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(6) no advance shall be made by SIPC to the trustee to
pay or otherwise satisfy any net equity claim of any customer
with respect to any digital commodities or swaps held in an
expanded securities portfolio margin account.'';
(2) in section 10(g) (15 U.S.C. 78fff-4(g)), by striking
``16(12)'' and inserting ``16(13)''; and
(3) in section 16 (15 U.S.C. 78lll)--
(A) by redesignating paragraphs (7) through (14) as
paragraphs (8) through (15), respectively;
(B) by inserting after paragraph (6) the following:
``(7) Expanded securities portfolio margin account.--The
term `expanded securities portfolio margin account' means a
customer account--
``(A) that is maintained by a broker or dealer
registered with the Commission;
``(B) that includes positions in securities,
security-based swaps, futures contracts, options on
futures contracts, swaps, digital commodities, or other
financial instruments, or any combination thereof, as
permitted by rule jointly issued by the Commission and
the Commodity Futures Trading Commission;
``(C) that is subject to portfolio margining
requirements approved pursuant to section 402 of the
Digital Asset Market Clarity Act; and
``(D) in which margin requirements are determined
on a risk-based, portfolio-wide basis, rather than on
an instrument-by-instrument basis.''; and
(C) in paragraph (10), as so redesignated, in the
matter following subparagraph (L), by striking ``a
transaction in the portfolio margining account'' and
inserting ``the portfolio margining account or expanded
securities portfolio margin account''.
(b) Rules.--
(1) Definitions.--In this subsection:
(A) Expanded securities portfolio margin account.--
The term ``expanded securities portfolio margin
account'' has the meaning given the term in section 16
of the Securities Investor Protection Act of 1970 (15
U.S.C. 78lll), as amended by this section.
(B) SIPC.--The term ``SIPC'' means the Securities
Investor Protection Corporation.
(2) Issuance of rules.--Notwithstanding any provision of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.), in jointly issuing rules under section 402, the
Commission and the Commodity Futures Trading Commission, in
consultation with the SIPC and the Secretary of the Treasury,
shall issue rules relating to the treatment under that Act of
securities (including related extensions of credit), security-
based swaps, contracts of sale of a commodity for future
delivery, options on contracts of sale of a commodity for
future delivery, swaps, digital commodities, cash, or other
property (to the extent that such instruments, cash, or other
property effectively hedge or collateralize a securities
position) held in an account offering portfolio margining
carried as a securities account by a registered broker or
dealer pursuant to an expanded securities portfolio margin
account to facilitate portfolio margining in a manner that
protects customers, including portfolio margin customers, which
shall include rules relating to--
(A) the transfer of accounts;
(B) the allocation of customer property among
customers;
(C) the eligibility of products and positions to be
held in an expanded securities portfolio margin
account, including any disclosures to and any elections
that may need to be performed by customers;
(D) the application of customer protection or
segregation requirements as between securities
customers who are and are not maintaining positions in
an expanded securities portfolio margin account;
(E) further defining the terms, solely as relating
to an expanded securities portfolio margin account,
``customer'', ``customer property'', and ``net
equity'', as necessary or appropriate to address non-
securities and non-cash positions and assets held in an
expanded securities portfolio margin account, and in a
manner consistent with subparagraphs (A) through (D);
and
(F) any interaction between a securities account
and an expanded securities portfolio margin account,
including any funding of debits in one type of account
by credits in the other type of account.
(3) Process for issuance of rules.--The requirements of
section 402(b) shall apply with respect to the rules issued
under this subsection.
(c) Effect of Rules.--An expanded securities portfolio margin
account may not be offered, maintained, or utilized until the final
rules required under subsection (b) are issued.TITLE V--RESPONSIBLE REGULATORY INNOVATION
SEC. 501. CFTC-SEC MICRO-INNOVATION SANDBOX.
(a) Definitions.--In this section:
(1) Commission.--The term ``Commission'' means either of
the Commissions, as the context requires.
(2) Commissions.--The term ``Commissions'' means the
Securities and Exchange Commission and the Commodity Futures
Trading Commission.
(3) Eligible firm.--The term ``eligible firm'' means a
person that is eligible to participate in the Sandbox, in
accordance with the requirements under this section.
(4) Innovative.--The term ``innovative'' means new or
emerging technology, or a novel application of technology,
including artificial intelligence, that--
(A) provides a financial product, service, business
model, or delivery mechanism to the public; and
(B) lacks--
(i) a substantially comparable, widely
available analogue in common use in the United
States; and
(ii) an analogous Federal regulatory
regime.
(5) Person.--The term ``person'' means a person, as defined
in section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)) or section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
(6) Sandbox.--The term ``Sandbox'' means the CFTC-SEC
Micro-Innovation Sandbox established under subsection (b).
(7) Self-regulatory organization.--The term ``self-
regulatory organization'' means a self-regulatory organization,
as defined in--
(A) section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)); or
(B) section 1.52(a)(2) of title 17, Code of Federal
Regulations, or any successor regulation.
(b) Establishment.--Not later than 360 days after the date of
enactment of this Act, the Commissions shall, by joint notice and
comment rulemaking, establish a CFTC-SEC Micro-Innovation Sandbox to
enable eligible firms to test innovative activities within the United
States, subject to--
(1) applicable Federal and State securities and commodities
laws;
(2) other State laws that are not specific to the
regulation of securities or commodities; and
(3) the limitations of this section.
(c) Eligible Firm.--
(1) In general.--A United States-based person shall be an
eligible firm, and shall be eligible to participate in the
Sandbox, if the person--
(A) submits an application under subsection (e)
that is approved under that subsection;
(B) seeks to conduct an eligible and lawful
innovative activity in the United States;
(C) is not subject to--
(i) a statutory disqualification, as
defined in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a));
(ii) a disqualification under section 8a(2)
of the Commodity Exchange Act (7 U.S.C.
12a(2)); or
(iii) a disqualification under State law;
(D) does not have a criminal conviction for fraud;
(E) agrees to submit to the jurisdiction and
oversight of the Commissions, to the extent that the
person is not subject to that jurisdiction or
oversight, for purposes of, and while participating in,
the Sandbox;
(F) designates to the Commissions an individual as
a point of contact with respect to activities that the
person undertakes as an applicant and participant with
respect to the Sandbox;
(G) employs not more than 25 employees; and
(H) has annual gross revenues of not more than
$10,000,000 in any fiscal year.
(2) Application of requirements.--The requirements under
paragraph (1) shall be satisfied during the entire period in
which an eligible firm participates in the Sandbox.
(d) Eligible Activities and Activity Ceilings.--
(1) List of eligible activities.--
(A) In general.--After providing notice and an
opportunity for public comment, the Commissions shall
maintain and publish a list of eligible innovative
activities, which shall be--
(i) updated once every 2 years after
providing notice and an opportunity for public
comment;
(ii) reasonably tailored to include
activities that--
(I) further the purposes of this
section; and
(II) are consistent with the
interests of the public and the
protection of investors;
(iii) sufficiently flexible to accommodate
evolving technological developments, including
distributed ledger-based products and services;
and
(iv) focused exclusively on activities for
which specific provisions of the securities
laws and commodities laws may create a material
impediment to the proposed innovative activity.
(B) Identification of requirements.--
(i) In general.--For each eligible
innovative activity, the Commissions shall,
consistent with existing (as of the day before
the date of enactment of this Act) statutory
and regulatory precedent concerning the
respective jurisdiction of each Commission,
identify the requirements that each Commission
will administer.
(ii) Joint jurisdiction.--With respect to
an eligible innovative activity that is subject
to the jurisdiction of both Commissions, the
rulemaking under subsection (b) shall specify
which requirements each Commission will
administer and any coordinated conditions
needed to protect investors and market
integrity.
(2) Activity ceilings.--For each eligible innovative
activity, the Commissions shall, after public input and
consultation, establish individual customer and monetary
ceilings, which shall provide that an eligible firm may not
raise or commit more than $20,000,000 in aggregate customer,
investor, or counterparty funds in connection with Sandbox
activities.
(3) Annual participation cap.--Each of the Commissions may
approve not more than 20 projects per year.
(e) Application.--
(1) In general.--An eligible firm seeking to participate in
the Sandbox shall submit to the Commission or Commissions, as
applicable, an application that--
(A) describes the proposed innovative activity and
the desired outcomes;
(B) subject to approval of the applicable
Commission, identifies the provisions of the securities
laws, or of the Commodity Exchange Act (7 U.S.C. 1 et
seq.), from which the eligible firm proposes to be
exempt during the period in which the eligible firm
participates in the Sandbox, which--
(i) shall not include any Federal or State
anti-fraud law or any other law that is not
specific to the regulation of securities or
commodities; and
(ii) shall be subject to the limitations of
this section;
(C) sets forth how relief from the provisions of
law identified under subparagraph (B) is reasonably
necessary to engage in the innovative activity;
(D) identifies material risks to investors,
customers, or market integrity and how the eligible
firm will mitigate those risks;
(E) certifies that the eligible firm will comply
with applicable Federal and State anti-fraud laws;
(F) states an exit objective of the eligible firm
involving action from the applicable Commission, which
may include registration, an exemptive order,
interpretive guidance, a no-action letter, or a
rulemaking petition, together with milestones and
metrics the eligible firm will use to demonstrate
readiness for that exit;
(G) states the agreement of the eligible firm to
submit to the jurisdiction and oversight of the
Commissions, to the extent that the eligible firm is
not otherwise subject to that jurisdiction and
oversight, for purposes of, and while participating in,
the Sandbox;
(H) designates to the Commissions an individual as
a point of contact with respect to activities that the
eligible firm undertakes as an applicant and
participant with respect to the Sandbox; and
(I) states the agreement of the eligible firm to
abide by any condition that either of the Commissions
may impose for engaging in an eligible innovative
activity in the Sandbox.
(2) Deadline for decision.--Not later than 180 business
days after the date on which an eligible firm submits an
application under this subsection, the Commission or
Commissions, as applicable, shall make a decision with respect
to the application, after which the eligible firm submitting
the application may commence eligible innovative activities in
the Sandbox unless the application is denied.(3) Updates and status reports.--Each eligible firm shall
submit to the Commission or Commissions, as applicable, on a
semi-annual basis while participating in the Sandbox, an
updated application that--
(A) describes any material changes to the
information originally provided under paragraph (1);
and
(B) reports the progress of the eligible firm
toward the stated exit objective described in paragraph
(1)(F), including milestones achieved, remaining
impediments, and any pending requests for official
action before the applicable Commission or the
Commissions.
(4) Unredacted and redacted versions.--
(A) In general.--An eligible firm that submits an
initial or updated application under this subsection
may submit to the applicable Commission or the
Commissions an unredacted version, together with a
request for confidential treatment, pursuant to
procedures the applicable Commission shall establish
that are modeled on the rules of that Commission
relating to the confidential treatment of information,
which shall include--
(i) for the Securities and Exchange
Commission, sections 200.83, 230.406, and
240.24b-2 of title 17, Code of Federal
Regulations, or any successor regulations; and
(ii) for the Commodity Futures Trading
Commission, section 145.9 of title 17, Code of
Federal Regulations, or any successor
regulations.
(B) Omitted information.--An eligible firm may omit
information granted confidential treatment under
subparagraph (A) from any public posting under
subsection (h) in accordance with the procedures
established under subparagraph (A).
(C) Indication of confidential information.--Any
omission in a public posting under subsection (h) shall
be clearly indicated by brackets with a prominent
legend stating that--
(i) confidential information has been
omitted; and
(ii) an unredacted version has been filed
with the applicable Commission or the
Commissions.
(f) Duration of Participation.--
(1) Duration.--Except as provided in paragraph (2), an
eligible firm may participate in the Sandbox for a period of
not more than 2 years, provided that the eligible firm does not
exceed the ceilings established under subsection (d)(2).
(2) Extension.--
(A) Sole jurisdiction.--If an eligible innovative
activity is subject only to the jurisdiction of 1
Commission, that Commission may extend participation by
an eligible firm in the Sandbox by not more than 1
additional year, if that Commission determines that the
eligible firm--
(i) is actively pursuing the exit objective
described in subsection (e)(1)(F) in good
faith;
(ii) is making demonstrable progress toward
achieving such an exit; and
(iii) establishes that such an extension is
necessary to achieve such an exit.
(B) Joint jurisdiction.--Where an eligible
innovative activity is subject to the jurisdiction of
both Commissions, an extension of participation by an
eligible firm in the Sandbox by not more than 1
additional year shall be by joint order of the
Commissions after making the findings described in
clauses (i) through (iii) of subparagraph (A).
(g) Conditions and Enforcement.--
(1) Conditions.--An eligible firm shall comply with
applicable regulatory conditions approved by the applicable
Commission or the Commissions under subsection (e)(1)(B), which
shall be consistent with applicable Federal and State anti-
fraud laws.
(2) Monitoring.--The Commissions shall monitor Sandbox
activities and enforce compliance with applicable regulatory
conditions and Federal anti-fraud laws.
(3) Coordination.--
(A) In general.--The Commissions shall coordinate
supervision, information requests, and examinations to
avoid duplication while each Commission retains full
authority under the provisions of law that such
Commission administers.
(B) Cooperation with states.--The Commissions may
cooperate with any State in enforcing compliance with
applicable regulatory conditions and Federal and State
anti-fraud laws with respect to the operation of the
Sandbox.
(4) Self-regulatory organizations.--Each self-regulatory
organization shall recognize and respect Sandbox conditions
that are applicable to a participant in the Sandbox.
(5) Cessation of activities.--The Commissions may, at any
time during the participation of an eligible firm in the
Sandbox, disqualify the eligible firm from continued
participation in the Sandbox, order the eligible firm to cease
engaging in a permitted activity in the Sandbox, revoke a grant
of exemptive relief, or impose additional or more stringent
conditions on continuing participation or engagement in a
permitted activity in the Sandbox, if the Commissions find that
the eligible firm has failed to comply with--
(A) the requirements of this section;
(B) the terms or conditions of participation
established by the Commissions; or
(C) other applicable law.
(h) Public Disclosure.--
(1) Initial posting.--Each eligible firm shall post, in a
prominent location on a public website of the eligible firm,
the information required under subsection (e)(1), subject to
confidential treatment under subsection (e)(4), not later than
the date on which the notice becomes effective under subsection
(e)(3).
(2) Updates.--Each eligible firm shall post, in the same
manner as under paragraph (1), the information required under
subsection (e)(3), subject to confidential treatment under
subsection (e)(4), concurrently with submission to the
applicable Commission or the Commissions.
(3) Disclosure requirements.--Each post under this
subsection shall satisfy the disclosure requirements of both
Commissions where the jurisdictions of both Commissions are
implicated.
(i) Use of Data by Commissions.--Each Commission may collect and
share data from Sandbox activities with the other Commission to inform
permanent, principles-based regulatory frameworks that advance the
missions of the Commissions.
(j) Publication by Commissions.--Not less frequently than annually,
each Commission shall publish on the public website of the Commission a
report summarizing the activities conducted under this section,
including--
(1) the number and general nature of eligible firms
participating in the Sandbox;
(2) the categories of innovative activities tested;
(3) the impact of Sandbox participation on innovation,
investor protection, market integrity, and the public interest;
(4) the disclosures posted by eligible firms under
subsection (h)(1); and
(5) exit outcomes, including the types of relief requested
and actions taken by the Commissions.
(k) Relationship of Sandbox Participation to State Law.--
(1) Limited preemption for sandbox participants.--This
section, including participation in the Sandbox, and any
exemption or relief granted under this section, shall supersede
any State securities or commodities law requiring registration,
qualification, or licensing as a condition of engaging in an
approved activity or otherwise regulating that activity as a
security or commodity.
(2) State enforcement preserved.--Nothing in this section
may be construed to prohibit or limit any State securities or
commodities regulator, any State bank regulator, or any State
law enforcement agency from conducting an investigation or
bringing an administrative, civil, or criminal enforcement
action under--
(A) a State law prohibiting fraud or deceit, or
fraudulent, deceptive, manipulative, unethical,
dishonest, or other unlawful conduct or practices, in
connection with securities or securities transactions;
(B) the anti-fraud provisions of the Commodity
Exchange Act (7 U.S.C. 1 et seq.) or State commodities
laws; or
(C) any State law of general applicability,
including such a law relating to banking, consumer
protection, contracts, property, or criminal conduct.
(3) Notice filings.--A State may require notice of any
document filed with either of the Commissions in connection
with participation in the Sandbox, together with consent to
service of process and reasonable fees, consistent with section
18(c) of the Securities Act of 1933 (15 U.S.C. 77r(c)).SEC. 502. INTERNATIONAL COOPERATION.
(a) Definition.--In this section, the term ``Commissions'' means
the Commission and the Commodity Futures Trading Commission.
(b) Cooperation.--In order to promote United States leadership in
effective, reciprocal, and innovative global regulation of digital
assets, and to advance the strategic economic and policy interests of
the United States, the Commissions, as appropriate--
(1) shall consult and coordinate with foreign regulatory
authorities or other relevant international organizations on
the application of consistent international standards with
respect to the regulation of digital assets;
(2) may enter into such information sharing arrangements as
may be determined to be necessary or appropriate in the public
interest or for the protection of investors, customers, and
users of digital assets;
(3) shall pursue reciprocal arrangements with foreign
regulatory authorities that ensure United States-based digital
asset firms, exchanges, and infrastructure providers receive
treatment equivalent to that granted to foreign counterparts
operating within the United States;
(4) shall advocate in international fora for the
development and adoption of technology-neutral, open standards
that preserve lawful access to public distributed ledger
infrastructure, support dollar-denominated digital asset usage,
and safeguard individual rights, including self-custody and
privacy; and
(5) may, as appropriate, engage in, at the least,
cooperative enforcement, supervisory coordination, and joint
technical assistance, in a manner that promotes responsible
innovation in digital financial markets.
(c) Cross-border Sandbox.--The Commissions may leverage the
activities described in paragraphs (1) through (5) of subsection (b) to
establish or participate in cross-border regulatory sandboxes that
build upon the CFTC-SEC Micro-Innovation Sandbox established pursuant
to section 501.SEC. 503. AUTOMATED REGULATORY COMPLIANCE STUDY.
(a) Definitions.--In this section:
(1) Automated regulatory compliance.--The term ``automated
regulatory compliance'' means the use of technology, including
data standards, automation, and distributed ledger or smart
contract functionality, to automate, tag, or otherwise
streamline regulatory reporting, disclosure, supervisory, or
other compliance obligations.
(2) Innovative.--The term ``innovative'' has the meaning
given the term in section 501(a).
(b) Study Required.--The Comptroller General of the United States
shall, in consultation with the Department of the Treasury (including
the Financial Crimes Enforcement Network, the Office of Foreign Assets
Control, and the Office of Financial Research), the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
the National Credit Union Administration, the Commission, the Commodity
Futures Trading Commission, the Bureau of Consumer Financial
Protection, and the Federal Housing Finance Agency, carry out a study
of distributed ledger-based compliance tools that--
(1) to the extent feasible, identifies and evaluates--
(A) the landscape of existing (as of the day before
the date of enactment of this Act) distributed ledger-
based compliance tools for--
(i) statutory and regulatory disclosures;
(ii) real-time reporting and audit-trail
logging; and
(iii) anti-money-laundering practices,
sanctions screening, and customer-
identification checks;
(B) the feasibility, benefits, and risks of
allowing regulated entities to satisfy applicable
regulatory obligations through on-chain, code-based, or
other automated mechanisms;
(C) the potential for interoperability with
automated regulatory compliance mechanisms across and
among each of those agencies;
(D) the data collection systems of each of those
agencies; and
(E) standards or taxonomies, or other common data
elements, if any, that those agencies could publish or
adopt to support the interoperability described in
subparagraph (C) in order to ensure consistency and
regulatory access;
(2) recommends pilot programs, guidance, rule changes, or
amendments to statutes that would be needed to implement
effective automated regulatory compliance approaches and any
other related approaches addressed in the study;
(3) identifies the costs and benefits to issuers of
different sizes, secondary market intermediaries, regulators,
investors, and other applicable parties, including differential
impacts on smaller entities and options to reduce those
burdens;
(4) benchmarks international efforts with respect to
automated regulatory compliance mechanisms and consults with
any appropriate State, Federal, or foreign regulators; and
(5) evaluates whether existing (as of the day before the
date of enactment of this Act) oversight, enforcement, and
liability frameworks are sufficient to--
(A) ensure accountability, transparency, fairness,
and consumer protection; and
(B) prevent misuse of distributed ledger-based
compliance tools.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall make
publicly available a report that includes the results of the study
conducted under subsection (b).SEC. 504. REPORT ON LEGISLATIVE RECOMMENDATIONS.
(a) Definitions.--In this section:
(1) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Committee on Agriculture, Nutrition, and
Forestry of the Senate;
(C) the Committee on Financial Services of the
House of Representatives; and
(D) the Committee on Agriculture of the House of
Representatives.
(2) Federal financial regulator.--The term ``Federal
financial regulator'' means--
(A) the Board of Governors of the Federal Reserve
System;
(B) the Commodity Futures Trading Commission;
(C) the Department of the Treasury;
(D) the Federal Deposit Insurance Corporation;
(E) the Federal Housing Finance Agency;
(F) the National Credit Union Administration;
(G) the Office of the Comptroller of the Currency;
(H) the Bureau of Consumer Financial Protection;
and
(I) the Commission.
(b) Requirement.--Not later than 1 year after the date of enactment
of this Act, and every 3 years thereafter for a total of not fewer than
12 years after the date of enactment of this Act, each Federal
financial regulator shall submit to the appropriate committees of
Congress a report that includes--
(1) a description of the implementation of this Act and the
amendments made by this Act (including the adoption of rules
and guidance, and the approval or rejection of applications
submitted, under this Act and the amendments made by this Act),
where applicable to the Federal financial regulator; and
(2) any legislative recommendations for the further
effective implementation of this Act and the amendments made by
this Act.SEC. 505. TOKENIZATION OF SECURITIES.
(a) Definitions.--In this section:
(1) Tokenization.--The term ``tokenization'' means the
process of creating a digital representation of all rights,
obligations, or interests in a tangible or intangible asset on
a distributed ledger or comparable technology.
(2) Tokenized.--The term ``tokenized'', with respect to an
asset, means that the asset has undergone tokenization.
(b) Sense of Congress.--It is the sense of Congress that States
should promptly consider and adopt commercial law frameworks under the
Uniform Commercial Code that provide clear and uniform rules for the
ownership, control, and enforceability of rights relating to digital
assets.
(c) Study.--Not later than 360 days after the date of enactment of
this Act, the Commission shall conduct a comprehensive study of the
regulatory treatment of tokenized securities, including custody
standards, interagency coordination, cross-border coordination, and
consumer protection.
(d) Parity in Regulatory Treatment.--
(1) In general.--Subject to paragraph (2), a tokenized
security shall be treated, for all regulatory purposes, as the
security that the tokenized security represents, except as
otherwise provided by--
(A) section 106(a); or
(B) a rule, regulation, or order issued by the
Commission.
(2) Requirement.--A rule, regulation, or order described in
paragraph (1)(B) may only be issued by the Commission to adapt
the manner in which the applicable regulatory requirements are
satisfied, to the extent necessary or appropriate--
(A) in light of the unique technological or other
characteristics of digital assets or substantially
similar technology; and
(B) consistent with--
(i) what is necessary or appropriate in the
public interest; and
(ii) protecting investors, maintaining
fair, orderly, and efficient markets, and
facilitating capital formation.
(e) Prohibition on Misrepresentation.--Any statement or omission
with respect to any material fact that is made by a person in
connection with the offer, sale, or other representation regarding a
tokenized security shall be subject to the securities laws, including
applicable anti-fraud or anti-manipulation provisions under the
securities laws.
(f) Agency Action for Tokenized Securities.--
(1) In general.--The Commission may issue rules governing
tokenized securities pursuant to the requirements of this
section.
(2) Requirements.--Rules issued under this subsection may
address, consistent with sections 106 and 107, how requirements
applicable to an underlying security apply to custody, books
and records, reconciliation with transfer agents or other
recordkeepers, auditability, settlement finality, treatment of
chain reorganizations, and other operational risks arising from
the use of distributed ledger technology or comparable
technology.
(g) Rule of Construction Regarding Enforcement.--Nothing in this
section may be construed to prevent the Commission from enforcing the
anti-fraud and anti-manipulation provisions of the securities laws, and
the rules issued under the securities laws, with respect to tokenized
securities, provided that the elements of those provisions are
satisfied.
(h) Savings Clauses.--
(1) Tokenized security.--Any asset that is a security under
the securities laws shall not cease to be a security solely
because the asset is issued, recorded, represented, or
transferred using distributed ledger technology or comparable
technology.
(2) Effect on state law.--Nothing in this section may be
construed, interpreted, or applied in a manner that preempts,
supersedes, invalidates, or otherwise affects any State
property transfer rules, laws, regulations, or common law
principles relating to the transfer or recording of real
tangible or intangible assets or interests therein.
(3) Rulemakings, orders, and other actions.--
Notwithstanding any other provision of this section, section
106 shall apply to any rulemaking, order, or other action of
the Commission under this section.
(4) No limit of ability to offer or sell.--Nothing in this
section, or any rule, regulation, or order promulgated under
this section, may be construed to limit the ability of any
person to offer or sell any tokenized security, consistent with
the securities laws.SEC. 506. VOLUNTARY ADOPTION OF NATIONAL INSTITUTE OF STANDARDS AND
TECHNOLOGY POST-QUANTUM CRYPTOGRAPHY STANDARDS.
(a) Definitions.--In this section:
(1) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Committee on Agriculture, Nutrition, and
Forestry of the Senate;
(C) the Committee on Commerce, Science, and
Transportation of the Senate;
(D) the Committee on Financial Services of the
House of Representatives;
(E) the Committee on Agriculture of the House of
Representatives; and
(F) the Committee on Energy and Commerce of the
House of Representatives.
(2) Director.--The term ``Director'' means the Under
Secretary of Commerce for Standards and Technology.
(b) Findings.--Congress finds the following:
(1) Technical standards with respect to digital assets
ensure quality, interoperability, and reliability in products,
processes, and services and facilitate innovation.
(2) The digital asset ecosystem should harness standards to
solve coordination problems and foster innovation, not through
regulation, but through voluntary, market-driven measures.
(3) Advances in quantum computing threaten existing (as of
the day before the date of enactment of this Act) cryptographic
standards and the security of digital assets.
(c) Voluntary Adoption.--The Director, in consultation with the
Secretary of Homeland Security and the heads of sector risk management
agencies, as appropriate, shall promote the voluntary adoption and
deployment of post-quantum cryptography standards, including by--
(1) disseminating and making publicly available guidance
and resources to help organizations adopt and deploy those
standards;
(2) providing technical assistance, as practicable, to
entities that are at high risk of quantum cryptography analytic
attacks, such as entities determined to be critical
infrastructure or digital infrastructure providers; and
(3) conducting such other activities determined necessary
by the Director to promote the adoption and deployment of those
standards across the United States.
(d) Industry Consultation.--In implementing subsection (c), the
Director shall, at a minimum--
(1) solicit regular input from a broad range of industry
stakeholders regarding the feasibility and practical challenges
of adopting the standards described in that subsection;
(2) facilitate ongoing dialogue between the National
Institute of Standards and Technology and industry participants
to identify, assess, and address barriers to the adoption of
the standards described in that subsection;
(3) not later than 2 years after the date of enactment of
this Act, and biennially thereafter until 2035, submit to the
appropriate congressional committees a report on the
implementation of that subsection, including stakeholder
engagement with respect to those actions and continued
challenges in adopting the standards described in that
subsection; and
(4) not later than 5 years after the date of enactment of
this Act, make available to the public a report on stakeholder
engagement and lessons learned in implementing that subsection.SEC. 507. INTERNATIONAL COORDINATION TO COMBAT DIGITAL ASSET ILLICIT
FINANCE.
(a) Definition.--In this section, the term ``Strategy'' means the
National Strategy to Combat International Digital Asset Illicit Finance
submitted under subsection (d).
(b) Interagency Initiative.--The Secretary of the Treasury, in
coordination with the Secretary of State, the Attorney General, the
Secretary of Homeland Security, and the heads of such other Federal
departments and agencies as the President may designate, shall lead an
interagency initiative to strengthen international cooperation to
prevent the misuse of digital assets for illicit finance, sanctions
evasion, terrorist financing, or other national-security threats.
(c) Objectives.--The initiative established under subsection (b)
shall--
(1) engage foreign counterparts, including finance
ministries, central banks, and financial intelligence units, to
promote anti-money-laundering, sanctions evasion, and counter-
terrorist financing standards applicable to digital asset
activities, consistent with United States standards and the
framework established under the Strategy;
(2) encourage the adoption and enforcement of effective
regulatory and supervisory frameworks for digital asset service
providers to ensure transparency and prevent illicit use;
(3) identify and prioritize jurisdictions of concern that
present significant risk of facilitating illicit digital asset
activity and develop coordinated diplomatic, economic, and law
enforcement strategies to address those risks;
(4) support technical assistance and capacity-building
programs for partner jurisdictions to enhance anti-money
laundering, sanctions evasion, and counter-terrorist financing
supervision, enforcement, and information sharing relating to
digital assets; and
(5) report annually to Congress on progress made toward the
objectives described in paragraphs (1) through (4), including a
list of cooperative and non-cooperative jurisdictions and any
recommendations for additional actions or sanctions.
(d) National Strategy to Combat International Digital Asset Illicit
Finance.--Not later than 270 days after the date of enactment of this
Act, the Secretary of the Treasury, in coordination with the Secretary
of State, the Attorney General, and the Director of National
Intelligence, shall submit to the Committee on Banking, Housing, and
Urban Affairs, the Committee on Foreign Relations, and the Committee on
Homeland Security and Governmental Affairs of the Senate, and the
Committee on Financial Services, the Committee on Foreign Affairs, and
the Committee on Homeland Security of the House of Representatives a
National Strategy to Combat International Digital Asset Illicit
Finance, which shall--
(1) assess global vulnerabilities with respect to the
digital assets framework set out in the Strategy;
(2) set measurable goals and timelines for multilateral
engagement with respect to digital assets;
(3) recommend resource and staffing requirements for
Treasury attaches, financial intelligence liaisons, and other
personnel necessary to implement the Strategy; and
(4) identify standards for combating money laundering,
sanctions evasion, and terrorist financing with respect to
digital asset activities applicable to foreign jurisdictions,
which shall be informed by United States law, regulation, and
supervisory standards, including standards relating to--
(A) anti-money laundering and countering the
financing of terrorism laws and regulations that
identify, prioritize, and mitigate illicit finance
threats, including preventive measures for financial
institutions and other entities covered by those laws
and regulations, including measures relating to
customer due diligence, recordkeeping, internal
controls, and the reporting of suspicious transactions;
(B) money laundering offenses, asset seizure, and
confiscation to recover proceeds of crime;
(C) terrorist financing and proliferation-financing
offenses and related targeted financial sanctions; and
(D) regulation, supervision, and enforcement by
competent authorities, including financial
intelligence, law enforcement, and sanctions measures.SEC. 508. ANNUAL REPORT ON FOREIGN DIGITAL ASSET TRADING VOLUME,
COMPLIANCE WITH UNITED STATES STANDARDS AND REMEDIATION
ACTIONS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, and annually thereafter for a period of 4 years, the
Secretary of the Treasury shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that--
(1) lists the top 20 foreign jurisdictions by volume of
digital asset trading activity on foreign digital asset service
providers during the calendar year immediately preceding the
year of the report;
(2) assesses the degree to which each foreign jurisdiction
listed under paragraph (1) has implemented anti-money
laundering, sanctions evasion, and counter-terrorist financing
laws, regulations, or standards applicable to digital asset
activities consistent with the standards and framework
identified under the National Strategy to Combat International
Digital Asset Illicit Finance submitted under section 507; and
(3) identifies foreign jurisdictions with--
(A) material deficiencies in the implementation or
enforcement of the standards described in paragraph
(2); and
(B) trading volumes that present systemic illicit
finance risk to the United States.
(b) Form.--Each report required under subsection (a) shall be
submitted in unclassified form, but may include a classified annex, as
appropriate.
(c) Remediation and Engagement Report.--For each foreign
jurisdiction identified pursuant to subsection (a)(3), the Secretary of
the Treasury shall include in the applicable report--
(1) a description of bilateral diplomatic, regulatory, or
law enforcement engagements undertaken during the calendar year
immediately preceding the year in which the report is submitted
to remedy the deficiencies of the foreign jurisdiction;
(2) a summary of actions taken by the United States
individually, or in conjunction with any applicable
international body, to identify high-risk or non-cooperative
jurisdictions with respect to digital asset illicit finance,
including public statements identifying those jurisdictions and
measures to support their remediation;
(3) any commitments obtained from the foreign jurisdiction
to address identified deficiencies, including timeliness and
benchmarks; and
(4) an assessment of progress made toward full
implementation of the standards identified under the National
Strategy to Combat International Digital Asset Illicit Finance
submitted under section 507.SEC. 509. AI INNOVATION LABS.
(a) Definitions.--
(1) AI test project.--The term ``AI test project'' means a
financial product, service, or activity--
(A) that makes substantial use of artificial
intelligence;
(B) that is, or may be, subject to a Federal
regulation or Federal statute; and
(C) for which a regulated entity submits an
application for the waiver or modification of an
applicable regulation subject to an alternative
compliance strategy.
(2) Appropriate financial regulatory agency.--The term
``appropriate financial regulatory agency'' means--
(A) the appropriate Federal banking agency, as
defined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813), with respect to an institution
described in subsection (q) of that section;
(B) the Bureau of Consumer Financial Protection,
with respect to a covered person, as defined in section
1002 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5481), that does not have an appropriate
financial regulatory agency under subparagraph (A),
(C), or (D) of this paragraph;
(C) the National Credit Union Administration, with
respect to an insured credit union, as defined in
section 101 of the Federal Credit Union Act (12 U.S.C.
1752); and
(D) the Federal Housing Finance Agency, with
respect to--
(i) a Federal Home Loan Bank;
(ii) the Federal Home Loan Bank System;
(iii) the Federal National Mortgage
Association; and
(iv) the Federal Home Loan Mortgage
Corporation.
(3) Artificial intelligence; ai.--The terms ``artificial
intelligence'' and ``AI'' have the meaning given the term
``artificial intelligence'' in section 5002 of the National
Artificial Intelligence Initiative Act of 2020 (15 U.S.C.
9401).
(4) Financial product or service.--The term ``financial
product or service''--
(A) has the meaning given the term in section 1002
of the Consumer Financial Protection Act of 2010 (12
U.S.C. 5481);
(B) includes--
(i) activities that are financial in
nature, as defined in section 4(k)(4) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(4)); and
(ii) any financial product or service
provided by a person regulated by the
Commission, as defined in section 1002 of the
Consumer Financial Protection Act of 2010 (12
U.S.C. 5481); and
(C) does not include the business of insurance.
(5) Financial regulatory agency.--The term ``financial
regulatory agency'' means--
(A) the Board of Governors of the Federal Reserve
System;
(B) the Federal Deposit Insurance Corporation;
(C) the Office of the Comptroller of the Currency;
(D) the Bureau of Consumer Financial Protection;
(E) the National Credit Union Administration; and
(F) the Federal Housing Finance Agency.
(6) Regulated entity.--The term ``regulated entity'' means
an entity regulated by any financial regulatory agency.
(b) Use of Artificial Intelligence by Regulated Financial
Entities.--
(1) AI innovation labs.--
(A) Establishment.--Each financial regulatory
agency shall establish, or identify an office,
division, or department of the agency that shall serve
as, an AI Innovation Lab to enable regulated entities
to experiment with AI test projects without unnecessary
or unduly burdensome regulation or expectation of
enforcement actions, pursuant to the approval of an
application under subparagraph (B).
(B) Applications.--
(i) Submission.--
(I) In general.--On and after the
date that is 1 year after the date of
enactment of this Act, a regulated
entity may submit to the appropriate
financial regulatory agency an
application, on a form determined by
the appropriate financial regulatory
agency, to engage in an AI test project
through the AI Innovation Lab
established or identified under
subparagraph (A).
(II) Contents.--An application
submitted under subclause (I) shall
include--
(aa) a description of the
AI test project proposed to be
carried out by the regulated
entity;
(bb) an alternative
compliance strategy that--
(AA) identifies a
regulation issued by
the appropriate
financial regulatory
agency that the
regulated entity
requests be waived or
modified; and
(BB) proposes an
alternative method for
the regulated entity to
comply with the
regulation, including
an explanation as to
why the alternative
method is essential to
the operation of the
entity and how the
regulated entity would
effectively manage
risks associated with
the AI test project;
(cc) an explanation of how
under the strategy described in
item (aa), the AI test
project--
(AA) would serve
the public interest,
improve consumer or
investor access to a
financial product or
service, or promote
consumer or investor
protection;
(BB) would enhance
efficiency or
operations, foster
innovation or
competitiveness,
improve risk management
and security, or
enhance regulatory
compliance;
(CC) would not
present a systemic risk
to the financial system
of the United States;
(DD) is consistent
with the purposes of
the anti-money
laundering and
countering the
financing of terrorism
obligations under
subchapter II of
chapter 53 of title 31,
United States Code; and
(EE) would not
present a national
security risk to the
United States;
(dd) a proposed date on
which the AI test project would
terminate and an explanation as
to why such termination date
would be appropriate;
(ee) proposed limitations
on the size, scope, and growth
of the AI test project;
(ff) a detailed businessplan; and
(gg) an estimate of the
economic impact of the AI test
project if approved.
(III) Joint applications.--Two or
more regulated entities may submit a
joint application to the same financial
regulatory agency under subclause (I).
(IV) Regulations of other
agencies.--
(aa) In general.--A
regulated entity may submit an
application under this
subparagraph that includes an
alternative compliance strategy
for a regulation issued or
enforced by a financial
regulatory agency that is not
the appropriate financial
regulatory agency for the
regulated entity.
(bb) Requirements.--An
application described in item
(aa) shall be subject to the
same requirements as an
application described in
subclause (II), except that--
(AA) the regulated
entity shall submit the
application to the
appropriate financial
regulatory agency and
the financial
regulatory agency that
issued or enforces the
regulation that is the
subject of the
alternative compliance
strategy; and
(BB) the AI test
project may not take
effect unless the
appropriate financial
regulatory agency and
any other financial
regulatory agency that
issued or enforces the
regulation that is the
subject of the
alternative compliance
strategy jointly
approve the application
using the process
described in clause
(ii).
(V) Notice.--A regulated entity
that is regulated or supervised by more
than 1 financial regulatory agency
shall provide notice of any application
submitted to the appropriate financial
regulatory agency under this section to
each financial regulatory agency by
which it is regulated or supervised not
later than 5 business days after the
entity submits the application to the
appropriate financial regulatory
agency.
(ii) Agency review.--
(I) In general.--Except as provided
in subclause (IV), not later than 120
days after the date on which an
application is submitted to the
appropriate financial regulatory agency
under clause (i), the appropriate
financial regulatory agency shall--
(aa) review the
application; and
(bb) submit to the
applicant in writing a
determination of the agency.
(II) Approval.--
(aa) In general.--If the
applicant shows that it is more
likely than not that the
application meets the
requirements for establishing
an alternative compliance
strategy and satisfies the
standards described in items
(bb) and (cc) of clause
(i)(II), the agency shall
approve the application and
notify the applicant in writing
of--
(AA) the regulation
that is the subject of
the alternative
compliance strategy;
(BB) the terms of
the alternative
compliance strategy for
the AI test project;
(CC) the date on
which the AI test
project will terminate;
(DD) any
limitations on the
size, scope, or growth
of the AI test project;
and
(EE) any additional
limitations or
conditions on the AI
test project, as
determined by the
appropriate financial
regulatory agency.
(bb) Effect of approval.--
With respect to an AI test
project, except as provided in
item (cc), beginning on the
date on which an application
submitted under clause (i) is
approved and ending on the date
described in item (aa)(CC)--
(AA) the
appropriate financial
regulatory agency may
enforce a regulation
described in item
(aa)(AA) only in the
manner set out in the
alternative compliance
strategy described in
item (aa)(BB); and
(BB) except as
provided in subclause
(III), a financial
regulatory agency that
is not the appropriate
financial regulatory
agency may not enforce
a regulation described
in item (aa)(AA).
(cc) Enforcement by another
financial regulatory agency.--
With respect to an AI test
project, a financial regulatory
agency other than the
appropriate financial
regulatory agency that approves
an application under clause
(i)(IV) may enforce a
regulation described in item
(aa)(AA) if the alternative
compliance strategy described
in item (aa)(BB) provides for
enforcement by such financial
regulatory agency.
(dd) Rule of
construction.--Nothing in this
clause may be construed to
limit the authority of a
financial regulatory agency to
take an enforcement action
against a regulated entity with
respect to fraud or market
manipulation or for engaging in
an unsafe or unsound practicerelating to an AI test project.
(III) Denial.--
(aa) In general.--If an
agency denies an application
submitted under clause (i), the
agency--
(AA) shall submit
to the applicant a
written notice
explaining the reason
for denial; and
(BB) may not take
an enforcement action
related to the proposed
AI test project against
the applicant earlier
than the date that is
30 days after the date
on which the agency
submits the written
notice described in
subitem (AA).
(bb) Resubmittals.--Each
time an application submitted
under clause (i) is denied, the
regulated entity--
(AA) may submit an
amended application
after receiving
feedback from the
agency making such
denial; and
(BB) may not
resubmit more than 2
applications that are
substantially similar
to the denied
application.
(cc) Injunctive relief.--
Notwithstanding item (aa)(BB),
a financial regulatory agency,
by and through its own
attorneys, may file a civil
action in an appropriate United
States district court to enjoin
an active AI test project if
the agency determines that the
AI test project presents an
immediate danger to consumers
or investors or presents a
risk--
(AA) to financial
markets;
(BB) in the case of
an AI test project
engaged in by an
insured depository
institution or an
insured credit union,
of loss to a Federal
deposit or share
insurance fund;
(CC) of a violation
of anti-money
laundering and
countering the
financing of terrorism
obligations under
subchapter II of
chapter 53 of title 31,
United States Code; or
(DD) to the
national security of
the United States.
(IV) Extension.--If the financial
regulatory agency needs additional
time, the agency may extend the
approval deadline by 120 days. After
the expiration of the 120-day extension
period, if the agency has not made a
determination on the application, the
application will automatically be
deemed approved and effective.
(V) Additional information.--Not
later than the initial or extended
approval deadline, as applicable, a
financial regulatory agency may request
additional information from the
applicant.
(iii) Data security.--All data supplied by
sponsors of AI test projects to a financial
regulatory agency submitted under this section
shall be stored and maintained in a secure
manner by the financial regulatory agency,
consistent with applicable data security
standards.
(iv) Regulations.--Not later than 180 days
after the date of enactment of this Act, each
financial regulatory agency shall promulgate
regulations that--
(I) shall be published in the
Federal Register and provide a 60-day
period for public notice and comment;
(II) include--
(aa) procedures for
modifying the AI test projects
that are approved by the
agency;
(bb) consequences for
failure to comply with the
terms of an alternative
compliance strategy;
(cc) a requirement that an
AI test project will terminate
not earlier than 1 year after
the AI test project is
approved;
(dd) procedures to extend
the termination date described
in item (cc);
(ee) procedures for
confidentiality; and
(ff) procedures for
coordinating decisions relating
to applications submitted
jointly by multiple regulated
entities or applications
submitted to more than one
financial regulatory agency.
(2) Report.--Not later than 2 years after the date of
enactment of this Act, and each year for 7 years thereafter,
each financial regulatory agency shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
an annual report on the outcomes of AI test projects. A report
under this subsection may not include the names of
participating entities or any proprietary or confidential
business information. A report under this subsection shall
include aggregated findings, trends, and lessons learned from
the AI test projects.
(3) Rule of construction.--Nothing in this section may be
construed to limit the authority of a financial regulatory
agency to take an enforcement action against a regulated entity
with respect to fraud or market manipulation relating to an AI
test project.TITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION
SEC. 601. PROTECTING SOFTWARE DEVELOPERS.
(a) Amendment to the Securities Act of 1933.--The Securities Act of
1933 (15 U.S.C. 77a et seq.) is amended by inserting after section 27B
(15 U.S.C. 77z-2a) the following:
``SEC. 27C. APPLICATION TO SOFTWARE DEVELOPERS.
``(a) Distributed Ledger System Defined.--In this section, the term
`distributed ledger system' has the meaning given the term in section 2
of the Digital Asset Market Clarity Act.
``(b) Application to Software Developers.--Notwithstanding any
other provision of this Act, a person shall not be subject to this Act
and the regulations promulgated under this Act solely based on the
person engaging in any of the following activities, whether singly or
in combination, in relation to the operation of a distributed ledger
system or any component thereof:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or providing other similar incidental services.''.
(b) Amendment to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 15G (15 U.S.C. 78o-11) the following:
``SEC. 15H. APPLICATION TO SOFTWARE DEVELOPERS.
``(a) Definitions.--In this section:
``(1) Constitute.--The term `constitute' means to compile,
assemble, integrate, or otherwise combine software components
into a complete software system.
``(2) Decentralized finance trading protocol.--
``(A) In general.--The term `decentralized finance
trading protocol' means a distributed ledger system
through which multiple participants can execute a
financial transaction--
``(i) in accordance with an automated rule
or algorithm that is predetermined and non-
discretionary; and
``(ii) without reliance on a person other
than the user to maintain custody or control of
the digital assets subject to the financial
transaction.
``(B) Exclusions.--
``(i) In general.--The term `decentralized
finance trading protocol' does not include a
distributed ledger system if--
``(I) a person or group of persons
under common control or acting pursuant
to an agreement to act in concert has
the authority, directly or indirectly,
through any contract, arrangement,
understanding, relationship, or
otherwise, to control or materially
alter the functionality, operation, or
rules of consensus or agreement of the
distributed ledger system;
``(II) the distributed ledger
system does not operate, execute, and
enforce its operations and transactions
based solely on pre-established,
transparent rules encoded directly
within the source code of the
distributed ledger system; or
``(III) a person or group of
persons under common control has the
unilateral authority, via operation of
the distributed ledger system, to
restrict, censor, or prohibit the use
of the distributed ledger system,
including any applicable system-based
user activity.
``(ii) Special rule.--For purposes of
clause (i), a decentralized governance system
shall not be considered to be a person or a
group of persons under common control or acting
pursuant to an agreement to act in concert.
``(3) Deploy.--The term `deploy' means to bring software or
hardware onto a distributed ledger system for active use.
``(4) Digital asset; distributed ledger application;
distributed ledger system; distributed ledger protocol;
decentralized governance system; smart contract.--The terms
`digital asset', `distributed ledger application', `distributed
ledger system', `distributed ledger protocol', `decentralized
governance system', and `smart contract' have the meanings
given those terms in section 2 of the Digital Asset Market
Clarity Act.
``(5) Decentralized finance messaging system.--
``(A) In general.--The term `decentralized finance
messaging system' means a software application that
provides a user with the ability to create or submit an
instruction, communication, or message to a
decentralized finance trading protocol.
``(B) Additional requirements.--The term
`decentralized finance messaging system' does not
include any system that provides any person other than
the user with--
``(i) control over the funds of the user;
or
``(ii) the authority to execute any of the
transaction of the user.
``(b) Application to Software Developers.--Notwithstanding any
other provision of this Act, a person shall not be subject to this Act
and the regulations promulgated under this Act solely based on the
person engaging in any of the following activities, whether singly or
in combination, in relation to the operation of a distributed ledger
system or any component thereof:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or providing other similar incidental services.
``(3) Developing, publishing, or constituting--
``(A) a distributed ledger system; or
``(B) software or systems that create or utilize
hardware or software, including wallets or other
systems, that facilitate the ability of a user to keep,
safeguard, or have custody of the digital assets or
private keys of the user.
``(c) Rule of Construction.--Subsection (b)(3) does not extend to
any activity covered in any of the activities described in
subparagraphs (A) through (D) of subsection (d)(1), including activity
taken following deployment of such software or hardware.
``(d) Clarification.--
``(1) In general.--The Commission shall, pursuant to notice
and comment rulemaking, clarify the circumstances under which a
person shall not be subject to this Act by reason of engaging
solely in 1 or more of the following activities in relation to
the operation of a decentralized finance trading protocol or
any component thereof:
``(A) Providing a user interface that enables a
user to read and access data.
``(B) Administering, maintaining, or otherwise
distributing a decentralized governance system relating
to a decentralized finance trading protocol, or a
decentralized finance trading protocol.
``(C) Administering, maintaining, or otherwise
distributing a decentralized finance messaging system
or operating or participating in a smart contract-based
liquidity pool in a decentralized finance trading
protocol.
``(D) Administering, maintaining, or otherwise
distributing software or systems that create or deploy
hardware or software, including wallets or other
systems, that facilitate the ability of a user to keep,
safeguard, or maintain custody of the digital assets or
related private keys of the user.
``(2) Considerations.--In providing the clarification under
paragraph (1) the Commission shall--
``(A) ensure that the rules are consistent with the
purposes of the securities laws, including the public
interest, the protection of investors, and the
maintenance of fair and orderly markets;
``(B) provide that section 108(a) of the Lummis-
Gillibrand Responsible Financial Innovation Act of 2026
shall apply to such rules;
``(C) protect the rights of software developers,
publishers, and users to create, publish, and use code
and software in a manner consistent with the First
Amendment to the Constitution of the United States; and
``(D) provide legal clarity for the development,
publication, and operation of distributed ledger
systems and the components therein in a manner
consistent with the purposes of this section.
``(3) Rule of construction.--Nothing in this subsection may
be construed to grant the Commission authority over persons,
systems, software, or activities that do not otherwise fall
within the jurisdiction of the Commission under this Act, or to
create a presumption that any such activity is subject to this
Act.
``(e) Anti-Fraud, Anti-Manipulation, and False Reporting.--The
determination that a person is not subject to this Act under
subsections (b) and (d) shall not apply to the anti-fraud, anti-
manipulation, or false reporting enforcement authorities of the
Commission.
``(f) Rule of Construction.--Nothing in this Act or the rules and
regulations promulgated under this Act may be construed to apply any
requirement of the securities laws to a digital commodity, as definedin section 2 of the Digital Asset Market Clarity Act, or expand the
authority of the Commission beyond that which the Commission had before
the date of enactment of the Digital Asset Market Clarity Act to
regulate the activities described in subsection (d)(1).
``(g) Federal Preemption.--
``(1) In general.--Notwithstanding any other provision of
law, no securities, commodities, or digital assets law of any
State (or of any political subdivision of a State) shall apply
to an activity described in subsection (b).
``(2) Rule of construction.--Nothing in paragraph (1) may
be construed to apply to the anti-money laundering, anti-fraud,
or anti-manipulation authorities of a State (or of any
political subdivision of a State).''.
(c) Applicability.--This section, and the amendments made by this
section, shall apply to conduct occurring before, on, or after the date
of enactment of this Act.SEC. 602. SAFE HARBOR FOR NONFUNGIBLE TOKENS.
(a) Definitions.--In this section:
(1) Nonfungible token.--The term ``nonfungible token''
means a digital asset recorded on a distributed ledger that--
(A) is individually identifiable and
distinguishable from any other digital asset;
(B) represents ownership of, or rights in, a work
of authorship, art, a collectible, a membership, an
access credential, a certificate of authenticity, an
in-game or in-application item, or another similar
specific item or discrete digital or physical good,
service, or benefit;
(C) is not interchangeable on a 1-to-1 basis with
any other token or digital asset; and
(D) may be bought, sold, or transferred for
consideration.
(2) Promoter.--The term ``promoter'' means a person or
group that manages, controls, or operates an enterprise in
which capital is invested, or any person or group acting on
behalf of such a person or group with respect to such an
enterprise, including an affiliate, agent, or coordinated actor
that contributes to the capital raising efforts of the
enterprise.
(b) Safe Harbor.--
(1) In general.--Except as provided in paragraph (3), the
offer, sale, resale, transfer, or conveyance of a nonfungible
token shall not be deemed to constitute an offer, sale, or
distribution of a security or investment contract under the
Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.), or any equivalent
State law, unless the transaction, in substance, involves all
of the elements of an investment contract.
(2) Rules of construction.--Neither of the following shall
be considered to be a security under the Securities Act of 1933
(15 U.S.C. 77a et seq.) or the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.):
(A) The resale or secondary market transfer of a
nonfungible token, where the payment for that resale or
transfer does not flow to a promoter or is not used to
raise new capital for an enterprise.
(B) A nonfungible token that serves as a
collectible, membership right, event ticket, access
credential, or other non-investment-based use case
solely because the nonfungible token may appreciate in
value or depend in part on the continued efforts or the
reputation of the creator or issuer of the nonfungible
token.
(3) Exceptions.--The safe harbor under paragraph (1) shall
not apply to--
(A) a mass-minted series of items with
substantially similar or nearly identical traits that
are marketed or sold interchangeably;
(B) a fractionalized interest in a nonfungible
token; or
(C) an interest representing a beneficial or
economic claim on a nonfungible token or an asset that
a nonfungible token represents.
(4) Reliance; prospective effect.--
(A) Reliance.--A person, other than an originator
or related person, that reasonably and in good faith
relies on the safe harbor under this subsection shall
not be subject to any civil or administrative
penalties.
(B) Prospective effect.--Any determination by the
Commission that the safe harbor under this subsection
does not apply to a particular circumstance shall--
(i) be prospective only; and
(ii) take effect not earlier than 60 days
after the date on which the Commission publicly
posts that determination.SEC. 603. STUDY ON NONFUNGIBLE TOKENS.
(a) Definition.--In this section, the term ``nonfungible token''
has the meaning given the term in section 602.
(b) Study.--The Comptroller General of the United States shall
carry out a study of nonfungible tokens that analyzes--
(1) the nature, size, role, purpose, and use of nonfungible
tokens;
(2) the similarities and differences between nonfungible
tokens and other digital commodities, including digital
commodities and payment stablecoins, and how the markets for
those digital commodities intersect;
(3) how nonfungible tokens are minted by issuers and
subsequently distributed to purchasers;
(4) how nonfungible tokens are stored after being purchased
by a consumer;
(5) the interoperability of nonfungible tokens between
different distributed ledger systems;
(6) the scalability of different nonfungible token
marketplaces;
(7) the benefits of nonfungible tokens, including
verifiable digital ownership;
(8) the risks of nonfungible tokens, including--
(A) the infringement of intellectual property
rights;
(B) cybersecurity risks; and
(C) market risks;
(9) whether and how nonfungible tokens have been, or could
be, integrated with traditional marketplaces, including
marketplaces for music, real estate, gaming, events, and
travel;
(10) whether and how nonfungible tokens have been, or could
be, used to facilitate commerce or other activities through the
representation of documents, identification, contracts,
licenses, and other commercial, governmental, or personal
records;
(11) any risks to traditional markets from the integration
described in paragraph (9); and
(12) the levels and types of illicit activity in
nonfungible token markets.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall make
publicly available a report that includes the results of the study
required under subsection (b).SEC. 604. BLOCKCHAIN REGULATORY CERTAINTY ACT.
(a) Short Title.--This section may be cited as the ``Blockchain
Regulatory Certainty Act''.
(b) Definitions.--In this section:
(1) Developer or provider.--The term ``developer or
provider'' means any person or business that creates or
publishes software to facilitate the creation of, or provide
maintenance to, a distributed ledger, or a service associated
with a distributed ledger.
(2) Distributed ledger service.--The term ``distributed
ledger service'' means any information, transaction, or
computing service or system that provides or enables access to
a distributed ledger system by multiple users, including a
service or system that enables users to send, receive,
exchange, or store digital assets described by distributed
ledger systems.
(3) Non-controlling developer or provider.--The term ``non-
controlling developer or provider'' means a developer or
provider of a distributed ledger service that, in the regular
course of operations, does not have the legal right or the
unilateral and independent ability to control, initiate upon
demand, or effectuate transactions involving digital assets to
which users are entitled, without the approval, consent, or
direction of any third party.
(c) Treatment.--Notwithstanding any other provision of law, a non-
controlling developer or provider--
(1) shall not be treated as--
(A) a money transmitting business, as defined in
section 5330 of title 31, United States Code, and the
regulations promulgated under that section; or
(B) engaged in money transmitting, as defined in
section 1960 of title 18, United States Code; and
(2) on or after the date of enactment of this Act, shall
not be otherwise subject to any registration requirement that
is substantially similar to a requirement (as in effect on the
day before the date of enactment of this Act) that applies to
an entity described in subparagraph (A) or (B) of paragraph
(1), solely on the basis of--
(A) creating or publishing software to facilitate
the creation of, or providing maintenance services to,
a distributed ledger or a service associated with a
distributed ledger;
(B) providing hardware or software to facilitate a
customer's own custody or safekeeping of the digital
assets of the customer; or
(C) providing infrastructure support to maintain a
distributed ledger service.
(d) Clarification of Treatment.--Subsection (c) shall not modify
the application of section 1960(b)(1)(C) of title 18, United States
Code, to any person (referred to in this subsection as the ``initial
person'') that acts with the specific intent to transfer, on behalf of
another person, funds that are known by the initial person to be--
(1) derived from a criminal offense; or
(2) intended to be used to promote or support unlawful
activity.
(e) Rules of Construction.--Nothing in this section may be
construed--
(1) to affect whether a developer or provider of a
distributed ledger service is otherwise subject to
classification or treatment as a money transmitter, or as
engaged in money transmitting, under applicable Federal or
State law, including laws relating to anti-money laundering or
countering the financing of terrorism, based on conduct outside
the scope of subsection (c);
(2) to affect whether a developer or provider is otherwise
subject to classification or treatment as a financial
institution under subchapter II of chapter 53 of title 31,
United States Code, this Act, any amendment made by this Act,
or any Act enacted after the date of enactment of this Act,
based on conduct outside the scope of subsection (c);
(3) to limit or expand any law pertaining to intellectual
property;
(4) to prevent any State from enforcing any State law that
is consistent with this section; or
(5) to create a cause of action or impose liability under
any State or local law that is inconsistent with this section.SEC. 605. KEEP YOUR COINS ACT.
(a) Short Title.--This section may be cited as the ``Keep Your
Coins Act''.
(b) Definitions.--In this section:
(1) Covered user.--The term ``covered user'' means a United
States individual who obtains digital assets to purchase goods
or services on behalf of that individual, without regard to the
method in which that individual obtained those digital assets.
(2) Self-hosted wallet.--The term ``self-hosted wallet''
means a digital interface--
(A) that is used to secure and transfer digital
assets; and
(B) under which the owner of digital assets secured
and transferred under subparagraph (A) retains
independent control over those digital assets.
(c) Self-Custody.--A Federal agency may not prohibit, restrict, or
otherwise impair the ability of a covered user to self-custody digital
assets using a self-hosted wallet or other means to conduct
transactions for any lawful purpose.
(d) Rule of Construction.--Nothing in this section may be construed
to limit the authority of the Secretary of the Treasury, the
Commission, the Commodity Futures Trading Commission, the Board of
Governors of the Federal Reserve System, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or the National
Credit Union Administration to carry out any enforcement action or
special measure authorized under applicable law, including--
(1) the Bank Secrecy Act, section 9714 of the Combating
Russian Money Laundering Act (31 U.S.C. 5318A note), and
section 7213A of the Fentanyl Sanctions Act (21 U.S.C. 2313a);
or
(2) any other law relating to illicit finance, money
laundering, terrorism financing, or United States sanctions.TITLE VII--PROTECTING CUSTOMER PROPERTY
SEC. 701. CUSTOMER PROPERTY PROTECTIONS FOR ANCILLARY ASSETS AND
DIGITAL COMMODITIES IN BANKRUPTCY.
(a) Definitions for Stockbroker Liquidation.--
(1) In general.--Section 741 of title 11, United States
Code, is amended--
(A) by redesignating paragraphs (5) through (9) as
paragraphs (7) through (11), respectively;
(B) by redesignating paragraphs (1) through (4) as
paragraphs (2) through (5), respectively;
(C) by inserting before paragraph (2), as so
redesignated, the following:
``(1) `ancillary asset' has the meaning given that term in
section 2 of the Digital Asset Market Clarity Act;'';
(D) in paragraph (3), as so redesignated--
(i) in subparagraph (A)(vi), by striking
``and'' at the end;
(ii) by redesignating subparagraph (B) as
subparagraph (C);
(iii) by inserting after subparagraph (A)
the following:
``(B) entity with whom a person deals as principal
or agent and that has a claim against such person on
account of a digital commodity or an ancillary asset
received, acquired, or held by such person from or for
the securities account or accounts of such entity for 1
or more of the purposes identified in clauses (i)
through (vi) of subparagraph (A) of this paragraph;
and''; and
(iv) in subparagraph (C), as so
redesignated--
(I) in clause (i)--
(aa) by inserting ``,
ancillary asset, or digital
commodity'' after ``security'';
and
(bb) by inserting ``or
(B)'' after ``subparagraph
(A)''; and
(II) in clause (ii), by inserting
``an ancillary asset, a digital
commodity,'' after ``a security,'';
(E) in paragraph (5), as so redesignated, in the
matter preceding subparagraph (A), by inserting
``ancillary asset, digital commodity,'' after ``cash,
security,'' each place it appears;
(F) by inserting after paragraph (5), as so
redesignated, the following:
``(6) `digital commodity' has the meaning given that term
in section 2 of the Digital Asset Market Clarity Act;''; and
(G) in paragraph (8), as so redesignated, in
subparagraph (A)(i), by inserting ``, ancillary asset
positions, and digital commodities positions'' after
``securities positions''.
(b) Extent of Customer Claims.--Section 746(b) of title 11, United
States Code, is amended, in the matter preceding paragraph (1), by
striking ``cash or a security'' and inserting ``cash, a security, an
ancillary asset, or a digital commodity''.
(c) Technical and Conforming Amendments.--
(1) Section 546(e) of title 11, United States Code, is
amended--
(A) by striking ``section 741(7)'' and inserting
``section 741''; and
(B) by striking ``section 761(4)'' and inserting
``section 761''.
(2) Section 561(a) of title 11, United States Code, is
amended--
(A) in paragraph (1), by striking ``section
741(7)'' and inserting ``section 741''; and
(B) in paragraph (2), by striking ``section
761(4)'' and inserting ``section 761''.
(3) Section 752(c) of title 11, United States Code, is
amended by striking ``section 741(4)(B)'' and inserting
``section 741(5)(B)''.
(d) Clarifications.--For the avoidance of doubt--
(1) nothing in this section or an amendment made by this
section may be construed to apply to securities or cash held by
a broker-dealer and such assets and related claims shall be
governed exclusively by the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.);
(2) nothing in this section or an amendment made by this
section may be construed to apply to deposits held by a bank or
commodity contracts, which shall be governed by the relevant
applicable law; and
(3) in any liquidation proceeding under subchapter III or
IV of chapter 7 of title 11, United States Code, those
provisions shall be construed to treat ancillary assets and
digital commodities held for customers as customer property
governed by title 11, United States Code, and required to be
distributed according to such title.SEC. 702. INSOLVENCY SAFE HARBOR.
(a) Definitions.--In this section:
(1) Commodity broker; financial institution; financial
participant; securities clearing agency; stockbroker.--The
terms ``commodity broker'', ``financial institution'',
``financial participant'', ``securities clearing agency'', and
``stockbroker'' have the meanings given those terms in section
101 of title 11, United States Code.
(2) Commodity contract.--The term ``commodity contract''
means a commodity contract described in paragraph (4)(A) of
section 761 of title 11, United States Code.
(b) Safe Harbor.--A purchase, sale, or loan of, a margin loan or
other extension of credit on, or a repurchase, reverse repurchase, or
other transaction involving, a unit of a digital commodity occurring
with a commodity broker, stockbroker, financial institution, financial
participant, or securities clearing agency shall be deemed to be--
(1) a commodity contract for purposes of--
(A) sections 362(b)(6), 362(o), 546(e), 553, 556,
561, and 562 of title 11, United States Code;
(B) section 11 of the Federal Deposit Insurance Act
(12 U.S.C. 1821);
(C) section 210 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (12 U.S.C. 5390);
and
(D) section 5(b)(2)(C) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)); and
(2) a margin payment for purposes of section 548(d)(2)(B)
of title 11, United States Code.TITLE VIII--CUSTOMER PROTECTION
SEC. 801. EDUCATIONAL MATERIALS.
The Commission and the Commodity Futures Trading Commission shall
require digital asset intermediaries to provide clear and accessible
educational materials to the public, including--
(1) an overview of how distributed ledger systems function;
(2) a description of common risks associated with digital
assets;
(3) a description of the differences between digital asset
markets and traditional financial markets;
(4) information on reporting and disclosure requirements
related to digital asset transactions and securities which may
be accompanied by network tokens or ancillary assets; and
(5) guidance on recognizing fraudulent schemes and
instructions for reporting suspected fraud.SEC. 802. SAVINGS CLAUSES.
(a) Definitions.--In this section:
(1) Digital consumer token.--The term ``digital consumer
token'' means a digital asset that is primarily acquired for a
consumptive purpose, including redemption for a specified good
or service at the time of sale or within a reasonable time
after sale, as defined by the Federal Trade Commission pursuant
to rule.
(2) Nonfungible token.--The term ``nonfungible token''
means a digital asset recorded on a distributed ledger that--
(A) is individually identifiable and
distinguishable from any other digital asset;
(B) represents ownership of, or rights in, a work
of authorship, art, a collectible, a membership, an
access credential, a certificate of authenticity, an
in-game or in-application item, or another similar
specific item or discrete digital or physical good,
service, or benefit;
(C) is not interchangeable on a 1-to-1 basis with
any other token or digital asset; and
(D) may be bought, sold, or transferred for
consideration.
(b) Federal Trade Commission.--Nothing in this Act, or any
amendment made by this Act, may be construed as limiting or abridging
the jurisdiction of the Federal Trade Commission with respect to--
(1) investigations or enforcement actions under the Federal
Trade Commission Act (15 U.S.C. 41 et seq.) relating to unfair
or deceptive acts or practices by persons relating to commerce
in nonfungible tokens or digital consumer tokens, including
deceptive acts with respect to advertising and endorsements
relating to nonfungible tokens and digital consumer tokens;
(2) highlighting best practices relating to commerce in
nonfungible tokens or digital consumer tokens;
(3) promoting responsible innovation;
(4) consumer education relating to fraudulent digital asset
activity; or
(5) investigating unlawful restraints of trade in the
digital asset industry.
(c) Rule of Construction.--Nothing in this Act, or any amendment
made by this Act, may be construed to expand, contract, or otherwise
affect the jurisdiction or authority with respect to the Federal
consumer financial laws under the Consumer Financial Protection Act of
2010 (12 U.S.C. 5481 et seq.), as in effect on the day before the date
of enactment of this Act, including with respect to subsection (i) or
(j) of section 1027 of the Consumer Financial Protection Act of 2010
(12 U.S.C. 5517).SEC. 803. STUDY ON EXPANDING FINANCIAL LITERACY.
(a) Study.--The Commission and the Commodity Futures Trading
Commission shall jointly conduct a study to identify--
(1) the existing (as of the day before the date of
enactment of this Act) level of financial literacy among retail
digital asset customers;
(2) methods to improve the timing, content, and format of
financial literacy materials regarding digital assets provided
by the respective commissions;
(3) methods to improve coordination between the Commission
and the Commodity Futures Trading Commission with other
agencies, including the Financial Literacy and Education
Commission, nonprofit organizations, and State and local
jurisdictions, to better disseminate financial literacy
materials;
(4) the efficacy of current financial literacy efforts with
a focus on rural communities and communities with majority-
minority populations;
(5) the most useful and understandable relevant
information, including clear disclosures, that retail digital
asset customers need to make informed financial decisions
before engaging with or purchasing a digital asset;
(6) the most effective public-private partnerships in
providing financial literacy regarding digital assets;
(7) the most relevant metrics to measure successful
improvement of the financial literacy of an individual after
engaging with financial literacy efforts; and
(8) in consultation with the Financial Literacy and
Education Commission, a strategy (including, to the extent
practicable, measurable goals and objectives) to increase
financial literacy of investors regarding digital assets.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Commission and the Commodity Futures Trading Commission
shall jointly submit to the Committee on Banking, Housing, and Urban
Affairs and the Committee on Agriculture, Nutrition, and Forestry of
the Senate and the Committee on Financial Services and the Committee on
Agriculture of the House of Representatives a written report on the
study required under subsection (a).SEC. 804. CONSULTATION WITH SIPC REGARDING MANDATORY BROKER-DEALER
DISCLOSURES TO INVESTORS CONCERNING THE STATUS OF PAYMENT
STABLECOINS AND DIGITAL COMMODITIES.
(a) Definition.--In this section, the term ``payment stablecoin''
has the meaning given the term in section 2 of the GENIUS Act (12
U.S.C. 5901).
(b) Rules.--Not later than 270 days after the date of enactment of
this Act, the Commission, after consultation with the Commodity Futures
Trading Commission and the Securities Investor Protection Corporation,
shall issue rules requiring written disclosures regarding the treatment
of customer assets in the event of an insolvency, resolution, or
liquidation proceeding to be provided by a registered broker or dealer
to an investor--
(1) before a digital commodity, a payment stablecoin, or a
security involving a unit of a digital commodity is received,
acquired, or held by the broker or dealer for the account of
the investor; and
(2) after the provision of the disclosures under paragraph
(1), at such frequency as the Commission may prescribe.
(c) Contents.--The rules issued under subsection (b) shall include,
as necessary or appropriate for the protection of investors--
(1) a description of the manner in which any digital
commodity, payment stablecoin, or security involving a unit of
a digital commodity received, acquired, or held by a broker or
dealer for the account of an investor would be treated in an
insolvency, resolution, or liquidation proceeding with respect
to the broker or dealer under--
(A) title II of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5381 et seq.);
(B) the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.); or
(C) as applicable, chapter 7 or 11 of title 11,
United States Code; and
(2) how the treatment described in paragraph (1) differs
from the treatment of securities and cash received, acquired,
or held by the broker or dealer for the account of the
applicable investor in the event of an insolvency, resolution,
or liquidation proceeding with respect to the broker or dealer
under each provision of law described in subparagraph (A), (B),
and (C) of paragraph (1).TITLE IX--OTHER MATTERS
SEC. 901. JOINT ADVISORY COMMITTEE ON DIGITAL ASSETS.
(a) Establishment.--The Commodity Futures Trading Commission and
the Commission (referred to collectively in this section as the
``Commissions'') shall jointly establish the Joint Advisory Committee
on Digital Assets (referred to in this section as the ``Committee'').
(b) Purpose.--
(1) In general.--The Committee shall--
(A) provide the Commissions with official findings
and nonbinding recommendations on--
(i) the rules, regulations, oversight, and
other matters of the Commissions relating to
digital assets, including with respect to
regulatory harmonization between the
Commissions;
(ii) how to further the regulatory
harmonization of digital asset policy between
the Commissions or areas in which that
harmonization should occur; and
(iii) the implementation by the Commissions
of this Act, and the amendments made by this
Act, including with respect to regulatory
harmonization between the Commissions,
memoranda of understanding, and the CFTC-SEC
Micro-Innovation Sandbox established pursuant
to section 501;
(B) develop and share objective methods and best
practices for evaluating digital asset networks and
activities, including, as appropriate, technical
features, economic design, and implications for market
integrity, investor protection, and operational
resilience; and
(C) issue nonbinding recommendations to assist in
resolving disputes between the Commissions.
(c) Review by the Commissions.--Each of the Commissions shall--
(1) review the findings and nonbinding recommendations
provided under subsection (b)(1)(A);
(2) promptly publish a public statement each time the
Committee submits a finding or nonbinding recommendation to the
applicable Commission under subsection (b)(1)(A) that--
(A) assesses the finding or recommendation; and
(B) if applicable, discloses the action or decision
not to take action; and
(3) provide the Committee with a formal written response
not later than 90 days after the date of submission of a
finding or nonbinding recommendation under subsection
(b)(1)(A).
(d) Membership and Leadership.--
(1) Non-federal members; size and composition.--
(A) In general.--The Commissions shall appoint to
the Committee not more than 14 nongovernmental voting
members who--
(i) represent a broad spectrum of
interests, equally divided between the
Commissions; and
(ii) serve at the pleasure of the
appointing Commission.
(B) Specific members.--For each of the Commissions,
the appointees under subparagraph (A) of this paragraph
shall include--
(i) 2 individuals described in paragraph
(2)(A);
(ii) 2 individuals described in paragraph
(2)(B);
(iii) 1 individual described in paragraph
(2)(C);
(iv) 2 individuals described in paragraph
(2)(D); and
(v) 1 individual described in paragraph
(2)(E).
(2) Members described.--A member described in this
paragraph is--
(A) an individual who is employed by, or is a
related person with respect to, a digital asset market
participant;
(B) a person registered with either of the
Commissions and that is engaged in activities relating
to digital assets;
(C) an individual engaged in academic research
relating to digital assets;
(D) a retail user of digital assets; and
(E) a State securities regulator.
(3) NIST.--The Director of the National Institute of
Standards and Technology, or the designee of the Director,
shall serve in an advisory capacity as a nonvoting, ex officio
member of the Committee, and shall not be excluded from any
proceedings, meetings, discussions, or deliberations of the
Committee, except that the chair of the Committee, upon an
affirmative vote of the Committee, may exclude the Director or
the designee from any proceedings, meetings, discussions, or
deliberations of the Committee when necessary to safeguard and
promote the free exchange of confidential information.
(4) Co-designated federal officers; commissioner support.--
(A) Co-designated federal officers.--
(i) In general.--Each Commission shall
designate 1 Federal officer to serve as a co-
designated Federal officer of the Committee.
(ii) Shared duties.--The duties required by
section 1009(e) of title 5, United States Code,
to be carried out by a designated officer or
employee of the Federal Government with respect
to the Committee shall be shared by the Federal
officers of the Committee who are co-designated
under clause (i).
(B) Commissioner support.--
(i) In general.--Commissioners of the
Commissions may be supported by officers or
employees of the respective Commission who may
prepare or transmit materials, coordinate with
agency staff, liaise with Committee leadership,
propose agenda items, gather information, and
otherwise support the participation of that
commissioner in Committee business, in an ex
officio, nonvoting capacity.
(ii) Rule of construction.--An officer or
employee described in clause (i) shall not be
considered to be a member of the Committee for
purposes of chapter 10 of title 5, United
States Code.
(C) Information sharing.--The co-designated Federal
officers under subparagraph (A) and the officers or
employees of the respective Commissions providing
support under subparagraph (B) shall share information
about digital asset activities under this Act, in
accordance with section 902, including with regard to
preventing insider trading.
(5) Committee leadership.--The members of the Committee
shall elect, from among the membership of the Committee, a
secretary and an assistant secretary.
(6) Rotating chair.--The chair and vice chair of the
Committee shall rotate annually between the Commissions, with
the Commission designating the chair in even-numbered calendar
years, the Commodity Futures Trading Commission designating the
chair in odd-numbered calendar years, the Commission
designating the vice chair in odd-numbered calendar years, and
the Commodity Futures Trading Commission designating the vice
chair in even-numbered calendar years.
(7) Terms; vacancies; holdover.--
(A) In general.--Each non-Federal member of the
Committee shall be appointed for a term of 4 years.
(B) Service until new appointment.--A member of the
Committee may continue to serve after the expiration of
the term of the member until a successor is appointed.
(C) Vacancies.--A vacancy with respect to
membership in the Committee shall be filled only for
the remainder of the applicable term.
(D) Reappointment.--A member of the Committee may
be reappointed.
(8) Status of members.--A member of the Committee appointed
under paragraph (1) shall not be deemed to be an employee or
agent of either of the Commissions solely by reason of
membership on the Committee.
(e) No Compensation for Committee Members.--
(1) Non-federal members.--All Committee members appointed
under subsection (d)(1) shall--
(A) serve without compensation; and
(B) while away from the home or regular place of
business of the member in the performance of services
for the Committee, be allowed travel expenses,
including per diem in lieu of subsistence, in the same
manner as persons employed intermittently in Government
service are allowed expenses under section 5703 of
title 5, United States Code.
(2) No compensation for co-designated federal officers.--
The Federal officers co-designated under subsection (d)(4)(A)
shall serve without compensation in addition to that received
for their services as officers or employees of the United
States.
(f) Frequency of Meetings.--The Committee shall meet--
(1) not less frequently than twice annually; and
(2) at such other times as either of the Commissions may
request.
(g) Procedures; Advisory Nature.--
(1) In general.--The Committee shall operate pursuant to
chapter 10 of title 5, United States Code, except as otherwise
expressly provided by this section.
(2) Advisory nature of recommendations.--The
recommendations of the Committee are advisory in nature, shall
not create any legal rights or obligations, and shall not limit
or delay the independent authority of either of the
Commissions.(h) Time Limits.--The Commissions shall--
(1) not later than 90 days after the date of enactment of
this Act, adopt a joint charter for the Committee;
(2) not later than 120 days after the date of enactment of
this Act, make the appointments required under subsection
(d)(1); and
(3) not later than 180 days after the date of enactment of
this Act, hold the initial meeting of the Committee.
(i) Funding.--Subject to the availability of funds, the Commissions
shall jointly fund the Committee.
(j) Duration and Renewal.--
(1) Initial period.--The Committee shall remain in effect
for 10 years beginning on the date of enactment of this Act.
(2) Renewal thereafter.--At the conclusion of the 10-year
period described in paragraph (1)--
(A) the Committee shall be subject to subsections
(a) and (b) of section 1013 of title 5, United States
Code; and
(B) the Commissions may renew the Committee for
successive 2-year periods by publishing a notice in the
Federal Register, consistent with chapter 10 of title
5, United States Code.SEC. 902. MEMORANDUM OF UNDERSTANDING.
(a) Memorandum of Understanding.--The Commission shall enter into a
memorandum of understanding with the Commodity Futures Trading
Commission to ensure--
(1) coordinated supervision and enforcement with respect to
registrants of the Commission and the Commodity Futures Trading
Commission, including with regard to--
(A) the anti-fraud and anti-manipulation
authorities of the Commission, such as with regard to
insider trading; and
(B) the market integrity authorities of the
Commodity Futures Trading Commission; and
(2) appropriate information sharing between the Commission
and the Commodity Futures Trading Commission to further the
purposes of and compliance with this Act, the amendments made
by this Act, the Securities Act of 1933 (15 U.S.C. 77a et seq.)
(as amended by this Act), the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) (as amended by this Act), and the
Commodity Exchange Act (7 U.S.C. 1 et seq.).
(b) Rule of Construction.--Nothing in this section may be construed
to limit the anti-fraud, anti-manipulation, or false reporting
enforcement authorities of the Commodity Futures Trading Commission
with respect to a contract of sale of a commodity and persons effecting
such contracts.
(c) Rule of Construction.--Nothing in this Act, or any amendment
made by this Act, may be construed to limit or prevent the continued
application of applicable law regarding the insider trading of
securities, including digital asset securities, including section 21A
of the Securities Exchange Act of 1934 (15 U.S.C. 78u-1).SEC. 903. FINCEN APPROPRIATIONS.
(a) Authorization of Appropriations.--For the purposes of
developing policy relating to digital assets, acquiring information
technology resources, funding the operations described in sections 202
and 203 of this Act, and enforcement of the laws within its
jurisdiction relating to digital assets, there is authorized to be
appropriated to the Financial Crimes Enforcement Network of the
Department of the Treasury the following:
(1) $30,000,000 for fiscal year 2026, to remain available
until September 30, 2027.
(2) $30,000,000 for fiscal year 2027, to remain available
until September 30, 2028.
(3) $30,000,000 for fiscal year 2028, to remain available
until September 30, 2029.
(4) $30,000,000 for fiscal year 2029, to remain available
until September 30, 2030.
(5) $30,000,000 for fiscal year 2030, to remain available
until September 30, 2031.
(b) Incentive Premium for Highly Qualified Individuals.--
Notwithstanding any other provision of law or regulation, the Director
of the Financial Crimes Enforcement Network of the Department of the
Treasury may pay an annual incentive premium of not more than 20
percent of the annual rate of basic pay for a position if necessary to
attract highly qualified individuals for positions that the Director
has certified to the Director of the Office of Personnel Management
reflect the needs of the Financial Crimes Enforcement Network.SEC. 904. BUILD NOW ACT.
(a) Definitions.--In this section:
(1) Covered recipient.--The term ``covered recipient''
means a metropolitan city or urban county, as those terms are
defined in section 102 of the Housing and Community Development
Act of 1974 (42 U.S.C. 5302), that receives funds under section
106.
(2) Current annual growth rate.--The term ``current annual
growth rate'', with respect to an eligible recipient and a
fiscal year, means the average annual percentage increase in
the number of housing units in the jurisdiction of the eligible
recipient, as calculated by the Secretary, during the period--
(A) beginning with the third quarter of the sixth
preceding fiscal year; and
(B) ending with the third quarter of the preceding
fiscal year.
(3) Eligible recipient.--The term ``eligible recipient''
means any covered recipient unless--
(A)(i) the median Small Area Fair Market Rent in
the jurisdiction of the covered recipient is at or
below the 60th percentile of median Small Area Fair
Market Rents in the jurisdictions of all covered
recipients; and
(ii) the median home value in the jurisdiction of
the covered recipient is below the median home value
for the United States;
(B) the annual rental vacancy rate in the
jurisdiction of the covered recipient is greater than
the national annual rental vacancy rate for the most
recent year available, as published by the Bureau of
the Census;
(C) during the 1-year period preceding the date on
which the Secretary allocates funds under section 106,
the jurisdiction of the covered recipient has been the
subject of a major disaster or emergency declaration
under section 401 or 501, respectively, of the Robert
T. Stafford Disaster Relief and Emergency Assistance
Act (42 U.S.C. 5170, 5191); or
(D) the covered recipient lacks the legal authority
to enact or update zoning and permitting ordinances.
(4) Extremely high-growth recipient.--The term ``extremely
high-growth recipient'' means an eligible recipient for which
the current annual growth rate is at or above 4 percent.
(5) Housing growth improvement rate.--The term ``housing
growth improvement rate'', with respect to an eligible
recipient and a fiscal year, means the quotient of--
(A)(i) the current annual growth rate of the
eligible recipient, minus
(ii) the prior annual growth rate of the eligible
recipient; and
(B) the sum obtained by adding the absolute values
of the current annual growth rate and the prior annual
growth rate of the eligible recipient.
(6) Prior annual growth rate.--The term ``prior annual
growth rate'', with respect to an eligible recipient and a
fiscal year, means the average annual percentage increase in
the number of housing units in the jurisdiction of the eligible
recipient, as calculated by the Secretary, during the period--
(A) beginning with the third quarter of the 11th
preceding fiscal year; and
(B) ending with the third quarter of the sixth
preceding fiscal year.
(7) Secretary.--The term ``Secretary'' means the Secretary
of Housing and Urban Development.
(8) Section 106.--The term ``section 106'' means section
106 of the Housing and Community Development Act of 1974 (42
U.S.C. 5306).
(b) Adjustments to Community Development Block Grant Allocations.--
(1) In general.--In allocating amounts to an eligible
recipient under section 106 for a fiscal year, the Secretary
shall adjust the allocation based on the housing growth
improvement rate of the eligible recipient, in accordance with
paragraph (2) of this subsection.
(2) Adjustments.--
(A) Housing growth improvement rate at or above
median; extremely high-growth recipients.--
(i) In general.--If, with respect to a
fiscal year for which the allocation under
section 106 is being determined, the housing
growth improvement rate for an eligible
recipient is at or above the median housing
growth improvement rate for all eligible
recipients other than extremely high-growth
recipients, or if an eligible recipient is an
extremely high-growth recipient, the Secretary
shall allocate to the eligible recipient for
that fiscal year, in addition to the amount
that would otherwise be allocated to the
eligible recipient under section 106, a bonus
amount, as determined under clause (ii) of this
subparagraph.
(ii) Bonus amount.--For purposes of clause
(i), the bonus amount for an eligible recipient
for a fiscal year shall be equal to the product
of--
(I) the aggregate amount by which
allocations to eligible recipients are
decreased under subparagraph (B) for
that fiscal year; and
(II) the quotient of--
(aa) the number of housing
units, as of the third quarter
of the preceding fiscal year,
in the jurisdiction of the
eligible recipient, as
calculated by the Secretary;
and
(bb) the number of housing
units, as of the third quarter
of the preceding fiscal year,
in the jurisdictions of all
eligible recipients that
receive a bonus amount under
this paragraph, as calculated
by the Secretary.
(B) Housing growth improvement rate below median.--
If, with respect to a fiscal year for which the
allocation under section 106 is being determined, the
housing growth improvement rate for an eligible
recipient is below the median housing growth
improvement rate for all eligible recipients other than
extremely high-growth recipients, the Secretary shall
decrease the amount that would otherwise be allocated
to the eligible recipient under section 106 for that
fiscal year by 10 percent.
(c) Calculation of Housing Units.--
(1) Housing and urban development requirements.--In
calculating the number of housing units in the jurisdiction of
an eligible recipient under any provision of this section, the
Secretary shall--
(A) use the Current Address Count Listing Files and
other data products, as needed, of the Bureau of the
Census tabulated from the Master Address File; and
(B) make calculations at the block level, using
boundaries that reflect the most current boundaries.
(2) Census bureau and postal service requirements.--The
Bureau of the Census and the United States Postal Service shall
provide any relevant data to the Secretary upon request to
assist the Secretary in making a calculation described in
paragraph (1).
(3) Adjustment of calculation periods.--The Secretary may
adjust the calculation periods under subparagraphs (A) and (B)
of subsection (a)(2), subparagraphs (A) and (B) of subsection
(a)(6), and items (aa) and (bb) of subsection (b)(2)(A)(ii)(II)
by not more than 2 months to achieve alignment with the data
provided by the Bureau of the Census.
(d) Annual Report on Housing Growth Improvement Rate.--Before
allocating funds under section 106 for a fiscal year, the Secretary
shall publish a report that--
(1) includes the housing growth improvement rate for each
eligible recipient; and
(2) lists, for the most recent fiscal year for which
allocations were made under section 106--
(A) the eligible recipients that received a bonus
amount under subsection (b)(2)(A) of this section; and
(B) the eligible recipients for which the
allocation under section 106 was decreased under
subsection (b)(2)(B) of this section.
(e) Notification; Implementation Dates.--
(1) Notification.--
(A) In general.--Not later than 60 days after the
date of enactment of this Act, the Secretary shall
notify each eligible recipient of the recipient's
housing growth improvement rate and whether that
housing growth improvement rate is above, at, or below
the median housing growth improvement rate for all
eligible recipients other than extremely high-growth
recipients.
(B) Guidance.--As part of the notification under
subparagraph (A), the Secretary shall share guidance,
including resources developed by the Department of
Housing and Urban Development, on best practices and
recommendations for policies to reduce regulatory
barriers to housing and increase housing supply.
(2) Implementation dates.--Subsection (b) shall take effect
beginning with the third full fiscal year after the date of
enactment of this Act and remain in effect through fiscal year
2043.
(3) No effect on previous appropriations.--This section
shall not apply to amounts appropriated before the date ofenactment of this Act.
SEC. 905. RULEMAKINGS.
Except as otherwise provided, not later than 1 year after the date
of enactment of this Act, each applicable regulator shall adopt rules
to carry out this Act, and the amendments made by this Act, through
appropriate notice and comment rulemaking.SEC. 906. EFFECTIVE DATE.
This Act, and the amendments made by this Act, shall take effect on
the date that is 360 days after the date of enactment of this Act,
except that, if a provision of this Act, or an amendment made by this
Act, requires a rulemaking, that provision shall take effect on the
later of--
(1) the date that is 360 days after the date of enactment
of this Act; or
(2) the date that is 60 days after the publication in the
Federal Register of the final rule implementing the provision.
Calendar No. 423
119th CONGRESS
2d Session
H. R. 3633
_______________________________________________________________________
AN ACT
To provide for a system of regulation of the offer and sale of digital
commodities by the Securities and Exchange Commission and the Commodity
Futures Trading Commission, to amend the Federal Reserve Act to
prohibit the Federal reserve banks from offering certain products or
services directly to an individual, to prohibit the use of central bank
digital currency for monetary policy, and for other purposes.
_______________________________________________________________________
June 1, 2026
Reported with an amendment