[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4451 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 4451

To amend the securities laws to exclude investment contract assets from 
                     the definition of a security.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 16, 2021

   Mr. Emmer (for himself, Mr. Soto, and Mr. Khanna) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
To amend the securities laws to exclude investment contract assets from 
                     the definition of a security.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Securities Clarity Act''.

SEC. 2. SENSE OF CONGRESS; PURPOSE.

    (a) Sense of Congress.--It is the sense of Congress that--
            (1) among the ways that participants in the digital asset 
        industry have raised capital and earned revenue is through 
        arrangements in which investors provide funds for the 
        development of blockchain-based protocols in exchange for 
        digital assets or the future delivery of digital assets to be 
        used in those protocols;
            (2) although certain of those fundraising arrangements may 
        be deemed to be ``investment contracts'' within the meaning 
        given to that term in section 2(a) of the Securities Act of 
        1933 (the ``Securities Act''), the underlying assets sold 
        pursuant to these arrangements are frequently not themselves 
        inherently securities as defined in section 2(a) of the 
        Securities Act and, like other assets sold pursuant to 
        investment contracts in the past, do not become securities as 
        so defined merely because they are sold pursuant to an 
        investment contract;
            (3) under SEC v. W.J. Howey Co., 328 U.S. 293 (1946), and 
        its progeny, the Federal courts have consistently held that 
        ``an investment contract, for purposes of the Securities Act, 
        means a contract, transaction, or scheme whereby a person 
        invests his money in a common enterprise and is led to expect 
        profits solely from the efforts of the promoter or a third 
        party'', and have not endorsed the notion that an asset 
        underlying an investment contract (for example, the orange 
        groves sold in Howey) is also conferred ``security'' status 
        merely as a result of its being sold pursuant to the relevant 
        contract, transaction, or scheme;
            (4) although the distinction between an investment 
        contract, which is a security, and the assets sold pursuant to 
        it had been well-settled for purposes of section 2(a) of the 
        Securities Act, the two have been unnecessarily conflated in 
        the context of digital assets; and
            (5) this new approach, which conflates an investment 
        contract and the asset sold pursuant to that contract or 
        scheme, differs from the approach taken in many other major 
        jurisdictions around the world, has discouraged development of 
        the digital asset sector in the United States, and has hindered 
        innovation in that industry here without providing concomitant 
        benefits to those who enter into investment contracts for the 
        purpose of acquiring digital assets.
    (b) Purpose.--The purpose of this Act is to clarify and codify that 
an asset sold pursuant to an investment contract, whether tangible or 
intangible (including an asset in digital form), that is not otherwise 
a security under the Act, does not become a security as a result of 
being sold or otherwise transferred pursuant to an investment contract.

SEC. 3. 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)) is amended--
            (1) in paragraph (1), by adding at the end the following: 
        ``The term `security' does not include an investment contract 
        asset.''; and
            (2) by adding at the end the following:
            ``(20) The term `investment contact asset' means an asset, 
        whether tangible or intangible, including assets in digital 
        form--
                    ``(A) sold or otherwise transferred, or intended to 
                be sold or otherwise transferred, pursuant to an 
                investment contract; and
                    ``(B) that is not otherwise a security pursuant to 
                the first sentence of paragraph (1).''.
    (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 `security' 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 `security' 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 `security' 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 `security' does 
not include an investment contract asset (as such term is defined under 
section 2(a) of the Securities Act of 1933).''.
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