Us Congress House Bill HB4763 Introduced / Bill

                    I 
118THCONGRESS 
1
STSESSION H. R. 4763 
To provide for a system of regulation of digital assets by the Commodity 
Futures Trading Commission and the Securities and Exchange Commis-
sion, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY20, 2023 
Mr. T
HOMPSONof Pennsylvania (for himself, Mr. HILL, Mr. JOHNSONof 
South Dakota, Mr. D
AVIDSON, and Mr. EMMER) introduced the following 
bill; which was referred to the Committee on Financial Services, and in 
addition to the Committee on Agriculture, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To provide for a system of regulation of digital assets by 
the Commodity Futures Trading Commission and the 
Securities and Exchange Commission, and for other pur-
poses. 
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3
(a) S
HORTTITLE.—This Act may be cited as the 4
‘‘Financial Innovation and Technology for the 21st Cen-5
tury Act’’. 6
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(b) TABLE OFCONTENTS.—The table of contents for 1
this Act is as follows: 2
Sec. 1. Short title; table of contents. 
TITLE I—DEFINITIONS; RULEMAKING; PROVISIONAL 
REGISTRATION 
Sec. 101. Definitions under the Securities Act of 1933. 
Sec. 102. Definitions under the Commodity Exchange Act. 
Sec. 103. Definitions under this Act. 
Sec. 104. Joint rulemakings. 
Sec. 105. Notice of intent to register for digital commodity exchanges, brokers, 
and dealers. 
Sec. 106. Notice of intent to register for digital asset brokers, dealers, and 
trading systems. 
Sec. 107. Commodity Exchange Act savings provisions. 
Sec. 108. International harmonization. 
Sec. 109. Implementation. 
TITLE II—DIGITAL ASSET EXEMPTIONS 
Sec. 201. Exempted transactions in digital assets. 
Sec. 202. Requirements to transact in certain digital assets. 
Sec. 203. Enhanced disclosure requirements. 
Sec. 204. Certification of certain digital assets. 
Sec. 205. Effective date. 
TITLE III—REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES 
AT THE SECURITIES AND EXCHANGE COMMISSION 
Sec. 301. Treatment of digital commodities and other digital assets. 
Sec. 302. Antifraud authority over permitted payment stablecoins. 
Sec. 303. Registration of digital asset trading systems. 
Sec. 304. Requirements for digital asset trading systems. 
Sec. 305. Registration of digital asset brokers and digital asset dealers. 
Sec. 306. Requirements of digital asset brokers and digital asset dealers. 
Sec. 307. Rules related to conflicts of interest. 
Sec. 308. Treatment of certain digital assets in connection with federally regu-
lated intermediaries. 
Sec. 309. Dual registration. 
Sec. 310. Exclusion for ancillary activities. 
Sec. 311. Registration and requirements for notice-registered digital asset 
clearing agencies. 
Sec. 312. Treatment of custody activities by banking institutions. 
TITLE IV—REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES 
AT THE COMMODITY FUTURES TRADING COMMISSION 
Sec. 401. Commission jurisdiction over digital commodity transactions. 
Sec. 402. Requiring futures commission merchants to use qualified digital com-
modity custodians. 
Sec. 403. Trading certification and approval for digital commodities. 
Sec. 404. Registration of digital commodity exchanges. 
Sec. 405. Qualified digital commodity custodians. 
Sec. 406. Registration and regulation of digital commodity brokers and dealers. 
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Sec. 407. Registration of associated persons. 
Sec. 408. Registration of commodity pool operators and commodity trading ad-
visors. 
Sec. 409. Exclusion for ancillary activities. 
Sec. 410. Effective date. 
TITLE V—INNOVATION AND TECHNOLOGY IMPROVEMENTS 
Sec. 501. Codification of the SEC Strategic Hub for Innovation and Financial 
Technology. 
Sec. 502. Codification of LabCFTC. 
Sec. 503. CFTC–SEC Joint Advisory Committee on Digital Assets. 
Sec. 504. Modernization of the Securities and Exchange Commission mission. 
Sec. 505. Study on decentralized finance. 
Sec. 506. Study on non-fungible digital assets. 
Sec. 507. Study on financial market infrastructure improvements. 
TITLE I—DEFINITIONS; RULE-1
MAKING; PROVISIONAL REG-2
ISTRATION 3
SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF 4
1933. 5
Section 2(a) of the Securities Act of 1933 (15 U.S.C. 6
77b(a)) is amended by adding at the end the following: 7
‘‘(20) A
FFILIATED PERSONS.—The term ‘affili-8
ated person’ means a person (including a related 9
person) that— 10
‘‘(A) with respect to a digital asset 11
issuer— 12
‘‘(i) directly, or indirectly through one 13
or more intermediaries, controls, or is con-14
trolled by, or is under common control 15
with, such digital asset issuer; and 16
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‘‘(ii) was described under clause (i) at 1
any point in the previous 3-month period; 2
or 3
‘‘(B) with respect to any digital asset— 4
‘‘(i) beneficially owns 5 percent or 5
more of the units of such digital asset that 6
are then outstanding; and 7
‘‘(ii) was described under clause (i) at 8
any point in the previous 3-month period. 9
‘‘(21) B
LOCKCHAIN.—The term ‘blockchain’ 10
means any technology— 11
‘‘(A) where data is— 12
‘‘(i) shared across a network to create 13
a public ledger of verified transactions or 14
information among network participants; 15
‘‘(ii) linked using cryptography to 16
maintain the integrity of the public ledger 17
and to execute other functions; and 18
‘‘(iii) distributed among network par-19
ticipants in an automated fashion to con-20
currently update network participants on 21
the state of the public ledger and any other 22
functions; and 23
‘‘(B) composed of source code that is pub-24
licly available. 25
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‘‘(22) BLOCKCHAIN PROTOCOL .—The term 1
‘blockchain protocol’ means any executable software 2
deployed to a blockchain composed of source code 3
that is publicly available and accessible, including a 4
smart contract or any network of smart contracts. 5
‘‘(23) B
LOCKCHAIN SYSTEM .—The term 6
‘blockchain system’ means any blockchain or 7
blockchain protocol. 8
‘‘(24) D
ECENTRALIZED NETWORK .—With re-9
spect to a blockchain system to which a digital asset 10
relates, the term ‘decentralized network’ means the 11
following conditions are met: 12
‘‘(A) During the previous 12-month period, 13
no person— 14
‘‘(i) had the unilateral authority, di-15
rectly or indirectly, through any contract, 16
arrangement, understanding, relationship, 17
or otherwise, to control or materially alter 18
the functionality or operation of the 19
blockchain system; or 20
‘‘(ii) had the unilateral authority to 21
restrict or prohibit any person who is not 22
a digital asset issuer, related person, or an 23
affiliated person from— 24
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‘‘(I) using, earning, or transmit-1
ting the digital asset; 2
‘‘(II) deploying software that 3
uses or integrates with the blockchain 4
system; 5
‘‘(III) participating in a decen-6
tralized governance system with re-7
spect to the blockchain system; or 8
‘‘(IV) operating a node, validator, 9
or other form of computational infra-10
structure with respect to the 11
blockchain system. 12
‘‘(B) During the previous 12-month pe-13
riod— 14
‘‘(i) no digital asset issuer or affiliated 15
person beneficially owned, in the aggre-16
gate, 20 percent or more of the total 17
amount of units of such digital asset 18
that— 19
‘‘(I) can be created, issued, or 20
distributed in such blockchain system; 21
and 22
‘‘(II) were freely transferrable or 23
otherwise used or available to be used 24
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for the purposes of such blockchain 1
network; 2
‘‘(ii) no digital asset issuer or affili-3
ated person had the unilateral authority to 4
direct the voting, in the aggregate, of 20 5
percent or more of the outstanding voting 6
power of such digital asset or related de-7
centralized governance system; or 8
‘‘(iii) the digital asset did not include 9
voting power. 10
‘‘(C) During the previous 3-month period, 11
the digital asset issuer, any affiliated person, or 12
any related person has not implemented or con-13
tributed any intellectual property to the source 14
code of the blockchain system that materially 15
alters the functionality or operation of the 16
blockchain system, unless such implementation 17
or contribution to the source code— 18
‘‘(i) addressed vulnerabilities, errors, 19
regular maintenance, cybersecurity risks, 20
or other technical improvements to the 21
blockchain system; or 22
‘‘(ii) were adopted through the con-23
sensus or agreement of a decentralized 24
governance system. 25
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‘‘(D) During the previous 3-month period, 1
neither any digital asset issuer nor any affili-2
ated person described under paragraph (20)(A) 3
has marketed to the public the digital assets as 4
an investment. 5
‘‘(E) During the previous 12-month period, 6
all issuances of units of such digital asset were 7
end user distributions made through the pro-8
grammatic functioning of the blockchain sys-9
tem. 10
‘‘(25) D
ECENTRALIZED GOVERNANCE SYS -11
TEM.— 12
‘‘(A) I
N GENERAL.—The term ‘decentral-13
ized governance system’ means, with respect to 14
a blockchain system, any rules-based system 15
permitting persons using the blockchain system 16
or the digital assets related to such blockchain 17
system to form consensus or reach agreement 18
in the development, provision, publication, man-19
agement, or administration of such blockchain 20
system. 21
‘‘(B) R
ELATIONSHIP OF PERSONS TO DE -22
CENTRALIZED GOVERNANCE SYSTEMS .—Per-23
sons acting through a decentralized governance 24
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system shall be treated as separate persons un-1
less such persons are under common control. 2
‘‘(C) E
XCLUSION.—The term ‘decentral-3
ized governance system’ does not include a sys-4
tem in which— 5
‘‘(i) a person or group of persons 6
under common control have the ability 7
to— 8
‘‘(I) unilaterally alter the rules of 9
consensus or agreement for the 10
blockchain system; or 11
‘‘(II) determine the final outcome 12
of decisions related to the develop-13
ment, provision, publication, manage-14
ment, or administration of such 15
blockchain system; 16
‘‘(ii) a person or group of persons is 17
directly engaging in an activity that re-18
quires registration with the Commission or 19
the Commodity Futures Trading Commis-20
sion other than— 21
‘‘(I) developing, providing, pub-22
lishing, managing, or administering a 23
blockchain system; or 24
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‘‘(II) an activity with respect to 1
which the organization is exempt from 2
such registration; or 3
‘‘(iii) a person or group of persons 4
seeking to knowingly evade the require-5
ments imposed on a digital asset issuer, a 6
related person, an affiliated person, or any 7
other person registered (or required to be 8
registered) under this Act, the Financial 9
Innovation and Technology for the 21st 10
Century Act, or the Commodity Exchange 11
Act. 12
‘‘(26) D
IGITAL ASSET.— 13
‘‘(A) I
N GENERAL.—The term ‘digital 14
asset’ means any fungible digital representation 15
of value that can be exclusively possessed and 16
transferred, person to person, without necessary 17
reliance on an intermediary, and is recorded on 18
a cryptographically secured public distributed 19
ledger. 20
‘‘(B) E
XCLUSIONS.—The term ‘digital 21
asset’ does not include— 22
‘‘(i) any note, stock, treasury stock, 23
security future, security-based swap, bond, 24
debenture, evidence of indebtedness, cer-25
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tificate of interest or participation in any 1
profit-sharing agreement, collateral-trust 2
certificate, preorganization certificate or 3
subscription, or transferable share; or 4
‘‘(ii) any asset which represents, oper-5
ates as the functional equivalent of, or oth-6
erwise has embedded functionality or char-7
acteristics which make it an agreement, 8
contract, or transaction that is— 9
‘‘(I) a contract of sale of a com-10
modity (as defined under section 1a of 11
the Commodity Exchange Act) for fu-12
ture delivery or an option thereon; 13
‘‘(II) a security futures product; 14
‘‘(III) a swap; 15
‘‘(IV) an agreement, contract, or 16
transaction described in section 17
2(c)(2)(C)(i) or 2(c)(2)(D)(i) of the 18
Commodity Exchange Act; 19
‘‘(V) a commodity option author-20
ized under section 4c of the Com-21
modity Exchange Act; or 22
‘‘(VI) a leverage transaction au-23
thorized under section 19 of the Com-24
modity Exchange Act. 25
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‘‘(C) RELATIONSHIP TO A BLOCKCHAIN 1
SYSTEM.—A digital asset is considered to relate 2
to a blockchain system if the digital asset is in-3
trinsically linked to the blockchain system, in-4
cluding— 5
‘‘(i) where the digital asset’s value is 6
reasonably expected to be generated by the 7
programmatic functioning of the 8
blockchain system; 9
‘‘(ii) where the asset has voting rights 10
with respect to the blockchain system; or 11
‘‘(iii) where the digital asset is issued 12
through the programmatic functioning of 13
the blockchain system. 14
‘‘(D) T
REATMENT OF CERTAIN DIGITAL 15
ASSETS SOLD PURSUANT TO AN INVESTMENT 16
CONTRACT.—A digital asset sold or transferred 17
or intended to be sold or transferred pursuant 18
to an investment contract is not and does not 19
become a security as a result of being sold or 20
otherwise transferred pursuant to that invest-21
ment contract. 22
‘‘(27) D
IGITAL ASSET ISSUER.—With respect to 23
a digital asset, the term ‘digital asset issuer’— 24
‘‘(A) means— 25
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‘‘(i) any person that, in exchange for 1
any consideration— 2
‘‘(I) issues or causes to be issued 3
a unit of such digital asset to a per-4
son; or 5
‘‘(II) offers or sells a right to a 6
future issuance of a unit of such dig-7
ital asset to a person; or 8
‘‘(ii) any person who seeks to know-9
ingly evade classification as a ‘digital asset 10
issuer’ and facilitate an arrangement for 11
the primary purpose of effecting a sale, 12
distribution, or other issuance of such dig-13
ital asset, by— 14
‘‘(I) the granting of a license or 15
assignment of intellectual property; 16
‘‘(II) the making available of free 17
software or open source licenses; or 18
‘‘(III) the granting of other 19
rights or transfer of assets material to 20
execution of such sale, distribution, or 21
other issuance; and 22
‘‘(B) does not include any person solely be-23
cause such person, for the purpose of such per-24
son participating in operations of a blockchain 25
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system, deploys source code to create units of a 1
digital asset which are incentive-based re-2
wards— 3
‘‘(i) to users of the digital asset or 4
any blockchain system to which the digital 5
asset relates; or 6
‘‘(ii) for activities directly related to 7
the operation of the blockchain system, 8
such as mining, validating, staking, or 9
other activity directly tied to the operation 10
of the blockchain system. 11
‘‘(28) D
IGITAL ASSET MATURITY DATE .—The 12
term ‘digital asset maturity date’ means, with re-13
spect to any units of a digital asset, the first date 14
on which 20 percent or more of the total units of 15
such digital asset that are then outstanding as of 16
such date are— 17
‘‘(A) digital commodities; or 18
‘‘(B) digital assets that have been reg-19
istered with the Commission. 20
‘‘(29) D
IGITAL COMMODITY.—The term ‘digital 21
commodity’ has the meaning given that term under 22
section 1a of the Commodity Exchange Act (7 23
U.S.C. 1a). 24
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‘‘(30) END USER DISTRIBUTION .—The term 1
‘end user distribution’ means an issuance of a unit 2
of a digital asset that— 3
‘‘(A) does not involve an exchange of more 4
than a nominal value of cash, property, or other 5
assets; and 6
‘‘(B) is distributed in a broad, equitable, 7
and non-discretionary manner based on condi-8
tions capable of being satisfied by any partici-9
pant in the blockchain system, including, as in-10
centive-based rewards— 11
‘‘(i) to users of the digital asset or 12
any blockchain system to which the digital 13
asset relates; 14
‘‘(ii) for activities directly related to 15
the operation of the blockchain system, 16
such as mining, validating, staking, or 17
other activity directly tied to the operation 18
of the blockchain system; or 19
‘‘(iii) to the existing holders of an-20
other digital asset, in proportion to the 21
total units of such other digital asset as 22
are held by each person. 23
‘‘(31) F
UNCTIONAL NETWORK .—With respect 24
to a blockchain system to which a digital asset re-25
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lates, the term ‘functional network’ means the net-1
work allows network participants to use such digital 2
asset for— 3
‘‘(A) the transmission and storage of value 4
on the blockchain system; 5
‘‘(B) the participation in services provided 6
by or an application running on the blockchain 7
system; or 8
‘‘(C) the participation in governance of the 9
blockchain system. 10
‘‘(32) P
ERMITTED PAYMENT STABLECOIN .— 11
The term ‘permitted payment stablecoin’— 12
‘‘(A) means a digital asset— 13
‘‘(i) that is or is designed to be used 14
as a means of payment or settlement; 15
‘‘(ii) the issuer of which— 16
‘‘(I) is obligated to convert, re-17
deem, or repurchase for a fixed 18
amount of monetary value; and 19
‘‘(II) represents will maintain or 20
creates the reasonable expectation 21
that it will maintain a stable value rel-22
ative to the value of a fixed amount of 23
monetary value; and 24
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‘‘(iii) that is subject to regulation by 1
a Federal or State regulator with authority 2
over entities that issue payment 3
stablecoins; and 4
‘‘(B) that is not— 5
‘‘(i) a national currency; or 6
‘‘(ii) a security issued by an invest-7
ment company registered under section 8
8(a) of the Investment Company Act of 9
1940 (15 U.S.C. 80a–8(a)). 10
‘‘(33) R
ELATED PERSON.—With respect to a 11
digital asset issuer, the term ‘related person’ 12
means— 13
‘‘(A) a founder, promoter, employee, con-14
sultant, advisor, or person serving in a similar 15
capacity; 16
‘‘(B) any person that is or was in the pre-17
vious 6-month period an executive officer, direc-18
tor, trustee, general partner, advisory board 19
member, or person serving in a similar capacity; 20
‘‘(C) any equity holder or other security 21
holder of a digital asset issuer; or 22
‘‘(D) any other person that received a unit 23
of digital asset from such digital asset issuer 24
through— 25
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‘‘(i) an exempt offering, other than an 1
offering made in reliance on section 2
4(a)(8); or 3
‘‘(ii) a distribution that is not an end 4
user distribution described under section 5
42(d)(1) of the Securities Exchange Act of 6
1934. 7
‘‘(34) R
ESTRICTED DIGITAL ASSET.— 8
‘‘(A) I
N GENERAL.—The term ‘restricted 9
digital asset’ means— 10
‘‘(i) any unit of a digital asset held by 11
a person, other than a digital asset issuer, 12
a related person, or an affiliated person, 13
prior to the first date on which each 14
blockchain system to which the digital 15
asset relates is a functional network and 16
certified to be a decentralized network 17
under section 44 of the Securities Ex-18
change Act of 1934, that was— 19
‘‘(I) issued to such person 20
through a distribution, other than an 21
end user distribution described under 22
section 42(d)(1) of the Securities Ex-23
change Act of 1934; or 24
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‘‘(II) acquired by such person in 1
a transaction that was not executed 2
on a digital commodity exchange; 3
‘‘(ii) any digital asset held by a re-4
lated person or an affiliated person during 5
any period when any blockchain system to 6
which the digital asset relates is not a 7
functional network or not certified to be a 8
decentralized network under section 44 of 9
the Securities Exchange Act of 1934; or 10
‘‘(iii) any unit of a digital asset held 11
by the digital asset issuer. 12
‘‘(B) E
XCLUSION.—The term ‘restricted 13
digital asset’ does not include a permitted pay-14
ment stablecoin. 15
‘‘(35) S
ECURITIES LAWS.—The term ‘securities 16
laws’ has the meaning given that term under section 17
3(a) of the Securities Exchange Act of 1934 (15 18
U.S.C. 78c(a)). 19
‘‘(36) S
OURCE CODE.—With respect to a 20
blockchain system, the term ‘source code’ means a 21
listing of commands to be compiled or assembled 22
into an executable computer program.’’. 23
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SEC. 102. DEFINITIONS UNDER THE COMMODITY EX-1
CHANGE ACT. 2
Section 1a of the Commodity Exchange Act (7 U.S.C. 3
1a) is amended— 4
(1) in paragraph (10)(A)— 5
(A) by redesignating clauses (iii) and (iv) 6
as clauses (iv) and (v), respectively; and 7
(B) by inserting after clause (ii) the fol-8
lowing: 9
‘‘(iii) digital commodity;’’; 10
(2) in paragraph (11)— 11
(A) in subparagraph (A)(i)— 12
(i) by redesignating subclauses (III) 13
and (IV) as subclauses (IV) and (V), re-14
spectively; and 15
(ii) by inserting after subclause (II) 16
the following: 17
‘‘(III) digital commodity;’’; and 18
(B) by redesignating subparagraph (B) as 19
subparagraph (C) and inserting after subpara-20
graph (A) the following: 21
‘‘(B) E
XCLUSION.—The term ‘commodity 22
pool operator’ does not include— 23
‘‘(i) a decentralized governance sys-24
tem; or 25
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‘‘(ii) ancillary activities, as defined in 1
section 4v.’’; 2
(3) in paragraph (12)(A)(i)— 3
(A) in subclause (II), by adding at the end 4
a semicolon; 5
(B) by redesignating subclauses (III) and 6
(IV) as subclauses (IV) and (V), respectively; 7
and 8
(C) by inserting after subclause (II) the 9
following: 10
‘‘(III) a digital commodity;’’; 11
(4) in paragraph (40)— 12
(A) by striking ‘‘and’’ at the end of sub-13
paragraph (E); 14
(B) by striking the period at the end of 15
subparagraph (F) and inserting ‘‘; and’’; and 16
(C) by adding at the end the following: 17
‘‘(G) a digital commodity exchange reg-18
istered under section 5i.’’; and 19
(5) by adding at the end the following: 20
‘‘(52) A
SSOCIATED PERSON OF A DIGITAL COM -21
MODITY BROKER.— 22
‘‘(A) I
N GENERAL.—Except as provided in 23
subparagraph (B), the term ‘associated person 24
of a digital commodity broker’ means a person 25
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who is associated with a digital commodity 1
broker as a partner, officer, employee, or agent 2
(or any person occupying a similar status or 3
performing similar functions) in any capacity 4
that involves— 5
‘‘(i) the solicitation or acceptance of a 6
contract for sale of a digital commodity; or 7
‘‘(ii) the supervision of any person en-8
gaged in the solicitation or acceptance of a 9
contract for sale of a digital commodity. 10
‘‘(B) E
XCLUSION.—The term ‘associated 11
person of a digital commodity broker’ does not 12
include any person associated with a digital 13
commodity broker the functions of which are 14
solely clerical or ministerial. 15
‘‘(53) A
SSOCIATED PERSON OF A DIGITAL COM -16
MODITY DEALER.— 17
‘‘(A) I
N GENERAL.—Except as provided in 18
subparagraph (B), the term ‘associated person 19
of a digital commodity dealer’ means a person 20
who is associated with a digital commodity deal-21
er as a partner, officer, employee, or agent (or 22
any person occupying a similar status or per-23
forming similar functions) in any capacity that 24
involves— 25
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‘‘(i) the solicitation or acceptance of a 1
contract for sale of a digital commodity; or 2
‘‘(ii) the supervision of any person en-3
gaged in the solicitation or acceptance of a 4
contract for sale of a digital commodity. 5
‘‘(B) E
XCLUSION.—The term ‘associated 6
person of a digital commodity dealer’ does not 7
include any person associated with a digital 8
commodity dealer the functions of which are 9
solely clerical or ministerial. 10
‘‘(54) B
ANK SECRECY ACT .—The term ‘Bank 11
Secrecy Act’ means— 12
‘‘(A) section 21 of the Federal Deposit In-13
surance Act (12 U.S.C. 1829b); 14
‘‘(B) chapter 2 of title I of Public Law 91– 15
508 (12 U.S.C. 1951 et seq.); and 16
‘‘(C) subchapter II of chapter 53 of title 17
31, United States Code. 18
‘‘(55) D
IGITAL COMMODITY.— 19
‘‘(A) I
N GENERAL.—The term ‘digital com-20
modity’ means— 21
‘‘(i) any unit of a digital asset held by 22
a person, other than a digital asset issuer, 23
a related person, or an affiliated person, 24
before the first date on which each 25
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blockchain system to which the digital 1
asset relates is a functional network and 2
certified to be a decentralized network 3
under section 44 of the Securities Ex-4
change Act of 1934, that was— 5
‘‘(I) issued to the person through 6
an end user distribution described 7
under section 42(d)(1) of the Securi-8
ties Exchange Act of 1934; or 9
‘‘(II) acquired by such person in 10
a transaction that was executed on a 11
digital commodity exchange; or 12
‘‘(ii) any unit of a digital asset held 13
by a person, other than a digital asset 14
issuer, a related person, or an affiliated 15
person, after the first date on which each 16
blockchain system to which the digital 17
asset relates is a functional network and 18
certified to be a decentralized network 19
under section 44 of the Securities Ex-20
change Act of 1934; and 21
‘‘(iii) any unit of a digital asset held 22
by a related person or an affiliated person 23
during any period when any blockchain 24
system to which the digital asset relates is 25
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a functional network and certified to be a 1
decentralized network under section 44 of 2
the Securities Exchange Act of 1934. 3
‘‘(B) E
XCLUSION.—The term ‘digital com-4
modity’ does not include a permitted payment 5
stablecoin. 6
‘‘(56) D
IGITAL COMMODITY BROKER .— 7
‘‘(A) I
N GENERAL.—The term ‘digital com-8
modity broker’ means any person who, in a dig-9
ital commodity cash or spot market, is— 10
‘‘(i) engaged in soliciting or accepting 11
orders for the purchase or sale of a unit of 12
a digital commodity from a customer that 13
is not an eligible contract participant; 14
‘‘(ii) engaged in soliciting or accepting 15
orders for the purchase or sale of a unit of 16
a digital commodity from a customer on or 17
subject to the rules of a registered entity; 18
or 19
‘‘(iii) registered with the Commission 20
as a digital commodity broker. 21
‘‘(B) E
XCEPTIONS.—The term ‘digital 22
commodity broker’ does not include a person 23
solely because the person— 24
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‘‘(i) enters into a digital commodity 1
transaction the primary purpose of which 2
is to make, send, receive, or facilitate pay-3
ments, whether involving a payment service 4
provider or on a peer-to-peer basis; or 5
‘‘(ii) validates a digital commodity 6
transaction, operates a node, or engages in 7
similar activity to participate in facili-8
tating, operating, or securing a blockchain 9
system. 10
‘‘(57) D
IGITAL COMMODITY CUSTODIAN .—The 11
term ‘digital commodity custodian’ means a bank or 12
trust company in the business of holding, maintain-13
ing, or safeguarding digital commodities. 14
‘‘(58) D
IGITAL COMMODITY DEALER .— 15
‘‘(A) I
N GENERAL.—The term ‘digital com-16
modity dealer’ means any person who— 17
‘‘(i) in digital commodity cash or spot 18
markets— 19
‘‘(I) holds itself out as a dealer in 20
a digital commodity; 21
‘‘(II) makes a market in a digital 22
commodity; 23
‘‘(III) regularly enters into dig-24
ital commodity transactions with 25
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counterparties as an ordinary course 1
of business for its own account; or 2
‘‘(IV) engages in any activity 3
causing the person to be commonly 4
known in the trade as a dealer or 5
market maker in a digital commodity; 6
‘‘(ii) regularly enters into any agree-7
ment, contract, or transaction described in 8
subsection (c)(2)(D)(i) involving a digital 9
commodity; or 10
‘‘(iii) is registered with the Commis-11
sion as a digital commodity dealer. 12
‘‘(B) E
XCEPTION.—The term ‘digital com-13
modity dealer’ does not include a person solely 14
because the person— 15
‘‘(i) enters into a digital commodity 16
transaction with an eligible contract partic-17
ipant; 18
‘‘(ii) enters into a digital commodity 19
transaction on or through a registered dig-20
ital commodity exchange; 21
‘‘(iii) enters into a digital commodity 22
transaction for the person’s own account, 23
either individually or in a fiduciary capac-24
ity, but not as a part of a regular business; 25
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‘‘(iv) enters into a digital commodity 1
transaction the primary purpose of which 2
is to make, send, receive, or facilitate pay-3
ments, whether involving a payment service 4
provider or on a peer-to-peer basis; or 5
‘‘(v) validates a digital commodity 6
transaction, operates a node, or engages in 7
similar activity to participate in facili-8
tating, operating, or securing a blockchain 9
system. 10
‘‘(59) D
IGITAL COMMODITY EXCHANGE .—The 11
term ‘digital commodity exchange’ means a trading 12
facility that offers or seeks to offer a cash or spot 13
market in at least 1 digital commodity. 14
‘‘(60) D
IGITAL ASSET-RELATED DEFINI -15
TIONS.— 16
‘‘(A) S
ECURITIES ACT OF 1933 .—The 17
terms ‘affiliated person’, ‘blockchain system’, 18
‘decentralized governance system’, ‘decentral-19
ized network’, ‘digital asset’, ‘digital asset 20
issuer’, ‘end user distribution’, ‘functional net-21
work’, ‘permitted payment stablecoin’, ‘related 22
person’, and ‘restricted digital asset’ have the 23
meaning given the terms, respectively, under 24
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section 2(a) of the Securities Act of 1933 (15 1
U.S.C. 77b(a)). 2
‘‘(B) S
ECURITIES EXCHANGE ACT OF 3
1934.—The terms ‘digital asset broker’ and ‘dig-4
ital asset dealer’ have the meaning given those 5
terms, respectively, under section 3(a) of the 6
Securities Exchange Act of 1934 (15 U.S.C. 7
78c(a)). 8
‘‘(61) M
IXED DIGITAL ASSET TRANSACTION .— 9
The term ‘mixed digital asset transaction’ has the 10
meaning given that term under section 3(a) of the 11
Securities Exchange Act of 1934 (15 U.S.C. 12
78c(a)).’’. 13
SEC. 103. DEFINITIONS UNDER THIS ACT. 14
In this Act: 15
(1) A
LTERNATIVE TRADING SYSTEM .—The 16
term ‘‘alternative trading system’’ has the meaning 17
given that term under section 242.300 of title 17, 18
Code of Federal Regulations. 19
(2) D
EFINITIONS UNDER THE COMMODITY EX -20
CHANGE ACT.—The terms ‘‘digital commodity’’, 21
‘‘digital commodity broker’’, and ‘‘digital commodity 22
exchange’’ have the meaning given those terms, re-23
spectively, under section 1a of the Commodity Ex-24
change Act (7 U.S.C. 1a). 25
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(3) DEFINITIONS UNDER THE SECURITIES ACT 1
OF 1933.—The terms ‘‘affiliated person’’, 2
‘‘blockchain’’, ‘‘blockchain system’’, ‘‘blockchain pro-3
tocol’’, ‘‘decentralized network’’, ‘‘digital asset’’, 4
‘‘digital asset issuer’’, ‘‘digital asset maturity date’’, 5
‘‘digital asset trading system’’, ‘‘end user distribu-6
tion’’, ‘‘functional network’’, ‘‘permitted payment 7
stablecoin’’, ‘‘restricted digital asset’’, ‘‘securities 8
laws’’, and ‘‘source code’’ have the meaning given 9
those terms, respectively, under section 2(a) of the 10
Securities Act of 1933 (15 U.S.C. 77b(a)). 11
(4) D
EFINITIONS UNDER THE SECURITIES EX -12
CHANGE ACT OF 1934 .—The terms ‘‘digital asset 13
broker’’, ‘‘digital asset dealer’’, ‘‘digital asset trading 14
system’’, ‘‘mixed digital asset transaction’’, and 15
‘‘self-regulatory organization’’ have the meaning 16
given those terms, respectively, under section 3(a) of 17
the Securities Exchange Act of 1934 (15 U.S.C. 18
78c(a)). 19
SEC. 104. JOINT RULEMAKINGS. 20
(a) D
EFINITIONS.—The Commodity Futures Trading 21
Commission and the Securities and Exchange Commission 22
shall, jointly, issue rules to further define the following 23
terms: 24
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(1) The terms ‘‘affiliated person’’, 1
‘‘blockchain’’, ‘‘blockchain system’’, ‘‘blockchain pro-2
tocol’’, ‘‘decentralized network’’, ‘‘decentralized gov-3
ernance system’’, ‘‘digital asset’’, ‘‘digital asset 4
issuer’’, ‘‘digital asset maturity date’’, ‘‘end user dis-5
tribution’’, ‘‘functional network’’, ‘‘related person’’, 6
‘‘restricted digital asset’’, and ‘‘source code’’, as de-7
fined under section 2(a) of the Securities Act of 8
1933. 9
(2) The term ‘‘mixed digital asset transaction’’, 10
as defined under section 3(a) of the Securities Ex-11
change Act of 1934. 12
(3) The term ‘‘digital commodity’’, as defined 13
under section 1a of the Commodity Exchange Act. 14
(b) J
OINTRULEMAKING FOR EXCHANGES.—The 15
Commodity Futures Trading Commission and the Securi-16
ties and Exchange Commission shall, jointly, issue rules 17
to exempt persons dually registered with the Commodity 18
Futures Trading Commission as a digital commodity ex-19
change and with the Securities and Exchange Commission 20
as a digital asset trading system from duplicative, con-21
flicting, or unduly burdensome provisions of this Act, the 22
securities laws, and the Commodity Exchange Act and the 23
rules thereunder, to the extent such exemption would fos-24
ter the development of fair and orderly markets in digital 25
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assets, be necessary or appropriate in the public interest, 1
and be consistent with the protection of investors. 2
(c) J
OINTRULEMAKING FOR MIXEDDIGITALASSET 3
T
RANSACTIONS.—The Commodity Futures Trading Com-4
mission and the Securities and Exchange Commission 5
shall, jointly, issue rules applicable to mixed digital asset 6
transactions under this Act and the amendments made by 7
this Act. 8
(d) P
ROHIBITION.—The Securities Exchange Com-9
mission and the Commodity Futures Trading Commission 10
shall not issue a rule, a regulation, an order, or guidance, 11
or take any other administrative action, which would re-12
strict the ability of an individual to use hardware or soft-13
ware to facilitate the custody or safekeeping by the indi-14
vidual of any digital asset of the individual. 15
SEC. 105. NOTICE OF INTENT TO REGISTER FOR DIGITAL 16
COMMODITY EXCHANGES, BROKERS, AND 17
DEALERS. 18
(a) I
NGENERAL.— 19
(1) N
OTICE OF INTENT TO REGISTER .—Any 20
person may file a notice of intent to register with 21
the Commodity Futures Trading Commission (in 22
this subsection referred to as the ‘‘Commission’’) as 23
a— 24
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(A) digital commodity exchange, for a per-1
son intending to register as a digital commodity 2
exchange under section 5i of the Commodity 3
Exchange Act; 4
(B) digital commodity broker, for a person 5
intending to register as a digital commodity 6
broker under section 4u of such Act; or 7
(C) digital commodity dealer, for a person 8
intending to register as a digital commodity 9
dealer under section 4u of such Act. 10
(2) F
ILING.—A person desiring to file a notice 11
of intent to register under paragraph (1) shall be in 12
compliance with this section if the person submits to 13
the Commission— 14
(A) a statement of the nature of the reg-15
istrations the filer intends to pursue; 16
(B) the information required by sub-17
sections (b) and (c). 18
(b) D
ISCLOSURE OF GENERALINFORMATION.—A 19
person filing a notice of intent to register under subsection 20
(a) shall disclose to the Commission the following: 21
(1) Information concerning the management of 22
the person, including information describing— 23
(A) the ownership and management of the 24
person; 25
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(B) the financial condition of the person; 1
(C) affiliated entities; and 2
(D) potential conflicts of interest. 3
(2) Information concerning the operations of 4
the person, including— 5
(A) any rulebook or other customer order 6
fulfilment rules; 7
(B) risk management procedures; and 8
(C) a description of the product listing 9
process. 10
(c) L
ISTINGINFORMATION.—A person filing a notice 11
of intent to register under subsection (a) shall provide to 12
the Commission and the Securities and Exchange Com-13
mission a detailed description of the product listing deter-14
mination made by the person for each asset listed or of-15
fered for trading by the person. 16
(d) R
EQUIREMENTS.—A person filing a notice of in-17
tent to register under subsection (a) shall comply with the 18
following requirements: 19
(1) B
OOKS AND RECORDS .—The person shall 20
keep their books and records open to inspection and 21
examination by the Commission. 22
(2) C
USTOMER DISCLOSURES .—The person 23
shall disclose to consumers— 24
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(A) information about the material risks 1
and characteristics of the assets listed for trad-2
ing on the person; and 3
(B) information about the material risks 4
and characteristics of the transactions facili-5
tated by the person. 6
(3) C
USTOMER ASSETS.— 7
(A) I
N GENERAL.—The person shall— 8
(i) hold customer money, assets, and 9
property in a manner to minimize the risk 10
of loss to the customer or unreasonable 11
delay in customer access to money, assets, 12
and property of the customer; 13
(ii) treat and deal with all money, as-14
sets, and property, including any rights as-15
sociated with any such money, assets, or 16
property, of any customer received as be-17
longing to the customer; 18
(iii) segregate all money, assets, and 19
property received from any customer of the 20
person from the funds of the person, ex-21
cept that— 22
(I) the money, assets, and prop-23
erty of any customer may be commin-24
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gled with that of any other customer, 1
if separately accounted for; and 2
(II) the share of the money, as-3
sets, and property, as in the normal 4
course of business are necessary to 5
margin, guarantee, secure, transfer, 6
adjust, or settle a contract of sale of 7
a commodity asset, may be withdrawn 8
and applied to do so, including the 9
payment of commissions, brokerage, 10
interest, taxes, storage, and other 11
charges lawfully accruing in connec-12
tion with the contract of sale of a dig-13
ital commodity. 14
(B) A
DDITIONAL RESOURCES .— 15
(i) I
N GENERAL.—This section shall 16
not prevent or be construed to prevent the 17
person from adding to the customer 18
money, assets, and property required to be 19
segregated under subparagraph (A), addi-20
tional amounts of money, assets, or prop-21
erty from the account of the person as the 22
person determines necessary to prevent the 23
account of a customer from becoming 24
under-segregated. 25
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(ii) TREATMENT AS CUSTOMER 1
FUNDS.—Any money, assets, or property 2
deposited pursuant to clause (i) shall be 3
considered customer property within the 4
meaning of this subsection. 5
(e) C
OMPLIANCE ANDENFORCEMENT.— 6
(1) I
N GENERAL.—A person who has filed a no-7
tice of intent to register under this section and is in 8
compliance with this section shall not be subject to 9
an enforcement action by the Securities and Ex-10
change Commission for— 11
(A) listing or offering a digital asset 12
deemed a security; or 13
(B) failing to register as a national securi-14
ties exchange, broker, dealer, or clearing agen-15
cy, for activities related to digital assets deemed 16
a security. 17
(2) N
ONCOMPLIANCE.—Paragraph (1) shall not 18
apply if, after notice from the Commission and a 19
reasonable opportunity to correct the deficiency, a 20
person who has submitted a notice of intent to reg-21
ister is not in compliance with this section. 22
(3) A
NTIFRAUD AND ANTIMANIPULATION .— 23
Paragraph (1) shall not be construed to limit any 24
antimanipulation, antifraud, or false reporting en-25
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forcement authority of the Commission or the Secu-1
rities and Exchange Commission. 2
(4) D
ELISTING.—Paragraph (1) shall not be 3
construed to limit the authority of the Commission 4
or the Securities and Exchange Commission to re-5
quire a person to delist an asset for trading if the 6
Commission or the Securities and Exchange Com-7
mission determines that the listing is inconsistent 8
with the Commodity Exchange Act, the securities 9
laws (including regulations under those laws), or this 10
Act. 11
(f) F
INALREGISTRATION.— 12
(1) I
N GENERAL.—A person may not file a no-13
tice of intent to register with the Commission after 14
the Commission has finalized its rules for the reg-15
istration of digital commodity exchanges, digital 16
commodity brokers, or digital commodity dealers, as 17
appropriate. 18
(2) T
RANSITION TO FINAL REGISTRATION .— 19
(A) O
NGOING DEFERRAL FOR ENTITIES 20
REGISTERED WITH THE COMMISSION .—Sub-21
section (e)(1) shall continue to apply to a per-22
son who has submitted a notice of intent to reg-23
ister while the person is registered with the 24
Commission as a digital commodity exchange, a 25
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digital commodity broker, or a digital com-1
modity dealer, as appropriate. 2
(B) E
ND OF DEFERRAL .—Subsection 3
(e)(1) shall not apply to a person who has sub-4
mitted a notice of intent to register if— 5
(i) the Commission— 6
(I) determines that the person 7
has failed to comply with the require-8
ments of this section; or 9
(II) denies the application of the 10
person to register; or 11
(ii) the digital commodity exchange, 12
digital commodity broker, or digital com-13
modity dealer that filed a notice of intent 14
to register failed to register as such with 15
the Commission within 180 days after the 16
Commission finalized the rules of the Com-17
mission for the registration of digital com-18
modity exchanges, digital commodity bro-19
kers, or digital commodity dealers, as ap-20
propriate. 21
(g) L
IABILITY OF THEFILER.—It shall be unlawful 22
for any person to provide false information in support of 23
a filing under this section if the person knowingly or rea-24
sonably should have known that the information was false. 25
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SEC. 106. NOTICE OF INTENT TO REGISTER FOR DIGITAL 1
ASSET BROKERS, DEALERS, AND TRADING 2
SYSTEMS. 3
(a) I
NGENERAL.— 4
(1) N
OTICE OF INTENT TO REGISTER .—Any 5
person may file a notice of intent to register with 6
the Securities and Exchange Commission (in this 7
subsection referred to as the ‘‘Commission’’) as a— 8
(A) digital asset trading system, for a per-9
son intending to register as a digital asset trad-10
ing system under section 6(m) of the Securities 11
Exchange Act of 1934; 12
(B) digital asset broker, for a person in-13
tending to register as a digital asset broker 14
under section 15H of the Securities Exchange 15
Act of 1934; or 16
(C) digital asset dealer, for a person in-17
tending to register as a digital asset dealer 18
under section 15H of the Securities Exchange 19
Act of 1934. 20
(2) F
ILING.—A person desiring to file a notice 21
of intent to register under paragraph (1) shall be in 22
compliance with this section if the person submits to 23
the Commission— 24
(A) a statement of the nature of the reg-25
istrations the filer intends to pursue; 26
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(B) the information required by sub-1
sections (b) and (c). 2
(b) D
ISCLOSURE OF GENERALINFORMATION.—A 3
person filing a notice of intent to register under subsection 4
(a) shall disclose to the Commission the following: 5
(1) Information concerning the management of 6
the person, including information describing— 7
(A) the ownership and management of the 8
person; 9
(B) the financial condition of the person; 10
(C) affiliated entities; and 11
(D) potential conflicts of interest. 12
(2) Information concerning the operations of 13
the person, including— 14
(A) any rulebook or other customer order 15
fulfilment rules; 16
(B) risk management procedures; and 17
(C) a description of the product listing 18
process. 19
(c) L
ISTINGINFORMATION.—A person filing a notice 20
of intent to register under subsection (a) shall provide to 21
the Commission and the Commodity Futures Trading 22
Commission a detailed description of the product listing 23
determination made by the person for each asset listed or 24
offered for trading by the person. 25
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(d) REQUIREMENTS.—A person filing a notice of in-1
tent to register under subsection (a) shall comply with the 2
following requirements: 3
(1) B
OOKS AND RECORDS .—The person shall 4
keep their books and records open to inspection and 5
examination by the Commission. 6
(2) C
USTOMER DISCLOSURES .—The person 7
shall disclose to consumers— 8
(A) information about the material risks 9
and characteristics of the assets listed for trad-10
ing on the person; and 11
(B) information about the material risks 12
and characteristics of the transactions facili-13
tated by the person. 14
(3) C
USTOMER ASSETS.— 15
(A) I
N GENERAL.—The person shall— 16
(i) hold customer money, assets, and 17
property in a manner to minimize the risk 18
of loss to the customer or unreasonable 19
delay in customer access to money, assets, 20
and property of the customer; 21
(ii) treat and deal with all money, as-22
sets, and property, including any rights as-23
sociated with any such money, assets, or 24
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property, of any customer received as be-1
longing to the customer; 2
(iii) segregate all money, assets, and 3
property received from any customer of the 4
person from the funds of the person, ex-5
cept that— 6
(I) the money, assets, and prop-7
erty of any customer may be commin-8
gled with that of any other customer, 9
if separately accounted for; and 10
(II) the share of the money, as-11
sets, and property, as in the normal 12
course of business are necessary to 13
margin, guarantee, secure, transfer, 14
adjust, or settle a contract of sale of 15
a commodity asset, may be withdrawn 16
and applied to do so, including the 17
payment of commissions, brokerage, 18
interest, taxes, storage, and other 19
charges lawfully accruing in connec-20
tion with the contract of sale of a dig-21
ital commodity. 22
(B) A
DDITIONAL RESOURCES .— 23
(i) I
N GENERAL.—This section shall 24
not prevent or be construed to prevent the 25
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person from adding to the customer 1
money, assets, and property required to be 2
segregated under subparagraph (A) addi-3
tional amounts of money, assets, or prop-4
erty from the account of the person as the 5
person determines necessary to prevent the 6
account of a customer from becoming 7
under-segregated. 8
(ii) T
REATMENT AS CUSTOMER 9
FUNDS.—Any money, assets, or property 10
deposited pursuant to clause (i) shall be 11
considered customer property within the 12
meaning of this subsection. 13
(e) C
OMPLIANCE ANDENFORCEMENT.— 14
(1) I
N GENERAL.—A person who has filed a no-15
tice of intent to register under this section and is in 16
compliance with this section shall not be subject to 17
an enforcement action by the Commission for— 18
(A) listing or offering a digital asset 19
deemed a security; or 20
(B) failing to register as a national securi-21
ties exchange, alternative trading system, 22
broker, dealer, or clearing agency, for activities 23
related to digital assets deemed a security. 24
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(2) NONCOMPLIANCE.—Paragraph (1) shall not 1
apply if, after notice from the Commission and a 2
reasonable opportunity to correct the deficiency, a 3
person who has submitted a notice of intent to reg-4
ister is not in compliance with this section. 5
(3) A
NTIFRAUD AND ANTIMANIPULATION .— 6
Paragraph (1) shall not be construed to limit any 7
antimanipulation, antifraud, or false reporting en-8
forcement authority of the Commission or the Com-9
modity Futures Trading Commission. 10
(4) D
ELISTING.—Paragraph (1) shall not be 11
construed to limit the authority of the Commission 12
or the Commodity Futures Trading Commission to 13
require a person to delist an asset for trading if the 14
Commission or the Commodity Futures Trading 15
Commission determines that the listing is incon-16
sistent with the Commodity Exchange Act, the secu-17
rities laws (including regulations under those laws), 18
or this Act. 19
(f) F
INALREGISTRATION.— 20
(1) I
N GENERAL.—A person may not file a no-21
tice of intent to register with the Commission after 22
the Commission has finalized its rules for the reg-23
istration of digital asset brokers, digital asset deal-24
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ers, and digital asset trading systems, as appro-1
priate. 2
(2) T
RANSITION TO FINAL REGISTRATION .— 3
(A) O
NGOING DEFERRAL FOR ENTITIES 4
REGISTERED WITH THE COMMISSION .—Sub-5
section (e)(1) shall continue to apply to a per-6
son who has submitted a notice of intent to reg-7
ister while the person is registered with the 8
Commission as a digital asset broker, digital 9
asset dealer, or digital asset trading system, as 10
appropriate. 11
(B) E
ND OF DEFERRAL .—Subsection 12
(e)(1) shall not apply to a person who has sub-13
mitted a notice of intent to register if— 14
(i) the Commission— 15
(I) determines that the person 16
has failed to comply with the require-17
ments of this section; or 18
(II) denies the application of the 19
person to register; or 20
(ii) the digital asset broker, digital 21
asset dealer, or digital asset trading sys-22
tem that filed a notice of intent to register 23
failed to register as such with the Commis-24
sion within 180 days after the Commission 25
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finalized the rules of the Commission for 1
the registration of digital asset brokers, 2
digital asset dealers, and digital asset trad-3
ing systems, as appropriate. 4
(g) L
IABILITY OF THEFILER.—It shall be unlawful 5
for any person to provide false information in support of 6
a filing under this section if the person knowingly or rea-7
sonably should have known that the information was false. 8
SEC. 107. COMMODITY EXCHANGE ACT SAVINGS PROVI-9
SIONS. 10
(a) I
NGENERAL.—Nothing in this Act shall affect 11
or apply to, or be interpreted to affect or apply to— 12
(1) any agreement, contract, or transaction that 13
is subject to regulation under the Commodity Ex-14
change Act as— 15
(A) a contract of sale of a commodity for 16
future delivery or an option on such a contract; 17
(B) a swap; 18
(C) a security futures product; 19
(D) an option authorized under section 4c 20
of such Act; 21
(E) an agreement, contract, or transaction 22
described in section 2(c)(2)(C)(i) of such Act; 23
or 24
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(F) a leverage transaction authorized 1
under section 19 of such Act; or 2
(2) the activities of any person with respect to 3
any such agreement, contract, or transaction. 4
(b) P
ROHIBITIONS ON SPOTDIGITALCOMMODITY 5
E
NTITIES.—Nothing in this Act authorizes, or shall be in-6
terpreted to authorize, a digital commodity exchange, dig-7
ital commodity broker, or digital commodity dealer to en-8
gage in any activities involving any transaction, contract, 9
or agreement described in subsection (a)(1), solely by vir-10
tue of being registered or filing notice of intent to register 11
as a digital commodity exchange, digital commodity 12
broker, or digital commodity dealer. 13
(c) D
EFINITIONS.—In this section, each term shall 14
have the meaning provided in the Commodity Exchange 15
Act or the regulations prescribed under such Act. 16
SEC. 108. INTERNATIONAL HARMONIZATION. 17
In order to promote effective and consistent global 18
regulation of digital assets, the Commodity Futures Trad-19
ing Commission and the Securities and Exchange Com-20
mission, as appropriate— 21
(1) shall consult and coordinate with foreign 22
regulatory authorities on the establishment of con-23
sistent international standards with respect to the 24
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regulation of digital assets, restricted digital assets, 1
and digital commodities; and 2
(2) may agree to such information-sharing ar-3
rangements as may be deemed to be necessary or 4
appropriate in the public interest or for the protec-5
tion of investors, customers, and users of digital as-6
sets. 7
SEC. 109. IMPLEMENTATION. 8
(a) G
LOBALRULEMAKINGTIMEFRAME.—Unless oth-9
erwise provided in this Act or an amendment made by this 10
Act, the Commodity Futures Trading Commission and the 11
Securities and Exchange Commission, or both, shall indi-12
vidually, and jointly where required, promulgate rules and 13
regulations required of each Commission under this Act 14
or an amendment made by this Act not later than 360 15
days after the date of enactment of this Act. 16
(b) R
ULES ANDREGISTRATIONBEFOREFINALEF-17
FECTIVEDATES.— 18
(1) I
N GENERAL.—In order to prepare for the 19
implementation of this Act, the Commodity Futures 20
Trading Commission and the Securities and Ex-21
change Commission may, before any effective date 22
provided in this Act— 23
(A) promulgate rules, regulations, or or-24
ders permitted or required by this Act; 25
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(B) conduct studies and prepare reports 1
and recommendations required by this Act; 2
(C) register persons under this Act; and 3
(D) exempt persons, agreements, contracts, 4
or transactions from provisions of this Act, 5
under the terms contained in this Act. 6
(2) L
IMITATION ON EFFECTIVENESS .—An ac-7
tion by the Commodity Futures Trading Commission 8
or the Securities and Exchange Commission under 9
paragraph (1) shall not become effective before the 10
effective date otherwise applicable to the action 11
under this Act. 12
TITLE II—DIGITAL ASSET 13
EXEMPTIONS 14
SEC. 201. EXEMPTED TRANSACTIONS IN DIGITAL ASSETS. 15
(a) I
NGENERAL.—The Securities Act of 1933 (15 16
U.S.C. 77a et seq.) is amended— 17
(1) in section 4(a), by adding at the end the 18
following: 19
‘‘(8) transactions involving the offer or sale of 20
units of a digital asset by a digital asset issuer, if— 21
‘‘(A) the aggregate amount of units of the 22
digital asset sold by the digital asset issuer in 23
reliance on the exemption provided under this 24
paragraph, during the 12-month period pre-25
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ceding the date of such transaction, including 1
the amount sold in such transaction, is not 2
more than $75,000,000 (as such amount is an-3
nually adjusted by the Commission to reflect 4
the change in the Consumer Price Index for All 5
Urban Consumers published by the Bureau of 6
Labor Statistics of the Department of Labor); 7
‘‘(B) with respect to a transaction involv-8
ing the purchase of units of a digital asset by 9
a person who is not an accredited investor, the 10
aggregate amount of all units of digital assets 11
purchased by such person during the 12-month 12
period preceding the date of such transaction, 13
including the unit of a digital asset purchased 14
in such transaction, does not exceed the greater 15
of— 16
‘‘(i) 10 percent of the person’s annual 17
income or joint income with that person’s 18
spouse or spousal equivalent; or 19
‘‘(ii) 10 percent of the person’s net 20
worth or joint net worth with the person’s 21
spouse or spousal equivalent; 22
‘‘(C) after the completion of the trans-23
action, the purchaser does not own more than 24
10 percent of the total amount of the units of 25
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the digital asset sold in reliance on the exemp-1
tion under this paragraph; 2
‘‘(D) the transaction does not involve the 3
offer or sale of any digital asset not offered as 4
part of an investment contract; 5
‘‘(E) the transaction does not involve the 6
offer or sale of a unit of a digital asset by a 7
digital asset issuer that— 8
‘‘(i) is not organized under the laws of 9
a State, a territory of the United States or 10
the District of Columbia; 11
‘‘(ii) is a development stage company 12
that either— 13
‘‘(I) has no specific business plan 14
or purpose; or 15
‘‘(II) has indicated that the busi-16
ness plan of the company is to merge 17
with or acquire an unidentified com-18
pany; 19
‘‘(iii) is an investment company, as 20
defined in section 3 of the Investment 21
Company Act of 1940 (15 U.S.C. 80a–3), 22
or is excluded from the definition of invest-23
ment company by section 3(b) or section 24
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3(c) of that Act (15 U.S.C. 80a–3(b) or 1
80a–3(c)); 2
‘‘(iv) is issuing fractional undivided 3
interests in oil or gas rights, or a similar 4
interest in other mineral rights; 5
‘‘(v) is, or has been, subject to any 6
order of the Commission entered pursuant 7
to section 12(j) of the Securities Exchange 8
Act of 1934 during the 5-year period be-9
fore the filing of the offering statement; or 10
‘‘(vi) is disqualified pursuant to sec-11
tion 230.262 of title 17, Code of Federal 12
Regulations; and 13
‘‘(F) the issuer meets the requirements of 14
section 4B(a).’’; and 15
(2) by inserting after section 4A the following: 16
‘‘SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIG-17
ITAL ASSET TRANSACTIONS. 18
‘‘(a) R
EQUIREMENTS FOR DIGITALASSET 19
I
SSUERS.— 20
‘‘(1) I
NFORMATION REQUIRED IN STATE -21
MENT.—A digital asset issuer offering or selling a 22
unit of digital asset in reliance on section 4(a)(8) 23
shall file with the Commission a statement con-24
taining the following information: 25
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‘‘(A) The name, legal status (including the 1
jurisdiction in which the issuer is organized and 2
the date of organization), and website of the 3
digital asset issuer. 4
‘‘(B) A certification that the digital asset 5
issuer meets the relevant requirements de-6
scribed under section 4(a)(8). 7
‘‘(C) An overview of the material aspects 8
of the offering. 9
‘‘(D) A description of the purpose and in-10
tended use of the offering proceeds. 11
‘‘(E) A description of the plan of distribu-12
tion of any unit of a digital asset that is to be 13
offered. 14
‘‘(F) A description of the material risks 15
surrounding ownership of a unit of a digital 16
asset. 17
‘‘(G) A description of exempt offerings 18
conducted within the past three years by the 19
digital asset issuer. 20
‘‘(H) A description of the digital asset 21
issuer and the current number of employees of 22
the digital asset issuer. 23
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‘‘(I) A description of any material trans-1
actions or relationships between the digital 2
asset issuer and affiliated persons. 3
‘‘(J) A description of exempt offerings con-4
ducted within the past three years. 5
‘‘(2) I
NFORMATION REQUIRED FOR PUR -6
CHASERS.—A digital asset issuer shall disclose the 7
information described under section 43 of the Secu-8
rities Exchange Act of 1934 on a freely accessible 9
public website. 10
‘‘(3) O
NGOING DISCLOSURE REQUIREMENTS .— 11
A digital asset issuer that has filed a statement 12
under paragraph (1) to offer and sell a unit of a dig-13
ital asset in reliance on section 4(a)(8) shall file the 14
following with the Commission: 15
‘‘(A) A
NNUAL REPORTS .—An annual re-16
port that includes any material changes to the 17
information described under paragraph (2) for 18
the current fiscal year and for any fiscal year 19
thereafter, unless the issuer is no longer obli-20
gated to file such annual report pursuant to 21
paragraph (4). 22
‘‘(B) S
EMIANNUAL REPORTS .—Along with 23
each annual report required under subpara-24
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graph (A), and separately six months there-1
after, a report containing— 2
‘‘(i) an updated description of the cur-3
rent state and timeline for the development 4
of the blockchain system to which the dig-5
ital asset relates, showing how and when 6
the blockchain system intends or intended 7
to be considered a functional network and 8
a decentralized network; 9
‘‘(ii) the amount of money raised by 10
the digital asset issuer in reliance on sec-11
tion 4(a)(8), how much of that money has 12
been spent, and the general categories and 13
amounts on which that money has been 14
spent; and 15
‘‘(iii) any material changes to the in-16
formation in the most recent annual re-17
port. 18
‘‘(C) C
URRENT REPORTS .—A current re-19
port shall be filed with the Commission reflect-20
ing any material changes to the information 21
previously reported to the Commission by the 22
digital asset issuer. 23
‘‘(4) T
ERMINATION OF REPORTING REQUIRE -24
MENTS.— 25
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‘‘(A) IN GENERAL.—The ongoing reporting 1
requirements under paragraph (3) shall not 2
apply to a digital asset issuer 180 days after 3
the end of the covered fiscal year. 4
‘‘(B) C
OVERED FISCAL YEAR DEFINED .— 5
In this paragraph, the term ‘covered fiscal year’ 6
means the first fiscal year of an issuer in which 7
the blockchain system to which the digital asset 8
relates is a functional network and certified to 9
be a decentralized network under section 44 of 10
the Securities Exchange Act of 1934. 11
‘‘(b) R
EQUIREMENTS FOR INTERMEDIARIES.— 12
‘‘(1) I
N GENERAL.—A person acting as an 13
intermediary in a transaction involving the offer or 14
sale of a unit of a digital asset in reliance on section 15
4(a)(8) shall— 16
‘‘(A) register with the Commission as a 17
broker under section 15(b) of the Securities Ex-18
change Act of 1934 (15 U.S.C. 78o(b)); and 19
‘‘(B) be a member of a national securities 20
association registered under section 15A of the 21
Securities Exchange Act of 1934 (15 U.S.C. 22
78o–3). 23
‘‘(2) P
URCHASER QUALIFICATION .— 24
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‘‘(A) IN GENERAL.—Each time, before ac-1
cepting any commitment (including any addi-2
tional commitment from the same person), an 3
intermediary or digital asset issuer shall have a 4
reasonable basis for believing that the pur-5
chaser satisfies the requirements of section 6
4(a)(8). 7
‘‘(B) R
ELIANCE ON PURCHASER ’S REP-8
RESENTATIONS.—For purposes of subpara-9
graph (A), an intermediary or digital asset 10
issuer may rely on a purchaser’s representa-11
tions concerning the purchaser’s annual income 12
and net worth and the amount of the pur-13
chaser’s other investments made, unless the 14
intermediary or digital asset issuer has reason 15
to question the reliability of the representation. 16
‘‘(C) R
ELIANCE ON INTERMEDIARY .—For 17
purposes of determining whether a transaction 18
meets the requirements described under sub-19
paragraph (A) through (C) of section 4(a)(8), a 20
digital asset issuer may rely on the efforts of an 21
intermediary. 22
‘‘(c) A
DDITIONALPROVISIONS.— 23
‘‘(1) A
CCEPTANCE OF WRITTEN OFFERS ; 24
SALES.—After an issuer files a statement under 25
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paragraph (1) to offer and sell a digital asset in reli-1
ance on section 4(a)(8)— 2
‘‘(A) written offers of the digital asset may 3
be made; and 4
‘‘(B) the issuer may sell the digital assets 5
in reliance on section 4(a)(8), if such sales meet 6
all other requirements. 7
‘‘(2) S
OLICITATION OF INTEREST.— 8
‘‘(A) I
N GENERAL.—At any time before 9
the filing of a statement under paragraph (1), 10
a digital asset issuer may communicate orally 11
or in writing to determine whether there is any 12
interest in a contemplated offering. Such com-13
munications are deemed to be an offer of a unit 14
of a digital asset for sale for purposes of the 15
antifraud provisions of the Federal securities 16
laws. No solicitation or acceptance of money or 17
other consideration, nor of any commitment, 18
binding or otherwise, from any person is per-19
mitted until the statement is filed. 20
‘‘(B) C
ONDITIONS.—In any communication 21
described under subparagraph (A), the digital 22
asset issuer shall— 23
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‘‘(i) state that no money or other con-1
sideration is being solicited, and if sent in 2
response, will not be accepted; 3
‘‘(ii) state that no offer to buy a unit 4
of a digital asset can be accepted and no 5
part of the purchase price can be received 6
until the statement is filed and then only 7
through an intermediary; and 8
‘‘(iii) state that a person’s indication 9
of interest involves no obligation or com-10
mitment of any kind. 11
‘‘(C) I
NDICATIONS OF INTEREST .—Any 12
written communication described under sub-13
paragraph (A) may include a means by which 14
a person may indicate to the digital asset issuer 15
that such person is interested in a potential of-16
fering. A digital asset issuer may require a 17
name, address, telephone number, or email ad-18
dress in any response form included with a 19
communication described under subparagraph 20
(A). 21
‘‘(3) D
ISQUALIFICATION PROVISIONS .—The 22
Commission shall issue rules to apply the disquali-23
fication provisions under section 230.262 of title 17, 24
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Code of Federal Regulations, to the exemption pro-1
vided under section 4(a)(8). 2
‘‘(4) D
IGITAL ASSETS DEEMED RESTRICTED 3
DIGITAL ASSET.—A unit of a digital asset acquired 4
directly or indirectly from the digital asset issuer in 5
reliance on the exemption provided under section 6
4(a)(8) is deemed a restricted digital asset.’’. 7
(b) A
DDITIONALEXEMPTIONS.— 8
(1) C
ERTAIN REGISTRATION REQUIREMENTS .— 9
Section 12(g)(6) of the Securities Exchange Act of 10
1934 (15 U.S.C. 78l(g)(6)) is amended by striking 11
‘‘under section 4(6)’’ and inserting ‘‘under section 12
4(a)(6) or 4(a)(8)’’. 13
(2) E
XEMPTION FROM STATE REGULATION .— 14
Section 18(b)(4) of the Securities Act of 1933 (15 15
U.S.C. 77r(b)(4)) is amended— 16
(A) in section (B), by striking ‘‘section 17
4(4)’’ and inserting ‘‘section 4(a)(4)’’; 18
(B) in section (C), by striking ‘‘section 19
4(6)’’ and inserting ‘‘section 4(a)(6)’’; 20
(C) in subparagraph (F)— 21
(i) by striking ‘‘section 4(2)’’ each 22
place such term appears and inserting 23
‘‘section 4(a)(2)’’; 24
(ii) by striking ‘‘or’’ at the end; 25
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(D) in subparagraph (G), by striking the 1
period and inserting ‘‘; or’’; and 2
(E) by adding at the end the following: 3
‘‘(H) section 4(a)(8).’’. 4
SEC. 202. REQUIREMENTS TO TRANSACT IN CERTAIN DIG-5
ITAL ASSETS. 6
Title I of the Securities Exchange Act of 1934 (15 7
U.S.C. 78a et seq.) is amended by adding at the end the 8
following: 9
‘‘SEC. 42. REQUIREMENTS TO TRANSACT IN CERTAIN DIG-10
ITAL ASSETS. 11
‘‘(a) T
RANSACTIONS INCERTAINRESTRICTEDDIG-12
ITALASSETS.— 13
‘‘(1) I
N GENERAL.—Notwithstanding any other 14
provision of law, subject to paragraph (2), a re-15
stricted digital asset may be offered and sold on an 16
alternative trading system by any person other than 17
a digital asset issuer if, at the time of such offer or 18
sale, any blockchain system to which the restricted 19
digital asset relates is a functional network and the 20
information described in section 43 has been cer-21
tified and made publicly available for any blockchain 22
system to which the restricted digital asset relates. 23
‘‘(2) A
DDITIONAL RULES FOR RELATED AND 24
AFFILIATED PERSONS .—A restricted digital asset 25
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owned by a related person or an affiliated person 1
may only be offered or sold after 12 months after 2
the later of— 3
‘‘(A) the date on which such restricted dig-4
ital asset was acquired; or 5
‘‘(B) the digital asset maturity date. 6
‘‘(b) T
RANSACTIONS INCERTAINDIGITALCOMMOD-7
ITIES.— 8
‘‘(1) I
N GENERAL.—Subject to paragraph (2), a 9
digital commodity may be offered and sold by any 10
person other than a digital asset issuer. 11
‘‘(2) R
ULES FOR RELATED AND AFFILIATED 12
PERSONS.—A digital commodity may only be offered 13
or sold by a related person or an affiliated person 14
if— 15
‘‘(A) the holder of the digital commodity 16
owned the digital commodity while it was a re-17
stricted digital asset for 12 months after the 18
later of— 19
‘‘(i) the date on which such restricted 20
digital asset was acquired; or 21
‘‘(ii) the digital asset maturity date; 22
‘‘(B) any blockchain system to which the 23
digital commodity relates is certified to be a de-24
centralized network under section 44; and 25
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‘‘(C) the digital commodity is offered or 1
sold on or subject to the rules of a digital com-2
modity exchange registered under section 5i of 3
the Commodity Exchange Act. 4
‘‘(3) N
OT A SECURITY.— 5
‘‘(A) I
N GENERAL.—Except as provided 6
under subparagraph (B), for purposes of the se-7
curities laws, a transaction in a digital com-8
modity made in compliance with paragraph (1) 9
or (2) shall not be a transaction in a security. 10
‘‘(B) E
XCEPTION.—Subparagraph (A) 11
does not apply to a transaction in a digital com-12
modity if the transaction— 13
‘‘(i) is a mixed digital asset trans-14
action; or 15
‘‘(ii) is made pursuant to an invest-16
ment contract or in conjunction with any 17
other security. 18
‘‘(c) S
ALESRESTRICTIONS FOR AFFILIATEDPER-19
SONS.—A digital asset may be offered or sold by an affili-20
ated person under subsection (a) or (b) if— 21
‘‘(1) the aggregate amount of such digital as-22
sets sold in any 3-month period by the affiliated per-23
son is not greater than one percent of the digital as-24
sets then outstanding; or 25
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‘‘(2) the affiliated person promptly, following 1
the placement of an order to sell one percent of the 2
digital assets then outstanding during any 3-month 3
period, reports the sale to— 4
‘‘(A) the Commodity Futures Trading 5
Commission, in the case of an order to sell a 6
digital commodity on or subject to the rules of 7
a digital commodity exchange; or 8
‘‘(B) the Securities and Exchange Commis-9
sion, in the case of a sell order for a restricted 10
digital asset placed with an alternative trading 11
system. 12
‘‘(d) T
REATMENT OFCERTAINENDUSERDISTRIBU-13
TIONSUNDER THESECURITIESLAWS.— 14
‘‘(1) I
N GENERAL.—With respect to a digital 15
asset, an end user distribution is described under 16
this paragraph if— 17
‘‘(A) each blockchain system to which such 18
digital asset relates is a functional network; and 19
‘‘(B) with respect to the digital asset and 20
each blockchain system to which such digital 21
asset relates, the information described in sec-22
tion 43 has been certified and made publicly 23
available. 24
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‘‘(2) NOT A SECURITY.—For purposes of the 1
securities laws, an end user distribution described 2
under paragraph (1) shall not be a transaction in a 3
security. 4
‘‘(3) E
XEMPTION.—Section 5 of the Securities 5
Act of 1933 (15 U.S.C. 77e) shall not apply to an 6
end user distribution described under paragraph (1) 7
or a transaction in a unit of digital asset issued in 8
such a distribution.’’. 9
SEC. 203. ENHANCED DISCLOSURE REQUIREMENTS. 10
Title I of the Securities Exchange Act of 1934 (15 11
U.S.C. 78a et seq.), as amended by section 202, is further 12
amended by adding at the end the following: 13
‘‘SEC. 43. ENHANCED DISCLOSURE REQUIREMENTS WITH 14
RESPECT TO DIGITAL ASSETS. 15
‘‘(a) D
ISCLOSUREINFORMATION.—With respect to a 16
digital asset and any blockchain system to which the dig-17
ital asset relates, the information described under this sec-18
tion is as follows: 19
‘‘(1) S
OURCE CODE.—The source code for any 20
blockchain system to which the digital asset relates. 21
‘‘(2) T
RANSACTION HISTORY.—A description of 22
the steps necessary to independently access, search, 23
and verify the transaction history of any blockchain 24
system to which the digital asset relates. 25
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‘‘(3) DIGITAL ASSET ECONOMICS .—A descrip-1
tion of the purpose of any blockchain system to 2
which the digital asset relates and the operation of 3
any such blockchain system, including— 4
‘‘(A) information explaining the launch 5
and supply process, including the number of 6
digital assets to be issued in an initial alloca-7
tion, the total number of digital assets to be 8
created, the release schedule for the digital as-9
sets, and the total number of digital assets then 10
outstanding; 11
‘‘(B) information on any applicable con-12
sensus mechanism or process for validating 13
transactions, method of generating or mining 14
digital assets, and any process for burning or 15
destroying digital assets on the blockchain sys-16
tem; 17
‘‘(C) an explanation of governance mecha-18
nisms for implementing changes to the 19
blockchain system or forming consensus among 20
holders of such digital assets; and 21
‘‘(D) sufficient information for a third 22
party to create a tool for verifying the trans-23
action history of the digital asset. 24
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‘‘(4) PLAN OF DEVELOPMENT .—The current 1
state and timeline for the development of any 2
blockchain system to which the digital asset relates, 3
showing how and when the blockchain system in-4
tends or intended to be considered a functional net-5
work and decentralized network. 6
‘‘(5) D
EVELOPMENT DISCLOSURES .—A list of 7
all persons who are related persons or affiliated per-8
sons who have been issued a unit of a digital asset 9
by a digital asset issuer or have a right to a unit of 10
a digital asset from a digital asset issuer. 11
‘‘(6) R
ISK FACTOR DISCLOSURES .—Where ap-12
propriate, provide under the caption ‘Risk Factors’ 13
a description of the material risks surrounding own-14
ership of a unit of a digital asset. This discussion 15
shall be organized logically with relevant headings 16
and each risk factor shall be set forth under a sub-17
caption that adequately describes the risk. 18
‘‘(b) C
ERTIFICATION.—With respect to a digital asset 19
and any blockchain system to which the digital asset re-20
lates, the information required to be made available under 21
this section has been certified if the digital asset issuer, 22
an affiliated person, or a decentralized governance system 23
(or, if no digital asset issuer, affiliated person, or decen-24
tralized governance system are identifiable, an alternative 25
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trading system or digital commodity exchange) certifies on 1
a quarterly basis to the Securities and Exchange Commis-2
sion and Commodity Futures Trading Commission that 3
the information is true and correct.’’. 4
SEC. 204. CERTIFICATION OF CERTAIN DIGITAL ASSETS. 5
Title I of the Securities Exchange Act of 1934 (15 6
U.S.C. 78a et seq.), as amended by section 203, is further 7
amended by adding at the end the following: 8
‘‘SEC. 44. CERTIFICATION OF CERTAIN DIGITAL ASSETS. 9
‘‘(a) C
ERTIFICATION.—Any person may certify to the 10
Securities and Exchange Commission that the blockchain 11
system to which a digital asset relates is a decentralized 12
network. 13
‘‘(b) F
ILINGREQUIREMENTS.—A certification de-14
scribed under subsection (a) shall be filed with the Com-15
mission, and include— 16
‘‘(1) information regarding the person making 17
the certification; 18
‘‘(2) a description of the blockchain system and 19
the digital asset which relates to such blockchain 20
system, including— 21
‘‘(A) the operation of the blockchain sys-22
tem; 23
‘‘(B) the functionality of the related digital 24
asset; 25
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‘‘(C) any decentralized governance system 1
which relates to the blockchain system; and 2
‘‘(D) the process to develop consensus or 3
agreement within such decentralized governance 4
system; 5
‘‘(3) a description of the development of the 6
blockchain system and the digital asset which relates 7
to the blockchain system, including— 8
‘‘(A) a history of the development of the 9
blockchain system and the digital asset which 10
relates to such blockchain system; 11
‘‘(B) a description of the issuance process 12
for the digital asset which relates to the 13
blockchain system; 14
‘‘(C) information identifying the digital 15
asset issuer of the digital asset which relates to 16
the blockchain system; and 17
‘‘(D) a list of any affiliated person related 18
to the digital asset issuer; 19
‘‘(4) an analysis of the factors on which such 20
person based the certification that the blockchain 21
system is a decentralized network, including— 22
‘‘(A) an explanation of the protections and 23
prohibitions available during the previous 12 24
months against any one person being able to— 25
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‘‘(i) control or materially alter the 1
blockchain system; 2
‘‘(ii) exclude any other person from 3
using or participating on the blockchain 4
system; and 5
‘‘(iii) exclude any other person from 6
participating in a decentralized governance 7
system; 8
‘‘(B) information regarding the beneficial 9
ownership of the digital asset which relates to 10
such blockchain system and any the distribution 11
of voting power in any decentralized governance 12
system during the previous 12 months; 13
‘‘(C) information regarding the history of 14
upgrades to the source code for such blockchain 15
system during the previous 3 months, includ-16
ing— 17
‘‘(i) a description of any consensus or 18
agreement process utilized to process or 19
approve changes to the source code; 20
‘‘(ii) a list of any material changes to 21
the source code, the purpose and effect of 22
the changes, and the contributor of the 23
changes, if known; and 24
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‘‘(iii) any changes to the source code 1
made by the digital asset issuer, a related 2
person, or an affiliated person; 3
‘‘(D) information regarding any activities 4
conducted to market the digital asset which re-5
lates to the blockchain system during the pre-6
vious 3 months by the digital asset issuer or an 7
affiliated person of the digital asset issuer; and 8
‘‘(E) information regarding any issuance of 9
a unit of the digital asset which relates to such 10
blockchain system during the previous 12 11
months; 12
‘‘(5) with respect to a blockchain system for 13
which a certification has previously been rebutted or 14
withdrawn under this section, specific information 15
relating to the analysis provided in subsection (f)(2) 16
or (g)(3), as applicable, in connection with such re-17
buttal or withdrawal. 18
‘‘(c) R
EBUTTABLEPRESUMPTION.—The Commission 19
may rebut a certification described under subsection (a) 20
with respect to a blockchain system if the Commission, 21
within 30 days of receiving such certification, determines 22
that the blockchain system is not a decentralized network. 23
‘‘(d) C
ERTIFICATIONREVIEW.— 24
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‘‘(1) IN GENERAL.—Any blockchain system that 1
relates to a digital asset for which a certification has 2
been made under subsection (a) shall be considered 3
a decentralized network 30 days after the date on 4
which the Commission receives a certification under 5
subsection (a), unless the Commission notifies the 6
person who made the certification within such time 7
that the Commission is staying the certification due 8
to— 9
‘‘(A) an inadequate explanation by the per-10
son making the certification; or 11
‘‘(B) any novel or complex issues which re-12
quire additional time to consider. 13
‘‘(2) P
UBLIC NOTICE.—The Commission shall 14
make the following available to the public and pro-15
vide a copy to the Commodity Futures Trading 16
Commission: 17
‘‘(A) Each certification received under sub-18
section (a). 19
‘‘(B) Each stay of the Commission under 20
this section, and the reasons therefore. 21
‘‘(C) Any response from a person making 22
a certification under subsection (a) to a stay of 23
the certification by the Commission. 24
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‘‘(3) CONSOLIDATION.—The Commission may 1
consolidate and treat as one submission multiple cer-2
tifications made under subsection (a) for the same 3
blockchain system which relates to a digital asset 4
which are received during the review period provided 5
under this subsection. 6
‘‘(e) S
TAY OFCERTIFICATION.— 7
‘‘(1) I
N GENERAL.—A notification by the Com-8
mission pursuant to subsection (d)(1) shall stay the 9
certification once for up to an additional 90 days 10
from the date of the notification. 11
‘‘(2) P
UBLIC COMMENT PERIOD .—Before the 12
end of the 30-day period described under subsection 13
(d)(1), the Commission may begin a public comment 14
period of at least 30 days in conjunction with a stay 15
under this section. 16
‘‘(f) D
ISPOSITION OFCERTIFICATION.— 17
‘‘(1) I
N GENERAL.—A certification made under 18
subsection (a) shall— 19
‘‘(A) become effective— 20
‘‘(i) upon the publication of a notifica-21
tion from the Commission to the person 22
who made the certification that the Com-23
mission does not object to the certification; 24
or 25
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‘‘(ii) at the expiration of the certifi-1
cation review period; and 2
‘‘(B) not become effective upon the publi-3
cation of a notification from the Commission to 4
the person who made the certification that the 5
Commission has rebutted the certification. 6
‘‘(2) D
ETAILED ANALYSIS INCLUDED WITH RE -7
BUTTAL.—The Commission shall include, with each 8
publication of a notification of rebuttal described 9
under paragraph (1)(B), a detailed analysis of the 10
factors on which the decision was based. 11
‘‘(g) W
ITHDRAWAL OFCERTIFICATION.— 12
‘‘(1) D
ETERMINATION BY A DIGITAL COM -13
MODITY EXCHANGE .—With respect to a certification 14
of a blockchain system that becomes effective pursu-15
ant to subsection (f), if a digital commodity ex-16
change determines that the blockchain system may 17
not be a decentralized network, the digital com-18
modity exchange shall notify the Commodity Futures 19
Trading Commission of such determination. 20
‘‘(2) W
ITHDRAWAL PROCESS .—With respect to 21
each notification received under paragraph (1), the 22
Commodity Futures Trading Commission shall ini-23
tiate a withdrawal process under which the Com-24
modity Futures Trading Commission shall— 25
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‘‘(A) publish a notice announcing the pro-1
posed withdrawal; 2
‘‘(B) provide a 30-day comment period 3
with respect to the proposed withdrawal; and 4
‘‘(C) after the end of the 30-day comment 5
required under subparagraph (B), publish ei-6
ther— 7
‘‘(i) a notification of withdrawal of the 8
applicable certification; or 9
‘‘(ii) a notice that the Commodity Fu-10
tures Trading Commission is not with-11
drawing the certification. 12
‘‘(3) D
ETAILED ANALYSIS REQUIRED .—The 13
Commodity Futures Trading Commission shall in-14
clude, with each publication of a notification of with-15
drawal described under paragraph (2)(C)(i), a de-16
tailed analysis of the factors on which the decision 17
was based. 18
‘‘(h) R
ECERTIFICATION.—With respect to a 19
blockchain system for which a certification has been rebut-20
ted or withdrawn under this section, no person may make 21
a certification under subsection (a) with respect to such 22
blockchain system during the 90-day period beginning on 23
the date of such rebuttal or withdrawal. 24
‘‘(i) A
PPEAL OFREBUTTAL ORWITHDRAWAL.— 25
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‘‘(1) IN GENERAL.—If a certification is rebut-1
ted or withdrawn under this section, the person 2
making such certification may appeal the decision to 3
the United States Court of Appeals for the District 4
of Columbia, not later than 60 days after the notice 5
of rebuttal or withdrawal is made. 6
‘‘(2) R
EVIEW.—In an appeal under paragraph 7
(1), the court shall have de novo review of the deter-8
mination to rebut or withdraw the certification. 9
‘‘(j) L
IABILITY FORPROVIDINGFALSEINFORMA-10
TION.—It shall be unlawful for any person to provide false 11
information in support of a certification under this section 12
if such person knowingly or reasonably should have known 13
such information was false.’’. 14
SEC. 205. EFFECTIVE DATE. 15
Unless otherwise provided in this title, this title and 16
the amendments made by this title shall take effect 360 17
days after the date of enactment of this Act, except that, 18
to the extent a provision of this title requires a rule-19
making, the provision shall take effect on the later of— 20
(1) 360 days after the date of enactment of this 21
Act; or 22
(2) 60 days after the publication in the Federal 23
Register of the final rule implementing the provision. 24
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TITLE III—REGISTRATION FOR 1
DIGITAL ASSET INTER-2
MEDIARIES AT THE SECURI-3
TIES AND EXCHANGE COM-4
MISSION 5
SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND 6
OTHER DIGITAL ASSETS. 7
(a) S
ECURITIESACT OF1933.—Section 2(a)(1) of 8
the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) is 9
amended by adding at the end the following: ‘‘The term 10
does not include a digital commodity or permitted pay-11
ment stablecoin.’’. 12
(b) S
ECURITIESEXCHANGEACT OF1934.—Section 13
3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 14
78c(a)) is amended— 15
(1) in paragraph (1), by adding at the end the 16
following: ‘‘The term ‘exchange’ does not include a 17
digital asset trading system, blockchain protocol, or 18
any person or group of persons solely because of 19
their development of a blockchain protocol.’’; 20
(2) in paragraph (2), by adding at the end the 21
following: ‘‘A digital asset trading system is not a 22
‘facility’ of an exchange.’’; 23
(3) in paragraph (4)(A), by inserting ‘‘, other 24
than restricted digital assets,’’ after ‘‘securities’’; 25
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(4) in paragraph (5)(A), by inserting ‘‘re-1
stricted digital assets or’’ after ‘‘not including’’; 2
(5) in paragraph (26) by inserting ‘‘(other than 3
a notice-registered digital asset clearing agency)’’ 4
after ‘‘or registered clearing agency’’; 5
(6) in paragraph (28) by inserting ‘‘(other than 6
a notice-registered digital asset clearing agency)’’ 7
after ‘‘registered clearing agency’’; 8
(7) in paragraph (10), by adding at the end the 9
following: ‘‘Subject to subsection (i), the term does 10
not include a digital commodity or permitted pay-11
ment stablecoin.’’; 12
(8) by redesignating the second paragraph (80) 13
(relating to funding portals) as paragraph (81); and 14
(9) by adding at the end the following: 15
‘‘(81) B
ANK SECRECY ACT .—The term ‘Bank 16
Secrecy Act’ means— 17
‘‘(A) section 21 of the Federal Deposit In-18
surance Act (12 U.S.C. 1829b); 19
‘‘(B) chapter 2 of title I of Public Law 91– 20
508 (12 U.S.C. 1951 et seq.); and 21
‘‘(C) subchapter II of chapter 53 of title 22
31, United States Code. 23
‘‘(82) D
IGITAL ASSET BROKER.—The term ‘dig-24
ital asset broker’— 25
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‘‘(A) means any person engaged in the 1
business of effecting transactions in restricted 2
digital assets for the account of others; and 3
‘‘(B) does not include a blockchain protocol 4
or a person or group of persons solely because 5
of their development of a blockchain protocol. 6
‘‘(83) D
IGITAL ASSET DEALER.—The term ‘dig-7
ital asset dealer’— 8
‘‘(A) means any person engaged in the 9
business of buying and selling digital assets for 10
such person’s own account through a broker or 11
otherwise; and 12
‘‘(B) does not include— 13
‘‘(i) a person that buys or sells digital 14
assets for such person’s own account, ei-15
ther individually or in a fiduciary capacity, 16
but not as a part of a regular business; or 17
‘‘(ii) a blockchain protocol or a person 18
or group of persons solely because of their 19
development of a blockchain protocol. 20
‘‘(84) D
IGITAL ASSET TRADING SYSTEM .—The 21
term ‘digital asset trading system’— 22
‘‘(A) means any organization, association, 23
person, or group of persons, whether incor-24
porated or unincorporated, that constitutes, 25
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maintains, or provides a market place or facili-1
ties for bringing together purchasers and sellers 2
of restricted digital assets or for otherwise per-3
forming with respect to digital assets the func-4
tions commonly performed by a stock exchange 5
within the meaning of section 240.3b–16 of title 6
17, Code of Federal Regulations, as in effect on 7
the date of enactment of this paragraph; and 8
‘‘(B) does not include a blockchain protocol 9
or a person or group of persons solely because 10
of their development of a blockchain protocol. 11
‘‘(85) M
IXED DIGITAL ASSET TRANSACTION .— 12
The term ‘mixed digital asset transaction’ means an 13
agreement, contract, or transaction involving a re-14
stricted digital asset and a digital commodity. 15
‘‘(86) N
OTICE-REGISTERED DIGITAL ASSET 16
CLEARING AGENCY .—The term ‘notice-registered 17
digital asset clearing agency’ means a clearing agen-18
cy that has registered with the Commission pursuant 19
to section 17A(b)(9). 20
‘‘(87) A
DDITIONAL DIGITAL ASSET -RELATED 21
TERMS.— 22
‘‘(A) S
ECURITIES ACT OF 1933 .—The 23
terms ‘affiliated person’, ‘blockchain system’, 24
‘decentralized governance system’, ‘decentral-25
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ized network’, ‘digital asset’, ‘digital asset 1
issuer’, ‘digital asset maturity date’, ‘end user 2
distribution’, ‘functional network’, ‘mixed dig-3
ital asset transaction’, ‘permitted payment 4
stablecoin’, ‘related person’, ‘restricted digital 5
asset’, and ‘source code’ have the meaning 6
given those terms, respectively, under section 7
2(a) of the Securities Act of 1933 (15 U.S.C. 8
77b(a)). 9
‘‘(B) C
OMMODITY EXCHANGE ACT .—The 10
terms ‘digital commodity’, ‘digital commodity 11
broker’, ‘digital commodity dealer’, and ‘digital 12
commodity exchange’ have the meaning given 13
those terms, respectively, under section 1a of 14
the Commodity Exchange Act (7 U.S.C. 1a).’’. 15
(c) I
NVESTMENTADVISERSACT OF1940.—Section 16
202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 17
80b–2) is amended— 18
(1) in paragraph (18), by adding at the end the 19
following: ‘‘The term does not include a digital com-20
modity or permitted payment stablecoin.’’; 21
(2) by redesignating the second paragraph (29) 22
(relating to commodity pools) as paragraph (31); 23
(3) by adding at the end, the following: 24
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‘‘(32) DIGITAL ASSET-RELATED TERMS .—The 1
terms ‘digital commodity’ and ‘permitted payment 2
stablecoin’ have the meaning given those terms, re-3
spectively, under section 2(a) of the Securities Act 4
of 1933 (15 U.S.C. 77b(a)).’’. 5
(d) I
NVESTMENTCOMPANYACT OF1940.—Section 6
2(a) of the Investment Company Act of 1940 (15 U.S.C. 7
80a–2) is amended— 8
(1) in paragraph (36), by adding at the end the 9
following: ‘‘The term does not include a digital com-10
modity or permitted payment stablecoin.’’; and 11
(2) by adding at the end the following: 12
‘‘(55) D
IGITAL ASSET-RELATED TERMS .—The 13
terms ‘digital commodity’ and ‘permitted payment 14
stablecoin’ have the meaning given those terms, re-15
spectively, under section 2(a) of the Securities Act 16
of 1933 (15 U.S.C. 77b(a)).’’. 17
SEC. 302. ANTIFRAUD AUTHORITY OVER PERMITTED PAY-18
MENT STABLECOINS. 19
Section 10 of the Securities Exchange Act of 1934 20
(15 U.S.C. 78j) is amended— 21
(1) by moving subsection (c) so as to appear 22
after subsection (b); 23
(2) by designating the undesignated matter at 24
the end of that section as subsection (d); and 25
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(3) by adding at the end the following: 1
‘‘(e)(1) Rules promulgated under subsection (b) that 2
prohibit fraud, manipulation, or insider trading (but not 3
rules imposing or specifying reporting or recordkeeping re-4
quirements, procedures, or standards as prophylactic 5
measures against fraud, manipulation, or insider trading), 6
and judicial precedents decided under subsection (b) and 7
rules promulgated thereunder that prohibit fraud, manip-8
ulation, or insider trading, shall apply to permitted pay-9
ment stablecoins with respect to those circumstances in 10
which the permitted payment stablecoins are brokered, 11
traded, or custodied by a broker, dealer, digital asset 12
broker, or digital asset dealer or through an alternative 13
trading system or digital asset trading platform to the 14
same extent as they apply to securities. 15
‘‘(2) Judicial precedents decided under section 17(a) 16
of the Securities Act of 1933 and sections 9, 15, 16, 20, 17
and 21A of this title, and judicial precedents decided 18
under applicable rules promulgated under such sections, 19
shall apply to permitted payment stablecoins with respect 20
to those circumstances in which the permitted payment 21
stablecoins are brokered, traded, or custodied by a digital 22
asset broker, digital asset dealer, or digital asset trading 23
platform to the same extent as they apply to securities. 24
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‘‘(3) Nothing in this subsection may be construed to 1
provide the Commission authority to make any rule, regu-2
lation, requirement, or obligation on a permitted payment 3
stablecoin issuer regarding the operations of a permitted 4
payment stablecoin issuer or a permitted payment 5
stablecoin, including requirements or obligations regard-6
ing— 7
‘‘(A) design; 8
‘‘(B) structure; 9
‘‘(C) issuance; 10
‘‘(D) redemption; 11
‘‘(E) financial resources; 12
‘‘(F) collateral; or 13
‘‘(G) any other aspect of the operation of a per-14
mitted payment stablecoin issuer or permitted pay-15
ment stablecoin.’’. 16
SEC. 303. REGISTRATION OF DIGITAL ASSET TRADING SYS-17
TEMS. 18
Section 6 of the Securities Exchange Act of 1934 (15 19
U.S.C. 78f) is amended by adding at the end the following: 20
‘‘(m) D
IGITALASSETTRADINGSYSTEM.— 21
‘‘(1) I
N GENERAL.—It shall be unlawful for any 22
digital asset trading system to make use of the mails 23
or any means or instrumentality of interstate com-24
merce within or subject to the jurisdiction of the 25
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United States to effect any transaction in a digital 1
asset, unless such digital asset trading system is reg-2
istered with the Commission. 3
‘‘(2) A
PPLICATION.—A person desiring to reg-4
ister as a digital asset trading system shall submit 5
to the Commission an application in such form and 6
containing such information as the Commission may 7
require for the purpose of making the determina-8
tions required for approval. 9
‘‘(3) E
XEMPTIONS.—A digital asset trading sys-10
tem that offers or seeks to offer at least one digital 11
asset shall not be required to register under this sec-12
tion (and subparagraph (A) shall not apply to such 13
digital asset trading system) if the trading system 14
satisfies any of the exemptions set forth in section 15
240.3b–16(b) of title 17, Code of Federal Regula-16
tions.’’. 17
SEC. 304. REQUIREMENTS FOR DIGITAL ASSET TRADING 18
SYSTEMS. 19
Title I of the Securities Exchange Act of 1934 (15 20
U.S.C. 78a et seq.) is amended by inserting after section 21
6 the following: 22
‘‘SEC. 6A. REQUIREMENTS FOR DIGITAL ASSET TRADING 23
SYSTEMS. 24
‘‘(a) H
OLDING OFCUSTOMERASSETS.— 25
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‘‘(1) IN GENERAL.—Subject to paragraph (2), a 1
digital asset trading system, in its capacity as such, 2
may not hold custody of customer money, assets, or 3
property. 4
‘‘(2) C
USTODY IN OTHER CAPACITY .—Nothing 5
in this Act shall prohibit a person registered as a 6
digital asset trading system from holding custody of 7
customer money, assets, or property in any other 8
permitted capacity, including as a digital asset 9
broker or digital asset dealer, in compliance with the 10
requirements of section 15H. 11
‘‘(b) R
ULEMAKING.—The Commission shall prescribe 12
rules for digital asset trading systems relating to the fol-13
lowing: 14
‘‘(1) N
OTICE.—Notice to the Commission of the 15
initial operation of a digital asset trading system or 16
any material change to the operation of the digital 17
asset trading system. 18
‘‘(2) O
RDER DISPLAY.—The thresholds at 19
which a digital asset trading system is required to 20
display the orders of the digital asset trading sys-21
tem, and the manner of such display. 22
‘‘(3) F
AIR ACCESS.—The thresholds at which a 23
digital asset trading system is required to have poli-24
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cies regarding providing fair access to the digital 1
asset trading system. 2
‘‘(4) C
APACITY, INTEGRITY, AND SECURITY OF 3
AUTOMATED SYSTEMS .—Policies and procedures rea-4
sonably designed to ensure the capacity, integrity, 5
and security of the digital asset trading system, tak-6
ing into account the particular nature of digital 7
asset trading systems. 8
‘‘(5) E
XAMINATIONS, INSPECTIONS, AND INVES-9
TIGATIONS.—The examination and inspection of the 10
premises, systems, and records of the digital asset 11
trading system by the Commission or by a self-regu-12
latory organization of which such digital asset trad-13
ing system is a member. 14
‘‘(6) R
ECORDKEEPING.—The making, keeping 15
current, and preservation of records related to trad-16
ing activity on the digital asset trading system. 17
‘‘(7) R
EPORTING.—The reporting of trans-18
actions in digital assets that occur through the dig-19
ital asset trading system. 20
‘‘(8) P
ROCEDURES.—The establishment of ade-21
quate written safeguards and written procedures to 22
protect confidential trading information. 23
‘‘(c) N
AMEREQUIREMENT.—A digital asset trading 24
system may not use the word ‘exchange’ in the name of 25
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the digital asset trading system, unless the digital asset 1
trading system— 2
‘‘(1) is operated by a registered national securi-3
ties exchange; and 4
‘‘(2) is clearly indicated as being provided out-5
side of the system’s capacity as a national securities 6
exchange. 7
‘‘(d) T
REATMENT UNDER THE BANKSECRECY 8
A
CT.—A digital asset trading system shall be treated as 9
a financial institution for purposes of the Bank Secrecy 10
Act.’’. 11
SEC. 305. REGISTRATION OF DIGITAL ASSET BROKERS AND 12
DIGITAL ASSET DEALERS. 13
The Securities Exchange Act of 1934 (15 U.S.C. 78a 14
et seq.) is amended by inserting after section 15G the fol-15
lowing: 16
‘‘SEC. 15H. REGISTRATION OF DIGITAL ASSET BROKERS 17
AND DIGITAL ASSET DEALERS. 18
‘‘(a) R
EGISTRATION.— 19
‘‘(1) I
N GENERAL.—It shall be unlawful for any 20
digital asset broker or digital asset dealer (other 21
than a natural person associated with a digital asset 22
broker or digital asset dealer, and other than such 23
a digital asset broker or digital asset dealer whose 24
business is exclusively intrastate and who does not 25
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make use of any facility of a digital asset trading 1
platform) to make use of the mails or any means or 2
instrumentality of interstate commerce to effect any 3
transactions in, or to induce or attempt to induce 4
the purchase or sale of, any digital asset unless such 5
digital asset broker or digital asset dealer is reg-6
istered in accordance with this section. 7
‘‘(2) A
PPLICATION.—A person desiring to reg-8
ister as a digital asset broker or digital asset dealer 9
shall submit to the Commission an application in 10
such form and containing such information as the 11
Commission may require for the purpose of making 12
the determinations required for approval. 13
‘‘(b) N
ATIONALSECURITIESASSOCIATIONMEMBER-14
SHIP.— 15
‘‘(1) I
N GENERAL.—A digital asset broker or 16
digital asset dealer may not register or maintain reg-17
istration under this section unless such digital asset 18
broker or digital asset dealer is a member of a na-19
tional securities association registered under section 20
15A. 21
‘‘(2) E
XCEPTION.—A digital asset broker or 22
digital asset dealer may register under this section 23
without obtaining membership in a national securi-24
ties association until the end of the 360-day period 25
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beginning on the date the first national securities as-1
sociation adopts rules to admit digital asset brokers 2
or digital asset dealers as members. 3
‘‘(c) A
DDITIONALREGISTRATIONSWITH THECOM-4
MODITYFUTURESTRADINGCOMMISSION.—A registered 5
digital asset broker or digital asset dealer shall be per-6
mitted to maintain any other registration with the Com-7
modity Futures Trading Commission relating to the other 8
activities of the registered digital asset broker or reg-9
istered digital asset dealer, including as a digital com-10
modity broker or digital commodity dealer, to list or trade 11
contracts of sale for digital commodities.’’. 12
SEC. 306. REQUIREMENTS OF DIGITAL ASSET BROKERS 13
AND DIGITAL ASSET DEALERS. 14
Section 15H of the Securities Exchange Act of 1934, 15
as added by section 205, is amended by adding at the end 16
the following: 17
‘‘(d) A
NTIFRAUD.—No digital asset broker or digital 18
asset dealer shall make use of the mails or any means or 19
instrumentality of interstate commerce to effect any trans-20
action in, or to induce or attempt to induce the purchase 21
or sale of, any digital asset that is not a digital commodity 22
by means of any manipulative, deceptive, or other fraudu-23
lent device or contrivance. 24
‘‘(e) H
OLDING OFCUSTOMERASSETS.— 25
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‘‘(1) IN GENERAL.—A digital asset broker or 1
digital asset dealer shall hold customer money, as-2
sets, and property in a manner to minimize the risk 3
of loss to the customer or unreasonable delay in the 4
access to the money, assets, and property of the cus-5
tomer. 6
‘‘(2) R
ULEMAKING.—Not later than 180 days 7
after the date of enactment of this section, the Com-8
mission shall issue rules to provide that a registered 9
digital asset broker or digital asset dealer will be 10
considered to satisfy the requirements of paragraph 11
(1), with respect to digital assets, so long as the dig-12
ital asset broker or digital asset dealer— 13
‘‘(A) holds such digital asset at a bank 14
that— 15
‘‘(i) is recognized by the appropriate 16
Federal banking agency or State bank su-17
pervisor (as such terms are defined, re-18
spectively, in section 3 of the Federal De-19
posit Insurance Act (12 U.S.C. 1813)) as 20
having custody over such assets; 21
‘‘(ii) delivers the digital asset to the 22
digital asset broker or digital asset dealer 23
without requiring the payment of money or 24
value; and 25
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‘‘(iii) has acknowledged in writing 1
that the digital asset in the custody or con-2
trol of the bank is free of charge, lien, or 3
claim of any kind in favor of such bank or 4
any person claiming through the bank; 5
‘‘(B) establishes, maintains, and enforces 6
written policies, procedures, and controls rea-7
sonably designed to demonstrate that the digital 8
asset broker or digital asset dealer— 9
‘‘(i) has control over the digital asset 10
that the digital asset broker or digital 11
asset dealer holds in custody to protect 12
against the theft, loss, or unauthorized use 13
of the private keys necessary to access and 14
transfer such digital asset; 15
‘‘(ii) has identified the steps that will 16
be taken in the wake of certain events that 17
could affect the custody of the digital as-18
sets by the digital asset broker or digital 19
asset dealer; 20
‘‘(iii) can comply with a court-ordered 21
freeze or seizure; and 22
‘‘(iv) has established arrangements to 23
allow for the transfer of the digital asset 24
held by such digital asset broker or digital 25
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asset dealer to another digital asset broker 1
or digital asset dealer, a trustee, receiver, 2
liquidator, or person performing a similar 3
function, or to another appropriate person, 4
in the event such digital asset broker or 5
digital asset dealer can no longer continue 6
as a going concern and self-liquidates or is 7
subject to a formal bankruptcy, receiver-8
ship, liquidation, or similar proceeding; or 9
‘‘(C) complies with such other require-10
ments as the Commission may permit. 11
‘‘(3) S
EGREGATION OF FUNDS .— 12
‘‘(A) I
N GENERAL.—A digital asset broker 13
or digital asset dealer shall treat and deal with 14
all money, assets, and property held for a cus-15
tomer of the digital asset broker or digital asset 16
dealer, or that accrues to a customer as a result 17
of trading in digital assets, as belonging to the 18
customer. 19
‘‘(B) C
OMMINGLING PROHIBITED .—Money, 20
assets, and property of a customer described in 21
subparagraph (A) shall be separately accounted 22
for and shall not be commingled with the funds 23
of the digital asset broker or digital asset dealer 24
or be used to margin, secure, or guarantee any 25
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trades of any person other than the customer of 1
the digital asset broker or digital asset dealer 2
for whom the same are held. 3
‘‘(4) E
XCEPTIONS.— 4
‘‘(A) U
SE OF FUNDS.— 5
‘‘(i) I
N GENERAL.—Notwithstanding 6
paragraph (3), money, assets, and property 7
of customers of a digital asset broker or 8
digital asset dealer described in paragraph 9
(3) may be maintained and deposited in 10
the same account or accounts with any 11
bank, trust company, digital asset broker, 12
or digital asset dealer, if the money, assets, 13
and property remain segregated from the 14
money, assets, and property of the digital 15
asset broker or digital asset dealer. 16
‘‘(ii) W
ITHDRAWAL.—Notwithstanding 17
paragraph (3), such share of the money, 18
assets, and property described in para-19
graph (3) as in the normal course of busi-20
ness shall be necessary to transfer, adjust, 21
or settle a digital asset transaction pursu-22
ant to a customer’s instruction (standing 23
or otherwise) may be withdrawn and ap-24
plied to such purposes, including the with-25
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drawal and payment of commissions, bro-1
kerage, interest, taxes, storage, and other 2
charges lawfully accruing in connection 3
with a digital asset transaction. 4
‘‘(iii) C
OMMISSION ACTION.—In ac-5
cordance with such terms and conditions 6
as the Commission may prescribe by rule, 7
regulation, or order, any money, assets, or 8
property of a customer of a digital asset 9
broker or digital asset dealer described in 10
paragraph (3) may be commingled and de-11
posited as provided in this section with any 12
other money, assets, or property received 13
by the digital asset broker or digital asset 14
dealer and required by the Commission to 15
be separately accounted for and treated 16
and dealt with as belonging to the cus-17
tomer of the digital asset broker or digital 18
asset dealer. 19
‘‘(B) P
ARTICIPATION IN BLOCKCHAIN 20
SERVICES.— 21
‘‘(i) I
N GENERAL.—A customer shall 22
have the right to waive the restrictions in 23
paragraph (3) for any unit of a digital 24
asset, by affirmatively electing, in writing 25
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to the digital asset broker or digital asset 1
dealer, to waive the restrictions. 2
‘‘(ii) U
SE OF FUNDS.—Customer dig-3
ital assets removed from segregation under 4
clause (i) may be pooled and used by the 5
digital asset broker or digital asset dealer 6
or its designee to provide a blockchain 7
service for a blockchain system to which 8
the unit of the digital asset removed from 9
segregation under clause (i) relates. 10
‘‘(iii) L
IMITATIONS.—The Commission 11
may, by rule, establish notice and disclo-12
sure requirements, and any other limita-13
tions and rules related to the waiving of 14
any restrictions under this subparagraph 15
that are reasonably necessary to protect 16
customers. 17
‘‘(iv) B
LOCKCHAIN SERVICE DE -18
FINED.—In this subparagraph, the term 19
‘blockchain service’ means any activity re-20
lating to validating transactions on a 21
blockchain system, providing security for a 22
blockchain system, or other similar activity 23
required for the ongoing operation of a 24
blockchain system. 25
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‘‘(5) FURTHER LIMITATIONS.—No person shall 1
treat or deal with a digital asset held on behalf of 2
any customer pursuant to paragraph (3) by utilizing 3
any unit of such digital asset to participate in a 4
blockchain service (as defined in paragraph 5
(4)(B)(iv)) or a decentralized governance system as-6
sociated with the digital asset or the blockchain sys-7
tem to which the digital asset relates in any manner 8
other than that which is expressly directed by the 9
customer from which such unit of a digital asset was 10
received. 11
‘‘(f) C
APITALREQUIREMENTS.— 12
‘‘(1) I
N GENERAL.—Each registered digital 13
asset broker and registered digital asset dealer shall 14
meet such minimum capital requirements as the 15
Commission may prescribe to ensure that the digital 16
asset broker or digital asset dealer is able to— 17
‘‘(A) conduct an orderly wind-down of the 18
activities of the digital asset broker or digital 19
asset dealer; and 20
‘‘(B) fulfill the customer obligations of the 21
digital asset broker or digital asset dealer. 22
‘‘(2) C
ALCULATION.—For purposes of any 23
Commission rule or order adopted under this section 24
or any interpretation thereof regulating a digital 25
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asset broker or digital asset dealer’s financial re-1
sponsibility obligations and capital requirements, a 2
registered digital asset broker or digital asset dealer 3
that maintains control of customer digital assets in 4
a manner that satisfies the rules issued by the Com-5
mission under subsection (e)(2) shall not be required 6
to include the value of such digital assets as assets 7
or liabilities of the digital asset broker or digital 8
asset dealer. 9
‘‘(3) C
OORDINATION OF CAPITAL REQUIRE -10
MENTS.— 11
‘‘(A) C
OMMISSION RULE.—The Commis-12
sion shall, by rule, provide appropriate offsets 13
to any applicable capital requirement for a per-14
son with multiple registrations, including as a 15
broker, dealer, digital asset broker, or digital 16
asset dealer. 17
‘‘(B) J
OINT RULE.—The Commission and 18
the Commodity Futures Trading Commission 19
shall jointly, by rule, provide appropriate offsets 20
to any applicable capital requirement for a per-21
son with multiple registrations, including as a 22
digital asset broker, digital asset dealer, digital 23
asset trading system, digital commodity broker, 24
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digital commodity dealer, or digital commodity 1
exchange. 2
‘‘(g) R
EPORTING ANDRECORDKEEPING.—Each reg-3
istered digital asset broker and digital asset dealer— 4
‘‘(1) shall make such reports as are required by 5
the Commission by rule or regulation regarding the 6
transactions, positions, and financial condition of the 7
digital asset broker or digital asset dealer; 8
‘‘(2) shall keep books and records in such form 9
and manner and for such period as may be pre-10
scribed by the Commission by rule or regulation; and 11
‘‘(3) shall keep the books and records open to 12
inspection and examination by any representative of 13
the Commission. 14
‘‘(h) T
REATMENT UNDER THE BANKSECRECY 15
A
CT.—A digital asset broker and a digital asset dealer 16
shall be treated as a financial institution for purposes of 17
the Bank Secrecy Act.’’. 18
SEC. 307. RULES RELATED TO CONFLICTS OF INTEREST. 19
The Securities Exchange Act of 1934 (15 U.S.C. 78a 20
et seq.) is amended by inserting after section 10D the fol-21
lowing: 22
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‘‘SEC. 10E. CONFLICTS OF INTEREST RELATED TO DIGITAL 1
ASSETS. 2
‘‘Each registered digital asset trading system, reg-3
istered digital asset broker, registered digital asset dealer, 4
and notice-registered digital asset clearing agency shall es-5
tablish, maintain, and enforce written policies and proce-6
dures reasonably designed, taking into consideration the 7
nature of such person’s business, to mitigate any conflicts 8
of interest and transactions or arrangements with affili-9
ates.’’. 10
SEC. 308. TREATMENT OF CERTAIN DIGITAL ASSETS IN 11
CONNECTION WITH FEDERALLY REGULATED 12
INTERMEDIARIES. 13
Section 18(b) of the Securities Act of 1933 (15 14
U.S.C. 77r(b)) is amended by adding at the end the fol-15
lowing: 16
‘‘(5) E
XEMPTION FOR CERTAIN DIGITAL ASSETS 17
IN CONNECTION WITH FEDERALLY REGULATED 18
INTERMEDIARIES.—A digital asset is a covered secu-19
rity with respect to a transaction that is exempt 20
from registration under this Act when— 21
‘‘(A) it is brokered, traded, custodied, or 22
cleared by a digital asset broker or digital asset 23
dealer registered under section 15H of the Se-24
curities Exchange Act of 1934; or 25
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‘‘(B) traded through a digital asset trading 1
system (as defined under section 242.301 of 2
title 17, Code of Federal Regulations).’’. 3
SEC. 309. DUAL REGISTRATION. 4
Any person that is registered with the Securities and 5
Exchange Commission as a digital asset broker, digital 6
asset dealer, or digital asset trading system may register 7
with the Commodity Futures Trading Commission, as ap-8
propriate, as— 9
(1) a digital commodity exchange under section 10
5i of the Commodity Exchange Act (7 U.S.C. 1 et 11
seq.), as added by this Act, if the person offers or 12
seeks to offer a cash or spot market in at least one 13
digital commodity; 14
(2) a digital commodity broker under section 4u 15
of the Commodity Exchange Act, as added by this 16
Act, if the person is engaged in soliciting or accept-17
ing orders in digital commodity cash or spot mar-18
kets; or 19
(3) a digital commodity dealer under section 4u 20
of the Commodity Exchange Act, as added by this 21
Act, if the person holds themself out as a dealer in 22
digital commodity cash or spot markets. 23
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SEC. 310. EXCLUSION FOR ANCILLARY ACTIVITIES. 1
The Securities Exchange Act of 1934 (15 U.S.C. 78a 2
et seq.) is amended by inserting after section 15G the fol-3
lowing: 4
‘‘SEC. 15H. EXCLUSION FOR ANCILLARY ACTIVITIES. 5
‘‘(a) I
NGENERAL.—Notwithstanding any other pro-6
vision of this Act, a person shall not be subject to this 7
Act and the regulations thereunder solely based on the 8
person undertaking any ancillary activities. 9
‘‘(b) E
XCEPTIONS.—Subsection (a) shall not be con-10
strued to apply to the antimanipulation and antifraud au-11
thorities of the Commission. 12
‘‘(c) A
NCILLARYACTIVITIESDEFINED.—In this sec-13
tion, the term ‘ancillary activities’ means any of the fol-14
lowing activities related to the operation of a blockchain 15
system: 16
‘‘(1) Compiling network transactions, operating 17
a pool, relaying, searching, sequencing, validating, or 18
acting in a similar capacity with respect to a re-19
stricted digital asset. 20
‘‘(2) Providing computational work, operating a 21
node, or procuring, offering, or utilizing network 22
bandwidth, or other similar incidental services with 23
respect to a restricted digital asset. 24
‘‘(3) Providing a user interface that enables a 25
user to read and access data about a blockchain sys-26
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tem, send messages, or otherwise interact with a 1
blockchain system. 2
‘‘(4) Developing, publishing, constituting, ad-3
ministering, maintaining, or otherwise distributing a 4
blockchain system. 5
‘‘(5) Developing, publishing, constituting, ad-6
ministering, maintaining, or otherwise distributing 7
software or systems that create or deploy a hard-8
ware or software wallet or other system facilitating 9
an individual user’s own personal ability to keep, 10
safeguard, or custody the user’s restricted digital as-11
sets or related private keys.’’. 12
SEC. 311. REGISTRATION AND REQUIREMENTS FOR NO-13
TICE-REGISTERED DIGITAL ASSET CLEARING 14
AGENCIES. 15
Section 17A(b) of the Securities Exchange Act of 16
1934 (15 U.S.C. 78q–1(b)) is amended— 17
(1) in subsection (1), by inserting ‘‘(other than 18
a notice-registered digital asset clearing agency)’’ 19
after ‘‘unlawful for any clearing agency’’; and 20
(2) by adding at the end, the following: 21
‘‘(9) R
EGISTRATION AND REQUIREMENTS FOR 22
NOTICE-REGISTERED DIGITAL ASSET CLEARING 23
AGENCY.— 24
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‘‘(A) ELIGIBILITY.—A person may register 1
with the Commission as a notice-registered dig-2
ital asset clearing agency if the person— 3
‘‘(i) is otherwise registered as a digital 4
asset broker or digital asset dealer with the 5
Commission and is engaging in a business 6
involving digital assets that are not digital 7
commodities, in compliance with Commis-8
sion rules pursuant to section 15H(e); or 9
‘‘(ii) is a bank engaging in a business 10
involving digital assets, in compliance with 11
applicable banking law and regulation re-12
lating to the custody and safekeeping of 13
such assets. 14
‘‘(B) R
EGISTRATION.—A person may reg-15
ister with the Commission as a notice-registered 16
digital asset clearing agency by providing the 17
Commission with notice of the activities of the 18
person or planned activities in such form as the 19
Commission determines appropriate. 20
‘‘(C) R
ULEMAKING.—The Commission may 21
adopt rules, which may not take effect until at 22
least 360 days following the date of enactment 23
of this paragraph, with regard to the activities 24
of notice-registered digital asset clearing agen-25
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cies, taking into account the nature of digital 1
assets.’’. 2
SEC. 312. TREATMENT OF CUSTODY ACTIVITIES BY BANK-3
ING INSTITUTIONS. 4
(a) T
REATMENT OFCUSTODYACTIVITIES.—The ap-5
propriate Federal banking agency (as defined under sec-6
tion 3 of the Federal Deposit Insurance Act (12 U.S.C. 7
1813)), the National Credit Union Administration (in the 8
case of a credit union), and the Securities and Exchange 9
Commission may not require a depository institution, na-10
tional bank, Federal credit union, State credit union, or 11
trust company, or any affiliate thereof— 12
(1) to include assets held in custody as a liabil-13
ity on any financial statement or balance sheet, in-14
cluding payment stablecoin custody or safekeeping 15
activities; 16
(2) to hold additional regulatory capital against 17
assets in custody or safekeeping, except as necessary 18
to mitigate against operational risks inherent with 19
the custody or safekeeping services, as determined 20
by— 21
(A) the appropriate Federal banking agen-22
cy; 23
(B) the National Credit Union Administra-24
tion (in the case of a credit union); 25
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(C) a State bank supervisor (as defined 1
under section 3 of the Federal Deposit Insur-2
ance Act (12 U.S.C. 1813)); or 3
(D) a State credit union supervisor (as de-4
fined under section 6003 of the Anti-Money 5
Laundering Act of 2020); or 6
(3) to recognize a liability for any obligations 7
related to activities or services performed for digital 8
assets that the entity does not own if that liability 9
would exceed the expense recognized in the income 10
statement as a result of the corresponding obliga-11
tion. 12
(b) D
EFINITIONS.—In this section: 13
(1) D
EPOSITORY INSTITUTION .—The terms 14
‘‘depository institution’’ has the meaning given that 15
term under section 3 of the Federal Deposit Insur-16
ance Act. 17
(2) C
REDIT UNION TERMS .—The terms ‘‘Fed-18
eral credit union’’ and ‘‘State credit union’’ have the 19
meaning given those terms, respectively, under sec-20
tion 101 of the Federal Credit Union Act. 21
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TITLE IV—REGISTRATION FOR 1
DIGITAL ASSET INTER-2
MEDIARIES AT THE COM-3
MODITY FUTURES TRADING 4
COMMISSION 5
SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COM-6
MODITY TRANSACTIONS. 7
(a) I
NGENERAL.—Section 2(a)(1) of the Commodity 8
Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding 9
at the end the following: 10
‘‘(J) Except as expressly provided in this 11
Act, nothing in the Financial Innovation and 12
Technology for the 21st Century Act shall af-13
fect or apply to, or be interpreted to affect or 14
apply to— 15
‘‘(i) any agreement, contract, or 16
transaction that is subject to regulation 17
under this Act as— 18
‘‘(I) a contract of sale of a com-19
modity for future delivery or an op-20
tion on such a contract; 21
‘‘(II) a swap; 22
‘‘(III) a security futures product; 23
‘‘(IV) an option authorized under 24
section 4c of this Act; 25
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‘‘(V) an agreement, contract, or 1
transaction described in subparagraph 2
(C)(i) or (D)(i) of subsection (c)(2) of 3
this section; or 4
‘‘(VI) a leverage transaction au-5
thorized under section 19 of this Act; 6
or 7
‘‘(ii) the activities of any person with 8
respect to any such an agreement, con-9
tract, or transaction.’’. 10
(b) I
NGENERAL.—Section 2(c)(1) of the Commodity 11
Exchange Act (7 U.S.C. 2(c)(1)) is amended— 12
(1) in subparagraph (F), by striking ‘‘or’’ at 13
the end; 14
(2) in subparagraph (G), by striking the period 15
and inserting ‘‘; or’’; and 16
(3) by adding at the end the following: 17
‘‘(H) permitted payment stablecoins.’’. 18
(c) I
NGENERAL.—Section 2(c)(2) of the Commodity 19
Exchange Act (7 U.S.C. 2(c)(2)) is amended— 20
(1) in subparagraph (D)(ii)— 21
(A) in subclause (III), in the matter that 22
precedes item (aa), by inserting ‘‘of a com-23
modity, other than a digital commodity,’’ before 24
‘‘that’’; and 25
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(B) by redesignating subclauses (IV) and 1
(V) as subclauses (V) and (VI) and inserting 2
after subclause (III) the following: 3
‘‘(IV) a contract of sale of a dig-4
ital commodity that— 5
‘‘(aa) results in actual deliv-6
ery, as the Commission shall by 7
rule determine, within 2 days or 8
such other period as the Commis-9
sion may determine by rule or 10
regulation based upon the typical 11
commercial practice in cash or 12
spot markets for the digital com-13
modity involved; or 14
‘‘(bb) is executed with a reg-15
istered digital commodity deal-16
er— 17
‘‘(AA) directly; 18
‘‘(BB) through a reg-19
istered digital commodity 20
broker; or 21
‘‘(CC) on or subject to 22
the rules of a registered dig-23
ital commodity exchange;’’; 24
and 25
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(2) by adding at the end the following: 1
‘‘(F) C
OMMISSIONJURISDICTIONWITHRESPECT TO 2
D
IGITALCOMMODITYTRANSACTIONS.— 3
‘‘(i) I
N GENERAL.—Subject to sections 6d and 4
12(e), the Commission shall have exclusive jurisdic-5
tion with respect to any account, agreement, con-6
tract, or transaction involving a contract of sale of 7
a digital commodity in interstate commerce, includ-8
ing in a digital commodity cash or spot market, that 9
is offered, solicited, traded, facilitated, executed, 10
cleared, reported, or otherwise dealt in— 11
‘‘(I) on or subject to the rules of a reg-12
istered entity or an entity that is required to be 13
registered as a registered entity; or 14
‘‘(II) by any other entity registered, or re-15
quired to be registered, with the Commission. 16
‘‘(ii) L
IMITATIONS.—Clause (i) shall not apply 17
with respect to custodial or depository activities for 18
a digital commodity, or custodial or depository ac-19
tivities for any promise or right to a future digital 20
commodity, of an entity regulated by an appropriate 21
Federal banking agency or a State bank supervisor 22
(within the meaning of section 3 of the Federal De-23
posit Insurance Act). 24
‘‘(iii) M
IXED DIGITAL ASSET TRANSACTIONS .— 25
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‘‘(I) IN GENERAL.—Clause (i) shall not 1
apply to a mixed digital asset transaction. 2
‘‘(II) O
VERSIGHT OF MIXED DIGITAL 3
ASSET TRANSACTIONS.— 4
‘‘(aa) O
N A CFTC REGULATED PLAT -5
FORM.—A mixed digital asset transaction 6
that occurs on or subject to the rules of a 7
registered entity or by any other entity 8
registered with the Commission— 9
‘‘(AA) shall not occur except on 10
or subject to the rules of a registered 11
entity or by any other entity that is 12
dually registered with the Commission 13
and the Securities and Exchange 14
Commission; and 15
‘‘(BB) shall be subject to the ju-16
risdiction of the Commission and the 17
Securities and Exchange Commission. 18
‘‘(bb) O
FF EXCHANGE.—A mixed dig-19
ital asset transaction that does not occur 20
on or subject to the rules of a registered 21
entity or by any other entity registered 22
with the Commission shall be subject to 23
the exclusive jurisdiction of the Securities 24
and Exchange Commission. 25
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‘‘(III) REPORTS ON MIXED DIGITAL ASSET 1
TRANSACTIONS.—A digital asset issuer, related 2
person, affiliated person, or other person reg-3
istered with the Securities and Exchange Com-4
mission that engages in a mixed digital asset 5
transaction, shall, on request, open to inspec-6
tion and examination by the Commodity Fu-7
tures Trading Commission all books and 8
records relating to the mixed digital asset 9
transaction, subject to the confidentiality and 10
disclosure requirements of section 8. 11
‘‘(G) A
GREEMENTS, CONTRACTS, ANDTRANS-12
ACTIONS INSTABLECOINS.— 13
‘‘(i) T
REATMENT OF PERMITTED PAYMENT 14
STABLECOINS ON COMMISSION -REGISTERED ENTI-15
TIES.—Except as provided in clauses (ii) and (iii), 16
the Commission shall only have jurisdiction over a 17
cash or spot agreement, contract, or transaction in 18
a permitted payment stablecoin that is offered, of-19
fered to enter into, entered into, executed, confirmed 20
the execution of, solicited, or accepted— 21
‘‘(I) on or subject to the rules of a reg-22
istered entity; or 23
‘‘(II) by any other entity registered by the 24
Commission. 25
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‘‘(ii) PERMITTED PAYMENT STABLECOIN 1
TRANSACTION RULES .—This Act shall only apply to 2
a transaction described in clause (i) for the purposes 3
of regulating the offer, execution, solicitation, or ac-4
ceptance of a cash or spot permitted payment 5
stablecoin transaction on a registered entity or other 6
entity registered by the Commission with respect to 7
requirements imposed with respect to— 8
‘‘(I) recordkeeping; 9
‘‘(II) custody; 10
‘‘(III) segregation; 11
‘‘(IV) reporting; 12
‘‘(V) trading procedures and trade proc-13
essing requirements; 14
‘‘(VI) information sharing; 15
‘‘(VII) conflicts of interest; 16
‘‘(VIII) antifraud, antimanipulation, or 17
false reporting; or 18
‘‘(IX) any other transaction level require-19
ment imposed on the registered entity or other 20
entity registered by the Commission that the 21
Commission by rule determines would foster the 22
development of fair and orderly cash or spot 23
markets in digital commodities, be necessary or 24
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appropriate in the public interest, and be con-1
sistent with the protection of customers. 2
‘‘(iii) N
O AUTHORITY OVER PERMITTED PAY -3
MENT STABLECOINS .—Notwithstanding clause (ii), 4
the Commission shall not make a rule or regulation, 5
impose a requirement or obligation on a registered 6
entity or other entity registered by the Commission, 7
or impose a requirement or obligation on a per-8
mitted payment stablecoin issuer, regarding the op-9
eration of a permitted payment stablecoin issuer or 10
a permitted payment stablecoin, including a require-11
ment or obligation regarding— 12
‘‘(I) design; 13
‘‘(II) structure; 14
‘‘(III) issuance; 15
‘‘(IV) redemption; 16
‘‘(V) financial resources; 17
‘‘(VI) collateral; or 18
‘‘(VII) any other aspect of such an oper-19
ation or such a stablecoin.’’. 20
(d) C
ONFORMINGAMENDMENT.—Section 2(a)(1)(A) 21
of such Act (7 U.S.C. 2(a)(1)(A)) is amended in the 1st 22
sentence by inserting ‘‘subsection (c)(2)(F) of this section 23
or’’ before ‘‘section 19’’. 24
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SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS 1
TO USE QUALIFIED DIGITAL COMMODITY 2
CUSTODIANS. 3
Section 4d of the Commodity Exchange Act (7 U.S.C. 4
6d) is amended— 5
(1) in subsection (a)(2)— 6
(A) in the 1st proviso, by striking ‘‘any 7
bank or trust company’’ and inserting ‘‘any 8
bank, trust company, or qualified digital com-9
modity custodian’’; and 10
(B) by inserting ‘‘: Provided further, That 11
any such property that is a digital commodity 12
shall be held in a qualified digital commodity 13
custodian’’ before the period at the end; and 14
(2) in subsection (f)(3)(A)(i), by striking ‘‘any 15
bank or trust company’’ and inserting ‘‘any bank, 16
trust company, or qualified digital commodity custo-17
dian’’. 18
SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR 19
DIGITAL COMMODITIES. 20
Section 5c of the Commodity Exchange Act (7 U.S.C. 21
7a–2) is amended— 22
(1) in subsection (a), by striking ‘‘5(d) and 23
5b(c)(2)’’ and inserting ‘‘5(d), 5b(c)(2), and 5i(c)’’; 24
(2) in subsection (b)— 25
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(A) in each of paragraphs (1) and (2), by 1
inserting ‘‘digital commodity exchange,’’ before 2
‘‘derivatives’’; and 3
(B) in paragraph (3), by inserting ‘‘digital 4
commodity exchange,’’ before ‘‘derivatives’’ each 5
place it appears; 6
(3) in subsection (c)— 7
(A) in paragraph (2), by inserting ‘‘or par-8
ticipants’’ before ‘‘(in’’; 9
(B) in paragraph (4)(B), by striking 10
‘‘1a(10)’’ and inserting ‘‘1a(9)’’; and 11
(C) in paragraph (5), by adding at the end 12
the following: 13
‘‘(D) S
PECIAL RULES FOR DIGITAL COM -14
MODITY CONTRACTS .—In certifying any new 15
rule or rule amendment, or listing any new con-16
tract or instrument, in connection with a con-17
tract of sale of a commodity for future delivery, 18
option, swap, or other agreement, contract, or 19
transaction, that is based on or references a 20
digital commodity, a registered entity shall 21
make or rely on a certification under subsection 22
(d) for the digital commodity.’’; and 23
(4) by inserting after subsection (c) the fol-24
lowing: 25
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‘‘(d) CERTIFICATIONS FOR DIGITALCOMMODITY 1
T
RADING.— 2
‘‘(1) I
N GENERAL.—Notwithstanding subsection 3
(c), for the purposes of listing or offering a digital 4
commodity for trading in a digital commodity cash 5
or spot market, an eligible entity shall issue a writ-6
ten certification that the digital commodity meets 7
the requirements of this Act (including regulations 8
thereunder). 9
‘‘(2) C
ONTENTS OF THE CERTIFICATION .— 10
‘‘(A) I
N GENERAL.—In making a written 11
certification under this paragraph, the eligible 12
entity shall furnish to the Commission— 13
‘‘(i) an analysis of how the digital 14
commodity meets the requirements of sec-15
tion 5i(c)(3); 16
‘‘(ii) information about the digital 17
commodity regarding— 18
‘‘(I) its purpose and use; 19
‘‘(II) its unit creation or release 20
process; 21
‘‘(III) its consensus mechanism; 22
‘‘(IV) its governance structure; 23
‘‘(V) its participation and dis-24
tribution; and 25
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‘‘(VI) its current and proposed 1
functionality; and 2
‘‘(iii) any other information, analysis, 3
or documentation the Commission may, by 4
rule, require. 5
‘‘(B) R
ELIANCE ON PRIOR DISCLO -6
SURES.—In making a certification under this 7
subsection, an eligible entity may rely on the 8
records and disclosures of any relevant person 9
registered with the Securities and Exchange 10
Commission or other State or Federal agency. 11
‘‘(3) M
ODIFICATIONS.— 12
‘‘(A) I
N GENERAL.—An eligible entity shall 13
modify a certification made under paragraph 14
(1) to— 15
‘‘(i) account for significant changes in 16
any information provided to the Commis-17
sion under paragraph (2)(A)(ii); or 18
‘‘(ii) permit or restrict trading in 19
units of a digital commodity asset held by 20
a related person or an affiliated person. 21
‘‘(B) R
ECERTIFICATION.—Modifications 22
required by this subsection shall be subject to 23
the same disapproval and review process as a 24
new certification under paragraphs (4) and (5). 25
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‘‘(4) DISAPPROVAL.— 1
‘‘(A) I
N GENERAL.—The written certifi-2
cation described in paragraph (1) shall become 3
effective unless the Commission finds that the 4
digital asset does not meet the requirements of 5
this Act or the rules and regulations there-6
under. 7
‘‘(B) A
NALYSIS REQUIRED.—The Commis-8
sion shall include, with any findings referred to 9
in subparagraph (A), a detailed analysis of the 10
factors on which the decision was based. 11
‘‘(C) P
UBLIC FINDINGS.—The Commission 12
shall make public any disapproval decision, and 13
any related findings and analysis, made under 14
this paragraph. 15
‘‘(5) R
EVIEW.— 16
‘‘(A) I
N GENERAL.—Unless the Commis-17
sion makes a disapproval decision under para-18
graph (4), the written certification described in 19
paragraph (1) shall become effective, pursuant 20
to the certification by the eligible entity and no-21
tice of the certification to the public (in a man-22
ner determined by the Commission) on the date 23
that is— 24
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‘‘(i) 20 business days after the date 1
the Commission receives the certification 2
(or such shorter period as determined by 3
the Commission by rule or regulation), in 4
the case of a digital commodity that has 5
not been certified under this section or for 6
which a certification is being modified 7
under paragraph (3); or 8
‘‘(ii) 2 business days after the date 9
the Commission receives the certification 10
(or such shorter period as determined by 11
the Commission by rule or regulation) for 12
any digital commodity that has been cer-13
tified under this section. 14
‘‘(B) E
XTENSIONS.—The time for consid-15
eration under subparagraph (A) may be ex-16
tended through notice to the eligible entity that 17
there are novel or complex issues that require 18
additional time to analyze, that the explanation 19
by the submitting eligible entity is inadequate, 20
or of a potential inconsistency with this Act— 21
‘‘(i) once, for 30 business days, 22
through written notice to the eligible entity 23
by the Chairman; and 24
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‘‘(ii) once, for an additional 30 busi-1
ness days, through written notice to the 2
digital commodity exchange from the Com-3
mission that includes a description of any 4
deficiencies with the certification, including 5
any— 6
‘‘(I) novel or complex issues 7
which require additional time to ana-8
lyze; 9
‘‘(II) missing information or in-10
adequate explanations; or 11
‘‘(III) potential inconsistencies 12
with this Act. 13
‘‘(6) C
ERTIFICATION REQUIRED .—Notwith-14
standing any other requirement of this Act, a reg-15
istered entity or other entity registered with the 16
Commission shall not list for trading, accept for 17
clearing, offer to enter into, enter into, execute, con-18
firm the execution of, or conduct any office or busi-19
ness anywhere in the United States, its territories or 20
possessions, for the purpose of soliciting, or accept-21
ing any order for, or otherwise dealing in, any trans-22
action in, or in connection with, a digital asset, un-23
less a certification has been made under this section 24
for the digital asset. 25
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‘‘(7) ELIGIBLE ENTITY DEFINED .—In this sub-1
section, the term ‘eligible entity’ means a registered 2
entity or group of registered entities acting jointly.’’. 3
SEC. 404. REGISTRATION OF DIGITAL COMMODITY EX-4
CHANGES. 5
The Commodity Exchange Act (7 U.S.C. 1 et seq.) 6
is amended by inserting after section 5h the following: 7
‘‘SEC. 5i. REGISTRATION OF DIGITAL COMMODITY EX-8
CHANGES. 9
‘‘(a) I
NGENERAL.— 10
‘‘(1) R
EGISTRATION.— 11
‘‘(A) I
N GENERAL.—A trading facility that 12
offers or seeks to offer a cash or spot market 13
in at least 1 digital commodity shall register 14
with the Commission as a digital commodity ex-15
change. 16
‘‘(B) A
PPLICATION.—A person desiring to 17
register as a digital commodity exchange shall 18
submit to the Commission an application in 19
such form and containing such information as 20
the Commission may require for the purpose of 21
making the determinations required for ap-22
proval. 23
‘‘(C) E
XEMPTIONS.—A trading facility 24
that offers or seeks to offer a cash or spot mar-25
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ket in at least 1 digital commodity shall not be 1
required to register under this section if the 2
trading facility— 3
‘‘(i) permits no more than a de mini-4
mis amount of trading activity; or 5
‘‘(ii) serves only customers in a single 6
State or territory. 7
‘‘(2) A
DDITIONAL REGISTRATIONS .— 8
‘‘(A) W
ITH THE COMMISSION.— 9
‘‘(i) I
N GENERAL.—A registered dig-10
ital commodity exchange may also register 11
as— 12
‘‘(I) a designated contract mar-13
ket; or 14
‘‘(II) a swap execution facility. 15
‘‘(ii) R
ULES.—For an entity with 16
multiple registrations under clause (i), the 17
Commission— 18
‘‘(I) shall prescribe rules to ex-19
empt the entity from duplicative, con-20
flicting, or unduly burdensome provi-21
sions of this Act and the rules under 22
this Act, to the extent such an exemp-23
tion would foster the development of 24
fair and orderly cash or spot markets 25
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in digital commodities, be necessary or 1
appropriate in the public interest, and 2
be consistent with the protection of 3
customers; and 4
‘‘(II) may, after an analysis of 5
the risks and benefits, prescribe rules 6
to provide for portfolio margining, as 7
may be necessary to protect market 8
participants, promote fair and equi-9
table trading in digital commodity 10
markets, and promote responsible eco-11
nomic or financial innovation. 12
‘‘(B) W
ITH THE SECURITIES AND EX -13
CHANGE COMMISSION .—A registered digital 14
commodity exchange may register with the Se-15
curities and Exchange Commission as a digital 16
asset trading system to list or trade contracts 17
of sale for digital assets deemed securities. 18
‘‘(C) W
ITH A REGISTERED FUTURES ASSO -19
CIATION.— 20
‘‘(i) I
N GENERAL.—A registered dig-21
ital commodity exchange shall also be a 22
member of a registered futures association 23
and comply with rules related to such ac-24
tivity, if the registered digital commodity 25
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exchange accepts customer funds required 1
to be segregated under subsection (d). 2
‘‘(ii) R
ULEMAKING REQUIRED .—The 3
Commission shall require any registered 4
futures association with a digital com-5
modity exchange as a member to provide 6
such rules as may be necessary to further 7
compliance with subsection (d), protect 8
customers, and promote the public interest. 9
‘‘(D) R
EGISTRATION REQUIRED .—A per-10
son required to be registered as a digital com-11
modity exchange under this section shall reg-12
ister with the Commission as such regardless of 13
whether the person is registered as such with 14
another State or Federal regulator. 15
‘‘(b) T
RADING.— 16
‘‘(1) P
ROHIBITION ON CERTAIN TRADING PRAC -17
TICES.— 18
‘‘(A) Section 4b shall apply to any agree-19
ment, contract, or transaction in a digital com-20
modity as if the agreement, contract, or trans-21
action were a contract of sale of a commodity 22
for future delivery. 23
‘‘(B) Section 4c shall apply to any agree-24
ment, contract, or transaction in a digital com-25
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modity as if the agreement, contract, or trans-1
action were a transaction involving the purchase 2
or sale of a commodity for future delivery. 3
‘‘(2) P
ROHIBITION ON ACTING AS A 4
COUNTERPARTY.—A registered digital commodity 5
exchange or any affiliate of such an exchange shall 6
not act as counterparty to any transaction executed 7
on or subject to the rules of the registered digital 8
commodity exchange. 9
‘‘(3) T
RADING SECURITIES.—A registered dig-10
ital commodity exchange that is also registered with 11
the Securities and Exchange Commission may offer 12
a contract of sale of a digital asset deemed a secu-13
rity. 14
‘‘(4) R
ULES FOR CERTAIN DIGITAL ASSET 15
SALES.—The digital commodity exchange shall have 16
in place such rules as may be necessary to reason-17
ably ensure the orderly sale of any unit of a digital 18
commodity sold by a related person or an affiliated 19
person. 20
‘‘(c) C
OREPRINCIPLES FORDIGITALCOMMODITY 21
E
XCHANGES.— 22
‘‘(1) C
OMPLIANCE WITH CORE PRINCIPLES .— 23
‘‘(A) I
N GENERAL.—To be registered, and 24
maintain registration, as a digital commodity 25
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exchange, a digital commodity exchange shall 1
comply with— 2
‘‘(i) the core principles described in 3
this subsection; and 4
‘‘(ii) any requirement that the Com-5
mission may impose by rule or regulation 6
pursuant to section 8a(5). 7
‘‘(B) R
EASONABLE DISCRETION OF A DIG -8
ITAL COMMODITY EXCHANGE .—Unless other-9
wise determined by the Commission by rule or 10
regulation, a digital commodity exchange de-11
scribed in subparagraph (A) shall have reason-12
able discretion in establishing the manner in 13
which the digital commodity exchange complies 14
with the core principles described in this sub-15
section. 16
‘‘(2) C
OMPLIANCE WITH RULES .—A digital 17
commodity exchange shall— 18
‘‘(A) establish and enforce compliance with 19
any rule of the digital commodity exchange, in-20
cluding— 21
‘‘(i) the terms and conditions of the 22
trades traded or processed on or through 23
the digital commodity exchange; and 24
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‘‘(ii) any limitation on access to the 1
digital commodity exchange; 2
‘‘(B) establish and enforce trading, trade 3
processing, and participation rules that will 4
deter abuses and have the capacity to detect, 5
investigate, and enforce those rules, including 6
means— 7
‘‘(i) to provide market participants 8
with impartial access to the market; and 9
‘‘(ii) to capture information that may 10
be used in establishing whether rule viola-11
tions have occurred; and 12
‘‘(C) establish rules governing the oper-13
ation of the exchange, including rules specifying 14
trading procedures to be used in entering and 15
executing orders traded or posted on the facil-16
ity. 17
‘‘(3) L
ISTING STANDARDS FOR DIGITAL COM -18
MODITIES.— 19
‘‘(A) I
N GENERAL.—A digital commodity 20
exchange shall permit trading only in a digital 21
commodity that is not readily susceptible to ma-22
nipulation. 23
‘‘(B) P
UBLIC INFORMATION REQUIRE -24
MENTS.— 25
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‘‘(i) IN GENERAL.—A digital com-1
modity exchange shall permit trading only 2
in a digital commodity if the information 3
required in clause (ii) is correct, current, 4
and available to the public. 5
‘‘(ii) R
EQUIRED INFORMATION .— 6
With respect to a digital commodity and 7
each blockchain system to which the digital 8
commodity relates for which the digital 9
commodity exchange will make the digital 10
commodity available to the customers of 11
the digital commodity exchange, the infor-12
mation required in this clause is as follows: 13
‘‘(I) S
OURCE CODE.—The source 14
code for any blockchain system to 15
which the digital commodity relates. 16
‘‘(II) T
RANSACTION HISTORY.—A 17
narrative description of the steps nec-18
essary to independently access, search, 19
and verify the transaction history of 20
any blockchain system to which the 21
digital commodity relates. 22
‘‘(III) D
IGITAL ASSET ECONOM -23
ICS.—A narrative description of the 24
purpose of any blockchain system to 25
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which the digital asset relates and the 1
operation of any such blockchain sys-2
tem, including— 3
‘‘(aa) information explaining 4
the launch and supply process, 5
including the number of digital 6
assets to be issued in an initial 7
allocation, the total number of 8
digital assets to be created, the 9
release schedule for the digital 10
assets, and the total number of 11
digital assets then outstanding; 12
‘‘(bb) information detailing 13
any applicable consensus mecha-14
nism or process for validating 15
transactions, method of gener-16
ating or mining digital assets, 17
and any process for burning or 18
destroying digital assets on the 19
blockchain system; 20
‘‘(cc) an explanation of gov-21
ernance mechanisms for imple-22
menting changes to the 23
blockchain system or forming 24
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consensus among holders of the 1
digital assets; and 2
‘‘(dd) sufficient information 3
for a third party to create a tool 4
for verifying the transaction his-5
tory of the digital asset. 6
‘‘(IV) A
DDITIONAL INFORMA -7
TION.—Such additional information 8
as the Commission may, by rule, de-9
termine to be necessary for a cus-10
tomer to understand the financial and 11
operational risks of a digital com-12
modity, and to be in the public inter-13
est or in furtherance of the require-14
ments of this Act. 15
‘‘(C) A
DDITIONAL LISTING CONSIDER -16
ATIONS.—In addition to the requirements of 17
subparagraphs (A) and (B), a digital com-18
modity exchange shall consider— 19
‘‘(i) if a sufficient percentage of the 20
units of the digital asset are units of a dig-21
ital commodity to permit robust price dis-22
covery; 23
‘‘(ii) if it is reasonably unlikely that 24
the transaction history can be fraudulently 25
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altered by any person or group of persons 1
acting collectively; 2
‘‘(iii) if the operating structure and 3
system of the digital commodity is secure 4
from cybersecurity threats; 5
‘‘(iv) if the functionality of the digital 6
commodity will protect holders from oper-7
ational failures; 8
‘‘(v) if sufficient public information 9
about the operation, functionality, and use 10
of the digital commodity is available; and 11
‘‘(vi) any other factor which the Com-12
mission has, by rule, determined to be in 13
the public interest or in furtherance of the 14
requirements of this Act. 15
‘‘(D) R
ESTRICTED DIGITAL ASSETS .—A 16
digital commodity exchange shall not permit the 17
trading of a unit of a digital asset that is a re-18
stricted digital asset. 19
‘‘(4) T
REATMENT OF CUSTOMER ASSETS .—A 20
digital commodity exchange shall establish standards 21
and procedures that are designed to protect and en-22
sure the safety of customer money, assets, and prop-23
erty. 24
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‘‘(5) MONITORING OF TRADING AND TRADE 1
PROCESSING.— 2
‘‘(A) I
N GENERAL.—A digital commodity 3
exchange shall provide a competitive, open, and 4
efficient market and mechanism for executing 5
transactions that protects the price discovery 6
process of trading on the exchange. 7
‘‘(B) P
ROTECTION OF MARKETS AND MAR -8
KET PARTICIPANTS.—A digital commodity ex-9
change shall establish and enforce rules— 10
‘‘(i) to protect markets and market 11
participants from abusive practices com-12
mitted by any party, including abusive 13
practices committed by a party acting as 14
an agent for a participant; and 15
‘‘(ii) to promote fair and equitable 16
trading on the exchange. 17
‘‘(C) T
RADING PROCEDURES .—A digital 18
commodity exchange shall— 19
‘‘(i) establish and enforce rules or 20
terms and conditions defining, or specifica-21
tions detailing— 22
‘‘(I) trading procedures to be 23
used in entering and executing orders 24
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traded on or through the facilities of 1
the digital commodity exchange; and 2
‘‘(II) procedures for trade proc-3
essing of digital commodities on or 4
through the facilities of the digital 5
commodity exchange; and 6
‘‘(ii) monitor trading in digital com-7
modities to prevent manipulation, price 8
distortion, and disruptions of the delivery 9
or cash settlement process through surveil-10
lance, compliance, and disciplinary prac-11
tices and procedures, including methods 12
for conducting real-time monitoring of 13
trading and comprehensive and accurate 14
trade reconstructions. 15
‘‘(6) A
BILITY TO OBTAIN INFORMATION .—A 16
digital commodity exchange shall— 17
‘‘(A) establish and enforce rules that will 18
allow the facility to obtain any necessary infor-19
mation to perform any of the functions de-20
scribed in this section; 21
‘‘(B) provide the information to the Com-22
mission on request; and 23
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‘‘(C) have the capacity to carry out such 1
international information-sharing agreements as 2
the Commission may require. 3
‘‘(7) E
MERGENCY AUTHORITY .—A digital com-4
modity exchange shall adopt rules to provide for the 5
exercise of emergency authority, in consultation or 6
cooperation with the Commission or a registered en-7
tity, as is necessary and appropriate, including the 8
authority to facilitate the liquidation or transfer of 9
open positions in any digital commodity or to sus-10
pend or curtail trading in a digital commodity. 11
‘‘(8) T
IMELY PUBLICATION OF TRADING INFOR -12
MATION.— 13
‘‘(A) I
N GENERAL.—A digital commodity 14
exchange shall make public timely information 15
on price, trading volume, and other trading 16
data on digital commodities to the extent pre-17
scribed by the Commission. 18
‘‘(B) C
APACITY OF DIGITAL COMMODITY 19
EXCHANGE.—A digital commodity exchange 20
shall have the capacity to electronically capture 21
and transmit trade information with respect to 22
transactions executed on the exchange. 23
‘‘(9) R
ECORDKEEPING AND REPORTING .— 24
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‘‘(A) IN GENERAL.—A digital commodity 1
exchange shall— 2
‘‘(i) maintain records of all activities 3
relating to the business of the facility, in-4
cluding a complete audit trail, in a form 5
and manner acceptable to the Commission 6
for a period of 5 years; 7
‘‘(ii) report to the Commission, in a 8
form and manner acceptable to the Com-9
mission, such information as the Commis-10
sion determines to be necessary or appro-11
priate for the Commission to perform the 12
duties of the Commission under this Act; 13
and 14
‘‘(iii) keep any such records of digital 15
commodities which relate to a security 16
open to inspection and examination by the 17
Securities and Exchange Commission. 18
‘‘(B) I
NFORMATION SHARING .—Subject to 19
section 8, and on request, the Commission shall 20
share information collected under subparagraph 21
(A) with— 22
‘‘(i) the Board; 23
‘‘(ii) the Securities and Exchange 24
Commission; 25
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‘‘(iii) each appropriate Federal bank-1
ing agency; 2
‘‘(iv) each appropriate State bank su-3
pervisor (within the meaning of section 3 4
of the Federal Deposit Insurance Act); 5
‘‘(v) the Financial Stability Oversight 6
Council; 7
‘‘(vi) the Department of Justice; and 8
‘‘(vii) any other person that the Com-9
mission determines to be appropriate, in-10
cluding— 11
‘‘(I) foreign financial supervisors 12
(including foreign futures authorities); 13
‘‘(II) foreign central banks; and 14
‘‘(III) foreign ministries. 15
‘‘(C) C
ONFIDENTIALITY AGREEMENT .—Be-16
fore the Commission may share information 17
with any entity described in subparagraph (B), 18
the Commission shall receive a written agree-19
ment from the entity stating that the entity 20
shall abide by the confidentiality requirements 21
described in section 8 relating to the informa-22
tion on digital commodities that is provided. 23
‘‘(D) P
ROVIDING INFORMATION .—A digital 24
commodity exchange shall provide to the Com-25
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mission (including any designee of the Commis-1
sion) information under subparagraph (A) in 2
such form and at such frequency as is required 3
by the Commission. 4
‘‘(10) A
NTITRUST CONSIDERATIONS .—Unless 5
necessary or appropriate to achieve the purposes of 6
this Act, a digital commodity exchange shall not— 7
‘‘(A) adopt any rules or take any actions 8
that result in any unreasonable restraint of 9
trade; or 10
‘‘(B) impose any material anticompetitive 11
burden on trading. 12
‘‘(11) C
ONFLICTS OF INTEREST .—A registered 13
digital commodity exchange shall implement conflict- 14
of-interest systems and procedures that— 15
‘‘(A) establish structural and institutional 16
safeguards— 17
‘‘(i) to minimize conflicts of interest 18
that might potentially bias the judgment or 19
supervision of the digital commodity ex-20
change and contravene the principles of 21
fair and equitable trading and the business 22
conduct standards described in this Act, 23
including conflicts arising out of trans-24
actions or arrangements with affiliates (in-25
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cluding affiliates engaging in digital com-1
modity activities) which may include infor-2
mation partitions and the legal separation 3
of different persons or entities involved in 4
digital commodity activities; and 5
‘‘(ii) to ensure that the activities of 6
any person within the digital commodity 7
exchange or any affiliated entity relating to 8
research or analysis of the price or market 9
for any digital commodity or acting in a 10
role of providing dealing, brokering, or ad-11
vising activities are separated by appro-12
priate informational partitions within the 13
digital commodity exchange or any affili-14
ated entity from the review, pressure, or 15
oversight of persons whose involvement in 16
pricing, trading, exchange, or clearing ac-17
tivities might potentially bias their judg-18
ment or supervision and contravene the 19
core principles of open access and the busi-20
ness conduct standards described in this 21
Act; and 22
‘‘(B) address such other issues as the 23
Commission determines to be appropriate. 24
‘‘(12) F
INANCIAL RESOURCES.— 25
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‘‘(A) IN GENERAL.—A digital commodity 1
exchange shall have adequate financial, oper-2
ational, and managerial resources, as deter-3
mined by the Commission, to discharge each re-4
sponsibility of the digital commodity exchange. 5
‘‘(B) M
INIMUM AMOUNT OF FINANCIAL RE -6
SOURCES.—A digital commodity exchange shall 7
possess financial resources that, at a minimum, 8
exceed the total amount that would enable the 9
digital commodity exchange to conduct an or-10
derly wind-down of its activities. 11
‘‘(13) D
ISCIPLINARY PROCEDURES .—A digital 12
commodity exchange shall establish and enforce dis-13
ciplinary procedures that authorize the digital com-14
modity exchange to discipline, suspend, or expel 15
members or market participants that violate the 16
rules of the digital commodity exchange, or similar 17
methods for performing the same functions, includ-18
ing delegation of the functions to third parties. 19
‘‘(14) G
OVERNANCE FITNESS STANDARDS .— 20
‘‘(A) G
OVERNANCE ARRANGEMENTS .—A 21
digital commodity exchange shall establish gov-22
ernance arrangements that are transparent to 23
fulfill public interest requirements. 24
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‘‘(B) FITNESS STANDARDS .—A digital 1
commodity exchange shall establish and enforce 2
appropriate fitness standards for— 3
‘‘(i) directors; and 4
‘‘(ii) any individual or entity with di-5
rect access to, or control of, customer as-6
sets. 7
‘‘(15) S
YSTEM SAFEGUARDS .—A digital com-8
modity exchange shall— 9
‘‘(A) establish and maintain a program of 10
risk analysis and oversight to identify and mini-11
mize sources of operational and security risks, 12
through the development of appropriate controls 13
and procedures, and automated systems, that— 14
‘‘(i) are reliable and secure; and 15
‘‘(ii) have adequate scalable capacity; 16
‘‘(B) establish and maintain emergency 17
procedures, backup facilities, and a plan for dis-18
aster recovery that allow for— 19
‘‘(i) the timely recovery and resump-20
tion of operations; and 21
‘‘(ii) the fulfillment of the responsibil-22
ities and obligations of the digital com-23
modity exchange; and 24
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‘‘(C) periodically conduct tests to verify 1
that the backup resources of the digital com-2
modity exchange are sufficient to ensure contin-3
ued— 4
‘‘(i) order processing and trade 5
matching; 6
‘‘(ii) price reporting; 7
‘‘(iii) market surveillance; and 8
‘‘(iv) maintenance of a comprehensive 9
and accurate audit trail. 10
‘‘(d) H
OLDING OFCUSTOMERASSETS.— 11
‘‘(1) I
N GENERAL.—A digital commodity ex-12
change shall hold customer money, assets, and prop-13
erty in a manner to minimize the risk of loss to the 14
customer or unreasonable delay in the access to the 15
money, assets, and property of the customer. 16
‘‘(A) S
EGREGATION OF FUNDS .— 17
‘‘(i) I
N GENERAL.—A digital com-18
modity exchange shall treat and deal with 19
all money, assets, and property that is re-20
ceived by the digital commodity exchange, 21
or accrues to a customer as the result of 22
trading in digital commodities, as belong-23
ing to the customer. 24
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‘‘(ii) COMMINGLING PROHIBITED .— 1
Money, assets, and property of a customer 2
described in clause (i) shall be separately 3
accounted for and shall not be commingled 4
with the funds of the digital commodity ex-5
change or be used to margin, secure, or 6
guarantee any trades or accounts of any 7
customer or person other than the person 8
for whom the same are held. 9
‘‘(B) E
XCEPTIONS.— 10
‘‘(i) U
SE OF FUNDS.— 11
‘‘(I) I
N GENERAL .—Notwith-12
standing subparagraph (A), money, 13
assets, and property of customers of a 14
digital commodity exchange described 15
in subparagraph (A) may, for conven-16
ience, be commingled and deposited in 17
the same account or accounts with 18
any bank, trust company, derivatives 19
clearing organization, or qualified dig-20
ital commodity custodian. 21
‘‘(II) W
ITHDRAWAL.—Notwith-22
standing subparagraph (A), such 23
share of the money, assets, and prop-24
erty described in item (aa) as in the 25
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normal course of business shall be 1
necessary to margin, guarantee, se-2
cure, transfer, adjust, or settle a con-3
tract of sale of a digital commodity 4
with a registered entity may be with-5
drawn and applied to such purposes, 6
including the payment of commis-7
sions, brokerage, interest, taxes, stor-8
age, and other charges, lawfully ac-9
cruing in connection with the contract 10
of sale of a digital commodity. 11
‘‘(ii) C
OMMISSION ACTION.—Notwith-12
standing subparagraph (A), in accordance 13
with such terms and conditions as the 14
Commission may prescribe by rule, regula-15
tion, or order, any money, assets, or prop-16
erty of the customers of a digital com-17
modity exchange described in subpara-18
graph (A) may be commingled and depos-19
ited in customer accounts with any other 20
money, assets, or property received by the 21
digital commodity exchange and required 22
by the Commission to be separately ac-23
counted for and treated and dealt with as 24
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belonging to the customer of the digital 1
commodity exchange. 2
‘‘(2) P
ERMITTED INVESTMENTS .—Money de-3
scribed in subparagraph (A) may be invested in obli-4
gations of the United States, in general obligations 5
of any State or of any political subdivision of a 6
State, and in obligations fully guaranteed as to prin-7
cipal and interest by the United States, or in any 8
other investment that the Commission may by rule 9
or regulation prescribe, and such investments shall 10
be made in accordance with such rules and regula-11
tions and subject to such conditions as the Commis-12
sion may prescribe. 13
‘‘(3) C
USTOMER PROTECTION DURING BANK -14
RUPTCY.— 15
‘‘(A) C
USTOMER PROPERTY .—All assets 16
held on behalf of a customer by a digital com-17
modity exchange, and all money, assets, and 18
property of any customer received by a digital 19
commodity exchange registered under section 5i 20
of this Act for trading or custody, or to facili-21
tate, margin, guarantee, or secure contracts of 22
sale of a digital commodity (including money, 23
assets, or property accruing to the customer as 24
the result of the transactions), shall be consid-25
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ered customer property for purposes of section 1
761 of title 11, United States Code. 2
‘‘(B) T
RANSACTIONS.—A transaction in-3
volving a unit of a digital commodity occurring 4
on or subject to the rules of a digital com-5
modity exchange shall be considered a ‘contract 6
for the purchase or sale of a commodity for fu-7
ture delivery, on or subject to the rules of, a 8
contract market or board of trade’ for the pur-9
poses of the definition of a ‘commodity con-10
tract’ in section 761 of title 11, United States 11
Code. 12
‘‘(C) E
XCHANGES.—A digital commodity 13
exchange shall be considered a futures commis-14
sion merchant for purposes of section 761 of 15
title 11, United States Code. 16
‘‘(4) M
ISUSE OF CUSTOMER PROPERTY .— 17
‘‘(A) I
N GENERAL.—It shall be unlawful— 18
‘‘(i) for any digital commodity ex-19
change that has received any customer 20
money, assets, or property for custody to 21
dispose of, or use any such money, assets, 22
or property as belonging to the digital 23
commodity exchange; or 24
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‘‘(ii) for any other person, including 1
any depository, other digital commodity ex-2
change, or digital commodity custodian 3
that has received any customer money, as-4
sets, or property for deposit, to hold, dis-5
pose of, or use any such money, assets, or 6
property, or property, as belonging to the 7
depositing digital commodity exchange or 8
any person other than the customers of the 9
digital commodity exchange. 10
‘‘(B) U
SE FURTHER DEFINED .—For pur-11
poses of this section, ‘use’ of a digital com-12
modity includes utilizing any unit of a digital 13
asset to participate in a blockchain service de-14
fined in paragraph (5) or a decentralized gov-15
ernance system associated with the digital com-16
modity or the blockchain system to which the 17
digital commodity relates in any manner other 18
than that expressly directed by the customer 19
from whom the unit of a digital commodity was 20
received. 21
‘‘(5) P
ARTICIPATION IN BLOCKCHAIN SERV -22
ICES.— 23
‘‘(A) I
N GENERAL.—A customer shall have 24
the right to waive the restrictions in paragraph 25
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(1) for any unit of a digital commodity, by af-1
firmatively electing, in writing to the digital 2
commodity exchange, to waive the restrictions. 3
‘‘(B) U
SE OF FUNDS.—Customer digital 4
commodities removed from segregation under 5
subparagraph (A) may be pooled and used by 6
the digital commodity exchange or its designee 7
to provide a blockchain service for a blockchain 8
system to which the unit of the digital asset re-9
moved from segregation in subparagraph (A) 10
relates. 11
‘‘(C) L
IMITATIONS.—The Commission 12
may, by rule, establish notice and disclosure re-13
quirements, and any other limitations and rules 14
related to the waiving of any restrictions under 15
this paragraph that are reasonably necessary to 16
protect customers, including eligible contract 17
participants, non-eligible contract participants, 18
or any other class of customers. 19
‘‘(D) B
LOCKCHAIN SERVICE DEFINED .—In 20
this subparagraph, the term ‘blockchain service’ 21
means any activity relating to validating trans-22
actions on a blockchain system, providing secu-23
rity for a blockchain system, or other similar 24
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activity required for the ongoing operation of a 1
blockchain system. 2
‘‘(e) M
ARKETACCESSREQUIREMENTS.— 3
‘‘(1) I
N GENERAL.—A digital commodity ex-4
change shall require any person who is not an eligi-5
ble contract participant to access trading on the ex-6
change through a digital commodity broker. 7
‘‘(2) A
FFILIATED COMMODITY BROKERS .—A 8
registered digital commodity exchange may maintain 9
an affiliated digital commodity broker to facilitate 10
access to the digital commodity exchange, if— 11
‘‘(A) no other digital commodity brokers 12
are permitted to facilitate access to the ex-13
change; 14
‘‘(B) the affiliated digital commodity 15
broker limits its activities only to providing cus-16
tomer access to the digital commodity exchange; 17
and 18
‘‘(C) the affiliated digital commodity 19
broker is not also registered as a digital com-20
modity dealer. 21
‘‘(3) D
IRECT ACCESS FOR ELIGIBLE CONTRACT 22
PARTICIPANTS.—Nothing in this section shall pro-23
hibit a digital commodity exchange in compliance 24
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with this section from permitting direct access for 1
eligible contract participants. 2
‘‘(4) A
DDITIONAL REQUIREMENTS .— 3
‘‘(A) I
N GENERAL.—The Commission may, 4
by rule, impose any additional requirements re-5
lated to the operations and activities of the dig-6
ital commodity exchange and the affiliated dig-7
ital commodity broker necessary to protect mar-8
ket participants, promote fair and equitable 9
trading on the digital commodity exchange, and 10
promote responsible economic or financial inno-11
vation. 12
‘‘(B) D
ELEGATION OF AUTHORITY .—The 13
Commission may delegate to a registered fu-14
tures association such oversight and regulatory 15
requirements as the Commission determines are 16
necessary to— 17
‘‘(i) supervise the activities of the dig-18
ital commodity exchange and an affiliated 19
digital commodity broker; and 20
‘‘(ii) protect market participants, pro-21
mote fair and equitable trading on the dig-22
ital commodity exchange, and promote re-23
sponsible economic or financial innovation. 24
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‘‘(f) DESIGNATION OF CHIEFCOMPLIANCEOFFI-1
CER.— 2
‘‘(1) I
N GENERAL.—A digital commodity ex-3
change shall designate an individual to serve as a 4
chief compliance officer. 5
‘‘(2) D
UTIES.—The chief compliance officer 6
shall— 7
‘‘(A) report directly to the board or to the 8
senior officer of the exchange; 9
‘‘(B) review compliance with the core prin-10
ciples in this subsection; 11
‘‘(C) in consultation with the board of the 12
exchange, a body performing a function similar 13
to that of a board, or the senior officer of the 14
exchange, resolve any conflicts of interest that 15
may arise; 16
‘‘(D) establish and administer the policies 17
and procedures required to be established pur-18
suant to this section; 19
‘‘(E) ensure compliance with this Act and 20
the rules and regulations issued under this Act, 21
including rules prescribed by the Commission 22
pursuant to this section; and 23
‘‘(F) establish procedures for the remedi-24
ation of noncompliance issues found during 25
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compliance office reviews, look backs, internal 1
or external audit findings, self-reported errors, 2
or through validated complaints. 3
‘‘(3) R
EQUIREMENTS FOR PROCEDURES .—In 4
establishing procedures under paragraph (2)(F), the 5
chief compliance officer shall design the procedures 6
to establish the handling, management response, re-7
mediation, retesting, and closing of noncompliance 8
issues. 9
‘‘(4) A
NNUAL REPORTS.— 10
‘‘(A) I
N GENERAL.—In accordance with 11
rules prescribed by the Commission, the chief 12
compliance officer shall annually prepare and 13
sign a report that contains a description of— 14
‘‘(i) the compliance of the digital com-15
modity exchange with this Act; and 16
‘‘(ii) the policies and procedures, in-17
cluding the code of ethics and conflict of 18
interest policies, of the digital commodity 19
exchange. 20
‘‘(B) R
EQUIREMENTS.—The chief compli-21
ance officer shall— 22
‘‘(i) submit each report described in 23
subparagraph (A) with the appropriate fi-24
nancial report of the digital commodity ex-25
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change that is required to be submitted to 1
the Commission pursuant to this section; 2
and 3
‘‘(ii) include in the report a certifi-4
cation that, under penalty of law, the re-5
port is accurate and complete. 6
‘‘(g) A
PPOINTMENT OFTRUSTEE.— 7
‘‘(1) I
N GENERAL.—If a proceeding under sec-8
tion 5e results in the suspension or revocation of the 9
registration of a digital commodity exchange, or if a 10
digital commodity exchange withdraws from registra-11
tion, the Commission, on notice to the digital com-12
modity exchange, may apply to the appropriate 13
United States district court where the digital com-14
modity exchange is located for the appointment of a 15
trustee. 16
‘‘(2) A
SSUMPTION OF JURISDICTION .—If the 17
Commission applies for appointment of a trustee 18
under paragraph (1)— 19
‘‘(A) the court may take exclusive jurisdic-20
tion over the digital commodity exchange and 21
the records and assets of the digital commodity 22
exchange, wherever located; and 23
‘‘(B) if the court takes jurisdiction under 24
subparagraph (A), the court shall appoint the 25
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Commission, or a person designated by the 1
Commission, as trustee with power to take pos-2
session and continue to operate or terminate 3
the operations of the digital commodity ex-4
change in an orderly manner for the protection 5
of customers subject to such terms and condi-6
tions as the court may prescribe. 7
‘‘(h) Q
UALIFIEDDIGITALCOMMODITY CUSTO-8
DIAN.—A digital commodity exchange shall hold in a 9
qualified digital commodity custodian each unit of a digital 10
commodity that is— 11
‘‘(1) the property of a customer of the digital 12
commodity exchange; 13
‘‘(2) required to be held by the digital com-14
modity exchange under subsection (c)(12) of this 15
section; or 16
‘‘(3) otherwise so required by the Commission 17
to reasonably protect customers or promote the pub-18
lic interest. 19
‘‘(i) E
XEMPTIONS.—In order to promote responsible 20
economic or financial innovation and fair competition, or 21
protect customers, the Commission may (on its own initia-22
tive or on application of the registered digital commodity 23
exchange) exempt, either unconditionally or on stated 24
terms or conditions or for stated periods and either retro-25
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actively or prospectively, or both, a registered digital com-1
modity exchange from the requirements of this section, if 2
the Commission determines that— 3
‘‘(1)(A) the exemption would be consistent with 4
the public interest and the purposes of this Act; and 5
‘‘(B) the exemption will not have a material ad-6
verse effect on the ability of the Commission or the 7
digital commodity exchange to discharge regulatory 8
or self-regulatory duties under this Act; or 9
‘‘(2) the digital commodity exchange is subject 10
to comparable, comprehensive supervision and regu-11
lation by the appropriate government authorities in 12
the home country of the exchange. 13
‘‘(j) C
USTOMERDEFINED.—In this section, the term 14
‘customer’ means any person that maintains an account 15
for the trading of digital commodities directly with a dig-16
ital commodity exchange (other than a person that is 17
owned or controlled, directly or indirectly, by the digital 18
commodity exchange) for its own behalf or on behalf of 19
other any person. 20
‘‘(k) F
EDERALPREEMPTION.—Notwithstanding any 21
other provision of law, the Commission shall have exclusive 22
jurisdiction over any digital commodity exchange reg-23
istered under this section. 24
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‘‘(l) TREATMENT UNDER THE BANKSECRECY 1
A
CT.—A registered digital commodity exchange shall be 2
treated as a financial institution for purposes of the Bank 3
Secrecy Act.’’. 4
SEC. 405. QUALIFIED DIGITAL COMMODITY CUSTODIANS. 5
The Commodity Exchange Act (7 U.S.C. 1 et seq.), 6
as amended by the preceding provisions of this Act, is 7
amended by inserting after section 5i the following: 8
‘‘SEC. 5j. QUALIFIED DIGITAL COMMODITY CUSTODIANS. 9
‘‘(a) I
NGENERAL.—For purposes of this Act, a 10
qualified digital commodity custodian is a digital com-11
modity custodian who meets the following conditions: 12
‘‘(1) S
UPERVISION.—The digital commodity 13
custodian is subject to adequate supervision and ap-14
propriate regulation. 15
‘‘(2) N
O PROHIBITION.—The digital commodity 16
custodian is— 17
‘‘(A) subject to the supervision of— 18
‘‘(i) an appropriate Federal banking 19
agency; 20
‘‘(ii) a State bank supervisor (within 21
the meaning of section 3 of the Federal 22
Deposit Insurance Act); or 23
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‘‘(iii) an appropriate foreign govern-1
mental authority in the home country of 2
the digital commodity custodian; and 3
‘‘(B) not prohibited by the applicable su-4
pervisor referred to in subparagraph (A) from 5
engaging in any activity with respect to the 6
holding of digital commodities. 7
‘‘(3) I
NFORMATION SHARING .— 8
‘‘(A) I
N GENERAL.—The digital commodity 9
custodian agrees to such periodic sharing of in-10
formation regarding customer accounts the dig-11
ital commodity custodian holds on behalf of an 12
entity registered with the Commission, as the 13
Commission determines by rule shall be reason-14
ably necessary to effectuate any of the provi-15
sions, or to accomplish any of the purposes, of 16
this Act. 17
‘‘(B) P
ROVISION OF INFORMATION .—Any 18
person that is subject to regulation and exam-19
ination by a prudential regulator may satisfy 20
any information request described in subpara-21
graph (A), by providing the Commission with a 22
detailed listing, in writing, of the digital com-23
modities of a customer within the custody or 24
use of the person. 25
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‘‘(b) ADEQUATESUPERVISION AND APPROPRIATE 1
R
EGULATIONFURTHERDEFINED.— 2
‘‘(1) I
N GENERAL.—In subsection (a), the 3
terms ‘adequate supervision’ and ‘appropriate regu-4
lation’ mean such minimum standards for super-5
vision and regulation as are reasonably necessary to 6
protect the digital commodities of customers of an 7
entity registered with the Commission, including 8
minimum standards relating to— 9
‘‘(A) accessibility of customer assets; 10
‘‘(B) financial resources; 11
‘‘(C) risk management requirements; 12
‘‘(D) governance arrangements; 13
‘‘(E) fitness standards; 14
‘‘(F) recordkeeping; 15
‘‘(G) information sharing; and 16
‘‘(H) conflicts of interest. 17
‘‘(2) D
EEMED COMPLIANCE .—For purposes of 18
subsection (a), a bank subject to the supervision of 19
an appropriate Federal banking agency or a State 20
bank supervisor (within the meaning of section 3 of 21
the Federal Deposit Insurance Act) is deemed to be 22
subject to adequate supervision and appropriate reg-23
ulation. 24
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‘‘(3) RULEMAKING AUTHORITY .—For purposes 1
of subsection (a), the Commission, by rule or order, 2
may further define the terms ‘adequate supervision’ 3
and ‘appropriate regulation’ as necessary in the pub-4
lic interest, as appropriate for the protection of cus-5
tomers, and consistent with the purposes of this Act. 6
‘‘(c) A
UTHORITY TOTEMPORARILY SUSPEND 7
S
TANDARDS.—The Commission may, by rule or order, 8
temporarily suspend, in whole or in part, any requirement 9
imposed under, or any standard referred to in, this section 10
if the Commission determines that the suspension would 11
be consistent with the public interest and the purposes of 12
this Act.’’. 13
SEC. 406. REGISTRATION AND REGULATION OF DIGITAL 14
COMMODITY BROKERS AND DEALERS. 15
The Commodity Exchange Act (7 U.S.C. 1 et seq.), 16
as amended by the preceding provisions of this Act, is 17
amended by inserting after section 4t the following: 18
‘‘SEC. 4u. REGISTRATION AND REGULATION OF DIGITAL 19
COMMODITY BROKERS AND DEALERS. 20
‘‘(a) R
EGISTRATION.—It shall be unlawful for any 21
person to act as a digital commodity broker or digital com-22
modity dealer unless the person is registered as such with 23
the Commission. 24
‘‘(b) R
EQUIREMENTS.— 25
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‘‘(1) IN GENERAL.—A person shall register as 1
a digital commodity broker or digital commodity 2
dealer by filing a registration application with the 3
Commission. 4
‘‘(2) C
ONTENTS.— 5
‘‘(A) I
N GENERAL.—The application shall 6
be made in such form and manner as is pre-7
scribed by the Commission, and shall contain 8
such information as the Commission considers 9
necessary concerning the business in which the 10
applicant is or will be engaged. 11
‘‘(B) C
ONTINUAL REPORTING .—A person 12
that is registered as a digital commodity broker 13
or digital commodity dealer shall continue to 14
submit to the Commission reports that contain 15
such information pertaining to the business of 16
the person as the Commission may require. 17
‘‘(3) T
RANSITION.—Within 180 days after the 18
date of the enactment of this section, the Commis-19
sion shall prescribe rules providing for the registra-20
tion of digital commodity brokers and digital com-21
modity dealers under this section. 22
‘‘(4) S
TATUTORY DISQUALIFICATION .—Except 23
to the extent otherwise specifically provided by rule, 24
regulation, or order, it shall be unlawful for a digital 25
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commodity broker or digital commodity dealer to 1
permit any person who is associated with a digital 2
commodity broker or a digital commodity dealer and 3
who is subject to a statutory disqualification to ef-4
fect or be involved in effecting a contract for sale of 5
a digital commodity on behalf of the digital com-6
modity broker or the digital commodity dealer, re-7
spectively, if the digital commodity broker or digital 8
commodity dealer, respectively, knew, or in the exer-9
cise of reasonable care should have known, of the 10
statutory disqualification. 11
‘‘(5) L
IMITATIONS ON CERTAIN ASSETS .—A 12
registered digital commodity broker or registered 13
digital commodity dealer shall not offer, offer to 14
enter into, enter into, or facilitate any contract for 15
sale of a digital commodity that has not been cer-16
tified under section 5c(d). 17
‘‘(c) A
DDITIONALREGISTRATIONS.— 18
‘‘(1) W
ITH THE COMMISSION .—Any person re-19
quired to be registered as a digital commodity 20
broker or digital commodity dealer may also be reg-21
istered as a futures commission merchant, intro-22
ducing broker, or swap dealer. 23
‘‘(2) W
ITH THE SECURITIES AND EXCHANGE 24
COMMISSION.—Any person required to be registered 25
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as a digital commodity broker or digital commodity 1
dealer under this section may register with the Secu-2
rities and Exchange Commission as a digital asset 3
broker or digital asset dealer, pursuant to section 4
15(b) of the Securities Exchange Act of 1934, as ap-5
plicable, if the digital asset broker or digital asset 6
dealer limits its solicitation of orders, acceptance of 7
orders, or execution of orders, or placing of orders 8
on behalf of others involving any contract of sale of 9
digital assets. 10
‘‘(3) W
ITH MEMBERSHIP IN A REGISTERED FU -11
TURES ASSOCIATION.—Any person required to be 12
registered as a digital commodity broker or digital 13
commodity dealer under this section shall be a mem-14
ber of a registered futures association. 15
‘‘(4) R
EGISTRATION REQUIRED .—Any person 16
required to be registered as a digital commodity 17
broker or digital commodity dealer under this sec-18
tion shall register with the Commission as such re-19
gardless of whether the person is registered as such 20
with another State or Federal regulator. 21
‘‘(d) R
ULEMAKING.— 22
‘‘(1) I
N GENERAL.—The Commission shall pre-23
scribe such rules applicable to registered digital com-24
modity brokers and registered digital commodity 25
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dealers as are appropriate to carry out this section, 1
including rules in the public interest that limit the 2
activities of digital commodity brokers and digital 3
commodity dealers. 4
‘‘(2) M
ULTIPLE REGISTRANTS .—The Commis-5
sion shall prescribe rules or regulations permitting, 6
or may otherwise authorize, exemptions or additional 7
requirements applicable to persons with multiple reg-8
istrations under this Act, including as futures com-9
mission merchants, introducing brokers, digital com-10
modity brokers, digital commodity dealers, or swap 11
dealers, as may be in the public interest to reduce 12
compliance costs and promote customer protection. 13
‘‘(e) C
APITALREQUIREMENTS.— 14
‘‘(1) I
N GENERAL.—Each registered digital 15
commodity broker and registered digital commodity 16
dealer shall meet such minimum capital require-17
ments as the Commission may prescribe to ensure 18
that the digital commodity broker or digital com-19
modity dealer, respectively, is able to— 20
‘‘(A) meet, and continue to meet, at all 21
times, the obligations of such a registrant; 22
‘‘(B) conduct an orderly wind-down of the 23
activities of the digital commodity broker or 24
digital commodity dealer, respectively; and 25
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‘‘(C) in the case of a digital commodity 1
dealer, fulfill the customer obligations of the 2
digital commodity dealer for any margined, le-3
veraged, or financed transactions. 4
‘‘(2) R
ULE OF CONSTRUCTION .—Nothing in 5
this section shall limit, or be construed to limit, the 6
authority of the Securities and Exchange Commis-7
sion to set financial responsibility rules for a broker 8
or dealer registered pursuant to section 15(b) of the 9
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) 10
(except for section 15(b)(11) of such Act (15 U.S.C. 11
78o(b)(11)) in accordance with section 15(c)(3) of 12
such Act (15 U.S.C. 78o(c)(3)). 13
‘‘(3) F
UTURES COMMISSION MERCHANTS AND 14
OTHER DEALERS.— 15
‘‘(A) I
N GENERAL.—Each futures commis-16
sion merchant, introducing broker, digital com-17
modity broker, digital commodity dealer, 18
broker, and dealer shall maintain sufficient cap-19
ital to comply with the stricter of any applicable 20
capital requirements to which the futures com-21
mission merchant, introducing broker, digital 22
commodity broker, digital commodity dealer, 23
broker, or dealer, respectively, is subject under 24
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this Act or the Securities Exchange Act of 1934 1
(15 U.S.C. 78a et seq.). 2
‘‘(B) C
OORDINATION OF CAPITAL RE -3
QUIREMENTS.— 4
‘‘(i) C
OMMISSION RULE.—The Com-5
mission shall, by rule, provide appropriate 6
offsets to any applicable capital require-7
ment for a person with multiple registra-8
tions as a digital commodity dealer, digital 9
commodity broker, futures commission 10
merchant, or introducing broker. 11
‘‘(ii) J
OINT RULE.—The Commission 12
and the Securities and Exchange Commis-13
sion shall jointly, by rule, provide appro-14
priate offsets to any applicable capital re-15
quirement for a person with multiple reg-16
istrations as a digital commodity dealer, 17
digital commodity broker, futures commis-18
sion merchant, introducing broker, broker, 19
or dealer. 20
‘‘(f) R
EPORTING ANDRECORDKEEPING.—Each reg-21
istered digital commodity broker and registered digital 22
commodity dealer— 23
‘‘(1) shall make such reports as are required by 24
the Commission by rule or regulation regarding the 25
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transactions, positions, and financial condition of the 1
digital commodity broker or digital commodity deal-2
er, respectively; 3
‘‘(2) shall keep books and records in such form 4
and manner and for such period as may be pre-5
scribed by the Commission by rule or regulation; and 6
‘‘(3) shall keep the books and records open to 7
inspection and examination by any representative of 8
the Commission. 9
‘‘(g) D
AILYTRADINGRECORDS.— 10
‘‘(1) I
N GENERAL.—Each registered digital 11
commodity broker and registered digital commodity 12
dealer shall maintain daily trading records of the 13
transactions of the digital commodity broker or dig-14
ital commodity dealer, respectively, and all related 15
records (including related forward or derivatives 16
transactions) and recorded communications, includ-17
ing electronic mail, instant messages, and recordings 18
of telephone calls, for such period as the Commission 19
may require by rule or regulation. 20
‘‘(2) I
NFORMATION REQUIREMENTS .—The daily 21
trading records shall include such information as the 22
Commission shall require by rule or regulation. 23
‘‘(3) C
OUNTERPARTY RECORDS .—Each reg-24
istered digital commodity broker and registered dig-25
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ital commodity dealer shall maintain daily trading 1
records for each customer or counterparty in a man-2
ner and form that is identifiable with each digital 3
commodity transaction. 4
‘‘(4) A
UDIT TRAIL.—Each registered digital 5
commodity broker and registered digital commodity 6
dealer shall maintain a complete audit trail for con-7
ducting comprehensive and accurate trade recon-8
structions. 9
‘‘(h) B
USINESSCONDUCTSTANDARDS.— 10
‘‘(1) I
N GENERAL.—Each registered digital 11
commodity broker and registered digital commodity 12
dealer shall conform with such business conduct 13
standards as the Commission, by rule or regulation, 14
prescribes related to— 15
‘‘(A) fraud, manipulation, and other abu-16
sive practices involving spot or margined, lever-17
aged, or financed digital commodity trans-18
actions (including transactions that are offered 19
but not entered into); 20
‘‘(B) diligent supervision of the business of 21
the registered digital commodity broker or dig-22
ital commodity dealer, respectively; and 23
‘‘(C) such other matters as the Commis-24
sion deems appropriate. 25
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‘‘(2) BUSINESS CONDUCT REQUIREMENTS .— 1
The Commission shall, by rule, prescribe business 2
conduct requirements which— 3
‘‘(A) require disclosure by a registered dig-4
ital commodity broker and registered digital 5
commodity dealer to any counterparty to the 6
transaction (other than an eligible contract par-7
ticipant) of— 8
‘‘(i) information about the material 9
risks and characteristics of the digital com-10
modity; and 11
‘‘(ii) information about the material 12
risks and characteristics of the transaction; 13
‘‘(B) establish a duty for such a digital 14
commodity broker and such a digital commodity 15
dealer to communicate in a fair and balanced 16
manner based on principles of fair dealing and 17
good faith; 18
‘‘(C) establish standards governing digital 19
commodity platform marketing and advertising, 20
including testimonials and endorsements; and 21
‘‘(D) establish such other standards and 22
requirements as the Commission may determine 23
are— 24
‘‘(i) in the public interest; 25
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‘‘(ii) appropriate for the protection of 1
customers; or 2
‘‘(iii) otherwise in furtherance of the 3
purposes of this Act. 4
‘‘(3) P
ROHIBITION ON FRAUDULENT PRAC -5
TICES.—It shall be unlawful for a registered digital 6
commodity broker or registered digital commodity 7
dealer to— 8
‘‘(A) employ any device, scheme, or artifice 9
to defraud any customer or counterparty; 10
‘‘(B) engage in any transaction, practice, 11
or course of business that operates as a fraud 12
or deceit on any customer or counterparty; or 13
‘‘(C) engage in any act, practice, or course 14
of business that is fraudulent, deceptive, or ma-15
nipulative. 16
‘‘(i) D
UTIES.— 17
‘‘(1) R
ISK MANAGEMENT PROCEDURES .—Each 18
registered digital commodity broker and registered 19
digital commodity dealer shall establish robust and 20
professional risk management systems adequate for 21
managing the day-to-day business of the digital com-22
modity broker or digital commodity dealer, respec-23
tively. 24
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‘‘(2) DISCLOSURE OF GENERAL INFORMA -1
TION.—Each registered digital commodity broker 2
and registered digital commodity dealer shall dis-3
close to the Commission information concerning— 4
‘‘(A) the terms and conditions of the trans-5
actions of the digital commodity broker or dig-6
ital commodity dealer, respectively; 7
‘‘(B) the trading operations, mechanisms, 8
and practices of the digital commodity broker 9
or digital commodity dealer, respectively; 10
‘‘(C) financial integrity protections relating 11
to the activities of the digital commodity broker 12
or digital commodity dealer, respectively; and 13
‘‘(D) other information relevant to trading 14
in digital commodities by the digital commodity 15
broker or digital commodity dealer, respectively. 16
‘‘(3) A
BILITY TO OBTAIN INFORMATION .—Each 17
registered digital commodity broker and registered 18
digital commodity dealer shall— 19
‘‘(A) establish and enforce internal systems 20
and procedures to obtain any necessary infor-21
mation to perform any of the functions de-22
scribed in this section; and 23
‘‘(B) provide the information to the Com-24
mission, on request. 25
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‘‘(4) CONFLICTS OF INTEREST .—Each reg-1
istered digital commodity broker and digital com-2
modity dealer shall implement conflict-of-interest 3
systems and procedures that— 4
‘‘(A) establish structural and institutional 5
safeguards— 6
‘‘(i) to minimize conflicts of interest 7
that might potentially bias the judgment or 8
supervision of the digital commodity broker 9
or digital commodity dealer, respectively, 10
and contravene the principles of fair and 11
equitable trading and the business conduct 12
standards described in this Act, including 13
conflicts arising out of transactions or ar-14
rangements with affiliates (including affili-15
ates acting as digital asset issuers, digital 16
commodity dealers, or qualified digital 17
commodity custodians), which may include 18
information partitions and the legal sepa-19
ration of different digital commodity trans-20
action intermediaries; and 21
‘‘(ii) to ensure that the activities of 22
any person within the digital commodity 23
broker or digital commodity dealer relating 24
to research or analysis of the price or mar-25
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ket for any digital commodity or acting in 1
a role of providing exchange activities or 2
making determinations as to accepting ex-3
change customers are separated by appro-4
priate informational partitions within the 5
digital commodity broker or digital com-6
modity dealer from the review, pressure, or 7
oversight of persons whose involvement in 8
pricing, trading, exchange, or clearing ac-9
tivities might potentially bias their judg-10
ment or supervision and contravene the 11
core principles of open access and the busi-12
ness conduct standards described in this 13
Act; and 14
‘‘(B) address such other issues as the 15
Commission determines to be appropriate. 16
‘‘(5) A
NTITRUST CONSIDERATIONS .—Unless 17
necessary or appropriate to achieve the purposes of 18
this Act, a digital commodity broker or digital com-19
modity dealer shall not— 20
‘‘(A) adopt any process or take any action 21
that results in any unreasonable restraint of 22
trade; or 23
‘‘(B) impose any material anticompetitive 24
burden on trading or clearing. 25
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‘‘(j) DESIGNATION OF CHIEFCOMPLIANCEOFFI-1
CER.— 2
‘‘(1) I
N GENERAL.—Each registered digital 3
commodity broker and registered digital commodity 4
dealer shall designate an individual to serve as a 5
chief compliance officer. 6
‘‘(2) D
UTIES.—The chief compliance officer 7
shall— 8
‘‘(A) report directly to the board or to the 9
senior officer of the registered digital com-10
modity broker or registered digital commodity 11
dealer; 12
‘‘(B) review the compliance of the reg-13
istered digital commodity broker or registered 14
digital commodity dealer with respect to the 15
registered digital commodity broker and reg-16
istered digital commodity dealer requirements 17
described in this section; 18
‘‘(C) in consultation with the board of di-19
rectors, a body performing a function similar to 20
the board, or the senior officer of the organiza-21
tion, resolve any conflicts of interest that may 22
arise; 23
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‘‘(D) be responsible for administering each 1
policy and procedure that is required to be es-2
tablished pursuant to this section; 3
‘‘(E) ensure compliance with this Act (in-4
cluding regulations), including each rule pre-5
scribed by the Commission under this section; 6
‘‘(F) establish procedures for the remedi-7
ation of noncompliance issues identified by the 8
chief compliance officer through any— 9
‘‘(i) compliance office review; 10
‘‘(ii) look-back; 11
‘‘(iii) internal or external audit find-12
ing; 13
‘‘(iv) self-reported error; or 14
‘‘(v) validated complaint; and 15
‘‘(G) establish and follow appropriate pro-16
cedures for the handling, management response, 17
remediation, retesting, and closing of non-18
compliance issues. 19
‘‘(3) A
NNUAL REPORTS.— 20
‘‘(A) I
N GENERAL.—In accordance with 21
rules prescribed by the Commission, the chief 22
compliance officer shall annually prepare and 23
sign a report that contains a description of— 24
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‘‘(i) the compliance of the registered 1
digital commodity broker or registered dig-2
ital commodity dealer with respect to this 3
Act (including regulations); and 4
‘‘(ii) each policy and procedure of the 5
registered digital commodity broker or reg-6
istered digital commodity dealer of the 7
chief compliance officer (including the code 8
of ethics and conflict of interest policies). 9
‘‘(B) R
EQUIREMENTS.—The chief compli-10
ance officer shall ensure that a compliance re-11
port under subparagraph (A)— 12
‘‘(i) accompanies each appropriate fi-13
nancial report of the registered digital 14
commodity broker or registered digital 15
commodity dealer that is required to be 16
furnished to the Commission pursuant to 17
this section; and 18
‘‘(ii) includes a certification that, 19
under penalty of law, the compliance re-20
port is accurate and complete. 21
‘‘(k) S
EGREGATION OFDIGITALCOMMODITIES.— 22
‘‘(1) H
OLDING OF CUSTOMER ASSETS .— 23
‘‘(A) I
N GENERAL.—Each registered dig-24
ital commodity broker and registered digital 25
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commodity dealer shall hold customer money, 1
assets, and property in a manner to minimize 2
the risk of loss to the customer or unreasonable 3
delay in customer access to the money, assets, 4
and property of the customer. 5
‘‘(B) Q
UALIFIED DIGITAL COMMODITY 6
CUSTODIAN.—Each registered digital com-7
modity broker and registered digital commodity 8
dealer shall hold in a qualified digital com-9
modity custodian each unit of a digital com-10
modity that is— 11
‘‘(i) the property of a customer or 12
counterparty of the digital commodity 13
broker or digital commodity dealer, respec-14
tively; or 15
‘‘(ii) otherwise so required by the 16
Commission to reasonably protect cus-17
tomers or promote the public interest. 18
‘‘(2) S
EGREGATION OF FUNDS .— 19
‘‘(A) I
N GENERAL.—Each registered dig-20
ital commodity broker and registered digital 21
commodity dealer shall treat and deal with all 22
money, assets, and property that is received by 23
the registered digital commodity broker or reg-24
istered digital commodity dealer, or accrues to 25
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a customer as the result of trading in digital 1
commodities, as belonging to the customer. 2
‘‘(B) C
OMMINGLING PROHIBITED .— 3
‘‘(i) I
N GENERAL.—Except as pro-4
vided in clause (ii), each registered digital 5
commodity broker and registered digital 6
commodity dealer shall separately account 7
for money, assets, and property of a digital 8
commodity customer, and shall not com-9
mingle any such money, assets, or property 10
with the funds of the digital commodity 11
broker or digital commodity dealer, respec-12
tively, or use any such money, assets, or 13
property to margin, secure, or guarantee 14
any trades or accounts of any customer or 15
person other than the person for whom the 16
money, assets, or property are held. 17
‘‘(ii) E
XCEPTIONS.— 18
‘‘(I) U
SE OF FUNDS.— 19
‘‘(aa) I
N GENERAL.—A reg-20
istered digital commodity broker 21
or registered digital commodity 22
dealer may, for convenience, com-23
mingle and deposit in the same 24
account or accounts with any 25
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bank, trust company, derivatives 1
clearing organization, or qualified 2
digital commodity custodian 3
money, assets, and property of 4
customers. 5
‘‘(bb) W
ITHDRAWAL.—The 6
share of the money, assets, and 7
property described in item (aa) 8
as in the normal course of busi-9
ness shall be necessary to mar-10
gin, guarantee, secure, transfer, 11
adjust, or settle a contract for 12
sale of a digital commodity with 13
a registered entity may be with-14
drawn and applied to such pur-15
poses, including the payment of 16
commissions, brokerage, interest, 17
taxes, storage, and other charges, 18
lawfully accruing in connection 19
with the contract. 20
‘‘(II) C
OMMISSION ACTION.—In 21
accordance with such terms and con-22
ditions as the Commission may pre-23
scribe by rule, regulation, or order, 24
any money, assets, or property of the 25
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customers of a registered digital com-1
modity broker or registered digital 2
commodity dealer may be commingled 3
and deposited in customer accounts 4
with any other money, assets, or prop-5
erty received by the digital commodity 6
broker or digital commodity dealer, 7
respectively, and required by the Com-8
mission to be separately accounted for 9
and treated and dealt with as belong-10
ing to the customer of the digital com-11
modity broker or digital commodity 12
dealer, respectively. 13
‘‘(3) P
ERMITTED INVESTMENTS .—Money de-14
scribed in paragraph (2) may be invested in obliga-15
tions of the United States, in general obligations of 16
any State or of any political subdivision of a State, 17
in obligations fully guaranteed as to principal and 18
interest by the United States, or in any other invest-19
ment that the Commission may by rule or regulation 20
allow. 21
‘‘(4) C
USTOMER PROTECTION DURING BANK -22
RUPTCY.— 23
‘‘(A) C
USTOMER PROPERTY .—All money, 24
assets, or property described in paragraph (2) 25
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shall be considered customer property for pur-1
poses of section 761 of title 11, United States 2
Code. 3
‘‘(B) T
RANSACTIONS.—A transaction in-4
volving a unit of a digital commodity occurring 5
with a digital commodity dealer shall be consid-6
ered a ‘contract for the purchase or sale of a 7
commodity for future delivery, on or subject to 8
the rules of, a contract market or board of 9
trade’ for purposes of the definition of a ‘com-10
modity contract’ in section 761 of title 11, 11
United States Code. 12
‘‘(C) B
ROKERS AND DEALERS .—A reg-13
istered digital commodity dealer and a reg-14
istered digital commodity broker shall be con-15
sidered a futures commission merchant for pur-16
poses of section 761 of title 11, United States 17
Code. 18
‘‘(D) A
SSETS REMOVED FROM SEGREGA -19
TION.—Assets removed from segregation due to 20
a customer election under paragraph (5) shall 21
not be considered customer property for pur-22
poses of section 761 of title 11, United States 23
Code. 24
‘‘(5) M
ISUSE OF CUSTOMER PROPERTY .— 25
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‘‘(A) IN GENERAL.—It shall be unlawful— 1
‘‘(i) for any digital commodity broker 2
or digital commodity dealer that has re-3
ceived any customer money, assets, or 4
property for custody to dispose of, or use 5
any such money, assets, or property as be-6
longing to the digital commodity broker or 7
digital commodity dealer, respectively; or 8
‘‘(ii) for any other person, including 9
any depository, digital commodity ex-10
change, other digital commodity broker, 11
other digital commodity dealer, or digital 12
commodity custodian that has received any 13
customer money, assets, or property for 14
deposit, to hold, dispose of, or use any 15
such money, assets, or property, as belong-16
ing to the depositing digital commodity 17
broker or digital commodity dealer or any 18
person other than the customers of the 19
digital commodity broker or digital com-20
modity dealer, respectively. 21
‘‘(B) U
SE FURTHER DEFINED .—For pur-22
poses of this section, ‘use’ of a digital com-23
modity includes utilizing any unit of a digital 24
asset to participate in a blockchain service de-25
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fined in paragraph (5) or a decentralized gov-1
ernance system associated with the digital com-2
modity or the blockchain system to which the 3
digital commodity relates in any manner other 4
than that expressly directed by the customer 5
from whom the unit of a digital commodity was 6
received. 7
‘‘(6) P
ARTICIPATION IN BLOCKCHAIN SERV -8
ICES.— 9
‘‘(A) I
N GENERAL.—A customer shall have 10
the right to waive the restrictions in paragraph 11
(1) for any unit of a digital commodity, by af-12
firmatively electing, in writing to the digital 13
commodity broker or digital commodity dealer, 14
to waive the restrictions. 15
‘‘(B) U
SE OF FUNDS.—Customer digital 16
commodities removed from segregation under 17
subparagraph (A) may be pooled and used by 18
the digital commodity broker or digital com-19
modity dealer, or one of their designees, to pro-20
vide a blockchain service for a blockchain sys-21
tem to which the unit of the digital asset re-22
moved from segregation in subparagraph (A) 23
relates. 24
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‘‘(C) LIMITATIONS.—The Commission 1
may, by rule, establish notice and disclosure re-2
quirements, and any other limitations and rules 3
related to the waiving of any restrictions under 4
this paragraph that are reasonably necessary to 5
protect customers, including eligible contract 6
participants, non-eligible contract participants, 7
or any other class of customers. 8
‘‘(D) B
LOCKCHAIN SERVICE DEFINED .—In 9
this subparagraph, the term ‘blockchain service’ 10
means any activity relating to validating trans-11
actions on a blockchain system, providing secu-12
rity for a blockchain system, or other similar 13
activity required for the ongoing operation of a 14
blockchain system. 15
‘‘(l) F
EDERALPREEMPTION.—Notwithstanding any 16
other provision of law, the Commission shall have exclusive 17
jurisdiction over any digital commodity broker or digital 18
commodity dealer registered under this section. 19
‘‘(m) E
XEMPTIONS.—In order to promote responsible 20
economic or financial innovation and fair competition, or 21
protect customers, the Commission may (on its own initia-22
tive or on application of the registered digital commodity 23
broker or registered digital commodity dealer) exempt, un-24
conditionally or on stated terms or conditions, or for stat-25
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ed periods, and retroactively or prospectively, or both, a 1
registered digital commodity broker or registered digital 2
commodity dealer from the requirements of this section, 3
if the Commission determines that— 4
‘‘(1)(A) the exemption would be consistent with 5
the public interest and the purposes of this Act; and 6
‘‘(B) the exemption will not have a material ad-7
verse effect on the ability of the Commission or the 8
digital commodity broker or digital commodity deal-9
er to discharge regulatory duties under this Act; or 10
‘‘(2) the registered digital commodity broker or 11
registered digital commodity dealer is subject to 12
comparable, comprehensive supervision and regula-13
tion by the appropriate government authorities in 14
the home country of the registered digital commodity 15
broker or registered digital commodity dealer, re-16
spectively. 17
‘‘(n) T
REATMENT UNDER THE BANKSECRECY 18
A
CT.—A registered digital commodity broker and a reg-19
istered digital commodity dealer shall be treated as a fi-20
nancial institution for purposes of the Bank Secrecy Act.’’. 21
SEC. 407. REGISTRATION OF ASSOCIATED PERSONS. 22
(a) I
NGENERAL.—Section 4k of the Commodity Ex-23
change Act (7 U.S.C. 6k) is amended— 24
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(1) by redesignating subsections (4) through 1
(6) as subsections (5) through (7), respectively; and 2
(2) by inserting after subsection (3) the fol-3
lowing: 4
‘‘(4) It shall be unlawful for any person to act as an 5
associated person of a digital commodity broker or an as-6
sociated person of a digital commodity dealer unless the 7
person is registered with the Commission under this Act 8
and such registration shall not have expired, been sus-9
pended (and the period of suspension has not expired), 10
or been revoked. It shall be unlawful for a digital com-11
modity broker or a digital commodity dealer to permit 12
such a person to become or remain associated with the 13
digital commodity broker or digital commodity dealer if 14
the digital commodity broker or digital commodity dealer 15
knew or should have known that the person was not so 16
registered or that the registration had expired, been sus-17
pended (and the period of suspension has not expired), 18
or been revoked.’’; and 19
(3) in subsection (5) (as so redesignated), by 20
striking ‘‘or of a commodity trading advisor’’ and in-21
serting ‘‘of a commodity trading advisor, of a digital 22
commodity broker, or of a digital commodity deal-23
er’’. 24
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(b) CONFORMINGAMENDMENTS.—The Commodity 1
Exchange Act (7 U.S.C. 1a et seq.) is amended by striking 2
‘‘section 4k(6)’’ each place it appears and inserting ‘‘sec-3
tion 4k(7)’’. 4
SEC. 408. REGISTRATION OF COMMODITY POOL OPERA-5
TORS AND COMMODITY TRADING ADVISORS. 6
Section 4m(3) of the Commodity Exchange Act (7 7
U.S.C. 6m(3)) is amended— 8
(1) in subparagraph (A)— 9
(A) by striking ‘‘any commodity trading 10
advisor’’ and inserting ‘‘a commodity pool oper-11
ator or commodity trading advisor’’; and 12
(B) by striking ‘‘acting as a commodity 13
trading advisor’’ and inserting ‘‘acting as a 14
commodity pool operator or commodity trading 15
advisor’’; and 16
(2) in subparagraph (C), by inserting ‘‘digital 17
commodities,’’ after ‘‘physical commodities,’’. 18
SEC. 409. EXCLUSION FOR ANCILLARY ACTIVITIES. 19
The Commodity Exchange Act (7 U.S.C. 1 et seq.), 20
as amended by the preceding provisions of this Act, is 21
amended by inserting after section 4u the following: 22
‘‘SEC. 4v. EXCLUSION FOR ANCILLARY ACTIVITIES. 23
‘‘(a) I
NGENERAL.—Notwithstanding any other pro-24
vision of this Act, a person shall not be subject to this 25
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Act and the regulations promulgated under this Act solely 1
based on the person undertaking any ancillary activities. 2
‘‘(b) E
XCEPTIONS.—Subsection (a) shall not be con-3
strued to apply to the antimanipulation, antifraud, or false 4
reporting enforcement authorities of the Commission. 5
‘‘(c) A
NCILLARYACTIVITIESDEFINED.—In this sec-6
tion, the term ‘ancillary activities’ means any of the fol-7
lowing activities related to the operation of a blockchain 8
system: 9
‘‘(1) Compiling network transactions, operating 10
a pool, relaying, searching, sequencing, validating, or 11
acting in a similar capacity with respect to a digital 12
commodity transaction. 13
‘‘(2) Providing computational work, operating a 14
node, or procuring, offering, or utilizing network 15
bandwidth, or other similar incidental services with 16
respect to a digital commodity transaction. 17
‘‘(3) Providing a user interface that enables a 18
user to read, and access data about a blockchain 19
system, send messages, or otherwise interact with a 20
blockchain system. 21
‘‘(4) Developing, publishing, constituting, ad-22
ministering, maintaining, or otherwise distributing a 23
blockchain system. 24
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‘‘(5) Developing, publishing, constituting, ad-1
ministering, maintaining, or otherwise distributing 2
software or systems that create or deploy hardware 3
or software, including wallets or other systems, fa-4
cilitating an individual user’s own personal ability to 5
keep, safeguard, or custody a user’s digital commod-6
ities or related private keys.’’. 7
SEC. 410. EFFECTIVE DATE. 8
Unless otherwise provided in this title, this title and 9
the amendments made by this title shall take effect 360 10
days after the date of enactment of this Act, except that, 11
to the extent a provision of this title requires a rule-12
making, the provision shall take effect on the later of— 13
(1) 360 days after the date of enactment of this 14
Act; or 15
(2) 60 days after the publication in the Federal 16
Register of the final rule implementing the provision. 17
TITLE V—INNOVATION AND 18
TECHNOLOGY IMPROVEMENTS 19
SEC. 501. CODIFICATION OF THE SEC STRATEGIC HUB FOR 20
INNOVATION AND FINANCIAL TECHNOLOGY. 21
Section 4 of the Securities Exchange Act of 1934 (15 22
U.S.C. 78d) is amended by adding at the end the fol-23
lowing: 24
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‘‘(l) STRATEGICHUB FORINNOVATION AND FINAN-1
CIALTECHNOLOGY.— 2
‘‘(1) O
FFICE ESTABLISHED .—There is estab-3
lished within the Commission the Strategic Hub for 4
Innovation and Financial Technology (referred to in 5
this section as the ‘FinHub’). 6
‘‘(2) P
URPOSES.—The purposes of FinHub are 7
as follows: 8
‘‘(A) To assist in shaping the approach of 9
the Commission to technological advancements 10
in the financial industry. 11
‘‘(B) To examine financial technology inno-12
vations within capital markets, market partici-13
pants, and investors. 14
‘‘(C) To coordinate the response of the 15
Commission to emerging technologies in finan-16
cial, regulatory, and supervisory systems. 17
‘‘(3) D
IRECTOR OF FINHUB .—FinHub shall 18
have a Director who shall be appointed by the Com-19
mission, from among individuals having experience 20
in both emerging technologies and Federal securities 21
law and serve at the pleasure of the Commission. 22
The Director shall report directly to the Commission 23
and perform such functions and duties as the Com-24
mission may prescribe. 25
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‘‘(4) RESPONSIBILITIES.—FinHub shall— 1
‘‘(A) foster responsible technological inno-2
vation and fair competition within the Commis-3
sion, including around financial technology, reg-4
ulatory technology, and supervisory technology; 5
‘‘(B) provide internal education and train-6
ing to the Commission regarding financial tech-7
nology; 8
‘‘(C) advise the Commission regarding fi-9
nancial technology that would serve the Com-10
mission’s oversight functions; 11
‘‘(D) analyze technological advancements 12
and the impact of regulatory requirements on 13
financial technology companies; 14
‘‘(E) advise the Commission with respect 15
to rulemakings or other agency or staff action 16
regarding financial technology; 17
‘‘(F) provide businesses working in emerg-18
ing financial technology fields with information 19
on the Commission, its rules and regulations; 20
and 21
‘‘(G) encourage firms working in emerging 22
technology fields to engage with the Commis-23
sion and obtain feedback from the Commission 24
on potential regulatory issues. 25
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‘‘(5) ACCESS TO DOCUMENTS .—The Commis-1
sion shall ensure that FinHub has full access to the 2
documents and information of the Commission and 3
any self-regulatory organization, as necessary to 4
carry out the functions of FinHub. 5
‘‘(6) R
EPORT TO CONGRESS.— 6
‘‘(A) I
N GENERAL.—Not later than Octo-7
ber 31 of each year after 2024, FinHub shall 8
submit to the Committee on Banking, Housing, 9
and Urban Affairs of the Senate and the Com-10
mittee on Financial Services of the House of 11
Representatives a report on the activities of 12
FinHub during the immediately preceding fiscal 13
year. 14
‘‘(B) C
ONTENTS.—Each report required 15
under subparagraph (A) shall include— 16
‘‘(i) the total number of persons that 17
met with FinHub; 18
‘‘(ii) the total number of market par-19
ticipants FinHub met with, including the 20
classification of those participants; 21
‘‘(iii) a summary of general issues dis-22
cussed during meetings with persons; 23
‘‘(iv) information on steps FinHub 24
has taken to improve Commission services, 25
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including responsiveness to the concerns of 1
persons; 2
‘‘(v) recommendations— 3
‘‘(I) with respect to the regula-4
tions of the Commission and the guid-5
ance and orders of the Commission; 6
and 7
‘‘(II) for such legislative actions 8
as the FinHub determines appro-9
priate; and 10
‘‘(vi) any other information, as deter-11
mined appropriate by the Director of 12
FinHub. 13
‘‘(C) C
ONFIDENTIALITY.—A report under 14
subparagraph (A) may not contain confidential 15
information. 16
‘‘(7) S
YSTEMS OF RECORDS.— 17
‘‘(A) I
N GENERAL.—The Commission shall 18
establish a detailed system of records (as de-19
fined under section 552a of title 5, United 20
States Code) to assist FinHub in commu-21
nicating with interested parties. 22
‘‘(B) E
NTITIES COVERED BY THE SYS -23
TEM.—Entities covered by the system required 24
under subparagraph (A) include entities or per-25
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sons submitting requests or inquiries and other 1
information to Commission through FinHub. 2
‘‘(C) S
ECURITY AND STORAGE OF 3
RECORDS.—FinHub shall store— 4
‘‘(i) electronic records— 5
‘‘(I) in the system required under 6
subparagraph (A); or 7
‘‘(II) on the secure network or 8
other electronic medium, such as 9
encrypted hard drives or back-up 10
media, of the Commission; and 11
‘‘(ii) paper records in secure facilities. 12
‘‘(8) E
FFECTIVE DATE.—This subsection shall 13
take effect on the date that is 180 days after the 14
date of the enactment of this subsection.’’. 15
SEC. 502. CODIFICATION OF LABCFTC. 16
(a) I
NGENERAL.—Section 18 of the Commodity Ex-17
change Act (7 U.S.C. 22) is amended by adding at the 18
end the following: 19
‘‘(c) L
ABCFTC.— 20
‘‘(1) E
STABLISHMENT.—There is established in 21
the Commission LabCFTC. 22
‘‘(2) P
URPOSE.—The purposes of LabCFTC 23
are to— 24
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‘‘(A) promote responsible financial tech-1
nology innovation and fair competition for the 2
benefit of the American public; 3
‘‘(B) serve as an information platform to 4
inform the Commission about new financial 5
technology innovation; and 6
‘‘(C) provide outreach to financial tech-7
nology innovators to discuss their innovations 8
and the regulatory framework established by 9
this Act and the regulations promulgated there-10
under. 11
‘‘(3) D
IRECTOR.—LabCFTC shall have a Direc-12
tor, who shall be appointed by the Commission and 13
serve at the pleasure of the Commission. Notwith-14
standing section 2(a)(6)(A), the Director shall re-15
port directly to the Commission and perform such 16
functions and duties as the Commission may pre-17
scribe. 18
‘‘(4) D
UTIES.—LabCFTC shall— 19
‘‘(A) advise the Commission with respect 20
to rulemakings or other agency or staff action 21
regarding financial technology; 22
‘‘(B) provide internal education and train-23
ing to the Commission regarding financial tech-24
nology; 25
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‘‘(C) advise the Commission regarding fi-1
nancial technology that would bolster the Com-2
mission’s oversight functions; 3
‘‘(D) engage with academia, students, and 4
professionals on financial technology issues, 5
ideas, and technology relevant to activities 6
under this Act; 7
‘‘(E) provide persons working in emerging 8
technology fields with information on the Com-9
mission, its rules and regulations, and the role 10
of a registered futures association; and 11
‘‘(F) encourage persons working in emerg-12
ing technology fields to engage with the Com-13
mission and obtain feedback from the Commis-14
sion on potential regulatory issues. 15
‘‘(5) A
CCESS TO DOCUMENTS .—The Commis-16
sion shall ensure that LabCFTC has full access to 17
the documents and information of the Commission 18
and any self-regulatory organization or registered fu-19
tures association, as necessary to carry out the func-20
tions of LabCFTC. 21
‘‘(6) R
EPORT TO CONGRESS.— 22
‘‘(A) I
N GENERAL.—Not later than Octo-23
ber 31 of each year after 2024, LabCFTC shall 24
submit to the Committee on Agriculture of the 25
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House of Representatives and the Committee 1
on Agriculture, Nutrition, and Forestry of the 2
Senate a report on its activities. 3
‘‘(B) C
ONTENTS.—Each report required 4
under paragraph (1) shall include— 5
‘‘(i) the total number of persons that 6
met with LabCFTC; 7
‘‘(ii) a summary of general issues dis-8
cussed during meetings with the person; 9
‘‘(iii) information on steps LabCFTC 10
has taken to improve Commission services, 11
including responsiveness to the concerns of 12
persons; 13
‘‘(iv) recommendations made to the 14
Commission with respect to the regula-15
tions, guidance, and orders of the Commis-16
sion and such legislative actions as may be 17
appropriate; and 18
‘‘(v) any other information determined 19
appropriate by the Director of LabCFTC. 20
‘‘(C) C
ONFIDENTIALITY.—A report under 21
paragraph (A) shall abide by the confidentiality 22
requirements in section 8. 23
‘‘(7) S
YSTEMS OF RECORDS.— 24
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‘‘(A) IN GENERAL.—The Commission shall 1
establish a detailed system of records (as de-2
fined in section 552a of title 5, United States 3
Code) to assist LabCFTC in communicating 4
with interested parties. 5
‘‘(B) P
ERSONS COVERED BY THE SYS -6
TEM.—The persons covered by the system of 7
records shall include persons submitting re-8
quests or inquiries and other information to the 9
Commission through LabCFTC. 10
‘‘(C) S
ECURITY AND STORAGE OF 11
RECORDS.—The system of records shall store 12
records electronically or on paper in secure fa-13
cilities, and shall store electronic records on the 14
secure network of the Commission and on other 15
electronic media, such as encrypted hard drives 16
and back-up media, as needed.’’. 17
(b) C
ONFORMING AMENDMENTS.—Section 18
2(a)(6)(A) of such Act (7 U.S.C. 2(a)(6)(A)) is amend-19
ed— 20
(1) by striking ‘‘paragraph and in’’ and insert-21
ing ‘‘paragraph,’’; and 22
(2) by inserting ‘‘and section 18(c)(3),’’ before 23
‘‘the executive’’. 24
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(c) EFFECTIVEDATE.—The Commodity Futures 1
Trading Commission shall implement the amendments 2
made by this section (including complying with section 3
18(c)(7) of the Commodity Exchange Act) within 180 4
days after the date of the enactment of this Act. 5
SEC. 503. CFTC–SEC JOINT ADVISORY COMMITTEE ON DIG-6
ITAL ASSETS. 7
(a) E
STABLISHMENT.—The Commodity Futures 8
Trading Commission and the Securities and Exchange 9
Commission (in this section referred to as the ‘‘Commis-10
sions’’) shall jointly establish the Joint Advisory Com-11
mittee on Digital Assets (in this section referred to as the 12
‘‘Committee’’). 13
(b) P
URPOSE.— 14
(1) I
N GENERAL.—The Committee shall— 15
(A) provide the Commissions with advice 16
on the rules, regulations, and policies of the 17
Commissions related to digital assets; 18
(B) further the regulatory harmonization 19
of digital asset policy between the Commissions; 20
(C) examine and disseminate methods for 21
describing, measuring, and quantifying digital 22
asset— 23
(i) decentralization; 24
(ii) functionality; 25
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(iii) information asymmetries; and 1
(iv) transaction and network security; 2
(D) examine the potential for digital as-3
sets, blockchain systems, and distributed ledger 4
technology to improve efficiency in the oper-5
ation of financial market infrastructure and 6
better protect financial market participants, in-7
cluding services and systems which provide— 8
(i) greater transparency regarding 9
customer funds; 10
(ii) reduced transaction cost; and 11
(iii) increased access to financial mar-12
ket services; and 13
(E) discuss the implementation by the 14
Commissions of this Act and the amendments 15
made by this Act. 16
(2) R
EVIEW BY AGENCIES.—Each Commission 17
shall— 18
(A) review the findings and recommenda-19
tions of the Committee; 20
(B) each time the Committee submits a 21
finding or recommendation to a Commission, 22
promptly issue a public statement— 23
(i) assessing the finding or rec-24
ommendation of the Committee; 25
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(ii) disclosing the action or decision 1
not to take action made by the Commis-2
sion in response to a finding or rec-3
ommendation; and 4
(iii) the reasons for the action or deci-5
sion not to take action; and 6
(C) each time the Committee submits a 7
finding or recommendation to a Commission, 8
provide the Committee with a formal response 9
to the finding or recommendation not later than 10
3 months after the date of the submission of 11
the finding or recommendation. 12
(c) M
EMBERSHIP ANDLEADERSHIP.— 13
(1) N
ON-FEDERAL MEMBERS .— 14
(A) I
N GENERAL.—The Commissions shall 15
appoint at least 20 nongovernmental stake-16
holders with a wide diversity of opinion and 17
who represent a broad spectrum of interests 18
representing the digital asset ecosystem, equally 19
divided between the Commissions, to serve as 20
members of the Committee. The appointees 21
shall include— 22
(i) digital asset issuers; 23
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(ii) persons registered with the Com-1
missions and engaged in digital asset re-2
lated activities; 3
(iii) individuals engaged in academic 4
research relating to digital assets; and 5
(iv) digital asset users. 6
(B) M
EMBERS NOT COMMISSION EMPLOY -7
EES.—Members appointed under subparagraph 8
(A) shall not be deemed to be employees or 9
agents of a Commission solely by reason of 10
membership on the Committee. 11
(2) C
O-DESIGNATED FEDERAL OFFICERS .— 12
(A) N
UMBER; APPOINTMENT.—There shall 13
be 2 co-designated Federal officers of the Com-14
mittee, as follows: 15
(i) The Director of LabCFTC of the 16
Commodity Futures Trading Commission. 17
(ii) The Director of the Strategic Hub 18
for Innovation and Financial Technology. 19
(B) D
UTIES.—The duties required by 20
chapter 10 of title 5, United States Code, to be 21
carried out by a designated Federal officer with 22
respect to the Committee shall be shared by the 23
co-designated Federal officers of the Com-24
mittee. 25
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(3) COMMITTEE LEADERSHIP .— 1
(A) C
OMPOSITION; ELECTION.—The Com-2
mittee members shall elect, from among the 3
Committee members— 4
(i) a chair; 5
(ii) a vice chair; 6
(iii) a secretary; and 7
(iv) an assistant secretary. 8
(B) T
ERM OF OFFICE .—Each member 9
elected under subparagraph (A) in a 2-year pe-10
riod referred to in section 1013(b)(2) of title 5, 11
United States Code, shall serve in the capacity 12
for which the member was so elected, until the 13
end of the 2-year period. 14
(d) N
OCOMPENSATION FOR COMMITTEEMEM-15
BERS.— 16
(1) N
ON-FEDERAL MEMBERS .—All Committee 17
members appointed under subsection (d)(1) shall— 18
(A) serve without compensation; and 19
(B) while away from the home or regular 20
place of business of the member in the perform-21
ance of services for the Committee, be allowed 22
travel expenses, including per diem in lieu of 23
subsistence, in the same manner as persons em-24
ployed intermittently in the Government service 25
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are allowed expenses under section 5703(b) of 1
title 5, United States Code. 2
(2) N
O COMPENSATION FOR CO -DESIGNATED 3
FEDERAL OFFICERS.—The co-designated Federal of-4
ficers shall serve without compensation in addition 5
to that received for their services as officers or em-6
ployees of the United States. 7
(e) F
REQUENCY OF MEETINGS.—The Committee 8
shall meet— 9
(1) not less frequently than twice annually; and 10
(2) at such other times as either Commission 11
may request. 12
(f) D
URATION.—Section 1013(a)(2) of title 5, United 13
States Code, shall not apply to the Committee. 14
(g) T
IMELIMITS.—The Commissions shall— 15
(1) adopt a joint charter for the Committee 16
within 90 days after the date of the enactment of 17
this section; 18
(2) appoint members to the Committee within 19
120 days after such date of enactment; and 20
(3) hold the initial meeting of the Committee 21
within 180 days after such date of enactment. 22
(h) F
UNDING.—The Commissions may jointly fund 23
the Committee. 24
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SEC. 504. MODERNIZATION OF THE SECURITIES AND EX-1
CHANGE COMMISSION MISSION. 2
(a) S
ECURITIESACT OF1933.—Section 2(b) of the 3
Securities Act of 1933 (15 U.S.C. 77(b)) is amended— 4
(1) in the heading, by inserting ‘‘I
NNOVATION,’’ 5
after ‘‘E
FFICIENCY,’’; and 6
(2) by inserting ‘‘innovation,’’ after ‘‘effi-7
ciency,’’. 8
(b) S
ECURITIESEXCHANGEACT OF1934.—Section 9
3(f) of the Securities Exchange Act of 1934 (15 U.S.C. 10
78(c)) is amended— 11
(1) in the heading, by inserting ‘‘I
NNOVATION,’’ 12
after ‘‘E
FFICIENCY,’’; and 13
(2) by inserting ‘‘innovation,’’ after ‘‘effi-14
ciency,’’. 15
(c) I
NVESTMENTADVISERSACT OF1940.—Section 16
202(c) of the Investment Advisers Act of 1940 (15 U.S.C. 17
80b–2) is amended— 18
(1) in the heading, by inserting ‘‘I
NNOVATION,’’ 19
after ‘‘E
FFICIENCY,’’; and 20
(2) by inserting ‘‘innovation,’’ after ‘‘effi-21
ciency,’’. 22
(d) I
NVESTMENTCOMPANYACT OF1940.—Section 23
2(c) of the Investment Company Act of 1940 (15 U.S.C. 24
80a–2) is amended— 25
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(1) in the heading, by inserting ‘‘INNOVATION,’’ 1
after ‘‘E
FFICIENCY,’’; and 2
(2) by inserting ‘‘innovation,’’ after ‘‘effi-3
ciency,’’. 4
SEC. 505. STUDY ON DECENTRALIZED FINANCE. 5
(a) I
NGENERAL.—The Securities and Exchange 6
Commission and the Commodity Futures Trading Com-7
mission shall jointly carry out a study on decentralized 8
finance that analyzes— 9
(1) the nature, size, role, and use of decentral-10
ized finance blockchain protocols; 11
(2) the operation of blockchain protocols that 12
comprise decentralized finance; 13
(3) the interoperability of blockchain protocols 14
and blockchain systems; 15
(4) the interoperability of blockchain protocols 16
and software-based systems, including websites and 17
wallets; 18
(5) the decentralized governance systems 19
through which blockchain protocols may be devel-20
oped, published, constituted, administered, main-21
tained, or otherwise distributed, including— 22
(A) whether the systems enhance or de-23
tract from— 24
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(i) the decentralization of the decen-1
tralized finance; and 2
(ii) the inherent risks of the decentral-3
ized governance system; and 4
(B) any procedures or requirements that 5
would mitigate the risks identified in subpara-6
graph (A)(ii); 7
(6) the benefits of decentralized finance, includ-8
ing— 9
(A) operational resilience and interoper-10
ability of blockchain-based systems; 11
(B) market competition and innovation; 12
(C) transaction efficiency; 13
(D) transparency and traceability of trans-14
actions; and 15
(E) disintermediation; and 16
(7) the risks of decentralized finance, includ-17
ing— 18
(A) pseudonymity of users and trans-19
actions; 20
(B) disintermediation; and 21
(C) cybersecurity vulnerabilities; 22
(8) the extent to which decentralized finance 23
has integrated with the traditional financial markets 24
and any potential risks to stability of the markets; 25
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(9) how the levels of illicit activity in decentral-1
ized finance compare with the levels of illicit activity 2
in traditional financial markets; 3
(10) how decentralized finance may increase the 4
accessibility of cross-border transactions; and 5
(11) the feasibility of embedding self-executing 6
compliance and risk controls into decentralized fi-7
nance. 8
(b) R
EPORT.—Not later than 1 year after the date 9
of enactment of this Act, the Securities and Exchange 10
Commission and the Commodity Futures Trading Com-11
mission shall jointly submit to the relevant congressional 12
committees a report that includes the results of the study 13
required by subsection (a). 14
(c) GAO S
TUDY.—The Comptroller General of the 15
United States shall— 16
(1) carry out a study on decentralized finance 17
that analyzes the information described under para-18
graphs (1) through (10) of subsection (a); and 19
(2) not later than 1 year after the date of en-20
actment of this Act, submit to the relevant congres-21
sional committees a report that includes the results 22
of the study required by paragraph (1). 23
(d) D
EFINITIONS.—In this section: 24
(1) D
ECENTRALIZED FINANCE .— 25
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(A) IN GENERAL.—The term ‘‘decentral-1
ized finance’’ means blockchain protocols that 2
allow users to engage in financial transactions 3
in a self-directed manner so that a third-party 4
intermediary does not effectuate the trans-5
actions or take custody of digital assets of a 6
user during any part of the transactions. 7
(B) R
ELATIONSHIP TO ANCILLARY ACTIVI -8
TIES.—The term ‘‘decentralized finance’’ shall 9
not be interpreted to limit or exclude any activ-10
ity from the meaning of ‘‘ancillary activities’’, 11
as defined in section 15H(c) of the Securities 12
Exchange Act of 1934 or section 4v(c) of the 13
Commodity Exchange Act. 14
(2) R
ELEVANT CONGRESSIONAL COMMIT -15
TEES.—The term ‘‘relevant congressional commit-16
tees’’ means— 17
(A) the Committees on Financial Services 18
and Agriculture of the House of Representa-19
tives; and 20
(B) the Committees on Banking, Housing, 21
and Urban Affairs and Agriculture, Nutrition, 22
and Forestry of the Senate. 23
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SEC. 506. STUDY ON NON-FUNGIBLE DIGITAL ASSETS. 1
(a) The Comptroller General of the United States 2
shall carry out a study of non-fungible digital assets that 3
analyzes— 4
(1) the nature, size, role, purpose, and use of 5
non-fungible digital assets; 6
(2) the similarities and differences between non- 7
fungible digital assets and other digital assets, in-8
cluding digital commodities and payments 9
stablecoins, and how the markets for those digital 10
assets intersect with each other; 11
(3) how non-fungible digital assets are minted 12
by issuers and subsequently administered to pur-13
chasers; 14
(4) how non-fungible digital assets are stored 15
after being purchased by a consumer; 16
(5) the interoperability of non-fungible digital 17
assets between different blockchain systems; 18
(6) the scalability of different non-fungible dig-19
ital asset marketplaces; 20
(7) the benefits of non-fungible digital assets, 21
including verifiable digital ownership; 22
(8) the risks of non-fungible tokens, including— 23
(A) intellectual property rights; 24
(B) cybersecurity risks; and 25
(C) market risks; 26
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(9) whether and how non-fungible digital assets 1
have integrated with traditional marketplaces, in-2
cluding those for music, real estate, gaming, events, 3
and travel; 4
(10) whether non-fungible tokens can be used 5
to facilitate commerce or other activities through the 6
representation of documents, identification, contract, 7
licenses, and other commercial, government, or per-8
sonal records; 9
(11) any potential risks to such traditional mar-10
kets from such integration; and 11
(12) the levels and types of illicit activity in 12
non-fungible digital asset markets. 13
(b) R
EPORT.—Not later than 1 year after the date 14
of the enactment of this Act, the Secretary of Commerce, 15
shall make publicly available a report that includes the re-16
sults of the study required by subsection (a). 17
SEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE 18
IMPROVEMENTS. 19
(a) I
NGENERAL.—The Securities and Exchange 20
Commission and the Commodity Futures Trading Com-21
mission shall jointly conduct a study to assess whether ad-22
ditional guidance or rules are necessary to facilitate the 23
development of tokenized securities and derivatives prod-24
ucts, and to the extent such rules would foster the develop-25
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ment of fair and orderly financial markets, be necessary 1
or appropriate in the public interest, and be consistent 2
with the protection of investors. 3
(b) R
EPORT.— 4
(1) T
IME LIMIT.—Not later than 1 year after 5
the date of enactment of this Act, the Securities and 6
Exchange Commission and the Commodity Futures 7
Trading Commission shall jointly submit to the rel-8
evant congressional committees a report that in-9
cludes the results of the study required by sub-10
section (a). 11
(2) R
ELEVANT CONGRESSIONAL COMMITTEES 12
DEFINED.—In this section, the term ‘‘relevant con-13
gressional committees’’ means— 14
(A) the Committees on Financial Services 15
and on Agriculture of the House of Representa-16
tives; and 17
(B) the Committees on Banking, Housing, 18
and Urban Affairs and on Agriculture, Nutri-19
tion, and Forestry of the Senate. 20
Æ 
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