[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3633 Reported in House (RH)]
<DOC>
Union Calendar No. 134
119th CONGRESS
1st Session
H. R. 3633
[Report No. 119-168, Parts I and II]
To provide for a system of regulation of the offer and sale of digital
commodities by the Securities and Exchange Commission and the Commodity
Futures Trading Commission, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 29, 2025
Mr. Hill of Arkansas (for himself, Mr. Thompson of Pennsylvania, Ms.
Craig, Mr. Emmer, Mr. Johnson of South Dakota, Mr. Davis of North
Carolina, Mr. Steil, Mr. Torres of New York, and Mr. Davidson)
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 provisions as fall within the jurisdiction of
the committee concerned
June 23, 2025
Additional sponsors: Mr. Gottheimer, Mr. Huizenga, Mr. Nunn of Iowa,
Mr. Lawler, Mr. Meuser, Mr. Carter of Georgia, Mr. Moore of West
Virginia, Mr. Begich, Ms. McDonald Rivet, Mr. Thanedar, Mr. Messmer,
Mr. Bresnahan, and Ms. Stevens
June 23, 2025
Reported from the Committee on Agriculture with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
June 23, 2025
Reported from the Committee on Financial Services with an amendment;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed
[Strike out all after the enacting clause and insert the part printed
in boldface roman]
[For text of introduced bill, see copy of bill as introduced on May 29,
2025]
_______________________________________________________________________
A BILL
To provide for a system of regulation of the offer and sale of digital
commodities by the Securities and Exchange Commission and the Commodity
Futures Trading Commission, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Digital Asset
Market Clarity Act of 2025'' or the ``CLARITY Act of 2025''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
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 Securities Exchange Act of 1934.
Sec. 103. Definitions under the Commodity Exchange Act.
Sec. 104. Definitions under this Act.
Sec. 105. Rulemakings.
Sec. 106. Registration for digital commodity exchanges, brokers, and
dealers; provisional status.
Sec. 107. Commodity Exchange Act and securities laws savings
provisions.
Sec. 108. Administrative requirements.
Sec. 109. International cooperation.
Sec. 110. Application of the Bank Secrecy Act.
Sec. 111. Implementation.
TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
Sec. 201. Treatment of investment contract assets.
Sec. 202. Exempted primary transactions in digital commodities.
Sec. 203. Treatment of secondary transactions in digital commodities
that originally involved investment
contracts.
Sec. 204. Requirements for offers and sales of digital commodities by
digital commodity related persons and
digital commodity affiliated persons.
Sec. 205. Mature blockchain system requirements.
Sec. 206. Effective date.
TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
EXCHANGE COMMISSION
Sec. 301. Treatment of digital commodities and permitted payment
stablecoins.
Sec. 302. Anti-fraud authority over permitted payment stablecoins and
certain digital commodity transactions.
Sec. 303. Eligibility of alternative trading systems.
Sec. 304. Operation of alternative trading systems.
Sec. 305. Modernization of recordkeeping requirements.
Sec. 306. Exemptive authority.
Sec. 307. Additional registrations with the Commodity Futures Trading
Commission.
Sec. 308. Exempting digital commodities from State securities laws.
Sec. 309. Exclusion for decentralized finance activities.
Sec. 310. Treatment of custody activities by banking institutions.
Sec. 311. Digital commodity activities that are financial in nature.
Sec. 312. Effective date; administration.
Sec. 313. Studies on foreign adversary participation.
TITLE IV--REGISTRATION FOR DIGITAL COMMODITY 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 asset custodians.
Sec. 403. Trading certification and approval for digital commodities.
Sec. 404. Registration of digital commodity exchanges.
Sec. 405. Qualified digital asset custodians.
Sec. 406. Registration and regulation of digital commodity brokers and
dealers.
Sec. 407. Registration of associated persons.
Sec. 408. Registration of commodity pool operators and commodity
trading advisors.
Sec. 409. Exclusion for decentralized finance activities.
Sec. 410. Resources for implementation and enforcement.
Sec. 411. Digital commodity activities by SEC-registered entities.
Sec. 412. Requirements related to control persons.
Sec. 413. Other tradable assets.
Sec. 414. Effective date.
Sec. 415. Sense of Congress.
TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
Sec. 501. Findings; sense of Congress.
Sec. 502. Modernization of the Securities and Exchange Commission
mission.
Sec. 503. Strategic Hub for Innovation and Financial Technology.
Sec. 504. Codification of LabCFTC.
Sec. 505. Study on decentralized finance.
Sec. 506. Study on non-fungible tokens.
Sec. 507. Study on expanding financial literacy amongst digital
commodity holders.
Sec. 508. Study on financial market infrastructure improvements.
Sec. 509. Study on illicit use of digital assets.
Sec. 510. Conflict of interest rulemaking.
TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION
SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF 1933.
Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is
amended by adding at the end the following:
``(20) Blockchain.--The term `blockchain' means--
``(A) any technology--
``(i) where data is--
``(I) shared across a network to
create a distributed ledger of
independently verifiable transactions
or information among network
participants;
``(II) linked using cryptography to
maintain the integrity of the
distributed ledger and to execute other
functions; and
``(III) propagated among network
participants to reach consensus on the
state of the distributed ledger and any
other functions; and
``(ii) composed of source code that is
publicly available; and
``(B) any similar technology to the technology
described in subparagraph (A).
``(21) Blockchain application.--The term `blockchain
application' means any executable software deployed to a
blockchain composed of source code that is publicly available,
including a smart contract or any network of smart contracts,
or other similar technology.
``(22) Blockchain protocol.--The term `blockchain protocol'
means the freely and publicly available source code of a
blockchain that is executed by the network participants of a
blockchain to facilitate its functioning, or other similar
technology.
``(23) Blockchain system.--The term `blockchain system'
means any blockchain, together with its blockchain protocol or
any blockchain application or network of blockchain
applications.
``(24) Decentralized governance system.--
``(A) In general.--The term `decentralized
governance system' means, with respect to a blockchain
system, any transparent, rules-based system permitting
persons to form consensus or reach agreement in the
development, provision, publication, management, or
administration of such blockchain system, where
participation is not limited to, or under the effective
control of, any person or group of persons under common
control.
``(B) Relationship of persons to decentralized
governance systems.--With respect to a decentralized
governance system, the decentralized governance system
and any persons participating in the decentralized
governance system shall be treated as separate persons
unless such persons are under common control.
``(C) Legal entities for decentralized governance
systems.--The term `decentralized governance system'
shall include a legal entity used to implement the
rules-based system described in subparagraph (A),
provided that the organizing and governing laws of such
legal entity do not create or require centralized and
hierarchical management of such legal entity. For the
purposes of this subparagraph, the delegation of
ministerial or administrative authority at the
direction of the participants in a decentralized
governance system shall not be construed to be
centralized and hierarchical management.
``(25) Digital asset.--The term `digital asset' means any
digital representation of value which is recorded on a
cryptographically-secured distributed ledger or other similar
technology.
``(26) Digital commodity.--The term `digital commodity' has
the meaning given that term under section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
``(27) Digital commodity affiliated person.--The term
`digital commodity affiliated person' means a person (including
a digital commodity related person) that, with respect to any
digital commodity--
``(A) acquires 5 percent or more of the total
outstanding units of such digital commodity from a
digital commodity issuer;
``(B) is a founder of the digital commodity issuer;
or
``(C) is an executive director, director, trustee,
or general partner of the digital commodity issuer or
held such role at any point in the previous 12-month
period.
``(28) Digital commodity issuer.--With respect to a digital
commodity, the term `digital commodity issuer' means any person
that--
``(A) proposes, issues, or causes to be issued a
unit of such digital commodity to a person; or
``(B) offers or sells a right to a future issuance
of a unit of such digital commodity to a person.
``(29) Digital commodity related person.--
``(A) In general.--With respect to a digital
commodity issuer, the term `digital commodity related
person' means--
``(i) a person that is or was in the
previous 6-month period a promoter, senior
employee, advisory board member, consultant,
advisor, or person serving in a similar
capacity; and
``(ii) a person that acquires 1 percent or
more of the total outstanding units of such
digital commodity from a digital commodity
issuer.
``(B) Senior employee defined.--In this paragraph
and with respect to a digital commodity issuer, the
term `senior employee' means any employee materially
involved in the management or planning of the digital
commodity issuer or the development of the blockchain
system to which the digital commodity relates.
``(30) End user distribution.--The term `end user
distribution' means a distribution of a unit of a digital
commodity that--
``(A) does not involve an exchange of more than a
nominal value of cash, property, or other assets; and
``(B) is distributed in a broad and equitable
manner based on conditions capable of being satisfied
by any participant in the blockchain system, including,
as incentive-based rewards--
``(i) to users of the digital commodity or
any blockchain system to which the digital
commodity relates;
``(ii) for activities directly related to
the operation of the blockchain system, such as
mining, validating, staking, or other activity
directly tied to the operation of the
blockchain system; or
``(iii) to the existing holders of another
digital commodity, in proportion to the total
units of such other digital commodity as are
held by each person.
``(31) Mature blockchain system.--The term `mature
blockchain system' means a blockchain system, together with its
related digital commodity, that is not controlled by any person
or group of persons under common control.
``(32) Permitted payment stablecoin.--
``(A) In general.--The term `permitted payment
stablecoin' means a digital asset--
``(i) that is or is designed to be used as
a means of payment or settlement;
``(ii) that is denominated in a national
currency;
``(iii) the issuer of which is subject to
the regulatory and supervisory authority of a
State or Federal agency;
``(iv) the issuer of which--
``(I) is obligated to convert,
redeem, or repurchase for a fixed
amount of monetary value; or
``(II) represents that the digital
asset will maintain or creates the
reasonable expectation that the digital
asset will maintain a stable value
relative to the value of a fixed amount
of monetary value; and
``(v) that is not--
``(I) a national currency;
``(II) a security issued by--
``(aa) an investment
company registered under
section 8(a) of the Investment
Company Act of 1940 (15 U.S.C.
80a-8(a)); or
``(bb) a person that would
be an investment company under
the Investment Company Act of
1940 but for paragraphs (1) and
(7) of section 3(c) of that Act
(15 U.S.C. 80a-3(c));
``(III) a deposit (as defined under
section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)),
regardless of the technology used to
record such deposit; or
``(IV) an account (as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752)), regardless of
the technology used to record such
account.
``(B) Monetary value defined.--The term `monetary
value'--
``(i) means--
``(I) a national currency;
``(II) a deposit (as defined in
section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)) that is
denominated in a national currency; or
``(III) an account (as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752)); and
``(ii) does not include any agricultural or
other physical commodity (as defined in section
1a of the Commodity Exchange Act (7 U.S.C.
1a)).
``(33) Securities laws.--The term `securities laws' has the
meaning given that term under section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).''.
SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)) is amended--
(1) by redesignating the second paragraph (80) (relating to
funding portals) as paragraph (81); and
(2) by adding at the end the following:
``(82) Bank secrecy act.--The term `Bank Secrecy Act'
means--
``(A) section 21 of the Federal Deposit Insurance
Act (12 U.S.C. 1829b);
``(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
``(C) subchapter II of chapter 53 of title 31,
United States Code.
``(83) Additional digital commodity-related terms.--
``(A) Securities act of 1933.--The terms
`blockchain system', `decentralized governance system',
`digital asset', `digital commodity affiliated person',
`digital commodity issuer', `digital commodity related
person', `end user distribution', `mature blockchain
system', and `permitted payment stablecoin', have the
meaning given those terms, respectively, under section
2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).
``(B) Commodity exchange act.--The terms `digital
commodity', `digital commodity broker', `digital
commodity dealer', `digital commodity exchange',
`decentralized finance messaging system', and
`decentralized finance trading protocol' have the
meaning given those terms, respectively, under section
1a of the Commodity Exchange Act (7 U.S.C. 1a).''.
SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.
(a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
1a) is amended--
(1) in paragraph (10)--
(A) in subparagraph (A)--
(i) by redesignating clauses (iii) and (iv)
as clauses (iv) and (v), respectively; and
(ii) by inserting after clause (ii) the
following:
``(iii) digital commodity;''; and
(B) by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A)
the following:
``(B) Exclusion.--For purposes of this paragraph,
the term `trading in commodity interests' shall not
include transacting in digital commodities for the
purpose of--
``(i) acting as a digital commodity
custodian;
``(ii) establishing, maintaining, or
managing inventory or payment instruments for
commercial purposes; or
``(iii) maintaining or supporting the
operation of, or validating transactions on, a
blockchain system.'';
(2) in paragraph (11)--
(A) in subparagraph (A)(i)--
(i) by redesignating subclauses (III) and
(IV) as subclauses (IV) and (V), respectively;
and
(ii) by inserting after subclause (II) the
following:
``(III) digital commodity;''; and
(B) by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A)
the following:
``(B) Exclusion.--For purposes of this paragraph,
the term `trading in commodity interests' shall not
include transacting in digital commodities for the
purpose of--
``(i) acting as a digital commodity
custodian;
``(ii) establishing, maintaining, or
managing inventory or payment instruments for
commercial purposes; or
``(iii) maintaining or supporting the
operation of, or validating transactions on, a
blockchain system.'';
(3) in paragraph (12)(A)(i)--
(A) in subclause (II), by adding at the end a
semicolon;
(B) by redesignating subclauses (III) and (IV) as
subclauses (IV) and (V), respectively; and
(C) by inserting after subclause (II) the
following:
``(III) a digital commodity;'';
(4) by redesignating paragraphs (16) through (51) as
paragraphs (17) through (52), respectively, and inserting after
paragraph (15) the following:
``(16) Terms related to digital commodities.--
``(A) Associated person of a digital commodity
broker.--
``(i) In general.--Except as provided in
clause (ii), the term `associated person of a
digital commodity broker' means a person who is
associated with a digital commodity broker as a
partner, officer, employee, or agent (or any
person occupying a similar status or performing
similar functions) in any capacity that
involves--
``(I) the solicitation or
acceptance of an order for the purchase
or sale of a digital commodity; or
``(II) the supervision of any
person engaged in the solicitation or
acceptance of an order for the purchase
or sale of a digital commodity.
``(ii) Exclusion.--The term `associated
person of a digital commodity broker' does not
include any person associated with a digital
commodity broker the functions of which are
solely clerical or ministerial.
``(B) Associated person of a digital commodity
dealer.--
``(i) In general.--Except as provided in
clause (ii), the term `associated person of a
digital commodity dealer' means a person who is
associated with a digital commodity dealer as a
partner, officer, employee, or agent (or any
person occupying a similar status or performing
similar functions) in any capacity that
involves--
``(I) the solicitation or
acceptance of a contract for the
purchase or sale of a digital
commodity; or
``(II) the supervision of any
person engaged in the solicitation or
acceptance of a contract for the
purchase or sale of a digital
commodity.
``(ii) Exclusion.--The term `associated
person of a digital commodity dealer' does not
include any person associated with a digital
commodity dealer the functions of which are
solely clerical or ministerial.
``(C) Bank secrecy act.--The term `Bank Secrecy
Act' means--
``(i) section 21 of the Federal Deposit
Insurance Act (12 U.S.C. 1829b);
``(ii) chapter 2 of title I of Public Law
91-508 (12 U.S.C. 1951 et seq.); and
``(iii) subchapter II of chapter 53 of
title 31, United States Code.
``(D) Decentralized finance messaging system.--
``(i) In general.--The term `decentralized
finance messaging system' means a software
application that provides a user with the
ability to create or submit an instruction,
communication, or message to a decentralized
finance trading protocol for the purpose of
executing a transaction by the user.
``(ii) Additional requirements.--The term
`decentralized finance messaging system' does
not include any system that provides any person
other than the user with control over--
``(I) the funds of the user; or
``(II) the execution of the
transaction of the user.
``(E) Decentralized finance trading protocol.--
``(i) In general.--The term `decentralized
finance trading protocol' means a blockchain
system through which multiple participants can
execute a financial transaction--
``(I) in accordance with an
automated rule or algorithm that is
predetermined and non-discretionary;
and
``(II) without reliance on any
other person to maintain control of the
digital assets of the user during any
part of the financial transaction.
``(ii) Exclusions.--
``(I) In general.--The term
`decentralized finance trading
protocol' does not include a blockchain
system if--
``(aa) a person or group of
persons under common control or
acting pursuant to an agreement
to act in concert has the
authority, directly or
indirectly, through any
contract, arrangement,
understanding, relationship, or
otherwise, to control or
materially alter the
functionality, operation, or
rules of consensus or agreement
of the blockchain system; or
``(bb) the blockchain
system does not operate,
execute, and enforce its
operations and transactions
based solely on pre-
established, transparent rules
encoded directly within the
source code of the blockchain
system.
``(II) Special rule.--For purposes
of subclause (I), a decentralized
governance system shall not be
considered to be a person or a group of
persons under common control or acting
pursuant to an agreement to act in
concert.
``(F) Digital commodity.--
``(i) In general.--The term `digital
commodity' means a digital asset that is
intrinsically linked to a blockchain system,
and the value of which is derived from or is
reasonably expected to be derived from the use
of the blockchain system.
``(ii) Relationship to a blockchain
system.--For purposes of this subparagraph, a
digital asset is intrinsically linked to a
blockchain system if the digital asset is
directly related to the functionality or
operation of the blockchain system or to the
activities or services for which the blockchain
system is created or utilized, including where
the digital asset is--
``(I) issued or generated by the
programmatic functioning of the
blockchain system;
``(II) used to transfer value
between participants in the blockchain
system;
``(III) used to access the
activities or services of the
blockchain system;
``(IV) used to participate in the
decentralized governance system of the
blockchain system;
``(V) used or removed from
circulation in whole or in part to pay
fees or otherwise verify or validate
transactions on the blockchain system;
``(VI) used as payment or incentive
to participants in the blockchain
system to engage in the activities of
the blockchain system, provide services
to other participants in the blockchain
system, or otherwise participate in the
functionality of the blockchain system;
or
``(VII) used as payment or
incentive to participants in the
blockchain system to validate
transactions, secure the blockchain
system, provide computational services,
maintain or distribute information, or
otherwise participate in the operations
of the blockchain system.
``(iii) Exclusion.--The term `digital
commodity' does not include any of the
following:
``(I) Security.--
``(aa) Any security, other
than a note, an investment
contract, or a certificate of
interest or participation in
any profit-sharing agreement.
``(bb) A note, an
investment contract, or a
certificate of interest or
participation in any profit-
sharing agreement that--
``(AA) represents
or gives the holder an
ownership interest or
other interest in the
revenues, profits,
obligations, debts,
assets, or assets or
debts to be acquired of
the issuer of the
digital asset or
another person (other
than a decentralized
governance system);
``(BB) makes the
holder a creditor of
the issuer of the
digital asset or
another person; or
``(CC) represents
or gives the holder the
right to receive
interest or the return
of principal from the
issuer of the digital
asset or another
person.
``(II) Security derivative.--A
digital asset that, based on its terms
and other characteristics, is,
represents, or is functionally
equivalent to an agreement, contract,
or transaction that is--
``(aa) a security future,
as defined in section 2a of the
Securities Act of 1933;
``(bb) a security-based
swap, as defined in section 2a
of the Securities Act of 1933;
``(cc) a put, call,
straddle, option, or privilege
on any security, certificate of
deposit, or group or index of
securities (including any
interest therein or based on
the value thereof), as defined
in section 2a of the Securities
Act of 1933; or
``(dd) a put, call,
straddle, option, or privilege
on any security, as defined in
section 2a of the Securities
Act of 1933.
``(III) Permitted payment
stablecoin.--A digital asset that is a
permitted payment stablecoin.
``(IV) Banking deposit.--
``(aa) A deposit (as
defined under section 3 of the
Federal Deposit Insurance Act
(12 U.S.C. 1813)), regardless
of the technology used to
record the deposit.
``(bb) An account (as
defined in section 101 of the
Federal Credit Union Act (12
U.S.C. 1752)), regardless of
the technology used to record
the account.
``(V) Commodity.--A digital asset
that references, represents an interest
in, or is functionally equivalent to--
``(aa) an agricultural
commodity;
``(bb) an excluded
commodity, other than a
security; or
``(cc) an exempt commodity,
other than the digital
commodity itself, as shall be
further defined by the
Commission.
``(VI) Commodity derivative.--A
digital asset that, based on its terms
and other characteristics, is,
represents, or is functionally
equivalent to an agreement, contract,
or transaction that is--
``(aa) a contract of sale
of a commodity for future
delivery or an option thereon;
``(bb) a security futures
product;
``(cc) a swap;
``(dd) an agreement,
contract, or transaction
described in section
2(c)(2)(C)(i) or 2(c)(2)(D)(i);
``(ee) a commodity option
authorized under section 4c; or
``(ff) a leverage
transaction authorized under
section 19.
``(VII) Pooled investment
vehicle.--
``(aa) In general.--A
digital asset that, based on
its terms and other
characteristics, is,
represents, or is functionally
equivalent to--
``(AA) a commodity
pool, as defined in
this Act; or
``(BB) a pooled
investment vehicle.
``(bb) Pooled investment
vehicle defined.--In this
subclause, the term `pooled
investment vehicle' means--
``(AA) any
investment company as
defined in section 3(a)
of the Investment
Company Act of 1940 (15
U.S.C. 80a-3(a));
``(BB) any company
that would be an
investment company
under section 3(a) of
such Act but for the
exclusion provided from
that definition by
paragraph (1), (7), or
(9) of section 3(c) of
such Act (15 U.S.C.
80a-3(c)(1), (7), or
(9)); or
``(CC) any entity
or person that is not
an investment company
but holds or will hold
assets other than
securities.
``(VIII) Good, collectible, and
other non-commodity asset.--A digital
asset that has value, utility, or
significance beyond its mere existence
as a digital asset, including the
digital equivalent of a tangible or
intangible good, such as--
``(aa) a work of art, a
musical composition, a literary
work, or other intellectual
property;
``(bb) collectibles,
merchandise, virtual land, and
video game assets;
``(cc) affinity, rewards,
or loyalty points, including
airline miles or credit card
points, that are not primarily
speculative in nature; or
``(dd) rights, licenses,
and tickets.
``(iv) Rule of construction.--No
presumption shall exist that a digital asset is
a security, nor shall a digital asset be
excluded from being a digital commodity
pursuant to clause (iii)(I), solely due to--
``(I) the digital asset providing
voting or economic rights with respect
to the blockchain system to which the
digital asset relates or the
decentralized governance system of the
blockchain system to which the digital
asset relates;
``(II) the value of the digital
asset having the potential to
appreciate or depreciate in response to
the efforts, operations, or financial
performance of the blockchain system to
which the digital asset relates or the
decentralized governance system of the
blockchain system to which the digital
asset relates; or
``(III) the value of the digital
asset appreciating or depreciating due
to the use of the blockchain system to
which the digital asset relates or the
decentralized governance system of the
blockchain system to which the digital
asset relates.
``(G) Digital commodity broker.--
``(i) In general.--The term `digital
commodity broker' means any person who, as a
regular business--
``(I) is engaged in--
``(aa) soliciting or
accepting an order from a
customer for--
``(AA) the purchase
or sale of a digital
commodity; or
``(BB) an
agreement, contract, or
transaction described
in section
2(c)(2)(D)(iv); and
``(bb) in conjunction with
the activities in item (aa),
accepts or maintains control
over--
``(AA) the funds of
any customer; or
``(BB) the
execution of any
transaction of a
customer;
``(II) is engaged in soliciting or
accepting orders from a customer for
the purchase or sale of a unit of a
digital commodity on or subject to the
rules of a registered entity; or
``(III) is registered with the
Commission as a digital commodity
broker.
``(ii) Exceptions.--The term `digital
commodity broker' does not include a person
solely because the person--
``(I) solicits or accepts an order
described in clause (i)(I)(aa)(AA) from
a customer who is an eligible contract
participant;
``(II) enters into 1 or more
digital commodity transactions that are
attributable or solely incidental to
making, sending, receiving, or
facilitating payments, whether
involving a payment service provider or
on a peer-to-peer basis; or
``(III) is a bank (as defined under
section 3(a) of the Securities Exchange
Act of 1934) engaging in certain
banking activities with respect to a
digital commodity in the same or a
similar manner as a bank is excluded
from the definition of a broker under
such section, as determined by the
Commission.
``(iii) Further definition.--The
Commission, by rule or regulation, may exclude
from the term `digital commodity broker' any
person or class of persons if the Commission
determines that the rule or regulation will
effectuate the purposes of this Act.
``(H) Digital commodity dealer.--
``(i) In general.--The term `digital
commodity dealer' means any person who, as a
regular business--
``(I) is, or offers to be a
counterparty to a person for the
purchase or sale of a digital commodity
as a regular business, and in
conjunction with the activities,
accepts or maintains control over the
funds of any counterparty; or
``(II) is registered with the
Commission as a digital commodity
dealer.
``(ii) Exception.--The term `digital
commodity dealer' does not include a person
solely because the person--
``(I) is or offers to be a
counterparty to a person who is an
eligible contract participant;
``(II) enters into a digital
commodity transaction with an eligible
contract participant;
``(III) enters into a digital
commodity transaction on or through a
registered digital commodity exchange,
with a registered digital commodity
broker, or through a decentralized
finance trading protocol;
``(IV) enters into a digital
commodity transaction for the person's
own account, either individually or in
a fiduciary capacity, but not as a part
of a regular business;
``(V) enters into 1 or more digital
commodity transactions that are
attributable or solely incidental to
making, sending, receiving, or
facilitating payments, whether
involving a payment service provider or
on a peer-to-peer basis; or
``(VI) is a bank (as defined under
section 3(a) of the Securities Exchange
Act of 1934) engaging in certain
banking activities with respect to a
digital commodity in the same or a
similar manner as a bank is excluded
from the definition of a dealer under
section 3(a)(5) of such Act, as
determined by the Commission.
``(iii) Further definition.--The
Commission, by rule or regulation, may exclude
from the term `digital commodity dealer' any
person or class of persons if the Commission
determines that the rule or regulation will
effectuate the purposes of this Act.
``(I) Digital commodity exchange.--The term
`digital commodity exchange' means a trading facility
that offers or seeks to offer a cash or spot market in
at least 1 digital commodity.
``(J) Mixed digital asset transaction.--The term
`mixed digital asset transaction' means a transaction
in which a digital commodity is traded for a security.
``(K) Terms defined under the securities act of
1933.--The terms `blockchain system', `decentralized
governance system', `digital asset', `digital commodity
issuer', `digital commodity affiliated person',
`digital commodity related person', `end user
distribution', `mature blockchain system', and
`permitted payment stablecoin' have the meaning given
those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''; and
(5) in paragraph (41) (as so redesignated by paragraph (4)
of this subsection)--
(A) by striking ``and'' at the end of subparagraph
(E);
(B) by striking the period at the end of
subparagraph (F) and inserting ``; and''; and
(C) by adding at the end the following:
``(G) a digital commodity exchange registered under
section 5i.''.
(b) Conforming Amendments.--
(1) Each of the following provisions of law is amended by
striking ``1a(18)'' and inserting ``1a(19)'':
(A) Section 4s(h)(5)(A)(i) of the Commodity
Exchange Act (7 U.S.C. 6s(h)(5)(A)(i)).
(B) Section 5(e) of the Securities Act of 1933 (15
U.S.C. 77e(e)).
(C) Section 6(g)(5)(B) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(g)(5)(B)).
(D) Section 15F(h)(5)(A)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-10(h)(5)(A)(i)).
(2) Section 752 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8325) is amended by
striking ``1a(39)'' and inserting ``1a(40)''.
(3) Section 4s(f)(1)(D) of the Commodity Exchange Act (7
U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)'' and
inserting ``1a(48)(A)''.
(4) Each of the following provisions of the Commodity
Exchange Act is amended by striking ``1a(47)(A)(v)'' and
inserting ``1a(48)(A)(v)'':
(A) Section 4t(b)(1)(C) (7 U.S.C. 6t(b)(1)(C)).
(B) Section 5(d)(23) (7 U.S.C. 7(d)(23)).
(C) Section 5b(k)(3) (7 U.S.C. 7a-1(k)(3)).
(D) Section 5h(f)(10)(A)(iii) (7 U.S.C. 7b-
3(f)(10)(A)(iii)).
(5) Section 21(f)(4)(C) of the Commodity Exchange Act (7
U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and
inserting ``1a(49)''.
(6) Section 403 of the Legal Certainty for Bank Products
Act of 2000 (7 U.S.C. 27a) is amended--
(A) in subsection (a)(2), by striking
``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)''; and
(B) in each of subsections (b)(1) and (c)(2), by
striking ``1a(47)'' and inserting ``1a(48)''.
(7) Section 712 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8302) is amended--
(A) in subsection (a)(8), by striking ``1a(47)(D)''
each place it appears and inserting ``1a(48)(D)''; and
(B) in subsection (d)(1), by striking
``1a(47)(A)(v)'' each place it appears and inserting
``1a(48)(A)(v)''.
SEC. 104. DEFINITIONS UNDER THIS ACT.
In this Act:
(1) Definitions under the commodity exchange act.--The
terms ``decentralized finance messaging system'',
``decentralized finance trading protocol'', ``digital
commodity'', ``digital commodity broker'', ``digital commodity
dealer'', ``digital commodity exchange'', and ``mixed digital
asset transaction'' have the meaning given those terms,
respectively, under section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
(2) Definitions under the securities act of 1933.--The
terms ``blockchain'', ``blockchain system'', ``blockchain
protocol'', ``decentralized governance system'', ``digital
asset'', ``digital commodity issuer'', ``end user
distribution'', ``mature blockchain system'', ``permitted
payment stablecoin'', and ``securities laws'' have the meaning
given those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).
(3) Definitions under the securities exchange act of
1934.--The terms ``Bank Secrecy Act'', ``securities laws'', and
``self-regulatory organization'' have the meaning given those
terms, respectively, under section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
SEC. 105. RULEMAKINGS.
(a) Definitions.--The Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly issue rules to further
define the following terms:
(1) The terms--
(A) ``blockchain'', ``blockchain application'',
``blockchain system'', ``blockchain protocol'',
``decentralized governance system'', ``digital
commodity affiliated person'', ``digital commodity
issuer'', ``digital commodity related person'', ``end
user distribution'', and ``mature blockchain system'',
as defined under section 2(a) of the Securities Act of
1933;
(B) ``unilateral authority'', as such term is used
in section 42 of the Securities Exchange Act of 1934
and section 1a of the Commodity Exchange Act; and
(C) ``programmatic functioning'', as such term is
used in sections 4C of the Securities Act of 1933,
section 42 of the Securities Exchange Act of 1934, and
section 1a of the Commodity Exchange Act.
(2) The terms ``digital commodity'', ``decentralized
finance messaging system'', and ``decentralized finance trading
protocol'' as defined under section 1a of the Commodity
Exchange Act.
(b) Joint Rulemaking for Mixed Digital Asset Transactions.--The
Securities and Exchange Commission and the Commodity Futures Trading
Commission shall jointly issue rules applicable to mixed digital asset
transactions under this Act and the amendments made by this Act,
including by further defining such term.
(c) Protection of Self-Custody.--
(1) In general.--A United States individual shall retain
the right to--
(A) maintain a hardware wallet or software wallet
for the purpose of facilitating the individual's own
lawful custody of digital assets; and
(B) engage in direct, peer-to-peer transactions in
digital assets with another individual or entity for
the individual's own lawful purposes using a hardware
wallet or software wallet, if--
(i) such other individual or entity is not
a financial institution (as defined in section
5312 of title 31, United States Code); and
(ii) the transactions do not involve any
property or interests in property that are
blocked pursuant to, or are otherwise
prohibited by, United States sanctions.
(2) Application.--This subsection--
(A) applies solely to personal use by individuals;
and
(B) does not apply to individuals acting in a
custodial or fiduciary capacity for others.
(3) Rule of construction.--Nothing in this subsection shall
be construed to limit the authority of the Secretary of the
Treasury, the Securities and Exchange Commission, the Commodity
Futures Trading Commission, the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the National Credit
Union Administration to carry out any enforcement action or
special measure authorized under applicable law, including--
(A) the Bank Secrecy Act, section 9714 of the
Combating Russian Money Laundering Act (31 U.S.C. 5318A
note), and section 7213A of the Fentanyl Sanctions Act
(21 U.S.C. 2313a); or
(B) any other law relating to illicit finance,
money laundering, terrorism financing, or United States
sanctions.
(d) Joint Rulemaking, Procedures, or Guidance for Delisting.--Not
later than 180 days after the date of the enactment of this Act, the
Commodity Futures Trading Commission and the Securities and Exchange
Commission shall jointly issue rules, procedures, or guidance (as
determined appropriate by the Commissions) regarding the process to
delist an asset for trading under section 106 of this Act if the
Commissions determine that the listing is inconsistent with the
Commodity Exchange Act, the securities laws (including regulations
under those laws), or this Act.
(e) Joint Rules for Portfolio Margining Determinations.--
(1) In general.--Not later than 360 days after the date of
the enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly issue rules describing the process for persons
registered with either such Commission to seek a joint order or
determination with respect to margin, customer protection,
segregation, or other requirements as necessary to facilitate
portfolio margining of securities (including related extensions
of credit), security-based swaps, contracts for future
delivery, options on a contract for future delivery, swaps, and
digital commodities, or any subset thereof, in--
(A) a securities account carried by a registered
broker or dealer or a security-based swap account
carried by a registered security-based swap dealer;
(B) a futures or cleared swap account carried by a
registered futures commission merchant;
(C) a swap account carried by a swap dealer; or
(D) a digital commodity account carried by a
registered digital commodity broker or digital
commodity dealer that is also registered in such other
capacity as is necessary to also carry the other
customer or counterparty positions being held in the
account.
(2) Process.--With respect to a joint order or
determination described in paragraph (1), the rules required to
be issued pursuant to paragraph (1) shall require--
(A) the joint order or determination to be issued
only if the order or determination is in the public
interest and provides for the appropriate protection of
customers;
(B) applicants to file a standard application, in a
form and manner determined by the Securities and
Exchange Commission and the Commodity Futures Trading
Commission, which shall include the information
necessary to make the joint order or determination;
(C) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to make a final
determination not later than 270 days after the filing
of a completed application;
(D) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to consider the
public interest of the joint order or determination
through the solicitation of public comments; and
(E) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to consult with
other relevant foreign or domestic regulators,
including the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, and
the Office of the Comptroller of the Currency, as
appropriate.
SEC. 106. REGISTRATION FOR DIGITAL COMMODITY EXCHANGES, BROKERS, AND
DEALERS; PROVISIONAL STATUS.
(a) Registration.--
(1) In general.--Unless exempted from registration under
section 5k of the Commodity Exchange Act, a person shall not
act as a digital commodity broker, digital commodity dealer, or
digital commodity exchange after the end of the 270-day period
beginning on the date of the enactment of this Act, unless, as
the case may be, the person is registered as a--
(A) digital commodity broker pursuant to section 4u
of the Commodity Exchange Act;
(B) digital commodity dealer pursuant to section 4u
of the Commodity Exchange Act; or
(C) digital commodity exchange pursuant to section
5i of the Commodity Exchange Act.
(2) Expedited process.--Not less than 270 days after the
date of the enactment of this Act, the Commodity Futures
Trading Commission shall adopt, by rule, regulation, or order,
a process for expedited registration of persons in provisional
status pursuant to subsection (b).
(b) Provisional Status.--
(1) In general.--A person who is registered in accordance
with subsection (a) of this section shall be in provisional
status until--
(A) in the case of a digital commodity broker or
dealer, 270 days after the final effective date of the
rulemakings required under section 4u of the Commodity
Exchange Act; or
(B) in the case of a digital commodity exchange,
270 days after the final effective date of the
rulemakings required under section 5i of such Act.
(2) Payment of fees.--A person in provisional status shall
pay all fees and penalties required under section 410.
(c) Operations Prior to Regulations.--
(1) Requirements.--A person in provisional status shall
apply and be subject to the statutory requirements of this Act
and any rules or regulations promulgated under this Act, as
applicable.
(2) Listings.--
(A) In general.--Except as provided in subparagraph
(B), a person in provisional status may continue to
offer, solicit, trade, facilitate, execute, clear,
report, or otherwise deal in any digital asset offered
on or through the facilities of the person before the
date of registration under this section, until such
time as the joint rulemaking on definitions required
under section 105(a) is effective.
(B) Delisting.--Before the effective date of the
joint rulemaking on definitions under section 105(a),
person in provisional status shall cease offering,
soliciting, trading, facilitating, executing, clearing,
reporting, or otherwise dealing in any digital asset
required to be delisted pursuant to a joint delisting
process established under section 105(d).
(3) Exemptive authority.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commodity Futures Trading Commission may exempt any persons or
class of persons registered pursuant to subsection (a) and in
provisional status pursuant to subsection (b) from any
requirements of this Act and any rules and regulations
promulgated under this Act.
(d) Customer Disclosure Before Registration.--
(1) In general.--Beginning 30 days after the date of the
enactment of this Act, any person acting as a digital commodity
exchange, digital commodity broker, or digital commodity dealer
shall disclose to the customers of the person so acting, in the
disclosure documents, offering documents, and promotional
material of the person so acting, in a prominent manner, that
the person is not registered with or regulated by the Commodity
Futures Trading Commission.
(2) Expiration.--Paragraph (1) of this subsection shall not
apply to any person who registers pursuant to subsection (a).
SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
PROVISIONS.
(a) In General.--Nothing in this Act shall affect or apply to, or
be interpreted to affect or apply to--
(1) any agreement, contract, or transaction that is subject
to the Commodity Exchange Act as--
(A) a contract of sale of a commodity for future
delivery or an option on such a contract;
(B) a swap;
(C) a security futures product;
(D) an option authorized under section 4c of such
Act;
(E) an agreement, contract, or transaction
described in section 2(c)(2)(C)(i) of such Act; or
(F) a leverage transaction authorized under section
19 of such Act;
(2) any agreement, contract, or transaction that is subject
to the securities laws as--
(A) a security-based swap;
(B) a security futures product; or
(C) an option on or based on the value of a
security; or
(3) the activities of any person with respect to any such
agreement, contract, or transaction.
(b) Prohibitions on Spot Digital Commodity Entities.--Nothing in
this Act authorizes, or shall be interpreted to authorize, a digital
commodity exchange, digital commodity broker, or digital commodity
dealer to engage in any activities involving any transaction, contract,
or agreement described in subsection (a)(1), solely by virtue of being
registered as a digital commodity exchange, digital commodity broker,
or digital commodity dealer.
(c) Definitions.--In this section, each term shall have the meaning
provided in the Commodity Exchange Act or the regulations prescribed
under such Act.
SEC. 108. ADMINISTRATIVE REQUIREMENTS.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended--
(1) in paragraph (3)--
(A) in subparagraph (B), by striking ``or'' at the
end;
(B) in subparagraph (C), by striking the period and
inserting ``; or''; and
(C) by adding at the end the following:
``(D) a contract of sale of a digital commodity.'';
(2) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) in clause (iii), by striking the
period and inserting ``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital
commodity.'';
(B) in subparagraph (B)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) in clause (iii), by striking the
period and inserting ``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital
commodity.''; and
(C) in subparagraph (C)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) by striking ``(iii) a swap, provided
however,'' and inserting the following:
``(iii) a swap; or
``(iv) a contract of sale of a digital
commodity,
provided, however,''; and
(iii) by striking ``clauses (i), (ii), or
(iii)'' and insert ``any of clauses (i) through
(iv)''.
SEC. 109. INTERNATIONAL COOPERATION.
In order to promote greater consistency in effective and consistent
global regulation of digital assets, the Commodity Futures Trading
Commission and the Securities and Exchange Commission, as appropriate--
(1) shall consult and coordinate with foreign regulatory
authorities on the application of consistent international
standards with respect to the regulation of digital assets; and
(2) may enter into such information-sharing arrangements as
may be deemed to be necessary or appropriate in the public
interest or for the protection of investors, customers, and
users of digital assets.
SEC. 110. APPLICATION OF THE BANK SECRECY ACT.
(a) In General.--Section 5312(c)(1)(A) of title 31, United States
Code, is amended--
(1) by inserting ``digital commodity broker, digital
commodity dealer,'' after ``futures commission merchant,''; and
(2) by inserting before the period the following: ``and any
digital commodity exchange registered, or required to register,
under the Commodity Exchange Act which permits direct customer
access''.
(b) GAO Study.--
(1) In general.--The Comptroller General of the United
States, in consultation with the Secretary of the Treasury,
shall conduct a study to--
(A) assess the risks posed by centralized
intermediaries that are primarily located in foreign
jurisdictions that provide services to U.S. persons
without regulatory requirements that are substantially
similar to the requirements of the Bank Secrecy Act;
and
(B) provide any regulatory or legislative
recommendations to address these risks under
subparagraph (A).
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall issue a
report to Congress containing all findings and determinations
made in carrying out the study required under paragraph (1).
SEC. 111. IMPLEMENTATION.
(a) Global Rulemaking Timeframe.--Unless otherwise provided in this
Act or an amendment made by this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission, or both, shall
individually, and jointly where required, promulgate rules and
regulations required of each Commission under this Act or an amendment
made by this Act not later than 360 days after the date of enactment of
this Act.
(b) Rules and Registration Before Final Effective Dates.--
(1) In general.--In order to prepare for the implementation
of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission may, before any effective
date provided in this Act--
(A) promulgate rules, regulations, or orders
permitted or required by this Act;
(B) conduct studies and prepare reports and
recommendations required by this Act;
(C) register persons under this Act; and
(D) exempt persons, agreements, contracts, or
transactions from provisions of this Act, under the
terms contained in this Act.
(2) Limitation on effectiveness.--An action by the
Commodity Futures Trading Commission or the Securities and
Exchange Commission under paragraph (1) shall not become
effective before the effective date otherwise applicable to the
action under this Act.
TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.
(a) Securities Act of 1933.--Section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)), as amended by section 101, is further
amended--
(1) in paragraph (1), by adding at the end the following:
``The term `investment contract' does not include an investment
contract asset.''; and
(2) by adding at the end the following:
``(36) The term `investment contract asset' means a digital
commodity--
``(A) that can be exclusively possessed and
transferred, person to person, without necessary
reliance on an intermediary, and is recorded on a
blockchain; and
``(B) sold or otherwise transferred, or intended to
be sold or otherwise transferred, pursuant to an
investment contract.''.
(b) Investment Advisers Act of 1940.--Section 202(a)(18) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is amended by
adding at the end the following: ``The term `investment contract' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
(c) Investment Company Act of 1940.--Section 2(a)(36) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended by
adding at the end the following: ``The term `investment contract' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
(d) Securities Exchange Act of 1934.--Section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by
adding at the end the following: ``The term `investment contract' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
(e) Securities Investor Protection Act of 1970.--Section 16(14) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
amended by adding at the end the following: ``The term `investment
contract' does not include an investment contract asset (as such term
is defined under section 2(a) of the Securities Act of 1933).''.
SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL COMMODITIES.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended--
(1) in section 4(a), by adding at the end the following:
``(8) the offer or sale of an investment contract involving
units of a digital commodity by its digital commodity issuer
(including all entities controlled by or under common control
with the issuer), if--
``(A) the blockchain system to which the digital
commodity relates, together with the digital commodity,
is certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934 or
the issuer intends for the blockchain system to which
the digital commodity relates to be a mature blockchain
system by the later of--
``(i) the date that is four years after the
first sale of the investment contract involving
such digital commodity; or
``(ii) the date that is four years after
the effective date of this paragraph;
``(B) the sum of all cash and other consideration
to be received by the digital commodity issuer in
reliance on the exemption provided under this
paragraph, during the 12-month period preceding the
date of such offering, including the amount received in
such offering, is not more than $75,000,000 (as such
amount is annually adjusted by the Commission to
reflect the change in the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor);
``(C) after the completion of the transaction, a
purchaser does not own more than 10 percent of the
total amount of the outstanding units of the digital
commodity;
``(D) the transaction does not involve the offer or
sale of an investment contract involving units of a
digital commodity by its digital commodity issuer
that--
``(i) is not organized under the laws of a
State, a territory of the United States, or the
District of Columbia;
``(ii) is a development stage company that
either--
``(I) has no specific business plan
or purpose; or
``(II) has indicated that the
business plan of the company is to
merge with or acquire an unidentified
company;
``(iii) is an investment company, as
defined in section 3 of the Investment Company
Act of 1940 (15 U.S.C. 80a-3), or is excluded
from the definition of investment company by
section 3(b) or section 3(c) of that Act (15
U.S.C. 80a-3(b) or 80a-3(c));
``(iv) is issuing fractional undivided
interests in oil or gas rights, or a similar
interest in other mineral rights;
``(v) is, or has been, subject to any order
of the Commission entered pursuant to section
12(j) of the Securities Exchange Act of 1934
during the 5-year period before the filing of
the offering statement; or
``(vi) is disqualified pursuant to section
230.262 of title 17, Code of Federal
Regulations; and
``(E) the issuer meets the requirements of section
4B(b).''; and
(2) by inserting after section 4A the following:
``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL COMMODITY
TRANSACTIONS.
``(a) Commission Jurisdiction.--For the purposes of this section:
``(1) The Commission shall have jurisdiction and
enforcement authority with respect to disclosures described in
this section.
``(2) Section 17 shall apply to a statement made in an
offering statement, disclosure, or report filed under this
section to the same extent as such section 17 applies to a
statement made in any other offering statement, disclosure, or
report filed under this Act.
``(b) Requirements for Digital Commodity Issuers.--
``(1) Terms and conditions.--A digital commodity issuer
offering or selling an investment contract involving units of a
digital commodity in reliance on section 4(a)(8) shall file
with the Commission an offering statement and any related
documents, in such form and with such content as prescribed by
the Commission, including financial information, a description
of the issuer and the operations of the issuer, the financial
condition of the issuer, a description of the plan of
distribution of any unit of a digital commodity that is to be
offered as well as the intended use of the offering proceeds,
and a description of the development plan for the blockchain
system, and the related digital commodity, to become a mature
blockchain system, if such blockchain system is not already
certified as a mature blockchain system pursuant to section 42
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(2) Information required for purchasers.--A digital
commodity issuer that has filed a statement under paragraph (1)
to offer and sell an investment contract involving a unit of a
digital commodity in reliance on section 4(a)(8) shall include
in such statement the following information:
``(A) Maturity status.--Whether the blockchain
system to which the digital commodity relates has been
certified as a mature blockchain system pursuant to
section 42 of the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) and, where such blockchain system
is not so certified, a statement of the digital
commodity issuer's intent for the blockchain system to
which the digital commodity relates to be a mature
blockchain system within the time period described in
section 4(a)(8)(A).
``(B) Source code.--The source code, or a publicly
accessible webpage displaying such source code, for any
blockchain system to which the digital commodity
relates, and whether the source code was sourced from
an external third party, whether there are any existing
external dependencies, and whether the code underwent a
third-party security audit.
``(C) Transaction history.--A description of the
steps necessary to independently access, search, and
verify the transaction history of any blockchain system
to which the digital commodity relates, to the extent
any such independent access, search, and verification
activities are technically feasible with respect to
such blockchain system.
``(D) Digital commodity economics.--A description
of the purpose of any blockchain system to which the
digital commodity relates and the operation of any such
blockchain system, including--
``(i) information explaining the launch and
supply process, including the number of units
of the digital commodity to be issued in an
initial allocation, the total number of units
of the digital commodity to be created, the
release schedule for the units of the digital
commodity, and the total number of units of the
digital commodity outstanding;
``(ii) information explaining the technical
requirements for holding, accessing, and
transferring the digital commodity;
``(iii) information on any applicable
consensus mechanism or process for validating
transactions, method of generating or mining
digital commodities, and any process for
burning or destroying units of the digital
commodity on the blockchain system;
``(iv) an explanation of any mechanism for
driving value to the digital commodity of such
blockchain system; and
``(v) an explanation of governance
mechanisms for implementing changes to the
blockchain system or forming consensus among
holders of units of such digital commodity.
``(E) Plan of development.--The current state and
timeline for the development of any blockchain system
to which the digital commodity relates, detailing how
and when the blockchain system is intended to be a
mature blockchain system, if the blockchain system is
not yet certified as a mature blockchain system, and
the various roles that exist or are intended to exist
in connection with the blockchain system, such as
users, service providers, developers, transaction
validators, and governance participants, including a
discussion of any mechanisms by which control or
authority are exerted with respect to the blockchain
system or its related digital commodity, and any
critical operational dependencies of the blockchain
system or its related digital commodity.
``(F) Ownership disclosures.--
``(i) In general.--A list of all persons
who are digital commodity related persons or
digital commodity affiliated persons who have
been issued a unit of the digital commodity by
the digital commodity issuer or have a right to
a unit of the digital commodity from the
digital commodity issuer.
``(ii) Confidentiality.--The Commission
shall keep each list described under clause (i)
confidential, consistent with what is necessary
or appropriate in the public interest or for
the protection of investors.
``(G) Risk factor disclosures.--A description of
the material risks surrounding ownership of a unit of a
digital commodity.
``(3) Ongoing disclosure requirements for maturing
blockchain systems.--Subject to paragraph (5), the issuer of a
digital commodity related to a blockchain system that is not
yet certified as a mature blockchain system that has filed a
statement under paragraph (1) to offer and sell an investment
contract involving a unit of a digital commodity in reliance on
section 4(a)(8) shall file the following with the Commission:
``(A) Semiannual reports.--Every 6 months, a report
containing--
``(i) an updated description of the current
state and timeline for the development of the
blockchain system to which the digital
commodity relates, showing how and when the
blockchain is intended to be a mature
blockchain system;
``(ii) a description of the efforts of the
issuer and digital commodity related persons in
developing the blockchain system to which the
digital commodity relates; and
``(iii) the amount of money raised by the
digital commodity issuer in reliance on section
4(a)(8), how much of that money has been spent,
and the general categories of activities for
which that money has been spent and amounts
spent per category.
``(B) Current reports.--A current report reflecting
any material changes relevant to the information
previously reported to the Commission by the digital
commodity issuer, which shall be filed as soon as
practicable after the material change occurred, in
accordance with such rules as the Commission may
prescribe as necessary or appropriate in the public
interest or for the protection of investors.
``(4) Rulemaking.--Not later than 360 days after the date
of the enactment of this section, the Commission shall
prescribe rules on requirements applicable to issuers of
digital commodities in reliance on section 4(a)(8).
``(5) Termination of certain reporting requirements; post-
maturity reporting requirements.--
``(A) In general.--The ongoing reporting
requirements under paragraph (3) shall not apply to a
digital commodity issuer 180 days after the end of the
covered fiscal year, if the information with respect to
the digital commodity and the blockchain system to
which it relates described in subparagraphs (A) through
(C) of paragraph (2) is made publicly available and the
disclosure requirements under subparagraph (C) of this
paragraph are satisfied.
``(B) Covered fiscal year defined.--In this
paragraph, the term `covered fiscal year' means, with
respect to a digital commodity, the first fiscal year
of a digital commodity issuer in which the blockchain
system to which such digital commodity relates is
certified as a mature blockchain system under section
42 of the Securities Exchange Act of 1934.
``(C) Post-maturity reporting requirements.--After
the blockchain system to which a digital commodity
relates is certified as a mature blockchain system
under section 42 of the Securities Exchange Act of
1934, any digital commodity issuer that has filed a
statement under paragraph (1) to offer and sell an
investment contract involving a unit of a digital
commodity in reliance on section 4(a)(8) and is engaged
in material ongoing efforts related to the mature
blockchain system shall disclose, in a manner
reasonably calculated to inform the public, and at such
frequency as the Commission may prescribe, by rule, a
description of such efforts, including--
``(i) any participation in a decentralized
governance system of such blockchain system;
``(ii) any participation in alterations or
proposed alterations to the functionality or
operation of such blockchain system;
``(iii) the use or planned use of any funds
raised in reliance on section 4(a)(8) or any
rulemaking pursuant to section 202(d) of the
CLARITY Act of 2025 in such efforts;
``(iv) the amount of units of the digital
commodity, or rights thereto, owned and
controlled by such issuer and any use, sale,
trading, or other disposition thereof; and
``(v) any affiliations of such issuer
material to the efforts of such issuer.
``(D) Rule of construction.--Nothing in
subparagraph (C) may be construed to make any digital
commodity described in such subparagraph a security.
``(c) Requirements for Intermediaries.--A person acting as an
intermediary in connection with the offer or sale of an investment
contract involving units of a digital commodity in reliance on section
4(a)(8) shall--
``(1) register with the Commission as a broker or dealer;
and
``(2) be a member of a national securities association
registered under section 15A of the Securities Exchange Act of
1934 (15 U.S.C. 78o-3).
``(d) Disqualification Provisions.--The Commission shall issue
rules to apply the disqualification provisions under section 230.262 of
title 17, Code of Federal Regulations, to the exemption provided under
section 4(a)(8).
``(e) Failure To Mature.--
``(1) In general.--Not later than 270 days after the date
of the enactment of this section, the Commission shall issue
rules applying such additional obligations and disclosures for
the digital commodity issuers, digital commodity related
persons, and digital commodity affiliated persons of a
blockchain system described under subsection (b)(1) that does
not become a mature blockchain system within the time period
described in section 4(a)(8)(A) as are necessary or appropriate
in the public interest or for the protection of investors. Such
obligations and disclosures shall include the following:
``(A) Disclosures.--Disclosures regarding the
following:
``(i) Failure to mature.--The material
reasons that the blockchain system has not
become a mature blockchain system within the
time period described in section 4(a)(8)(A).
``(ii) Development plans.--The future plans
of development of the blockchain system,
including information required under subsection
(b)(3).
``(iii) Risk factor disclosures.--The
material risks surrounding ownership of a unit
of a digital commodity that relates to a
blockchain system described under subsection
(b)(1) that has not become a mature blockchain
system within the time period described in
section 4(a)(8)(A).
``(B) Obligations.--Transaction reporting and
beneficial ownership disclosure obligations applicable
to digital commodity related persons and digital
commodity affiliated persons of such blockchain system.
``(2) Qualification required.--The Commission may not
permit any additional raising of capital by the issuer of a
digital commodity related to a blockchain system described
under subsection (a)(1) that has not become a mature blockchain
system within the time period described in section 4(a)(8)(A)
unless the Commission has qualified any offering statement
related to such additional raising of capital.''.
(b) Additional Exemptions.--
(1) Certain registration requirements.--Section 12(g)(6) of
the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is
amended by striking ``under section 4(6)'' and inserting
``under section 4(a)(6) or 4(a)(8)''.
(2) Exemption from state regulation.--Section 18(b)(4) of
the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
(A) in section (B), by striking ``section 4(4)''
and inserting ``section 4(a)(4)'';
(B) in section (C), by striking ``section 4(6)''
and inserting ``section 4(a)(6)'';
(C) in subparagraph (F)--
(i) by striking ``section 4(2)'' each place
such term appears and inserting ``section
4(a)(2)''; and
(ii) by striking ``or'' at the end;
(D) in subparagraph (G), by striking the period and
inserting ``; or''; and
(E) by adding at the end the following:
``(H) section 4(a)(8).''.
(c) Prior Issuers.--
(1) Reporting exception.--With respect to a digital
commodity, the digital commodity issuer shall not be required
to file the reports otherwise required under section 4B(b)(3)
of the Securities Act of 1933 (or, with respect to a digital
commodity not issued in reliance on section 4(a)(8) of the
Securities Act of 1933, a comparable set of reports specified
by the Securities and Exchange Commission), if the digital
commodity issuer--
(A) last offered or sold an investment contract
involving a unit of the digital commodity prior to
January 1, 2020; or
(B) both--
(i) last offered or sold an investment
contract involving a unit of the digital
commodity between January 1, 2020, and June 1,
2025; and
(ii) is no longer engaged in material
ongoing efforts related to the blockchain
system to which the digital commodity relates.
(2) Reporting application date for certain prior issuers.--
With respect to a digital commodity, if the digital commodity
issuer is engaged in material ongoing efforts related to the
blockchain system to which the digital commodity relates and
last offered and sold an investment contract involving a unit
of the digital commodity between January 1, 2020, and June 1,
2025, the digital commodity issuer shall file with the
Commission a comparable set of reports to the reports described
under, as applicable, section 4B(b)(3) or 4B(b)(5)(C) of the
Securities Act of 1933, where required by the Commission, not
later than one year after the effective date of this section.
(d) Use of Other Exemptions.--
(1) Rule of construction.--Nothing in this section or the
amendments made by this section may be construed as prohibiting
the offer or sale of an investment contract involving units of
a digital commodity in reliance on an exemption provided under
section 3, 4(a), or 19 of the Securities Act of 1933 other than
that provided under section 4(a)(8) of the Securities Act of
1933.
(2) Rulemaking.--The Securities and Exchange Commission may
issue rules--
(A) to permit the issuer of a digital commodity
related to a blockchain system described under section
4B(b)(1) of the Securities Act of 1933 that has not
become a mature blockchain system within the time
period described in section 4(a)(8)(A) of such Act to
raise capital pursuant to an exempt offering, if the
Commission qualifies any offering statement related to
such raising of capital; and
(B) for the offer and sale of investment contracts
involving units of a digital commodity by issuers that
are not organized under the laws of a State, a
territory of the United States, or the District of
Columbia.
SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL COMMODITIES
THAT ORIGINALLY INVOLVED INVESTMENT CONTRACTS.
(a) Secondary Market Treatment.--Notwithstanding any other
provision of law, the offer or sale of a digital commodity that
originally involved an investment contract by a person other than the
issuer of such digital commodity, or an agent or underwriter thereof,
shall be deemed not to be an offer or sale of the investment contract
originally involving the digital commodity between the issuer of the
investment contract involving the digital commodity, or an agent or
underwriter thereof, and the purchaser of such digital commodity
under--
(1) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
(2) the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.);
(3) the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
seq.);
(4) the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.);
(5) the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.); and
(6) any applicable provisions of State law.
(b) End User Distributions Not an Offer or Sale of a Security.--An
end user distribution does not involve the offer or sale of a security.
(c) Agent Defined.--In this section and with respect to a digital
commodity issuer, the term ``agent'' means any person directly or
indirectly controlled by the issuer or under direct or indirect common
control with the issuer.
SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
AFFILIATED PERSONS.
The Securities Act of 1933 (15 U.S.C. 77a et seq.), as amended by
section 202, is further amended by inserting after section 4B the
following:
``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
AFFILIATED PERSONS.
``(a) In General.--It shall be a violation of this Act for a
digital commodity affiliated person or a digital commodity related
person to offer or sell a digital commodity acquired directly from its
issuer, or an agent or underwriter thereof, pursuant to an investment
contract in reliance on section 4(a)(8) or another exemption under this
Act, other than as provided in this section.
``(b) Commission Jurisdiction.--
``(1) Where a digital commodity affiliated person or a
digital commodity related person offers or sells a digital
commodity acquired directly from its issuer, or an agent or
underwriter thereof, pursuant to an investment contract in
reliance on section 4(a)(8), or another exemption under this
Act, other than as provided in this section, such digital
commodity affiliated person or digital commodity related person
shall be considered an issuer of such investment contract.
``(2) For the purposes of this section, the Commission
shall have jurisdiction and enforcement authority with respect
to an offer or sale of a digital commodity described in
subsection (a).
``(c) Restrictions on Digital Commodity Related Persons and Digital
Commodity Affiliated Persons.--
``(1) Prior to being a mature blockchain system.--Prior to
the blockchain system to which a digital commodity relates
being certified as a mature blockchain system under section 42
of the Securities Exchange Act of 1934, units of the digital
commodity acquired by a digital commodity related person or
digital commodity affiliated person directly from its issuer,
or an agent or underwriter thereof, pursuant to an investment
contract in reliance on section 4(a)(8), or another exemption
under this Act, may be offered or sold by such digital
commodity related person or digital commodity affiliated person
if--
``(A) reports with respect to such digital
commodity, where required under section 4B(b)(3) (or,
with respect to a digital commodity not issued in
reliance on section 4(a)(8), a comparable set of
reports where required by the Commission) have been
filed with the Commission;
``(B) the digital commodity related person or
digital commodity affiliated person has held the units
for not less than 12 months from the date the units
were delivered; and
``(C) the aggregate amount of the units of the
digital commodity offered or sold by the digital
commodity related person or digital commodity
affiliated person is--
``(i) in any 12-month period, not greater
than 15 percent of the total units of the
digital commodity acquired directly from its
issuer by the digital commodity related person
or digital commodity affiliated person; and
``(ii) not greater than 50 percent of the
total units of the digital commodity acquired
directly from its issuer by the digital
commodity related person or digital commodity
affiliated person.
``(2) After becoming a mature blockchain system.--After the
blockchain system to which a digital commodity relates is
certified as a mature blockchain system under section 42 of the
Securities Exchange Act of 1934, units of the digital commodity
acquired by a digital commodity related person or digital
commodity affiliated person directly from its issuer, or the
issuer's agent or underwriter, pursuant to an investment
contract in reliance on section 4(a)(8) or another exemption
under this Act, may be--
``(A) offered or sold by a digital commodity
related person; or
``(B) offered or sold by a digital commodity
affiliated person if--
``(i) information described in section
4B(b)(5)(C), where required (or, with respect
to a digital commodity not issued in reliance
on section 4(a)(8), a comparable set of
information, where required) is publicly
available;
``(ii) the digital commodity affiliated
person has held the units for not less than the
earlier of--
``(I) 12 months from the date the
units were delivered; or
``(II) 3 months following the date
on which the blockchain system is
certified as a mature blockchain system
under section 42 of the Securities
Exchange Act of 1934; and
``(iii) the aggregate amount of the units
of the digital commodity offered or sold by the
digital commodity affiliated person in any 12-
month period does not exceed the greater of--
``(I) 8 percent of the total
outstanding amount of the digital
commodity; or
``(II) 25 percent of the total
units of the digital commodity acquired
directly from its issuer by the digital
commodity affiliated person.
``(d) Use of a Digital Commodity in the Programmatic Functioning of
the Blockchain System.--For purposes of this section, the use of a
digital commodity in the programmatic functioning of the blockchain
system to which it relates is not an offer or sale of a digital
commodity.
``(e) Manipulative and Deceptive Devices; Reporting.--
``(1) In general.--It shall be unlawful for any digital
commodity issuer, digital commodity related person, or digital
commodity affiliated person, directly or indirectly, by the use
of any means or instrumentality of interstate commerce or of
the mails, to use or employ, in connection with the purchase or
sale of any digital commodity, any manipulative or deceptive
device or contrivance in contravention of such rules and
regulations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.
``(2) Affirmative defense.--Not later than 270 days after
the date of the enactment of this section, the Commission shall
issue rules to implement paragraph (1), including by providing
any affirmative defenses to an enforcement action thereunder as
the Commission may prescribe as necessary or appropriate in the
public interest or for the protection of investors.
``(3) Reporting.--Not later than 270 days after the date of
the enactment of this section, the Commission shall issue rules
to prescribe such transaction reporting and beneficial
ownership disclosure obligations applicable to digital
commodity related persons and digital commodity affiliated
persons, as necessary or appropriate in the public interest or
for the protection of investors.
``(4) Differentiation between persons.--In issuing rules
required under paragraphs (2) and (3), the Commission shall
differentiate between digital commodity related persons and
digital commodity affiliated persons as necessary or
appropriate in the public interest or for the protection of
investors.
``(f) Rules for Previously-Issued Digital Commodities.--
``(1) Units received prior to january 1, 2020.--If a unit
of a digital commodity was received by a digital commodity
related person or digital commodity affiliated person prior to
January 1, 2020, the unit of the digital commodity may be
offered or sold by the digital commodity related person or
digital commodity affiliated person without condition.
``(2) Certain units related to a non-mature blockchain
system.--If a unit of a digital commodity was received by a
digital commodity related person or digital commodity
affiliated person between January 1, 2020, and June 1, 2025,
and the blockchain system to which the digital commodity
relates is not certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934, the unit of
the digital asset may be offered or sold by a digital commodity
related person or digital commodity affiliated person if--
``(A) reports with respect to such digital
commodity comparable to the reports described under
section 4B(b)(3), where required by the Commission,
have been filed with the Commission;
``(B) the digital commodity related person or
digital commodity affiliated person meets any
requirements pursuant to subsection (e)(3); and
``(C) the digital commodity related person or
digital commodity affiliated person has held the units
for not less than 12 months from the date the units
were delivered.
``(3) Certain units related to a mature blockchain
system.--If a unit of a digital commodity was received by a
digital commodity related person or digital commodity
affiliated person between January 1, 2020, and June 1, 2025,
and the blockchain system to which the digital commodity
relates is certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934, it may be
offered or sold by a digital commodity related person or
digital commodity affiliated person if--
``(A) information described in section 4B(b)(5)(C)
or comparable thereto, where required by the
Commission, is publicly available; and
``(B) the digital commodity related person or
digital commodity affiliated person has held the units
for not less than 12 months from the date the units
were delivered.
``(g) Rulemaking on Further Usage of Digital Commodities.--Not
later than 270 days after the date of enactment of this section, the
Commission may issue rules to exempt, unconditionally or on stated
terms or conditions, a digital commodity related person or a digital
commodity affiliated person from the requirements of this section for
the offer or sale of a digital commodity in order to foster the
development of mature blockchain systems and fair and orderly
markets.''.
SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by adding at the end the following:
``SEC. 42. MATURE BLOCKCHAIN SYSTEMS.
``(a) Certification of Blockchain Systems.--
``(1) Certification.--For purposes of sections 4(a)(8), 4B,
and 4C of the Securities Act of 1933 any digital commodity
issuer, digital commodity related person, digital commodity
affiliated person, or decentralized governance system of the
blockchain system may certify to the Securities and Exchange
Commission that the blockchain system to which a digital
commodity relates is a mature blockchain system.
``(2) Filing requirements.--A certification described under
paragraph (1) shall be filed with the Commission, and include
such information that is reasonably necessary to establish that
the blockchain system is not controlled by any person or group
of persons under common control, which may include information
regarding--
``(A) the operation of the blockchain system;
``(B) the functionality of the related digital
commodity;
``(C) how the market value of the digital commodity
is substantially derived from the programmatic
functioning of such blockchain system;
``(D) any decentralized governance system which
relates to the blockchain system; and
``(E) the current roles, if any, of the digital
commodity issuer, digital commodity affiliated persons,
and digital commodity related persons where such roles
are material to the development or operation of such
blockchain system or the decentralized governance
system of such blockchain system.
``(3) Rebuttable presumption.--The Commission may rebut a
certification described under paragraph (1) with respect to a
blockchain system if the Commission, within 60 days of
receiving such certification, determines that the blockchain
system is not a mature blockchain system.
``(4) Certification review.--
``(A) In general.--Any blockchain system that
relates to a digital commodity for which a
certification has been made under paragraph (1) shall
be considered a mature blockchain system 60 days after
the date on which the Commission receives a
certification under paragraph (1), unless the
Commission notifies the person who made the
certification within such time that the Commission is
staying the certification due to--
``(i) an inadequate explanation by the
person making the certification; or
``(ii) any novel or complex issues which
require additional time to consider.
``(B) Public notice.--The Commission shall make the
following available to the public and provide a copy to
the Commodity Futures Trading Commission:
``(i) Each certification received under
paragraph (1).
``(ii) Each stay of the Commission under
this subsection, and the reasons therefor.
``(iii) Any response from a person making a
certification under paragraph (1) to a stay of
the certification by the Commission.
``(C) Consolidation.--The Commission may
consolidate and treat as one submission multiple
certifications made under paragraph (1) for the same
blockchain system which relates to a digital commodity
which are received during the review period provided
under this paragraph.
``(5) Stay of certification.--
``(A) In general.--A notification by the Commission
pursuant to paragraph (4)(A) shall stay the
certification once for up to an additional 120 days
from the date of the notification.
``(B) Public comment period.--Before the end of the
60-day period described under paragraph (4)(A), the
Commission may begin a public comment period of at
least 30 days in conjunction with a stay under this
subsection.
``(6) Disposition of certification.--A certification made
under paragraph (1) shall--
``(A) become effective--
``(i) upon the publication of a
notification from the Commission to the person
who made the certification that the Commission
does not object to the certification; or
``(ii) at the expiration of the
certification review period; and
``(B) not become effective upon the publication of
a notification from the Commission to the person who
made the certification that the Commission has rebutted
the certification.
``(7) Recertification.--With respect to a blockchain system
for which a certification has been rebutted under this
subsection, no person may make a certification under paragraph
(1) with respect to such blockchain system during the 90-day
period beginning on the date of such rebuttal.
``(8) Appeal of rebuttal.--
``(A) In general.--If a certification is rebutted
under this section, the person making such
certification may appeal the decision to the United
States Court of Appeals for the District of Columbia,
not later than 60 days after the notice of rebuttal is
made.
``(B) Review.--In an appeal under subparagraph (A),
the court shall have de novo review of the
determination to rebut the certification.
``(b) Maturity Criteria.--
``(1) Sense of congress.--It is the sense of the Congress
that protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation
necessitates establishing clear criteria for blockchain systems
to be deemed mature, as well as enabling the Commission to
develop, without prejudice to any such criteria codified in
statute, alternative criteria by which blockchain systems may
be considered not to be controlled by any person or group of
persons under common control in order to accommodate changes in
markets and technology.
``(2) In general.--The Commission may issue rules
identifying conditions by which a blockchain system, together
with its related digital commodity, shall be considered a
mature blockchain system, consistent with the protection of
investors, maintenance of fair, orderly, and efficient markets,
and the facilitation of capital formation.
``(3) Rules of construction.--
``(A) Nothing in this subsection may be construed
to permit the Commission to impose additional criteria
to the criteria in subsection (c) for certifying that a
blockchain system is a mature blockchain system
pursuant to subsection (c).
``(B) Nothing in this subsection or subsection (c)
may be construed to limit the Commission's ability to
identify alternative conditions and criteria by which a
blockchain system may be considered a mature blockchain
system.
``(c) Deemed Mature.--
``(1) In general.--Notwithstanding subsection (b), for the
purposes of subsection (a), a digital commodity issuer, digital
commodity related person, digital commodity affiliated person,
or decentralized governance system of the blockchain system may
establish that a blockchain system, together with its related
digital commodity, is not controlled by any person or group of
persons under common control, if the blockchain system,
together with its related digital asset, meets the requirements
described in paragraph (2) or (3).
``(2) Criteria for any blockchain system.--The requirements
described in this paragraph are the following:
``(A) System value.--
``(i) Market value.--The digital commodity
has a value that is substantially derived from
the adoption, use, and functioning of the
blockchain system.
``(ii) Development of value mechanism
substantially completed.--Where the digital
commodity issuer has made public a development
plan describing how the digital commodity's
value is reasonably expected to be derived from
the programmatic functioning of the blockchain
system, the development of such mechanisms has
been substantially completed.
``(B) Functional system.--The blockchain system
allows network participants to engage in the activities
the blockchain system is intended to provide,
including--
``(i) using, transmitting, or storing
value, or otherwise executing transactions, on
the blockchain system;
``(ii) deploying, executing, or accessing
software or services, or otherwise offering or
participating in services, deployed on or
integrated with the blockchain system;
``(iii) participating in the consensus
mechanism, transaction validation process, or
decentralized governance system of the
blockchain system; or
``(iv) operating any client, node,
validator, sequencer, or other form of
computational infrastructure with respect to
the blockchain system.
``(C) Open and interoperable system.--The
blockchain system--
``(i) is composed of source code that is
open source; and
``(ii) does not restrict or prohibit based
on the exercise of unilateral authority any
person, other than a digital commodity issuer,
digital commodity related person, or a digital
commodity affiliated person from engaging in
the activities the blockchain system is
intended to provide, including the activities
described in subparagraph (B).
``(D) Programmatic system.--The blockchain system
operates, executes, and enforces its operations and
transactions based solely on pre-established,
transparent rules encoded directly within the source
code of the blockchain system.
``(E) System governance.--No person or group of
persons under common control--
``(i) has the unilateral authority,
directly or indirectly, through any contract,
arrangement, understanding, relationship, or
otherwise, to control or materially alter the
functionality, operation, or rules of consensus
or agreement of the blockchain system or its
related digital commodity; or
``(ii) has the unilateral authority to
direct the voting, in the aggregate, of 20
percent or more of the outstanding voting power
of such blockchain system by means of a related
digital commodity, nodes or validators, a
decentralized governance system, or otherwise,
in a blockchain system which can be altered by
a voting system.
``(F) Impartial system.--No person or group of
persons under common control possesses a unique
permission or privilege to alter the functionality,
operation, or rules of consensus or agreement of the
blockchain system or its related digital commodity,
unless such alteration--
``(i) addresses errors, regular
maintenance, or cybersecurity risks of the
blockchain system that affect the programmatic
functioning of the blockchain system; and
``(ii) is adopted through the consensus or
agreement of a decentralized governance system.
``(G) Distributed ownership.--No digital commodity
issuer, digital commodity related person, or digital
commodity affiliated person beneficially owns, in the
aggregate, 20 percent or more of the total amount of
units of the digital commodity.
``(3) Optional criteria for preexisting blockchain
systems.--The requirements described in this paragraph are that
the blockchain system--
``(A) was created prior to the date of enactment of
this section;
``(B) met the requirements of subparagraphs (A)
through (F) of paragraph (2) prior to January 1, 2020;
and
``(C) at least 50 percent of the units of the
digital commodity related to the blockchain system are
held by persons other than the digital commodity
issuer, a digital commodity related person, or a
digital commodity affiliated person.
``(d) Decentralized Governance System.--
``(1) For the purposes of this section, a decentralized
governance system is not a `person' or a `group of persons
under common control'.
``(2) A blockchain system, together with its digital
commodity, shall not be precluded from being considered a
mature blockchain system solely based on a functional,
administrative, clerical, or ministerial action of a
decentralized governance system, including any such action
taken by a person acting on behalf of and at the direction of
the decentralized governance system, as determined by the
Commission and consistent with the protection of investors,
maintenance of fair, orderly, and efficient markets, and the
facilitation of capital formation.
``(e) Rulemaking.--Not more than 270 days after the date of
enactment of this section, the Commission shall issue rules to carry
out this section.''.
SEC. 206. EFFECTIVE DATE.
Unless otherwise provided in this title, this title and the
amendments made by this title shall take effect 360 days after the date
of enactment of this Act, except that, to the extent a provision of
this title requires a rulemaking, the provision shall take effect on
the later of--
(1) 360 days after the date of enactment of this Act; or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
EXCHANGE COMMISSION
SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED PAYMENT
STABLECOINS.
(a) Securities Act of 1933.--Section 2(a)(1) of the Securities Act
of 1933 (15 U.S.C. 77b(a)(1)) is amended by adding at the end the
following: ``The term does not include a digital commodity or permitted
payment stablecoin.''.
(b) Securities Exchange Act of 1934.--Section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding
at the end the following: ``The term does not include a digital
commodity or permitted payment stablecoin.''
(c) Investment Advisers Act of 1940.--Section 202(a) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--
(1) in paragraph (18), by adding at the end the following:
``The term does not include a digital commodity or permitted
payment stablecoin.'';
(2) by redesignating the second paragraph (29) (relating to
commodity pools) as paragraph (31); and
(3) by adding at the end, the following:
``(32) Digital commodity-related terms.--The terms `digital
commodity' and `permitted payment stablecoin' have the meaning
given those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(d) Investment Company Act of 1940.--Section 2(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a-2) is amended--
(1) in paragraph (36), by adding at the end the following:
``The term does not include a digital commodity or permitted
payment stablecoin.''; and
(2) by adding at the end, the following:
``(55) Digital commodity-related terms.--The terms `digital
commodity' and `permitted payment stablecoin' have the meaning
given those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(e) Securities Investor Protection Act of 1970.--Section 16(14) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
amended by adding at the end the following: ``The term does not include
a digital commodity or permitted payment stablecoin, as such terms are
defined, respectively, under section 2(a) of the Securities Act of 1933
(15 U.S.C. 77b(a))''.
SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT STABLECOINS AND
CERTAIN DIGITAL COMMODITY TRANSACTIONS.
(a) In General.--Section 10 of the Securities Exchange Act of 1934
(15 U.S.C. 78j) is amended--
(1) by moving subsection (c) so as to appear after
subsection (b);
(2) by designating the undesignated matter at the end of
that section as subsection (d); and
(3) by adding at the end the following:
``(e)(1) Rules promulgated under subsection (b) that prohibit
fraud, manipulation, or insider trading (but not rules imposing or
specifying reporting or recordkeeping requirements, procedures, or
standards as prophylactic measures against fraud, manipulation, or
insider trading), and judicial precedents decided under subsection (b)
and rules promulgated thereunder that prohibit fraud, manipulation, or
insider trading, shall apply with respect to permitted payment
stablecoin and digital commodity transactions engaged in by a broker or
dealer or through an alternative trading system or, as applicable, a
national securities exchange to the same extent as they apply to
securities transactions.
``(2) Judicial precedents decided under section 17(a) of the
Securities Act of 1933 and sections 9, 15, 16, 20, and 21A of this
title, and judicial precedents decided under applicable rules
promulgated under such sections, shall apply to permitted payment
stablecoins and digital commodities with respect to those circumstances
in which the permitted payment stablecoins and digital commodities are
brokered, traded, or custodied by a broker or dealer or through an
alternative trading system or, as applicable, a national securities
exchange to the same extent as they apply to securities.''.
(b) Treatment of Permitted Payment Stablecoins.--Title I of the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 6 the following:
``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT STABLECOINS.
``(a) Authority To Broker, Trade, and Custody Permitted Payment
Stablecoins.--Permitted payment stablecoins may be brokered, traded, or
custodied by a broker, dealer or through an alternative trading system
or national securities exchange.
``(b) Commission Jurisdiction.--The Commission shall only have
jurisdiction over a transaction in a permitted payment stablecoin with
respect to those circumstances in which a permitted payment stablecoin
is brokered, traded, or custodied--
``(1) by a broker or dealer;
``(2) through a national securities exchange; or
``(3) through an alternative trading system.
``(c) Limitation.--Subsection (b) shall only apply to a transaction
described in subsection (b) for the purposes of regulating the offer,
execution, solicitation, or acceptance of a permitted payment
stablecoin in those circumstances in which the permitted payment
stablecoin is brokered, traded, or custodied--
``(1) by a broker or dealer;
``(2) through a national securities exchange; or
``(3) through an alternative trading system.
``(d) Rule of Construction.--Nothing in this section may be
construed to prohibit permitted payment stablecoins from being
custodied by any person or entity that is not a broker, dealer,
alternative trading system, or national securities exchange.''.
SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING SYSTEMS.
(a) In General.--Section 5 of the Securities Exchange Act of 1934
(15 U.S.C. 78e) is amended--
(1) by striking ``It'' and inserting the following:
``(a) In General.--It'';
(2) by adding at the end the following:
``(b) Digital Commodity Protections.--
``(1) In general.--The Commission may not preclude a
trading platform from operating pursuant to a covered exemption
on the basis that the assets traded or to be traded on such
platform include--
``(A) digital commodities or permitted payment
stablecoins; and
``(B) securities.
``(2) Covered exemption.--In this subsection, the term
`covered exemption' means an exemption--
``(A) described in subsection (a)(2); or
``(B) with respect to any other rule of the
Commission relating to the definition of `exchange'.''.
(b) Securities Exchange Act of 1934.--Section 3(a)(2) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by
adding at the end the following: ``An alternative trading system
primarily facilitating the trading of digital commodities, permitted
payment stablecoins, or both, is not a `facility' of an exchange.''.
(c) Rule of Construction.--Nothing in this section, the amendments
made by this section, or section 304 may be construed to--
(1) prohibit a national securities exchange from owning or
operating any other type of alternative trading system; or
(2) create a presumption that any other type of alternative
trading system owned or operated by a national securities
exchange is a facility of that exchange.
SEC. 304. OPERATION OF ALTERNATIVE TRADING SYSTEMS.
(a) Commission Authority.--The Securities and Exchange Commission
shall have jurisdiction over digital commodity activities and
transactions engaged in by--
(1) a registered broker or registered dealer exempt from
registration with the Commodity Futures Trading Commission
pursuant to section 5k of the Commodity Exchange Act; and
(2) a national securities exchange.
(b) Rulemaking Authority.--The Securities and Exchange Commission
shall have authority to issue rules governing any digital commodity
activities and transactions engaged in by a broker, dealer, or national
securities exchange registered with the Securities and Exchange
Commission and exempt from registration with the Commodity Futures
Trading Commission pursuant to section 5k of the Commodity Exchange
Act, consistent with this section and what is necessary or appropriate
in the public interest or for the protection of investors.
(c) National Securities Exchanges.--Not later than 270 days after
the date of the enactment of this Act, the Securities and Exchange
Commission shall revise the covered regulations to permit a national
securities exchange or affiliate thereof to operate an alternative
trading system that permits the trading of digital commodities,
permitted payment stablecoins, or both by registered brokers or
registered dealers that are exempt from registration with the Commodity
Futures Trading Commission pursuant section 5k of the Commodity
Exchange Act, consistent with this section and what is necessary or
appropriate in the public interest or for the protection of investors.
(d) Registered Brokers and Registered Dealers.--Not later than 270
days after the date of the enactment of this Act, the Securities and
Exchange Commission shall revise the covered regulations to permit a
registered broker or registered dealer that is exempt from registration
with the Commodity Futures Trading Commission pursuant to section 5k of
the Commodity Exchange Act to operate an alternative trading system
that permits the trading of digital commodities, permitted payment
stablecoins, or both, consistent with this section and what is
necessary or appropriate in the public interest or for the protection
of investors.
(e) Permitted Trading.--
(1) In general.--An alternative trading system operated
pursuant to this section and the regulations promulgated
hereunder shall be permitted to trade upon notice to the
Securities and Exchange Commission in a manner prescribed by
the Securities and Exchange Commission any digital commodity
that has been listed by a digital commodity exchange in
compliance with section 5i(c)(3) of the Commodity Exchange Act.
(2) Commission authority.--Digital commodity transactions
offered on an alternative trading system operating pursuant to
this section shall be subject to the jurisdiction of the
Securities and Exchange Commission. The Securities and Exchange
Commission shall have authority to promulgate rules governing
such digital commodity transactions of alternative trading
systems, consistent with this section and what is necessary or
appropriate in the public interest or for the protection of
investors.
(3) Suspension of trading.--The Securities and Exchange
Commission may suspend the trading of a digital commodity by an
alternative trading system operating pursuant to this section
as is necessary or appropriate in the public interest and is
consistent with the protection of investors.
(f) Order Display and Execution Reporting.--Not later than 270 days
after the date of the enactment of this Act, the Securities and
Exchange Commission shall issue and revise rules, as necessary or
appropriate in the public interest or for the protection of investors,
regarding whether alternative trading systems operating pursuant to
subsections (c) and (d) have an obligation to provide the prices and
sizes of orders displayed to more than one person in such alternative
trading system of digital commodities to self-regulatory organizations
with members who trade in digital commodities or permitted payment
stablecoins.
(g) Principles of Trade.--Not later than 270 days after the date of
the enactment of this Act, the Securities and Exchange Commission shall
issue and revise rules, as necessary or appropriate in the public
interest or for the protection of investors, to--
(1) apply the rules and standards promulgated pursuant to
paragraph (2) to the appropriate market participants,
including--
(A) national securities exchanges operating an
alternative trading system described in subsection (c);
and
(B) registered brokers and registered dealers
operating or subscribing to an alternative trading
system described in subsection (d); and
(2) apply, as appropriate to the market participants
described in subparagraph (1) and customers thereof rules and
standards to--
(A) prevent fraudulent and manipulative acts and
practices;
(B) foster cooperation and coordination with
persons engaged in regulating, settling, processing
information with respect to, and facilitating
transactions in digital commodities or permitted
payment stablecoins traded, as applicable, on or by any
alternative trading system operating pursuant to
subsection (c) or (d), or any registered broker or
registered dealer;
(C) remove impediments to and perfect the mechanism
of a free and open market in digital commodities or
permitted payment stablecoins traded, as applicable, on
or by any alternative trading system operating pursuant
to subsection (c) or (d), or any registered broker or
registered dealer;
(D) in general, protect investors and the public
interest; and
(E) prohibit any unfair discrimination between--
(i) customers;
(ii) any market participants described in
subparagraphs (A) and (B) of paragraph (1); or
(iii) issuers of digital commodities.
(h) Implementing Organizations.--The Securities and Exchange
Commission shall require any registered national securities association
that has as a member a registered broker or registered dealer that
operates an alternative trading system pursuant to subsection (d) or
otherwise transacts in digital commodities or permitted payment
stablecoins to adopt such rules as may be necessary to further
compliance with this section, including subsection (g)(2), protect
investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation.
(i) Rule of Construction.--The enumeration of any category of rules
or regulations in this section shall not be construed to limit the
authority of the Securities and Exchange Commission to promulgate such
rules as may be necessary or appropriate to implement this section and
the purposes of this Act, including over--
(1) system capacity, integrity, and security;
(2) examinations, inspections, and investigations;
(3) trade reporting; or
(4) written procedures for the confidential treatment of
trading information.
(j) Memorandum of Understanding.--Consistent with section 5k of the
Commodity Exchange Act and to carry out this Act, the Securities and
Exchange Commission shall enter into a memorandum of understanding with
the Commodity Futures Trading Commission to ensure--
(1) requirements imposed on registered brokers or
registered dealers operating an alternative trading system
pursuant to subsection (c) or otherwise transacting in digital
commodities or permitted payment stablecoins are consistent
with the substantive requirements under section 4u of the
Commodity Exchange Act;
(2) requirements imposed on alternative trading systems
operating pursuant to subsection (c) or (d) are not
inconsistent with core principles of and are consistent with
the other substantive requirements under section 5i of the
Commodity Exchange Act; and
(3) non-duplicative supervision and enforcement with
respect to registrants of the Securities and Exchange
Commission notice registered with the Commodity Futures Trading
Commission.
(k) Covered Regulations Defined.--In this section, the term
``covered regulations'' means sections 242.300, 242.301, 242.302,
242.303, 242.304, and 242.1000 through 242.1007 of title 17, Code of
Federal Regulations.
(l) Rule of Construction.--Nothing in this section shall be
construed to limit the anti-fraud, anti-manipulation, or false
reporting enforcement authorities of the Commodity Futures Trading
Commission with respect to a contract of sale of a commodity and
persons effecting such contracts.
SEC. 305. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.
(a) In General.--For purposes of books and records requirements for
brokers, dealers, and exchanges under the Securities and Exchange Act
of 1934 (15 U.S.C. 78a et seq.), a person may consider records from a
blockchain system.
(b) Revision of Rules.--Not later than 180 days after the date of
enactment of this Act, the Securities and Exchange Commission shall
issue and revise such rules as may be necessary to implement this
section.
SEC. 306. EXEMPTIVE AUTHORITY.
Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3) is
amended by striking ``by rule or regulation'' and inserting ``by rule,
regulation, or order''.
SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES TRADING
COMMISSION.
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
is amended by adding at the end the following:
``(p) Additional Registrations With the Commodity Futures Trading
Commission.--A registered broker or registered dealer shall be
permitted to maintain a registration with the Commodity Futures Trading
Commission as a digital commodity broker or digital commodity dealer,
to list or trade contracts of sale for digital commodities.''.
SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES LAWS.
Section 18(b) of the Securities Act of 1933 (15 U.S.C. 77r(b)) is
amended by adding at the end the following:
``(5) Exemption in connection with digital commodities.--A
digital commodity shall be treated as a covered security.''.
SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 15G the following:
``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.
``(a) In General.--Notwithstanding any other provision of this Act,
a person shall not be subject to this Act and the regulations
promulgated under this Act based on the person directly or indirectly
engaging in any of the following activities, whether singly or in
combination, in relation to the operation of a blockchain system or in
relation to a decentralized finance trading protocol:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or providing other similar incidental services.
``(3) Providing a user-interface that enables a user to
read and access data about a blockchain system.
``(4) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a blockchain system or a
decentralized finance trading protocol.
``(5) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a decentralized finance
messaging system, or operating or participating in a liquidity
pool, for the purpose of executing a contract of sale of a
digital commodity.
``(6) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing software or systems that
create or deploy hardware or software, including wallets or
other systems, facilitating an individual user's own personal
ability to keep, safeguard, or custody the user's digital
assets or related private keys.
``(b) Exceptions.--Subsection (a) shall not apply to the anti-fraud
and anti-manipulation authorities of the Commission.''.
SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING INSTITUTIONS.
(a) Treatment of Custody Activities.--The appropriate Federal
banking agency, the National Credit Union Administration (in the case
of a credit union), and the Securities and Exchange Commission may not
require a depository institution, national bank, Federal credit union,
State credit union, trust company, broker, or dealer, or any affiliate
thereof (the ``entity'')--
(1) to include assets held in custody that are not owned by
the entity as a liability on the financial statement or balance
sheet of the entity, including digital commodity or permitted
payment stablecoin custody or safekeeping services;
(2) to hold regulatory capital against assets, including
reserves backing such assets, in custody or safekeeping, except
as necessary to mitigate against operational risks inherent
with the custody or safekeeping services, as determined by--
(A) the appropriate Federal banking agency;
(B) the National Credit Union Administration (in
the case of a credit union);
(C) a State bank supervisor;
(D) a State credit union supervisor (as defined in
section 6003 of the Anti-Money Laundering Act of 2020
(31 U.S.C. 5311 note)); or
(E) the Securities and Exchange Commission (in the
case of a broker or dealer); and
(3) to recognize a liability for any obligations related to
activities or services performed with respect to digital
commodities that the entity does not own if that liability
would exceed the expense recognized in the income statement as
a result of the corresponding obligation.
(b) Definitions.--In this section:
(1) Banking terms.--The terms ``appropriate Federal banking
agency'', ``depository institution'', ``national bank'', and
``State bank supervisor'' have the meaning given those terms,
respectively, under section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813).
(2) Credit union terms.--The terms ``Federal credit union''
and ``State credit union'' have the meaning given those terms,
respectively, under section 101 of the Federal Credit Union Act
(12 U.S.C. 1752).
SEC. 311. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN NATURE.
Section 4(k)(4) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(4)) is amended--
(1) in subparagraph (A), by striking ``or securities'' and
inserting ``, securities, or digital commodities''; and
(2) in subparagraph (E), by inserting ``or digital
commodities'' before the period at the end.
SEC. 312. EFFECTIVE DATE; ADMINISTRATION.
Except as otherwise provided under this title, this title and the
amendments made by this title shall take effect 360 days after the date
of enactment of this Act, except that, to the extent a provision of
this title requires a rulemaking, the provision shall take effect on
the later of--
(1) 360 days after the date of enactment of this Act; or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
SEC. 313. STUDIES ON FOREIGN ADVERSARY PARTICIPATION.
(a) In General.--The Secretary of the Treasury, in consultation
with the Commodity Futures Trading Commission and the Securities and
Exchange Commission, shall, not later than 1 year after date of the
enactment of this section, conduct a study and submit a report to the
relevant congressional committees that--
(1) identifies any digital commodity registrants which are
owned by governments of foreign adversaries;
(2) determines whether any governments of foreign
adversaries are collecting personal data or trading data about
United States persons in the digital commodity markets; and
(3) evaluates whether any proprietary intellectual property
of digital commodity registrants is being misused or stolen by
any governments of foreign adversaries.
(b) GAO Study and Report.--
(1) In general.--The Comptroller General shall, not later
than 1 year after date of the enactment of this section,
conduct a study and submit a report to the relevant
congressional committees that--
(A) identifies any digital commodity registrants
which are owned by governments of foreign adversaries;
(B) determines whether any governments of foreign
adversaries are collecting personal data or trading
data about United States persons in the digital
commodity markets; and
(C) evaluates whether any proprietary intellectual
property of digital commodity registrants is being
misused or stolen by any governments of foreign
adversaries.
(c) Definitions.--In this section:
(1) Digital commodity registrant.--The term ``digital
commodity registrant'' means any person required to register as
a digital commodity exchange, digital commodity broker, or
digital commodity dealer under the Commodity Exchange Act.
(2) Foreign adversaries.--The term ``foreign adversaries''
means the foreign governments and foreign non-government
persons determined by the Secretary of Commerce to be foreign
adversaries under section 7.4(a) of title 15, Code of Federal
Regulations.
(3) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committees on Financial Services and
Agriculture of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban
Affairs and Agriculture, Nutrition, and Forestry of the
Senate.
TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
COMMODITY FUTURES TRADING COMMISSION
SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.
(a) Savings Clause.--Section 2(a)(1) of the Commodity Exchange Act
(7 U.S.C. 2(a)(1)) is amended by adding at the end the following:
``(J) Except as expressly provided in this Act,
nothing in the CLARITY Act of 2025 shall affect or
apply to, or be interpreted to affect or apply to--
``(i) any agreement, contract, or
transaction that is subject to this Act as--
``(I) a contract of sale of a
commodity for future delivery or an
option on such a contract;
``(II) a swap;
``(III) a security futures product;
``(IV) an option authorized under
section 4c of this Act;
``(V) an agreement, contract, or
transaction described in subparagraph
(C)(i) or (D)(i) of subsection (c)(2)
of this section; or
``(VI) a leverage transaction
authorized under section 19; or
``(ii) the activities of any person with
respect to any such an agreement, contract, or
transaction.''.
(b) Limitation on Authority Over Permitted Payment Stablecoins.--
Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C. 2(c)(1)) is
amended--
(1) in subparagraph (F), by striking ``or'' at the end;
(2) in subparagraph (G), by striking the period and
inserting ``; or''; and
(3) by adding at the end the following:
``(H) permitted payment stablecoins.''.
(c) Commission Jurisdiction Over Financing Agreements.--Section
2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended--
(1) in subparagraph (D)--
(A) in clause (ii)(I), by inserting after
``paragraph (1)'' the following: ``(other than an
agreement, contract, or transaction in a permitted
payment stablecoin)''; and
(B) by redesignating clause (iv) as clause (v) and
inserting after clause (iii) the following:
``(iv) Agreements for margin financing.--
Notwithstanding clause (iii), a digital
commodity broker may, subject to the
requirements of section 4u(c)(2), offer to or
enter into an agreement for margin financing
with a customer for the purchase or sale of a
digital commodity, provided any purchase or
sale made pursuant to the agreement shall
result in the delivery of the digital commodity
into or from an account carried for the
customer, as determined by the Commission by
rule or regulation, based on commercial spot
market practices.''; and
(2) by adding at the end the following:
``(F) Commission jurisdiction with respect to
digital commodity transactions.--
``(i) In general.--Subject to sections 6d
and 12(e), the Commission shall have exclusive
jurisdiction with respect to any account,
agreement, contract, or transaction involving a
contract of sale of a digital commodity in
interstate commerce, including in a digital
commodity cash or spot market, that is offered,
solicited, traded, facilitated, executed,
cleared, reported, or otherwise dealt in--
``(I) on or subject to the rules of
a registered entity or an entity that
is required to be registered as a
registered entity; or
``(II) by any other entity
registered, or required to be
registered, with the Commission.
``(ii) Limitations.--Clause (i) shall not
apply with respect to--
``(I) custodial or depository
activities for a digital commodity of
an entity regulated by an appropriate
Federal banking agency or a State bank
supervisor (within the meaning of
section 3 of the Federal Deposit
Insurance Act); or
``(II) an offer or sale of an
investment contract involving a digital
commodity or of a securities offer or
sale involving a digital commodity.
``(iii) Mixed digital asset transactions.--
``(I) In general.--Clause (i) shall
not apply to a mixed digital asset
transaction.
``(II) Reports on mixed digital
asset transactions.--A digital
commodity issuer, digital commodity
related person, digital commodity
affiliated person, or other person
registered with the Securities and
Exchange Commission that engages in a
mixed digital asset transaction, shall,
on request of the Commission, open to
inspection and examination by the
Commission all books and records
relating to the mixed digital asset
transaction, subject to the
confidentiality and disclosure
requirements of section 8.
``(G) Agreements, contracts, and transactions in
stablecoins.--
``(i) Treatment of permitted payment
stablecoins on commission-registered
entities.--Subject to clauses (ii) and (iii),
the Commission shall have jurisdiction over a
cash or spot agreement, contract, or
transaction in a permitted payment stablecoin
that is offered, offered to enter into, entered
into, executed, confirmed the execution of,
solicited, or accepted--
``(I) on or subject to the rules of
a registered entity; or
``(II) by any other entity
registered with the Commission.
``(ii) Permitted payment stablecoin
transaction rules.--This Act shall apply to a
transaction described in clause (i) only for
the purpose of regulating the offer, execution,
solicitation, or acceptance of a cash or spot
permitted payment stablecoin transaction on a
registered entity or by any other entity
registered with the Commission, as if the
permitted payment stablecoin were a digital
commodity.
``(iii) No authority over permitted payment
stablecoins.--Notwithstanding clauses (i) and
(ii), the Commission shall not make a rule or
regulation, impose a requirement or obligation
on a registered entity or other entity
registered with the Commission, or impose a
requirement or obligation on a permitted
payment stablecoin issuer, regarding the
operation of a permitted payment stablecoin
issuer or a permitted payment stablecoin.''.
(d) Conforming Amendment.--Section 2(a)(1)(A) of such Act (7 U.S.C.
2(a)(1)(A)) is amended in the 1st sentence by inserting ``subparagraphs
(F) and (G) of subsection (c)(2) of this section or'' before ``section
19''.
SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE QUALIFIED
DIGITAL ASSET CUSTODIANS.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended--
(1) in subsection (a)(2)--
(A) in the 1st proviso, by striking ``any bank or
trust company'' and inserting ``any bank, trust
company, or qualified digital asset custodian, as
applicable,''; and
(B) by inserting ``: Provided further, That any
such property that is a digital asset shall be held in
a qualified digital asset custodian'' before the period
at the end; and
(2) in subsection (f)(3)(A)(i), by striking ``any bank or
trust company'' and inserting ``any bank, trust company, or
qualified digital asset custodian''.
SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL COMMODITIES.
Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
amended--
(1) in subsection (a), by striking ``5(d) and 5b(c)(2)''
and inserting ``5(d), 5b(c)(2), and 5i(c)'';
(2) in subsection (b)--
(A) in each of paragraphs (1) and (2), by inserting
``digital commodity exchange,'' before ``derivatives'';
and
(B) in paragraph (3), by inserting ``digital
commodity exchange,'' before ``derivatives'' each place
it appears;
(3) in subsection (c)--
(A) in paragraph (2), by inserting ``or
participants'' before ``(in a'';
(B) in paragraph (4)(B), by striking ``1a(10)'' and
inserting ``1a(9)''; and
(C) in paragraph (5), by adding at the end the
following:
``(D) Special rules for digital commodity
contracts.--In certifying any new rule or rule
amendment, or listing any new contract or instrument,
in connection with a contract of sale of a commodity
for future delivery, option, swap, or other agreement,
contract, or transaction, that is based on or
references a digital commodity, a registered entity
shall make or rely on a certification under subsection
(d) for the digital commodity.''; and
(4) by inserting after subsection (c) the following:
``(d) Certifications for Digital Commodity Trading.--
``(1) In general.--Notwithstanding subsection (c), for the
purposes of listing or offering a digital commodity for trading
in a digital commodity cash or spot market, an eligible entity
shall submit a written certification to the Commission that the
digital commodity meets the requirements of this Act (including
the regulations prescribed under this Act).
``(2) Contents of the certification.--
``(A) In general.--In making a written
certification under this paragraph, the eligible entity
shall furnish to the Commission an analysis of how the
digital commodity meets the requirements of section
5i(c)(3).
``(B) Reliance on prior disclosures.--In making a
certification under this subsection, an eligible entity
may rely on the records and disclosures of any relevant
person registered with the Securities and Exchange
Commission or other State or Federal agency.
``(3) Modifications.--
``(A) In general.--An eligible entity shall modify
a certification made under paragraph (1) to--
``(i) account for significant changes in
any information provided to the Commission
under paragraph (2)(A)(ii); or
``(ii) permit or restrict trading in units
of a digital commodity held by a digital
commodity related person or a digital commodity
affiliated person.
``(B) Recertification.--Modifications required by
this subsection shall be subject to the same
disapproval and review process as a new certification
under paragraphs (4) and (5).
``(4) Disapproval.--
``(A) In general.--The written certification
described in paragraph (1) shall become effective
unless the Commission finds that the listing of the
digital commodity is inconsistent with the requirements
of this Act or the rules and regulations prescribed
under this Act.
``(B) Analysis required.--The Commission shall
include, with any findings referred to in subparagraph
(A), a detailed analysis of the factors on which the
decision was based.
``(C) Public findings.--The Commission shall make
public any disapproval decision, and any related
findings and analysis, made under this paragraph.
``(5) Review.--
``(A) In general.--Unless the Commission makes a
disapproval decision under paragraph (4), the written
certification described in paragraph (1) shall become
effective, pursuant to the certification by the
eligible entity and notice of the certification to the
public (in a manner determined by the Commission) on
the date that is--
``(i) 20 business days after the date the
Commission receives the certification (or such
shorter period as determined by the Commission
by rule or regulation), in the case of a
digital commodity that has not been certified
under this section or for which a certification
is being modified under paragraph (3); or
``(ii) 1 business day after the date the
Commission receives the certification (or such
shorter period as determined by the Commission
by rule or regulation) for any digital
commodity that has been certified under this
section.
``(B) Extensions.--The time for consideration under
subparagraph (A) may be extended through notice to the
eligible entity that there are novel or complex issues
that require additional time to analyze, that the
explanation by the submitting eligible entity is
inadequate, or of a potential inconsistency with this
Act--
``(i) once, for 30 business days, through
written notice to the eligible entity by the
Commission; and
``(ii) once, for an additional 30 business
days, through written notice to the eligible
entity from the Commission that includes a
description of any deficiencies with the
certification, including any--
``(I) novel or complex issues which
require additional time to analyze;
``(II) missing information or
inadequate explanations; or
``(III) potential inconsistencies
with this Act.
``(6) Prior approval before registration.--
``(A) In general.--A person applying for
registration with the Commission for the purposes of
listing or offering a digital commodity for trading in
a digital commodity cash or spot market may request
that the Commission grant prior approval for the person
to list or offer the digital commodity on being
registered with the Commission.
``(B) Request for prior approval.--A person seeking
prior approval under subparagraph (A) shall furnish the
Commission with a written certification that the
digital commodity meets the requirements of this Act
(including the regulations prescribed under this Act)
and the information described in paragraph (2).
``(C) Deadline.--The Commission shall take final
action on a request for prior approval not later than
90 business days after submission of the request,
unless the person submitting the request agrees to an
extension of the time limitation established under this
subparagraph.
``(D) Disapproval.--
``(i) In general.--The Commission shall
approve the listing of the digital commodity
unless the Commission finds that the listing is
inconsistent with this Act (including any
regulation prescribed under this Act).
``(ii) Analysis required.--The Commission
shall include, with any findings made under
clause (i), a detailed analysis of the factors
on which the decision is based.
``(iii) Public findings.--The Commission
shall make public any disapproval decision, and
any related findings and analysis, made under
this paragraph.
``(7) Eligible entity defined.--In this subsection, the
term `eligible entity' means a registered entity or group of
registered entities acting jointly.''.
SEC. 404. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 5h the following:
``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
``(a) In General.--
``(1) Registration.--
``(A) In general.--A trading facility that offers
or seeks to offer a cash or spot market in at least 1
digital commodity shall register with the Commission as
a digital commodity exchange.
``(B) Application.--A person desiring to register
as a digital commodity exchange shall submit to the
Commission an application in such form and containing
such information as the Commission may require for the
purpose of making the determinations required for
approval.
``(C) Exemptions.--A trading facility that offers
or seeks to offer a cash or spot market in at least 1
digital commodity shall not be required to register
under this section if the trading facility--
``(i) permits no more than a de minimis
amount of trading activity, as the Commission
may determine by rule or regulation, in a
digital commodity; or
``(ii) serves only customers in a single
State, territory, or possession of the United
States.
``(2) Additional registrations.--
``(A) With the commission.--In order to foster the
development of fair and orderly markets, protect
customers, and promote responsible innovation, the
Commission--
``(i) shall prescribe rules to exempt an
entity registered with the Commission under
more than 1 section of this Act from
duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this
Act;
``(ii) shall prescribe rules to address
conflicts of interests and activities of the
entity; and
``(iii) may, after an analysis of the risks
and benefits, prescribe rules to provide for
portfolio margining.
``(B) With a registered futures association.--
``(i) In general.--A registered digital
commodity exchange shall become and remain a
member of a registered futures association and
comply with rules related to such activity, if
the registered digital commodity exchange
accepts customer funds required to be
segregated under subsection (d).
``(ii) Rulemaking required.--The Commission
shall require any registered futures
association with a digital commodity exchange
as a member to provide such rules as may be
necessary to further compliance with subsection
(d), protect customers, and promote the public
interest.
``(C) Registration required.--A person required to
be registered as a digital commodity exchange under
this section shall register with the Commission as such
regardless of whether the person is registered with
another State or Federal regulator.
``(b) Trading.--
``(1) Prohibition on certain trading practices.--
``(A) Section 4b shall apply to any agreement,
contract, or transaction in a digital commodity as if
the agreement, contract, or transaction were a contract
of sale of a commodity for future delivery.
``(B) Section 4c shall apply to any agreement,
contract, or transaction in a digital commodity as if
the agreement, contract, or transaction were a
transaction involving the purchase or sale of a
commodity for future delivery.
``(C) Section 4b-1 shall apply to any agreement,
contract, or transaction in a digital commodity as if
the agreement, contract, or transaction were a contract
of sale of a commodity for future delivery.
``(2) Prohibition on acting as a counterparty.--
``(A) In general.--A digital commodity exchange or
any affiliate of such an exchange shall not trade on or
subject to the rules of the digital commodity exchange
for its own account.
``(B) Exceptions.--Subject to any conditions,
requirements, or limitations imposed by the Commission
pursuant to subparagraph (C), a digital commodity
exchange may engage in trading on the exchange so long
as the trading is not solely for the purpose of the
profit of the exchange, including the following:
``(i) Customer direction.--A transaction
for, or entered into at the direction of, or
for the benefit of, an unaffiliated customer.
``(ii) Risk management.--A transaction to
manage the credit, market, and liquidity risks
associated with the digital commodity business
of the exchange.
``(iii) Operational needs.--A transaction
related to the operational needs of the
business of the digital commodity exchange or
its affiliate.
``(iv) Functional use.--A transaction
related to the functional operation of a
blockchain system.
``(C) Rulemaking.--The Commission may, by rule,
establish conditions, requirements, or other
limitations on the activities of a digital commodity
exchange and its affiliate permitted pursuant to
subparagraph (B) that are necessary for the protection
of customers, the promotion of innovation, or the
maintenance of fair, orderly, and efficient markets.
``(D) Notice requirement.--In order for a digital
commodity exchange or any affiliate of a digital
commodity exchange to engage in trading on the
affiliated exchange pursuant to subsection (B), notice
must be given to the Commission that shall enumerate
how any proposed activity is consistent with the
exceptions in subsection (B) and the purposes of this
Act.
``(c) Core Principles for Digital Commodity Exchanges.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a digital commodity exchange, a
digital commodity exchange shall comply with--
``(i) the core principles described in this
subsection; and
``(ii) any requirement that the Commission
may impose by rule or regulation pursuant to
section 8a(5).
``(B) Reasonable discretion of a digital commodity
exchange.--Unless otherwise determined by the
Commission by rule or regulation, a digital commodity
exchange described in subparagraph (A) shall have
reasonable discretion in establishing the manner in
which the digital commodity exchange complies with the
core principles described in this subsection.
``(2) Compliance with rules.--A digital commodity exchange
shall--
``(A) establish and enforce compliance with any
rule of the digital commodity exchange, including--
``(i) the terms and conditions of the
trades traded or processed on or through the
digital commodity exchange; and
``(ii) any limitation on access to the
digital commodity exchange;
``(B) establish and enforce trading, trade
processing, and participation rules that will deter
abuses and have the capacity to detect, investigate,
and enforce those rules, including means--
``(i) to provide market participants with
impartial access to the market; and
``(ii) to capture information that may be
used in establishing whether rule violations
have occurred; and
``(C) establish rules governing the operation of
the exchange, including rules specifying trading
procedures to be used in entering and executing orders
traded or posted on the facility.
``(3) Listing standards for digital commodities.--
``(A) In general.--A digital commodity exchange
shall establish policies and procedures to permit
trading in a digital commodity only if--
``(i) reports with respect to the digital
commodity required under, as applicable,
section 4B(b)(3) or 4B(b)(5)(C) of the
Securities Act of 1933 (or, with respect to a
digital commodity not issued in reliance on
section 4(a)(8) of the Securities Act of 1933,
a comparable set of reports, where required by
the Securities and Exchange Commission) have
been filed with the Securities and Exchange
Commission;
``(ii) such other similar information as
the Commission may, by rule or regulation
require, that is related to the ongoing
development plan of the blockchain system and
is able to be publicly ascertained, has been
provided to the public; or
``(iii) the blockchain system to which the
digital commodity relates, together with the
digital commodity, is certified as a mature
blockchain system under section 42 of the
Securities Exchange Act of 1934.
``(B) Public information requirements.--
``(i) In general.--A digital commodity
exchange shall--
``(I) permit trading in a digital
commodity only if the digital commodity
exchange reasonably determines that the
information required by clause (ii) is
correct, current, and available to the
public; and
``(II) establish policies and
procedures to determine that the
information provided pursuant to clause
(ii) is correct, current, and available
to the public.
``(ii) Required information.--With respect
to a digital commodity and each blockchain
system to which the digital commodity relates
for which the digital commodity exchange will
make the digital commodity available to the
customers of the digital commodity exchange,
the following information:
``(I) Source code.--The source code
for any blockchain system to which the
digital commodity relates.
``(II) Transaction history.--A
description of the steps necessary to
independently access, search, and
verify the transaction history of any
blockchain system to which the digital
commodity relates, to the extent any
such independent access, search, and
verification activities are technically
feasible with respect to the blockchain
system.
``(III) Digital commodity
economics.--A narrative description of
the purpose of any blockchain system to
which the digital commodity relates and
the operation of any such blockchain
system, including--
``(aa) information
explaining the launch and
supply process, including the
number of digital assets to be
issued in an initial
allocation, the total number of
digital commodities to be
created, the release schedule
for the digital commodities,
and the total number of digital
commodities then outstanding;
``(bb) information
detailing any applicable
consensus mechanism or process
for validating transactions,
method of generating or mining
digital commodities, and any
process for burning or
destroying digital commodities
on the blockchain system;
``(cc) an explanation of
governance mechanisms for
implementing changes to the
blockchain system or forming
consensus among holders of the
digital commodities; and
``(dd) sufficient
information for a third party
to create a tool for verifying
the transaction history of the
digital asset.
``(IV) Trading volume and
volatility.--The trading volume and
volatility of the digital commodity on
the exchange.
``(V) Additional information.--Such
additional information as the
Commission may determine by rule to be
necessary for a customer to understand
the financial and operational risks of
a digital commodity, and to be
practically feasible to provide.
``(iii) Format.--The Commission shall
prescribe rules and regulations for the
standardization and simplification of
disclosures under clause (ii), including
requiring that disclosures--
``(I) be conspicuous;
``(II) use plain language
comprehensible to customers;
``(III) are not drafted in a way
that presumes the customer already has
a base knowledge, familiarity, or
understanding of the basic terminology,
operation, and function of blockchain
systems; and
``(IV) succinctly explain the
information that is required to be
communicated to the customer.
``(iv) Reliance on previous disclosures.--
In complying with this subparagraph, a digital
commodity exchange may rely on and make
available to the public relevant information
publicly disclosed to the Commission, the
Securities and Exchange Commission, or an
appropriate Federal banking agency.
``(C) Digital commodities held by related and
digital commodity affiliated persons.--A digital
commodity exchange shall establish policies and
procedures designed to permit the trading of a unit of
a digital commodity acquired from the issuer and held
by a digital commodity affiliated person or a digital
commodity related person, only in accordance with the
requirements of section 4C of the Securities Act of
1933.
``(4) Treatment of customer assets.--A digital commodity
exchange shall establish policies and procedures that are
designed to protect and ensure the safety of customer money,
assets, and property.
``(5) Monitoring of trading and trade processing.--
``(A) In general.--A digital commodity exchange
shall provide a competitive, open, and efficient market
and mechanism for executing transactions that protects
the price discovery process of trading on the exchange.
``(B) Protection of markets and market
participants.--A digital commodity exchange shall
establish and enforce rules--
``(i) to protect markets and market
participants from abusive practices committed
by any party, including abusive practices
committed by a party acting as an agent for a
participant; and
``(ii) to promote fair and equitable
trading on the exchange.
``(C) Trading procedures.--A digital commodity
exchange shall--
``(i) establish and enforce rules or terms
and conditions defining, or specifications
detailing--
``(I) trading procedures to be used
in entering and executing orders traded
on or through the facilities of the
digital commodity exchange; and
``(II) procedures for trade
processing of digital commodities on or
through the facilities of the digital
commodity exchange; and
``(ii) monitor trading in digital
commodities to prevent manipulation, price
distortion, and disruptions, through
surveillance, compliance, and disciplinary
practices and procedures, including methods for
conducting real-time monitoring of trading and
comprehensive and accurate trade
reconstructions.
``(6) Ability to obtain information.--A digital commodity
exchange shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this section;
``(B) provide the information to the Commission on
request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(7) Emergency authority.--A digital commodity exchange
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission
or a registered entity, as is necessary and appropriate,
including the authority to facilitate the liquidation or
transfer of open positions in any digital commodity or to
suspend or curtail trading in a digital commodity.
``(8) Timely publication of trading information.--
``(A) In general.--A digital commodity exchange
shall make public timely information on price, trading
volume, and other trading data on digital commodities
to the extent prescribed by the Commission.
``(B) Capacity of digital commodity exchange.--A
digital commodity exchange shall have the capacity to
electronically capture and transmit trade information
with respect to transactions executed on the exchange.
``(9) Recordkeeping and reporting.--
``(A) In general.--A digital commodity exchange
shall--
``(i) maintain records relating to the
business of the exchange, including a complete
audit trail, in a form and manner acceptable to
the Commission for a period of 5 years;
``(ii) report to the Commission, in a form
and manner acceptable to the Commission, such
information as the Commission determines to be
necessary or appropriate for the Commission to
perform the duties of the Commission under this
Act; and
``(iii) keep any such records of digital
commodities which relate to a security open to
inspection and examination by the Securities
and Exchange Commission.
``(B) Information-sharing.--Subject to section 8,
and on request, the Commission shall share information
collected under subparagraph (A) with--
``(i) the Board;
``(ii) the Securities and Exchange
Commission;
``(iii) each appropriate Federal banking
agency;
``(iv) each appropriate State bank
supervisor (within the meaning of section 3 of
the Federal Deposit Insurance Act);
``(v) the Financial Stability Oversight
Council;
``(vi) the Department of Justice; and
``(vii) any other person that the
Commission determines to be appropriate,
including--
``(I) foreign financial supervisors
(including foreign futures
authorities);
``(II) foreign central banks; and
``(III) foreign ministries.
``(C) Confidentiality agreement.--Before the
Commission may share information with any entity
described in subparagraph (B), the Commission shall
receive a written agreement from the entity stating
that the entity shall abide by the confidentiality
requirements described in section 8 relating to the
information on digital commodities that is provided.
``(D) Providing information.--A digital commodity
exchange shall provide to the Commission (including any
designee of the Commission) information under
subparagraph (A) in such form and at such frequency as
is required by the Commission.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a digital
commodity exchange shall not--
``(A) adopt any rules or take any actions that
result in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading.
``(11) Conflicts of interest.--The digital commodity
exchange shall establish and enforce rules--
``(A) to minimize conflicts of interest in the
decision making processes of the contract market; and
``(B) to establish a process for resolving
conflicts of interest referred to in subparagraph (A).
``(12) Financial resources.--
``(A) In general.--A digital commodity exchange
shall have adequate financial, operational, and
managerial resources, as determined by the Commission,
to discharge each responsibility of the digital
commodity exchange.
``(B) Minimum amount of financial resources.--A
digital commodity exchange shall possess financial
resources that, at a minimum, exceed the sum of--
``(i) the total amount that would enable
the digital commodity exchange to cover the
operating costs of the digital commodity
exchange for a 1-year period, as calculated on
a rolling basis; and
``(ii) the total amount necessary to meet
the financial obligations of the digital
commodity exchange to all customers of the
digital commodity exchange.
``(13) Disciplinary procedures.--A digital commodity
exchange shall establish and enforce disciplinary procedures
that authorize the digital commodity exchange to discipline,
suspend, or expel members or market participants that violate
the rules of the digital commodity exchange, or similar methods
for performing the same functions, including delegation of the
functions to third parties.
``(14) Governance fitness standards.--
``(A) Governance arrangements.--A digital commodity
exchange shall establish governance arrangements that
are transparent and designed to permit consideration of
the views of market participants.
``(B) Fitness standards.--A digital commodity
exchange shall establish and enforce appropriate
fitness standards for--
``(i) officers and directors; and
``(ii) any individual or entity with direct
access to, or control of, customer assets.
``(15) System safeguards.--A digital commodity exchange
shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational and security risks, through the
development of appropriate controls and procedures, and
automated systems in accordance with industry
standards, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup resources, and a plan for disaster recovery that
allow for--
``(i) the timely recovery and resumption of
operations; and
``(ii) the fulfillment of the
responsibilities and obligations of the digital
commodity exchange; and
``(C) periodically conduct tests to verify that the
backup resources of the digital commodity exchange are
sufficient to ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and
accurate audit trail.
``(d) Holding of Customer Assets.--
``(1) In general.--A digital commodity exchange shall hold
customer money, assets, and property in a manner to minimize
the risk of loss to the customer or unreasonable delay in
customer access to the money, assets, and property of the
customer.
``(2) Segregation of funds.--
``(A) In general.--A digital commodity exchange
shall treat and deal with all money, assets, and
property that is received by the digital commodity
exchange, or accrues to a customer as the result of
trading in digital commodities, as belonging to the
customer.
``(B) Commingling prohibited.--Money, assets, and
property described in subparagraph (A) shall be
separately accounted for and shall not be commingled
with the funds of the digital commodity exchange or be
used to margin, secure, or guarantee any trades or
accounts of any customer or person other than the
person for whom the same are held.
``(C) Exceptions.--
``(i) Use of funds.--
``(I) In general.--Notwithstanding
subparagraph (A), money, assets, and
property described in subparagraph (A)
may, for convenience, be commingled and
deposited in the same account or
accounts with any bank, trust company,
derivatives clearing organization, or
qualified digital asset custodian.
``(II) Withdrawal.--Notwithstanding
subparagraph (A), such share of the
money, assets, and property described
in subparagraph (A) as in the normal
course of business shall be necessary
to margin, guarantee, secure, transfer,
adjust, or settle a contract of sale of
a digital commodity with a registered
entity may be withdrawn and applied to
such purposes, including the payment of
commissions, brokerage, interest,
taxes, storage, and other charges,
lawfully accruing in connection with
the contract.
``(ii) Commission action.--Notwithstanding
subparagraph (A), in accordance with such terms
and conditions as the Commission may prescribe
by rule, regulation, or order, any money,
assets, or property of the customers of a
digital commodity exchange may be commingled
and deposited in customer accounts with any
other money, assets, or property received by
the digital commodity exchange and required by
the Commission to be separately accounted for
and treated and dealt with as belonging to the
customer of the digital commodity exchange.
``(3) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed as
to principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation
prescribe, and such investments shall be made in accordance
with such rules and regulations and subject to such conditions
as the Commission may prescribe.
``(4) Customer protection during bankruptcy.--
``(A) Customer property.--All assets held on behalf
of a customer by a digital commodity exchange, and all
money, assets, and property of any customer received by
a digital commodity exchange for trading or custody, or
to facilitate, margin, guarantee, or secure contracts
of sale of a digital commodity (including money,
assets, or property accruing to the customer as the
result of the transactions), shall be considered
customer property for purposes of section 761 of title
11, United States Code.
``(B) Transactions.--A transaction involving the
sale of a unit of a digital commodity occurring on or
subject to the rules of a digital commodity exchange
shall be considered a contract for the purchase or sale
of a commodity for future delivery, on or subject to
the rules of, a contract market or board of trade for
purposes of the definition of `commodity contract' in
section 761 of title 11, United States Code.
``(C) Exchanges.--A digital commodity exchange
shall be considered a futures commission merchant for
purposes of section 761 of title 11, United States
Code.
``(D) Assets removed from segregation.--Assets
removed from segregation due to a customer election
under paragraph (6) shall not be considered customer
property for purposes of section 761 of title 11,
United States Code.
``(5) Misuse of customer property.--
``(A) In general.--It shall be unlawful--
``(i) for any digital commodity exchange
that has received any customer money, assets,
or property for custody to dispose of, or use
any such money, assets, or property as
belonging to the digital commodity exchange or
any person other than a customer of the digital
commodity exchange; or
``(ii) for any other person, including any
depository, other digital commodity exchange,
or digital asset custodian that has received
any customer money, assets, or property for
deposit, to hold, dispose of, or use any such
money, assets, or property, or property, as
belonging to the depositing digital commodity
exchange or any person other than the customers
of the digital commodity exchange.
``(B) Use further defined.--For purposes of this
section, `use' of a digital commodity includes
utilizing any unit of a digital asset to participate in
a blockchain service defined in paragraph (6) or a
decentralized governance system associated with the
digital commodity or the blockchain system to which the
digital commodity relates in any manner other than that
expressly directed by the customer from whom the unit
of a digital commodity was received.
``(6) Participation in blockchain services.--
``(A) In general.--A customer shall have the right
to waive the restrictions in paragraph (2) for any unit
of a digital commodity to be used under subparagraph
(B) of this paragraph, by affirmatively electing, in
writing to the digital commodity exchange, to waive the
restrictions.
``(B) Use of funds.--Customer digital commodities
removed from segregation under subparagraph (A) may be
pooled and used by the digital commodity exchange or
its designee to provide a blockchain service for a
blockchain system to which the unit of the digital
asset removed from segregation in subparagraph (A)
relates.
``(C) Limitations.--
``(i) In general.--The Commission shall, by
rule, establish notice and disclosure
requirements, and may, by rule, establish any
other limitations and rules related to the
waiving of any restrictions under this
paragraph that are reasonably necessary to
protect customers, including eligible contract
participants, non-eligible contract
participants, or any other class of customers.
``(ii) Customer choice.--A digital
commodity exchange may not require a waiver
from a customer described in subparagraph (A)
as a condition of doing business on the
exchange.
``(D) Blockchain service defined.--In this
paragraph, the term `blockchain service' means any
activity relating to validating transactions on a
blockchain system, providing security for a blockchain
system, or other similar activity required for the
ongoing operation of a blockchain system.
``(e) Market Access Requirements.--The Commission may, by rule,
impose any additional requirements related to the operations and
activities of the digital commodity exchange and an affiliated digital
commodity broker necessary to protect market participants, promote fair
and equitable trading on the digital commodity exchange, and promote
responsible innovation.
``(f) Designation of Chief Compliance Officer.--
``(1) In general.--A digital commodity exchange shall
designate an individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the exchange;
``(B) review compliance with the core principles in
this subsection;
``(C) in consultation with the board of the
exchange, a body performing a function similar to that
of a board, or the senior officer of the exchange,
resolve any conflicts of interest that may arise;
``(D) establish and administer the policies and
procedures required to be established pursuant to this
section;
``(E) ensure compliance with this Act and the rules
and regulations issued under this Act, including rules
prescribed by the Commission pursuant to this section;
and
``(F) establish procedures for the remediation of
noncompliance issues found during compliance office
reviews, look backs, internal or external audit
findings, self-reported errors, or through validated
complaints.
``(3) Requirements for procedures.--In establishing
procedures under paragraph (2)(F), the chief compliance officer
shall design the procedures to establish the handling,
management response, remediation, retesting, and closing of
noncompliance issues.
``(4) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the digital
commodity exchange with this Act; and
``(ii) the policies and procedures,
including the code of ethics and conflicts of
interest policies, of the digital commodity
exchange.
``(B) Requirements.--The chief compliance officer
shall--
``(i) submit each report described in
subparagraph (A) with the appropriate financial
report of the digital commodity exchange that
is required to be submitted to the Commission
pursuant to this section; and
``(ii) include in the report a
certification that, under penalty of law, the
report is accurate and complete.
``(g) Appointment of Trustee.--
``(1) In general.--If a proceeding under section 5e results
in the suspension or revocation of the registration of a
digital commodity exchange, or if a digital commodity exchange
withdraws from registration, the Commission, on notice to the
digital commodity exchange, may apply to the appropriate United
States district court where the digital commodity exchange is
located for the appointment of a trustee.
``(2) Assumption of jurisdiction.--If the Commission
applies for appointment of a trustee under paragraph (1)--
``(A) the court may take exclusive jurisdiction
over the digital commodity exchange and the records and
assets of the digital commodity exchange, wherever
located; and
``(B) if the court takes jurisdiction under
subparagraph (A), the court shall appoint the
Commission, or a person designated by the Commission,
as trustee with power to take possession and continue
to operate or terminate the operations of the digital
commodity exchange in an orderly manner for the
protection of customers subject to such terms and
conditions as the court may prescribe.
``(h) Qualified Digital Asset Custodian.--A digital commodity
exchange shall hold in a qualified digital asset custodian each unit of
a digital asset that is--
``(1) the property of a customer of the digital commodity
exchange;
``(2) required to be held by the digital commodity exchange
under subsection (c)(12) of this section; or
``(3) otherwise so required by the Commission to reasonably
protect customers.
``(i) Exemptions.--
``(1) In general.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commission may (on its own initiative or on application of the
registered digital commodity exchange) exempt, either
unconditionally or on stated terms or conditions or for stated
periods and either retroactively or prospectively, or both, a
registered digital commodity exchange from the requirements of
this section, if the Commission determines that--
``(A) the exemption would be consistent with the
public interest and the purposes of this Act; and
``(B) the exemption will not have a material
adverse effect on the ability of the Commission or the
digital commodity exchange to discharge regulatory or
self-regulatory duties under this Act.
``(2) Foreign exchanges.--The Commission may exempt,
conditionally or unconditionally, a digital commodity exchange
from registration under this section if the Commission finds
that the digital commodity exchange is subject to comparable,
comprehensive supervision and regulation on a consolidated
basis by the appropriate governmental authorities in the home
country of the facility.
``(j) Customer Defined.--In this section, the term `customer' means
any person that maintains an account for the trading of digital
commodities directly with a digital commodity exchange (other than a
person that is owned or controlled, directly or indirectly, by the
digital commodity exchange) for its own behalf or on behalf of any
other person.
``(k) Federal Preemption.--Notwithstanding any other provision of
law, the Commission shall have exclusive jurisdiction over any digital
commodity exchange registered under this section with respect to
activities and transactions subject to this Act.''.
SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
5i the following:
``SEC. 5J. QUALIFIED DIGITAL ASSET CUSTODIANS.
``(a) In General.--A person is a qualified digital asset custodian
for purposes of this Act if the person--
``(1) holds digital assets on behalf of a person registered
under this Act or a customer of a person registered under this
Act; and
``(2) is in compliance with subsections (b) and (c).
``(b) Supervision Requirement.--A person is in compliance with this
subsection if the person is subject to--
``(1) supervision and examination for custody and
safekeeping of digital assets by an appropriate Federal banking
agency, the National Credit Union Administration, the
Commission, or the Securities and Exchange Commission; or
``(2) adequate supervision and appropriate regulation for
custody and safekeeping of digital assets by--
``(A) a State bank supervisor (within the meaning
of section 3 of the Federal Deposit Insurance Act);
``(B) a State credit union supervisor, as defined
under section 6003 of the Anti-Money Laundering Act of
2020; or
``(C) an appropriate foreign governmental authority
in the home country of the digital commodity custodian.
``(c) Other Requirements.--A person shall be in compliance with
this subsection if:
``(1) Not otherwise prohibited.--The person has not been
prohibited by its supervisor from engaging in an activity with
respect to the custody and safekeeping of digital assets.
``(2) Information sharing.--
``(A) In general.--The person shares information
with the Commission on request and complies with such
requirements for periodic sharing of information
regarding customer accounts that the person holds on
behalf of an entity registered with the Commission as
the Commission determines by rule are reasonably
necessary to effectuate any of the provisions, or to
accomplish any of the purposes, of this Act.
``(B) Provision of information.--If the person is
subject to regulation and examination by an appropriate
Federal banking agency, the person may satisfy any
information request described in subparagraph (A) by
providing the Commission with a detailed listing, in
writing, of the digital assets of a customer in the
custody of, or use by, the person.
``(C) Rulemaking for cftc entities.--
``(i) In general.--The Commission shall
prescribe rules to permit a person registered
with the Commission to be a qualified digital
asset custodian in compliance with this
section.
``(ii) Content.--In prescribing the rules
under subparagraph (A), the Commission shall
require a person registered with the Commission
to--
``(I) implement requirement
consistent with the requirements in
subsection (d)(1);
``(II) establish sufficient system
safeguards;
``(III) prevent or mitigate
conflicts of interest, as appropriate;
and
``(IV) establish separate
governance arrangements for the
custodial function of the entity.
``(d) Adequate Supervision and Appropriate Regulation.--
``(1) In general.--For purposes of subsection (b), the
terms `adequate supervision' and `appropriate regulation' mean
such minimum standards for supervision and regulation as are
reasonably necessary to protect the digital assets held by a
person registered under this Act, including standards relating
to the licensing, examination, and supervisory processes that
require the person to, at a minimum--
``(A) receive a review and evaluation of ownership,
character and fitness, conflicts of interest, business
model, financial statements, funding resources, and
policies and procedures of the person;
``(B) hold capital sufficient for the financial
integrity of the person;
``(C) protect customer assets;
``(D) establish and maintain books and records
regarding the business of the person;
``(E) submit financial statements and audited
financial statements to the applicable supervisor
described in subsection (b);
``(F) provide disclosures to the applicable
supervisor described in subsection (b) regarding
actions, proceedings, and other items as determined by
the supervisor;
``(G) maintain and enforce policies and procedures
for compliance with applicable State and Federal laws,
including those related to anti-money laundering and
cybersecurity;
``(H) establish a business continuity plan to
ensure functionality in cases of disruption; and
``(I) establish policies and procedures to resolve
complaints.
``(2) Rulemaking with respect to definitions.--
``(A) In general.--For purposes of this section,
the Commission may, by rule, further define the terms
`adequate supervision' and `appropriate regulation' as
necessary and appropriate for the protection of
customers, and consistent with the purposes of this
Act.
``(B) Conditional treatment of certain custodians
before rulemaking.--Before the effective date of a
rulemaking under subparagraph (A), a trust company is
deemed subject to adequate supervision and appropriate
regulation if--
``(i) the trust company is expressly
permitted by a State bank supervisor to engage
in the custody and safekeeping of digital
assets;
``(ii) the State bank supervisor has
established licensing, examination, and
supervisory processes that require the trust
company to, at a minimum, meet the conditions
described in subparagraphs (A) through (I) of
paragraph (1); and
``(iii) the trust company is in good
standing with its State bank supervisor.
``(C) Transition period for certain custodians.--In
implementing the rulemaking under subparagraph (A), the
Commission shall provide a transition period of not
less than 2 years for any trust company that is deemed
subject to adequate supervision and appropriate
regulation under subparagraph (B) on the effective date
of the rulemaking.
``(e) Authority To Temporarily Suspend Standards.--The Commission
may, by rule or order, temporarily suspend, in whole or in part, any
requirement imposed under, or any standard referred to in, this
section, or any requirement to utilize a qualified digital asset
custodian, if the Commission determines that the suspension would be
consistent with the public interest and the purposes of this Act.''.
SEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND
DEALERS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4t the following:
``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND
DEALERS.
``(a) Registration.--
``(1) Requirement.--It shall be unlawful for any person to
act as a digital commodity broker or digital commodity dealer
unless the person is registered as such with the Commission.
``(2) Additional registration.--
``(A) Rules.--In order to foster the development of
fair and orderly markets, protect customers, and
promote responsible innovation, the Commission--
``(i) shall prescribe rules to exempt an
entity registered with the Commission under
more than 1 section of this Act from
duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this
Act;
``(ii) shall prescribe rules to address
conflicts of interests and the activities of
the entity; and
``(iii) may after an analysis of the risks
and benefits, prescribe rules to provide for
portfolio margining.
``(B) With membership in a registered futures
association.--Any person required to be registered as a
digital commodity broker or digital commodity dealer
under this section shall become and remain a member of
a registered futures association.
``(b) Requirements.--
``(1) In general.--A person shall register as a digital
commodity broker or digital commodity dealer by filing a
registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in
such form and manner as is prescribed by the
Commission, and shall contain such information as the
Commission considers necessary concerning the business
in which the applicant is or will be engaged.
``(B) Continual reporting.--A person that is
registered as a digital commodity broker or digital
commodity dealer shall continue to submit to the
Commission reports that contain such information
pertaining to the business of the person as the
Commission may require.
``(3) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order,
it shall be unlawful for a digital commodity broker or digital
commodity dealer to permit any person who is associated with a
digital commodity broker or a digital commodity dealer and who
is subject to a statutory disqualification to effect or be
involved in effecting a contract of sale of a digital commodity
on behalf of the digital commodity broker or the digital
commodity dealer, respectively, if the digital commodity broker
or digital commodity dealer, respectively, knew, or in the
exercise of reasonable care should have known, of the statutory
disqualification.
``(c) Rulemaking.--
``(1) In general.--The Commission shall prescribe such
rules applicable to registered digital commodity brokers and
registered digital commodity dealers as are appropriate to
carry out this section, including rules in the public interest
that limit the activities of digital commodity brokers and
digital commodity dealers.
``(2) Financing agreements.--
``(A) In general.--The Commission shall prescribe
rules and regulations applicable to digital commodity
brokers or digital commodity dealers which shall set
forth minimum requirements related to disclosure,
recordkeeping, margin financing arrangements,
rehypothecation, capital, reporting, business conduct,
documentation, and supervision of employees and agents,
in connection with--
``(i) an agreement described in section
2(c)(2)(D)(iv); or
``(ii) any other margined, leveraged, or
financing arrangement for the purchase or sale
of a digital commodity with an eligible
contract participant.
``(B) Specific authority.--Except as prohibited in
section 2(c)(2)(G)(iii), the Commission may also make,
promulgate, and enforce such rules and regulations as,
in the judgment of the Commission, are reasonably
necessary to effectuate any of the provisions of, or to
accomplish any of the purposes of, this Act in
connection with an agreement referred to in
subparagraph (A) of this paragraph.
``(d) Capital Requirements.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall meet such minimum capital
requirements as the Commission may prescribe to address the
risks associated with digital commodity trading and to ensure
that the digital commodity broker or digital commodity dealer,
respectively, is able, at all times, to--
``(A) meet, and continue to meet the obligations of
such a registrant; and
``(B) fulfill obligations to customers or
counterparties for any margined, leveraged, or financed
transactions.
``(2) Futures commission merchants and other dealers.--Each
futures commission merchant, introducing broker, digital
commodity broker, digital commodity dealer, broker, and dealer
shall maintain sufficient capital to comply with the stricter
of any applicable capital requirements to which the futures
commission merchant, introducing broker, digital commodity
broker, digital commodity dealer, broker, or dealer,
respectively, is subject under this Act or the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(e) Reporting and Recordkeeping.--Each digital commodity broker
and digital commodity dealer--
``(1) shall make such reports as are required by the
Commission by rule or regulation regarding the transactions,
positions, and financial condition of the digital commodity
broker or digital commodity dealer, respectively;
``(2) shall keep books and records in such form and manner
and for such period as may be prescribed by the Commission by
rule or regulation; and
``(3) shall keep the books and records open to inspection
and examination by any representative of the Commission.
``(f) Daily Trading Records.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall maintain daily trading records
of the transactions of the digital commodity broker or digital
commodity dealer, respectively, and all related records
(including related forward or derivatives transactions) and
recorded communications, including electronic mail, instant
messages, and recordings of telephone calls, for such period as
the Commission may require by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall require
by rule or regulation.
``(3) Counterparty records.--Each digital commodity broker
and digital commodity dealer shall maintain daily trading
records for each customer or counterparty in a manner and form
that is identifiable with each digital commodity transaction.
``(4) Audit trail.--Each digital commodity broker and
digital commodity dealer shall maintain a complete audit trail
for conducting comprehensive and accurate trade
reconstructions.
``(g) Business Conduct Standards.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall conform with such business
conduct standards as the Commission, by rule or regulation,
prescribes related to--
``(A) fraud, manipulation, and other abusive
practices involving spot or margined, leveraged, or
financed digital commodity transactions (including
transactions that are offered but not entered into);
``(B) diligent supervision of the business of the
registered digital commodity broker or digital
commodity dealer, respectively; and
``(C) such other matters as the Commission deems
appropriate.
``(2) Business conduct requirements.--The Commission shall,
by rule, prescribe business conduct requirements which--
``(A) require disclosure by a registered digital
commodity broker and registered digital commodity
dealer to any counterparty to the transaction (other
than an eligible contract participant) of--
``(i) information about the material risks
and characteristics of the digital commodity;
and
``(ii) information about the material risks
and characteristics of the transaction;
``(B) establish a duty for such a digital commodity
broker and such a digital commodity dealer to
communicate in a fair and balanced manner based on
principles of fair dealing and good faith;
``(C) establish standards governing digital
commodity broker and digital commodity dealer marketing
and advertising, including testimonials and
endorsements; and
``(D) establish such other standards and
requirements as the Commission may determine are
appropriate for the protection of customers.
``(3) Prohibition on fraudulent practices.--It shall be
unlawful for a digital commodity broker or digital commodity
dealer to--
``(A) employ any device, scheme, or artifice to
defraud any customer or counterparty;
``(B) engage in any transaction, practice, or
course of business that operates as a fraud or deceit
on any customer or counterparty; or
``(C) engage in any act, practice, or course of
business that is fraudulent, deceptive, or
manipulative.
``(h) Duties.--
``(1) Risk management procedures.--Each digital commodity
broker and digital commodity dealer shall establish robust and
professional risk management systems adequate for managing the
day-to-day business of the digital commodity broker or digital
commodity dealer, respectively.
``(2) Disclosure of general information.--Each digital
commodity broker and digital commodity dealer shall disclose to
the Commission information concerning--
``(A) the terms and conditions of the transactions
of the digital commodity broker or digital commodity
dealer, respectively;
``(B) the trading operations, mechanisms, and
practices of the digital commodity broker or digital
commodity dealer, respectively;
``(C) financial integrity protections relating to
the activities of the digital commodity broker or
digital commodity dealer, respectively; and
``(D) other information relevant to trading in
digital commodities by the digital commodity broker or
digital commodity dealer, respectively.
``(3) Ability to obtain information.--Each digital
commodity broker and digital commodity dealer shall--
``(A) establish and enforce internal systems and
procedures to obtain any necessary information to
perform any of the functions described in this section;
and
``(B) provide the information to the Commission, on
request.
``(4) Conflicts of interest.--Each digital commodity broker
and digital commodity dealer shall establish, maintain, and
enforce written policies and procedures reasonably designed,
taking into consideration the nature of the business of the
person, to mitigate any conflicts of interest in transactions
or arrangements with affiliates.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a digital
commodity broker or digital commodity dealer shall not--
``(A) adopt any process or take any action that
results in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading or clearing.
``(i) Designation of Chief Compliance Officer.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall designate an individual to serve
as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the registered digital commodity broker or
registered digital commodity dealer;
``(B) review the compliance of the registered
digital commodity broker or registered digital
commodity dealer with respect to the registered digital
commodity broker and registered digital commodity
dealer requirements described in this section;
``(C) in consultation with the board of directors,
a body performing a function similar to the board, or
the senior officer of the organization, resolve any
conflicts of interest that may arise;
``(D) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(E) ensure compliance with this Act (including
regulations), including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the registered
digital commodity broker or registered digital
commodity dealer with this Act (including
regulations); and
``(ii) each policy and procedure of the
registered digital commodity broker or
registered digital commodity dealer followed by
the chief compliance officer (including the
code of ethics and conflict of interest
policies).
``(B) Requirements.--The chief compliance officer
shall ensure that a compliance report under
subparagraph (A)--
``(i) accompanies each appropriate
financial report of the registered digital
commodity broker or registered digital
commodity dealer that is required to be
furnished to the Commission pursuant to this
section; and
``(ii) includes a certification that, under
penalty of law, the compliance report is
accurate and complete.
``(j) Segregation of Digital Commodities.--
``(1) Holding of customer assets.--
``(A) In general.--Each digital commodity broker
and digital commodity dealer shall hold customer money,
assets, and property in a manner to minimize the risk
of loss to the customer or unreasonable delay in
customer access to the money, assets, and property of
the customer.
``(B) Qualified digital asset custodian.--Each
digital commodity broker and digital commodity dealer
shall hold in a qualified digital asset custodian each
unit of a digital asset that is--
``(i) the property of a customer or
counterparty of the digital commodity broker or
digital commodity dealer, respectively;
``(ii) required to be held by the digital
commodity broker or digital commodity dealer
under subsection (e); or
``(iii) otherwise so required by the
Commission to reasonably protect customers or
promote the public interest.
``(2) Segregation of funds.--
``(A) In general.--Each digital commodity broker
and digital commodity dealer shall treat and deal with
all money, assets, and property that is received by the
digital commodity broker or digital commodity dealer,
or accrues to a customer as the result of trading in
digital commodities, as belonging to the customer.
``(B) Commingling prohibited.--
``(i) In general.--Except as provided in
clause (ii), each digital commodity broker and
digital commodity dealer shall separately
account for money, assets, and property of a
digital commodity customer, and shall not
commingle any such money, assets, or property
with the funds of the digital commodity broker
or digital commodity dealer, respectively, or
use any such money, assets, or property to
margin, secure, or guarantee any trades or
accounts of any customer or person other than
the person for whom the money, assets, or
property are held.
``(ii) Exceptions.--
``(I) Use of funds.--
``(aa) In general.--A
digital commodity broker or
digital commodity dealer may,
for convenience, commingle and
deposit in the same account or
accounts with any bank, trust
company, derivatives clearing
organization, or qualified
digital asset custodian money,
assets, and property of
customers.
``(bb) Withdrawal.--The
share of the money, assets, and
property described in item (aa)
as in the normal course of
business shall be necessary to
margin, guarantee, secure,
transfer, adjust, or settle a
contract of sale of a digital
commodity with a registered
entity may be withdrawn and
applied to such purposes,
including the payment of
commissions, brokerage,
interest, taxes, storage, and
other charges, lawfully
accruing in connection with the
contract.
``(II) Commission action.--In
accordance with such terms and
conditions as the Commission may
prescribe by rule, regulation, or
order, any money, assets, or property
of the customers of a digital commodity
broker or digital commodity dealer may
be commingled and deposited in customer
accounts with any other money, assets,
or property received by the digital
commodity broker or digital commodity
dealer, respectively, and required by
the Commission to be separately
accounted for and treated and dealt
with as belonging to the customer of
the digital commodity broker or digital
commodity dealer, respectively.
``(3) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, in obligations fully guaranteed as to
principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation allow.
``(4) Customer protection during bankruptcy.--
``(A) Customer property.--All money, assets, or
property described in paragraph (2) shall be considered
customer property for purposes of section 761 of title
11, United States Code.
``(B) Transactions.--A transaction involving a unit
of a digital commodity occurring with a digital
commodity broker or digital commodity dealer shall be
considered a contract for the purchase or sale of a
commodity for future delivery, on or subject to the
rules of, a contract market or board of trade for
purposes of the definition of a `commodity contract' in
section 761 of title 11, United States Code.
``(C) Brokers and dealers.--A digital commodity
broker and a digital commodity dealer shall be
considered a futures commission merchant for purposes
of section 761 of title 11, United States Code.
``(D) Assets removed from segregation.--Assets
removed from segregation due to a customer election
under paragraph (6) shall not be considered customer
property for purposes of section 761 of title 11,
United States Code.
``(5) Misuse of customer property.--
``(A) In general.--It shall be unlawful--
``(i) for any digital commodity broker or
digital commodity dealer that has received any
customer money, assets, or property for custody
to dispose of, or use any such money, assets,
or property as belonging to the digital
commodity broker or digital commodity dealer,
respectively, or any person other than a
customer of the digital commodity broker or
digital commodity dealer, respectively; or
``(ii) for any other person, including any
depository, digital commodity exchange, other
digital commodity broker, other digital
commodity dealer, or digital commodity
custodian that has received any customer money,
assets, or property for deposit, to hold,
dispose of, or use any such money, assets, or
property, as belonging to the depositing
digital commodity broker or digital commodity
dealer or any person other than the customers
of the digital commodity broker or digital
commodity dealer, respectively.
``(B) Use further defined.--For purposes of this
section, `use' of a digital commodity includes
utilizing any unit of a digital asset to participate in
a blockchain service defined in paragraph (6) or a
decentralized governance system associated with the
digital commodity or the blockchain system to which the
digital commodity relates in any manner other than that
expressly directed by the customer from whom the unit
of a digital commodity was received.
``(6) Participation in blockchain services.--
``(A) In general.--A customer shall have the right
to waive the restrictions in paragraph (2) for any unit
of a digital commodity to be used under subparagraph
(B) of this paragraph, by affirmatively electing, in
writing to the digital commodity broker or digital
commodity dealer, to waive the restrictions.
``(B) Use of funds.--Customer digital commodities
removed from segregation under subparagraph (A) may be
pooled and used by the digital commodity broker or
digital commodity dealer, or one of their designees, to
provide a blockchain service for a blockchain system to
which the unit of the digital asset removed from
segregation in subparagraph (A) relates.
``(C) Limitations.--
``(i) In general.--The Commission shall, by
rule, establish notice and disclosure
requirements, and may, by rule, establish any
other limitations and rules related to the
waiving of any restrictions under this
paragraph that are reasonably necessary to
protect customers, including eligible contract
participants, non-eligible contract
participants, or any other class of customers.
``(ii) Customer choice.--A digital
commodity broker or digital commodity dealer
may not require a waiver from a customer
described in subparagraph (A) as a condition of
doing business with the broker or dealer.
``(D) Blockchain service defined.--In this
paragraph, the term `blockchain service' means any
activity relating to validating transactions on a
blockchain system, providing security for a blockchain
system, or other similar activity required for the
ongoing operation of a blockchain system.
``(k) Federal Preemption.--Notwithstanding any other provision of
law, the Commission shall have exclusive jurisdiction over any digital
commodity broker or digital commodity dealer registered under this
section with respect to activities subject to this Act.
``(l) Exemptions.--In order to promote responsible innovation and
fair competition, or protect customers, the Commission may (on its own
initiative or on application of the registered digital commodity broker
or registered digital commodity dealer) exempt, unconditionally or on
stated terms or conditions, or for stated periods, and retroactively or
prospectively, or both, a registered digital commodity broker or
registered digital commodity dealer from the requirements of this
section, if the Commission determines that--
``(1)(A) the exemption would be consistent with the public
interest and the purposes of this Act; and
``(B) the exemption will not have a material adverse effect
on the ability of the Commission to discharge regulatory duties
under this Act; or
``(2) the registered digital commodity broker or registered
digital commodity dealer is subject to comparable,
comprehensive supervision and regulation by the appropriate
government authorities in the home country of the registered
digital commodity broker or registered digital commodity
dealer, respectively.''.
SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.
(a) In General.--Section 4k of the Commodity Exchange Act (7 U.S.C.
6k) is amended--
(1) by redesignating subsections (4) through (6) as
subsections (5) through (7), respectively;
(2) by inserting after subsection (3) the following:
``(4) It shall be unlawful for any person to act as an associated
person of a digital commodity broker or an associated person of a
digital commodity dealer unless the person is registered with the
Commission under this Act and such registration shall not have expired,
been suspended (and the period of suspension has not expired), or been
revoked. It shall be unlawful for a digital commodity broker or a
digital commodity dealer to permit such a person to become or remain
associated with the digital commodity broker or digital commodity
dealer if the digital commodity broker or digital commodity dealer knew
or should have known that the person was not so registered or that the
registration had expired, been suspended (and the period of suspension
has not expired), or been revoked.''; and
(3) in subsection (5) (as so redesignated), by striking
``or of a commodity trading advisor'' and inserting ``of a
commodity trading advisor, of a digital commodity broker, or of
a digital commodity dealer''.
(b) Conforming Amendments.--The Commodity Exchange Act (7 U.S.C. 1a
et seq.) is amended by striking ``section 4k(6)'' each place it appears
and inserting ``section 4k(7)''.
SEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND COMMODITY
TRADING ADVISORS.
(a) In General.--Section 4m(3) of the Commodity Exchange Act (7
U.S.C. 6m(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``any commodity trading advisor''
and inserting ``a commodity pool operator or commodity
trading advisor''; and
(B) by striking ``acting as a commodity trading
advisor'' and inserting ``acting as a commodity pool
operator or commodity trading advisor''; and
(2) in subparagraph (C), by inserting ``digital
commodities,'' after ``physical commodities,''.
(b) Exemptive Authority.--Section 4m of such Act (7 U.S.C. 6m) is
amended by adding at the end the following:
``(4) Exemptive Authority.--The Commission shall promulgate rules
to provide appropriate exemptions for commodity pool operators and
commodity trading advisors, to provide relief from duplicative,
conflicting, or unduly burdensome requirements or to promote
responsible innovation, to the extent the exemptions foster the
development of fair and orderly cash or spot digital commodity markets,
are necessary or appropriate in the public interest, and are consistent
with the protection of customers.''.
SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
4u the following:
``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.
``(a) In General.--Notwithstanding any other provision of this Act,
a person shall not be subject to this Act and the regulations
promulgated under this Act based on the person directly or indirectly
engaging in any of the following activities, whether singly or in
combination, in relation to the operation of a blockchain system or in
relation to decentralized finance trading protocol:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or other similar incidental services.
``(3) Providing a user-interface that enables a user to
read, and access data about a blockchain system.
``(4) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a blockchain system
other than a decentralized finance trading protocol.
``(5) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a decentralized finance
messaging system or decentralized finance trading protocol, or
operating or participating in a liquidity pool with respect
thereto, for the purpose of executing a spot contract for the
purchase or sale of a digital commodity.
``(6) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing software or systems that
create or deploy hardware or software, including wallets or
other systems, facilitating an individual user's own personal
ability to keep, safeguard, or custody the user's digital
assets or related private keys.
``(b) Exceptions.--Subsection (a) shall not be interpreted to apply
to the anti-fraud, anti-manipulation, or false reporting enforcement
authorities of the Commission.''.
SEC. 410. RESOURCES FOR IMPLEMENTATION AND ENFORCEMENT.
(a) Collection of Fees.--
(1) In general.--The Commodity Futures Trading Commission
(in this section referred to as the ``Commission'') shall
charge and collect a fee from each person in provisional status
registered with the Commission pursuant to section 106, on--
(A) the filing of the initial application for
registration; and
(B) an annual basis thereafter for maintaining
provisional status.
(2) Amount.--The fees authorized under paragraph (1) may be
collected and available for obligation only in the amounts
provided in advance in an appropriation Act.
(3) Authority to adjust fees.--Notwithstanding the
preceding provisions of this subsection, to promote fair
competition or innovation, the Commission, in its sole
discretion, may reduce or eliminate any fee otherwise required
to be paid by a small or medium filer under this subsection.
(b) Fee Schedule.--
(1) In general.--The Commission shall publish in the
Federal Register a schedule of the fees to be charged and
collected under this section.
(2) Content.--The fee schedule for a fiscal year shall
include a written analysis of the estimate of the Commission of
the total costs of carrying out the functions of the Commission
under this Act during the fiscal year.
(3) Submission to congress.--Before publishing the fee
schedule for a fiscal year, the Commission shall submit a copy
of the fee schedule to the Committees on Agriculture and on
Appropriations of the House of Representatives and the
Committees on Agriculture, Nutrition, and Forestry and on
Appropriations of the Senate.
(4) Timing.--
(A) 1st fiscal year.--The Commission shall publish
the fee schedule for the fiscal year in which this Act
is enacted, within 30 days after the date of the
enactment of this Act.
(B) Subsequent fiscal years.--The Commission shall
publish the fee schedule for each subsequent fiscal
year, not less than 90 days before the due date
prescribed by the Commission for payment of the annual
fee for the fiscal year.
(c) Late Payment Penalty.--
(1) In general.--The Commission may impose a penalty
against a person that fails to pay an annual fee charged under
this section, within 30 days after the due date prescribed by
the Commission for payment of the fee.
(2) Amount.--The amount of the penalty shall be--
(A) 5 percent of the amount of the fee due,
multiplied by
(B) the whole number of consecutive 30-day periods
that have elapsed since the due date.
(d) Reimbursement of Excess Fees.--To the extent that the total
amount of fees collected under this section during a fiscal year that
begins after the date of the enactment of this Act exceeds the amount
provided under subsection (a)(2) with respect to the fiscal year, the
Commission shall reimburse the excess amount to the persons who have
timely paid their annual fees, on a pro-rata basis that excludes
penalties, and shall do so within 60 days after the end of the fiscal
year.
(e) Deposit of Fees Into the Treasury.--All amounts collected under
this section shall be credited to the currently applicable
appropriation, account, or fund of the Commission as discretionary
offsetting collections, and shall be available for the purposes
authorized in subsection (f) only to the extent and in the amounts
provided in advance in appropriations Acts.
(f) Authorization of Appropriations.--In addition to amounts
otherwise authorized to be appropriated to the Commission, there is
authorized to be appropriated to the Commission amounts collected under
this section to cover the costs of carrying out the functions of the
Commission under this Act.
(g) Expedited Hiring Authority.--
(1) Appointment authority.--The Chairman, pursuant to
section 6(a), may appoint individuals to a position described
in paragraph (2) of this subsection--
(A) in accordance with the statutes, rules, and
regulations governing appointments to positions in the
excepted service (as defined in section 2103 of title
5, United States Code); and
(B) without regard to any statute, rule, or
regulation governing appointments to positions in the
competitive service (as defined in section 2102 of such
title).
(2) Position described.--A position referred to in
subparagraph (1) is a position at the Commission that--
(A) is in the competitive service (as defined in
section 2102 of such title); and
(B) requires specialized knowledge of digital
commodities markets, financial and capital market
formation or regulation, financial market structures or
surveillance, data collection or analysis, or
information technology, cybersecurity, or system
safeguards.
(3) Rule of construction.--The appointment of a candidate
to a position under this subsection shall not be considered to
cause the position to be converted from the competitive service
to the excepted service.
(h) Sunset.--The authorities provided by this section shall expire
at the end of the 4th fiscal year that begins after the date of the
enactment of this Act.
SEC. 411. DIGITAL COMMODITY ACTIVITIES BY SEC-REGISTERED ENTITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
5j the following:
``SEC. 5K. EXEMPTION FOR CERTAIN REGISTERED ENTITIES ENGAGED IN DIGITAL
COMMODITY ACTIVITIES.
``(a) By Alternative Trading Systems.--
``(1) In general.--On receipt by the Commission from an
alternative trading system of a written or electronic notice
that contains such information as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or
for the protection of investors, the alternative trading system
shall be exempt from registration as a digital commodity
exchange pursuant to section 5i if--
``(A) the alternative trading system does not list
any retail commodity transactions pursuant to section
2(c)(2)(D);
``(B) the provider, or an affiliated person of the
provider, of the alternative trading system is not
otherwise registered under this Act;
``(C) the alternative trading system lists or
trades no other contracts of sale of commodities,
except for digital commodities, currencies, and
securities; and
``(D) the registration of the alternative trading
system is not suspended pursuant to an order by the
Securities and Exchange Commission.
``(2) Further requirements.--An alternative trading system
that provides notice to the Commission pursuant to paragraph
(1) of this subsection shall be exempt from the requirements of
section 5i to the extent that the alternative trading system--
``(A) is in compliance with requirements consistent
with the requirements of section 5i and imposed on the
alternative trading system by the Securities and
Exchange Commission;
``(B) annually files with the Commission, in a form
and manner acceptable to the Commission, a notice that
demonstrates compliance with this paragraph and
contains any other information the Commission
determines to be necessary or appropriate to perform
the duties of the Commission under this Act; and
``(C) has total trading volume in digital
commodities during any calendar quarter in either of
its 2 most recently completed fiscal years that does
not exceed the lesser of--
``(i) 25 percent of the total trading
volume for all transactions over the same
period; or
``(ii) $50,000,000,000.
``(3) Enforcement.--This subsection shall not be construed
to limit any jurisdiction that the Commission may otherwise
have under any other provision of this Act with respect to a
contract of sale of a digital commodity or persons effecting
contracts of sale of digital commodities.
``(b) By Registered Intermediaries.--
``(1) In general.--On receipt by the Commission, from a
broker or dealer that is registered with the Securities and
Exchange Commission, of a written or electronic notice that
contains such information as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or
for the protection of investors, the broker or dealer shall be
exempt from registration as a digital commodity broker or
digital commodity dealer pursuant to section 4u of this Act
if--
``(A) the broker or dealer does not offer or engage
in any retail commodity transactions pursuant to
section 2(c)(2)(D) of this Act;
``(B) the broker or dealer, or an affiliated person
of the broker or dealer, is not otherwise registered
under this Act;
``(C) the broker or dealer does not offer or engage
in any other contracts of sale of commodities, except
for digital commodities, currencies, and securities;
``(D) the broker or dealer is not subject to a
statutory disqualification, as defined under section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)); and
``(E) the broker or dealer is a member of a
national securities association registered pursuant to
section 15A of the Securities Exchange Act of 1934.
``(2) Further requirements.--A broker or dealer that
provides notice to the Commission pursuant to paragraph (1)
shall be exempt from the requirements of section 4u to the
extent that the broker or dealer--
``(A) is in compliance with requirements consistent
with the requirements of section 4u and imposed on the
broker or dealer by the Securities and Exchange
Commission;
``(B) annually files with the Commission, in a form
and manner acceptable to the Commission, a notice that
demonstrates compliance with this subsection and
contains any other information the Commission
determines to be necessary or appropriate to perform
the duties of the Commission under this Act; and
``(C) has consolidated annual gross financial
revenues in either of its 2 most recently completed
fiscal years from sales, commissions or other
activities in digital commodities that do not exceed
the lesser of--
``(i) 10 percent of the total annual gross
revenues during the same period; or
``(ii) $100,000,000.
``(3) Enforcement.--This subsection shall not be construed
to limit any jurisdiction that the Commission may otherwise
have under any other provision of this Act with respect to a
contract of sale of a digital commodity and persons effecting
contracts of sale of digital commodities.''.
SEC. 412. REQUIREMENTS RELATED TO CONTROL PERSONS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended the
preceding provisions of this Act, is amended by inserting after section
4v the following:
``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL PERSONS.
``(a) Limitation.--It shall be unlawful for a blockchain control
person with respect to a blockchain system certified as a mature
blockchain system in accordance with section 42 of the Securities
Exchange Act of 1934 to sell a unit of a digital commodity related to
the blockchain system unless the person files notice with the
Commission, in a form and manner determined by the Commission, that the
person has or intends to obtain an authority described in subsection
(b)(1) with respect to the blockchain system, and complies with rules
adopted by the Commission that require--
``(1) disclosure of information to the Commission and the
public about the material activities, as determined by the
Commission, of the blockchain control person; and
``(2)(A) the use of a digital commodity broker to effect
the sale; or
``(B) such other sales restrictions applicable to the
blockchain control person, or any affiliated blockchain control
person, to prevent manipulation and distortion of the value of
the digital commodity and promote further maturity of the
blockchain system to which the digital commodity relates.
``(b) Definitions.--In this section:
``(1) Blockchain control person.--The term `blockchain
control person' means, with respect to a blockchain system, any
person or group of persons under common control, other than a
decentralized governance system, who--
``(A) has the unilateral authority, directly or
indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, to control
or materially alter the functionality, operation, or
rules of consensus or agreement of the blockchain
system or its related digital commodity; or
``(B) has the unilateral authority to direct the
voting, in the aggregate, of 20 percent or more of the
outstanding voting power of the blockchain system by
means of a related digital commodity, nodes or
validators, a decentralized governance system, or
otherwise, in a blockchain system which can be altered
by a voting system.
``(2) Affiliated blockchain control person.--The term
`affiliated blockchain control person' means any person
directly or indirectly controlling, controlled by, or under
common control with a blockchain control person, as the
Commission by rule or regulation, may determine will effectuate
the purposes of this section.''.
SEC. 413. OTHER TRADABLE ASSETS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
4w the following:
``SEC. 4X. TRADING REQUIREMENTS FOR OTHER TRADABLE ASSETS.
``(a) Limitation.--A tradable asset shall not be offered,
solicited, traded, facilitated, executed, cleared, reported, or
otherwise dealt in, on or subject to the rules of a registered entity,
or by any other entity registered with the Commission, except in
accordance with subsection (b).
``(b) Requirements.--
``(1) Treatment of tradable assets.--A tradable asset that
is offered, solicited, traded, facilitated, executed, cleared,
reported, or otherwise dealt in on or subject to the rules of a
registered entity, or by any other entity registered with the
Commission, shall be treated as a digital commodity for
purposes of this Act.
``(2) Additional rulemaking authority.--In addition to the
other requirements of this Act, the Commission may, by rule or
regulation, impose additional obligations on any person
registered under this Act offering, soliciting, trading,
facilitating, executing, clearing, reporting, or otherwise
dealing in a tradable asset, or class thereof, pursuant to
paragraph (1) as are necessary for the protection of customers,
the promotion of innovation, and the maintenance of fair,
orderly, and efficient markets, including additional
obligations related to--
``(A) disclosure;
``(B) recordkeeping;
``(C) capital;
``(D) reporting;
``(E) business conduct;
``(F) documentation;
``(G) supervision of employees; and
``(H) segregation.
``(3) Prohibition on trading.--A tradable asset, the
primary purpose of which is to be used to commit fraud or
market manipulation, or engage in any other conduct that would
result in abusive practices or be disruptive to market
integrity, shall not be offered, solicited, traded,
facilitated, executed, cleared, reported, or otherwise dealt in
on or subject to the rules of a registered entity, or by any
other entity registered with the Commission.
``(c) Tradable Asset Defined.--In this section, the term `tradable
asset' means a digital asset other than--
``(1) a digital commodity that is treated as such other
than by reason of subsection (b)(1) of this section; or
``(2) a digital asset excluded from the definition of
digital commodity pursuant to subclause (I) through (VII) of
section 1a(16)(F)(iii).
``(d) Guidance on Fraudulent, Manipulative, or Disruptive Tradable
Assets.--The Commission may, after public notice and comment, issue
guidance establishing criteria for determining if the primary purpose
of a tradable asset is to be used to commit fraud or market
manipulation, or engage in any other conduct that would result in
abusive practices or be disruptive to market integrity.''.
SEC. 414. EFFECTIVE DATE.
Unless otherwise provided in this title, this title and the
amendments made by this title shall take effect 270 days after the date
of the enactment of this Act.
SEC. 415. SENSE OF CONGRESS.
It is the sense of Congress that nothing in this Act or any
amendment made by this Act should be interpreted to authorize any
entity to regulate any commodity, other than a digital commodity, on
any spot market.
TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
SEC. 501. FINDINGS; SENSE OF CONGRESS.
(a) Findings.--Congress finds the following:
(1) Entrepreneurs and innovators are building and deploying
this next generation of the internet.
(2) Digital commodity networks represent a new way for
people to join together and cooperate with one another to
undertake certain activities.
(3) Digital commodities have the potential to be the
foundational building blocks of these systems, aligning the
economic incentive for individuals to cooperate with one
another to achieve a common purpose.
(4) The digital commodity ecosystem has the potential to
grow our economy and improve everyday lives of Americans by
facilitating collaboration through the use of technology to
manage activities, allocate resources, and facilitate decision
making.
(5) Blockchain systems and the digital commodities they
empower provide control, enhance transparency, reduce
transaction costs, and increase efficiency if proper
protections are put in place for investors, consumers, our
financial system, and our national security.
(6) Blockchain technology facilitates new types of network
participation which businesses in the United States may utilize
in innovative ways.
(7) Other digital commodity companies are setting up their
operations outside of the United States, where countries are
establishing frameworks to embrace the potential of blockchain
technology and digital commodities and provide safeguards for
consumers.
(8) Digital commodities, despite the purported anonymity,
provide law enforcement with an exceptional tracing tool to
identify illicit activity and bring criminals to justice.
(9) The Financial Services Committee of the House of
Representatives has held multiple hearings highlighting various
risks that digital commodities can pose to the financial
markets, consumers, and investors that must be addressed as we
seek to harness the benefits of these innovations.
(b) Sense of Congress.--It is the sense of Congress that--
(1) the United States should seek to prioritize
understanding the potential opportunities of the next
generation of the internet;
(2) the United States should seek to foster advances in
technology that have robust evidence indicating they can
improve our financial system and create more fair and equitable
access to financial services for everyday Americans while
protecting our financial system, investors, and consumers;
(3) the United States must support the responsible
development of digital commodities and the underlying
technology in the United States or risk the shifting of the
development of such assets and technology outside of the United
States, to less regulated countries;
(4) Congress should consult with public and private sector
stakeholders to understand how to enact a functional framework
tailored to the specific risks and unique benefits of different
digital commodity-related activities, distributed ledger
technology, distributed networks, and mature blockchain
systems;
(5) Congress should enact a functional framework tailored
to the specific risks of different digital commodity-related
activities and unique benefits of distributed ledger
technology, distributed networks, and mature blockchain
systems; and
(6) consumers and market participants will benefit from a
framework for digital commodities consistent with longstanding
investor protections in securities and commodities markets, yet
tailored to the unique benefits and risks of the digital
commodity ecosystem.
SEC. 502. MODERNIZATION OF THE SECURITIES AND EXCHANGE COMMISSION
MISSION.
(a) Securities Act of 1933.--Section 2(b) of the Securities Act of
1933 (15 U.S.C. 77(b)) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
(b) Securities Exchange Act of 1934.--Section 3(f) of the
Securities Exchange Act of 1934 (15 U.S.C. 78(c)) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
(c) Investment Advisers Act of 1940.--Section 202(c) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
(d) Investment Company Act of 1940.--Section 2(c) of the Investment
Company Act of 1940 (15 U.S.C. 80a-2) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
SEC. 503. STRATEGIC HUB FOR INNOVATION AND FINANCIAL TECHNOLOGY.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(k) Strategic Hub for Innovation and Financial Technology.--
``(1) Establishment.--Not later than 180 days after the
date of the enactment of this subsection, the Securities and
Exchange Commission shall establish a committee to be known as
the Strategic Hub for Innovation and Financial Technology
(referred to in this subsection as the `FinHub') to support
engagement on emerging technologies in the financial sector.
``(2) Members.--The composition of FinHub shall be
determined by the Commission, drawing from relevant divisions
as appropriate, including the Division of Trading and Markets,
Division of Corporate Finance, and Division of Investment
Management.
``(3) Responsibilities.--FinHub shall--
``(A) serve as a resource for the Commission on
emerging financial technology advancements;
``(B) engage with market participants working on
emerging financial technologies; and
``(C) facilitate communication between the
Commission and businesses working in emerging financial
technology fields with information on the Commission,
its rules, and regulations.
``(4) Report to the commission.--
``(A) In general.--Not later than October 31 of
each year after 2025, FinHub shall provide an annual
summary of its engagement activities to the Commission,
which shall be included in the Commission's annual
report to Congress.
``(B) Confidentiality.--Each report submitted under
this paragraph shall not contain confidential
information.''.
SEC. 504. CODIFICATION OF LABCFTC.
(a) In General.--Section 18 of the Commodity Exchange Act (7 U.S.C.
22) is amended by adding at the end the following:
``(c) LabCFTC.--
``(1) Establishment.--There is established in the
Commission LabCFTC.
``(2) Purpose.--The purposes of LabCFTC are to--
``(A) promote responsible financial technology
innovation and fair competition for the benefit of the
American public;
``(B) serve as an information platform to inform
the Commission about new financial technology
innovation; and
``(C) provide outreach to financial technology
innovators to discuss their innovations and the
regulatory framework established by this Act and the
regulations promulgated thereunder.
``(3) Director.--LabCFTC shall have a Director, who shall
be appointed by the Commission and serve at the pleasure of the
Commission. Notwithstanding section 2(a)(6)(A), the Director
shall report directly to the Commission and perform such
functions and duties as the Commission may prescribe.
``(4) Duties.--LabCFTC shall--
``(A) advise the Commission with respect to
rulemakings or other agency or staff action regarding
financial technology;
``(B) provide internal education and training to
the Commission regarding financial technology;
``(C) advise the Commission regarding financial
technology that would bolster the Commission's
oversight functions;
``(D) engage with academia, students, and
professionals on financial technology issues, ideas,
and technology relevant to activities under this Act;
``(E) provide persons working in emerging
technology fields with information on the Commission,
its rules and regulations, and the role of a registered
futures association; and
``(F) encourage persons working in emerging
technology fields to engage with the Commission and
obtain feedback from the Commission on potential
regulatory issues.
``(5) Report to congress.--
``(A) In general.--Not later than October 31 of
each year after 2025, LabCFTC shall submit to the
Committee on Agriculture of the House of
Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate a report on its
activities.
``(B) Contents.--Each report required under
paragraph (1) shall include--
``(i) the total number of persons that met
with LabCFTC;
``(ii) a summary of general issues
discussed during meetings with the person;
``(iii) information on steps LabCFTC has
taken to improve Commission services, including
responsiveness to the concerns of persons;
``(iv) recommendations made to the
Commission with respect to the regulations,
guidance, and orders of the Commission and such
legislative actions as may be appropriate; and
``(v) any other information determined
appropriate by the Director of LabCFTC.
``(C) Confidentiality.--A report under paragraph
(A) shall abide by the confidentiality requirements in
section 8.
``(6) Records and engagement.--The Commission shall--
``(A) maintain systems of records to track
engagements with the public through LabCFTC;
``(B) store communications and materials received
in connection with any such engagement in accordance
with Commission policies and procedures on data
retention and confidentiality; and
``(C) take reasonable steps to protect any
confidential or proprietary information received
through LabCFTC engagement.''.
(b) Conforming Amendments.--Section 2(a)(6)(A) of such Act (7
U.S.C. 2(a)(6)(A)) is amended--
(1) by striking ``paragraph and in'' and inserting
``paragraph,''; and
(2) by inserting ``and section 18(c)(3),'' before ``the
executive''.
(c) Effective Date.--The Commodity Futures Trading Commission shall
implement the amendments made by this section (including complying with
section 18(c)(7) of the Commodity Exchange Act) within 180 days after
the date of the enactment of this Act.
SEC. 505. STUDY ON DECENTRALIZED FINANCE.
(a) In General.--The Commodity Futures Trading Commission, the
Securities and Exchange Commission, and the Secretary of the Treasury
shall jointly carry out a study on decentralized finance that
analyzes--
(1) the nature, size, role, and use of decentralized
finance blockchain applications;
(2) the operation of blockchain applications that comprise
decentralized finance;
(3) the interoperability of blockchain applications and
other blockchain systems;
(4) the interoperability of blockchain applications and
software-based systems, including websites and wallets;
(5) the decentralized governance systems through which
blockchain applications may be developed, published,
constituted, administered, maintained, or otherwise
distributed, including--
(A) whether the systems enhance or detract from--
(i) the decentralization of the
decentralized finance; and
(ii) the inherent benefits and risks of the
decentralized governance system; and
(B) any procedures, requirements, or best practices
that would mitigate the risks identified in
subparagraph (A)(ii);
(6) the benefits of decentralized finance, including--
(A) operational resilience and availability of
blockchain systems;
(B) interoperability of blockchain systems;
(C) market competition and innovation;
(D) transaction efficiency;
(E) transparency and traceability of transactions;
and
(F) disintermediation;
(7) the risks of decentralized finance, including--
(A) pseudonymity of users and transactions;
(B) disintermediation; and
(C) cybersecurity vulnerabilities;
(8) the extent to which decentralized finance has
integrated with the traditional financial markets and any
potential risks or improvements to the stability of the
markets;
(9) how the levels of illicit activity in decentralized
finance compare with the levels of illicit activity in
traditional financial markets;
(10) methods for addressing illicit activity in
decentralized finance and traditional markets that are tailored
to the unique attributes of each;
(11) how decentralized finance may increase the
accessibility of cross-border transactions; and
(12) the feasibility of embedding self-executing compliance
and risk controls into decentralized finance.
(b) Consultation.--In carrying out the study required under
subsection (a), the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall consult with the Secretary of
the Treasury on the factors described under paragraphs (7) through (10)
of subsection (a).
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Commodity Futures Trading Commission and the Securities
and Exchange Commission shall jointly submit to the relevant
congressional committees a report that includes the results of the
study required by subsection (a).
(d) GAO Study.--The Comptroller General of the United States
shall--
(1) carry out a study on decentralized finance that
analyzes the information described under paragraphs (1) through
(12) of subsection (a); and
(2) not later than 1 year after the date of enactment of
this Act, submit to the relevant congressional committees a
report that includes the results of the study required by
paragraph (1).
(e) Definitions.--In this section:
(1) Decentralized finance.--
(A) In general.--The term ``decentralized finance''
means blockchain applications (including decentralized
finance trading protocols and related decentralized
finance messaging systems) that allow users to engage
in financial transactions in a self-directed manner so
that a third-party intermediary does not effectuate the
transactions or take custody of digital commodities of
a user during any part of the transactions.
(B) Relationship to excluded activities.--The term
``decentralized finance'' shall not be interpreted to
limit or exclude any activity from the activities
described in section 15I(a) of the Securities Exchange
Act of 1934 or section 4v(a) of the Commodity Exchange
Act.
(2) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committees on Financial Services and
Agriculture of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban
Affairs and Agriculture, Nutrition, and Forestry of the
Senate.
SEC. 506. STUDY ON NON-FUNGIBLE TOKENS.
(a) In General.--The Comptroller General of the United States shall
carry out a study of non-fungible tokens that analyzes--
(1) the nature, size, role, purpose, and use of non-
fungible tokens;
(2) the similarities and differences between non-fungible
tokens and other digital commodities, including digital
commodities and permitted payment stablecoins, and how the
markets for those digital commodities intersect with each
other;
(3) how non-fungible tokens are minted by issuers and
subsequently administered to purchasers;
(4) how non-fungible tokens are stored after being
purchased by a consumer;
(5) the interoperability of non-fungible tokens between
different blockchain systems;
(6) the scalability of different non-fungible tokens
marketplaces;
(7) the benefits of non-fungible tokens, including
verifiable digital ownership;
(8) the risks of non-fungible tokens, including--
(A) intellectual property rights;
(B) cybersecurity risks; and
(C) market risks;
(9) whether and how non-fungible tokens have integrated
with traditional marketplaces, including those for music, real
estate, gaming, events, and travel;
(10) whether and how non-fungible tokens can be used to
facilitate commerce or other activities through the
representation of documents, identification, contracts,
licenses, and other commercial, government, or personal
records;
(11) any potential risks to traditional markets from such
integration; and
(12) the levels and types of illicit activity in non-
fungible tokens markets.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Comptroller General, shall make publicly available a
report that includes the results of the study required by subsection
(a).
SEC. 507. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST DIGITAL
COMMODITY HOLDERS.
(a) In General.--The Commodity Futures Trading Commission with the
Securities and Exchange Commission shall jointly conduct a study to
identify--
(1) the existing level of financial literacy among retail
digital commodity holders, including subgroups of investors
identified by the Commodity Futures Trading Commission with the
Securities and Exchange Commission;
(2) methods to improve the timing, content, and format of
financial literacy materials regarding digital commodities
provided by the Commodity Futures Trading Commission and the
Securities and Exchange Commission;
(3) methods to improve coordination between the Securities
and Exchange Commission and the Commodity Futures Trading
Commission with other agencies, including the Financial
Literacy and Education Commission as well as nonprofit
organizations and State and local jurisdictions, to better
disseminate financial literacy materials;
(4) the efficacy of current financial literacy efforts with
a focus on rural communities and communities with majority
minority populations;
(5) the most useful and understandable relevant
information, including clear disclosures, that retail digital
commodity holders need to make informed financial decisions
before engaging with or purchasing a digital commodity or
service that is typically sold to retail investors of digital
commodities;
(6) the most effective public-private partnerships in
providing financial literacy regarding digital commodities to
consumers;
(7) the most relevant metrics to measure successful
improvement of the financial literacy of an individual after
engaging with financial literacy efforts; and
(8) in consultation with the Financial Literacy and
Education Commission, a strategy (including to the extent
practicable, measurable goals and objectives) to increase
financial literacy of investors regarding digital commodities.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly submit a written
report on the study required by subsection (a) to the Committees on
Financial Services and on Agriculture of the House of Representatives
and the Committees on Banking, Housing, and Urban Affairs and on
Agriculture, Nutrition, and Forestry of the Senate.
SEC. 508. STUDY ON FINANCIAL MARKET INFRASTRUCTURE IMPROVEMENTS.
(a) In General.--The Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly conduct a study to
assess whether additional guidance or rules are necessary to facilitate
the development of tokenized securities and derivatives products, and
to the extent such guidance or rules would foster the development of
fair and orderly financial markets, be necessary or appropriate in the
public interest, and be consistent with the protection of investors and
customers.
(b) Report.--
(1) Time limit.--Not later than 1 year after the date of
enactment of this Act, the Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly submit
to the relevant congressional committees a report that includes
the results of the study required by subsection (a).
(2) Relevant congressional committees defined.--In this
section, the term ``relevant congressional committees'' means--
(A) the Committees on Financial Services and on
Agriculture of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban
Affairs and on Agriculture, Nutrition, and Forestry of
the Senate.
SEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.
(a) In General.--One year after the date of the enactment of this
Act, the Securities and Exchange Commission and the Commodity Futures
Trading Commission, in conjunction with the Secretary of the Treasury,
shall conduct a comprehensive review of how Foreign Terrorist
Organizations and Transnational Criminal Syndicates utilize digital
assets in connection with illicit activities.
(b) Scope.--This review shall include an analysis of whether the
Securities and Exchange Commission and the Commodity Futures Trading
Commission have the necessary tools and resources to effectively
detect, disrupt, and deter illicit financial activity.
(c) Report.--The two Commissions shall jointly issue a report to
the Committees on Agriculture and on Financial Services of the House of
Representatives and the Committees on Agriculture, Nutrition, and
Forestry and on Banking, Housing, and Urban Affairs of the Senate on
the findings of the Commissions.
SEC. 510. CONFLICT OF INTEREST RULEMAKING.
No later than 360 days after the date of the enactment of this Act,
the Commodity Futures Trading Commission shall issue rules establishing
requirements for the identification, mitigation, and resolution of
conflicts of interest among and across registered entities (within the
meaning of the Commodity Exchange Act) and persons required to be
registered with the Commission, including conflicts of interest related
to vertically integrated market structures and their varying
responsibilities.
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Digital Asset
Market Clarity Act of 2025'' or the ``CLARITY Act of 2025''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
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 Securities Exchange Act of 1934.
Sec. 103. Definitions under the Commodity Exchange Act.
Sec. 104. Definitions under this Act.
Sec. 105. Rulemakings.
Sec. 106. Provisional registration for digital commodity exchanges,
brokers, and dealers.
Sec. 107. Commodity Exchange Act and securities laws savings
provisions.
Sec. 108. Administrative requirements.
Sec. 109. International cooperation.
Sec. 110. Treatment of certain non-controlling blockchain developers.
Sec. 111. Application of the Bank Secrecy Act.
Sec. 112. Implementation.
TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
Sec. 201. Treatment of investment contract assets.
Sec. 202. Exempted primary transactions in digital commodities.
Sec. 203. Treatment of secondary transactions in digital commodities
that originally involved investment
contracts.
Sec. 204. Requirements for offers and sales of digital commodities by
digital commodity related persons and
digital commodity affiliated persons.
Sec. 205. Mature blockchain system requirements.
Sec. 206. Effective date.
TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
EXCHANGE COMMISSION
Sec. 301. Treatment of digital commodities and permitted payment
stablecoins.
Sec. 302. Anti-fraud authority over permitted payment stablecoins and
certain digital commodity transactions.
Sec. 303. Eligibility of alternative trading systems.
Sec. 304. Operation of alternative trading systems.
Sec. 305. Modernization of recordkeeping requirements.
Sec. 306. Exemptive authority.
Sec. 307. Additional registrations with the Commodity Futures Trading
Commission.
Sec. 308. Exempting digital commodities from State securities laws.
Sec. 309. Exclusion for decentralized finance activities.
Sec. 310. Treatment of custody activities by banking institutions.
Sec. 311. Broker and dealer disclosures regarding the treatment of
assets.
Sec. 312. Digital commodity activities that are financial in nature.
Sec. 313. Effective date; administration.
Sec. 314. Studies on foreign adversary participation.
TITLE IV--REGISTRATION FOR DIGITAL COMMODITY 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 asset custodians.
Sec. 403. Trading certification and approval for digital commodities.
Sec. 404. Registration of digital commodity exchanges.
Sec. 405. Qualified digital asset custodians.
Sec. 406. Registration and regulation of digital commodity brokers and
dealers.
Sec. 407. Registration of associated persons.
Sec. 408. Registration of commodity pool operators and commodity
trading advisors.
Sec. 409. Exclusion for decentralized finance activities.
Sec. 410. Resources for implementation and enforcement.
Sec. 411. Digital commodity activities by SEC-registered entities.
Sec. 412. Requirements related to control persons.
Sec. 413. Effective date.
Sec. 414. Sense of Congress.
TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
Sec. 501. Findings; sense of Congress.
Sec. 502. Modernization of the Securities and Exchange Commission
mission.
Sec. 503. Strategic Hub for Innovation and Financial Technology.
Sec. 504. Codification of LabCFTC.
Sec. 505. Study on decentralized finance.
Sec. 506. Study on non-fungible tokens.
Sec. 507. Study on expanding financial literacy amongst digital
commodity holders.
Sec. 508. Study on financial market infrastructure improvements.
Sec. 509. Study on blockchain in payments.
TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION
SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF 1933.
Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is
amended by adding at the end the following:
``(20) Blockchain.--The term `blockchain' means--
``(A) any technology--
``(i) where data is--
``(I) shared across a network to
create a distributed ledger of
independently verifiable transactions
or information among network
participants;
``(II) linked using cryptography to
maintain the integrity of the
distributed ledger and to execute other
functions; and
``(III) propagated among network
participants to reach consensus on the
state of the distributed ledger and any
other functions; and
``(ii) composed of source code that is
publicly available; and
``(B) any similar technology to the technology
described in subparagraph (A).
``(21) Blockchain application.--The term `blockchain
application' means any executable software that is deployed to
a blockchain and composed of source code that is publicly
available, including a smart contract or any network of smart
contracts, or other similar technology.
``(22) Blockchain protocol.--The term `blockchain protocol'
means publicly available source code of a blockchain that is
executed by the network participants of a blockchain to
facilitate its functioning, or other similar technology.
``(23) Blockchain system.--The term `blockchain system'
means any blockchain, together with its blockchain protocol or
any blockchain application or network of blockchain
applications.
``(24) Decentralized governance system.--
``(A) In general.--The term `decentralized
governance system' means, with respect to a blockchain
system, any transparent, rules-based system permitting
persons to form consensus or reach agreement in the
development, provision, publication, maintenance, or
administration of such blockchain system, where
participation is not limited to, or under the effective
control of, any person or group of persons under common
control.
``(B) Relationship of persons to decentralized
governance systems.--With respect to a decentralized
governance system, the decentralized governance system
and any persons participating in the decentralized
governance system shall be treated as separate persons
unless such persons are under common control or acting
pursuant to an agreement to act in concert.
``(C) Legal entities for decentralized governance
systems.--The term `decentralized governance system'
shall include a legal entity used to implement the
rules-based system described in subparagraph (A),
provided that the legal entity does not operate
pursuant to centralized management. For the purposes of
this subparagraph, the delegation of ministerial or
administrative authority at the direction of the
participants in a decentralized governance system shall
not be construed to be centralized management.
``(25) Digital asset.--The term `digital asset' means any
digital representation of value which is recorded on a
cryptographically-secured distributed ledger or other similar
technology.
``(26) Digital commodity.--The term `digital commodity' has
the meaning given that term under section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
``(27) Digital commodity affiliated person.--The term
`digital commodity affiliated person' means a person (including
a digital commodity related person) that, with respect to any
digital commodity--
``(A) acquires or has any right to acquire 5
percent or more of the total outstanding units of such
digital commodity from a digital commodity issuer or an
agent or underwriter thereof (other than a
decentralized governance system);
``(B) is a founder of the digital commodity issuer;
or
``(C) is an executive officer, director, trustee,
general partner, or person serving in a similar
capacity of the digital commodity issuer or held such
role at any point in the previous 12-month period.
``(28) Digital commodity issuer.--
``(A) In general.--With respect to a digital
commodity, the term `digital commodity issuer' means
any person that--
``(i) issues or causes to be issued, or
proposes to issue or cause to be issued, a unit
of such digital commodity to a person; or
``(ii) offers or sells a right to a future
issuance of a unit of such digital commodity to
a person.
``(B) Prohibition on evasion.--It shall be unlawful
for any person to knowingly evade classification as a
`digital commodity issuer' and facilitate an
arrangement for the primary purpose of effecting an
offer, sale, distribution, or other issuance of a
digital commodity, including via any arrangement
involving the transfer of intellectual property
associated with the blockchain system to which the
digital commodity relates.
``(29) Digital commodity related person.--
``(A) In general.--With respect to a digital
commodity issuer, the term `digital commodity related
person' means a person--
``(i) that is or was in the previous 6-
month period a promoter, senior employee,
advisory board member, consultant, advisor, or
person serving in a similar capacity; or
``(ii) that acquires or has any right to
acquire 1 percent or more of the total
outstanding units of such digital commodity
from a digital commodity issuer or an agent or
underwriter thereof (other than a decentralized
governance system).
``(B) Senior employee defined.--In this paragraph
and with respect to a digital commodity issuer, the
term `senior employee' means any employee materially
involved in the management of the digital commodity
issuer, including management of the development of the
blockchain system to which the digital commodity
relates.
``(30) End user distribution.--The term `end user
distribution' means a distribution of a unit of a digital
commodity that--
``(A) does not involve an exchange of more than a
nominal value of cash, property, or other assets; and
``(B) is distributed in a broad and equitable
manner based on conditions capable of being satisfied
by any participant in the blockchain system, including,
as incentive-based rewards--
``(i) to users of the digital commodity or
any blockchain system to which the digital
commodity relates;
``(ii) for activities directly related to
the operation of the blockchain system, such as
mining, validating, staking, or other activity
directly tied to the operation of the
blockchain system; or
``(iii) to the existing holders of another
digital commodity, in proportion to the total
units of such other digital commodity as are
held by each person.
``(31) Mature blockchain system.--The term `mature
blockchain system' means a blockchain system, together with its
related digital commodity, that is not controlled by any person
or group of persons under common control.
``(32) Permitted payment stablecoin.--
``(A) In general.--The term `permitted payment
stablecoin' means a digital asset--
``(i) that is or is designed to be used as
a means of payment or settlement;
``(ii) that is denominated in a national
currency;
``(iii) the issuer of which is subject to
the regulatory and supervisory authority of a
State or Federal agency;
``(iv) the issuer of which--
``(I) is obligated to convert,
redeem, or repurchase for a fixed
amount of monetary value; or
``(II) represents that the digital
asset will maintain or creates the
reasonable expectation that the digital
asset will maintain a stable value
relative to the value of a fixed amount
of monetary value; and
``(v) that is not--
``(I) a national currency;
``(II) a security issued by--
``(aa) an investment
company registered under
section 8(a) of the Investment
Company Act of 1940 (15 U.S.C.
80a-8(a)); or
``(bb) a person that would
be an investment company under
the Investment Company Act of
1940 but for paragraphs (1) and
(7) of section 3(c) of that Act
(15 U.S.C. 80a-3(c));
``(III) a deposit (as defined under
section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)),
regardless of the technology used to
record such deposit; or
``(IV) an account (as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752)), regardless of
the technology used to record such
account.
``(B) Monetary value defined.--The term `monetary
value'--
``(i) means--
``(I) a national currency;
``(II) a deposit (as defined in
section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813)) that is
denominated in a national currency; or
``(III) an account (as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752)); and
``(ii) does not include any agricultural or
other physical commodity (as defined in section
1a of the Commodity Exchange Act (7 U.S.C.
1a)).
``(33) Securities laws.--The term `securities laws' has the
meaning given that term under section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).''.
SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)) is amended--
(1) by redesignating the second paragraph (80) (relating to
funding portals) as paragraph (81); and
(2) by adding at the end the following:
``(82) Bank secrecy act.--The term `Bank Secrecy Act'
means--
``(A) section 21 of the Federal Deposit Insurance
Act (12 U.S.C. 1829b);
``(B) chapter 2 of title I of Public Law 91-508 (12
U.S.C. 1951 et seq.); and
``(C) subchapter II of chapter 53 of title 31,
United States Code.
``(83) Additional digital commodity-related terms.--
``(A) Securities act of 1933.--The terms
`blockchain system', `decentralized governance system',
`digital asset', `digital commodity affiliated person',
`digital commodity issuer', `digital commodity related
person', `end user distribution', `mature blockchain
system', and `permitted payment stablecoin' have the
meaning given those terms, respectively, under section
2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).
``(B) Commodity exchange act.--The terms `digital
commodity', `digital commodity broker', `digital
commodity dealer', `digital commodity exchange',
`decentralized finance messaging system', and
`decentralized finance trading protocol' have the
meaning given those terms, respectively, under section
1a of the Commodity Exchange Act (7 U.S.C. 1a).''.
SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.
(a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
1a) is amended--
(1) in paragraph (10)--
(A) in subparagraph (A)--
(i) by redesignating clauses (iii) and (iv)
as clauses (iv) and (v), respectively; and
(ii) by inserting after clause (ii) the
following:
``(iii) digital commodity;''; and
(B) by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A)
the following:
``(B) Exclusion.--For purposes of this paragraph,
the term `trading in commodity interests' shall not
include transacting in digital commodities for the
purpose of--
``(i) acting as a digital commodity
custodian;
``(ii) establishing, maintaining, or
managing inventory or payment instruments for
commercial purposes; or
``(iii) maintaining or supporting the
operation of, or validating transactions on, a
blockchain system.'';
(2) in paragraph (11)--
(A) in subparagraph (A)(i)--
(i) by redesignating subclauses (III) and
(IV) as subclauses (IV) and (V), respectively;
and
(ii) by inserting after subclause (II) the
following:
``(III) digital commodity;''; and
(B) by redesignating subparagraph (B) as
subparagraph (C) and inserting after subparagraph (A)
the following:
``(B) Exclusion.--For purposes of this paragraph,
the term `trading in commodity interests' shall not
include transacting in digital commodities for the
purpose of--
``(i) acting as a digital commodity
custodian;
``(ii) establishing, maintaining, or
managing inventory or payment instruments for
commercial purposes; or
``(iii) maintaining or supporting the
operation of, or validating transactions on, a
blockchain system.'';
(3) in paragraph (12)(A)(i)--
(A) in subclause (II), by adding at the end a
semicolon;
(B) by redesignating subclauses (III) and (IV) as
subclauses (IV) and (V), respectively; and
(C) by inserting after subclause (II) the
following:
``(III) a digital commodity;'';
(4) by redesignating paragraphs (16) through (51) as
paragraphs (17) through (52), respectively, and inserting after
paragraph (15) the following:
``(16) Terms related to digital commodities.--
``(A) Associated person of a digital commodity
broker.--
``(i) In general.--Except as provided in
clause (ii), the term `associated person of a
digital commodity broker' means a person who is
associated with a digital commodity broker as a
partner, officer, employee, or agent (or any
person occupying a similar status or performing
similar functions) in any capacity that
involves--
``(I) the solicitation or
acceptance of an order for the purchase
or sale of a digital commodity; or
``(II) the supervision of any
person engaged in the solicitation or
acceptance of an order for the purchase
or sale of a digital commodity.
``(ii) Exclusion.--The term `associated
person of a digital commodity broker' does not
include any person associated with a digital
commodity broker the functions of which are
solely clerical or ministerial.
``(B) Associated person of a digital commodity
dealer.--
``(i) In general.--Except as provided in
clause (ii), the term `associated person of a
digital commodity dealer' means a person who is
associated with a digital commodity dealer as a
partner, officer, employee, or agent (or any
person occupying a similar status or performing
similar functions) in any capacity that
involves--
``(I) the solicitation or
acceptance of a contract for the
purchase or sale of a digital
commodity; or
``(II) the supervision of any
person engaged in the solicitation or
acceptance of a contract for the
purchase or sale of a digital
commodity.
``(ii) Exclusion.--The term `associated
person of a digital commodity dealer' does not
include any person associated with a digital
commodity dealer the functions of which are
solely clerical or ministerial.
``(C) Bank secrecy act.--The term `Bank Secrecy
Act' means--
``(i) section 21 of the Federal Deposit
Insurance Act (12 U.S.C. 1829b);
``(ii) chapter 2 of title I of Public Law
91-508 (12 U.S.C. 1951 et seq.); and
``(iii) subchapter II of chapter 53 of
title 31, United States Code.
``(D) Decentralized finance messaging system.--
``(i) In general.--The term `decentralized
finance messaging system' means a software
application that provides a user with the
ability to create or submit an instruction,
communication, or message to a decentralized
finance trading protocol for the purpose of
executing a transaction by the user.
``(ii) Additional requirements.--The term
`decentralized finance messaging system' does
not include any system that provides any person
other than the user with control over--
``(I) the funds of the user; or
``(II) the execution of the
transaction of the user.
``(E) Decentralized finance trading protocol.--
``(i) In general.--The term `decentralized
finance trading protocol' means a blockchain
system through which multiple participants can
execute a financial transaction--
``(I) in accordance with an
automated rule or algorithm that is
predetermined and non-discretionary;
and
``(II) without reliance on any
other person to maintain control of the
digital assets of the user during any
part of the financial transaction.
``(ii) Exclusions.--
``(I) In general.--The term
`decentralized finance trading
protocol' does not include a blockchain
system if--
``(aa) a person or group of
persons under common control
has the unilateral authority,
directly or indirectly, through
any contract, arrangement,
understanding, relationship, or
otherwise, to control or
materially alter the
functionality, operation, or
rules of consensus or agreement
of the blockchain system; or
``(bb) the blockchain
system does not operate,
execute and enforce its
operations and transactions
based solely on pre-
established, transparent rules
encoded directly within the
source code of the blockchain
system.
``(II) Special rule.--For purposes
of subclause (I), a decentralized
governance system shall not be
considered to be a person or a group of
persons under common control.
``(F) Digital commodity.--
``(i) In general.--The term `digital
commodity' means a digital asset that is
intrinsically linked to a blockchain system,
and the value of which is derived from or is
reasonably expected to be derived from the use
of the blockchain system.
``(ii) Relationship to a blockchain
system.--For purposes of this subparagraph, a
digital asset is intrinsically linked to a
blockchain system if the digital asset is
directly related to the functionality or
operation of the blockchain system or to the
activities or services for which the blockchain
system is created or utilized, including where
the digital asset is--
``(I) issued or generated by the
programmatic functioning of the
blockchain system;
``(II) used to transfer value
between participants in the blockchain
system;
``(III) used to access the
activities or services of the
blockchain system;
``(IV) used to participate in the
decentralized governance system of the
blockchain system;
``(V) used or removed from
circulation in whole or in part to pay
fees or otherwise verify or validate
transactions on the blockchain system;
``(VI) used as payment or incentive
to participants in the blockchain
system to engage in the activities of
the blockchain system, provide services
to other participants in the blockchain
system, or otherwise participate in the
functionality of the blockchain system;
or
``(VII) used as payment or
incentive to participants in the
blockchain system to validate
transactions, secure the blockchain
system, provide computational services,
maintain or distribute information, or
otherwise participate in the operations
of the blockchain system.
``(iii) Exclusion.--The term `digital
commodity' does not include any of the
following:
``(I) Security.--
``(aa) Any security, other
than a note, an investment
contract, or a certificate of
interest or participation in
any profit-sharing agreement.
``(bb) A note, an
investment contract, or a
certificate of interest or
participation in any profit-
sharing agreement that
represents or gives the holder
an ownership interest or other
interest in the revenues,
profits, obligations, debts,
assets, or assets or debts to
be acquired of the issuer of
the digital asset or another
person (other than a
decentralized governance
system).
``(II) Security derivative.--A
digital asset that, based on its terms
and other characteristics, is,
represents, or is functionally
equivalent to an agreement, contract,
or transaction that is--
``(aa) a security future,
as defined in section 2a of the
Securities Act of 1933;
``(bb) a security-based
swap, as defined in section 2a
of the Securities Act of 1933;
``(cc) a put, call,
straddle, option, or privilege
on any security, certificate of
deposit, or group or index of
securities (including any
interest therein or based on
the value thereof), as defined
in section 2a of the Securities
Act of 1933; or
``(dd) a put, call,
straddle, option, or privilege
on any security, as defined in
section 2a of the Securities
Act of 1933.
``(III) Permitted payment
stablecoin.--A digital asset that is a
permitted payment stablecoin.
``(IV) Banking deposit.--
``(aa) A deposit (as
defined under section 3 of the
Federal Deposit Insurance Act
(12 U.S.C. 1813)), regardless
of the technology used to
record the deposit.
``(bb) An account (as
defined in section 101 of the
Federal Credit Union Act (12
U.S.C. 1752)), regardless of
the technology used to record
the account.
``(V) Commodity.--A digital asset
that references, represents an interest
in, or is functionally equivalent to--
``(aa) an agricultural
commodity;
``(bb) an excluded
commodity, other than a
security; or
``(cc) an exempt commodity,
other than the digital
commodity itself, as shall be
further defined by the
Commission.
``(VI) Commodity derivative.--A
digital asset that, based on its terms
and other characteristics, is,
represents, or is functionally
equivalent to an agreement, contract,
or transaction that is--
``(aa) a contract of sale
of a commodity for future
delivery or an option thereon;
``(bb) a security futures
product;
``(cc) a swap;
``(dd) an agreement,
contract, or transaction
described in section
2(c)(2)(C)(i) or 2(c)(2)(D)(i);
``(ee) a commodity option
authorized under section 4c; or
``(ff) a leverage
transaction authorized under
section 19.
``(VII) Pooled investment
vehicle.--
``(aa) In general.--A
digital asset that, based on
its terms and other
characteristics, is,
represents, or is functionally
equivalent to--
``(AA) a commodity
pool, as defined in
this Act; or
``(BB) a pooled
investment vehicle.
``(bb) Pooled investment
vehicle defined.--In this
subclause, the term `pooled
investment vehicle' means any
investment company as defined
in section 3(a) of the
Investment Company Act of 1940
(15 U.S.C. 80a-3(a)) or any
company that would be an
investment company under
section 3(a) of such Act but
for the exclusion provided from
that definition by paragraph
(1), (7), or (9) of section
3(c) of such Act (15 U.S.C.
80a-3(c)(1), (7), or (9)).
``(VIII) Good, collectible, and
other non-commodity asset.--A digital
asset that has inherent value, utility,
or significance beyond its mere
existence as a digital asset, including
the digital equivalent of a tangible or
intangible good, such as--
``(aa) a work of art, a
musical composition, a literary
work, or other intellectual
property;
``(bb) collectibles,
merchandise, virtual land, and
video game assets;
``(cc) affinity, rewards,
or loyalty points, including
airline miles or credit card
points, that are not primarily
speculative in nature; or
``(dd) rights, licenses,
and tickets.
``(iv) Rule of construction.--No
presumption shall exist that a digital asset is
a security, nor shall a digital asset be
excluded from being a digital commodity
pursuant to clause (iii)(I), solely due to--
``(I) the digital asset providing
voting or economic rights with respect
to the blockchain system to which the
digital asset relates or the
decentralized governance system of the
blockchain system;
``(II) the value of the digital
asset having the potential to
appreciate or depreciate in response to
the efforts, operations, or financial
performance of the decentralized
governance system of the blockchain
system to which the digital asset
relates; or
``(III) the value of the digital
asset appreciating or depreciating due
to the adoption and use of the
blockchain system to which the digital
asset relates or the decentralized
governance system of the blockchain
system.
``(G) Digital commodity broker.--
``(i) In general.--The term `digital
commodity broker' means any person who, as a
regular business--
``(I) is engaged in--
``(aa) soliciting or
accepting an order from a
customer for--
``(AA) the purchase
or sale of a digital
commodity; or
``(BB) an
agreement, contract, or
transaction described
in section
2(c)(2)(D)(iv); and
``(bb) in conjunction with
the activities in item (aa),
accepts or maintains control
over--
``(AA) the funds of
any customer; or
``(BB) the
execution of any
transaction of a
customer;
``(II) is engaged in soliciting or
accepting orders from a customer for
the purchase or sale of a unit of a
digital commodity on or subject to the
rules of a registered entity; or
``(III) is registered with the
Commission as a digital commodity
broker.
``(ii) Exceptions.--The term `digital
commodity broker' does not include a person
solely because the person--
``(I) solicits or accepts an order
described in clause (i)(I)(aa)(AA) from
a customer who is an eligible contract
participant;
``(II) enters into a digital
commodity transaction the primary
purpose of which is to make, send,
receive, or facilitate payments,
whether involving a payment service
provider or on a peer-to-peer basis; or
``(III) is a bank (as defined under
section 3(a) of the Securities Exchange
Act of 1934) engaging in certain
banking activities with respect to a
digital commodity in the same or a
similar manner as a bank is excluded
from the definition of a broker under
such section, as determined by the
Commission.
``(iii) Further definition.--The
Commission, by rule or regulation, may exclude
from the term `digital commodity broker' any
person or class of persons if the Commission
determines that the rule or regulation will
effectuate the purposes of this Act.
``(H) Digital commodity dealer.--
``(i) In general.--The term `digital
commodity dealer' means any person who, as a
regular business--
``(I) is, or offers to be a
counterparty to a person for the
purchase or sale of a digital commodity
as a regular business, and in
conjunction with the activities,
accepts or maintains control over the
funds of any counterparty; or
``(II) is registered with the
Commission as a digital commodity
dealer.
``(ii) Exception.--The term `digital
commodity dealer' does not include a person
solely because the person--
``(I) is or offers to be a
counterparty to a person who is an
eligible contract participant;
``(II) enters into a digital
commodity transaction with an eligible
contract participant;
``(III) enters into a digital
commodity transaction on or through a
registered digital commodity exchange,
with a registered digital commodity
broker, or through a decentralized
finance trading protocol;
``(IV) enters into a digital
commodity transaction for the person's
own account, either individually or in
a fiduciary capacity, but not as a part
of a regular business;
``(V) enters into a digital
commodity transaction the primary
purpose of which is to make, send,
receive, or facilitate payments,
whether involving a payment service
provider or on a peer-to-peer basis; or
``(VI) is a bank (as defined under
section 3(a) of the Securities Exchange
Act of 1934) engaging in certain
banking activities with respect to a
digital commodity in the same or a
similar manner as a bank is excluded
from the definition of a dealer under
section 3(a)(5) of such Act, as
determined by the Commission.
``(iii) Further definition.--The
Commission, by rule or regulation, may exclude
from the term `digital commodity dealer' any
person or class of persons if the Commission
determines that the rule or regulation will
effectuate the purposes of this Act.
``(I) Digital commodity exchange.--The term
`digital commodity exchange' means a trading facility
that offers or seeks to offer a cash or spot market in
at least 1 digital commodity.
``(J) Mixed digital asset transaction.--The term
`mixed digital asset transaction' means a transaction
in which a digital commodity is traded for a security.
``(K) Terms defined under the securities act of
1933.--The terms `blockchain system', `decentralized
governance system', `digital asset', `digital commodity
issuer', `digital commodity affiliated person',
`digital commodity related person', `end user
distribution', `mature blockchain system', and
`permitted payment stablecoin' have the meaning given
those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''; and
(5) in paragraph (41) (as so redesignated by paragraph (4)
of this subsection)--
(A) by striking ``and'' at the end of subparagraph
(E);
(B) by striking the period at the end of
subparagraph (F) and inserting ``; and''; and
(C) by adding at the end the following:
``(G) a digital commodity exchange registered under
section 5i.''.
(b) Conforming Amendments.--
(1) Each of the following provisions of law is amended by
striking ``1a(18)'' and inserting ``1a(19)'':
(A) Section 4s(h)(5)(A)(i) of the Commodity
Exchange Act (7 U.S.C. 6s(h)(5)(A)(i)).
(B) Section 5(e) of the Securities Act of 1933 (15
U.S.C. 77e(e)).
(C) Section 6(g)(5)(B) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(g)(5)(B)).
(D) Section 15F(h)(5)(A)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-10(h)(5)(A)(i)).
(2) Section 752 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8325) is amended by
striking ``1a(39)'' and inserting ``1a(40)''.
(3) Section 4s(f)(1)(D) of the Commodity Exchange Act (7
U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)'' and
inserting ``1a(48)(A)''.
(4) Each of the following provisions of the Commodity
Exchange Act is amended by striking ``1a(47)(A)(v)'' and
inserting ``1a(48)(A)(v)'':
(A) Section 4t(b)(1)(C) (7 U.S.C. 6t(b)(1)(C)).
(B) Section 5(d)(23) (7 U.S.C. 7(d)(23)).
(C) Section 5b(k)(3) (7 U.S.C. 7a-1(k)(3)).
(D) Section 5h(f)(10)(A)(iii) (7 U.S.C. 7b-
3(f)(10)(A)(iii)).
(5) Section 21(f)(4)(C) of the Commodity Exchange Act (7
U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and
inserting ``1a(49)''.
(6) Section 403 of the Legal Certainty for Bank Products
Act of 2000 (7 U.S.C. 27a) is amended--
(A) in subsection (a)(2), by striking
``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)''; and
(B) in each of subsections (b)(1) and (c)(2), by
striking ``1a(47)'' and inserting ``1a(48)''.
(7) Section 712 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8302) is amended--
(A) in subsection (a)(8), by striking ``1a(47)(D)''
each place it appears and inserting ``1a(48)(D)''; and
(B) in subsection (d)(1), by striking
``1a(47)(A)(v)'' each place it appears and inserting
``1a(48)(A)(v)''.
SEC. 104. DEFINITIONS UNDER THIS ACT.
In this Act:
(1) Definitions under the commodity exchange act.--The
terms ``decentralized finance messaging system'',
``decentralized finance trading protocol'', ``digital
commodity'', ``digital commodity broker'', ``digital commodity
dealer'', ``digital commodity exchange'', and ``mixed digital
asset transaction'' have the meaning given those terms,
respectively, under section 1a of the Commodity Exchange Act (7
U.S.C. 1a).
(2) Definitions under the securities act of 1933.--The
terms ``blockchain'', ``blockchain system'', ``blockchain
protocol'', ``decentralized governance system'', ``digital
asset'', ``digital commodity issuer'', ``end user
distribution'', ``mature blockchain system'', ``permitted
payment stablecoin'', and ``securities laws'' have the meaning
given those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).
(3) Definitions under the securities exchange act of
1934.--The terms ``Bank Secrecy Act'', ``securities laws'', and
``self-regulatory organization'' have the meaning given those
terms, respectively, under section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
SEC. 105. RULEMAKINGS.
(a) Definitions.--The Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly issue rules to further
define the following terms:
(1) The terms--
(A) ``blockchain'', ``blockchain application'',
``blockchain system'', ``blockchain protocol'',
``decentralized governance system'', ``digital
commodity affiliated person'', ``digital commodity
issuer'', ``digital commodity related person'', ``end
user distribution'', and ``mature blockchain system'',
as defined under section 2(a) of the Securities Act of
1933;
(B) ``unilateral authority'', as such term is used
in section 42 of the Securities Exchange Act of 1934
and section 1a of the Commodity Exchange Act; and
(C) ``programmatic functioning'', as such term is
used in sections 4C of the Securities Act of 1933,
section 42 of the Securities Exchange Act of 1934, and
section 1a of the Commodity Exchange Act.
(2) The terms ``digital commodity'', ``decentralized
finance messaging system'', and ``decentralized finance trading
protocol'', as defined under section 1a of the Commodity
Exchange Act.
(b) Joint Rulemaking for Mixed Digital Asset Transactions.--The
Securities and Exchange Commission and the Commodity Futures Trading
Commission shall jointly issue rules applicable to mixed digital asset
transactions under this Act and the amendments made by this Act,
including by further defining such term.
(c) Protection of Self-Custody.--
(1) In general.--A United States individual shall retain
the right to--
(A) maintain a hardware wallet or software wallet
for the purpose of facilitating the individual's own
lawful custody of digital assets; and
(B) engage in direct, peer-to-peer transactions in
digital assets with another individual or entity for
the individual's own lawful purposes using a hardware
wallet or software wallet, if--
(i) such other individual or entity is not
a financial institution (as defined in section
5312 of title 31, United States Code); and
(ii) the transactions do not involve any
property or interests in property that are
blocked pursuant to, or are otherwise
prohibited by, United States sanctions.
(2) Application.--This subsection--
(A) applies solely to personal use by individuals;
and
(B) does not apply to individuals acting in a
custodial or fiduciary capacity for others.
(3) Rule of construction.--Nothing in this subsection shall
be construed to limit the authority of the Secretary of the
Treasury, the Securities and Exchange Commission, the Commodity
Futures Trading Commission, the Board of Governors of the
Federal Reserve System, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, or the National Credit
Union Administration to carry out any enforcement action or
special measure authorized under applicable law, including--
(A) the Bank Secrecy Act, section 9714 of the
Combating Russian Money Laundering Act (31 U.S.C. 5318A
note), and section 7213A of the Fentanyl Sanctions Act
(21 U.S.C. 2313a); or
(B) any other law relating to illicit finance,
money laundering, terrorism financing, or United States
sanctions.
(d) Joint Rulemaking, Procedures, or Guidance for Delisting.--Not
later than 180 days after the date of the enactment of this Act, the
Commodity Futures Trading Commission and the Securities and Exchange
Commission shall jointly issue rules, procedures, or guidance (as
determined appropriate by the Commissions) regarding the process to
delist an asset for trading under section 106 of this Act if the
Commissions determine that the listing is inconsistent with the
Commodity Exchange Act, the securities laws (including regulations
under those laws), or this Act.
(e) Joint Rules for Portfolio Margining Determinations.--
(1) In general.--Not later than 360 days after the date of
the enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly issue rules describing the process for persons
registered with either such Commission to seek a joint order or
determination with respect to margin, customer protection,
segregation, or other requirements as necessary to facilitate
portfolio margining of securities (including related extensions
of credit), security-based swaps, contracts for future
delivery, options on a contract for future delivery, swaps, and
digital commodities, or any subset thereof, in--
(A) a securities account carried by a registered
broker or dealer or a security-based swap account
carried by a registered security-based swap dealer;
(B) a futures or cleared swap account carried by a
registered futures commission merchant;
(C) a swap account carried by a swap dealer; or
(D) a digital commodity account carried by a
registered digital commodity broker or digital
commodity dealer that is also registered in such other
capacity as is necessary to also carry the other
customer or counterparty positions being held in the
account.
(2) Process.--With respect to a joint order or
determination described in paragraph (1), the rules required to
be issued pursuant to paragraph (1) shall require--
(A) the joint order or determination to be issued
only if the order or determination is in the public
interest and provides for the appropriate protection of
customers;
(B) applicants to file a standard application, in a
form and manner determined by the Securities and
Exchange Commission and the Commodity Futures Trading
Commission, which shall include the information
necessary to make the joint order or determination;
(C) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to make a final
determination not later than 270 days after the filing
of a completed application;
(D) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to consider the
public interest of the joint order or determination
through the solicitation of public comments; and
(E) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to consult with
other relevant foreign or domestic regulators,
including the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, and
the Office of the Comptroller of the Currency, as
appropriate.
(f) Capital Requirements to Address Netting Agreements.--No later
than 360 days following the date of enactment of this Act, the Board of
Governors of the Federal Reserve System, the Comptroller of the
Currency, and the Federal Deposit Insurance Corporation shall develop
risk-based and leverage capital requirements for insured depository
institutions, depository institution holding companies, and nonbank
financial companies supervised by the Board of Governors that address
netting agreements that provide for termination and close-out netting
across multiple types of financial transactions, consistent with
subsection (e), in the event of a counterparty's default.
SEC. 106. PROVISIONAL REGISTRATION FOR DIGITAL COMMODITY EXCHANGES,
BROKERS, AND DEALERS.
(a) In General.--
(1) Provisional registration.--Within 180 days after the
date of the enactment of this Act, a person acting as a digital
commodity exchange, digital commodity broker, or digital
commodity dealer shall file a statement of provisional
registration with the Commodity Futures Trading Commission (in
this subsection referred to as the ``Commission''), unless
exempted from registration under section 5k of the Commodity
Exchange Act, as a--
(A) digital commodity exchange, for a person acting
as a digital commodity exchange;
(B) digital commodity broker, for a person acting
as a digital commodity broker; or
(C) digital commodity dealer, for a person acting
as a digital commodity dealer.
(2) Conditions.--
(A) Non-registered entities.--A person, other than
a registered entity, who files a statement of
provisional registration under paragraph (1) shall be
considered to be in compliance with this section if the
person--
(i) is a member of a futures association
registered under section 17 of the Commodity
Exchange Act, and complies with the rules of
the association, including the rules of the
association pertaining to customer disclosures
and protection of customer assets;
(ii) submits to the Commission, in the form
and manner determined by the Commission, and
continues to materially update, as necessary or
required by the Commission, a statement of the
nature of the digital commodity-related
activities the person is pursuing or intends to
pursue;
(iii) submits to the Commission and
continues to materially update the information
required by this subsection;
(iv) complies with subsection (c) of this
section; and
(v) pays all fees and penalties imposed on
the person under section 410 of this Act.
(B) Registered entity.--
(i) In general.--A registered entity who
files a statement of provisional registration
under paragraph (1) shall be considered to be
in compliance with this section if the person--
(I) submits to the Commission and
continues to materially update, a
statement of the nature of the digital
commodity-related activities the person
is pursuing or intends to pursue;
(II) submits, and continues to
materially update, the information
required by this subsection and
subsection (b);
(III) complies with subsection (c);
and
(IV) pays all fees and penalties
imposed on the person under section
410.
(ii) Definition.--In this paragraph, the
term ``registered entity'' means a person who
is designated by the Commodity Futures Trading
Commission as a contract market or registered
with the Commodity Futures Trading Commission
as a swap execution facility.
(b) Disclosure of General Information.--A person who files a
statement of provisional registration under subsection (a) shall
disclose to the Commission, unless already known to the Commission, the
following:
(1) Management.--Information concerning the management of
the person, including information describing--
(A) the ownership and management of the person;
(B) the financial condition of the person;
(C) affiliated entities;
(D) potential conflicts of interest;
(E) the address of the person, including--
(i) the place of incorporation;
(ii) principal place of business; and
(iii) an address for service of process;
and
(F) a list of the States in which the person has
operations.
(2) Digital commodity operations.--Information concerning
the digital commodity operations of the person, including--
(A) a general description of the person's business
and the terms of service for United States customers;
(B) a description of the person's account approval
process;
(C) any rulebook or other customer order
fulfillment rules or procedures;
(D) risk management procedures;
(E) a description of the product listing process;
and
(F) policies and procedures for compliance with the
Bank Secrecy Act.
(c) Requirements.--A person who files a statement of provisional
registration under subsection (a) shall comply with the following
requirements:
(1) Statutory disqualifications.--Except to the extent
otherwise specifically provided by the Commission or any
registered futures association rule, regulation, or order, the
person shall not permit an individual who is subject to a
statutory disqualification under paragraph (2) or (3) of
section 8a of the Commodity Exchange Act or subject to a
statutory disqualification as defined in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) to effect or
be involved in effecting transactions on behalf of the person,
if the person knew, or in the exercise of reasonable care
should have known, of the statutory disqualification.
(2) Books and records.--The person shall keep their books
and records open to inspection and examination by the
Commission and by any registered futures association or
national securities association of which the person is a
member.
(3) Customer disclosures.--The person shall disclose to
customers--
(A) information about the material risks and
characteristics of the assets listed for trading on the
person;
(B) information about the legal entity that
custodies customer assets and the general manner in
which the digital assets of the customer will be and
are custodied;
(C) information concerning the policies and
procedures of the person that are related to the
protection of customers of the person, including
information regarding any conflicts of interest or
material affiliates; and
(D) in their disclosure documents, offering
documents, and promotional material--
(i) in a prominent manner, that they are
not registered with or regulated by the
Commission; and
(ii) the contact information for the
whistleblower, complaint, and reparation
programs of the Commission.
(d) Authority.--
(1) In general.--
(A) Deemed registration.--A person who remains in
compliance with the requirements of this section is
deemed to be--
(i) a registered digital commodity
exchange, pursuant to section 5i, if the person
filed a statement of provisional registration
as a digital commodity exchange; or
(ii) a registered digital commodity broker
or dealer, pursuant to section 4u, if the
person filed a statement of provisional
registration as a digital commodity broker or
dealer, as the case may be.
(B) Sunset.--The applicability of subparagraph (A)
shall expire--
(i) in the case of a digital commodity
exchange deemed registered pursuant to
subparagraph (A)(i), 180 days after the final
effective date of the rulemakings required
under 5i; or
(ii) in the case of a digital commodity
broker or dealer deemed registered pursuant to
subparagraph (A)(ii), 180 days after the final
effective date of the rulemakings required
under 4u.
(2) Superiority of commission-adopted requirements.--The
requirements of the preceding provisions of this section shall
not supersede any requirements applicable to registered persons
adopted by the Commission under the Commodity Exchange Act.
(e) Delisting.--This section shall not be construed to limit the
authority of the Commission and the Securities and Exchange Commission
to jointly require a person to delist an asset for trading if the
Commission and the Securities and Exchange Commission determine, in
accordance with rules, procedures or guidance jointly issued by the
Commission and the Securities and Exchange Commission to delist an
asset for trading, that the listing is inconsistent with the Commodity
Exchange Act, the securities laws (including regulations under those
laws), or this Act.
(f) Registration.--A person may not file a statement of provisional
registration with the Commission after the Commission has finalized its
rules for the registration of digital commodity exchanges, digital
commodity brokers, or digital commodity dealers, as appropriate.
(g) Rulemaking.--
(1) In general.--Within 180 days after the date of the
enactment of this Act, a registered futures association shall
adopt and enforce rules applicable to persons required by
subsection (a)(2) to be members of the association.
(2) Fees.--The rules adopted under subparagraph (A) of this
paragraph may provide for dues in accordance with section
17(b)(6) of the Commodity Exchange Act.
(3) Effect.--A registered futures association shall submit
to the Commission any rule adopted under subparagraph (A) of
this paragraph, which shall take effect pursuant to the
requirements of section 17(j) of the Commodity Exchange Act.
(h) Liability of the Filer.--It shall be unlawful for any person to
provide false information in support of a filing under this section if
the person knew or reasonably should have known that the information
was false.
(i) Whistleblower Enforcement.--For purposes of section 23 of the
Commodity Exchange Act, the term ``this Act'' includes this section.
(j) Federal Preemption.--
(1) This section shall supersede any State or local law
(other than antifraud provisions of general applicability) that
regulates the offer or sale of digital assets in the case of a
transaction conducted in compliance with this section and
conducted on or through a person who files a statement of
provisional registration under subsection (a) and complies with
the requirements of this section.
(2) Notwithstanding any other provision of law, the
Commission shall have exclusive jurisdiction over the digital
asset activities of a person who--
(A) files a statement of provisional registration
under subsection (a); and
(B) complies with the requirements of this section.
SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
PROVISIONS.
(a) In General.--Nothing in this Act shall affect or apply to, or
be interpreted to affect or apply to--
(1) any agreement, contract, or transaction that is subject
to the Commodity Exchange Act as--
(A) a contract of sale of a commodity for future
delivery or an option on such a contract;
(B) a swap;
(C) a security futures product;
(D) an option authorized under section 4c of such
Act;
(E) an agreement, contract, or transaction
described in section 2(c)(2)(C)(i) of such Act; or
(F) a leverage transaction authorized under section
19 of such Act;
(2) any agreement, contract, or transaction that is subject
to the securities laws as--
(A) a security-based swap;
(B) a security futures product; or
(C) an option on or based on the value of a
security; or
(3) the activities of any person with respect to any such
agreement, contract, or transaction.
(b) Prohibitions on Spot Digital Commodity Entities.--Nothing in
this Act authorizes, or shall be interpreted to authorize, a digital
commodity exchange, digital commodity broker, or digital commodity
dealer to engage in any activities involving any transaction, contract,
or agreement described in subsection (a)(1), solely by virtue of being
registered or filing a statement of provisional registration as a
digital commodity exchange, digital commodity broker, or digital
commodity dealer.
(c) Definitions.--In this section, each term shall have the meaning
provided in the Commodity Exchange Act or the regulations prescribed
under such Act.
SEC. 108. ADMINISTRATIVE REQUIREMENTS.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended--
(1) in paragraph (3)--
(A) in subparagraph (B), by striking ``or'' at the
end;
(B) in subparagraph (C), by striking the period and
inserting ``; or''; and
(C) by adding at the end the following:
``(D) a contract of sale of a digital commodity.'';
(2) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) in clause (iii), by striking the
period and inserting ``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital
commodity.'';
(B) in subparagraph (B)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) in clause (iii), by striking the
period and inserting ``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital
commodity.''; and
(C) in subparagraph (C)--
(i) in clause (ii), by striking ``or'' at
the end;
(ii) by striking ``(iii) a swap, provided
however,'' and inserting the following:
``(iii) a swap; or
``(iv) a contract of sale of a digital
commodity,
provided, however,''; and
(iii) by striking ``clauses (i), (ii), or
(iii)'' and insert ``any of clauses (i) through
(iv)''.
SEC. 109. INTERNATIONAL COOPERATION.
In order to promote greater consistency in effective and consistent
global regulation of digital assets, the Commodity Futures Trading
Commission and the Securities and Exchange Commission, as appropriate--
(1) shall consult and coordinate with foreign regulatory
authorities on the application of consistent international
standards with respect to the regulation of digital assets; and
(2) may enter into such information-sharing arrangements as
may be deemed to be necessary or appropriate in the public
interest or for the protection of investors, customers, and
users of digital assets.
SEC. 110. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN DEVELOPERS.
(a) In General.--Notwithstanding applicable law, a non-controlling
blockchain developer or provider of a blockchain service shall not be
treated as a money transmitter or as engaged in ``money transmitting''
or, following the date of enactment of this Act, be otherwise subject
to any new registration requirement that is substantially similar to
the requirement that currently applies to money transmitters, solely on
the basis of--
(1) creating or publishing software to facilitate the
creation of, or provision of maintenance services to, a
blockchain or blockchain service;
(2) providing hardware or software to facilitate a
customer's own custody or safekeeping of the customer's digital
assets; or
(3) providing infrastructure support to maintain a
blockchain service.
(b) Rule of Construction.--Nothing in this section shall be
construed to affect whether a blockchain developer or provider of a
blockchain service is otherwise subject to classification or treatment
as a money transmitter, or as engaged in ``money transmitting'', under
applicable State or Federal law, including laws relating to anti-money
laundering or countering the financing of terrorism, based on conduct
outside the scope of subsection (a). Nothing in this section shall be
construed to affect whether a blockchain developer or provider of a
blockchain service is otherwise subject to classification or treatment
as a financial institution under the Bank Secrecy Act, this Act, or any
Act enacted after the date of enactment of this Act.
(c) Effect on Other Laws.--
(1) Intellectual property law.--Nothing in this section
shall be construed to limit or expand any law pertaining to
intellectual property.
(2) State law.--Nothing in this section shall be construed
to prevent any State from enforcing any State law that is
consistent with this section. No cause of action may be brought
and no liability may be imposed under any State or local law
that is inconsistent with this section.
(d) Definitions.--In this section:
(1) Blockchain developer.--The term ``blockchain
developer'' means any person or business that creates or
publishes software to facilitate the creation of, or provide
maintenance to, a blockchain or a blockchain service.
(2) Blockchain service.--The term ``blockchain service''
means any information, transaction, or computing service or
system that provides or enables access to a blockchain network
by multiple users, including specifically a service or system
that enables users to send, receive, exchange, or store digital
assets described by blockchain networks.
(3) Non-controlling blockchain developer or provider of a
blockchain service.--The term ``non-controlling blockchain
developer or provider of a blockchain service'' means a
blockchain developer or provider of a blockchain service that
in the regular course of operations, does not have the legal
right or the unilateral and independent ability to control,
initiate upon demand, or effectuate transactions involving
digital assets that users are entitled to, without the
approval, consent, or direction of any other third party.
SEC. 111. APPLICATION OF THE BANK SECRECY ACT.
(a) In General.--Section 5312(c)(1)(A) of title 31, United States
Code, is amended--
(1) by inserting ``digital commodity broker, digital
commodity dealer,'' after ``futures commission merchant,''; and
(2) by inserting before the period the following: ``and any
digital commodity exchange registered, or required to register,
under the Commodity Exchange Act which permits direct customer
access''.
(b) GAO Study.--
(1) In general.--The Comptroller General of the United
States, in consultation with the Secretary of the Treasury,
shall conduct a study to--
(A) assess the risks posed by centralized
intermediaries that are primarily located in foreign
jurisdictions that provide services to U.S. persons
without regulatory requirements that are substantially
similar to the requirements of the Bank Secrecy Act;
and
(B) provide any regulatory or legislative
recommendations to address these risks under
subparagraph (A).
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall issue a
report to Congress containing all findings and determinations
made in carrying out the study required under paragraph (1).
SEC. 112. IMPLEMENTATION.
(a) Global Rulemaking Timeframe.--Unless otherwise provided in this
Act or an amendment made by this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission, or both, shall
individually, and jointly where required, promulgate rules and
regulations required of each Commission under this Act or an amendment
made by this Act not later than 360 days after the date of enactment of
this Act.
(b) Rules and Registration Before Final Effective Dates.--
(1) In general.--In order to prepare for the implementation
of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission may, before any effective
date provided in this Act--
(A) promulgate rules, regulations, or orders
permitted or required by this Act;
(B) conduct studies and prepare reports and
recommendations required by this Act;
(C) register persons under this Act; and
(D) exempt persons, agreements, contracts, or
transactions from provisions of this Act, under the
terms contained in this Act.
(2) Limitation on effectiveness.--An action by the
Commodity Futures Trading Commission or the Securities and
Exchange Commission under paragraph (1) shall not become
effective before the effective date otherwise applicable to the
action under this Act.
TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.
(a) Securities Act of 1933.--Section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)), as amended by section 101, is further
amended--
(1) in paragraph (1), by adding at the end the following:
``The term `investment contract' does not include an investment
contract asset.''; and
(2) by adding at the end the following:
``(34) The term `investment contract asset' means a digital
commodity--
``(A) that can be exclusively possessed and
transferred, person to person, without necessary
reliance on an intermediary, and is recorded on a
blockchain; and
``(B) sold or otherwise transferred, or intended to
be sold or otherwise transferred, pursuant to an
investment contract.''.
(b) Investment Advisers Act of 1940.--Section 202(a)(18) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is amended by
adding at the end the following: ``The term `investment contract' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
(c) Investment Company Act of 1940.--Section 2(a)(36) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended by
adding at the end the following: ``The term `investment contract' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
(d) Securities Exchange Act of 1934.--Section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by
adding at the end the following: ``The term `investment contract' does
not include an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
(e) Securities Investor Protection Act of 1970.--Section 16(14) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
amended by adding at the end the following: ``The term `investment
contract' does not include an investment contract asset (as such term
is defined under section 2(a) of the Securities Act of 1933).''.
SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL COMMODITIES.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended--
(1) in section 4(a), by adding at the end the following:
``(8) the offer or sale of an investment contract involving
units of a digital commodity by its digital commodity issuer
(including all entities controlled by or under common control
with the issuer), if--
``(A) the blockchain system to which the digital
commodity relates, together with the digital commodity,
is certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934 or
the issuer intends for the blockchain system to which
the digital commodity relates to be a mature blockchain
system by the later of--
``(i) the date that is four years after the
first sale of the investment contract involving
a unit of such digital commodity in reliance on
the exemption provided under this paragraph,
subject to any extensions as may be granted by
the Commission; or
``(ii) the date that is four years after
the effective date of this paragraph;
``(B) the sum of all cash and other consideration
to be received by the digital commodity issuer in
reliance on the exemption provided under this
paragraph, during the 12-month period preceding the
date of such offering, including the amount received in
such offering, is not more than $75,000,000 (as such
amount is annually adjusted by the Commission to
reflect the change in the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor);
``(C) after the completion of the transaction, a
purchaser does not own more than 10 percent of the
total amount of the outstanding units of the digital
commodity;
``(D) the transaction does not involve the offer or
sale of an investment contract involving units of a
digital commodity by its digital commodity issuer
that--
``(i) is not organized under the laws of a
State, a territory of the United States, or the
District of Columbia;
``(ii) is a development stage company that
either--
``(I) has no specific business plan
or purpose; or
``(II) has indicated that the
business plan of the company is to
merge with or acquire an unidentified
company;
``(iii) is an investment company, as
defined in section 3 of the Investment Company
Act of 1940 (15 U.S.C. 80a-3), or is excluded
from the definition of investment company by
section 3(b) or section 3(c) of that Act (15
U.S.C. 80a-3(b) or 80a-3(c));
``(iv) is issuing fractional undivided
interests in oil or gas rights, or a similar
interest in other mineral rights;
``(v) is, or has been, subject to any order
of the Commission entered pursuant to section
12(j) of the Securities Exchange Act of 1934
during the 5-year period before the filing of
the offering statement; or
``(vi) is disqualified pursuant to section
230.262 of title 17, Code of Federal
Regulations; and
``(E) the issuer meets the requirements of section
4B(b).''; and
(2) by inserting after section 4A the following:
``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL COMMODITY
TRANSACTIONS.
``(a) Commission Jurisdiction.--For the purposes of this section:
``(1) The Commission shall have jurisdiction and
enforcement authority with respect to disclosures described in
this section.
``(2) Section 17 shall apply to a statement made in an
offering statement, disclosure, or report filed under this
section to the same extent as such section 17 applies to a
statement made in any other offering statement, disclosure, or
report filed under this Act.
``(b) Requirements for Digital Commodity Issuers.--
``(1) Terms and conditions.--A digital commodity issuer
offering or selling an investment contract involving units of a
digital commodity in reliance on section 4(a)(8) shall file
with the Commission an offering statement and any related
documents, in such form and with such content as prescribed by
the Commission, including financial information, a description
of the issuer and the operations of the issuer, the financial
condition of the issuer, a description of the plan of
distribution of any unit of a digital commodity that is to be
offered as well as the intended use of the offering proceeds,
and a description of the development plan for the blockchain
system, and the related digital commodity, to become a mature
blockchain system, if such blockchain system is not already
certified as a mature blockchain system pursuant to section 42
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(2) Information required for purchasers.--A digital
commodity issuer that has filed a statement under paragraph (1)
to offer and sell an investment contract involving a unit of a
digital commodity in reliance on section 4(a)(8) shall include
in such statement the following information:
``(A) Maturity status.--Whether the blockchain
system to which the digital commodity relates has been
certified as a mature blockchain system pursuant to
section 42 of the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) and, where such blockchain system
is not so certified, a statement of the digital
commodity issuer's intent for the blockchain system to
which the digital commodity relates to be a mature
blockchain system within the time period described in
section 4(a)(8)(A).
``(B) Source code.--The source code, or a publicly
accessible webpage displaying such source code, for any
blockchain system to which the digital commodity
relates, and whether the source code was sourced from
an external third party, whether there are any existing
external dependencies, and whether the code underwent a
third-party security audit, along with material results
of any such audit.
``(C) Transaction history.--A description of the
steps necessary to independently access, search, and
verify the transaction history of any blockchain system
to which the digital commodity relates, to the extent
any such independent access, search, and verification
activities are technically feasible with respect to
such blockchain system.
``(D) Digital commodity economics.--A description
of the purpose of any blockchain system to which the
digital commodity relates and the operation of any such
blockchain system, including--
``(i) information explaining the launch and
supply process, including the number of units
of the digital commodity to be issued in an
initial allocation, the total number of units
of the digital commodity to be created, the
release schedule for the units of the digital
commodity, and the total number of units of the
digital commodity outstanding;
``(ii) information explaining the technical
requirements for holding, accessing, and
transferring the digital commodity;
``(iii) information on any applicable
consensus mechanism or process for validating
transactions, method of generating or mining
digital commodities, and any process for
burning or destroying units of the digital
commodity on the blockchain system;
``(iv) an explanation of any mechanism for
driving value to the digital commodity of such
blockchain system; and
``(v) an explanation of governance
mechanisms for implementing changes to the
blockchain system or forming consensus among
holders of units of such digital commodity.
``(E) Plan of development.--The current state and
timeline for the development of any blockchain system
to which the digital commodity relates, detailing how
and when the blockchain system is intended to be a
mature blockchain system, if the blockchain system is
not yet certified as a mature blockchain system, and
the various roles that exist or are intended to exist
in connection with the blockchain system, such as
users, service providers, developers, transaction
validators, and governance participants, including a
discussion of any mechanisms by which control or
authority are exerted with respect to the blockchain
system or its related digital commodity, and any
critical operational dependencies of the blockchain
system or its related digital commodity.
``(F) Ownership disclosures.--
``(i) In general.--A list of all persons
who are digital commodity related persons or
digital commodity affiliated persons who have
been issued a unit of the digital commodity by
the digital commodity issuer or have a right to
a unit of the digital commodity from the
digital commodity issuer.
``(ii) Confidentiality.--The Commission
shall keep each list described under clause (i)
confidential, consistent with what is necessary
or appropriate in the public interest or for
the protection of investors.
``(G) Risk factor disclosures.--A description of
the material risks surrounding ownership of a unit of a
digital commodity.
``(3) Ongoing disclosure requirements for maturing
blockchain systems.--Subject to paragraph (5), the issuer of a
digital commodity related to a blockchain system that is not
yet certified as a mature blockchain system under section 42 of
the Securities Exchange Act of 1934 that has filed a statement
under paragraph (1) to offer and sell an investment contract
involving a unit of a digital commodity in reliance on section
4(a)(8) shall file the following with the Commission:
``(A) Semiannual reports.--Every 6 months, a report
containing--
``(i) an updated description of the current
state and timeline for the development of the
blockchain system to which the digital
commodity relates, showing how and when the
blockchain is intended to be a mature
blockchain system;
``(ii) a description of the efforts of the
issuer and digital commodity related persons in
developing the blockchain system to which the
digital commodity relates;
``(iii) the amount of money raised by the
digital commodity issuer in reliance on section
4(a)(8), how much of that money has been spent,
and the general categories of activities for
which that money has been spent and amounts
spent per category; and
``(iv) financial statements, where
applicable.
``(B) Current reports.--A current report reflecting
any material changes relevant to the information
previously reported to the Commission by the digital
commodity issuer, which shall be filed as soon as
practicable after the material change occurred, in
accordance with such rules as the Commission may
prescribe as necessary or appropriate in the public
interest or for the protection of investors.
``(4) Rulemaking.--Not later than 360 days after the date
of the enactment of this section, the Commission shall
prescribe rules on requirements applicable to issuers of
digital commodities in reliance on section 4(a)(8).
``(5) Termination of certain reporting requirements; post-
maturity reporting requirements.--
``(A) In general.--The ongoing reporting
requirements under paragraph (3) shall not apply to a
digital commodity issuer 180 days after the end of the
covered fiscal year, if the information with respect to
the digital commodity and the blockchain system to
which it relates described in subparagraphs (A) through
(C) of paragraph (2) is made publicly available and the
disclosure requirements under subparagraph (C) of this
paragraph are satisfied.
``(B) Covered fiscal year defined.--In this
paragraph, the term `covered fiscal year' means, with
respect to a digital commodity, the first fiscal year
of a digital commodity issuer in which the blockchain
system to which such digital commodity relates is
certified as a mature blockchain system under section
42 of the Securities Exchange Act of 1934.
``(C) Post-maturity reporting requirements.--After
the blockchain system to which a digital commodity
relates is certified as a mature blockchain system
under section 42 of the Securities Exchange Act of
1934, any digital commodity issuer that has filed a
statement under paragraph (1) to offer and sell an
investment contract involving a unit of a digital
commodity in reliance on section 4(a)(8) and is engaged
in material ongoing efforts related to the mature
blockchain system shall disclose, in a manner
reasonably calculated to inform the public, and at such
frequency as the Commission may prescribe, by rule, a
description of such efforts, including--
``(i) any participation in a decentralized
governance system of such blockchain system;
``(ii) any participation in alterations or
proposed alterations to the functionality or
operation of such blockchain system;
``(iii) the use or planned use of any funds
raised in reliance on section 4(a)(8) or any
rulemaking pursuant to section 202(c) of the
CLARITY Act of 2025 in such efforts;
``(iv) the amount of units of the digital
commodity, or rights thereto, owned and
controlled by such issuer and any use, sale,
trading, or other disposition thereof; and
``(v) any affiliations of such issuer
material to the efforts of such issuer.
``(D) Termination of and exemption from post-
maturity reporting requirements.--Not later than 270
days after the date of the enactment of this section,
the Commission shall issue rules--
``(i) for terminating the disclosure
requirements described in subparagraph (C)
during the first fiscal year in which the
digital commodity issuer does not engage in
material ongoing efforts related to the mature
blockchain system; and
``(ii) to, as is necessary or appropriate
in the public interest or for the protection of
investors, exempt a digital commodity issuer
from the requirements described in subparagraph
(C) where only a de minimis amount of market
activity involving the digital commodity of
such digital commodity issuer is taking place.
``(E) Rule of construction.--Nothing in
subparagraph (C) may be construed to make any digital
commodity described in such subparagraph a security.
``(c) Requirements for Intermediaries.--A person acting as an
intermediary in connection with the offer or sale of an investment
contract involving units of a digital commodity in reliance on section
4(a)(8) shall--
``(1) register with the Commission as a broker or dealer;
and
``(2) be a member of a national securities association
registered under section 15A of the Securities Exchange Act of
1934 (15 U.S.C. 78o-3).
``(d) Disqualification Provisions.--The Commission shall issue
rules to apply the disqualification provisions under section 230.262 of
title 17, Code of Federal Regulations, to the exemption provided under
section 4(a)(8).
``(e) Failure To Mature.--
``(1) In general.--Not later than 270 days after the date
of the enactment of this section, the Commission shall issue
rules applying such additional obligations and disclosures for
the digital commodity issuers, digital commodity related
persons, and digital commodity affiliated persons of a
blockchain system described under subsection (b)(1) that does
not become a mature blockchain system within the time period
described in section 4(a)(8)(A) as are necessary or appropriate
in the public interest or for the protection of investors. Such
obligations and disclosures shall include the following:
``(A) Disclosures.--Disclosures regarding the
following:
``(i) Failure to mature.--A detailed
explanation of the reason that the blockchain
system has not become a mature blockchain
system within the time period described in
section 4(a)(8)(A).
``(ii) Development plans.--The future plans
of development of the blockchain system,
including information required under subsection
(b)(3).
``(iii) Risk factor disclosures.--The
material risks surrounding ownership of a unit
of a digital commodity that relates to a
blockchain system described under subsection
(b)(1) that has not become a mature blockchain
system within the time period described in
section 4(a)(8)(A).
``(B) Obligations.--Transaction reporting and
beneficial ownership disclosure obligations applicable
to digital commodity related persons and digital
commodity affiliated persons of such blockchain system.
``(2) Qualification required.--The Commission may not
permit any additional reliance on an exempt offering for the
offer or sale of an investment contract involving a unit of a
digital commodity by the issuer of the digital commodity
related to a blockchain system described under subsection
(a)(1) that has not become a mature blockchain system within
the time period described in section 4(a)(8)(A) unless the
Commission has qualified any offering statement related to such
exempt offering.''.
(b) Additional Exemptions.--
(1) Certain registration requirements.--Section 12(g)(6) of
the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is
amended by striking ``under section 4(6)'' and inserting
``under section 4(a)(6) or 4(a)(8)''.
(2) Exemption from state regulation.--Section 18(b)(4) of
the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
(A) in subparagraph (B), by striking ``section
4(4)'' and inserting ``section 4(a)(4)'';
(B) in subparagraph (C), by striking ``section
4(6)'' and inserting ``section 4(a)(6)'';
(C) in subparagraph (F)--
(i) by striking ``section 4(2)'' each place
such term appears and inserting ``section
4(a)(2)''; and
(ii) by striking ``or'' at the end;
(D) in subparagraph (G), by striking the period and
inserting ``; or''; and
(E) by adding at the end the following:
``(H) section 4(a)(8).''.
(c) Use of Other Exemptions.--
(1) Rule of construction.--Except as provided in this
subsection, nothing in this section or the amendments made by
this section may be construed as prohibiting the offer or sale
of an investment contract involving units of a digital
commodity in reliance on an exemption provided under section 3,
4(a), or 19 of the Securities Act of 1933 other than that
provided under section 4(a)(8) of the Securities Act of 1933.
(2) Rulemakings.--
(A) The Securities and Exchange Commission may
issue rules--
(i) to permit the issuer of a digital
commodity related to a blockchain system
described under section 4B(b)(1) of the
Securities Act of 1933 that has not become a
mature blockchain system within the time period
described in section 4(a)(8)(A) of such Act, or
the issuer of a digital commodity described in
subparagraph (B)(iii), to utilize an exempt
offering to offer or sell an investment
contract involving the digital commodity, if
the Commission qualifies any offering statement
related to such exempt offering; and
(ii) for the offer and sale of investment
contracts involving units of a digital
commodity by issuers that are not organized
under the laws of a State, a territory of the
United States, or the District of Columbia.
(B) Not later than 270 days after the date of the
enactment of this section, the Securities and Exchange
Commission shall issue the following rules:
(i) A rule requiring a digital commodity
issuer that last offered or sold an investment
contract involving units of a digital commodity
in reliance on an exemption provided under
section 3, 4(a), or 19 of the Securities Act of
1933 prior to the date of enactment of this
Act, to file a comparable set of disclosures to
those described under section 4B of the
Securities Act of 1933 as the Commission
determines appropriate based on the exemption,
the maturity of the blockchain system to which
such digital commodity relates, and any
material ongoing efforts of such digital
commodity issuer (provided that for blockchains
certified as a mature blockchain system under
section 42 of the Securities Exchange Act of
1934, such disclosures shall be comparable to
those under section 4B(b)(5)(C)), not later
than the later of--
(I) one year after the effective
date of this section; or
(II) the date of any secondary
market sale of such digital commodity
made in reliance on section 203.
(ii) A rule requiring a digital commodity
issuer that offers or sells an investment
contract involving units of a digital commodity
in reliance on an exemption provided under
section 3, 4(a), or 19 of the Securities Act of
1933, other than that provided under section
4(a)(8) of the Securities Act of 1933, on or
after the date of enactment of this Act, to
file a comparable set of disclosures to those
described under section 4B of the Securities
Act of 1933 as the Commission determines
appropriate based on the exemption, the
maturity of the blockchain system to which such
digital commodity relates, and any material
ongoing efforts of such digital commodity
issuer, prior to the date of any secondary
market sale of such digital commodity made in
reliance on section 203.
(iii) With respect to a digital commodity
where the digital commodity issuer is required
to file disclosures under clause (i) or (ii)
and where the blockchain system to which the
digital commodity relates is not certified as a
mature blockchain system pursuant to section 42
of the Securities Exchange Act of 1934 after
the 4-year period beginning on the date that
the first such disclosure is filed--
(I) a rule prohibiting the offer or
sale of an investment contract
involving units of the digital
commodity unless the Commission has
qualified any offering statement
related to such offer or sale, where
such offer or sale is permitted
pursuant to subparagraph (A)(i); and
(II) a rule requiring the digital
commodity issuer to make disclosures
comparable to those described in
4B(e)(1)(A) of the Securities Act of
1933.
SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL COMMODITIES
THAT ORIGINALLY INVOLVED INVESTMENT CONTRACTS.
(a) Secondary Market Treatment.--Notwithstanding any other
provision of law, the offer or sale of a digital commodity that
originally involved an investment contract by a person other than the
issuer of such digital commodity, or an agent or underwriter thereof,
shall be deemed not to be an offer or sale of such investment contract
between the issuer of the investment contract involving the digital
commodity, or an agent or underwriter thereof, and the purchaser of
such digital commodity under--
(1) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
(2) the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.);
(3) the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
seq.);
(4) the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.);
(5) the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.); and
(6) any applicable provisions of State law.
(b) End User Distributions Not an Offer or Sale of a Security.--An
end user distribution does not involve the offer or sale of a security.
(c) Agent Defined.--In this section and with respect to a digital
commodity issuer, the term ``agent'' means any person directly or
indirectly controlled by the issuer or under direct or indirect common
control with the issuer.
SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
AFFILIATED PERSONS.
The Securities Act of 1933 (15 U.S.C. 77a et seq.), as amended by
section 202, is further amended by inserting after section 4B the
following:
``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
AFFILIATED PERSONS.
``(a) In General.--It shall be a violation of this Act for a
digital commodity affiliated person or a digital commodity related
person to offer or sell a digital commodity acquired directly from its
issuer, or an agent or underwriter thereof, pursuant to an investment
contract in reliance on section 4(a)(8) or another exemption under this
Act, other than as provided in this section.
``(b) Commission Jurisdiction.--
``(1) Where a digital commodity affiliated person or a
digital commodity related person offers or sells a digital
commodity acquired directly from its issuer, or an agent or
underwriter thereof, pursuant to an investment contract in
reliance on section 4(a)(8), or another exemption under this
Act, other than as provided in this section, such digital
commodity affiliated person or digital commodity related person
shall be considered an issuer of such investment contract.
``(2) For the purposes of this section, the Commission
shall have jurisdiction and enforcement authority with respect
to an offer or sale of a digital commodity described in
subsection (a).
``(c) Restrictions on Digital Commodity Related Persons and Digital
Commodity Affiliated Persons.--
``(1) Prior to being a mature blockchain system.--Prior to
the blockchain system to which a digital commodity relates
being certified as a mature blockchain system under section 42
of the Securities Exchange Act of 1934, units of the digital
commodity acquired by a digital commodity related person or
digital commodity affiliated person directly from its issuer
(or an agent or underwriter thereof) pursuant to an investment
contract in reliance on section 4(a)(8), or another exemption
under this Act, may be offered or sold by such digital
commodity related person or digital commodity affiliated person
if--
``(A) reports with respect to such digital
commodity, where required under section 4B(b)(3) (or,
with respect to a digital commodity not issued in
reliance on section 4(a)(8), a comparable set of
reports where required by the Commission) have been
filed with the Commission;
``(B) the digital commodity related person or
digital commodity affiliated person has held the units
for not less than 12 months; and
``(C) the aggregate amount of the units of the
digital commodity offered or sold by the digital
commodity related person or digital commodity
affiliated person is--
``(i) in any 12-month period, or shorter
period as the Commission may prescribe, not
less than 5 percent or greater than 20 percent
of the total units of the digital commodity
acquired directly from its issuer (or an agent
or underwriter thereof) by the digital
commodity related person or digital commodity
affiliated person, as determined by the
Commission pursuant to paragraph (3); and
``(ii) an amount, as determined by the
Commission pursuant to paragraph (3), not less
than 30 percent or greater than 50 percent of
the total units of the digital commodity
acquired directly from its issuer (or an agent
or underwriter thereof) by the digital
commodity related person or digital commodity
affiliated person.
``(2) After becoming a mature blockchain system.--After the
blockchain system to which a digital commodity relates is
certified as a mature blockchain system under section 42 of the
Securities Exchange Act of 1934, units of the digital commodity
acquired by a digital commodity related person or digital
commodity affiliated person directly from its issuer (or an
agent or underwriter thereof) pursuant to an investment
contract in reliance on section 4(a)(8) or another exemption
under this Act, may be--
``(A) offered or sold by a digital commodity
related person; or
``(B) offered or sold by a digital commodity
affiliated person if--
``(i) information described in section
4B(b)(5)(C), where required (or, with respect
to a digital commodity not issued in reliance
on section 4(a)(8), a comparable set of
information, where required) is publicly
available;
``(ii) the digital commodity affiliated
person has held the units for not less than the
earlier of--
``(I) 12 months; or
``(II) 3 months following the date
on which the blockchain system is
certified as a mature blockchain system
under section 42 of the Securities
Exchange Act of 1934; and
``(iii) the aggregate amount of the units
of the digital commodity offered or sold by the
digital commodity affiliated person in any 12-
month period is an amount, as determined by the
Commission pursuant to paragraph (3), not less
than 5 percent or greater than 10 percent of
the total outstanding amount of the digital
commodity.
``(3) Rulemakings required.--Not later than 270 days after
the date of the enactment of this section, consistent with
protecting investors, fostering the development of mature
blockchain systems, facilitating capital formation, and
maintaining fair and orderly markets the Commission, by rule,
after notice and comment--
``(A) shall set the percentage amounts described in
paragraphs (1)(C)(i), (1)(C)(ii), and (2)(B)(iii); and
``(B) may provide an exemption from the limitation
described in paragraph (1)(C)(ii), if the Commission
requires any offer or sale pursuant to such exemption
of a digital commodity related to a blockchain system
that has failed to become a mature blockchain system
under this Act or any rule promulgated hereunder to be
accompanied by the disclosures required under, as
applicable, section 4B(e)(1)(A) or section
202(c)(2)(B)(iii)(II) of the CLARITY Act of 2025.
``(d) Use of a Digital Commodity in the Programmatic Functioning of
the Blockchain System.--For purposes of this section, the use of a
digital commodity in the programmatic functioning of the blockchain
system to which it relates is not an offer or sale of a digital
commodity.
``(e) Manipulative and Deceptive Devices; Reporting.--
``(1) In general.--It shall be unlawful for any digital
commodity issuer, digital commodity related person, or digital
commodity affiliated person, directly or indirectly, by the use
of any means or instrumentality of interstate commerce or of
the mails, to use or employ, in connection with the purchase or
sale of any digital commodity, any manipulative or deceptive
device or contrivance in contravention of such rules and
regulations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.
``(2) Affirmative defense.--Not later than 270 days after
the date of the enactment of this section, the Commission shall
issue rules to implement paragraph (1), including by providing
any affirmative defenses to an enforcement action thereunder as
the Commission may prescribe as necessary or appropriate in the
public interest or for the protection of investors.
``(3) Reporting.--Not later than 270 days after the date of
the enactment of this section, the Commission shall issue rules
to prescribe such transaction reporting and beneficial
ownership disclosure obligations applicable to digital
commodity related persons and digital commodity affiliated
persons, as necessary or appropriate in the public interest or
for the protection of investors.
``(4) Differentiation between persons.--In issuing rules
required under paragraphs (2) and (3), the Commission shall
differentiate between digital commodity related persons and
digital commodity affiliated persons, as necessary or
appropriate in the public interest or for the protection of
investors.
``(f) Certain Units Received Prior to Enactment.--A unit of a
digital commodity received from the digital commodity issuer prior to
the date of the enactment of this section through an offer or sale of
an investment contract involving units of a digital commodity in
reliance on an exemption provided under section 3, 4(a), or 19, may be
offered or sold by a digital commodity related person or digital
commodity affiliated person, if--
``(1) the digital commodity issuer is no longer engaged in
material ongoing efforts related to the blockchain system to
which the digital commodity relates and the blockchain system
to which the digital commodity relates is certified as a mature
blockchain system under section 42 of the Securities Exchange
Act of 1934;
``(2) the digital commodity issuer is engaged in material
ongoing efforts related to the blockchain system to which the
digital commodity relates and the blockchain system to which
the digital commodity relates is certified as a mature
blockchain system under section 42 of the Securities Exchange
Act of 1934, and the appropriate disclosures required under
section 202(c)(2)(B) of the CLARITY Act of 2025 have been made
with the Commission; or
``(3) the digital commodity issuer is engaged in material
ongoing efforts related to the blockchain system to which the
digital commodity relates and the blockchain system to which
the digital commodity relates is not certified as a mature
blockchain system under section 42 of the Securities Exchange
Act of 1934, and the appropriate disclosures required under
section 202(c)(2)(B) of the CLARITY Act of 2025 have been made
with the Commission.
``(g) Rulemaking on Further Usage of Digital Commodities.--The
Commission, consistent with protecting investors, fostering the
development of mature blockchain systems, facilitating capital
formation, and maintaining fair and orderly markets, may, by rule,
exempt unconditionally or on stated terms or conditions, a digital
commodity related person or a digital commodity affiliated person, or
any class thereof, from the requirements of this section for the offer
or sale of a digital commodity.''.
SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by adding at the end the following:
``SEC. 42. MATURE BLOCKCHAIN SYSTEMS.
``(a) Certification of Blockchain Systems.--
``(1) Certification.--For purposes of sections 4(a)(8), 4B,
and 4C of the Securities Act of 1933, any digital commodity
issuer, digital commodity related person, digital commodity
affiliated person, or decentralized governance system of the
blockchain system may certify to the Securities and Exchange
Commission that the blockchain system to which a digital
commodity relates is a mature blockchain system.
``(2) Filing requirements.--A certification described under
paragraph (1) shall be filed with the Commission, and include
such information that is reasonably necessary to establish that
the blockchain system is not controlled by any person or group
of persons under common control, which may include information
regarding--
``(A) the operation of the blockchain system;
``(B) the functionality of the related digital
commodity;
``(C) how the market value of the digital commodity
is substantially derived from the programmatic
functioning of such blockchain system;
``(D) any decentralized governance system which
relates to the blockchain system; and
``(E) the current roles, if any, of the digital
commodity issuer, digital commodity affiliated persons,
and digital commodity related persons where such roles
are material to the development or operation of such
blockchain system or the decentralized governance
system of such blockchain system.
``(3) Rebuttable presumption.--The Commission may rebut a
certification described under paragraph (1) with respect to a
blockchain system if the Commission, within 60 days of
receiving such certification, determines that the blockchain
system is not a mature blockchain system.
``(4) Certification review.--
``(A) In general.--Any blockchain system that
relates to a digital commodity for which a
certification has been made under paragraph (1) shall
be considered a mature blockchain system 60 days after
the date on which the Commission receives a
certification under paragraph (1), unless the
Commission notifies the person who made the
certification within such time that the Commission is
staying the certification due to--
``(i) an inadequate explanation by the
person making the certification; or
``(ii) any novel or complex issues which
require additional time to consider.
``(B) Public notice.--The Commission shall make the
following available to the public and provide a copy to
the Commodity Futures Trading Commission:
``(i) Each certification received under
paragraph (1).
``(ii) Each stay of the Commission under
this subsection, and the reasons therefor.
``(iii) Any response from a person making a
certification under paragraph (1) to a stay of
the certification by the Commission.
``(C) Consolidation.--The Commission may
consolidate and treat as one submission multiple
certifications made under paragraph (1) for the same
blockchain system which relates to a digital commodity
which are received during the review period provided
under this paragraph.
``(5) Stay of certification.--
``(A) In general.--A notification by the Commission
pursuant to paragraph (4)(A) shall stay the
certification once for up to an additional 120 days
from the date of the notification.
``(B) Public comment period.--Before the end of the
60-day period described under paragraph (4)(A), the
Commission may begin a public comment period of at
least 30 days in conjunction with a stay under this
subsection.
``(6) Disposition of certification.--A certification made
under paragraph (1) shall--
``(A) become effective--
``(i) upon the publication of a
notification from the Commission to the person
who made the certification that the Commission
does not object to the certification; or
``(ii) at the expiration of the
certification review period; and
``(B) not become effective upon the publication of
a notification from the Commission to the person who
made the certification that the Commission has rebutted
the certification.
``(7) Recertification.--With respect to a blockchain system
for which a certification has been rebutted under this
subsection, no person may make a certification under paragraph
(1) with respect to such blockchain system during the 90-day
period beginning on the date of such rebuttal.
``(8) Appeal of rebuttal.--
``(A) In general.--If a certification is rebutted
under this section, the person making such
certification may appeal the decision to the United
States Court of Appeals for the District of Columbia,
not later than 60 days after the notice of rebuttal is
made.
``(B) Review.--In an appeal under subparagraph (A),
the court shall have de novo review of the
determination to rebut the certification.
``(b) Maturity Criteria.--
``(1) Sense of congress.--It is the sense of the Congress
that protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation
necessitates establishing clear criteria for blockchain systems
to be deemed mature, as well as enabling the Commission to
develop, without prejudice to any such criteria codified in
statute, alternative criteria by which blockchain systems may
be considered not to be controlled by any person or group of
persons under common control in order to accommodate changes in
markets and technology.
``(2) In general.--The Commission may issue rules
identifying conditions by which a blockchain system, together
with its related digital commodity, shall be considered a
mature blockchain system, consistent with the protection of
investors, maintenance of fair, orderly, and efficient markets,
and the facilitation of capital formation.
``(3) Rules of construction.--
``(A) Nothing in this subsection may be construed
to permit the Commission to impose additional criteria
to the criteria in subsection (c) for certifying that a
blockchain system is a mature blockchain system
pursuant to subsection (c).
``(B) Nothing in this subsection or subsection (c)
may be construed to limit the Commission's ability to
identify alternative conditions and criteria by which a
blockchain system may be considered a mature blockchain
system.
``(c) Deemed Mature.--
``(1) In general.--Notwithstanding subsection (b), for the
purposes of subsection (a), a digital commodity issuer, digital
commodity related person, digital commodity affiliated person,
or decentralized governance system of the blockchain system may
establish that a blockchain system, together with its related
digital commodity, is not controlled by any person or group of
persons under common control, if the blockchain system,
together with its related digital asset, meets the requirements
described in paragraph (2) or (3).
``(2) Criteria for any blockchain system.--The requirements
described in this paragraph are the following:
``(A) System value.--
``(i) Market value.--The digital commodity
has a value that is substantially derived from
the use and functioning of the blockchain
system.
``(ii) Development of value mechanism
substantially completed.--Where the digital
commodity issuer has made public a development
plan describing how the digital commodity's
value is reasonably expected to be derived from
the programmatic functioning of the blockchain
system, the development of such mechanisms has
been substantially completed.
``(B) Functional system.--The blockchain system
allows network participants to engage in the activities
the blockchain system is intended to provide,
including--
``(i) using, transmitting, or storing
value, or otherwise executing transactions, on
the blockchain system;
``(ii) deploying, executing, or accessing
software or services, or otherwise offering or
participating in services, deployed on or
integrated with the blockchain system;
``(iii) participating in the consensus
mechanism, transaction validation process, or
decentralized governance system of the
blockchain system; or
``(iv) operating any client, node,
validator, or other form of computational
infrastructure with respect to the blockchain
system.
``(C) Open and interoperable system.--The
blockchain system--
``(i) is composed of source code that is
open source; and
``(ii) does not restrict or prohibit based
on the exercise of unilateral authority any
person, other than a digital commodity issuer,
digital commodity related person, or digital
commodity affiliated person from engaging in
the activities the blockchain system is
intended to provide, including the activities
described in subparagraph (B).
``(D) Programmatic system.--The blockchain system
operates, executes, and enforces its operations and
transactions based solely on pre-established,
transparent rules encoded directly within the source
code of the blockchain system.
``(E) System governance.--No person or group of
persons under common control--
``(i) has the unilateral authority,
directly or indirectly, through any contract,
arrangement, understanding, relationship, or
otherwise, to control or materially alter the
functionality, operation, or rules of consensus
or agreement of the blockchain system or its
related digital commodity; or
``(ii) has the unilateral authority to
direct the voting, in the aggregate, of 20
percent or more of the outstanding voting power
of such blockchain system by means of a related
digital commodity, nodes or validators, a
decentralized governance system, or otherwise,
in a blockchain system which can be altered by
a voting system.
``(F) Impartial system.--No person or group of
persons under common control possesses a unique
permission or privilege to alter the functionality,
operation, or rules of consensus or agreement of the
blockchain system or its related digital commodity,
unless such alteration--
``(i) addresses errors, regular
maintenance, or cybersecurity risks of the
blockchain system that affect the programmatic
functioning of the blockchain system; and
``(ii) is adopted through the consensus or
agreement of a decentralized governance system.
``(G) Distributed ownership.--No digital commodity
issuer, digital commodity related person, or digital
commodity affiliated person beneficially owns, in the
aggregate, 20 percent or more of the total amount of
units of the digital commodity.
``(3) Optional criteria for preexisting blockchain
systems.--The requirements described in this paragraph are that
the blockchain system--
``(A) was created prior to the date of enactment of
this section;
``(B) met the requirements of subparagraphs (A)
through (F) of paragraph (2) prior to January 1, 2020;
and
``(C) at least 50 percent of the units of the
digital commodity related to the blockchain system are
held by persons other than the digital commodity
issuer, a digital commodity related person, or a
digital commodity affiliated person.
``(d) Decentralized Governance System.--
``(1) For the purposes of this section, a decentralized
governance system is not a `person' or a `group of persons
under common control'.
``(2) A blockchain system, together with its digital
commodity, shall not be precluded from being considered a
mature blockchain system solely based on a functional,
administrative, clerical, or ministerial action of a
decentralized governance system, including any such action
taken by a person acting on behalf of and at the direction of
the decentralized governance system, as determined by the
Commission and consistent with the protection of investors,
maintenance of fair, orderly, and efficient markets, and the
facilitation of capital formation.
``(e) Rulemaking.--Not more than 270 days after the date of
enactment of this section, the Commission shall issue rules to carry
out this section.''.
SEC. 206. EFFECTIVE DATE.
Unless otherwise provided in this title, this title and the
amendments made by this title shall take effect 360 days after the date
of enactment of this Act, except that, to the extent a provision of
this title requires a rulemaking, the provision shall take effect on
the later of--
(1) 360 days after the date of enactment of this Act; or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
EXCHANGE COMMISSION
SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED PAYMENT
STABLECOINS.
(a) Securities Act of 1933.--Section 2(a)(1) of the Securities Act
of 1933 (15 U.S.C. 77b(a)(1)), as amended by section 201(a)(1), is
further amended by adding at the end the following: ``The term does not
include a digital commodity or permitted payment stablecoin.''.
(b) Securities Exchange Act of 1934.--Section 3(a)(10) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as amended by
section 201(d) is further is amended by adding at the end the
following: ``The term does not include a digital commodity or permitted
payment stablecoin.''.
(c) Investment Advisers Act of 1940.--Section 202(a) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--
(1) in paragraph (18)), as amended by section 201(b), by
adding at the end the following: ``The term does not include a
digital commodity or permitted payment stablecoin.'';
(2) by redesignating the second paragraph (29) (relating to
commodity pools) as paragraph (31); and
(3) by adding at the end, the following:
``(32) Digital commodity-related terms.--The terms `digital
commodity' and `permitted payment stablecoin' have the meaning
given those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(d) Investment Company Act of 1940.--Section 2(a) of the Investment
Company Act of 1940 (15 U.S.C. 80a-2) is amended--
(1) in paragraph (36), as amended by section 201(c), by
adding at the end the following: ``The term does not include a
digital commodity or permitted payment stablecoin.''; and
(2) by adding at the end, the following:
``(55) Digital commodity-related terms.--The terms `digital
commodity' and `permitted payment stablecoin' have the meaning
given those terms, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(e) Securities Investor Protection Act of 1970.--Section 16 of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78lll) is
amended--
(1) in paragraph (14), as amended by section 201(e), by
adding at the end the following: ``The term does not include a
digital commodity or permitted payment stablecoin, as such
terms are defined, respectively, under section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a))''; and
(2) by adding at the end the following:
``(15) Treatment of permitted payment stablecoins.--A
permitted payment stablecoin, as defined in section 2(a) of the
Securities Act of 1933, shall not qualify as `cash' and a claim
for a permitted payment stablecoin shall not qualify as a
`claim for cash'.''.
SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT STABLECOINS AND
CERTAIN DIGITAL COMMODITY TRANSACTIONS.
(a) In General.--Section 10 of the Securities Exchange Act of 1934
(15 U.S.C. 78j) is amended--
(1) by moving subsection (c) so as to appear after
subsection (b);
(2) by inserting after subsection (c) the following:
``(d) To use or employ, in connection with the purchase or
sale of any permitted payment stablecoin or digital commodity,
including, as applicable, by or through a broker or dealer or
an alternative trading system, any manipulative or deceptive
device or contrivance in contravention of such rules and
regulations as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of
investors.''; and
(3) by adding at the end the following: ``Rules promulgated
under subsection (b) that prohibit fraud, manipulation, or
insider trading (but not rules imposing or specifying reporting
or recordkeeping requirements, procedures, or standards as
prophylactic measures against fraud, manipulation, or insider
trading), and judicial precedents decided under subsection (b)
and rules promulgated thereunder that prohibit fraud,
manipulation, or insider trading, shall apply with respect to
permitted payment stablecoin and digital commodity transactions
engaged in by a broker or dealer or through an alternative
trading system or, as applicable, a national securities
exchange to the same extent as they apply to securities
transactions. Judicial precedents decided under section 17(a)
of the Securities Act of 1933 and sections 9, 15, 16, 20, and
21A of this title, and judicial precedents decided under
applicable rules promulgated under such sections, shall apply
to permitted payment stablecoins and digital commodities with
respect to those circumstances in which the permitted payment
stablecoins and digital commodities are brokered, traded, or
custodied by a broker or dealer or through an alternative
trading system or, as applicable, a national securities
exchange to the same extent as they apply to securities.''.''.
(b) Treatment of Permitted Payment Stablecoins.--Title I of the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
inserting after section 6 the following:
``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT STABLECOINS.
``(a) Authority To Broker, Trade, and Custody Permitted Payment
Stablecoins.--Permitted payment stablecoins may be brokered, traded, or
custodied by a broker or dealer or through an alternative trading
system or national securities exchange.
``(b) Commission Jurisdiction.--The Commission shall only have
jurisdiction over a transaction in a permitted payment stablecoin with
respect to those circumstances in which a permitted payment stablecoin
is brokered, traded, or custodied--
``(1) by a broker or dealer;
``(2) through a national securities exchange; or
``(3) through an alternative trading system.
``(c) Limitation.--Subsection (b) shall only apply to a transaction
described in subsection (b) for the purposes of regulating the offer,
execution, solicitation, or acceptance of a permitted payment
stablecoin in those circumstances in which the permitted payment
stablecoin is brokered, traded, or custodied--
``(1) by a broker or dealer;
``(2) through a national securities exchange; or
``(3) through an alternative trading system.''.
SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING SYSTEMS.
(a) In General.--Section 5 of the Securities Exchange Act of 1934
(15 U.S.C. 78e) is amended--
(1) by striking ``It'' and inserting the following:
``(a) In General.--It''; and
(2) by adding at the end the following:
``(b) Digital Commodity Protections.--
``(1) In general.--The Commission may not preclude a
trading platform from operating pursuant to a covered exemption
on the basis that the assets traded or to be traded on such
platform include--
``(A) digital commodities or permitted payment
stablecoins; and
``(B) securities.
``(2) Covered exemption.--In this subsection, the term
`covered exemption' means an exemption--
``(A) described in subsection (a)(2); or
``(B) with respect to any other rule of the
Commission relating to the definition of `exchange'.''.
(b) Securities Exchange Act of 1934.--Section 3(a)(2) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by
adding at the end the following: ``An alternative trading system
primarily facilitating the trading of digital commodities, permitted
payment stablecoins, or both, is not a `facility' of an exchange.''.
(c) Rule of Construction.--Nothing in this section, the amendments
made by this section, or section 304 may be construed to--
(1) prohibit a national securities exchange from owning or
operating any other type of alternative trading system; or
(2) create a presumption that any other type of alternative
trading system owned or operated by a national securities
exchange is a facility of that exchange.
SEC. 304. OPERATION OF ALTERNATIVE TRADING SYSTEMS.
(a) Commission Authority.--The Securities and Exchange Commission
shall have jurisdiction over digital commodity activities and
transactions engaged in by--
(1) a registered broker or registered dealer exempt from
registration with the Commodity Futures Trading Commission
pursuant to section 5k of the Commodity Exchange Act; and
(2) an alternative trading system exempt from registration
with the Commodity Futures Trading Commission pursuant to
section 5k of the Commodity Exchange Act, including where such
alternative trading system is operated by a national securities
exchange or affiliate thereof.
(b) Rulemaking Authority.--The Securities and Exchange Commission
shall have authority to issue rules governing any digital commodity
activities and transactions engaged in by a registered broker or
registered dealer, or an alternative trading system, including where
such alternative trading system is operated by a national securities
exchange or affiliate thereof, that is exempt from registration with
the Commodity Futures Trading Commission pursuant to section 5k of the
Commodity Exchange Act, consistent with this section and what is
necessary or appropriate in the public interest or for the protection
of investors.
(c) National Securities Exchanges.--Not later than 270 days after
the date of the enactment of this Act, the Securities and Exchange
Commission shall revise the covered regulations to permit a national
securities exchange or affiliate thereof to operate an alternative
trading system that permits the trading of digital commodities,
permitted payment stablecoins, or both by registered brokers or
registered dealers that are exempt from registration with the Commodity
Futures Trading Commission pursuant section 5k of the Commodity
Exchange Act, consistent with this section and what is necessary or
appropriate in the public interest or for the protection of investors.
(d) Registered Brokers and Registered Dealers.--Not later than 270
days after the date of the enactment of this Act, the Securities and
Exchange Commission shall revise the covered regulations to permit a
registered broker or registered dealer that is exempt from registration
with the Commodity Futures Trading Commission pursuant to section 5k of
the Commodity Exchange Act to operate an alternative trading system
that permits the trading of digital commodities, permitted payment
stablecoins, or both, consistent with this section and what is
necessary or appropriate in the public interest or for the protection
of investors.
(e) Permitted Trading.--
(1) In general.--An alternative trading system operated
pursuant to this section and the regulations promulgated
hereunder shall be permitted to trade upon notice to the
Securities and Exchange Commission in a manner prescribed by
the Securities and Exchange Commission any digital commodity
that has been listed by a digital commodity exchange in
compliance with section 5i(c)(3) of the Commodity Exchange Act.
(2) Commission authority.--Digital commodity transactions
offered on an alternative trading system operating pursuant to
this section shall be subject to the jurisdiction of the
Securities and Exchange Commission. The Securities and Exchange
Commission shall have authority to promulgate rules governing
such digital commodity transactions of alternative trading
systems, consistent with this section and what is necessary or
appropriate in the public interest or for the protection of
investors.
(3) Suspension of trading.--The Securities and Exchange
Commission may suspend the trading of a digital commodity by an
alternative trading system operating pursuant to this section
as is necessary or appropriate in the public interest and is
consistent with the protection of investors.
(f) Order Display and Execution.--Not later than 270 days after the
date of the enactment of this Act, the Securities and Exchange
Commission shall issue and revise rules, as necessary or appropriate in
the public interest or for the protection of investors, regarding
whether alternative trading systems operating pursuant to subsections
(c) and (d) have an obligation to provide the prices and sizes of
orders displayed to more than one person in such alternative trading
system of digital commodities to self-regulatory organizations with
members who trade in digital commodities or permitted payment
stablecoins.
(g) Principles of Trade.--Not later than 270 days after the date of
the enactment of this Act, the Securities and Exchange Commission shall
issue and revise rules, as necessary or appropriate in the public
interest or for the protection of investors, to--
(1) apply the rules and standards promulgated pursuant to
paragraph (2) to the appropriate market participants,
including--
(A) national securities exchanges operating an
alternative trading system described in subsection (c);
and
(B) registered brokers and registered dealers
operating or subscribing to an alternative trading
system described in subsection (d); and
(2) apply, as appropriate to the market participants
described in paragraph (1) and customers thereof, rules and
standards to--
(A) prevent fraudulent and manipulative acts and
practices;
(B) foster cooperation and coordination with
persons engaged in regulating, settling, processing
information with respect to, and facilitating
transactions in digital commodities or permitted
payment stablecoins traded, as applicable, on or by any
alternative trading system operating pursuant to
subsection (c) or (d), or any registered broker or
registered dealer;
(C) remove impediments to and perfect the mechanism
of a free and open market in digital commodities or
permitted payment stablecoins traded, as applicable, on
or by any alternative trading system operating pursuant
to subsection (c) or (d), or any registered broker or
registered dealer;
(D) in general, protect investors and the public
interest; and
(E) prohibit any unfair discrimination between--
(i) customers;
(ii) any market participants described in
subparagraphs (A) and (B) of paragraph (1); or
(iii) issuers of digital commodities.
(h) Implementing Organizations.--The Securities and Exchange
Commission shall require any registered national securities association
that has as a member a registered broker or registered dealer that
operates an alternative trading system pursuant to subsection (d) or
otherwise transacts in digital commodities or permitted payment
stablecoins to adopt such rules as may be necessary to further
compliance with this section, including subsection (g)(2), protect
investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation.
(i) Rule of Construction.--The enumeration of any category of rules
or regulations in this section shall not be construed to limit the
authority of the Securities and Exchange Commission to promulgate such
rules as may be necessary or appropriate to implement this section and
the purposes of this Act, including over--
(1) system capacity, integrity, and security;
(2) examinations, inspections, and investigations;
(3) trade reporting; or
(4) written procedures for the confidential treatment of
trading information.
(j) Memorandum of Understanding.--Consistent with section 5k of the
Commodity Exchange Act and to carry out this Act, the Securities and
Exchange Commission shall enter into a memorandum of understanding with
the Commodity Futures Trading Commission to ensure--
(1) requirements imposed on registered brokers or
registered dealers operating an alternative trading system
pursuant to subsection (c) or otherwise transacting in digital
commodities or permitted payment stablecoins are consistent
with the substantive requirements under section 4u of the
Commodity Exchange Act;
(2) requirements imposed on alternative trading systems
operating pursuant to subsection (c) or (d) are not
inconsistent with core principles of and are consistent with
the other substantive requirements under section 5i of the
Commodity Exchange Act; and
(3) non-duplicative supervision and enforcement with
respect to registrants of the Securities and Exchange
Commission notice registered with the Commodity Futures Trading
Commission.
(k) Covered Regulations Defined.--In this section, the term
``covered regulations'' means sections 242.300, 242.301, 242.302,
242.303, 242.304, and 242.1000 through 242.1007 of title 17, Code of
Federal Regulations.
(l) Rule of Construction.--Nothing in this section shall be
construed to limit the anti-fraud, anti-manipulation, or false
reporting enforcement authorities of the Commodity Futures Trading
Commission with respect to a contract of sale of a commodity and
persons effecting such contracts.
SEC. 305. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.
(a) In General.--For purposes of books and records requirements for
brokers, dealers, transfer agents, national securities exchanges under
the Securities and Exchange Act of 1934 (15 U.S.C. 78a et seq.),
investment advisers under the Investment Advisers Act of 1940 (15
U.S.C. 80b-1 et seq.), and investment companies under the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.), a person may consider
records from a blockchain system.
(b) Revision of Rules.--Not later than 180 days after the date of
enactment of this Act, the Securities and Exchange Commission shall
issue and revise such rules as may be necessary to implement this
section.
SEC. 306. EXEMPTIVE AUTHORITY.
Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3) is
amended by striking ``by rule or regulation'' and inserting ``by rule,
regulation, or order''.
SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES TRADING
COMMISSION.
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
is amended by adding at the end the following:
``(p) Additional Registrations With the Commodity Futures Trading
Commission.--A registered broker or registered dealer shall be
permitted to maintain a registration with the Commodity Futures Trading
Commission as a digital commodity broker or digital commodity dealer,
to list or trade contracts of sale for digital commodities.''.
SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES LAWS.
Section 18(b) of the Securities Act of 1933 (15 U.S.C. 77r(b)) is
amended by adding at the end the following:
``(5) Exemption in connection with digital commodities.--A
digital commodity shall be treated as a covered security.''.
SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 15G the following:
``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.
``(a) In General.--Notwithstanding any other provision of this Act,
a person shall not be subject to this Act and the regulations
promulgated under this Act based on the person directly or indirectly
engaging in any of the following activities, whether singly or in
combination, in relation to the operation of a blockchain system or in
relation to a decentralized finance trading protocol:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or providing other similar incidental services.
``(3) Providing a user-interface that enables a user to
read and access data about a blockchain system.
``(4) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a blockchain system or a
decentralized finance trading protocol.
``(5) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a decentralized finance
messaging system, or operating or participating in a liquidity
pool, for the purpose of executing a spot contract for the
purchase or sale of a digital commodity in relation to a
decentralized finance trading protocol.
``(6) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing software or systems that
create or deploy hardware or software, including wallets or
other systems, facilitating an individual user's own personal
ability to keep, safeguard, or custody the user's digital
assets or related private keys.
``(b) Exceptions.--Subsection (a) shall not apply to the anti-fraud
and anti-manipulation authorities of the Commission.''.
SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING INSTITUTIONS.
(a) Treatment of Custody Activities.--The appropriate Federal
banking agency, the National Credit Union Administration (in the case
of a credit union), and the Securities and Exchange Commission may not
require a depository institution, national bank, Federal credit union,
State credit union, trust company, broker, or dealer, or any affiliate
thereof (the ``entity'')--
(1) to include assets held in custody that are not owned by
the entity as a liability on the financial statement or balance
sheet of the entity, including digital commodity or permitted
payment stablecoin custody or safekeeping services;
(2) to hold regulatory capital against assets, including
reserves backing such assets, in custody or safekeeping, except
as necessary to mitigate against operational risks inherent
with the custody or safekeeping services, as determined by--
(A) the appropriate Federal banking agency;
(B) the National Credit Union Administration (in
the case of a credit union);
(C) a State bank supervisor;
(D) a State credit union supervisor (as defined in
section 6003 of the Anti-Money Laundering Act of 2020
(31 U.S.C. 5311 note)); or
(E) the Securities and Exchange Commission (in the
case of a broker or dealer); and
(3) to recognize a liability for any obligations related to
activities or services performed with respect to digital
commodities that the entity does not own if that liability
would exceed the expense recognized in the income statement as
a result of the corresponding obligation.
(b) Definitions.--In this section:
(1) Banking terms.--The terms ``appropriate Federal banking
agency'', ``depository institution'', ``national bank'', and
``State bank supervisor'' have the meaning given those terms,
respectively, under section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813).
(2) Credit union terms.--The terms ``Federal credit union''
and ``State credit union'' have the meaning given those terms,
respectively, under section 101 of the Federal Credit Union Act
(12 U.S.C. 1752).
SEC. 311. BROKER AND DEALER DISCLOSURES REGARDING THE TREATMENT OF
ASSETS.
(a) In General.--Not later than 270 days after the date of the
enactment of this Act, the Securities and Exchange Commission shall
issue rules requiring written disclosures regarding the treatment of
customer assets in the event of an insolvency, resolution, or
liquidation proceeding to be provided by a registered broker or dealer
to an investor before a digital commodity, a permitted payment
stablecoin, or an investment contract involving a unit of a digital
commodity is received, acquired, or held by the broker or dealer for
the account of the investor, which shall include, as necessary or
appropriate for the protection of investors--
(1) a description of the manner in which any digital
commodity, permitted payment stablecoin, or investment contact
involving a unit of a digital commodity received, acquired, or
held by the broker or dealer for the account of such investor
would be treated in an insolvency, resolution, or liquidation
proceeding with respect to the broker or dealer under--
(A) title II of the Dodd-Frank Wall Street Reform
and Consumer Protection Act (12 U.S.C. 5381 et seq.);
(B) the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.); or
(C) as applicable, chapter 7 or chapter 11 of title
11, United States Code; and
(2) how the treatment described in paragraph (1) differs
from the treatment of securities and cash received, acquired,
or held by the broker or dealer for the account of such
investor in the event of an insolvency, resolution, or
liquidation proceeding with respect to the broker or dealer
under each law described under subparagraph (A) through (C) of
paragraph (1).
SEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN NATURE.
(a) Digital Commodity Activities That Are Financial in Nature.--
Section 4(k)(4) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(4)) is amended--
(1) in subparagraph (A), by striking ``or securities'' and
inserting ``, securities, or digital commodities''; and
(2) in subparagraph (E), by inserting ``or digital
commodities'' before the period at the end.
(b) National Bank Activity.--
(1) In general.--A national bank may use a digital asset or
blockchain system to perform, provide, or deliver any activity,
function, product, or service that the national bank is
otherwise authorized by law to perform, provide, or deliver.
(2) Rule of construction.--Nothing in this subsection may
be construed to exempt a national bank's performance,
provision, or delivery of an activity, function, product, or
service from a requirement that would apply if the activity
were not performed, provided, or delivered using a digital
asset or blockchain system.
(c) Insured State Banks and Subsidiaries of Insured State Banks.--
For purposes of sections 24(a) and 24(d) of the Federal Deposit
Insurance Act (12 U.S.C. 1831a(a) and (d)), all of the activities
authorized for a national bank under subsection (b) that are principal
activities shall be permissible for an insured State bank and
subsidiary of an insured State bank.
SEC. 313. EFFECTIVE DATE; ADMINISTRATION.
Except as otherwise provided under this title, this title and the
amendments made by this title shall take effect 360 days after the date
of enactment of this Act, except that, to the extent a provision of
this title requires a rulemaking, the provision shall take effect on
the later of--
(1) 360 days after the date of enactment of this Act; or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
SEC. 314. STUDIES ON FOREIGN ADVERSARY PARTICIPATION.
(a) In General.--The Secretary of the Treasury, in consultation
with the Commodity Futures Trading Commission and the Securities and
Exchange Commission, shall, not later than 1 year after date of the
enactment of this section, conduct a study and submit a report to the
relevant congressional committees that--
(1) identifies any digital commodity registrants which are
owned by governments of foreign adversaries;
(2) determines whether any governments of foreign
adversaries are collecting personal data or trading data about
United States persons in the digital commodity markets; and
(3) evaluates whether any proprietary intellectual property
of digital commodity registrants is being misused or stolen by
any governments of foreign adversaries.
(b) GAO Study and Report.--
(1) In general.--The Comptroller General shall, not later
than 1 year after date of the enactment of this section,
conduct a study and submit a report to the relevant
congressional committees that--
(A) identifies any digital commodity registrants
which are owned by governments of foreign adversaries;
(B) determines whether any governments of foreign
adversaries are collecting personal data or trading
data about United States persons in the digital
commodity markets; and
(C) evaluates whether any proprietary intellectual
property of digital commodity registrants is being
misused or stolen by any governments of foreign
adversaries.
(c) Definitions.--In this section:
(1) Digital commodity registrant.--The term ``digital
commodity registrant'' means any person required to register as
a digital commodity exchange, digital commodity broker, or
digital commodity dealer under the Commodity Exchange Act.
(2) Foreign adversaries.--The term ``foreign adversaries''
means the foreign governments and foreign non-government
persons determined by the Secretary of Commerce to be foreign
adversaries under section 7.4(a) of title 15, Code of Federal
Regulations.
(3) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committees on Financial Services and
Agriculture of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban
Affairs and Agriculture, Nutrition, and Forestry of the
Senate.
TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
COMMODITY FUTURES TRADING COMMISSION
SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.
(a) Savings Clause.--Section 2(a)(1) of the Commodity Exchange Act
(7 U.S.C. 2(a)(1)) is amended by adding at the end the following:
``(J) Except as expressly provided in this Act,
nothing in the CLARITY Act of 2025 shall affect or
apply to, or be interpreted to affect or apply to--
``(i) any agreement, contract, or
transaction that is subject to this Act as--
``(I) a contract of sale of a
commodity for future delivery or an
option on such a contract;
``(II) a swap;
``(III) a security futures product;
``(IV) an option authorized under
section 4c of this Act;
``(V) an agreement, contract, or
transaction described in subparagraph
(C)(i) or (D)(i) of subsection (c)(2)
of this section; or
``(VI) a leverage transaction
authorized under section 19; or
``(ii) the activities of any person with
respect to any such an agreement, contract, or
transaction.''.
(b) Limitation on Authority Over Permitted Payment Stablecoins.--
Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C. 2(c)(1)) is
amended--
(1) in subparagraph (F), by striking ``or'' at the end;
(2) in subparagraph (G), by striking the period and
inserting ``; or''; and
(3) by adding at the end the following:
``(H) permitted payment stablecoins.''.
(c) Commission Jurisdiction Over Financing Agreements.--Section
2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended--
(1) in subparagraph (D), by redesignating clause (iv) as
clause (v) and inserting after clause (iii) the following:
``(iv) Notwithstanding clause (iii), a
digital commodity broker may, subject to the
requirements of section 4u(c)(3), offer to or
enter into an agreement for margin financing
with a customer for the purchase or sale of a
digital commodity.''; and
(2) by adding at the end the following:
``(F) Commission Jurisdiction With Respect to Digital Commodity
Transactions.--
``(i) In general.--Subject to sections 6d and 12(e), the
Commission shall have exclusive jurisdiction with respect to
any account, agreement, contract, or transaction involving a
contract of sale of a digital commodity in interstate commerce,
including in a digital commodity cash or spot market, that is
offered, solicited, traded, facilitated, executed, cleared,
reported, or otherwise dealt in--
``(I) on or subject to the rules of a registered
entity or an entity that is required to be registered
as a registered entity; or
``(II) by any other entity registered, or required
to be registered, with the Commission.
``(ii) Limitations.--Clause (i) shall not apply with
respect to--
``(I) custodial or depository activities for a
digital commodity of an entity regulated by an
appropriate Federal banking agency or a State bank
supervisor (within the meaning of section 3 of the
Federal Deposit Insurance Act); or
``(II) an offer or sale of an investment contract
involving a digital commodity or of a securities offer
or sale involving a digital commodity.
``(iii) Mixed digital asset transactions.--
``(I) In general.--Clause (i) shall not apply to a
mixed digital asset transaction.
``(II) Reports on mixed digital asset
transactions.--A digital commodity issuer, digital
commodity related person, digital commodity affiliated
person, or other person registered with the Securities
and Exchange Commission that engages in a mixed digital
asset transaction, shall, on request of the Commission,
open to inspection and examination by the Commission
all books and records relating to the mixed digital
asset transaction, subject to the confidentiality and
disclosure requirements of section 8.
``(G) Agreements, Contracts, and Transactions in Stablecoins.--
``(i) Treatment of permitted payment stablecoins on
commission-registered entities.--Subject to clauses (ii) and
(iii), the Commission shall have jurisdiction over a cash or
spot agreement, contract, or transaction in a permitted payment
stablecoin that is offered, offered to enter into, entered
into, executed, confirmed the execution of, solicited, or
accepted--
``(I) on or subject to the rules of a registered
entity; or
``(II) by any other entity registered with the
Commission.
``(ii) Permitted payment stablecoin transaction rules.--
This Act shall apply to a transaction described in clause (i)
only for the purpose of regulating the offer, execution,
solicitation, or acceptance of a cash or spot permitted payment
stablecoin transaction on a registered entity or by any other
entity registered with the Commission, as if the permitted
payment stablecoin were a digital commodity.
``(iii) No authority over permitted payment stablecoins.--
Notwithstanding clauses (i) and (ii), the Commission shall not
make a rule or regulation, impose a requirement or obligation
on a registered entity or other entity registered with the
Commission, or impose a requirement or obligation on a
permitted payment stablecoin issuer, regarding the operation of
a permitted payment stablecoin issuer or a permitted payment
stablecoin.''.
(d) Conforming Amendment.--Section 2(a)(1)(A) of such Act (7 U.S.C.
2(a)(1)(A)) is amended in the 1st sentence by inserting ``subparagraphs
(F) and (G) of subsection (c)(2) of this section or'' before ``section
19''.
SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE QUALIFIED
DIGITAL ASSET CUSTODIANS.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended--
(1) in subsection (a)(2)--
(A) in the 1st proviso, by striking ``any bank or
trust company'' and inserting ``any bank, trust
company, or qualified digital asset custodian, as
applicable,''; and
(B) by inserting ``: Provided further, That any
such property that is a digital asset shall be held in
a qualified digital asset custodian'' before the period
at the end; and
(2) in subsection (f)(3)(A)(i), by striking ``any bank or
trust company'' and inserting ``any bank, trust company, or
qualified digital asset custodian''.
SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL COMMODITIES.
Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
amended--
(1) in subsection (a), by striking ``5(d) and 5b(c)(2)''
and inserting ``5(d), 5b(c)(2), and 5i(c)'';
(2) in subsection (b)--
(A) in each of paragraphs (1) and (2), by inserting
``digital commodity exchange,'' before ``derivatives'';
and
(B) in paragraph (3), by inserting ``digital
commodity exchange,'' before ``derivatives'' each place
it appears;
(3) in subsection (c)--
(A) in paragraph (2), by inserting ``or
participants'' before ``(in'';
(B) in paragraph (4)(B), by striking ``1a(10)'' and
inserting ``1a(9)''; and
(C) in paragraph (5), by adding at the end the
following:
``(D) Special rules for digital commodity
contracts.--In certifying any new rule or rule
amendment, or listing any new contract or instrument,
in connection with a contract of sale of a commodity
for future delivery, option, swap, or other agreement,
contract, or transaction, that is based on or
references a digital commodity, a registered entity
shall make or rely on a certification under subsection
(d) for the digital commodity.''; and
(4) by inserting after subsection (c) the following:
``(d) Certifications for Digital Commodity Trading.--
``(1) In general.--Notwithstanding subsection (c), for the
purposes of listing or offering a digital commodity for trading
in a digital commodity cash or spot market, an eligible entity
shall submit a written certification to the Commission that the
digital commodity meets the requirements of this Act (including
the regulations prescribed under this Act).
``(2) Contents of the certification.--
``(A) In general.--In making a written
certification under this paragraph, the eligible entity
shall furnish to the Commission an analysis of how the
digital commodity meets the requirements of section
5i(c)(3).
``(B) Reliance on prior disclosures.--In making a
certification under this subsection, an eligible entity
may rely on the records and disclosures of any relevant
person registered with the Securities and Exchange
Commission or other State or Federal agency.
``(3) Modifications.--
``(A) In general.--An eligible entity shall modify
a certification made under paragraph (1) to--
``(i) account for significant changes in
any information provided to the Commission
under paragraph (2)(A)(ii); or
``(ii) permit or restrict trading in units
of a digital commodity held by a digital
commodity related person or a digital commodity
affiliated person.
``(B) Recertification.--Modifications required by
this subsection shall be subject to the same
disapproval and review process as a new certification
under paragraphs (4) and (5).
``(4) Disapproval.--
``(A) In general.--The written certification
described in paragraph (1) shall become effective
unless the Commission finds that the listing of the
digital commodity is inconsistent with the requirements
of this Act or the rules and regulations prescribed
under this Act.
``(B) Analysis required.--The Commission shall
include, with any findings referred to in subparagraph
(A), a detailed analysis of the factors on which the
decision was based.
``(C) Public findings.--The Commission shall make
public any disapproval decision, and any related
findings and analysis, made under this paragraph.
``(5) Review.--
``(A) In general.--Unless the Commission makes a
disapproval decision under paragraph (4), the written
certification described in paragraph (1) shall become
effective, pursuant to the certification by the
eligible entity and notice of the certification to the
public (in a manner determined by the Commission) on
the date that is--
``(i) 20 business days after the date the
Commission receives the certification (or such
shorter period as determined by the Commission
by rule or regulation), in the case of a
digital commodity that has not been certified
under this section or for which a certification
is being modified under paragraph (3); or
``(ii) 1 business day after the date the
Commission receives the certification (or such
shorter period as determined by the Commission
by rule or regulation) for any digital
commodity that has been certified under this
section.
``(B) Extensions.--The time for consideration under
subparagraph (A) may be extended through notice to the
eligible entity that there are novel or complex issues
that require additional time to analyze, that the
explanation by the submitting eligible entity is
inadequate, or of a potential inconsistency with this
Act--
``(i) once, for 30 business days, through
written notice to the eligible entity by the
Commission; and
``(ii) once, for an additional 30 business
days, through written notice to the eligible
entity from the Commission that includes a
description of any deficiencies with the
certification, including any--
``(I) novel or complex issues which
require additional time to analyze;
``(II) missing information or
inadequate explanations; or
``(III) potential inconsistencies
with this Act.
``(6) Prior approval before registration.--
``(A) In general.--A person applying for
registration with the Commission for the purposes of
listing or offering a digital commodity for trading in
a digital commodity cash or spot market may request
that the Commission grant prior approval for the person
to list or offer the digital commodity on being
registered with the Commission.
``(B) Request for prior approval.--A person seeking
prior approval under subparagraph (A) shall furnish the
Commission with a written certification that the
digital commodity meets the requirements of this Act
(including the regulations prescribed under this Act)
and the information described in paragraph (2).
``(C) Deadline.--The Commission shall take final
action on a request for prior approval not later than
90 business days after submission of the request,
unless the person submitting the request agrees to an
extension of the time limitation established under this
subparagraph.
``(D) Disapproval.--
``(i) In general.--The Commission shall
approve the listing of the digital commodity
unless the Commission finds that the listing is
inconsistent with this Act (including any
regulation prescribed under this Act).
``(ii) Analysis required.--The Commission
shall include, with any findings made under
clause (i), a detailed analysis of the factors
on which the decision is based.
``(iii) Public findings.--The Commission
shall make public any disapproval decision, and
any related findings and analysis, made under
this paragraph.
``(7) Eligible entity defined.--In this subsection, the
term `eligible entity' means a registered entity or group of
registered entities acting jointly.''.
SEC. 404. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 5h the following:
``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
``(a) In General.--
``(1) Registration.--
``(A) In general.--A trading facility that offers
or seeks to offer a cash or spot market in at least 1
digital commodity shall register with the Commission as
a digital commodity exchange.
``(B) Application.--A person desiring to register
as a digital commodity exchange shall submit to the
Commission an application in such form and containing
such information as the Commission may require for the
purpose of making the determinations required for
approval.
``(C) Exemptions.--A trading facility that offers
or seeks to offer a cash or spot market in at least 1
digital commodity shall not be required to register
under this section if the trading facility--
``(i) permits no more than a de minimis
amount of trading activity, as the Commission
may determine by rule or regulation, in a
digital commodity; or
``(ii) serves only customers in a single
State, territory, or possession of the United
States.
``(2) Additional registrations.--
``(A) With the commission.--In order to foster the
development of fair and orderly markets, protect
customers, and promote responsible innovation, the
Commission--
``(i) shall prescribe rules to exempt an
entity registered with the Commission under
more than 1 section of this Act from
duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this
Act;
``(ii) shall prescribe rules to address
conflicts of interests and activities of the
entity; and
``(iii) may, after an analysis of the risks
and benefits, prescribe rules to provide for
portfolio margining.
``(B) With a registered futures association.--
``(i) In general.--A registered digital
commodity exchange shall also be a member of a
registered futures association and comply with
rules related to such activity, if the
registered digital commodity exchange accepts
customer funds required to be segregated under
subsection (d).
``(ii) Rulemaking required.--The Commission
shall require any registered futures
association with a digital commodity exchange
as a member to provide such rules as may be
necessary to further compliance with subsection
(d), protect customers, and promote the public
interest.
``(C) Registration required.--A person required to
be registered as a digital commodity exchange under
this section shall register with the Commission as such
regardless of whether the person is registered with
another State or Federal regulator.
``(b) Trading.--
``(1) Prohibition on certain trading practices.--
``(A) Section 4b shall apply to any agreement,
contract, or transaction in a digital commodity as if
the agreement, contract, or transaction were a contract
of sale of a commodity for future delivery.
``(B) Section 4c shall apply to any agreement,
contract, or transaction in a digital commodity as if
the agreement, contract, or transaction were a
transaction involving the purchase or sale of a
commodity for future delivery.
``(C) Section 4b-1 shall apply to any agreement,
contract, or transaction in a digital commodity as if
the agreement, contract, or transaction were a contract
of sale of a commodity for future delivery.
``(2) Prohibition on acting as a counterparty.--
``(A) In general.--A digital commodity exchange or
any affiliate of such an exchange shall not trade on or
subject to the rules of the digital commodity exchange
for its own account.
``(B) Exceptions.--The Commission shall, by rule,
permit a digital commodity exchange or any affiliate of
a digital commodity exchange to engage in trading on
the exchange so long as the trading is not solely for
the purpose of the profit of the exchange, including
the following:
``(i) Customer direction.--A transaction
for, or entered into at the direction of, or
for the benefit of, an unaffiliated customer.
``(ii) Risk management.--A transaction to
manage the credit, market, and liquidity risks
associated with the digital commodity business
of the exchange.
``(iii) Operational needs.--A transaction
related to the operational needs of the
business of the digital commodity exchange or
its affiliate.
``(iv) Functional use.--A transaction
related to the functional operation of a
blockchain system.
``(C) Notice requirement.--In order for a digital
commodity exchange or any affiliate of a digital
commodity exchange to engage in trading on the
affiliated exchange pursuant to subsection (B), notice
must be given to the Commission that shall enumerate
how any proposed activity is consistent with the
exceptions in subsection (B) and the purposes of this
Act.
``(c) Core Principles for Digital Commodity Exchanges.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a digital commodity exchange, a
digital commodity exchange shall comply with--
``(i) the core principles described in this
subsection; and
``(ii) any requirement that the Commission
may impose by rule or regulation pursuant to
section 8a(5).
``(B) Reasonable discretion of a digital commodity
exchange.--Unless otherwise determined by the
Commission by rule or regulation, a digital commodity
exchange described in subparagraph (A) shall have
reasonable discretion in establishing the manner in
which the digital commodity exchange complies with the
core principles described in this subsection.
``(2) Compliance with rules.--A digital commodity exchange
shall--
``(A) establish and enforce compliance with any
rule of the digital commodity exchange, including--
``(i) the terms and conditions of the
trades traded or processed on or through the
digital commodity exchange; and
``(ii) any limitation on access to the
digital commodity exchange;
``(B) establish and enforce trading, trade
processing, and participation rules that will deter
abuses and have the capacity to detect, investigate,
and enforce those rules, including means--
``(i) to provide market participants with
impartial access to the market; and
``(ii) to capture information that may be
used in establishing whether rule violations
have occurred; and
``(C) establish rules governing the operation of
the exchange, including rules specifying trading
procedures to be used in entering and executing orders
traded or posted on the facility.
``(3) Listing standards for digital commodities.--
``(A) In general.--A digital commodity exchange
shall not permit trading in a digital commodity
unless--
``(i) reports with respect to the digital
commodity required under section 4B(b)(3) of
the Securities Act of 1933 (or, with respect to
a digital commodity not issued in reliance on
section 4(a)(8) of the Securities Act of 1933,
a comparable set of reports, where required by
the Securities and Exchange Commission) have
been filed with the Securities and Exchange
Commission; or
``(ii) the blockchain system to which the
digital commodity relates, together with the
digital commodity, is certified as a mature
blockchain system under section 42 of the
Securities Exchange Act of 1934.
``(B) Public information requirements.--
``(i) In general.--A digital commodity
exchange shall permit trading only in a digital
commodity if the information required in clause
(ii) is correct, current, and available to the
public.
``(ii) Required information.--With respect
to a digital commodity and each blockchain
system to which the digital commodity relates
for which the digital commodity exchange will
make the digital commodity available to the
customers of the digital commodity exchange,
the information required in this clause is as
follows:
``(I) Source code.--The source code
for any blockchain system to which the
digital commodity relates.
``(II) Transaction history.--A
description of the steps necessary to
independently access, search, and
verify the transaction history of any
blockchain system to which the digital
commodity relates, to the extent any
such independent access, search, and
verification activities are technically
feasible with respect to the blockchain
system.
``(III) Digital commodity
economics.--A narrative description of
the purpose of any blockchain system to
which the digital commodity relates and
the operation of any such blockchain
system, including--
``(aa) information
explaining the launch and
supply process, including the
number of digital assets to be
issued in an initial
allocation, the total number of
digital commodities to be
created, the release schedule
for the digital commodities,
and the total number of digital
commodities then outstanding;
``(bb) information
detailing any applicable
consensus mechanism or process
for validating transactions,
method of generating or mining
digital commodities, and any
process for burning or
destroying digital commodities
on the blockchain system;
``(cc) an explanation of
governance mechanisms for
implementing changes to the
blockchain system or forming
consensus among holders of the
digital commodities; and
``(dd) sufficient
information for a third party
to create a tool for verifying
the transaction history of the
digital asset.
``(IV) Trading volume and
volatility.--The trading volume and
volatility of the digital commodity on
the exchange.
``(V) Additional information.--Such
additional information as the
Commission may determine by rule to be
necessary for a customer to understand
the financial and operational risks of
a digital commodity, and to be
practically feasible to provide.
``(iii) Format.--The Commission shall
prescribe rules and regulations for the
standardization and simplification of
disclosures under clause (ii), including
requiring that disclosures--
``(I) be conspicuous;
``(II) use plain language
comprehensible to customers; and
``(III) succinctly explain the
information that is required to be
communicated to the customer.
``(iv) Reliance on previous disclosures.--
In complying with this subparagraph, a digital
commodity exchange may rely on and make
available to the public relevant information
publicly disclosed to the Commission, the
Securities and Exchange Commission, or an
appropriate Federal banking agency.
``(C) Digital commodities held by related and
digital commodity affiliated persons.--A digital
commodity exchange shall permit the trading of a unit
of a digital commodity held by a digital commodity
affiliated person or a digital commodity related
person, only pursuant to section 4C of the Securities
Act of 1933.
``(4) Treatment of customer assets.--A digital commodity
exchange shall establish policies and procedures that are
designed to protect and ensure the safety of customer money,
assets, and property.
``(5) Monitoring of trading and trade processing.--
``(A) In general.--A digital commodity exchange
shall provide a competitive, open, and efficient market
and mechanism for executing transactions that protects
the price discovery process of trading on the exchange.
``(B) Protection of markets and market
participants.--A digital commodity exchange shall
establish and enforce rules--
``(i) to protect markets and market
participants from abusive practices committed
by any party, including abusive practices
committed by a party acting as an agent for a
participant; and
``(ii) to promote fair and equitable
trading on the exchange.
``(C) Trading procedures.--A digital commodity
exchange shall--
``(i) establish and enforce rules or terms
and conditions defining, or specifications
detailing--
``(I) trading procedures to be used
in entering and executing orders traded
on or through the facilities of the
digital commodity exchange; and
``(II) procedures for trade
processing of digital commodities on or
through the facilities of the digital
commodity exchange; and
``(ii) monitor trading in digital
commodities to prevent manipulation, price
distortion, and disruptions, through
surveillance, compliance, and disciplinary
practices and procedures, including methods for
conducting real-time monitoring of trading and
comprehensive and accurate trade
reconstructions.
``(6) Ability to obtain information.--A digital commodity
exchange shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this section;
``(B) provide the information to the Commission on
request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(7) Emergency authority.--A digital commodity exchange
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission
or a registered entity, as is necessary and appropriate,
including the authority to facilitate the liquidation or
transfer of open positions in any digital commodity or to
suspend or curtail trading in a digital commodity.
``(8) Timely publication of trading information.--
``(A) In general.--A digital commodity exchange
shall make public timely information on price, trading
volume, and other trading data on digital commodities
to the extent prescribed by the Commission.
``(B) Capacity of digital commodity exchange.--A
digital commodity exchange shall have the capacity to
electronically capture and transmit trade information
with respect to transactions executed on the exchange.
``(9) Recordkeeping and reporting.--
``(A) In general.--A digital commodity exchange
shall--
``(i) maintain records relating to the
operation of the exchange, including a complete
audit trail, in a form and manner acceptable to
the Commission for a period of 5 years;
``(ii) report to the Commission, in a form
and manner acceptable to the Commission, such
information as the Commission determines to be
necessary or appropriate for the Commission to
perform the duties of the Commission under this
Act; and
``(iii) keep any such records of digital
commodities which relate to a security open to
inspection and examination by the Securities
and Exchange Commission.
``(B) Information-sharing.--Subject to section 8,
and on request, the Commission shall share information
collected under subparagraph (A) with--
``(i) the Board;
``(ii) the Securities and Exchange
Commission;
``(iii) each appropriate Federal banking
agency;
``(iv) each appropriate State bank
supervisor (within the meaning of section 3 of
the Federal Deposit Insurance Act);
``(v) the Financial Stability Oversight
Council;
``(vi) the Department of Justice; and
``(vii) any other person that the
Commission determines to be appropriate,
including--
``(I) foreign financial supervisors
(including foreign futures
authorities);
``(II) foreign central banks; and
``(III) foreign ministries.
``(C) Confidentiality agreement.--Before the
Commission may share information with any entity
described in subparagraph (B), the Commission shall
receive a written agreement from the entity stating
that the entity shall abide by the confidentiality
requirements described in section 8 relating to the
information on digital commodities that is provided.
``(D) Providing information.--A digital commodity
exchange shall provide to the Commission (including any
designee of the Commission) information under
subparagraph (A) in such form and at such frequency as
is required by the Commission.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a digital
commodity exchange shall not--
``(A) adopt any rules or take any actions that
result in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading.
``(11) Conflicts of interest.--The digital commodity
exchange shall establish and enforce rules--
``(A) to minimize conflicts of interest in the
decision making processes of the contract market; and
``(B) to establish a process for resolving
conflicts of interest referred to in subparagraph (A).
``(12) Financial resources.--
``(A) In general.--A digital commodity exchange
shall have adequate financial, operational, and
managerial resources, as determined by the Commission,
to discharge each responsibility of the digital
commodity exchange.
``(B) Minimum amount of financial resources.--A
digital commodity exchange shall possess financial
resources that, at a minimum, exceed--
``(i) the total amount that would enable
the digital commodity exchange to cover the
operating costs of the digital commodity
exchange for a 1-year period, as calculated on
a rolling basis; and
``(ii) the total amount necessary to meet
the financial obligations of the digital
commodity exchange to all customers of the
digital commodity exchange.
``(13) Disciplinary procedures.--A digital commodity
exchange shall establish and enforce disciplinary procedures
that authorize the digital commodity exchange to discipline,
suspend, or expel members or market participants that violate
the rules of the digital commodity exchange, or similar methods
for performing the same functions, including delegation of the
functions to third parties.
``(14) Governance fitness standards.--
``(A) Governance arrangements.--A digital commodity
exchange shall establish governance arrangements that
are transparent and designed to permit consideration of
the views of market participants.
``(B) Fitness standards.--A digital commodity
exchange shall establish and enforce appropriate
fitness standards for--
``(i) officers and directors; and
``(ii) any individual or entity with direct
access to, or control of, customer assets.
``(15) System safeguards.--A digital commodity exchange
shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational and security risks, through the
development of appropriate controls and procedures, and
automated systems in accordance with industry
standards, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup resources, and a plan for disaster recovery that
allow for--
``(i) the timely recovery and resumption of
operations; and
``(ii) the fulfillment of the
responsibilities and obligations of the digital
commodity exchange; and
``(C) periodically conduct tests to verify that the
backup resources of the digital commodity exchange are
sufficient to ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and
accurate audit trail.
``(d) Holding of Customer Assets.--
``(1) In general.--A digital commodity exchange shall hold
customer money, assets, and property in a manner to minimize
the risk of loss to the customer or unreasonable delay in
customer access to the money, assets, and property of the
customer.
``(A) Segregation of funds.--
``(i) In general.--A digital commodity
exchange shall treat and deal with all money,
assets, and property that is received by the
digital commodity exchange, or accrues to a
customer as the result of trading in digital
commodities, as belonging to the customer.
``(ii) Commingling prohibited.--Money,
assets, and property of a customer described in
clause (i) shall be separately accounted for
and shall not be commingled with the funds of
the digital commodity exchange or be used to
margin, secure, or guarantee any trades or
accounts of any customer or person other than
the person for whom the same are held.
``(B) Exceptions.--
``(i) Use of funds.--
``(I) In general.--Notwithstanding
subparagraph (A), money, assets, and
property of customers of a digital
commodity exchange described in
subparagraph (A) may, for convenience,
be commingled and deposited in the same
account or accounts with any bank,
trust company, derivatives clearing
organization, or qualified digital
asset custodian.
``(II) Withdrawal.--Notwithstanding
subparagraph (A), such share of the
money, assets, and property described
in subclause (I) of this clause as in
the normal course of business shall be
necessary to margin, guarantee, secure,
transfer, adjust, or settle a contract
of sale of a digital commodity with a
registered entity may be withdrawn and
applied to such purposes, including the
payment of commissions, brokerage,
interest, taxes, storage, and other
charges, lawfully accruing in
connection with the contract of sale of
a digital commodity.
``(ii) Commission action.--Notwithstanding
subparagraph (A), in accordance with such terms
and conditions as the Commission may prescribe
by rule, regulation, or order, any money,
assets, or property of the customers of a
digital commodity exchange described in
subparagraph (A) may be commingled and
deposited in customer accounts with any other
money, assets, or property received by the
digital commodity exchange and required by the
Commission to be separately accounted for and
treated and dealt with as belonging to the
customer of the digital commodity exchange.
``(2) Permitted investments.--Money described in
subparagraph (A) may be invested in obligations of the United
States, in general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed as
to principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation
prescribe, and such investments shall be made in accordance
with such rules and regulations and subject to such conditions
as the Commission may prescribe.
``(3) Customer protection during bankruptcy.--
``(A) Customer property.--All assets held on behalf
of a customer by a digital commodity exchange, and all
money, assets, and property of any customer received by
a digital commodity exchange for trading or custody, or
to facilitate, margin, guarantee, or secure contracts
of sale of a digital commodity (including money,
assets, or property accruing to the customer as the
result of the transactions), shall be considered
customer property for purposes of section 761 of title
11, United States Code.
``(B) Transactions.--A transaction involving the
sale of a unit of a digital commodity occurring on or
subject to the rules of a digital commodity exchange
shall be considered a contract for the purchase or sale
of a commodity for future delivery, on or subject to
the rules of, a contract market or board of trade for
purposes of the definition of `commodity contract' in
section 761 of title 11, United States Code.
``(C) Exchanges.--A digital commodity exchange
shall be considered a futures commission merchant for
purposes of section 761 of title 11, United States
Code.
``(D) Assets removed from segregation.--Assets
removed from segregation due to a customer election
under paragraph (5) shall not be considered customer
property for purposes of section 761 of title 11,
United States Code.
``(4) Misuse of customer property.--
``(A) In general.--It shall be unlawful--
``(i) for any digital commodity exchange
that has received any customer money, assets,
or property for custody to dispose of, or use
any such money, assets, or property as
belonging to the digital commodity exchange or
any person other than a customer of the digital
commodity exchange; or
``(ii) for any other person, including any
depository, other digital commodity exchange,
or digital asset custodian that has received
any customer money, assets, or property for
deposit, to hold, dispose of, or use any such
money, assets, or property, or property, as
belonging to the depositing digital commodity
exchange or any person other than the customers
of the digital commodity exchange.
``(B) Use further defined.--For purposes of this
section, `use' of a digital commodity includes
utilizing any unit of a digital asset to participate in
a blockchain service defined in paragraph (5) or a
decentralized governance system associated with the
digital commodity or the blockchain system to which the
digital commodity relates in any manner other than that
expressly directed by the customer from whom the unit
of a digital commodity was received.
``(5) Participation in blockchain services.--
``(A) In general.--A customer shall have the right
to waive the restrictions in paragraph (1) for any unit
of a digital commodity to be used under subparagraph
(B), by affirmatively electing, in writing to the
digital commodity exchange, to waive the restrictions.
``(B) Use of funds.--Customer digital commodities
removed from segregation under subparagraph (A) may be
pooled and used by the digital commodity exchange or
its designee to provide a blockchain service for a
blockchain system to which the unit of the digital
asset removed from segregation in subparagraph (A)
relates.
``(C) Limitations.--
``(i) In general.--The Commission shall, by
rule, establish notice and disclosure
requirements, and may, by rule, establish any
other limitations and rules related to the
waiving of any restrictions under this
paragraph that are reasonably necessary to
protect customers, including eligible contract
participants, non-eligible contract
participants, or any other class of customers.
``(ii) Customer choice.--A digital
commodity exchange may not require a waiver
from a customer described in subparagraph (A)
as a condition of doing business on the
exchange.
``(D) Blockchain service defined.--In this
subparagraph, the term `blockchain service' means any
activity relating to validating transactions on a
blockchain system, providing security for a blockchain
system, or other similar activity required for the
ongoing operation of a blockchain system.
``(e) Market Access Requirements.--The Commission may, by rule,
impose any additional requirements related to the operations and
activities of the digital commodity exchange and an affiliated digital
commodity broker necessary to protect market participants, promote fair
and equitable trading on the digital commodity exchange, and promote
responsible innovation.
``(f) Designation of Chief Compliance Officer.--
``(1) In general.--A digital commodity exchange shall
designate an individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the exchange;
``(B) review compliance with the core principles in
this subsection;
``(C) in consultation with the board of the
exchange, a body performing a function similar to that
of a board, or the senior officer of the exchange,
resolve any conflicts of interest that may arise;
``(D) establish and administer the policies and
procedures required to be established pursuant to this
section;
``(E) ensure compliance with this Act and the rules
and regulations issued under this Act, including rules
prescribed by the Commission pursuant to this section;
and
``(F) establish procedures for the remediation of
noncompliance issues found during compliance office
reviews, look backs, internal or external audit
findings, self-reported errors, or through validated
complaints.
``(3) Requirements for procedures.--In establishing
procedures under paragraph (2)(F), the chief compliance officer
shall design the procedures to establish the handling,
management response, remediation, retesting, and closing of
noncompliance issues.
``(4) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the digital
commodity exchange with this Act; and
``(ii) the policies and procedures,
including the code of ethics and conflicts of
interest policies, of the digital commodity
exchange.
``(B) Requirements.--The chief compliance officer
shall--
``(i) submit each report described in
subparagraph (A) with the appropriate financial
report of the digital commodity exchange that
is required to be submitted to the Commission
pursuant to this section; and
``(ii) include in the report a
certification that, under penalty of law, the
report is accurate and complete.
``(g) Appointment of Trustee.--
``(1) In general.--If a proceeding under section 5e results
in the suspension or revocation of the registration of a
digital commodity exchange, or if a digital commodity exchange
withdraws from registration, the Commission, on notice to the
digital commodity exchange, may apply to the appropriate United
States district court where the digital commodity exchange is
located for the appointment of a trustee.
``(2) Assumption of jurisdiction.--If the Commission
applies for appointment of a trustee under paragraph (1)--
``(A) the court may take exclusive jurisdiction
over the digital commodity exchange and the records and
assets of the digital commodity exchange, wherever
located; and
``(B) if the court takes jurisdiction under
subparagraph (A), the court shall appoint the
Commission, or a person designated by the Commission,
as trustee with power to take possession and continue
to operate or terminate the operations of the digital
commodity exchange in an orderly manner for the
protection of customers subject to such terms and
conditions as the court may prescribe.
``(h) Qualified Digital Asset Custodian.--A digital commodity
exchange shall hold in a qualified digital asset custodian each unit of
a digital asset that is--
``(1) the property of a customer of the digital commodity
exchange;
``(2) required to be held by the digital commodity exchange
under subsection (c)(12) of this section; or
``(3) otherwise so required by the Commission to reasonably
protect customers.
``(i) Exemptions.--
``(1) In order to promote responsible innovation and fair
competition, or protect customers, the Commission may (on its
own initiative or on application of the registered digital
commodity exchange) exempt, either unconditionally or on stated
terms or conditions or for stated periods and either
retroactively or prospectively, or both, a registered digital
commodity exchange from the requirements of this section, if
the Commission determines that--
``(A) the exemption would be consistent with the
public interest and the purposes of this Act; and
``(B) the exemption will not have a material
adverse effect on the ability of the Commission or the
digital commodity exchange to discharge regulatory or
self-regulatory duties under this Act.
``(2) The Commission may exempt, conditionally or
unconditionally, a digital commodity exchange from registration
under this section if the Commission finds that the digital
commodity exchange is subject to comparable, comprehensive
supervision and regulation on a consolidated basis by the
appropriate governmental authorities in the home country of the
facility.
``(j) Customer Defined.--In this section, the term `customer' means
any person that maintains an account for the trading of digital
commodities directly with a digital commodity exchange (other than a
person that is owned or controlled, directly or indirectly, by the
digital commodity exchange) for its own behalf or on behalf of any
other person.
``(k) Federal Preemption.--Notwithstanding any other provision of
law, the Commission shall have exclusive jurisdiction over any digital
commodity exchange registered under this section with respect to
activities and transactions subject to this Act.''.
SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
5i the following:
``SEC. 5J. QUALIFIED DIGITAL ASSET CUSTODIANS.
``(a) In General.--A person is a qualified digital asset custodian
for purposes of this Act if the person--
``(1) holds digital assets on behalf of a person registered
under this Act or a customer of a person registered under this
Act; and
``(2) is in compliance with subsections (b) and (c).
``(b) Supervision Requirement.--A person is in compliance with this
subsection if the person is subject to--
``(1) supervision and examination for custody and
safekeeping of digital assets by an appropriate Federal banking
agency, the National Credit Union Administration, the
Commission, or the Securities and Exchange Commission; or
``(2) adequate supervision and appropriate regulation for
custody and safekeeping of digital assets by--
``(A) a State bank supervisor (within the meaning
of section 3 of the Federal Deposit Insurance Act);
``(B) a State credit union supervisor, as defined
under section 6003 of the Anti-Money Laundering Act of
2020; or
``(C) an appropriate foreign governmental authority
in the home country of the digital commodity custodian.
``(c) Other Requirements.--A person shall be in compliance with
this subsection if:
``(1) Not otherwise prohibited.--The person has not been
prohibited by its supervisor from engaging in an activity with
respect to the custody and safekeeping of digital assets.
``(2) Information sharing.--
``(A) In general.--The person shares information
with the Commission on request and complies with such
requirements for periodic sharing of information
regarding customer accounts that the person holds on
behalf of an entity registered with the Commission as
the Commission determines by rule are reasonably
necessary to effectuate any of the provisions, or to
accomplish any of the purposes, of this Act.
``(B) Provision of information.--If the person is
subject to regulation and examination by an appropriate
Federal banking agency, the person may satisfy any
information request described in subparagraph (A) by
providing the Commission with a detailed listing, in
writing, of the digital assets of a customer in the
custody of, or use by, the person.
``(C) Rulemaking for cftc entities.--
``(i) In general.--The Commission shall
prescribe rules to permit a person registered
with the Commission to be a qualified digital
asset custodian in compliance with this
section.
``(ii) Content.--In prescribing the rules
under subparagraph (A), the Commission shall
require a person registered with the Commission
to--
``(I) implement requirement
consistent with the requirements in
subsection (d)(1);
``(II) establish sufficient system
safeguards;
``(III) prevent or mitigate
conflicts of interest, as appropriate;
and
``(IV) establish separate
governance arrangements for the
custodial function of the entity.
``(d) Adequate Supervision and Appropriate Regulation.--
``(1) In general.--For purposes of subsection (b), the
terms `adequate supervision' and `appropriate regulation' mean
such minimum standards for supervision and regulation as are
reasonably necessary to protect the digital assets held by a
person registered under this Act, including standards relating
to the licensing, examination, and supervisory processes that
require the person to, at a minimum--
``(A) receive a review and evaluation of ownership,
character and fitness, conflicts of interest, business
model, financial statements, funding resources, and
policies and procedures of the person;
``(B) hold capital sufficient for the financial
integrity of the person;
``(C) protect customer assets;
``(D) establish and maintain books and records
regarding the business of the person;
``(E) submit financial statements and audited
financial statements to the applicable supervisor
described in subsection (b);
``(F) provide disclosures to the applicable
supervisor described in subsection (b) regarding
actions, proceedings, and other items as determined by
the supervisor;
``(G) maintain and enforce policies and procedures
for compliance with applicable State and Federal laws,
including those related to anti-money laundering and
cybersecurity;
``(H) establish a business continuity plan to
ensure functionality in cases of disruption; and
``(I) establish policies and procedures to resolve
complaints.
``(2) Rulemaking with respect to definitions.--
``(A) In general.--For purposes of this section,
the Commission may, by rule, further define the terms
`adequate supervision' and `appropriate regulation' as
necessary and appropriate for the protection of
customers, and consistent with the purposes of this
Act.
``(B) Conditional treatment of certain custodians
before rulemaking.--Before the effective date of a
rulemaking under subparagraph (A), a trust company is
deemed subject to adequate supervision and appropriate
regulation if--
``(i) the trust company is expressly
permitted by a State bank supervisor to engage
in the custody and safekeeping of digital
assets;
``(ii) the State bank supervisor has
established licensing, examination, and
supervisory processes that require the trust
company to, at a minimum, meet the conditions
described in subparagraphs (A) through (I) of
paragraph (1); and
``(iii) the trust company is in good
standing with its State bank supervisor.
``(C) Transition period for certain custodians.--In
implementing the rulemaking under subparagraph (A), the
Commission shall provide a transition period of not
less than 2 years for any trust company that is deemed
subject to adequate supervision and appropriate
regulation under subparagraph (B) on the effective date
of the rulemaking.
``(e) Authority To Temporarily Suspend Standards.--The Commission
may, by rule or order, temporarily suspend, in whole or in part, any
requirement imposed under, or any standard referred to in, this section
if the Commission determines that the suspension would be consistent
with the public interest and the purposes of this Act.''.
SEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND
DEALERS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4t the following:
``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND
DEALERS.
``(a) Registration.--
``(1) Requirement.--It shall be unlawful for any person to
act as a digital commodity broker or digital commodity dealer
unless the person is registered as such with the Commission.
``(2) Additional registration.--
``(A) Rules.--In order to foster the development of
fair and orderly markets, protect customers, and
promote responsible innovation, the Commission--
``(i) shall prescribe rules to exempt an
entity registered with the Commission under
more than 1 section of this Act from
duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this
Act;
``(ii) shall prescribe rules to address
conflicts of interests and the activities of
the entity; and
``(iii) may after an analysis of the risks
and benefits, prescribe rules to provide for
portfolio margining.
``(B) With membership in a registered futures
association.--Any person required to be registered as a
digital commodity broker or digital commodity dealer
under this section shall be a member of a registered
futures association.
``(b) Requirements.--
``(1) In general.--A person shall register as a digital
commodity broker or digital commodity dealer by filing a
registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in
such form and manner as is prescribed by the
Commission, and shall contain such information as the
Commission considers necessary concerning the business
in which the applicant is or will be engaged.
``(B) Continual reporting.--A person that is
registered as a digital commodity broker or digital
commodity dealer shall continue to submit to the
Commission reports that contain such information
pertaining to the business of the person as the
Commission may require.
``(3) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order,
it shall be unlawful for a digital commodity broker or digital
commodity dealer to permit any person who is associated with a
digital commodity broker or a digital commodity dealer and who
is subject to a statutory disqualification to effect or be
involved in effecting a contract of sale of a digital commodity
on behalf of the digital commodity broker or the digital
commodity dealer, respectively, if the digital commodity broker
or digital commodity dealer, respectively, knew, or in the
exercise of reasonable care should have known, of the statutory
disqualification.
``(c) Rulemaking.--
``(1) In general.--The Commission shall prescribe such
rules applicable to registered digital commodity brokers and
registered digital commodity dealers as are appropriate to
carry out this section, including rules in the public interest
that limit the activities of digital commodity brokers and
digital commodity dealers.
``(2) Financing agreements.--
``(A) In general.--The Commission shall prescribe
rules and regulations applicable to digital commodity
brokers or digital commodity dealers which shall set
forth minimum requirements related to disclosure,
recordkeeping, margin and financing arrangements,
rehypothecation, capital, reporting, business conduct,
documentation, and supervision of employees and agents,
in connection with--
``(i) an agreement described in section
2(c)(2)(D)(iv); or
``(ii) any other margined, leveraged, or
financing arrangement for the purchase or sale
of a digital commodity with an eligible
contract participant.
``(B) Specific authority.--Except as prohibited in
section 2(c)(2)(G)(iii), the Commission may also make,
promulgate, and enforce such rules and regulations as,
in the judgment of the Commission, are reasonably
necessary to effectuate any of the provisions of, or to
accomplish any of the purposes of, this Act in
connection with an agreement referred to in
subparagraph (A) of this paragraph, which may include,
without limitation, requirements regarding registration
with the Commission and membership in a registered
futures association.
``(d) Capital Requirements.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall meet such minimum capital
requirements as the Commission may prescribe to address the
risks associated with digital commodity trading and to ensure
that the digital commodity broker or digital commodity dealer,
respectively, is able, at all times, to--
``(A) meet, and continue to meet the obligations of
such a registrant; and
``(B) fulfill obligations to customers or
counterparties for any margined, leveraged, or financed
transactions.
``(2) Futures commission merchants and other dealers.--Each
futures commission merchant, introducing broker, digital
commodity broker, digital commodity dealer, broker, and dealer
shall maintain sufficient capital to comply with the stricter
of any applicable capital requirements to which the futures
commission merchant, introducing broker, digital commodity
broker, digital commodity dealer, broker, or dealer,
respectively, is subject under this Act or the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(e) Reporting and Recordkeeping.--Each digital commodity broker
and digital commodity dealer--
``(1) shall make such reports as are required by the
Commission by rule or regulation regarding the transactions,
positions, and financial condition of the digital commodity
broker or digital commodity dealer, respectively;
``(2) shall keep books and records in such form and manner
and for such period as may be prescribed by the Commission by
rule or regulation; and
``(3) shall keep the books and records open to inspection
and examination by any representative of the Commission.
``(f) Daily Trading Records.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall maintain daily trading records
of the transactions of the digital commodity broker or digital
commodity dealer, respectively, and all related records
(including related forward or derivatives transactions) and
recorded communications, including electronic mail, instant
messages, and recordings of telephone calls, for such period as
the Commission may require by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall require
by rule or regulation.
``(3) Counterparty records.--Each digital commodity broker
and digital commodity dealer shall maintain daily trading
records for each customer or counterparty in a manner and form
that is identifiable with each digital commodity transaction.
``(4) Audit trail.--Each digital commodity broker and
digital commodity dealer shall maintain a complete audit trail
for conducting comprehensive and accurate trade
reconstructions.
``(g) Business Conduct Standards.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall conform with such business
conduct standards as the Commission, by rule or regulation,
prescribes related to--
``(A) fraud, manipulation, and other abusive
practices involving spot or margined, leveraged, or
financed digital commodity transactions (including
transactions that are offered but not entered into);
``(B) diligent supervision of the business of the
registered digital commodity broker or digital
commodity dealer, respectively; and
``(C) such other matters as the Commission deems
appropriate.
``(2) Business conduct requirements.--The Commission shall,
by rule, prescribe business conduct requirements which--
``(A) require disclosure by a registered digital
commodity broker and registered digital commodity
dealer to any counterparty to the transaction (other
than an eligible contract participant) of--
``(i) information about the material risks
and characteristics of the digital commodity;
``(ii) information about the material risks
and characteristics of the transaction;
``(B) establish a duty for such a digital commodity
broker and such a digital commodity dealer to
communicate in a fair and balanced manner based on
principles of fair dealing and good faith;
``(C) establish standards governing digital
commodity broker and digital commodity dealer marketing
and advertising, including testimonials and
endorsements; and
``(D) establish such other standards and
requirements as the Commission may determine are
appropriate for the protection of customers.
``(3) Prohibition on fraudulent practices.--It shall be
unlawful for a digital commodity broker or digital commodity
dealer to--
``(A) employ any device, scheme, or artifice to
defraud any customer or counterparty;
``(B) engage in any transaction, practice, or
course of business that operates as a fraud or deceit
on any customer or counterparty; or
``(C) engage in any act, practice, or course of
business that is fraudulent, deceptive, or
manipulative.
``(h) Duties.--
``(1) Risk management procedures.--Each digital commodity
broker and digital commodity dealer shall establish robust and
professional risk management systems adequate for managing the
day-to-day business of the digital commodity broker or digital
commodity dealer, respectively.
``(2) Disclosure of general information.--Each digital
commodity broker and digital commodity dealer shall disclose to
the Commission information concerning--
``(A) the terms and conditions of the transactions
of the digital commodity broker or digital commodity
dealer, respectively;
``(B) the trading operations, mechanisms, and
practices of the digital commodity broker or digital
commodity dealer, respectively;
``(C) financial integrity protections relating to
the activities of the digital commodity broker or
digital commodity dealer, respectively; and
``(D) other information relevant to trading in
digital commodities by the digital commodity broker or
digital commodity dealer, respectively.
``(3) Ability to obtain information.--Each digital
commodity broker and digital commodity dealer shall--
``(A) establish and enforce internal systems and
procedures to obtain any necessary information to
perform any of the functions described in this section;
and
``(B) provide the information to the Commission, on
request.
``(4) Conflicts of interest.--Each digital commodity broker
and digital commodity dealer shall establish, maintain, and
enforce written policies and procedures reasonably designed,
taking into consideration the nature of the business of the
person, to mitigate any conflicts of interest in transactions
or arrangements with affiliates.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a digital
commodity broker or digital commodity dealer shall not--
``(A) adopt any process or take any action that
results in any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading or clearing.
``(i) Designation of Chief Compliance Officer.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall designate an individual to serve
as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior
officer of the registered digital commodity broker or
registered digital commodity dealer;
``(B) review the compliance of the registered
digital commodity broker or registered digital
commodity dealer with respect to the registered digital
commodity broker and registered digital commodity
dealer requirements described in this section;
``(C) in consultation with the board of directors,
a body performing a function similar to the board, or
the senior officer of the organization, resolve any
conflicts of interest that may arise;
``(D) be responsible for administering each policy
and procedure that is required to be established
pursuant to this section;
``(E) ensure compliance with this Act (including
regulations), including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures
for the handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules
prescribed by the Commission, the chief compliance
officer shall annually prepare and sign a report that
contains a description of--
``(i) the compliance of the registered
digital commodity broker or registered digital
commodity dealer with this Act (including
regulations); and
``(ii) each policy and procedure of the
registered digital commodity broker or
registered digital commodity dealer followed by
the chief compliance officer (including the
code of ethics and conflict of interest
policies).
``(B) Requirements.--The chief compliance officer
shall ensure that a compliance report under
subparagraph (A)--
``(i) accompanies each appropriate
financial report of the registered digital
commodity broker or registered digital
commodity dealer that is required to be
furnished to the Commission pursuant to this
section; and
``(ii) includes a certification that, under
penalty of law, the compliance report is
accurate and complete.
``(j) Segregation of Digital Commodities.--
``(1) Holding of customer assets.--
``(A) In general.--Each digital commodity broker
and digital commodity dealer shall hold customer money,
assets, and property in a manner to minimize the risk
of loss to the customer or unreasonable delay in
customer access to the money, assets, and property of
the customer.
``(B) Qualified digital asset custodian.--Each
digital commodity broker and digital commodity dealer
shall hold in a qualified digital asset custodian each
unit of a digital asset that is--
``(i) the property of a customer or
counterparty of the digital commodity broker or
digital commodity dealer, respectively;
``(ii) required to be held by the digital
commodity broker or digital commodity dealer
under subsection (e); or
``(iii) otherwise so required by the
Commission to reasonably protect customers or
promote the public interest.
``(2) Segregation of funds.--
``(A) In general.--Each digital commodity broker
and digital commodity dealer shall treat and deal with
all money, assets, and property that is received by the
digital commodity broker or digital commodity dealer,
or accrues to a customer as the result of trading in
digital commodities, as belonging to the customer.
``(B) Commingling prohibited.--
``(i) In general.--Except as provided in
clause (ii), each digital commodity broker and
digital commodity dealer shall separately
account for money, assets, and property of a
digital commodity customer, and shall not
commingle any such money, assets, or property
with the funds of the digital commodity broker
or digital commodity dealer, respectively, or
use any such money, assets, or property to
margin, secure, or guarantee any trades or
accounts of any customer or person other than
the person for whom the money, assets, or
property are held.
``(ii) Exceptions.--
``(I) Use of funds.--
``(aa) In general.--A
digital commodity broker or
digital commodity dealer may,
for convenience, commingle and
deposit in the same account or
accounts with any bank, trust
company, derivatives clearing
organization, or qualified
digital asset custodian money,
assets, and property of
customers.
``(bb) Withdrawal.--The
share of the money, assets, and
property described in item (aa)
as in the normal course of
business shall be necessary to
margin, guarantee, secure,
transfer, adjust, or settle a
contract of sale of a digital
commodity with a registered
entity may be withdrawn and
applied to such purposes,
including the payment of
commissions, brokerage,
interest, taxes, storage, and
other charges, lawfully
accruing in connection with the
contract.
``(II) Commission action.--In
accordance with such terms and
conditions as the Commission may
prescribe by rule, regulation, or
order, any money, assets, or property
of the customers of a digital commodity
broker or digital commodity dealer may
be commingled and deposited in customer
accounts with any other money, assets,
or property received by the digital
commodity broker or digital commodity
dealer, respectively, and required by
the Commission to be separately
accounted for and treated and dealt
with as belonging to the customer of
the digital commodity broker or digital
commodity dealer, respectively.
``(3) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, in obligations fully guaranteed as to
principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation allow.
``(4) Customer protection during bankruptcy.--
``(A) Customer property.--All money, assets, or
property described in paragraph (2) shall be considered
customer property for purposes of section 761 of title
11, United States Code.
``(B) Transactions.--A transaction involving a unit
of a digital commodity occurring with a digital
commodity broker or digital commodity dealer shall be
considered a `contract for the purchase or sale of a
commodity for future delivery, on or subject to the
rules of, a contract market or board of trade' for
purposes of the definition of a `commodity contract' in
section 761 of title 11, United States Code.
``(C) Brokers and dealers.--A digital commodity
broker and a digital commodity dealer shall be
considered a futures commission merchant for purposes
of section 761 of title 11, United States Code.
``(D) Assets removed from segregation.--Assets
removed from segregation due to a customer election
under paragraph (6) shall not be considered customer
property for purposes of section 761 of title 11,
United States Code.
``(5) Misuse of customer property.--
``(A) In general.--It shall be unlawful--
``(i) for any digital commodity broker or
digital commodity dealer that has received any
customer money, assets, or property for custody
to dispose of, or use any such money, assets,
or property as belonging to the digital
commodity broker or digital commodity dealer,
respectively, or any person other than a
customer of the digital commodity broker or
digital commodity dealer, respectively; or
``(ii) for any other person, including any
depository, digital commodity exchange, other
digital commodity broker, other digital
commodity dealer, or digital commodity
custodian that has received any customer money,
assets, or property for deposit, to hold,
dispose of, or use any such money, assets, or
property, as belonging to the depositing
digital commodity broker or digital commodity
dealer or any person other than the customers
of the digital commodity broker or digital
commodity dealer, respectively.
``(B) Use further defined.--For purposes of this
section, `use' of a digital commodity includes
utilizing any unit of a digital asset to participate in
a blockchain service defined in paragraph (6) or a
decentralized governance system associated with the
digital commodity or the blockchain system to which the
digital commodity relates in any manner other than that
expressly directed by the customer from whom the unit
of a digital commodity was received.
``(6) Participation in blockchain services.--
``(A) In general.--A customer shall have the right
to waive the restrictions in paragraph (2) for any unit
of a digital commodity to be used under subparagraph
(B) of this paragraph, by affirmatively electing, in
writing to the digital commodity broker or digital
commodity dealer, to waive the restrictions.
``(B) Use of funds.--Customer digital commodities
removed from segregation under subparagraph (A) may be
pooled and used by the digital commodity broker or
digital commodity dealer, or one of their designees, to
provide a blockchain service for a blockchain system to
which the unit of the digital asset removed from
segregation in subparagraph (A) relates.
``(C) Limitations.--
``(i) In general.--The Commission shall, by
rule, establish notice and disclosure
requirements, and may, by rule, establish any
other limitations and rules related to the
waiving of any restrictions under this
paragraph that are reasonably necessary to
protect customers, including eligible contract
participants, non-eligible contract
participants, or any other class of customers.
``(ii) Customer choice.--A digital
commodity broker or digital commodity dealer
may not require a waiver from a customer
described in subparagraph (A) as a condition of
doing business with the broker or dealer.
``(D) Blockchain service defined.--In this
subparagraph, the term `blockchain service' means any
activity relating to validating transactions on a
blockchain system, providing security for a blockchain
system, or other similar activity required for the
ongoing operation of a blockchain system.
``(k) Federal Preemption.--Notwithstanding any other provision of
law, the Commission shall have exclusive jurisdiction over any digital
commodity broker or digital commodity dealer registered under this
section with respect to activities subject to this Act, except as
provided in section 5k.
``(l) Exemptions.--In order to promote responsible innovation and
fair competition, or protect customers, the Commission may (on its own
initiative or on application of the registered digital commodity broker
or registered digital commodity dealer) exempt, unconditionally or on
stated terms or conditions, or for stated periods, and retroactively or
prospectively, or both, a registered digital commodity broker or
registered digital commodity dealer from the requirements of this
section, if the Commission determines that--
``(1)(A) the exemption would be consistent with the public
interest and the purposes of this Act; and
``(B) the exemption will not have a material adverse effect
on the ability of the Commission to discharge regulatory duties
under this Act; or
``(2) the registered digital commodity broker or registered
digital commodity dealer is subject to comparable,
comprehensive supervision and regulation by the appropriate
government authorities in the home country of the registered
digital commodity broker or registered digital commodity
dealer, respectively.''.
SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.
(a) In General.--Section 4k of the Commodity Exchange Act (7 U.S.C.
6k) is amended--
(1) by redesignating subsections (4) through (6) as
subsections (5) through (7), respectively;
(2) by inserting after subsection (3) the following:
``(4) It shall be unlawful for any person to act as an associated
person of a digital commodity broker or an associated person of a
digital commodity dealer unless the person is registered with the
Commission under this Act and such registration shall not have expired,
been suspended (and the period of suspension has not expired), or been
revoked. It shall be unlawful for a digital commodity broker or a
digital commodity dealer to permit such a person to become or remain
associated with the digital commodity broker or digital commodity
dealer if the digital commodity broker or digital commodity dealer knew
or should have known that the person was not so registered or that the
registration had expired, been suspended (and the period of suspension
has not expired), or been revoked.''; and
(3) in subsection (5) (as so redesignated), by striking
``or of a commodity trading advisor'' and inserting ``of a
commodity trading advisor, of a digital commodity broker, or of
a digital commodity dealer''.
(b) Conforming Amendments.--The Commodity Exchange Act (7 U.S.C. 1a
et seq.) is amended by striking ``section 4k(6)'' each place it appears
and inserting ``section 4k(7)''.
SEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND COMMODITY
TRADING ADVISORS.
(a) In General.--Section 4m(3) of the Commodity Exchange Act (7
U.S.C. 6m(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``any commodity trading advisor''
and inserting ``a commodity pool operator or commodity
trading advisor''; and
(B) by striking ``acting as a commodity trading
advisor'' and inserting ``acting as a commodity pool
operator or commodity trading advisor''; and
(2) in subparagraph (C), by inserting ``digital
commodities,'' after ``physical commodities,''.
(b) Exemptive Authority.--Section 4m of such Act (7 U.S.C. 6m) is
amended by adding at the end the following:
``(4) Exemptive Authority.--The Commission shall promulgate rules
to provide appropriate exemptions for commodity pool operators and
commodity trading advisors, to provide relief from duplicative,
conflicting, or unduly burdensome requirements or to promote
responsible innovation, to the extent the exemptions foster the
development of fair and orderly cash or spot digital commodity markets,
are necessary or appropriate in the public interest, and are consistent
with the protection of customers.''.
SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
4u the following:
``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.
``(a) In General.--Notwithstanding any other provision of this Act,
a person shall not be subject to this Act and the regulations
promulgated under this Act based on the person directly or indirectly
engaging in any of the following activities, whether singly or in
combination, in relation to the operation of a blockchain system or in
relation to decentralized finance trading protocol:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or other similar incidental services.
``(3) Providing a user-interface that enables a user to
read, and access data about a blockchain system.
``(4) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a blockchain system or a
decentralized finance trading protocol.
``(5) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a decentralized finance
messaging system or operating or participating in a liquidity
pool for the purpose of executing a contract of sale of a
digital commodity.
``(6) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing software or systems that
create or deploy hardware or software, including wallets or
other systems, facilitating an individual user's own personal
ability to keep, safeguard, or custody the user's digital
assets or related private keys.
``(b) Exceptions.--Subsection (a) shall not be interpreted to apply
to the anti-fraud, anti-manipulation, or false reporting enforcement
authorities of the Commission.''.
SEC. 410. RESOURCES FOR IMPLEMENTATION AND ENFORCEMENT.
(a) Collection of Fees.--
(1) In general.--The Commodity Futures Trading Commission
(in this section referred to as the ``Commission'') shall
charge and collect a filing fee from each person who files with
the Commission a statement of provisional registration as a
digital commodity exchange, digital commodity broker, or
digital commodity dealer pursuant to section 106.
(2) Amount.--The fees authorized under paragraph (1) may be
collected and available for obligation only in the amounts
provided in advance in an appropriation Act.
(3) Authority to adjust fees.--Notwithstanding the
preceding provisions of this subsection, to promote fair
competition or innovation, the Commission, in its sole
discretion, may reduce or eliminate any fee otherwise required
to be paid by a small or medium filer under this subsection.
(b) Fee Schedule.--
(1) In general.--The Commission shall publish in the
Federal Register a schedule of the fees to be charged and
collected under this section.
(2) Content.--The fee schedule for a fiscal year shall
include a written analysis of the estimate of the Commission of
the total costs of carrying out the functions of the Commission
under this Act during the fiscal year.
(3) Submission to congress.--Before publishing the fee
schedule for a fiscal year, the Commission shall submit a copy
of the fee schedule to the Committees on Agriculture and on
Appropriations of the House of Representatives and the
Committees on Agriculture, Nutrition, and Forestry and on
Appropriations of the Senate.
(4) Timing.--
(A) 1st fiscal year.--The Commission shall publish
the fee schedule for the fiscal year in which this Act
is enacted, within 30 days after the date of the
enactment of this Act.
(B) Subsequent fiscal years.--The Commission shall
publish the fee schedule for each subsequent fiscal
year, not less than 90 days before the due date
prescribed by the Commission for payment of the annual
fee for the fiscal year.
(c) Late Payment Penalty.--
(1) In general.--The Commission may impose a penalty
against a person that fails to pay an annual fee charged under
this section, within 30 days after the due date prescribed by
the Commission for payment of the fee.
(2) Amount.--The amount of the penalty shall be--
(A) 5 percent of the amount of the fee due,
multiplied by
(B) the whole number of consecutive 30-day periods
that have elapsed since the due date.
(d) Reimbursement of Excess Fees.--To the extent that the total
amount of fees collected under this section during a fiscal year that
begins after the date of the enactment of this Act exceeds the amount
provided under subsection (a)(2) with respect to the fiscal year, the
Commission shall reimburse the excess amount to the persons who have
timely paid their annual fees, on a pro-rata basis that excludes
penalties, and shall do so within 60 days after the end of the fiscal
year.
(e) Deposit of Fees Into the Treasury.--All amounts collected under
this section shall be credited to the currently applicable
appropriation, account, or fund of the Commission as discretionary
offsetting collections, and shall be available for the purposes
authorized in subsection (f) only to the extent and in the amounts
provided in advance in appropriations Acts.
(f) Authorization of Appropriations.--In addition to amounts
otherwise authorized to be appropriated to the Commission, there is
authorized to be appropriated to the Commission amounts collected under
this section to cover the costs the costs of carrying out the functions
of the Commission under this Act.
(g) Expedited Hiring Authority.--
(1) Appointment authority.--The Chairman, pursuant to
section 6(a), may appoint individuals to a position described
in paragraph (2) of this subsection--
(A) in accordance with the statutes, rules, and
regulations governing appointments to positions in the
excepted service (as defined in section 2103 of title
5, United States Code); and
(B) without regard to any statute, rule, or
regulation governing appointments to positions in the
competitive service (as defined in section 2102 of such
title).
(2) Position described.--A position referred to in
subparagraph (1) is a position at the Commission that--
(A) is in the competitive service (as defined in
section 2102 of such title); and
(B) requires specialized knowledge of digital
commodities markets, financial and capital market
formation or regulation, financial market structures or
surveillance, data collection or analysis, or
information technology, cybersecurity, or system
safeguards.
(3) Rule of construction.--The appointment of a candidate
to a position under this subsection shall not be considered to
cause the position to be converted from the competitive service
to the excepted service.
(h) Sunset.--The authorities provided by this section shall expire
at the end of the 4th fiscal year that begins after the date of the
enactment of this Act.
SEC. 411. DIGITAL COMMODITY ACTIVITIES BY SEC-REGISTERED ENTITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the
preceding provisions of this Act, is amended by inserting after section
5j the following:
``SEC. 5K. EXEMPTION FOR CERTAIN REGISTERED ENTITIES ENGAGED IN DIGITAL
COMMODITY ACTIVITIES.
``(a) By Alternative Trading Systems.--
``(1) In general.--On receipt by the Commission from an
alternative trading system of a written or electronic notice
that contains such information as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or
for the protection of investors, the alternative trading system
shall be exempt from registration as a digital commodity
exchange pursuant to section 5i if--
``(A) the alternative trading system does not list
any retail commodity transactions pursuant to section
2(c)(2)(D);
``(B) the provider, or an affiliate person of the
provider, of the alternative trading system is not
otherwise registered under this Act;
``(C) the alternative trading system lists or
trades no other contracts of sale of commodities,
except for digital commodities, currencies, and
securities; and
``(D) the registration of the alternative trading
system is not suspended pursuant to an order by the
Securities and Exchange Commission.
``(2) Further requirements.--An alternative trading system
that provides notice to the Commission pursuant to paragraph
(1) of this subsection shall be exempt from the requirements of
section 5i to the extent that the alternative trading system--
``(A) is in compliance with requirements consistent
with the requirements of section 5i and imposed on the
alternative trading system by the Securities and
Exchange Commission;
``(B) annually files with the Commission, in a form
and manner acceptable to the Commission, a notice that
demonstrates compliance with this paragraph and
contains any other information the Commission
determines to be necessary or appropriate to perform
the duties of the Commission under this Act; and
``(C) has total trading volume in digital
commodities during any calendar quarter in either of
its 2 most recently completed fiscal years that does
not exceed the lesser of--
``(i) 25 percent of the total trading
volume for all transactions over the same
period; or
``(ii) $50,000,000,000.
``(3) Enforcement.--This subsection shall not be construed
to limit any jurisdiction that the Commission may otherwise
have under any other provision of this Act with respect to a
contract of sale of a digital commodity or persons effecting
contracts of sale of digital commodities.
``(b) By Registered Intermediaries.--
``(1) In general.--On receipt by the Commission, from a
broker or dealer that is registered with the Securities and
Exchange Commission, of a written or electronic notice that
contains such information as the Commission, by rule, may
prescribe as necessary or appropriate in the public interest or
for the protection of investors, the broker or dealer shall be
exempt from registration as a digital commodity broker or
digital commodity dealer pursuant to section 4u of this Act
if--
``(A) the broker or dealer does not offer or engage
in any retail commodity transactions pursuant to
section 2(c)(2)(D) of this Act or other contracts of
sale of commodities, except for digital commodities,
currencies, and securities;
``(B) the broker or dealer is not otherwise
registered under this Act;
``(C) the broker or dealer is not subject to a
statutory disqualification, as defined under section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)); and
``(D) the broker or dealer is a member of a
national securities association registered pursuant to
section 15A of the Securities Exchange Act of 1934.
``(2) Further requirements.--A broker or dealer that
provides notice to the Commission pursuant to paragraph (1)
shall be exempt from the requirements of section 4u to the
extent that the broker or dealer--
``(A) is in compliance with requirements consistent
with the requirements of section 4u and imposed on the
broker or dealer by the Securities and Exchange
Commission;
``(B) annually files with the Commission, in a form
and manner acceptable to the Commission, a notice that
demonstrates compliance with this subsection and
contains any other information the Commission
determines to be necessary or appropriate to perform
the duties of the Commission under this Act; and
``(C) has consolidated annual gross financial
revenues in either of its 2 most recently completed
fiscal years from sales, commissions or other
activities in digital commodities that do not exceed
the lesser of--
``(i) 10 percent of the total annual gross
revenues during the same period; or
``(ii) $100,000,000.
``(3) Enforcement.--This subsection shall not be construed
to limit any jurisdiction that the Commission may otherwise
have under any other provision of this Act with respect to a
contract of sale of a digital commodity and persons effecting
contracts of sale of digital commodities.''.
SEC. 412. REQUIREMENTS RELATED TO CONTROL PERSONS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended the
preceding provisions of this Act, is amended by inserting after section
4v the following:
``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL PERSONS.
``(a) Limitation.--It shall be unlawful for a blockchain control
person with respect to a blockchain system certified as a mature
blockchain system in accordance with section 42 of the Securities
Exchange Act of 1934 to sell a unit of a digital commodity related to
the blockchain system unless the person files notice with the
Commission, in a form and manner determined by the Commission, that the
person has or intends to obtain an authority described in subsection
(b)(1) with respect to the blockchain system, and complies with rules
adopted by the Commission that require--
``(1) disclosure of information to the Commission and the
public about the material activities, as determined by the
Commission, of the blockchain control person; and
``(2)(A) the use of a digital commodity broker to effect
the sale; or
``(B) such other sales restrictions applicable to
blockchain control person, or any of its digital commodity
affiliated persons, to prevent manipulation and distortion of
the value of the digital commodity and promote further maturity
of the blockchain system to which the digital commodity
relates.
``(b) Definitions.--In this section:
``(1) Blockchain control person.--The term `blockchain
control person' means, with respect to a blockchain system, any
person or group of persons under common control who--
``(A) has the unilateral authority, directly or
indirectly, through any contract, arrangement,
understanding, relationship, or otherwise, to control
or materially alter the functionality, operation, or
rules of consensus or agreement of the blockchain
system or its related digital commodity; or
``(B) has the unilateral authority to direct the
voting, in the aggregate, of 20 percent or more of the
outstanding voting power of the blockchain system by
means of a related digital commodity, nodes or
validators, a decentralized governance system, or
otherwise, in a blockchain system which can be altered
by a voting system.
``(2) Digital commodity affiliated person.--The term
`digital commodity affiliated person' means any person directly
or indirectly controlling, controlled by, or under common
control with a blockchain control person, as the Commission by
rule or regulation, may determine will effectuate the purposes
of this section.''.
SEC. 413. EFFECTIVE DATE.
Unless otherwise provided in this title, this title and the
amendments made by this title shall take effect 360 days after the date
of the enactment of this Act, except that, to the extent a provision of
this title requires a rulemaking, the provision shall take effect on
the later of--
(1) 360 days after the date of the enactment of this Act;
or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
SEC. 414. SENSE OF CONGRESS.
It is the sense of Congress that nothing in this Act or any
amendment made by this Act should be interpreted to authorize any
entity to regulate any commodity, other than a digital commodity, on
any spot market.
TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
SEC. 501. FINDINGS; SENSE OF CONGRESS.
(a) Findings.--Congress finds the following:
(1) Entrepreneurs and innovators are building and deploying
this next generation of the internet.
(2) Digital commodity networks represent a new way for
people to join together and cooperate with one another to
undertake certain activities.
(3) Digital commodities have the potential to be the
foundational building blocks of these systems, aligning the
economic incentive for individuals to cooperate with one
another to achieve a common purpose.
(4) The digital commodity ecosystem has the potential to
grow our economy and improve everyday lives of Americans by
facilitating collaboration through the use of technology to
manage activities, allocate resources, and facilitate decision
making.
(5) Blockchain systems and the digital commodities they
empower provide control, enhance transparency, reduce
transaction costs, and increase efficiency if proper
protections are put in place for investors, consumers, our
financial system, and our national security.
(6) Blockchain technology facilitates new types of network
participation which businesses in the United States may utilize
in innovative ways.
(7) Other digital commodity companies are setting up their
operations outside of the United States, where countries are
establishing frameworks to embrace the potential of blockchain
technology and digital commodities and provide safeguards for
consumers.
(8) Digital commodities, despite the purported anonymity,
provide law enforcement with an exceptional tracing tool to
identify illicit activity and bring criminals to justice.
(9) The Financial Services Committee of the House of
Representatives has held multiple hearings highlighting various
risks that digital commodities can pose to the financial
markets, consumers, and investors that must be addressed as we
seek to harness the benefits of these innovations.
(b) Sense of Congress.--It is the sense of Congress that--
(1) the United States should seek to prioritize
understanding the potential opportunities of the next
generation of the internet;
(2) the United States should seek to foster advances in
technology that have robust evidence indicating they can
improve our financial system and create more fair and equitable
access to financial services for everyday Americans while
protecting our financial system, investors, and consumers;
(3) the United States must support the responsible
development of digital commodities and the underlying
technology in the United States or risk the shifting of the
development of such assets and technology outside of the United
States, to less regulated countries;
(4) Congress should consult with public and private sector
stakeholders to understand how to enact a functional framework
tailored to the specific risks and unique benefits of different
digital commodity-related activities, distributed ledger
technology, distributed networks, and mature blockchain
systems;
(5) Congress should enact a functional framework tailored
to the specific risks of different digital commodity-related
activities and unique benefits of distributed ledger
technology, distributed networks, and mature blockchain
systems; and
(6) consumers and market participants will benefit from a
framework for digital commodities consistent with longstanding
investor protections in securities and commodities markets, yet
tailored to the unique benefits and risks of the digital
commodity ecosystem.
SEC. 502. MODERNIZATION OF THE SECURITIES AND EXCHANGE COMMISSION
MISSION.
(a) Securities Act of 1933.--Section 2(b) of the Securities Act of
1933 (15 U.S.C. 77(b)) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
(b) Securities Exchange Act of 1934.--Section 3(f) of the
Securities Exchange Act of 1934 (15 U.S.C. 78(c)) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
(c) Investment Advisers Act of 1940.--Section 202(c) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
(d) Investment Company Act of 1940.--Section 2(c) of the Investment
Company Act of 1940 (15 U.S.C. 80a-2) is amended--
(1) in the heading, by inserting ``Innovation,'' after
``Efficiency,''; and
(2) by inserting ``innovation,'' after ``efficiency,''.
SEC. 503. STRATEGIC HUB FOR INNOVATION AND FINANCIAL TECHNOLOGY.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(l) Strategic Hub for Innovation and Financial Technology.--
``(1) Establishment.--Not later than 180 days after the
date of the enactment of this subsection, the Securities and
Exchange Commission shall establish a committee to be known as
the Strategic Hub for Innovation and Financial Technology
(referred to in this subsection as the `FinHub') to support
engagement on emerging technologies in the financial sector.
``(2) Members.--The composition of FinHub shall be
determined by the Commission, drawing from relevant divisions
as appropriate, including the Division of Trading and Markets,
Division of Corporate Finance, and Division of Investment
Management.
``(3) Responsibilities.--FinHub shall--
``(A) serve as a resource for the Commission on
emerging financial technology advancements;
``(B) engage with market participants working on
emerging financial technologies; and
``(C) facilitate communication between the
Commission and businesses working in emerging financial
technology fields with information on the Commission,
its rules, and regulations.
``(4) Report to the commission.--
``(A) In general.--Not later than October 31 of
each year after 2025, FinHub shall provide an annual
summary of its engagement activities to the Commission,
which shall be included in the Commission's annual
report to Congress.
``(B) Confidentiality.--Each report submitted under
this paragraph shall not contain confidential
information.''.
SEC. 504. CODIFICATION OF LABCFTC.
(a) In General.--Section 18 of the Commodity Exchange Act (7 U.S.C.
22) is amended by adding at the end the following:
``(c) LabCFTC.--
``(1) Establishment.--There is established in the
Commission LabCFTC.
``(2) Purpose.--The purposes of LabCFTC are to--
``(A) promote responsible financial technology
innovation and fair competition for the benefit of the
American public;
``(B) serve as an information platform to inform
the Commission about new financial technology
innovation; and
``(C) provide outreach to financial technology
innovators to discuss their innovations and the
regulatory framework established by this Act and the
regulations promulgated thereunder.
``(3) Director.--LabCFTC shall have a Director, who shall
be appointed by the Commission and serve at the pleasure of the
Commission. Notwithstanding section 2(a)(6)(A), the Director
shall report directly to the Commission and perform such
functions and duties as the Commission may prescribe.
``(4) Duties.--LabCFTC shall--
``(A) advise the Commission with respect to
rulemakings or other agency or staff action regarding
financial technology;
``(B) provide internal education and training to
the Commission regarding financial technology;
``(C) advise the Commission regarding financial
technology that would bolster the Commission's
oversight functions;
``(D) engage with academia, students, and
professionals on financial technology issues, ideas,
and technology relevant to activities under this Act;
``(E) provide persons working in emerging
technology fields with information on the Commission,
its rules and regulations, and the role of a registered
futures association; and
``(F) encourage persons working in emerging
technology fields to engage with the Commission and
obtain feedback from the Commission on potential
regulatory issues.
``(5) Report to congress.--
``(A) In general.--Not later than October 31 of
each year after 2025, LabCFTC shall submit to the
Committee on Agriculture of the House of
Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate a report on its
activities.
``(B) Contents.--Each report required under
paragraph (1) shall include--
``(i) the total number of persons that met
with LabCFTC;
``(ii) a summary of general issues
discussed during meetings with the person;
``(iii) information on steps LabCFTC has
taken to improve Commission services, including
responsiveness to the concerns of persons;
``(iv) recommendations made to the
Commission with respect to the regulations,
guidance, and orders of the Commission and such
legislative actions as may be appropriate; and
``(v) any other information determined
appropriate by the Director of LabCFTC.
``(C) Confidentiality.--A report under paragraph
(A) shall abide by the confidentiality requirements in
section 8.
``(6) Records and engagement.--The Commission shall--
``(A) maintain systems of records to track
engagements with the public through LabCFTC;
``(B) store communications and materials received
in connection with any such engagement in accordance
with Commission policies and procedures on data
retention and confidentiality; and
``(C) take reasonable steps to protect any
confidential or proprietary information received
through LabCFTC engagement.''.
(b) Conforming Amendments.--Section 2(a)(6)(A) of such Act (7
U.S.C. 2(a)(6)(A)) is amended--
(1) by striking ``paragraph and in'' and inserting
``paragraph,''; and
(2) by inserting ``and section 18(c)(3),'' before ``the
executive''.
(c) Effective Date.--The Commodity Futures Trading Commission shall
implement the amendments made by this section (including complying with
section 18(c)(7) of the Commodity Exchange Act) within 180 days after
the date of the enactment of this Act.
SEC. 505. STUDY ON DECENTRALIZED FINANCE.
(a) In General.--The Commodity Futures Trading Commission, the
Securities and Exchange Commission, and the Secretary of the Treasury
shall jointly carry out a study on decentralized finance that
analyzes--
(1) the nature, size, role, and use of decentralized
finance blockchain applications;
(2) the operation of blockchain applications that comprise
decentralized finance;
(3) the interoperability of blockchain applications and
other blockchain systems;
(4) the interoperability of blockchain applications and
software-based systems, including websites and wallets;
(5) the decentralized governance systems through which
blockchain applications may be developed, published,
constituted, administered, maintained, or otherwise
distributed, including--
(A) whether the systems enhance or detract from--
(i) the decentralization of the
decentralized finance; and
(ii) the inherent benefits and risks of the
decentralized governance system; and
(B) any procedures, requirements, or best practices
that would mitigate the risks identified in
subparagraph (A)(ii);
(6) the benefits of decentralized finance, including--
(A) operational resilience and availability of
blockchain systems;
(B) interoperability of blockchain systems;
(C) market competition and innovation;
(D) transaction efficiency;
(E) transparency and traceability of transactions;
and
(F) disintermediation;
(7) the risks of decentralized finance, including--
(A) pseudonymity of users and transactions;
(B) disintermediation; and
(C) cybersecurity vulnerabilities;
(8) the extent to which decentralized finance has
integrated with the traditional financial markets and any
potential risks or improvements to the stability of the
markets;
(9) how the levels of illicit activity in decentralized
finance compare with the levels of illicit activity in
traditional financial markets;
(10) methods for addressing illicit activity in
decentralized finance and traditional markets that are tailored
to the unique attributes of each;
(11) how decentralized finance may increase the
accessibility of cross-border transactions; and
(12) the feasibility of embedding self-executing compliance
and risk controls into decentralized finance.
(b) Consultation.--In carrying out the study required under
subsection (a), the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall consult with the Secretary of
the Treasury on the factors described under paragraphs (7) through (10)
of subsection (a).
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Commodity Futures Trading Commission and the Securities
and Exchange Commission shall jointly submit to the relevant
congressional committees a report that includes the results of the
study required by subsection (a).
(d) GAO Study.--The Comptroller General of the United States
shall--
(1) carry out a study on decentralized finance that
analyzes the information described under paragraphs (1) through
(12) of subsection (a); and
(2) not later than 1 year after the date of enactment of
this Act, submit to the relevant congressional committees a
report that includes the results of the study required by
paragraph (1).
(e) Definitions.--In this section:
(1) Decentralized finance.--
(A) In general.--The term ``decentralized finance''
means blockchain applications (including decentralized
finance trading protocols and related decentralized
finance messaging systems) that allow users to engage
in financial transactions in a self-directed manner so
that a third-party intermediary does not effectuate the
transactions or take custody of digital commodities of
a user during any part of the transactions.
(B) Relationship to excluded activities.--The term
``decentralized finance'' shall not be interpreted to
limit or exclude any activity from the activities
described in section 15I(a) of the Securities Exchange
Act of 1934 or section 4v(a) of the Commodity Exchange
Act.
(2) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committees on Financial Services and
Agriculture of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban
Affairs and Agriculture, Nutrition, and Forestry of the
Senate.
SEC. 506. STUDY ON NON-FUNGIBLE TOKENS.
(a) In General.--The Comptroller General of the United States shall
carry out a study of non-fungible tokens that analyzes--
(1) the nature, size, role, purpose, and use of non-
fungible tokens;
(2) the similarities and differences between non-fungible
tokens and other digital commodities, including digital
commodities and permitted payment stablecoins, and how the
markets for those digital commodities intersect with each
other;
(3) how non-fungible tokens are minted by issuers and
subsequently administered to purchasers;
(4) how non-fungible tokens are stored after being
purchased by a consumer;
(5) the interoperability of non-fungible tokens between
different blockchain systems;
(6) the scalability of different non-fungible tokens
marketplaces;
(7) the benefits of non-fungible tokens, including
verifiable digital ownership;
(8) the risks of non-fungible tokens, including--
(A) intellectual property rights;
(B) cybersecurity risks; and
(C) market risks;
(9) whether and how non-fungible tokens have integrated
with traditional marketplaces, including those for music, real
estate, gaming, events, and travel;
(10) whether and how non-fungible tokens can be used to
facilitate commerce or other activities through the
representation of documents, identification, contracts,
licenses, and other commercial, government, or personal
records;
(11) any potential risks to traditional markets from such
integration; and
(12) the levels and types of illicit activity in non-
fungible tokens markets.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Comptroller General, shall make publicly available a
report that includes the results of the study required by subsection
(a).
SEC. 507. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST DIGITAL
COMMODITY HOLDERS.
(a) In General.--The Commodity Futures Trading Commission with the
Securities and Exchange Commission shall jointly conduct a study to
identify--
(1) the existing level of financial literacy among retail
digital commodity holders, including subgroups of investors
identified by the Commodity Futures Trading Commission with the
Securities and Exchange Commission;
(2) methods to improve the timing, content, and format of
financial literacy materials regarding digital commodities
provided by the Commodity Futures Trading Commission and the
Securities and Exchange Commission;
(3) methods to improve coordination between the Securities
and Exchange Commission and the Commodity Futures Trading
Commission with other agencies, including the Financial
Literacy and Education Commission as well as nonprofit
organizations and State and local jurisdictions, to better
disseminate financial literacy materials;
(4) the efficacy of current financial literacy efforts with
a focus on rural communities and communities with majority
minority populations;
(5) the most useful and understandable relevant
information, including clear disclosures, that retail digital
commodity holders need to make informed financial decisions
before engaging with or purchasing a digital commodity or
service that is typically sold to retail investors of digital
commodities;
(6) the most effective public-private partnerships in
providing financial literacy regarding digital commodities to
consumers;
(7) the most relevant metrics to measure successful
improvement of the financial literacy of an individual after
engaging with financial literacy efforts; and
(8) in consultation with the Financial Literacy and
Education Commission, a strategy (including to the extent
practicable, measurable goals and objectives) to increase
financial literacy of investors regarding digital commodities.
(b) Report.--Not later than 1 year after the date of the enactment
of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly submit a written
report on the study required by subsection (a) to the Committees on
Financial Services and on Agriculture of the House of Representatives
and the Committees on Banking, Housing, and Urban Affairs and on
Agriculture, Nutrition, and Forestry of the Senate.
SEC. 508. STUDY ON FINANCIAL MARKET INFRASTRUCTURE IMPROVEMENTS.
(a) In General.--The Commodity Futures Trading Commission and the
Securities and Exchange Commission shall jointly conduct a study to
assess whether additional guidance or rules are necessary to facilitate
the development of tokenized securities and derivatives products, and
to the extent such guidance or rules would foster the development of
fair and orderly financial markets, be necessary or appropriate in the
public interest, and be consistent with the protection of investors and
customers.
(b) Report.--
(1) Time limit.--Not later than 1 year after the date of
enactment of this Act, the Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly submit
to the relevant congressional committees a report that includes
the results of the study required by subsection (a).
(2) Relevant congressional committees defined.--In this
section, the term ``relevant congressional committees'' means--
(A) the Committees on Financial Services and on
Agriculture of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban
Affairs and on Agriculture, Nutrition, and Forestry of
the Senate.
SEC. 509. STUDY ON BLOCKCHAIN IN PAYMENTS.
(a) Study Required.--The Secretary of the Treasury shall conduct a
study on the potential use of blockchain technology by the domestic
private sector to address--
(1) fraud in payments;
(2) transaction costs and transaction times;
(3) automated payments; and
(4) efficiency in commercial transactions.
(b) Report to Congress.--Not later than one year after the date of
enactment of this Act, the Secretary shall submit a report to the
Committee on Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate that
summarizes the findings of the study required under subsection (a).
(c) Rule of Construction.--Nothing in this section shall be
construed to mandate the use of blockchain technology by any public or
private entity.
Union Calendar No. 134
119th CONGRESS
1st Session
H. R. 3633
[Report No. 119-168, Parts I and II]
_______________________________________________________________________
A BILL
To provide for a system of regulation of the offer and sale of digital
commodities by the Securities and Exchange Commission and the Commodity
Futures Trading Commission, and for other purposes.
_______________________________________________________________________
June 23, 2025
Reported from the Committee on Agriculture with an amendment
June 23, 2025
Reported from the Committee on Financial Services with an amendment;
committed to the Committee of the Whole House on the State of the Union
and ordered to be printed