106 S4356 IS: Lummis-Gillibrand Responsible Financial Innovation Act
U.S. Senate
2022-06-07
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title; table of contents(a)This Act may be cited as the Lummis-Gillibrand Responsible Financial Innovation Act
.(b)The table of contents for this Act is as follows:Sec. 1. Short title; table of contents.Sec. 2. Definitions.TITLE I—DefinitionsSec. 101. Definitions.TITLE II—Responsible taxation of digital assetsSec. 201. Gain from disposition of digital assets.Sec. 202. Information reporting requirements imposed on brokers with respect to digital assets.Sec. 203. Sources of income.Sec. 204. Decentralized autonomous organizations.Sec. 205. Tax treatment of digital asset lending agreements and related matters.Sec. 206. Implementing effective IRS guidance.Sec. 207. Analysis of retirement investing in digital assets.Sec. 208. Digital asset mining and staking.Sec. 209. Conforming amendments.TITLE III—Responsible securities innovationSec. 301. Securities offerings involving certain intangible assets.Sec. 302. Termination of specified periodic disclosure requirements.Sec. 303. Guidance relating to satisfactory control location.Sec. 304. Custody and customer protection rules.TITLE IV—Responsible Commodities InnovationSec. 401. Definitions.Sec. 402. Reporting and recordkeeping.Sec. 403. CFTC jurisdiction over digital asset transactions.Sec. 404. Registration of digital asset exchanges.Sec. 405. Violations.Sec. 406. Market reports.Sec. 407. Bankruptcy treatment of digital assets.Sec. 408. Identified banking products.Sec. 409. Financial institutions definition.Sec. 410. Offsetting the costs of digital asset regulation.TITLE V—Responsible consumer protectionSec. 501. Responsible consumer protection.Sec. 502. Source code version of digital assets.Sec. 503. Settlement finality.Sec. 504. Notice to customers; enforcement.Sec. 505. Right to individual management of digital assets.Sec. 506. Technical and conforming amendments.TITLE VI—Responsible payments innovationSec. 601. Issuance of payment stablecoins.Sec. 602. Sanctions compliance responsibilities of payment stablecoin issuers.Sec. 603. Use of the official digital currency of the People’s Republic of China on Government devices.Sec. 604. Certificate of authority to commence banking.Sec. 605. Holding company supervision of covered depository institutions.Sec. 606. Implementation rules to preserve adequate competition in payment stablecoins.Sec. 607. Financial Crimes Enforcement Network Innovation Laboratory.TITLE VII—Responsible banking innovationSec. 701. Study on use of distributed ledger technology for reduction of risk in depository institutions.Sec. 702. Eligibility for Federal Reserve services to depository institutions.Sec. 703. Routing transit number issuance.Sec. 704. Clarifying application review times with respect to the Federal banking agencies.Sec. 705. Examination standards for digital asset activities.Sec. 706. Asset custody for depository institutions and certain other entities.Sec. 707. Reputation risk; requirements for account termination requests and orders.Sec. 708. Conforming amendments.TITLE VIII—Responsible interagency coordinationSec. 801. Timeline for interpretive guidance issued by Federal financial agencies.Sec. 802. Interstate sandbox activities.Sec. 803. State money transmission coordination relating to digital assets.Sec. 804. Information sharing among Federal and State financial regulators.Sec. 805. Analysis of decentralized finance markets and technologies.Sec. 806. Analysis of energy consumption in digital asset markets.Sec. 807. Analysis of self-regulation and registered digital asset associations.Sec. 808. Cybersecurity standards for digital asset intermediaries.Sec. 809. Advisory Committee on Financial Innovation.2.In this Act:(1)The term commodity has the meaning given the term in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).(2)Digital asset; digital asset intermediary; distributed ledger technology; payment stablecoin; smart contract; virtual currencyThe terms digital asset, digital asset intermediary, distributed ledger technology, payment stablecoin, smart contract, and virtual currency have the meanings given the terms in section 9801 of title 31, United States Code, as added by section 101 of this Act.(3)Except as otherwise expressly provided, the term security has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)). <enum>I</enum><header>Definitions</header><section id="idA245250970C8460DAFF371A23A8EB1A6"><enum>101.</enum><header>Definitions</header><subsection id="id53CE1D0DC0F9455CAC57FB26F61CE3D9"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Subtitle VI of title 31, United States Code, is amended by adding after chapter 97 the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="id625AAAB311394342A6213CB2C2816D48"><chapter id="idD6C3861E245642F387A59CCFA590D469" style="OLC"><enum>98</enum><header>Digital assets</header><toc><toc-entry level="section">Sec. </toc-entry><toc-entry level="section">9801. Definitions. </toc-entry></toc><section id="id3C6E6B41796A45028F98112F888C0D2A" section-type="section-one"><enum>9801.</enum><header>Definitions</header><text display-inline="no-display-inline">In this chapter:</text><paragraph id="ida58a494021f2423db7105923131a2c44"><enum>(1)</enum><header>Depository institution</header><text>The term <term>depository institution</term> has the meaning given the term in section 19(b)(1) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)</external-xref>).</text></paragraph><paragraph id="id28aafd7680ef40818dbb6e32bf308e4e"><enum>(2)</enum><header>Digital asset</header><text>The term <term>digital asset</term>—</text><subparagraph id="id1bcc6023bc2d4a18b006172ad748eac3"><enum>(A)</enum><text>means a natively electronic asset that—</text><clause id="id89fec3ade5e44d929d90fde5c9607b07"><enum>(i)</enum><text>confers economic, proprietary, or access rights or powers; and</text></clause><clause id="id09209bca80714e57afa965131603247a"><enum>(ii)</enum><text>is recorded using cryptographically secured distributed ledger technology, or any similar analogue; and</text></clause></subparagraph><subparagraph id="id53d9f19353174374b46fc081bd05773a"><enum>(B)</enum><text>includes—</text><clause id="id0595C75CE0F74E73AB67BEDE2D8D48E5"><enum>(i)</enum><text>virtual currency and ancillary assets in accordance with section 2(c)(2)(F) of the Commodity Exchange Act;</text></clause><clause id="idA3C698ADDD564680BCCE8CB154BFD94F"><enum>(ii)</enum><text>payment stablecoins in accordance with section 403 of the Commodity Futures Modernization Act of 2000 (<external-xref legal-doc="usc" parsable-cite="usc/7/27a">7 U.S.C. 27a</external-xref>); and</text></clause><clause id="id453EA6A930074EDFA74BF88E52704A85"><enum>(iii)</enum><text>any other security or commodity that meets the requirements of subparagraph (A).</text></clause></subparagraph></paragraph><paragraph id="id811790ac6d27453aac9c377ca398297d"><enum>(3)</enum><header>Digital asset intermediary</header><text>The term <term>digital asset intermediary</term>—</text><subparagraph id="idB9C111523D124B53B49AEE6C476E4EBA"><enum>(A)</enum><text>means—</text><clause id="idA4C83992C69B4401B5AE504327060D38"><enum>(i)</enum><text>a person who holds a license, registration, or other similar authorization, as specified by this chapter, the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>), the Corporation of Foreign Bondholders Act, 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77bb">15 U.S.C. 77bb et seq.</external-xref>), the Trust Indenture Act of 1939 (<external-xref legal-doc="usc" parsable-cite="usc/15/77aaa">15 U.S.C. 77aaa et seq.</external-xref>), the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>), the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-1">15 U.S.C. 80a–1 et seq.</external-xref>), the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1</external-xref>), and the Omnibus Small Business Capital Formation Act of 1980 (<external-xref legal-doc="usc" parsable-cite="usc/15/80c">15 U.S.C. 80c</external-xref>), that may conduct market activities relating in digital assets; or</text></clause><clause id="idFC03C2273F064DD4B2CB037CBCF77AB3"><enum>(ii)</enum><text>a person who is required by law to hold a license, registration, or other similar authorization described in clause (i);</text></clause></subparagraph><subparagraph id="id5FB81CBB0D1D47B49F72E770E7D2E5AB"><enum>(B)</enum><text>includes—</text><clause id="idB2DBB4ABC40A4F16A693A256EC4D94F9"><enum>(i)</enum><text>a person who holds a license, registration, or other similar authorization under State or Federal law that issues a payment stablecoin; and</text></clause><clause id="idD08DCAF18D7C4B78A9910CEED8D12271"><enum>(ii)</enum><text>a person who is required by law to hold a license, registration, or other similar authorization described in clause (i); and</text></clause></subparagraph><subparagraph id="idC94E11080E32419BAB64F75C29F43923"><enum>(C)</enum><text>does not include a depository institution.</text></subparagraph></paragraph><paragraph id="id18ceb6db78f24764bae90051393b8b1c"><enum>(4)</enum><header>Distributed ledger technology</header><text>The term <term>distributed ledger technology</term> means technology that enables the operation and use of a ledger that—</text><subparagraph id="idace49c889edf4c0aa8714d1deac9f2c7"><enum>(A)</enum><text>is shared across a set of distributed nodes that participate in a network and store a complete or partial replica of the ledger;</text></subparagraph><subparagraph id="id39e00d55142040f6be256bb4da390488"><enum>(B)</enum><text>is synchronized between the nodes;</text></subparagraph><subparagraph id="id8b9639d2cb6d4f0db3782260d4934e0c"><enum>(C)</enum><text>has data appended to the ledger by following the specified consensus mechanism of the ledger;</text></subparagraph><subparagraph id="id40832a084fc249e28413fb89b11effb7"><enum>(D)</enum><text>may be accessible to anyone or restricted to a subset of participants; and</text></subparagraph><subparagraph id="id530402215894400594d7ceda8fc93569"><enum>(E)</enum><text>may require participants to have authorization to perform certain actions or require no authorization.</text></subparagraph></paragraph><paragraph id="id2ee52a427e4d4450850e3075c5add96b"><enum>(5)</enum><header>Payment stablecoin</header><text>The term <term>payment stablecoin</term> means a digital asset that is—</text><subparagraph id="idb5838aebb95a43b79f6a783e3d82933d"><enum>(A)</enum><text>redeemable, on demand, on a 1-to-1 basis for instruments denominated in United States dollars;</text></subparagraph><subparagraph id="id5E753F8F4D90431B9F9A380899726AFE"><enum>(B)</enum><text>defined as legal tender under section 5103 or under the laws of a foreign country (excluding digital assets);</text></subparagraph><subparagraph id="id088504e60fb648d9a605f5dbef7e58ed"><enum>(C)</enum><text>issued by a business entity;</text></subparagraph><subparagraph id="id50b9691eb2d04b69ac63cd66279865ca"><enum>(D)</enum><text>accompanied by a statement from the issuer that the asset is redeemable, as specified in subparagraph (A), from the issuer or another identified person;</text></subparagraph><subparagraph id="id468308e9cea54e699ec3f7073a0550c4"><enum>(E)</enum><text>backed by 1 or more financial assets (excluding other digital assets), consistent with subparagraph (A); and</text></subparagraph><subparagraph id="idc5ad5a3cca9c4f0fa30f988d272d1f1b"><enum>(F)</enum><text>intended to be used as a medium of exchange.</text></subparagraph></paragraph><paragraph id="id557cdbb52f184d3ea9ada0df2cc5af9a"><enum>(6)</enum><header>Person who provides digital asset services</header><text>The term <term>person who provides digital asset services</term> means—</text><subparagraph id="id181d3169a5cf49d8896bf21c3dfe58f5"><enum>(A)</enum><text>a digital asset intermediary;</text></subparagraph><subparagraph id="ida977904a9b0d4faa9888d298ed783918"><enum>(B)</enum><text>a financial institution, as defined in section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>);</text></subparagraph><subparagraph id="idb6a8c23e8e7a453391532521cbfe1230"><enum>(C)</enum><text>any other person conducting digital asset activities pursuant to a Federal or State charter, license, registration, or other similar authorization; and</text></subparagraph><subparagraph id="id6A6CA8DDB69841368DA8D9771F9AA2D7"><enum>(D)</enum><text>any person who is required by law to hold a license, registration, or other similar authorization described in subparagraph (C).</text></subparagraph></paragraph><paragraph id="id27ef4bc58f054e2db5a89297152fbca1"><enum>(7)</enum><header>Security</header><text>The term <term>security</term> has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>).</text></paragraph><paragraph id="id83676d940db1439387377d246d29b29f"><enum>(8)</enum><header>Smart contract</header><text>The term <term>smart contract</term>—</text><subparagraph id="id9ADBE24296CD452F812FEBB9E6773F8F"><enum>(A)</enum><text>means—</text><clause id="id139c40f5828449389ea22520628c773b"><enum>(i)</enum><text>computer code deployed to a distributed ledger technology network that executes an instruction based on the occurrence or nonoccurrence of specified conditions; or</text></clause><clause id="id6399DCF5D797498A86215B6DFA6B4B13"><enum>(ii)</enum><text>any similar analogue; and</text></clause></subparagraph><subparagraph id="id5C5BA97707AD48CEA53D001B5ED0EEA1"><enum>(B)</enum><text>includes taking possession or control of a digital asset and transferring the asset or issuing executable instructions for these actions.</text></subparagraph></paragraph><paragraph id="id05EEB8331FA44C838D6333902582236C"><enum>(9)</enum><header>Source code version</header><text>The term <term>source code version</term>—</text><subparagraph id="id9559F7B069FE48C48A328672C88182FD"><enum>(A)</enum><text>means the source code version comprising a digital asset; and</text></subparagraph><subparagraph id="id8D0D82C76CAE4659A22514D0A8600706"><enum>(B)</enum><text>does not include software used to manage or facilitate transactions in a digital asset. </text></subparagraph></paragraph><paragraph id="idddfffdc1f37f417f97e40f96b8d0cf89"><enum>(10)</enum><header>Virtual currency</header><text>The term <term>virtual currency</term>—</text><subparagraph id="id18829dfa62064d5988422d9534771187"><enum>(A)</enum><text>means a digital asset that—</text><clause id="id57355c00d06a4221ac70a945e3da702a"><enum>(i)</enum><text>is used primarily as a medium of exchange, unit of account, store of value, or any combination of such functions; </text></clause><clause id="idb69e03fca9564e3b9fe260d5d6a31459"><enum>(ii)</enum><text>is not legal tender, as described in section 5103; and</text></clause><clause id="idf0ddd05de6284f35b80e2135e2c5630e"><enum>(iii)</enum><text>does not derive value from or is backed by an underlying financial asset (except other digital assets); and</text></clause></subparagraph><subparagraph id="id5ebada16bcf14b79b45fadfe849e4507"><enum>(B)</enum><text>includes a digital asset, consistent with subparagraph (A) that is accompanied by a statement from the issuer that a denominated or pegged value will be maintained and be available upon redemption from the issuer or other identified person, based solely on a smart contract.</text></subparagraph></paragraph></section></chapter><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="idB1751D4AA92C4BFE9294BE14DA2050DB"><enum>(b)</enum><header>Technical and conforming amendment</header><text>The table of contents for subtitle VI of title 31, United States Code, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="idDA8255C7586840BBBE9AC6BC74175BAD"><toc><multi-column-toc-entry level="chapter" bold="on"><toc-enum>98.</toc-enum><level-header level="chapter"> Digital assets</level-header><target>9801</target></multi-column-toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><enum>II</enum><header>Responsible taxation of digital assets</header><section id="H813011CC5F2343E0A75FB5F94CC37544" section-type="subsequent-section"><enum>201.</enum><header>Gain from disposition of digital assets</header><subsection display-inline="no-display-inline" id="H438478ED85204CF19B9C3F047FCEB04E"><enum>(a)</enum><header>In general</header><text>Part III of subchapter B of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:</text><quoted-block id="HCF90E36CDE114860A619D1F1FC3A1548" display-inline="no-display-inline" style="OLC"><section id="H7CEA82119BD14C1E84BA4EB4F0EC04C3"><enum>139J.</enum><header>Gain or loss from sale or exchange of virtual currency</header><subsection id="HCA5775F8E121462DA8C501EA76DE0182"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Gross income shall not include gain or loss from the sale or exchange of virtual currency in a personal transaction (as defined in section 988(e)(3)) for goods and services.</text></subsection><subsection id="HDAB29DC9F70042D893892D8CE4C9443A"><enum>(b)</enum><header>Limitation</header><paragraph id="HA2CBE3D41FBE4C8EABCE3064862DDD41"><enum>(1)</enum><header>In general</header><text>The amount of gain or loss excluded from gross income under subsection (a) with respect to a sale or exchange shall not exceed $200.</text></paragraph><paragraph commented="no" id="H3DDC6592B51F4D73AEDC3237B6088E00"><enum>(2)</enum><header>Aggregation rule</header><text display-inline="yes-display-inline">For purposes of this subsection, all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange.</text></paragraph></subsection><subsection id="id2cd77de2b663494d843c9532de29e02d"><enum>(c)</enum><header>Other sales or exchanges</header><text>Subsection (a) shall not apply to sales or exchanges in which virtual currency is sold or exchanged for cash, cash equivalents, digital assets (as defined in section 9801 of title 31, United States Code), or other securities or commodities. </text></subsection><subsection id="H66FB0EDA5E414C6DB1B27CBAE21CBCE2"><enum>(d)</enum><header>Virtual currency</header><text display-inline="yes-display-inline">For purposes of this section, the term <term>virtual currency</term> has the meaning given such term in section 9801 of title 31, United States Code.</text></subsection><subsection id="HCB3E351F15F24C68ACF6A9D8C843B7E4"><enum>(e)</enum><header>Inflation adjustment</header><text>In the case of any taxable year beginning in a calendar year after 2023, the dollar amount in subsection (b) shall be increased by an amount equal to—</text><paragraph id="H2F9E5D317A6C405DBC2893FA9EE60333"><enum>(1)</enum><text>such dollar amount, multiplied by</text></paragraph><paragraph id="H9EFFEDEDB3664965B38507A4E6DA8F0D"><enum>(2)</enum><text>the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting <quote>calendar year 2022</quote> for <quote>calendar year 2016</quote> in subparagraph (A)(ii) thereof.</text></paragraph><continuation-text continuation-text-level="subsection">Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.</continuation-text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H1D5F75C6B09F4407AEF766F177854B6B"><enum>(b)</enum><header>Clerical amendment</header><text>The table of sections for part III of subchapter B of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/26/1">chapter 1</external-xref> of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 139I the following new item:</text><quoted-block display-inline="no-display-inline" id="H0ADC1E98945343BDA54ECF4575D2C542" style="OLC"><toc regeneration="no-regeneration"><toc-entry level="section">Sec. 139J. Gain or loss from sale or exchange of virtual currency.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H2CF9A21A7898494FAC55139A28DE7502"><enum>(c)</enum><header>Reporting of gains or losses</header><text display-inline="yes-display-inline">The Secretary shall issue regulations providing for information returns on virtual currency transactions for which gain or loss is recognized.</text></subsection><subsection id="H994D538A46F14506AC3F6A6E5A8AE113" commented="no" display-inline="no-display-inline"><enum>(d)</enum><header>Effective date</header><text>The amendments made by this section shall apply to transactions entered into after December 31, 2022.</text></subsection></section><section id="id15E4DE8019724F19A37646EA842FCE96"><enum>202.</enum><header>Information reporting requirements imposed on brokers with respect to digital assets</header><subsection id="H5D122888D8384A56BEA690732E134BA2"><enum>(a)</enum><header>Clarification of definition of broker</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/6045">Section 6045(c)(1)(D)</external-xref> of the Internal Revenue Code of 1986 is amended to read as follows:</text><quoted-block style="OLC" display-inline="no-display-inline" id="H9174DC755F024364B50E1458BA1EF13A"><subparagraph id="HD64CE69524B349CD98FBFEE02FC46C27"><enum>(D)</enum><text display-inline="yes-display-inline">any person who (for consideration) stands ready in the ordinary course of a trade or business to effect sales of digital assets at the direction of their customers.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HDD0A3C1A56944FDE8740253FE6D343AC"><enum>(b)</enum><header>Reporting of digital assets</header><paragraph id="H2C09A12B139246EA9DE65624027DED60"><enum>(1)</enum><header>Brokers</header><subparagraph id="H3BCC6EA14E03416980670B6BCDE0F6D7"><enum>(A)</enum><header>Definition of digital asset</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc" parsable-cite="usc/26/6045">Section 6045(g)(3)(D)</external-xref> of the Internal Revenue Code of 1986 is amended to read as follows:</text><quoted-block style="OLC" id="H032769E0193A4512B1512CC0A073B711" display-inline="no-display-inline"><subparagraph id="H7AC9AC0D08EE45E78C120C3BDCF9F220"><enum>(D)</enum><header>Digital asset</header><text display-inline="yes-display-inline">The term <quote>digital asset</quote> has the meaning given such term in section 9801 of title 31, United States Code.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph><subparagraph id="H3DF031071B4842D4B8009B0A8C77C9E1"><enum>(B)</enum><header>Applicable date</header><text>Section 6045(g)(3)(C)(iii) of such Code is amended to read as follows: </text><quoted-block style="OLC" id="H3BAC271B95054062AE7033BEA4645B9D" display-inline="no-display-inline"><clause id="H71BD5D20471E4641AFEDC20AB2A17117"><enum>(iii)</enum><text display-inline="yes-display-inline">January 1, 2025, in the case of any specified security which is a digital asset, and</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H734DAEE22DC24591A774F333F1DE496A"><enum>(2)</enum><header>Furnishing of information</header><text>Section 6045A(d) of such Code is amended to read as follows:</text><quoted-block style="OLC" id="H8D844A1401BF46B5918380CC587510CC" display-inline="no-display-inline"><subsection id="H67AAC84F43F34D47B77529D57BA7E686"><enum>(d)</enum><header>Return requirement for certain transfers of digital assets not otherwise subject to reporting</header><text display-inline="yes-display-inline">Any broker, with respect to any transfer (which is not part of a sale or exchange executed by such broker) during a calendar year of a covered security which is a digital asset from an account wholly controlled and maintained by such broker to an account which is not maintained by, or an address not associated with, a person that such broker knows or has reason to know is also a broker, shall make a return for such calendar year, in such form as determined by the Secretary, showing the information otherwise required to be furnished with respect to transfers subject to subsection (a). Information reported by brokers under this section shall be limited to customer information that is voluntarily provided by the customer and held by the broker for a legitimate business purpose.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="HAAC23799068243A7AAFF18F16630EBA3"><enum>(c)</enum><header>Effective dates</header><text>The amendments made by this section shall apply to returns required to be filed and statements required to be furnished after December 31, 2025.</text></subsection></section><section id="id9F4B32CBA27144EC9CD121EE70C71680"><enum>203.</enum><header>Sources of income</header><subsection id="idD97FFFFCC18A412487C3B8F256023DFC"><enum>(a)</enum><header>In general</header><text>Paragraph (2) of <external-xref legal-doc="usc" parsable-cite="usc/26/864">section 864(b)</external-xref> of the Internal Revenue Code of 1986 is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id4F3B0ECE9ED341119D540731E4BED108"><subparagraph id="id4002c8325cbd49eaac2d5f8134a7a815"><enum>(C)</enum><header>Digital assets</header><clause id="id1574b222821444f281bb62a3aa86831e"><enum>(i)</enum><header>In general</header><text>Trading in digital assets through a resident broker, commission agent, custodian, digital asset exchange, or other independent agent.</text></clause><clause id="id0c90a0dee09c43be8684a24ac22f0b94"><enum>(ii)</enum><header>Trading for taxpayer’s own account</header><text>Trading in digital assets for the taxpayer’s own account, whether by the taxpayer or the taxpayer's employees or through a resident broker, commission agent, custodian, digital asset exchange, or other agent, and whether or not any such employee or agent has discretionary authority to make decisions in effecting the transactions. This clause shall not apply in the case of a dealer in digital assets.</text></clause><clause id="ide40e42adbd014ec08fa63dd713687069"><enum>(iii)</enum><header>Definitions</header><text>For purposes of this subparagraph—</text><subclause id="id9247cf23dd884b8a8af2c3af6e811969"><enum>(I)</enum><header>Digital asset exchange</header><text>The term <term>digital asset exchange</term> means a centralized or decentralized platform which facilitates the transfer of digital assets.</text></subclause><subclause id="id37ef7c31210b40668f1af63687ea5e47"><enum>(II)</enum><header>Digital asset</header><text>The term <term>digital asset</term> has the meaning given such term in section 9801 of title 31, United States Code.</text></subclause></clause><clause id="idc873146114cf49609356a7892be8fdd3"><enum>(iv)</enum><header>Limitation</header><text>This subparagraph shall apply only if the digital assets are of a kind customarily dealt in on a digital asset exchange and if the transaction is of a kind customarily consummated at such exchange.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="idEB3729D6CFFF4DAFB90327C7CE932936"><enum>(b)</enum><header>Conforming amendment</header><text>Subparagraph (D) of <external-xref legal-doc="usc" parsable-cite="usc/26/864">section 864(b)(2)</external-xref> of the Internal Revenue Code of 1986, as redesignated by subsection (a), is amended by striking <quote>(A)(i) and (B)(i)</quote> and inserting <quote>(A)(i), (B)(i), and (C)(i)</quote>.</text></subsection><subsection id="id9C518A03099442DC869D7694A5DE3C92"><enum>(c)</enum><header>Effective date</header><text>The amendments made by this section shall apply to sales and exchanges after December 31, 2022.</text></subsection></section><section id="id2AB27C5AD58747FFAF064A3E24F86A4E"><enum>204.</enum><header>Decentralized autonomous organizations</header><subsection id="id669b1e2a9fb449b8a7fdb241380e7880"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/7701">Section 7701(a)</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id029a3ac3f82b4024bca2e7fe6f2e98be"><paragraph id="id3fdf1ee7aa70445aad60eaf0ab923856"><enum>(51)</enum><header>Decentralized autonomous organizations</header><subparagraph id="idcff4ed212cdd4799ad83cd2ca42770ae"><enum>(A)</enum><header>In general</header><text>The default classification of a decentralized autonomous organization shall be as a business entity which is not a disregarded entity.</text></subparagraph><subparagraph id="ide1954513f37c49caa515980c16214e6c"><enum>(B)</enum><header>Classification of other activities</header><text>The following shall not be considered a business activity of such organization for purposes of determining whether such organization is described in section 501(c)(7):</text><clause id="id7CB8539BA5EF454D9DF66B6CA32B4A5F"><enum>(i)</enum><text>Treasury management, including mining and staking of digital assets (as defined in section 9801 of title 31, United States Code).</text></clause><clause id="idB2D6AA9D3A0D48679F7EDD59C658362F"><enum>(ii)</enum><text>Raising funds for a charitable purpose.</text></clause></subparagraph><subparagraph id="idd4e36d88bb2848e99fa9cf3c39592444"><enum>(C)</enum><header>Decentralized autonomous organization</header><text>The term <term>decentralized autonomous organization</term> means an organization—</text><clause id="id0ff8768daf5d4676951c217612659cbe"><enum>(i)</enum><text>which utilizes smart contracts (as defined in section 9801 of title 31, United States Code) to effectuate collective action for a business, commercial, charitable, or similar entity,</text></clause><clause id="id876d9088841a4aadb635b2118c29a96a"><enum>(ii)</enum><text>governance of which is achieved primarily on a distributed basis, and</text></clause><clause id="id3397906f20c246648c30809dfca18563"><enum>(iii)</enum><text>which is properly incorporated or organized under the laws of a State or foreign jurisdiction as a decentralized autonomous organization, cooperative, foundation, or any similar entity.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id6eca1a2ebe05402d8da33ac282b5b53c"><enum>(b)</enum><header>Effective date</header><text>Except as provided by subsection (c), the amendments made by this section shall apply to taxable years beginning after December 31, 2022.</text></subsection></section><section id="id5E7D74E4EBC141FE8A0EBE01F8B70715"><enum>205.</enum><header>Tax treatment of digital asset lending agreements and related matters</header><subsection id="idF0BA862B475848F18FBB4E6B7A524123"><enum>(a)</enum><header>In general</header><text>Subsection (a) of <external-xref legal-doc="usc" parsable-cite="usc/26/1058">section 1058</external-xref> of the Internal Revenue Code of 1986 is amended by striking <quote>(as defined in section 1236(c))</quote>.</text></subsection><subsection id="id2d4eac0eef294e6bbfbfc9fb401add6f"><enum>(b)</enum><header>Fixed term</header><text>Paragraph (1) of subsection (b) of <external-xref legal-doc="usc" parsable-cite="usc/26/1058">section 1058</external-xref> of the Internal Revenue Code of 1986 is amended by inserting <quote>, including a fixed-term transfer that occurs in the ordinary course of a securities lending or investment management business</quote> after <quote>transferred</quote>.</text></subsection><subsection id="id4f8adda1e0ec439f82380399f01d968a"><enum>(c)</enum><header>Basis</header><text>Subsection (c) of <external-xref legal-doc="usc" parsable-cite="usc/26/1058">section 1058</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following: <quote>All appropriate basis adjustments to an agreement under subsection (b) shall be made, as determined by the Secretary, including upon the return of the lent securities to the taxpayer.</quote>.</text></subsection><subsection id="id29E3126B0489409B8DCBBB9CFAC4C785"><enum>(d)</enum><header>Securities</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/1058">Section 1058</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsections:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id04615CC2B6F74E13A84BAF63F5C5BDAC"><subsection id="id3dc3d23aac8a48379e72879cce7ef49c"><enum>(d)</enum><header>Securities</header><text>For purposes of this section, the term <term>securities</term> has the meaning given such term by section 1236(c), except that such term includes any digital asset (as defined in section 9801 of title 31, United States Code) and, with respect to a digital asset, does not require a call option.</text></subsection><subsection id="iddedbc2a4b37a4bbf81c2bff067daec25"><enum>(e)</enum><header>Income</header><text>An amount equal to the income which would otherwise accrue to the lender but for a lending transaction under this section shall be included in gross income of the lender.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="idd9ccd86065a04c0ebb1c1dcf988ce6f8"><enum>(e)</enum><header>Rule of construction</header><text>Nothing in this section shall be construed to create any inference with respect to the classification of any digital asset as security under the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) or the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>).</text></subsection><subsection id="id80a6d4c7039f46d7b8c72a86d48764ce"><enum>(f)</enum><header>Rulemaking authority</header><text>The Secretary of the Treasury (or the Secretary's delegate) may adopt rules to implement this section, including the application of this section to forks, airdrops, and similar subsidiary value.</text></subsection><subsection id="idF476265ED93F42FDAB26541A4C308CD6"><enum>(g)</enum><header>Effective date</header><text>The amendments made by this section shall apply to sales and exchanges after December 31, 2022. </text></subsection></section><section id="id432E3E336C184A4C86B91671173C64BD"><enum>206.</enum><header>Implementing effective IRS guidance</header><subsection id="id1B7B2357C0D648DABE0ECA48288F009B"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Not later than 1 year after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary's delegate) shall adopt guidance relating to the following:</text><paragraph id="ide3fc8ea02b044584bda90d5fc692f802" commented="no"><enum>(1)</enum><text>Classification of forks, airdrops, and similar subsidiary value as taxable, contingent upon the affirmative claim and disposition of the subsidiary value by a taxpayer. Such guidance shall also permit a taxpayer to provide notification through an annual return or other appropriate means to the Internal Revenue Service relating to claim and disposition of, or disclaimer of, subsidiary value. </text></paragraph><paragraph id="idf69fdd184a3d45a79f7a2931a6569fc2" commented="no"><enum>(2)</enum><text>Merchant acceptance of digital assets and the tax treatment of payments and receipts, consistent with the amendments made by section 80603 of the Infrastructure Investment and Jobs Act, as amended by section 203.</text></paragraph><paragraph id="idd3b59847ab3b4770a9ca49b0db67156f" commented="no"><enum>(3)</enum><text>Treatment of digital asset mining and staking, including mining and staking rewards, in which income is not realized until disposition of the assets produced or received in connection with such activity, in accordance with <external-xref legal-doc="usc" parsable-cite="usc/26/451">section 451(l)</external-xref> of the Internal Revenue Code of 1986 (as added by this Act).</text></paragraph><paragraph id="ide48f0ca387db4cc78dae1d7d264578c2" commented="no"><enum>(4)</enum><text>Classification of charitable contributions greater than $5,000 of digital assets which are traded on established financial markets as contributions of readily valued property not requiring a qualified appraisal for purposes of <external-xref legal-doc="usc" parsable-cite="usc/26/170">section 170(f)(11)(A)</external-xref> of the Internal Revenue Code of 1986, as amended by this Act.</text></paragraph><paragraph id="id815c068da293468f8498ba94b08f5b3b"><enum>(5)</enum><text>Characterization of payment stablecoins (as defined in section 9801 of title 31, United States Code) as indebtedness.</text></paragraph></subsection><subsection id="idf5cbbf160e2540dca775d98ad51c23d7"><enum>(b)</enum><header>Effective date</header><text>The guidance adopted under this section shall be applicable on a prospective basis for taxable years beginning after December 31, 2023. </text></subsection></section><section id="ideda1d96249ab4a71865f45f5f980ae79"><enum>207.</enum><header>Analysis of retirement investing in digital assets</header><subsection id="id36a19028fb094123bd8fb9bcb3daba0f"><enum>(a)</enum><text>Not later than March 1, 2023, the Comptroller General of the United States shall conduct a study and provide a report to the entities specified in subsection (b) regarding the following issues relating to retirement investing in digital assets:</text><paragraph id="ida52a6f23961d4f10b219a7ea8838e641"><enum>(1)</enum><text>Potential benefits to diversification and return of an investor’s retirement portfolio.</text></paragraph><paragraph id="idbe9fe141feab42c29f530645c60804a9"><enum>(2)</enum><text>Appropriate asset allocations, including among other alternative investments.</text></paragraph><paragraph id="id64b78b38fee542f28e115cda03db1ee6"><enum>(3)</enum><text>Consumer education, financial literacy and investment advisor training relating to digital assets.</text></paragraph><paragraph id="id238dcb79e3da47e1ae98e501d35231fc"><enum>(4)</enum><text>Risk.</text></paragraph><paragraph id="id9664226b520143a2814679e0d4e0a6bf"><enum>(5)</enum><text>Legal and operational barriers to effective retirement investing in digital assets.</text></paragraph><paragraph id="id9c852618a9b44cab965d81eb633cc1c8"><enum>(6)</enum><text>Any other topic determined to be material by the Comptroller General relating to retirement investing in digital assets.</text></paragraph></subsection><subsection id="id23040bf4c4264b02982e35c4aaba039c"><enum>(b)</enum><text>The Comptroller General shall provide the report required by subsection (a) to the following:</text><paragraph id="id14e01391b589414a80fbdf1905be1e17"><enum>(1)</enum><text>The Committee on Banking, Housing, and Urban Affairs of the Senate.</text></paragraph><paragraph id="id708301fc20e048d295494baaf3e3e493"><enum>(2)</enum><text>The Committee on Finance of the Senate.</text></paragraph><paragraph id="id3b594cb493e344ebbc6d28e020c35c2f"><enum>(3)</enum><text>The Committee on Health, Education, Labor, and Pensions of the Senate.</text></paragraph><paragraph id="id2236043df3f1407a9cea56ca81de8288"><enum>(4)</enum><text>The Committee on Financial Services of the House of Representatives.</text></paragraph><paragraph id="id82ff55b3c8f2456b938a4bff748db1ed"><enum>(5)</enum><text>The Committee on Ways and Means of the House of Representatives.</text></paragraph><paragraph id="id2f0b462b06fe4f9e849b8666241d6786"><enum>(6)</enum><text>The Committee on Education and Labor of the House of Representatives.</text></paragraph><paragraph id="idc607130104fe4b14a28db59f9ef1dd7f"><enum>(7)</enum><text>The Secretary of the Treasury.</text></paragraph><paragraph id="ide5c81110d41f401e87285fdfa76784d0"><enum>(8)</enum><text>The Secretary of Labor. </text></paragraph></subsection></section><section commented="no" id="id81CE91DE7E4641FCB6849AECB1C054FC"><enum>208.</enum><header>Digital asset mining and staking</header><subsection commented="no" id="id0B1FAD0976E4407CB9E93C1153DCCD6B"><enum>(a)</enum><header>In general</header><text><external-xref legal-doc="usc" parsable-cite="usc/26/451">Section 451</external-xref> of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idb12d0a48b324480695a02842bbf24e78"><subsection id="ida8bd166370404d828192ea5bedee0620"><enum>(l)</enum><header>Deferral of income recognition for digital asset activities</header><text>In the case of a taxpayer who conducts digital asset mining or staking activities, the amount of income relating to such activities shall not be included in the gross income of the taxpayer until the taxable year of the disposition of the assets produced or received in connection with the mining or staking activities.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id6D018989805B48919DB4E8990001C6A9" commented="no" display-inline="no-display-inline"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall apply to taxable years beginning after December 31, 2022.</text></subsection></section><section display-inline="no-display-inline" commented="no" id="id478CA5435DB34757BF1CCAC218D74040"><enum>209.</enum><header>Conforming amendments</header><subsection commented="no" id="idB49997A348C64909A175A1BF33B8E383"><enum>(a)</enum><header>Charitable contributions</header><paragraph commented="no" id="id5F0CD3D86D1B40FE89B7033BE5D8A83C"><enum>(1)</enum><header>In general</header><text>Subclause (I) of <external-xref legal-doc="usc" parsable-cite="usc/26/170">section 170(f)(11)(A)(ii)</external-xref> of the Internal Revenue Code of 1986 is amended by inserting <quote>, digital assets (as defined in section 9801 of title 31, United States Code)</quote> after <quote>6050L(a)(2)(B))</quote>.</text></paragraph><paragraph id="idA2BDE6DC828049AC9B7A806BC90FFF93" commented="no" display-inline="no-display-inline"><enum>(2)</enum><header>Effective date</header><text>The amendment made by this subsection shall apply to taxable years beginning after December 31, 2022. </text></paragraph></subsection><subsection id="idDE907BB27376463899C0ED83CD3210FA"><enum>(b)</enum><header>Other conforming amendments</header><paragraph id="idD40CB60ACC41428BB65A980B0FB6FF02"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">Title 31, United States Code, is amended—</text><subparagraph id="id937FB473EF364B2286F3C868F9CED0BE"><enum>(A)</enum><text display-inline="yes-display-inline">in section 5312(a)(2)—</text><clause id="id8FAC965B04814FD3AB6222111827012F"><enum>(i)</enum><text display-inline="yes-display-inline">by redesignating subparagraphs (A) through (Z) as clauses (i) through (xxvi), respectively;</text></clause><clause id="idAFD04AF0CAF147D1840192364D6AE00F"><enum>(ii)</enum><text display-inline="yes-display-inline">in the matter preceding clause (i), as so designated, by striking <quote><quote>institution</quote> means—</quote> and inserting</text><quoted-block style="OLC" display-inline="yes-display-inline" id="id5A97D69F60E64B40B510FED01F6E606C"><text><quote>institution</quote>—</text><subparagraph id="id5C1F1261B80F49318452AC8BDD20E5C3"><enum>(A)</enum><text display-inline="yes-display-inline">means—</text></subparagraph><after-quoted-block>; </after-quoted-block></quoted-block></clause><clause id="id1BE66EBF137E4E3FA7871553A179C6DA"><enum>(iii)</enum><text>in clause (xxvi), as so designated, by striking the period at the end and inserting <quote>; and</quote>; and</text></clause><clause id="id9B431C767DA64225B7A1C2248A83FBF6"><enum>(iv)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id9A811C9A43DC44D39C494FC9B20BCB66"><subparagraph id="idD0ECD342F988439CBA9303647BCE188A"><enum>(B)</enum><text>does not include a decentralized autonomous organization, as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/7701">section 7701(a)</external-xref> of the Internal Revenue Code of 1986.</text></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="id0c9504d4a0214090acfda465848bdfa5"><enum>(B)</enum><text>in section 5336(a)(11)(B)(2)—</text><clause id="id13892F44800040FEA7705463C16F61F5"><enum>(i)</enum><text>by redesignating clause (xxv) as clause (xxvi); and</text></clause><clause id="id6D37088F013549B7A8A85AEEC540B491"><enum>(ii)</enum><text>by adding after clause (xxv) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id1c4ec53586914758b6c4734d03e4568b"><clause id="id278be51cdfe54f49b2f791713d25636f"><enum>(xxv)</enum><text>A decentralized autonomous organization, as defined in <external-xref legal-doc="usc" parsable-cite="usc/26/7701">section 7701(a)</external-xref> of the Internal Revenue Code of 1986; and</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></clause></subparagraph></paragraph><paragraph id="id22122E5DBFF54DDBB684FFFB842C0D94"><enum>(2)</enum><header>Anti-Money Laundering Act of 2020</header><text>Section 6110(a) of the Anti-Money Laundering Act of 2020 (division F of <external-xref legal-doc="public-law" parsable-cite="pl/116/283">Public Law 116–283</external-xref>) is amended by striking paragraph (1) and inserting the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idF402051674DB442AB897B634ACF3E3F4"><subparagraph id="id87762ec171bf4c0a890a5aaa12146007"><enum>(A)</enum><text>by redesignating clauses (xxv) and (xxvi) as clauses (xxvi) and (xxvii), respectively, and adjust the margins accordingly; and</text></subparagraph><subparagraph id="id8a838cb7984d4e24923606ea803dec03"><enum>(B)</enum><text>by inserting after clause (xxiv) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id11B096B0D46746B489740F07E67190B8"><subparagraph id="id1986690896d04292800b717fa7d343b4"><enum>(Y)</enum><text>a person engaged in the trade of antiquities, including an advisor, consultant, or any other person who engages as a business in the solicitation or the sale of antiquities, subject to regulations prescribed by the Secretary;</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection></section><enum>III</enum><header>Responsible securities innovation</header><section id="idc0d87e8b85ec46c4a92501d11d169d1a"><enum>301.</enum><header>Securities offerings involving certain intangible assets</header><text display-inline="no-display-inline">Title I of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id6A5BEE5557484D5D95925BCB1638CD68"><section id="id1122888cd26a48d09a544a5661d4ac1e"><enum>41.</enum><header>Securities offerings involving certain intangible assets</header><subsection id="id2b788ccc1d4047b6ac8c6a7db4a618cb"><enum>(a)</enum><header>Definitions</header><text>In this section: </text><paragraph id="id4E14A9D4478945B3800257AEC8A8A01C"><enum>(1)</enum><header>Ancillary asset</header><subparagraph id="idB7BBC39BD1BF4239A421C273569533F1"><enum>(A)</enum><header>In general</header><text>The term <term>ancillary asset</term> means an intangible, fungible asset that is offered, sold, or otherwise provided to a person in connection with the purchase and sale of a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>).</text></subparagraph><subparagraph id="id885A6B1BBA5E4203B6F8DC543E556246"><enum>(B)</enum><header>Exclusion</header><text>The term <term>ancillary asset</term> does not include an asset that provides the holder of the asset with any of the following rights in a business entity:</text><clause id="id5cae7cc79d014d288b487f6141b6014d"><enum>(i)</enum><text>A debt or equity interest in that entity.</text></clause><clause id="ide68c2153d4ca41da9b74920e2205f597"><enum>(ii)</enum><text>Liquidation rights with respect to that entity.</text></clause><clause id="id18CBE500EE8D4A2EABDDE1C0D638C5D5"><enum>(iii)</enum><text>An entitlement to an interest or dividend payment from that entity.</text></clause><clause id="ida582c7eb92504e5faeb5f69fcbf7ceed"><enum>(iv)</enum><text>A profit or revenue share in that entity solely from the entrepreneurial or managerial efforts of others.</text></clause><clause id="id1b9c8f60cb844eb980a22bb48167369b"><enum>(v)</enum><text>Any other financial interest in that entity. </text></clause></subparagraph></paragraph><paragraph id="idF843297F5E364DBDBB0509D1DA8E7787"><enum>(2)</enum><header>Foreign private issuer</header><text>The term <term>foreign private issuer</term> means a foreign issuer, other than a foreign government, except that the term does not include a foreign issuer that, as of the last business day of the most recently completed fiscal quarter of the issuer, satisfies the following conditions:</text><subparagraph id="id312D2D4B0B3944C197702484B41A6C67"><enum>(A)</enum><text>More than 50 percent of the outstanding voting securities of the issuer are directly or indirectly owned by residents of the United States.</text></subparagraph><subparagraph id="id70D952DC1CF1451CB2D308145D1825DE"><enum>(B)</enum><text>Any of the following:</text><clause id="idCD3339FCFCCD4355B9CABADAEC9B9635"><enum>(i)</enum><text>The majority of the executive officers or directors of the issuer are citizens or residents of the United States.</text></clause><clause id="idFC22117A7EBA4E26AECF21938C763AEC"><enum>(ii)</enum><text>More than 50 percent of the assets of the issuer are located in the United States.</text></clause><clause id="id9A9331B4D1F24CB0AC5C3DBC540C274A"><enum>(iii)</enum><text>The business of the issuer is principally administered in the United States.</text></clause></subparagraph></paragraph></subsection><subsection id="id0b8f54f014ad4c0d8b0e77d010d5ed11"><enum>(b)</enum><header>Disclosure requirements</header><paragraph id="id37969c0c98674a8fa289736a617b1e29"><enum>(1)</enum><header>Initial compliance with specified periodic disclosure requirements</header><text>Subject to paragraphs (4) and (5), an issuer engaged in business in or affecting interstate commerce, or that is organized outside of the United States and is not a foreign private issuer, that offers, sells, or otherwise provides a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>), and that provides or proposes to provide any holder of the security with an ancillary asset, shall be subject to the periodic disclosure requirements under subsection (c) for the 1-year period beginning on the date that is 180 days after the first date on which the security is offered, sold, or otherwise provided by the issuer, if—</text><subparagraph id="ida11b387e5cae460987b56e1c68fdb673"><enum>(A)</enum><text>the average daily aggregate value of all ancillary assets offered, sold, or otherwise provided by the issuer in relation to the offer, sale, or provision of the security in all spot markets open to the public in the United States (based on the knowledge of the issuer after due inquiry) is greater than $5,000,000 for the 180-day period immediately succeeding the date of that first offer, sale, or provision; and</text></subparagraph><subparagraph id="idf91d52e51e1c424b8ee886a67910bf5a"><enum>(B)</enum><text>during the 180-day period described in subparagraph (A), the issuer, or any person owning not less than 10 percent of any class of equity securities of the issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.</text></subparagraph></paragraph><paragraph id="id411c88bf36504f938fe0c26b638e719b"><enum>(2)</enum><header>Ongoing compliance with specified periodic disclosure requirements</header><text>Subject to paragraphs (4) and (5), an issuer that is engaged in business in or affecting interstate commerce, or that is organized outside of the United States and is not a foreign private issuer, that offers, sells, or otherwise provides a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>), and that provides the holder of the security with an ancillary asset in connection with the acquisition of the security, shall be subject to the periodic disclosure requirements under subsection (c) for a given fiscal year of that issuer, if, in the immediately preceding fiscal year of the issuer (or any portion thereof)—</text><subparagraph id="id1c7284e318ea4667b990e54a972f5e44"><enum>(A)</enum><text>the average daily aggregate value of all trading in the ancillary asset in all spot markets open to the public in the United States was greater than $5,000,000, based on the knowledge of the issuer after due inquiry; and</text></subparagraph><subparagraph id="idc454a0e147004c3f97521e5693497bec"><enum>(B)</enum><text>the issuer, or any person owning not less than 10 percent of any class of equity securities of the issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.</text></subparagraph></paragraph><paragraph id="idAA34028E30604807813C64B2DFD0BDA6"><enum>(3)</enum><header>Transition rule</header><text>Subject to paragraphs (4) and (5), an issuer that is engaged in business in or affecting interstate commerce, or that is organized outside of the United States and is not a foreign private issuer, that offers, sells, or otherwise provides a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>), and that provides the holder of the security with an ancillary asset before January 1, 2023, in connection with the acquisition of the security shall be subject to the periodic disclosure requirements under subsection (c) beginning in the first fiscal year of the issuer that begins on or after that date, if, in the immediately preceding fiscal year of the issuer—</text><subparagraph id="id0825C9A1307A41868011A7DEE20E385E"><enum>(A)</enum><text>the average daily aggregate value of trading in the ancillary asset in all spot markets open to the public for which trading volume is generally available was greater than $5,000,000, based on the knowledge of the issuer after due inquiry; and</text></subparagraph><subparagraph id="idF128CF6899D54E02846CFA697FC0F2D9"><enum>(B)</enum><text>the issuer, or any person owning not less than 10 percent of any class of equity securities of the issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset.</text></subparagraph></paragraph><paragraph id="id5c2649f2b3fc4bbca547a08df71a4acd"><enum>(4)</enum><header>Treatment of ancillary assets</header><subparagraph id="id2A69639821B34486AF3F6FDC71F80CD4"><enum>(A)</enum><header>In general</header><text>Notwithstanding any other provision of law, if an issuer issues a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>), is subject to paragraph (1), (2), or (3), and is in compliance with the periodic disclosure requirements under subsection (c), an ancillary asset provided directly or indirectly by the issuer shall be presumed— </text><clause id="id9DF68785D7DC4465841BBFD88949464C"><enum>(i)</enum><text>to be a commodity, consistent with section 2(c)(2)(F) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(c)(2)(F)</external-xref>); and </text></clause><clause id="idAD5A8597BE6448C99FF22AEEECA9FF3F"><enum>(ii)</enum><text>not to be a security under—</text><subclause id="id91D2C651EE624A19BB73A98FFBA31F8B"><enum>(I)</enum><text>section 3(a); </text></subclause><subclause id="id115242BF35FE422597032ABBF39A499E"><enum>(II)</enum><text>such section 2(a)(1); </text></subclause><subclause id="id11DE083528A1400B8B0E5C6F62E2ACEF"><enum>(III)</enum><text>section 2(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)</external-xref>); </text></subclause><subclause id="id213F8970FBF14F8283463983D57493CC"><enum>(IV)</enum><text>section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>); or </text></subclause><subclause id="id369F94F454CC4D378118E467F2E8F32C"><enum>(V)</enum><text>any applicable provision of State law. </text></subclause></clause></subparagraph><subparagraph id="idd4a21890c2274efe97914f5f8bea371f"><enum>(B)</enum><header>Other persons</header><text>A person who is not an issuer, an entity controlled by an issuer (including a person that acquires an ancillary asset from such an issuer for the purpose of resale or distribution of the ancillary asset), or a person acting at the direction or on the behalf of an issuer shall be not required to treat an ancillary asset provided by an issuer as a security under this Act or any provision of law described in subparagraph (A)(ii).</text></subparagraph><subparagraph id="id34c5c2f60587459698fb3f1b847a56d9"><enum>(C)</enum><header>Exception</header><clause id="id216446AA5B204F68B266AD9CEA5EC440"><enum>(i)</enum><header>In general</header><text>Subparagraph (A) shall not apply to an ancillary asset if a court of the United States of competent jurisdiction, after an appropriate proceeding, issues an order finding that there is not a substantial basis for the presumption that the ancillary asset is a commodity and not a security under subparagraph (A).</text></clause><clause id="idAE0313191AF44F2C8034FB2DA452A6D6"><enum>(ii)</enum><header>Rules of construction</header><text>Nothing in this subparagraph shall be construed to preclude the Commission from entering into a settlement agreement relating to violations or alleged violations of this section. Compliance under this section shall not be used in any administrative or judicial proceeding that an ancillary asset is a security. </text></clause></subparagraph></paragraph><paragraph id="id84B7AFBD030C41DBA9A8CF79853B33DC"><enum>(5)</enum><header>Calculation</header><text>For the purposes of paragraphs (1), (2), and (3), the calculation of daily aggregate value shall be based on data disclosed by spot markets or otherwise available to the public for inspection.</text></paragraph></subsection><subsection id="id3b063a58de0f480582470b8aad696c2a"><enum>(c)</enum><header>Specified periodic disclosure requirements</header><text>If an issuer is subject to paragraph (1), (2), or (3) of subsection (b), the issuer shall furnish, or cause the relevant affiliate to furnish, to the Commission, on a semi-annual basis, information that the Commission may, by rule, require relating to the issuer and any relevant ancillary asset, as necessary or appropriate in the public interest or for the protection of investors, which shall be exclusively comprised of the following:</text><paragraph id="id27217d9037434ca586749c0c67a91b56"><enum>(1)</enum><text>Basic corporate information regarding the issuer, including the following:</text><subparagraph id="idA144BD2929EE42E486EFB8A9369D39D3"><enum>(A)</enum><text>The experience of the issuer in developing assets similar to the ancillary asset.</text></subparagraph><subparagraph id="idDDF4E83AB8CD4AABAC20D259FE01F094"><enum>(B)</enum><text>If the issuer has previously provided ancillary assets to purchasers of securities, information on the subsequent history of those previously provided ancillary assets, including price history, if the information is publicly available.</text></subparagraph><subparagraph id="idC88CA099B7324DFAB98EF12525E62A61"><enum>(C)</enum><text>The activities that the issuer has taken in the relevant disclosure period, and is projecting to take in the 1-year period following the submission of the disclosure, with respect to promoting the use, value, or resale of the ancillary asset (including any activity to facilitate the creation or maintenance of a trading market for the ancillary asset and any network or system that utilizes the ancillary asset).</text></subparagraph><subparagraph id="idC3DE9A1906E44CBEB156925EA6EC9E1F"><enum>(D)</enum><text>The anticipated cost of the activities of the issuer in subparagraph (C) and whether the issuer has unencumbered, liquid funds equal to that amount.</text></subparagraph><subparagraph id="id52959B07F09C4504B2EE0FB9CA6EA6DC"><enum>(E)</enum><text>To the extent the ancillary asset involves the use of a particular technology, the experience of the issuer with the use of that technology.</text></subparagraph><subparagraph id="id28E4291CF4A549C59A160C533F78EC71"><enum>(F)</enum><text>The backgrounds of the board of directors (or equivalent body), senior management, and key employees of the issuer, the experience or functions of whom are material to the value of the ancillary asset, as well as any personnel changes relating to the issuer during the period covered by the disclosure.</text></subparagraph><subparagraph id="idA2AB49DDC4874DFC8493BE2F550B0ED0"><enum>(G)</enum><text>A description of the assets and liabilities of the issuer, to the extent material to the value of the ancillary asset.</text></subparagraph><subparagraph id="idAF6D37FDD870437EBFDB2F63F84CC302"><enum>(H)</enum><text>A description of any legal proceedings in which the issuer is engaged (including inquiries by governmental agencies into the activities of the issuer), to the extent material to the value of the ancillary asset.</text></subparagraph><subparagraph id="id8EA0946E36044F97A3CA0DE1EF9338DC"><enum>(I)</enum><text>Risk factors relating to the impact of the issuer on, or unique knowledge relating to, the value of the ancillary asset.</text></subparagraph><subparagraph id="id717E481E20B8418BBBCDAC6AC94D2E6F"><enum>(J)</enum><text>Information relating to ownership of the ancillary asset by—</text><clause id="idE768D77FDE16478B879A33B9B310FC18"><enum>(i)</enum><text>persons owning not less than 10 percent of any class of equity security of the issuer; and</text></clause><clause id="id440D54E49873472EA3B1AB810506D5E1"><enum>(ii)</enum><text>the management of the issuer.</text></clause></subparagraph><subparagraph id="id8E089430A78A4E44B96AFBBFAF61BE75"><enum>(K)</enum><text>Information relating to transactions involving the ancillary asset by the issuer with related persons, promoters, and control persons.</text></subparagraph><subparagraph id="id12E80539DE0F4FB785256821DBD5EC96"><enum>(L)</enum><text>Recent sales or similar dispositions of ancillary assets by the issuer and affiliates of the issuer.</text></subparagraph><subparagraph id="idAE0ABF5897BA4C298486FE06FD74699A"><enum>(M)</enum><text>Purchases or similar dispositions of ancillary assets by the issuer and affiliates of the issuer.</text></subparagraph><subparagraph id="idFDF50F10DFEF4E47883EB6A3C858D154"><enum>(N)</enum><text>A going concern statement from the chief financial officer of the issuer or equivalent official, signed under penalty of perjury, stating whether the issuer maintains the financial resources to continue business as a going concern for the 1-year period following the submission of the disclosure, absent a material change in circumstances.</text></subparagraph></paragraph><paragraph id="id35cc6bfeaf824680b1a0f3bae49f2ff1"><enum>(2)</enum><text>Information relating to the ancillary asset, including the following:</text><subparagraph id="id2b0b617b3a5a4bf38aba24a44a16207f"><enum>(A)</enum><text>A general description of the ancillary asset, including the standard unit of measure with respect to the ancillary asset, the intended or known functionality and uses of the ancillary asset, the market for the ancillary asset, other assets or services that may compete with the ancillary asset, and the total supply of the ancillary asset or the manner and rate of the ongoing production or creation of the ancillary asset.</text></subparagraph><subparagraph id="id1113b208849247d5a3b365b6accff921"><enum>(B)</enum><text>If ancillary assets have been offered, sold, or otherwise provided by the issuer to investors, intermediaries, or resellers, a description of the amount of assets offered, sold, or provided, the terms of each such transaction, and any contractual or other restrictions on the resale of the assets by intermediaries. </text></subparagraph><subparagraph id="idBA9D28DED3054E689776A8027810B497"><enum>(C)</enum><text>If ancillary assets were distributed without charge, a description of each distribution, including the identity of any recipient that received more than 5 percent of the total amount of the ancillary assets in any such distribution.</text></subparagraph><subparagraph id="id6b0b4a1c33ae4c79a7230ff7b8c673ed"><enum>(D)</enum><text>The amount of ancillary assets owned by the issuer.</text></subparagraph><subparagraph id="id7b0822b8a01245b59c8a42851ea1748e"><enum>(E)</enum><text>For the 1-year period following the submission of the disclosure, a description of the plans of the issuer to support (or to cease supporting) the use or development of the ancillary asset, including markets for the ancillary asset and each platform or system that uses the ancillary asset.</text></subparagraph><subparagraph id="id4e2b2e41d6b34f04a84c022a222dff04"><enum>(F)</enum><text>Each third party not affiliated with the issuer, the activities of which may have a material impact on the value of the ancillary asset.</text></subparagraph><subparagraph id="id2abff91ad47948f085f2b220fb10d02b"><enum>(G)</enum><text>Risk factors known to the issuer that may limit demand for, or interest in, the ancillary asset.</text></subparagraph><subparagraph id="idfdd78bf80bfd43f599bbdc435c96d019"><enum>(H)</enum><text>The names and locations of the markets in which the ancillary asset is known by the issuer to be available for sale or purchase.</text></subparagraph><subparagraph id="id425e17d3cbe649fb9c1ec4bbe33f8994"><enum>(I)</enum><text>To the extent available to the issuer, the average daily price for a constant unit of value of the ancillary asset during the relevant reporting period, as well as the 12-month high and low prices for the ancillary asset.</text></subparagraph><subparagraph id="ida5811fde7ed74ecb8d59fe1c8b86dc55"><enum>(J)</enum><text>If applicable, information relating to any external audit of the code and functionality of the ancillary asset, including the entity performing the audit and the experience of the entity in conducting similar audits.</text></subparagraph><subparagraph id="id0d846fd3f0e74927a4c868e7362e5775"><enum>(K)</enum><text>If applicable, any third-party valuation report or economic analysis regarding the ancillary asset or the projected market of the ancillary asset, which shall include the entity performing the valuation or analysis and the experience of the entity in conducting similar reports or analyses.</text></subparagraph><subparagraph id="id8ffe5cd2d7354c5da348fc302aee145b"><enum>(L)</enum><text>If the ancillary asset is intangible, information relating to custody by the owner of the ancillary asset or a third party.</text></subparagraph><subparagraph id="idc254c318e16d4ee4b33fda68f1848298"><enum>(M)</enum><text>Information on intellectual property rights claimed or disputed relating to the ancillary asset.</text></subparagraph><subparagraph id="id24e8f927144e4ef1b5285827719cc8d4"><enum>(N)</enum><text>A description of the technology underlying the ancillary asset.</text></subparagraph><subparagraph id="idabc7a974500845028deb366263cf660c"><enum>(O)</enum><text>Any material tax considerations applicable to owning, storing, using, or trading the ancillary asset.</text></subparagraph><subparagraph id="id7d3b2e62de274a36b14fc35cc71a0f58"><enum>(P)</enum><text>Any material legal or regulatory considerations applicable to owning, storing, using, or trading the ancillary asset, including any legal proceeding that may impact the value of the ancillary asset.</text></subparagraph><subparagraph id="ida3f53e217a514fa8ad4f6282e62ee51f"><enum>(Q)</enum><text>Any other material factor or information that may impact the value of the ancillary asset and about which the issuer is reasonably aware.</text></subparagraph></paragraph></subsection><subsection id="id2af780c446a3411a9f79c3cb528cdd10"><enum>(d)</enum><header>Application to successor entities and certain affiliates</header><paragraph id="id41F4B44F275446D0BD658FB51DFB9AD6"><enum>(1)</enum><header>In general</header><text>If an issuer would otherwise be subject to specified periodic disclosure requirements under subsection (c) and is no longer in operation, any successor entity that directly or indirectly received not less than 50 percent of the proceeds raised by the sale of the related securities of that issuer, and that is engaged in entrepreneurial or managerial efforts that primarily determine the value of the applicable ancillary asset, shall furnish, or cause to be furnished, to the Commission the information required under that subsection.</text></paragraph><paragraph id="idC920DAA1FC384868A5A2B573FF522871"><enum>(2)</enum><header>Certain affiliates</header><text>If an entity controlled by an issuer is subject to specified periodic disclosure requirements under subsection (c) and is engaged in entrepreneurial or managerial efforts that primarily determine the value of an ancillary asset, the entity may furnish to the Commission the information required under that subsection.</text></paragraph></subsection><subsection id="idA93FA66E28794E3686142725B24D9F47"><enum>(e)</enum><header>Voluntary disclosure</header><text>An issuer that is not subject to the specified periodic disclosure requirements under subsection (c) and that offers or sells a security through an arrangement or scheme that constitutes an investment contract, as that term is used in section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>), and that provides the holder of that security with an ancillary asset in connection with the acquisition of the security may voluntarily furnish to the Commission the information required under that subsection if the issuer believes that it is reasonably likely that the issuer will become subject to those requirements in the future.</text></subsection><subsection id="idECE36D0FC723444285865C26AE9CB3AD"><enum>(f)</enum><header>Exemptions</header><text>The Commission may, by order, exempt an ancillary asset from the specified periodic disclosure requirements under subsection (c) if the Commission determines that the public policy goals of disclosure and consumer protection are not satisfied by requiring disclosures relating to an ancillary asset.</text></subsection><subsection id="idddb96f9abec8455690e05e4e36f1656e"><enum>(g)</enum><header>Rule of construction</header><text>If an issuer fails to comply with a provision of this section, an ancillary asset provided by the issuer shall not be presumed to be a security under a provision of law described in subsection (b)(4)(A)(ii), solely because of such failure.</text></subsection><subsection id="ida4ff948151d7453e865c66dc531383bc"><enum>(h)</enum><header>Rules</header><text>The Commission may adopt rules and guidance to implement this section, consistent with the statutory intent of this section.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="id2f5ab8327e5a4226b3c22595dc52e3cb"><enum>302.</enum><header>Termination of specified periodic disclosure requirements</header><text display-inline="no-display-inline">Section 41 of the Securities Exchange Act of 1934, as added by section 301 of this Act, is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id42c61a3bdb204f6986f823c10136de23"><subsection id="id3c0bfbf245c148b78b71e56557c8728b"><enum>(i)</enum><header>Termination of specified periodic disclosure requirements</header><paragraph id="idB5DFCED2948D4412B82BEF944C20C6FB"><enum>(1)</enum><header>In general</header><text>The obligation of an issuer to furnish the information required under subsection (c) shall terminate on the date that is 90 days, or such shorter period as the Commission may determine, after the date on which the issuer files a certification described in paragraph (2).</text></paragraph><paragraph id="idCE39C020BB29448584C162C265286876"><enum>(2)</enum><header>Certification</header><subparagraph id="id21D95964991E40E6AD8DF4B0DFBCEB41"><enum>(A)</enum><header>In general</header><text>A certification filed under paragraph (1) shall be supported by reasonable evidence, based on the knowledge of the issuer filing the certification, after due inquiry, that— </text><clause id="id210E3A407A394E4DAACA2330EF80464E"><enum>(i)</enum><text>the average daily aggregate value of all trading in the applicable ancillary asset in all spot markets open to the public in the United States in the 12-month period preceding the date on which the certification is filed was not greater than $5,000,000; or</text></clause><clause id="idF6D7252BD494408F9187ED83EF824E3E"><enum>(ii)</enum><text>during the 12-month period preceding the date on which the certification is filed, neither the applicable issuer, nor any entity controlled by the applicable issuer, engaged in entrepreneurial or managerial efforts that primarily determined the value of the ancillary asset. </text></clause></subparagraph><subparagraph id="idFD8EBCA1433E4BE9AF5D7259191D8774"><enum>(B)</enum><header>Denial</header><clause id="idF762CC694A684811B363FC583D27967B"><enum>(i)</enum><header>In general</header><text>Subject to subparagraph (C)(ii), the Commission may, by majority vote and after notice and opportunity for hearing, deny a certification filed under paragraph (1) if the Commission finds that the certification is not supported by substantial evidence. </text></clause><clause id="idCCB20CD93D664AC18DA0B897FE6A4543"><enum>(ii)</enum><header>Effect</header><text>The denial, under clause (i), of a certification filed under paragraph (1)—</text><subclause id="id017D5FCAEFED4993A83E3A1F9CAF5123"><enum>(I)</enum><text>shall terminate the certification so filed; and</text></subclause><subclause id="idC38D58814CCF408896B8E7AB38FFA651"><enum>(II)</enum><text>shall not prevent the applicable issuer from filing another certification under paragraph (1), if the re-filed certification is filed not earlier than 180 days after the date on which the original certification is denied.</text></subclause></clause></subparagraph><subparagraph id="id6171CC33145148DCACF24CCA51E9C304"><enum>(C)</enum><header>Pending status</header><clause id="id1888A9DCB1E94736BA474F0196D04D4E"><enum>(i)</enum><header>In general</header><text>Termination of the disclosure requirements described in paragraph (1) applicable to an issuer that has filed a certification under that paragraph shall be deferred pending review by the Commission of the evidence supporting the certification.</text></clause><clause id="id3ADBA58B201B4D8DA752ECEB790976E5"><enum>(ii)</enum><header>Effect of delay</header><text>If, as of the date that is 90 days after receiving a certification filed under paragraph (1), the Commission has not requested additional evidence with respect to the certification from the applicable issuer, the disclosure obligations that are the subject of the certification shall terminate.</text></clause></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="id967a8888ca2a4688bcb5d23d4fd14737"><enum>303.</enum><header>Guidance relating to satisfactory control location</header><text display-inline="no-display-inline">Not later than 180 days after the date of the enactment of this Act, the Securities and Exchange Commission (referred to in this title as the <quote>Commission</quote>) shall issue guidance relating to section 240.15c3–3 of title 17, Code of Federal Regulations, or any successor regulation, providing that the requirement to designate a satisfactory control location for a digital asset that is, or may represent ownership of, a security may be satisfied by protecting the digital asset through commercially reasonable cybersecurity practices to maintain control of sufficient private key material to transfer control of the digital asset to another person, or to cause another person to obtain control of the digital asset, including by means of a smart contract that generates private key material without the involvement of a natural person.</text></section><section id="id9430c6176d704ff7bcf38f1a06574175"><enum>304.</enum><header>Custody and customer protection rules</header><subsection id="idB7F2558C94E943A5A3F5F11FAFC5EA5F"><enum>(a)</enum><header>In general</header><paragraph id="idE1CF6AE4768D40E0B5EB46170682ECC7"><enum>(1)</enum><header>Modernization of existing rules and adoption of new rules</header><text display-inline="yes-display-inline">Not later than 18 months after the date of enactment of this Act, the Commission shall— </text><subparagraph id="id223CD9ED21ED472BABC813719BF593D0"><enum>(A)</enum><text display-inline="yes-display-inline">complete the multi-year study of the Commission with respect to the modernization of the rules of the Commission relating to customer protection (section 240.15c3–3 of title 17, Code of Federal Regulations) and custody of securities, digital assets, and client funds (section 275.206(4)–2 of title 17, Code of Federal Regulations); and </text></subparagraph><subparagraph id="idC6BBAB3BFB6F4D3F80B988432268AFF3"><enum>(B)</enum><text display-inline="yes-display-inline">consistent with the results of the study described in subparagraph (A), adopt final rules relating to the issues described in paragraph (2). </text></subparagraph></paragraph><paragraph id="idAE158F74DD8B4037A14729A54EC1155F"><enum>(2)</enum><header>Contents</header><text display-inline="yes-display-inline">The final rules adopted under paragraph (1)(B) shall address the following concepts:</text><subparagraph id="ide370bb71f8a84b6fa2a9cf2081da06ee"><enum>(A)</enum><text>Investor protection and education with respect to digital assets.</text></subparagraph><subparagraph id="idc22b8b3bf7fc4c77962dadd39ab2fd57"><enum>(B)</enum><text>Digital assets, distributed ledger technology, and use of collaborative custody or multi-signature arrangements, including distribution of private key material and resulting obligations.</text></subparagraph><subparagraph id="ida4013710c3814579a0f0a82eb153346b"><enum>(C)</enum><text>Changes in market structure and asset characteristics, including disuse of physical securities and assets and appropriate custodial methods for electronically native assets.</text></subparagraph><subparagraph id="ida57083e0b76b464589fc8cfcb9b04b79"><enum>(D)</enum><text>Reduction of regulatory burden.</text></subparagraph><subparagraph id="id61e3aa148e0e42bb9a1f3b63a7163630"><enum>(E)</enum><text>Use of technology to facilitate regulatory compliance and risk management.</text></subparagraph><subparagraph id="id22fd0c6e5a8343dc956930bfda81b85d"><enum>(F)</enum><text>Parity of State- and nationally chartered banks, as defined in section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>), with respect to asset custody in a manner consistent with that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>) and other existing law.</text></subparagraph><subparagraph id="id3343e0b3c54a4c0a9f5058489fbb521b"><enum>(G)</enum><text>Standards under which an issuer of an unregistered digital asset that is, or may represent ownership of, a security is not required to utilize a registered transfer agent.</text></subparagraph><subparagraph id="idf68b769eca4c4c7d9a1e77f0924725bc"><enum>(H)</enum><text>Specification of the digital assets which constitute client funds under section 275.206(4)–2 of title 17, Code of Federal Regulations. </text></subparagraph></paragraph></subsection><subsection id="id95dce77a0b1349628154d2f2f1348d43" commented="no" display-inline="no-display-inline"><enum>(b)</enum><header>Digital assets and securities</header><text>Not later than 270 days after the date of enactment of this Act, the Commission shall adopt final guidance permitting, for the purposes of section 240.15c3–3(b) of title 17, Code of Federal Regulations, a broker or a dealer to perform, within the same legal entity, both trading and custodial activities relating to fully paid and excess margin digital assets, including virtual currency and digital assets that are securities or may represent ownership of securities, in addition to traditional securities, client funds, and other assets permitted by the Commission to be within the control of a broker or dealer.</text></subsection></section><enum>IV</enum><header>Responsible Commodities Innovation</header><section id="id8cb8d3e79e564c9d9acc36f40a8d946a"><enum>401.</enum><header>Definitions</header><text display-inline="no-display-inline">Section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>) is amended—</text><paragraph id="idb2e3dab4bd35419f97510f98f2bfac12"><enum>(1)</enum><text>in paragraph (9), by striking <quote>and frozen concentrated orange juice</quote> and inserting <quote>frozen concentrated orange juice, and a digital asset (consistent with section 2(c)(2)(F))</quote>;</text></paragraph><paragraph id="id25BAEEDEF6EF4DFE80F02BFB33F328E8"><enum>(2)</enum><text>by inserting after paragraph (15) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id98D5E3FD8BA64D2CA5F58DDB3AAC68B8"><paragraph id="idFE95067398C3405CA04CF95FC00947A0" commented="no" display-inline="no-display-inline"><enum>(15A)</enum><header display-inline="yes-display-inline">Digital asset</header><subparagraph commented="no" display-inline="no-display-inline" id="idB4E58D632A5E40B8ACF975E316B1B026"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">Except as provided in subparagraph (B), the term <term>digital asset</term> has the meaning given the term in section 9801 of title 31, United States Code.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idFCFA80ACBD014B45B47F30F7FD4EF4D9"><enum>(B)</enum><header>Exclusion</header><text display-inline="yes-display-inline">The term <term>digital asset</term> does not include an asset that provides the holder of the asset with any of the following rights in a business entity: </text><clause id="id7de79b8409fb4ab5a8b96251b2be0fe9"><enum>(i)</enum><text>A debt or equity interest in that entity.</text></clause><clause id="id9da13956675d4c1ba27a5ecba74883c4"><enum>(ii)</enum><text>Liquidation rights with respect to that entity.</text></clause><clause id="idf4cab26517cf46858f4dbdeac7ec5d0e"><enum>(iii)</enum><text>An entitlement to an interest or dividend payment from that entity.</text></clause><clause id="idd594ff555e9e4e22a7a34eaccbdf8249"><enum>(iv)</enum><text>A profit or revenue share in that entity derived solely from the entrepreneurial or managerial efforts of others.</text></clause><clause id="id6b2ad9dc327040d7adeaf57a1be549a8"><enum>(v)</enum><text>Any other financial interest in that entity.</text></clause></subparagraph></paragraph><paragraph id="id78f01d94a5d142eba7ff448e1f14e57b"><enum>(15B)</enum><header>Digital asset exchange</header><text>The term <term>digital asset exchange</term> means a trading facility that lists for trading at least 1 digital asset.</text></paragraph><after-quoted-block>;</after-quoted-block></quoted-block></paragraph><paragraph id="idfee9ba4b19f643d193a12c497fdf8034"><enum>(3)</enum><text>in paragraph (28)(A)(i)—</text><subparagraph id="id9EAD61624CC1421D999913F4FA654C3E"><enum>(A)</enum><text>in subclause (I)—</text><clause id="idB9FF6488C9464AFDB445612BB7C7E89D"><enum>(i)</enum><text>in item (aa)—</text><subclause id="idb3f095ece4064902bd6716b5ce670e0f"><enum>(I)</enum><text>in subitem (EE), by striking <quote>or</quote> at the end; and</text></subclause><subclause id="id646f8daae67c4d4aba93aa2d3d15f74e"><enum>(II)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id407ba720e1ad400fade4099719854a31"><subitem id="id239626e882b84311a464ee8b7ea37172"><enum>(GG)</enum><text>the purchase or sale of a digital asset that is traded on or subject to the rules of a registered entity;</text></subitem><after-quoted-block>; </after-quoted-block></quoted-block></subclause></clause><clause id="idF92D6C99C1F8459CA5AFE8BBDCFC4062"><enum>(ii)</enum><text>in item (bb), by striking <quote>and</quote> and inserting <quote>or</quote>; and</text></clause><clause id="id31277AA44E484E07B379F219A03BF378"><enum>(iii)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id17D51AAD81F14C2CA383AA85F3604A1E"><item id="id60CB784D5257459AB99F12B1C6C35B40"><enum>(cc)</enum><text>acting as a counterparty to any cash or spot agreement, contract, or transaction involving a digital asset with a person who is not an eligible contract participant, unless the activity is—</text><subitem id="id6068C91F9D684B8D930B09E95782845E"><enum>(AA)</enum><text>conducted in compliance with the laws of the State in which the activity occurs;</text></subitem><subitem id="id650D470E84BF4ADDBFBEBDF5798C2042"><enum>(BB)</enum><text>subject to regulation by another Federal authority; or</text></subitem><subitem id="idE269410B2D284FB8B161C04E3620D03D"><enum>(CC)</enum><text>separately regulated under this Act; and</text></subitem></item><after-quoted-block>; and</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="id4AB73D8578C44E88ABA195E41DEE43FF"><enum>(B)</enum><text>in subclause (II), by striking <quote>items (aa) or (bb)</quote> and inserting <quote>item (aa), (bb), or (cc)</quote>;</text></subparagraph></paragraph><paragraph id="id31FB60F6A4B64F8FA4E142603C06FA9F"><enum>(4)</enum><text>by inserting after paragraph (39) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idD612C71503824E428D82E1DB547D06B6"><paragraph commented="no" display-inline="no-display-inline" id="id0B21AFCCBEC64578A702DB33FEAF9D71"><enum>(39A)</enum><header>Registered digital asset exchange</header><text display-inline="yes-display-inline">The term <term>registered digital asset exchange</term> means a digital asset exchange registered under section 5i.</text></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="idfa6c353d2b3e46f6bf3801392482ad39"><enum>(5)</enum><text>in paragraph (40)—</text><subparagraph id="id21af82e1aec74990b26a39c98413d2f9"><enum>(A)</enum><text>in subparagraph (E), by striking <quote>and</quote> at the end;</text></subparagraph><subparagraph id="id593ca500ffc142f191646781b072cae0"><enum>(B)</enum><text>by redesignating subparagraph (F) as subparagraph (G); and </text></subparagraph><subparagraph id="id77F6C0006B8145D69D7D15096D26FDDD"><enum>(C)</enum><text>by inserting after subparagraph (E) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id3f12d839b6dd4e09aa4d5f9cdb30266e"><subparagraph id="id2140313f95454eecb7460a899c7c41c8"><enum>(F)</enum><text>a registered digital asset exchange; and</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></section><section id="idA2E8F3E9AFB64B72852BA2257A2D9D99"><enum>402.</enum><header>Reporting and recordkeeping</header><text display-inline="no-display-inline">Section 4g of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6g">7 U.S.C. 6g</external-xref>) is amended—</text><paragraph id="id769553c31a144c21a296aa61b8f78c56"><enum>(1)</enum><text>in subsection (a), by inserting <quote>digital assets or</quote> before <quote>commodities</quote>; and</text></paragraph><paragraph id="id7db9b8203e594081b8b3f8cfd9de9e6c"><enum>(2)</enum><text>in subsection (d), in the second sentence, by striking <quote>commodity futures.</quote> and inserting <quote>commodities.</quote>. </text></paragraph></section><section id="id224ed40c21b54311b0b38d2315bf954f"><enum>403.</enum><header>CFTC jurisdiction over digital asset transactions</header><subsection id="id5cbe0934e47f4223813bcbf6f36cf090"><enum>(a)</enum><header>Commission jurisdiction over retail digital asset transactions</header><paragraph id="idd1d0f16974eb4a539c3292b595ce789b"><enum>(1)</enum><header>In general</header><text>Section 2(c)(2) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(c)(2)</external-xref>) is amended—</text><subparagraph id="id7115e29a89f048f580d1bdeaa84082f8"><enum>(A)</enum><text>in subparagraph (D)(ii)—</text><clause id="id571c315bc1af444c9a2db3ad2c546218"><enum>(i)</enum><text>in subclause (III), in the matter preceding item (aa), by inserting <quote>of a commodity, other than a digital asset,</quote> before <quote>that</quote>; </text></clause><clause id="id1f88d4e39b984658bc2917ffb2756831"><enum>(ii)</enum><text>by redesignating subclauses (IV) and (V) as subclauses (V) and (VI), respectively; and </text></clause><clause id="id70826A63F39C42C8B847B8BB23D53A8D"><enum>(iii)</enum><text>by inserting after subclause (III) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id6d2cb5d56cf14f1f831970a207e58150"><subclause id="id347aa79857fb4c50ba8c686d95e6d4ed"><enum>(IV)</enum><text>a contract of sale of a digital asset that—</text><item id="idc8b8333bc68e4c448d3eaa583d14aafd"><enum>(aa)</enum><text>results in actual delivery within 2 days or such other period as the Commission may determine by rule based upon the typical commercial practice in cash or spot markets for the digital asset involved; or</text></item><item id="id7b9e35571782440db42e35b1b48ad8a8"><enum>(bb)</enum><text>is executed on or subject to the rules of a registered digital asset exchange or with a registered futures commission merchant;</text></item></subclause><after-quoted-block>; and</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="ide5f92b2ac96d4523ba1afbab261a4410"><enum>(B)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idA541D946E65B4931B4459505A416FC88"><subparagraph id="idf3e4d0d8626a46b6a2dba2f61e49e4b2"><enum>(F)</enum><header>Commission jurisdiction over digital asset transactions</header><clause id="idd244b9b9f2cc4db08dfeb9d49e059f9c"><enum>(i)</enum><header>In general</header><subclause id="idFEF9014A80B9444A87CC85709CB934BE"><enum>(I)</enum><header>Jurisdiction</header><text>Subject to sections 6d and 12(e) and section 403 of the Commodity Futures Modernization Act of 2000 (<external-xref legal-doc="usc" parsable-cite="usc/7/27a">7 U.S.C. 27a</external-xref>), the Commission shall have exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset in interstate commerce, including ancillary assets (consistent with section 41(b)(4) of the Securities Exchange Act of 1934), except that specified periodic reporting requirements made by an issuer which provided the holder of the security with an ancillary asset under that section, and the security that constitutes an investment contract (within the meaning of section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>)), shall remain within the jurisdiction of the Securities and Exchange Commission. </text></subclause><subclause id="id7BBCD614880D4EBD9D1B403F28C4BED7"><enum>(II)</enum><header>Fungibility requirement</header><text>The Commission shall only exercise jurisdiction over an agreement, contract, or transaction involving a contract of sale of a digital asset that is fungible, which shall not include digital collectibles and other unique digital assets. </text></subclause></clause><clause id="idf3acc5de60a842b681891ff695f616e8"><enum>(ii)</enum><header>Withholding of rulemaking authority over certain transactions</header><text>Notwithstanding clause (i), this subparagraph shall not be interpreted to permit the Commission to issue any rule regarding any agreement, contract, or transaction that is not offered, solicited, traded, facilitated, executed, cleared, reported, or otherwise dealt in—</text><subclause id="ida84ec8d9b8ae4516af3bc1ce0dfbacf9"><enum>(I)</enum><text>on or subject to the rules of a registered entity; or</text></subclause><subclause id="id96367c3e5e38483aa3591f011487091b"><enum>(II)</enum><text>by any other entity registered by the Commission.</text></subclause></clause><clause id="id3b6da657db8c4b478a02caade6ac1930"><enum>(iii)</enum><header>Limitation</header><text>Clause (i) shall not apply to custodial activities with respect to a digital asset of an entity supervised or regulated by a State or other Federal regulatory agency.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="id2d294c25c6fd4bc39ca42b75f5a3c44c"><enum>(2)</enum><header>Conforming amendment</header><text>Section 2(a)(1)(A) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(a)(1)(A)</external-xref>) is amended, in the first sentence, by striking <quote>section 19 of this Act</quote> and inserting <quote>subsection (c)(2)(F) or section 19</quote>.</text></paragraph></subsection><subsection id="id2a391685b96e4329b334174056334e5f"><enum>(b)</enum><header>Segregation of digital assets</header><text>Section 4d of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6d">7 U.S.C. 6d</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id3C47693BC48E4D709E99C1CAEF799F01"><subsection id="ided53962faa3f4aab95d633230d303a78"><enum>(i)</enum><header>Segregation of digital assets</header><paragraph id="id93d3bcc12b004cb4b39c5b655640f399"><enum>(1)</enum><header>Holding of customer assets</header><subparagraph id="idf4cd7c011d374f959307d9d20cbfbdba"><enum>(A)</enum><header>In general</header><text>Each futures commission merchant shall hold customer money, assets, and property in a manner to minimize the customer’s risk of loss of, or unreasonable delay in the access to, the money, assets, and property.</text></subparagraph><subparagraph id="id8c9d26ef19764a229f808a7779b819a9"><enum>(B)</enum><header>Custodian</header><text>A futures commission merchant shall hold the property of a customer of the futures commission merchant with a licensed, chartered, or registered entity subject to regulation by 1 of the following agencies:</text><clause id="id2abb1ff98d964ac3919b279887ef8f88"><enum>(i)</enum><text>The Commission.</text></clause><clause id="idec8b67ca91fa4b5fa484fe442d176c17"><enum>(ii)</enum><text>The Securities and Exchange Commission.</text></clause><clause id="ida1a7bb3d00014effa35a3db29330761b"><enum>(iii)</enum><text>An appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>)).</text></clause><clause id="idDF2E6722A91E44B68B96C3F1BEEC5E09"><enum>(iv)</enum><text>A State bank supervisor (as defined in that section). </text></clause><clause id="id33ebaee6076845c2bbc2b4d9f7522a88"><enum>(v)</enum><text>An appropriate foreign governmental authority in the home country of the custodian.</text></clause></subparagraph></paragraph><paragraph id="id1cac1048ad044e37a18231aaa96a1d3b"><enum>(2)</enum><header>Segregation of funds</header><subparagraph id="ide265d3921de34eed98e624a36dfd261e"><enum>(A)</enum><header>Definition of digital asset customer</header><text>In this paragraph, the term <term>digital asset customer</term> means a customer involved in a cash or spot, leveraged, margined, or financed digital asset transaction in which the futures commission merchant is acting as the counterparty.</text></subparagraph><subparagraph id="id19E63D6D295B4EA5AB5D5D83248E68DB"><enum>(B)</enum><header>Requirements</header><clause id="idd38a8be8a2314053a9255bb8fa6a5527"><enum>(i)</enum><header>In general</header><text>A futures commission merchant shall treat and deal with all money, assets, and property of any digital asset customer received as belonging to the customer.</text></clause><clause id="id7ce4888dfdbe45f8aa5b6591ff7ff5cc"><enum>(ii)</enum><header>Commingling prohibited</header><text>Money, assets, and property of a digital asset customer described in clause (i)—</text><subclause id="idAEE68D6E6D524647A0769B80B8BAC264"><enum>(I)</enum><text>shall be separately accounted for; and </text></subclause><subclause id="idC72573690D5D4985B2C2D0595DE26AC3"><enum>(II)</enum><text>shall not be—</text><item id="id2EF97085F8784C23A3D71F126CC53EF2"><enum>(aa)</enum><text>commingled with the funds of the futures commission merchant; or </text></item><item id="id0DBD88E3A5304152817424339B64B7BD"><enum>(bb)</enum><text>used 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.</text></item></subclause></clause></subparagraph><subparagraph id="id6e64faaed8a846de926e361b0bd4006a"><enum>(C)</enum><header>Exceptions</header><clause id="id00418aabd0a9436aaa9ae10cffd08ccc"><enum>(i)</enum><header>Use of funds</header><subclause id="id4d0884b7ed4244a4bc0e62573e44033f"><enum>(I)</enum><header>In general</header><text>Notwithstanding subparagraph (B), money, assets, and property of a digital asset customer may, for convenience, be commingled and deposited in the same account or accounts with an entity described in paragraph (1)(B).</text></subclause><subclause id="id3835f5e0b6654421aac487e3a1da73da"><enum>(II)</enum><header>Withdrawal</header><text>Notwithstanding subparagraph (B), the share of the money, assets, and property described in subclause (I) as in the normal course of business is necessary to margin, guarantee, secure, transfer, adjust, or settle a digital asset transaction with a registered entity may be withdrawn and applied to those purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the digital asset transaction.</text></subclause></clause><clause id="id86cf4d7cd3cc4c2593e15b7c7b9f8c17"><enum>(ii)</enum><header>Commission action</header><text>Notwithstanding subparagraph (B), in accordance with such terms and conditions as the Commission may prescribe by rule or order, any money, assets, or property of a digital asset customer may be commingled and deposited in customer accounts with any other money, assets, or property received by the futures commission merchant and required by the Commission to be separately accounted for and treated and dealt with as belonging to the digital asset customer.</text></clause></subparagraph><subparagraph id="id8de6c36158e34720a6dc2a9e8dbbb994"><enum>(D)</enum><header>Permitted investments</header><text>Money of a digital asset customer may be invested—</text><clause id="id2A3FF68414F04A8BB534F3D3F5025A3D"><enum>(i)</enum><text>in—</text><subclause id="id80A0C305D61C49EB8D9BCD36D6F84301"><enum>(I)</enum><text>obligations of the United States;</text></subclause><subclause id="id0F520768A85A4CB68B4B841FB3174227"><enum>(II)</enum><text>general obligations of any State or of any political subdivision of a State;</text></subclause><subclause id="id344D451126DD4A07982B5B56CB1B07AE"><enum>(III)</enum><text>obligations fully guaranteed as to principal and interest by the United States; or </text></subclause><subclause id="id85BD7625CE7C4742BC0348C328E3C954"><enum>(IV)</enum><text>any other investment that the Commission may by rule prescribe; and</text></subclause></clause><clause id="idDE422A57D6844440A9DBF1AC36871261"><enum>(ii)</enum><text>in accordance with such rules and subject to such conditions as the Commission may prescribe.</text></clause></subparagraph><subparagraph id="idd880c81693684a1cabe2c93952b44b33"><enum>(E)</enum><header>Prohibition</header><text>It shall be unlawful for any person, including any derivatives clearing organization or depository institution, that has received any money, assets, or property for deposit in a separate account or accounts as required by subparagraph (B) to hold, dispose of, or use any of the money, assets, or property that belongs to the depositing futures commission merchant or any person other than the digital asset customer of the futures commission merchant.</text></subparagraph></paragraph><paragraph id="ided781a770c484eb1a3a828d2cdf3a717"><enum>(3)</enum><header>Customer right to opt out</header><subparagraph id="id0b5a97fc085f40ff9283f735c49f7daf"><enum>(A)</enum><header>In general</header><text>A customer shall have the right to waive any requirement under this subsection by affirmatively electing, in writing to the futures commission merchant, to waive the requirement.</text></subparagraph><subparagraph id="idffe829aa789f42ba813abf3ba37f6605"><enum>(B)</enum><header>Limitations</header><text>The Commission may, by rule, establish notice and disclosure requirements, segregation requirements, investment limitations, and other rules relating to the waiving of any requirement under this subsection that are reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, and any other class of customers.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="idaa3eb7e0129c47f2988c7b516248c202"><enum>(c)</enum><header>Limitation on futures commission merchants acting as a counterparty in digital asset transactions</header><text>Section 4d of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6d">7 U.S.C. 6d</external-xref>) (as amended by subsection (b)) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id615E664BD1EB45BAB19723E6877962F7"><subsection id="id1824fcde5f3849d3bcaf99b5fefb954b"><enum>(j)</enum><header>Limitation on futures commission merchants acting as a counterparty in digital asset transactions</header><text>A registered futures commission merchant shall not act as a counterparty in any agreement, contract, or transaction involving a digital asset that has not been listed for trading on a registered digital asset exchange.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id04671d103207405e99b9c991b6ca04a5"><enum>(d)</enum><header>Common provisions applicable to registered entities</header><text>Section 5c of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/7a-2">7 U.S.C. 7a–2</external-xref>) is amended—</text><paragraph id="idf452ea2913634c9c8252cf3c20e4a244"><enum>(1)</enum><text>in subsection (a)(1), by striking <quote>5(d) and 5b(c)(2)</quote> and inserting <quote>5(d), 5b(c)(2), and 5i(c)</quote>;</text></paragraph><paragraph id="idc6e397c9dc0c4e79947ac02280e431d9"><enum>(2)</enum><text>in subsection (b), by inserting <quote>registered digital asset exchange,</quote> before <quote>derivatives</quote> each place it appears; and</text></paragraph><paragraph id="id599b1e8f01dd46849c030794956fcb18"><enum>(3)</enum><text>in subsection (c)—</text><subparagraph id="idced4c94c27c14ae59d3936e505aa223d"><enum>(A)</enum><text>in paragraph (2), by inserting <quote>or participants</quote> before <quote>(in a</quote>;</text></subparagraph><subparagraph id="id6ca77b36db0d4063bd989fbfbf5bd907"><enum>(B)</enum><text>in paragraph (4)(B), by striking <quote>1a(10)</quote> and inserting <quote>1a(9)</quote>; and</text></subparagraph><subparagraph id="id49f405669bb54e6fba01cb5fa10262d3"><enum>(C)</enum><text>in paragraph (5), by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idcbf4a5c2c10e423bb6b21a09e6329cd9"><subparagraph id="ida563dcab4c8b4ad7a4f7838f41e040a7"><enum>(D)</enum><header>Special rules for the listing of certain digital assets</header><clause id="id719e8821af0c4262bf9038b297bae1b4"><enum>(i)</enum><header>In general</header><text>In the case of listing for trading a digital asset that has not previously been listed for trading on another registered entity—</text><subclause id="id6627EA7D802C4F95A4EF7202E23C05EE"><enum>(I)</enum><text>paragraphs (2) and (3) shall apply as if the listing were a rule; and </text></subclause><subclause id="idBBB5B6160D984B4FAC5E9252F5E88F92"><enum>(II)</enum><text>paragraph (2) shall be applied by substituting <quote>20 business days</quote> for <quote>10 business days</quote>.</text></subclause></clause><clause id="id68c3e5275bda47fe958abcbcb2510fbb"><enum>(ii)</enum><header>Transitional extension</header><text>During the 1-year period beginning on the date of the registration of the first digital asset exchange, the Commission shall have an additional 20 business days to review any certification under clause (i).</text></clause><clause id="id1dad6aed718c43348922bba04c976bab"><enum>(iii)</enum><header>Consideration of comments</header><text>In conducting a review under clause (i), the Commission shall consider any comments provided by the Securities and Exchange Commission with respect to the legal classification of a digital asset.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></subsection></section><section id="idc9eee73973994df0a374639e54ad8a1f"><enum>404.</enum><header>Registration of digital asset exchanges</header><subsection id="id3f8363216ff14d31a64fd0896b1ea688"><enum>(a)</enum><header>In general</header><text>The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>) is amended by inserting after section 5h the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idf12d465f9e9046338aec607f7212b8c8"><section id="ida6672a06c51c482aa399de1669a19cfa"><enum>5i.</enum><header>Registration of digital asset exchanges</header><subsection id="id011435cc51a449e5accc77f2acf640df"><enum>(a)</enum><header>Definition of customer</header><text>In this section, the term <term>customer</term> means any person that maintains an account for the trading of digital assets directly with a registered digital asset exchange (other than a person that is owned or controlled, directly or indirectly, by the registered digital asset exchange) on behalf of the person or any other person.</text></subsection><subsection id="id45738a4149024fbc9b3998a4a652a021"><enum>(b)</enum><header>Registration</header><paragraph id="idcff9fc3c3057453d8575b375d966191b"><enum>(1)</enum><header>In general</header><text>Any trading facility that offers or seeks to offer a market in digital assets may register with the Commission as a digital asset exchange by submitting 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 under subsections (d) and (f).</text></paragraph><paragraph id="idb9bebfeb6b9146ce94425f837f443b50"><enum>(2)</enum><header>Deemed registration</header><text>A registered designated contract market or registered swap execution facility that fulfills the requirements of this section may elect to be considered a registered digital asset exchange, in such form and manner as the Commission shall prescribe.</text></paragraph><paragraph id="idc120b271a163444483ef903d73596783"><enum>(3)</enum><header>Additional registration</header><text>A registered digital asset exchange shall be registered with the Secretary of the Treasury as a money services business.</text></paragraph></subsection><subsection id="idc3cedf4184d942c29fedd34bf4136bf9"><enum>(c)</enum><header>Trading</header><paragraph id="id9eaba2b9cbd74f1b82d9c7a9316d7ff9"><enum>(1)</enum><header>In general</header><text>A registered digital asset exchange may make available for trading any digital asset that is not readily susceptible to manipulation, subject to this subsection.</text></paragraph><paragraph id="idf8bef4bad23d4afb97fcf1c0be649f42"><enum>(2)</enum><header>Rules governing margined or leveraged trading</header><text>The Commission may make, promulgate, and enforce such additional rules governing margined, leveraged, or financed transactions as are reasonably necessary to protect market participants and promote the orderly settlement of transactions with respect to—</text><subparagraph id="ida564315dafad46dabe368ade1d7c17c6"><enum>(A)</enum><text>disclosure;</text></subparagraph><subparagraph id="idfae03e2ee6a14d36bd508ac488953307"><enum>(B)</enum><text>recordkeeping;</text></subparagraph><subparagraph id="ida0519434fff243c68707431286c48e91"><enum>(C)</enum><text>capital, margin, and other financial resources;</text></subparagraph><subparagraph id="id093a97f8a3c2499883a5e1b867f4e7a1"><enum>(D)</enum><text>reporting;</text></subparagraph><subparagraph id="id45c2b2dfda0443688348c76939b73383"><enum>(E)</enum><text>business conduct;</text></subparagraph><subparagraph id="id03e317dbb5cd4fc89da2d7aa6081d5c9"><enum>(F)</enum><text>documentation; and</text></subparagraph><subparagraph id="id4006742305de476e8ac7697a96242f22"><enum>(G)</enum><text>such other matters as the Commission determines to be necessary.</text></subparagraph></paragraph><paragraph id="idf691a67915c24e4b9fb30d8d7ab8e6c9"><enum>(3)</enum><header>Prohibition on trading derivatives products</header><text>Registration as a digital asset exchange shall not permit a trading facility to offer any contract of sale of a commodity for future delivery, option, or swap for trading without also being registered as a designated contract market or swap execution facility.</text></paragraph></subsection><subsection id="id25c1df6290c44d699ee269443ec7e8af"><enum>(d)</enum><header>Core principles for digital asset exchanges</header><paragraph id="id6c4e920d5d6747839f51f2fc2f53f4d1"><enum>(1)</enum><header>Compliance with core principles</header><subparagraph id="id27a76b5331754e4cad757aba42c035df"><enum>(A)</enum><header>In general</header><text>To be registered, and maintain registration, as a digital asset exchange, the registered digital asset exchange shall comply with—</text><clause id="idc925980114d24c50b17c5a3c3b1f5127"><enum>(i)</enum><text>the core principles described in this subsection; and</text></clause><clause id="idf190a1502f5b4388aac880c732640115"><enum>(ii)</enum><text>any requirement that the Commission may impose by rule pursuant to section 8a(5).</text></clause></subparagraph><subparagraph id="id2b6b15ae927843cf81b9163aa262a4d5"><enum>(B)</enum><header>Reasonable discretion of digital asset exchange</header><text>Unless otherwise determined by the Commission by rule, a registered digital asset exchange described in subparagraph (A) shall have reasonable discretion in establishing the manner in which the registered digital asset exchange complies with the core principles described in this subsection.</text></subparagraph></paragraph><paragraph id="id8900ebe2025b43a49941c0630e379d36"><enum>(2)</enum><header>Compliance with rules</header><text>A registered digital asset exchange shall—</text><subparagraph id="ide0c4d074f8bb441db27e14a3580bb928"><enum>(A)</enum><text>establish and enforce compliance with 1 or more rules of the registered digital asset exchange, including—</text><clause id="id12ccc7825f3545fb9afe1ce4c988691c"><enum>(i)</enum><text>the terms and conditions of the trades traded or processed on or through the registered digital asset exchange; and</text></clause><clause id="id75aac759760c466fb60a89d1a76c97f7"><enum>(ii)</enum><text>any limitation on access to the registered digital asset exchange;</text></clause></subparagraph><subparagraph id="idfe3d3cfdf78d4ecb9f7a914af3323ec1"><enum>(B)</enum><text>establish and enforce compliance with trading, trade processing, and participation rules that will deter abuses and have the capacity to detect, investigate, and enforce violations of those rules, including means—</text><clause id="id94d31114edd343da95e9a61677e496ce"><enum>(i)</enum><text>to provide market participants with impartial access to the market; and</text></clause><clause id="id3488b44e583f4a0081ccdadcd0959653"><enum>(ii)</enum><text>to capture information that may be used in establishing whether rule violations have occurred; and</text></clause></subparagraph><subparagraph id="id8e4cd3b8199a4db4a95d1a6d24d31f43"><enum>(C)</enum><text>establish rules governing the operation of the registered digital asset exchange, including rules specifying trading procedures to be used in entering and executing orders traded or posted on the registered digital asset exchange.</text></subparagraph></paragraph><paragraph id="idec6bc67a3401446d93ea98e6b9f30c1a"><enum>(3)</enum><header>Digital assets not readily susceptible to manipulation</header><subparagraph id="iddf24e829fce84f58b6e1e7e851b96ac7"><enum>(A)</enum><header>In general</header><text>A registered digital asset exchange shall permit trading only in assets that are not readily susceptible to manipulation.</text></subparagraph><subparagraph id="idd8cd444f195e4102b41091508402102d"><enum>(B)</enum><header>Listing restrictions</header><text>A registered digital asset exchange shall not permit trading in a digital asset if it is reasonably likely that—</text><clause id="id380E4B6B34C344D19B2CDBDD11FFE26D"><enum>(i)</enum><text>the transaction history of the digital asset can be fraudulently altered by any person or group of persons acting collectively; or</text></clause><clause id="id0bbdcd1aa41949da8b81315f34180c6a"><enum>(ii)</enum><text>the functionality or operation of the digital asset can be materially altered by any person or group of persons under common control.</text></clause></subparagraph><subparagraph id="id484fb4dea3eb4a74b70a2d4f9297ab7b"><enum>(C)</enum><header>Considerations</header><text>In assessing a digital asset under this paragraph, a registered digital asset exchange shall consider—</text><clause id="id43d1a995bf004af5b02c94102ddf0474"><enum>(i)</enum><text>the purpose and use of the digital asset;</text></clause><clause id="idf4e991b2c31142d68aa289d464c0c67a"><enum>(ii)</enum><text>the creation or release process of the digital asset;</text></clause><clause id="id3fc77d4caf8346c980a68f682e585259"><enum>(iii)</enum><text>the consensus mechanism of the digital asset;</text></clause><clause id="idcec624bafac64f95a1d3c65328a22123"><enum>(iv)</enum><text>the governance structure of the digital asset;</text></clause><clause id="id76ccdb5a3b8f4d148f887de8368934cb"><enum>(v)</enum><text>the participation and distribution of the digital asset;</text></clause><clause id="id6400647713144a2289e280455b929027"><enum>(vi)</enum><text>the current and proposed functionality of the digital asset;</text></clause><clause id="ide1a88411937a495f9a67423088d6eb3f"><enum>(vii)</enum><text>the legal classification of the digital asset; and</text></clause><clause id="id2e9339c3ebfa416cacf845699068d5cc"><enum>(viii)</enum><text>any other factor required by the Commission.</text></clause></subparagraph></paragraph><paragraph id="id2ec4d0b041e94cb5a343d8310def7297"><enum>(4)</enum><header>Treatment of customer assets</header><subparagraph id="idba734ec5c0bf4ff28b77ec1b077e913e"><enum>(A)</enum><header>Required standards and procedures</header><text>A registered digital asset exchange shall establish standards and procedures that are designed to protect and ensure the safety of customer money, assets, and property.</text></subparagraph><subparagraph id="idcba7fa51f5ce41ac94af9471c1b8c4f9"><enum>(B)</enum><header>Holding of customer assets</header><clause id="id5331b68ac05b47f0ad9f7202d7430ce4"><enum>(i)</enum><header>In general</header><text>A registered digital asset exchange shall hold customer money, assets, and property in a manner to minimize the customer’s risk of loss of, or unreasonable delay in the access to, the money, assets, and property.</text></clause><clause id="idcb13e52347d242d4ab6368160bdf85af"><enum>(ii)</enum><header>Segregation of funds</header><subclause id="idda189936a4b84e2ba2af8df24ac9a877"><enum>(I)</enum><header>In general</header><text>A registered digital asset exchange shall treat and deal with all money, assets, and property of any customer received as belonging to the customer.</text></subclause><subclause id="id1ae73ddf2b0444fb8f4486843fbc9b2a"><enum>(II)</enum><header>Commingling prohibited</header><text>Money, assets, and property of a customer described in subclause (I)—</text><item id="idD1D5F8728DD24E4DA4D222E670F0CFAA"><enum>(aa)</enum><text>shall be separately accounted for; and </text></item><item id="id54762CC60FF7413AB7B87DC5184F69FC"><enum>(bb)</enum><text>shall not be—</text><subitem id="id38BAE914763D45B3B791EDFAFE5C75E7"><enum>(AA)</enum><text>commingled with the funds of the registered digital asset exchange; or </text></subitem><subitem id="idE15EBC84B2B342CF93DF82DE7EABF7E4"><enum>(BB)</enum><text>used 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.</text></subitem></item></subclause></clause><clause id="idc5d23ab0af9c4090b3a5872f1a239955"><enum>(iii)</enum><header>Exceptions</header><subclause id="id0bbc698eb6454f4da64eeb8d62f17328"><enum>(I)</enum><header>Use of funds</header><item id="id57e08cafec024a3d86089122673986e1"><enum>(aa)</enum><header>In general</header><text>Notwithstanding clause (ii), money, assets, and property of customers of a registered digital asset exchange may, for convenience, be commingled and deposited with an entity described in section 4d(i)(1)(B).</text></item><item id="id9845833eb8fb4b868b5343cb6eb93a61"><enum>(bb)</enum><header>Withdrawal</header><text>Notwithstanding clause (ii), the share of the money, assets, and property described in item (aa) as in the normal course of business is necessary to margin, guarantee, secure, transfer, adjust, or settle a digital asset transaction with a registered entity may be withdrawn and applied to those purposes, including the payment of commissions, brokerage, interest, taxes, storage, and other charges, lawfully accruing in connection with the digital asset transaction.</text></item></subclause><subclause id="idff720b96c9914dc792fc0776af5a0cfb"><enum>(II)</enum><header>Commission action</header><text>Notwithstanding clause (ii), in accordance with such terms and conditions as the Commission may prescribe by rule or order, any money, assets, or property of the customers of a registered digital asset exchange may be commingled and deposited in customer accounts with any other money, assets, or property received by the registered digital asset exchange and required by the Commission to be separately accounted for and treated and dealt with as belonging to the customer of the registered digital asset exchange.</text></subclause></clause></subparagraph><subparagraph id="idc947fb41ba4a45ba99c0cac15cb79ec8"><enum>(C)</enum><header>Permitted investments</header><text>Money described in subparagraph (B)(ii)(I) may be invested—</text><clause id="idC2CF371A2BAD45CEBB431F3061441E56"><enum>(i)</enum><text>in—</text><subclause id="id07B8483491F841E7B8FEDBFFBD488AF6"><enum>(I)</enum><text>obligations of the United States;</text></subclause><subclause id="id0E0BFA8B596840E7A16D03090205C1C8"><enum>(II)</enum><text>general obligations of any State or of any political subdivision of a State;</text></subclause><subclause id="id26EC9572F79946C1A74FA815E1D7FCB6"><enum>(III)</enum><text>obligations fully guaranteed as to principal and interest by the United States; or</text></subclause><subclause id="id83331BED5BCD426E92041F2CC7B58833"><enum>(IV)</enum><text>any other investment that the Commission may by rule prescribe; and </text></subclause></clause><clause id="idE515EDCDC8B34319A327DE9B1A95A2B9"><enum>(ii)</enum><text>in accordance with such rules and subject to such conditions as the Commission may prescribe.</text></clause></subparagraph><subparagraph id="ida6525f18e0e349868c22ba3ebdf6da40"><enum>(D)</enum><header>Misuse of customer property</header><text>It shall be unlawful—</text><clause id="id08b3a42a19ac47a399cafe7e373c5d49"><enum>(i)</enum><text>for any registered digital asset exchange that has received any customer money, assets, or property for custody to dispose of, or use any of the money, assets, or property as belonging to the registered digital asset exchange; or</text></clause><clause id="idd1d396d28f804381aa046d2a95729f23"><enum>(ii)</enum><text>for any other person, including any other registered digital asset exchange or custodian that has received any customer money, assets, or property for deposit, to hold, dispose of, or use any of the money, assets, or property as belonging to—</text><subclause id="id222C45D41B3B412F8C96547E4DCF9CCA"><enum>(I)</enum><text>the registered digital asset exchange that deposited the money, assets, or property; or </text></subclause><subclause id="id51D4C22779994AEFA7B7A1B1D4F27032"><enum>(II)</enum><text>any person other than the customers of the registered digital asset exchange.</text></subclause></clause></subparagraph><subparagraph id="id1e23bf7a91574992ba13ddf422ff1522"><enum>(E)</enum><header>Customer right to opt out</header><clause id="id7f005572199d4c3bae24662dd906fda8"><enum>(i)</enum><header>In general</header><text>A customer shall have the right to waive any requirement under subparagraph (B) by affirmatively electing, in writing to the registered digital asset exchange, to waive the requirement.</text></clause><clause id="id4d49896d1db044ee8e2ac3f5c477d5cd"><enum>(ii)</enum><header>Limitations</header><text>The Commission may, by rule, establish notice and disclosure requirements, segregation requirements, investment limitations, and other rules relating to the waiving of any requirement under this paragraph that is reasonably necessary to protect customers, including eligible contract participants, non-eligible contract participants, or any other class of customers.</text></clause></subparagraph></paragraph><paragraph id="idbf3d178b236e462b9e425382116a1056"><enum>(5)</enum><header>Monitoring of trading and trade processing</header><subparagraph id="id5bcf52e5c6784524ad69647fb3038b00"><enum>(A)</enum><header>In general</header><text>A registered digital asset exchange shall provide a competitive, open, and efficient market and mechanism for executing transactions that protects the price discovery process of trading on the registered digital asset exchange.</text></subparagraph><subparagraph id="id7a725b15ef8b4d56a20a93a962ec08e5"><enum>(B)</enum><header>Protection of markets and market participants</header><text>A registered digital asset exchange shall establish and enforce compliance with rules—</text><clause id="id0f7a9c31f9334d83aaf77515b4dc304e"><enum>(i)</enum><text>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</text></clause><clause id="ida67b5341dfe34c40a82cddca440d5413"><enum>(ii)</enum><text>to promote fair and equitable trading on the registered digital asset exchange.</text></clause></subparagraph><subparagraph id="ida14c53b53fbd404cb018404693243a6d"><enum>(C)</enum><header>Procedures and monitoring</header><text>A registered digital asset exchange shall—</text><clause id="ida392af93cf8e4541917d76c39d0277d0"><enum>(i)</enum><text>establish and enforce compliance with rules or terms and conditions defining, or specifications detailing—</text><subclause id="id565ef3ef1e2442f4a4ade597db25a224"><enum>(I)</enum><text>trading procedures to be used in entering and executing orders traded on or through the facilities of the registered digital asset exchange; and</text></subclause><subclause id="idf8633ee46622482986add744fa78e213"><enum>(II)</enum><text>procedures for trade processing of digital assets on or through the facilities of the registered digital asset exchange; and</text></subclause></clause><clause id="ide0f928f6750b42fdbb47ae6ce215bbbc"><enum>(ii)</enum><text>monitor trading in digital assets to prevent manipulation, price distortion, and disruptions of the delivery or cash settlement process through surveillance, and compliance, including methods for conducting real-time monitoring of trading and comprehensive and accurate trade reconstructions.</text></clause></subparagraph></paragraph><paragraph id="id6835bc08af0744518a5be9888eec885a"><enum>(6)</enum><header>Ability to obtain information</header><text>A registered digital asset exchange shall—</text><subparagraph id="id4e0193259f0e4e7bb27d75af81792166"><enum>(A)</enum><text>establish and enforce rules that will allow the registered digital asset exchange to obtain any necessary information to perform any of the functions described in this section;</text></subparagraph><subparagraph id="id78248ec6cf954435b22817c91de997f3"><enum>(B)</enum><text>provide the information to the Commission on request; and</text></subparagraph><subparagraph id="idaeca27146eaa4d22851b24652c6b68a3"><enum>(C)</enum><text>have the capacity to carry out such international information-sharing agreements as the Commission may require.</text></subparagraph></paragraph><paragraph id="id98b15fd9a0104ec7afe8d14551c5be13"><enum>(7)</enum><header>Emergency authority</header><text>A registered digital asset 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 asset or to suspend or curtail trading in a digital asset.</text></paragraph><paragraph id="id50ce2a49900e46febdc00199747ebf44"><enum>(8)</enum><header>Reporting requirements</header><subparagraph id="idba5f7d2fa7594e08809507a1e2970bed"><enum>(A)</enum><header>In general</header><text>A registered digital asset exchange shall provide to the Commission information that is determined by the Commission to be necessary to perform any responsibility of the Commission under this Act.</text></subparagraph><subparagraph id="idd1ac67582f3d4d68bc199cdf0a10b58b"><enum>(B)</enum><header>Timely publication of trading information</header><clause id="id103efa5a4dbe4c7cbb19526de751a0f6"><enum>(i)</enum><header>In general</header><subclause id="idAA4F3F42B5A243E4B5DA84197CFE0E77"><enum>(I)</enum><header>Publication</header><text>A registered digital asset exchange shall make public timely information on price, trading volume, and other trading data on digital assets to the extent prescribed by the Commission. </text></subclause><subclause id="id53787E14528C424FAC3C373D65DC9B9B"><enum>(II)</enum><header>Accessibility</header><text>A registered digital asset exchange may make trading data freely accessible to the public under rules established by the Commission.</text></subclause></clause><clause id="ide98fb9c9de134077928e413e80564453"><enum>(ii)</enum><header>Capacity of digital asset exchange</header><text>A registered digital asset exchange shall be required to have the capacity to electronically capture and transmit trade information with respect to transactions executed on the registered digital asset exchange.</text></clause></subparagraph></paragraph><paragraph id="id1eedbe70a2564ed5922df828a982b4c4"><enum>(9)</enum><header>Recordkeeping and reporting</header><subparagraph id="id7e81dece15594c739b52c65558ef622b"><enum>(A)</enum><header>In general</header><text>A registered digital asset exchange shall—</text><clause id="id1d7c19ba87cd47ef901f96bf64180729"><enum>(i)</enum><text>maintain records of all activities relating to the business of the registered digital asset exchange, including a complete audit trail, in a form and manner acceptable to the Commission for a period of 5 years;</text></clause><clause id="id78cc1e1293d94a358c0bdc57713fe670"><enum>(ii)</enum><text>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</text></clause><clause id="idd6590d087d87498c93a1c8a4892a7f10"><enum>(iii)</enum><text>keep any records relating to ancillary assets open to inspection and examination by the Securities and Exchange Commission.</text></clause></subparagraph><subparagraph id="idffb6b74c379a4eb597ef74bd4c414fdf"><enum>(B)</enum><header>Information-sharing</header><text>Subject to section 8, and on request, the Commission shall share information collected under subparagraph (A) with—</text><clause id="id8938b88c3147452db5630fd9715f8ee4"><enum>(i)</enum><text>a self-regulatory organization;</text></clause><clause id="idbffd292880ae49e39624308fcb38a1e3"><enum>(ii)</enum><text>the Securities and Exchange Commission;</text></clause><clause id="idDA79DD57FCD84DD7B64CEE99ED2ABBA6"><enum>(iii)</enum><text>an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>));</text></clause><clause id="idF22BA38BCD7448C68A825F0F97A71437"><enum>(iv)</enum><text>a State bank supervisor (as defined in that section);</text></clause><clause id="id730D9310D51D483DAC29515CCBBB75A0"><enum>(v)</enum><text>a State securities or commodities regulator;</text></clause><clause id="ida36937dff4b74369ab5b7fa45d994d5a"><enum>(vi)</enum><text>the Financial Stability Oversight Council;</text></clause><clause id="id3ba1ee04e92d40e3b48c5399ef203ff5"><enum>(vii)</enum><text>the Department of Justice; and</text></clause><clause id="id6cc798e9d0914b0ebc32ce94bb98b523"><enum>(viii)</enum><text>any other person that the Commission determines to be appropriate, including—</text><subclause id="id9126a3756a324e6e849e4c90ec8159ff"><enum>(I)</enum><text>foreign financial supervisors (including foreign futures authorities);</text></subclause><subclause id="id4efce51319ca453a935e51aeb13b4a25"><enum>(II)</enum><text>foreign central banks; and</text></subclause><subclause id="id95e4c2ad253a4b06b7a21829e59ead56"><enum>(III)</enum><text>foreign ministries.</text></subclause></clause></subparagraph><subparagraph id="idef4cc1bd1f884fad98df4c7b48a06436"><enum>(C)</enum><header>Confidentiality agreement</header><text>Before the Commission may share information with any entity described in subparagraph (B), the Commission shall receive a written agreement from each entity stating that the entity shall abide by the confidentiality requirements described in section 8 relating to the information on digital asset transactions that is provided.</text></subparagraph><subparagraph id="id635037daaa4a46c0a46d527dad95d199"><enum>(D)</enum><header>Providing information</header><text>Each registered digital asset 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.</text></subparagraph></paragraph><paragraph id="idcd65f35fbc5c451d9f48808981d6f2bb"><enum>(10)</enum><header>Antitrust considerations</header><text>Unless necessary or appropriate to achieve the purposes of this Act, a registered digital asset exchange shall not—</text><subparagraph id="idee4fca19c1f0423c9575d2be2d259386"><enum>(A)</enum><text>adopt any rules or take any actions that result in any unreasonable restraint of trade; or</text></subparagraph><subparagraph id="id1094ba3143c547a98182fbf952f2ce64"><enum>(B)</enum><text>impose any material anticompetitive burden on trading.</text></subparagraph></paragraph><paragraph id="id32662aedb6504c15b997cb7058ee634b"><enum>(11)</enum><header>Conflicts of interest</header><text>A registered digital asset exchange shall—</text><subparagraph id="idb4ba34276c4843efb8a2a86f4bbc7a9a"><enum>(A)</enum><text>establish and enforce rules to minimize conflicts of interest in the decision-making process of the registered digital asset exchange; and</text></subparagraph><subparagraph id="idc608db3938464f77817508a1884cfefe"><enum>(B)</enum><text>establish a process for resolving conflicts of interest described in subparagraph (A).</text></subparagraph></paragraph><paragraph id="id6e6df10248f0466e9d2be7fbf43c8b76"><enum>(12)</enum><header>Financial resources</header><subparagraph id="id86e06e2a59354d76b88ca55524c297af"><enum>(A)</enum><header>In general</header><text>A registered digital asset exchange shall have adequate financial, operational, and managerial resources, as determined by the Commission, to discharge each responsibility of the registered digital asset exchange.</text></subparagraph><subparagraph id="idab4c5a7113bb4013841067fa4a3facd7"><enum>(B)</enum><header>Minimum amount of financial resources</header><text>A registered digital asset exchange shall possess financial resources that, at a minimum, exceed the total amount that would enable the registered digital asset exchange to conduct an orderly wind-down of the activities of the registered digital asset exchange.</text></subparagraph><subparagraph id="idf9bc814db25547b5a797d737f84a75f5"><enum>(C)</enum><header>Additional financial resources for leverage trading</header><text>The Commission may require such additional financial resources as are necessary to enable a registered digital asset exchange that offers margined, leveraged, or financed transactions to fulfill the customer obligations of the registered digital asset exchange.</text></subparagraph></paragraph><paragraph id="idae48a7bb22524c359c1ebfcc1502043f"><enum>(13)</enum><header>Governance fitness standards</header><subparagraph id="idcc4d2d28a5f745cc8ab69db3296495c8"><enum>(A)</enum><header>Governance arrangements</header><text>A registered digital asset exchange shall establish governance arrangements that are transparent to fulfill public interest requirements.</text></subparagraph><subparagraph id="idab50918202974eab860e0a0aa3db7fcc"><enum>(B)</enum><header>Fitness standards</header><text>A registered digital asset exchange shall establish and enforce appropriate fitness standards for—</text><clause id="idebb4896665bd43b7ac43d2b9f080b0c5"><enum>(i)</enum><text>directors;</text></clause><clause id="id90d9488a53614d8797777e39d2dd7b0b"><enum>(ii)</enum><text>any individual or entity with direct access to the settlement activities of the registered digital asset exchange;</text></clause><clause id="idc07b7e89a78c4835a119691e14258ce8"><enum>(iii)</enum><text>any individual or entity with direct access to any custodian affiliated with the registered digital asset exchange;</text></clause><clause id="id576c862e9dbf4ce49d8a09869937b233"><enum>(iv)</enum><text>any entity offering affiliated services for the registered digital asset exchange; and</text></clause><clause id="id35146d01599743deaf1c458abb865b3a"><enum>(v)</enum><text>any party affiliated with any individual or entity described in clauses (i) through (iv).</text></clause></subparagraph></paragraph><paragraph id="idcc4cac95fe9f4dca81b30b1a5310c42c"><enum>(14)</enum><header>System safeguards</header><text>A registered digital asset exchange shall—</text><subparagraph id="idee2edf6564dc4b16ab635aaa0fe6d86e"><enum>(A)</enum><text>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 that—</text><clause id="id445afa3257114d98b1fb1cfd320a7a2a"><enum>(i)</enum><text>are reliable and secure; and</text></clause><clause id="idda6fa7383ed3481d8a732e6f0140a7c3"><enum>(ii)</enum><text>have adequate scalable capacity;</text></clause></subparagraph><subparagraph id="id23156394dec34165971c935c8b1bbb75"><enum>(B)</enum><text>establish and maintain emergency procedures, backup facilities, and a plan for disaster recovery that allow for—</text><clause id="id7034ad049a2f4055b3f1f3b88bc1db7d"><enum>(i)</enum><text>the timely recovery and resumption of operations; and</text></clause><clause id="idc59454bc04594df19c454e2dddad6f45"><enum>(ii)</enum><text>the fulfillment of the responsibilities and obligations of the registered digital asset exchange; and</text></clause></subparagraph><subparagraph id="id63f7bf8871d44fdba177a392346dc224"><enum>(C)</enum><text>periodically conduct tests to verify that the backup resources of the registered digital asset exchange are sufficient to ensure continued—</text><clause id="ide74b7e71ae5a414880661798841a9e59"><enum>(i)</enum><text>order processing and trade matching;</text></clause><clause id="id0fcb04b603d34016b9c0a0b0e6a6f6ed"><enum>(ii)</enum><text>price reporting;</text></clause><clause id="id0dda5a4fd37b4200b46bbbb25132d39d"><enum>(iii)</enum><text>market surveillance; and</text></clause><clause id="id7017504643ce459d8113a03407f7c7eb"><enum>(iv)</enum><text>maintenance of a comprehensive and accurate audit trail.</text></clause></subparagraph></paragraph></subsection><subsection id="idff85605be23f4affae62f09f86ed2095"><enum>(e)</enum><header>Appointment of trustee</header><paragraph id="id2c2b231931f14b0784846f174774a44c"><enum>(1)</enum><header>In general</header><text>If a proceeding under section 5e results in the suspension or revocation of the registration of a digital asset exchange, or if a digital asset exchange withdraws from registration, the Commission, after providing notice to the digital asset exchange, may apply to the district court of the United States for the judicial district in which the digital asset exchange is located for the appointment of a trustee.</text></paragraph><paragraph id="idc3c5bdf04a3d41f082c24195427b166e"><enum>(2)</enum><header>Assumption of jurisdiction</header><text>If the Commission applies to a court for appointment of a trustee under paragraph (1)—</text><subparagraph id="id3fcbde227add4565b3ad26b74a9b43b1"><enum>(A)</enum><text>the court may take exclusive jurisdiction over—</text><clause id="idDEF261F285E34FA79B93B783E1F9E918"><enum>(i)</enum><text>the digital asset exchange; and </text></clause><clause id="id57368B92852E4E11A223CAF9FE7118AB"><enum>(ii)</enum><text>the records and assets of the digital asset exchange, wherever those records and assets are located; and</text></clause></subparagraph><subparagraph id="idcfb253071b154707bb0ad8e81203f925"><enum>(B)</enum><text>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 asset exchange in an orderly manner for the protection of customers, subject to such terms and conditions as the court may prescribe.</text></subparagraph></paragraph></subsection><subsection id="idfeb2b5fdd25346b398d562619da64d81"><enum>(f)</enum><header>Custodian</header><text>A registered digital asset exchange shall deposit with an entity described in section 4d(i)(1)(B) each digital asset that is—</text><paragraph id="id7cacad0abf0a4a0b9a4bed2e1d906420"><enum>(1)</enum><text>the property of a customer of the registered digital asset exchange;</text></paragraph><paragraph id="id3c11deb0510b4afcaa35ea0fd067760b"><enum>(2)</enum><text>required to be held by the registered digital asset exchange under subsection (c)(2) or (d)(12); or</text></paragraph><paragraph id="ide9919355fdbd4799a47ffeb0b2a8981a"><enum>(3)</enum><text>otherwise required by the Commission to be so held to reasonably protect customers or promote the public interest.</text></paragraph></subsection><subsection id="id328062621e93406f92a11c5bcc553bdb"><enum>(g)</enum><header>Exemptions</header><paragraph id="idC82F80A6885E4BBAA5242184A5BA69C1"><enum>(1)</enum><header>In general</header><text>To promote responsible economic or financial innovation and fair competition, or protect customers, the Commission may exempt, either unconditionally or on stated terms or conditions or for stated periods, and retroactively, prospectively, or both, a registered digital asset exchange from the requirements of this section, if the Commission determines that—</text><subparagraph id="id1d0bcdd9faa84be38f6fa619ad2eef9b"><enum>(A)</enum><text>the exemption—</text><clause id="id59E03778705F4D99B844B856481CE199"><enum>(i)</enum><text>will be consistent with the public interest and the purposes of this Act; and</text></clause><clause id="iddd3dc1aa1507431786d8529e834a3e6a"><enum>(ii)</enum><text>will not have a material adverse effect on the ability of the Commission or the registered digital asset exchange to discharge duties under this Act; or</text></clause></subparagraph><subparagraph id="id916ba82a05bd41ae91b03b7247030cf8"><enum>(B)</enum><text>the registered digital asset exchange is subject to comparable, comprehensive regulation by the appropriate government authorities in the home country of the registered digital asset exchange.</text></subparagraph></paragraph><paragraph id="idDDA35559A2B941D291F056E8EF6B3B9F"><enum>(2)</enum><header>Process</header><text>The Commission may grant an exemption under paragraph (1)—</text><subparagraph id="idCF040F25E1354D14AC898FC3DF02A2BD"><enum>(A)</enum><text>on the initiative of the Commission; or</text></subparagraph><subparagraph id="idB68F97E7B5CF44F2991C655BA31F5049"><enum>(B)</enum><text>after receiving an application for the exemption by the registered digital asset exchange.</text></subparagraph></paragraph></subsection><subsection id="id9e3bce8e44c6495788777fac27f3ee00"><enum>(h)</enum><header>Jurisdiction</header><text>Notwithstanding any other provision of law, the Commission shall have exclusive jurisdiction over the regulation and all other activities of a registered digital asset exchange.</text></subsection><subsection id="id4062283b0e2b419cbddb5cac3c5a70e3"><enum>(i)</enum><header>Implementation</header><text>The Commission may prescribe rules to implement this section.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id7934dc49cda24e96b5ba618b94526e87"><enum>(b)</enum><header>Certain digital asset exchange functions not sufficient To trigger requirement To register as futures commission merchant</header><text>Section 4f(c) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6f">7 U.S.C. 6f(c)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idd6fae3dcc7e74f89a7e5019783f122af"><paragraph id="idc03c94348e794fcebe283e1748972deb" indent="up1"><enum>(12)</enum><header>Clarification of scope of registration requirement</header><text>A registered digital asset exchange shall not be required to register as a futures commission merchant for any activity for which the registered digital asset exchange is regulated under section 5i.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><section id="id594b72aa0882418b8c4c1eac79f081e3"><enum>405.</enum><header>Violations</header><text display-inline="no-display-inline">Section 9 of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/13">7 U.S.C. 13</external-xref>) is amended— </text><paragraph id="idec5aa0aedf3f4c20b4149daec18df35a"><enum>(1)</enum><text>in subsection (a)(2), by striking <quote>subsection 4c</quote> and inserting <quote>section 4c</quote>; and</text></paragraph><paragraph id="idaad1bc61b74e4b98becd25e14319f41f"><enum>(2)</enum><text>in subsection (e)—</text><subparagraph id="id254fd8590d3943f7ba00cdd547cc3751"><enum>(A)</enum><text>in paragraph (1), by inserting <quote>contracts for the sale of digital assets,</quote> after <quote>options thereon,</quote>; and</text></subparagraph><subparagraph id="id62cedee995664f3f90b6f9bc285f3964"><enum>(B)</enum><text>in paragraph (2), by inserting <quote>or contracts for the sale of digital assets</quote> after <quote>options thereon</quote>.</text></subparagraph></paragraph></section><section id="id002b717375e54441814249b73039df80"><enum>406.</enum><header>Market reports</header><text display-inline="no-display-inline">Section 16(a) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/20">7 U.S.C. 20(a)</external-xref>) is amended—</text><paragraph id="id827f3951649b4661867785440bb628f4"><enum>(1)</enum><text>in the first sentence, by striking <quote>which are the subject of futures contracts,</quote> and inserting <quote>under the jurisdiction of the Commission,</quote>; and</text></paragraph><paragraph id="id648e60bce870422faee0f7080f36b215"><enum>(2)</enum><text>in the second sentence, by striking <quote>futures markets.</quote> and inserting <quote>markets under the jurisdiction of the Commission.</quote>.</text></paragraph></section><section id="id0D183BF7416949C9A6B583AC034E8133"><enum>407.</enum><header>Bankruptcy treatment of digital assets</header><subsection id="id55458A337FF94ADCAE9A1B8E20426027"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 20(a) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/24">7 U.S.C. 24(a)</external-xref>) is amended in paragraphs (1) and (2) by inserting <quote>digital assets,</quote> after <quote>securities,</quote> each place it appears.</text></subsection><subsection id="id2dad21a5ccd243c486936d5ceefaa3af"><enum>(b)</enum><header>Commodity broker definition</header><text>Section 101(6) of title 11, United States Code, is amended by inserting <quote>registered digital asset exchange, as defined in section 1a of the Commodity Exchange Act,</quote> before <quote>foreign</quote>.</text></subsection><subsection id="id895890912e7244c29a4246f9f25196e8"><enum>(c)</enum><header>Commodities contracts</header><text>Section 556 of title 11, United States Code, is amended by inserting <quote>a registered digital asset exchange, as defined in section 1a of the Commodity Exchange Act,</quote> before <quote>a contract</quote>.</text></subsection><subsection id="id746d2f287c4a4f31bfd4235e7d172af1"><enum>(d)</enum><header>Contractual rights</header><text>Section 561 of title 11, United States Code, is amended by inserting <quote>registered digital asset exchange, as defined in section 1a of the Commodity Exchange Act,</quote> after <quote>designated under the Commodity Exchange Act</quote> each place it appears. </text></subsection><subsection id="idF5C011A0CB1C497E8859A1F424F5B3B9"><enum>(e)</enum><header>Definitions</header><text>Section 761 of title 11, United States Code, is amended—</text><paragraph id="id1B3AA9D0C0D645638752270BA9556587"><enum>(1)</enum><text>in paragraph (4)—</text><subparagraph id="id9A01BFB4C4A548BE82B6428A7C57A12B"><enum>(A)</enum><text>in subparagraph (A), by inserting <quote>digital asset or a</quote> before <quote>commodity</quote>;</text></subparagraph><subparagraph id="idD94BC7EBD57F46F2B9410C07493B2E1E"><enum>(B)</enum><text>in subparagraph (I), by striking <quote>or</quote> at the end;</text></subparagraph><subparagraph id="idF604803D84D34804BBFDA88001079038"><enum>(C)</enum><text>in subparagraph (J), by adding <quote>or</quote> at the end; and</text></subparagraph><subparagraph id="id6E8CABC34FB14FECA774B3A31B30448D"><enum>(D)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id78E4493888E8472898A3B2D5B597608F"><subparagraph id="idAFD1DBA7A655450ABA58F674A52041FA"><enum>(K)</enum><text>a contract for the sale of a digital asset by a registered digital asset exchange;</text></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="idAA5A7E87F5834BA98557CDAAFEA96E00"><enum>(2)</enum><text>in paragraph (10)—</text><subparagraph id="idFD93E2605FC8464ABA41257088770539"><enum>(A)</enum><text>in the matter preceding subparagraph (A)—</text><clause id="id354DE0423D704D4AAFA275F00C23E676"><enum>(i)</enum><text>by inserting <quote>a digital asset,</quote> after <quote>a security,</quote>; and</text></clause><clause id="id7C64E2B0031A4DE3BF75FA721B20B3F4"><enum>(ii)</enum><text>by inserting <quote>digital asset,</quote> after <quote>cash, security,</quote>;</text></clause></subparagraph><subparagraph id="id8C6A2502C8AC401EB345590FA7589E25"><enum>(B)</enum><text>in subparagraph (A)—</text><clause id="idE4F290EC411D4C28A9DC111B36FD8E37"><enum>(i)</enum><text>in clause (vi), by inserting <quote>a digital asset,</quote> after <quote>a security,</quote>; and</text></clause><clause id="id2E5019DC2578460BBE6B83F52409F94C"><enum>(ii)</enum><text>in clause (vii)—</text><subclause id="id40ED33C9182A471D941B191543387123"><enum>(I)</enum><text>by inserting <quote>or a digital asset</quote> before <quote>held as property</quote>;</text></subclause><subclause id="id72C48C03BE1644B1834F09A79B5B04D6"><enum>(II)</enum><text>by inserting <quote>or digital asset</quote> after <quote>such security</quote>; and</text></subclause><subclause id="id3C291A0540854BFABD51ED942251C42A" commented="no" display-inline="no-display-inline"><enum>(III)</enum><text>by inserting <quote>or digital asset</quote> after <quote>based on a security</quote>; and</text></subclause></clause></subparagraph><subparagraph display-inline="no-display-inline" commented="no" id="id1DCF777243AB47E1840D0E4E72E492E7"><enum>(C)</enum><text>in subparagraph (B)—</text><clause id="id553E0F0090B84C39BF2FFC8391D67D9F"><enum>(i)</enum><text>by striking <quote>not including property</quote> and inserting “not including—</text><quoted-block style="OLC" display-inline="no-display-inline" id="id35E9C63E95CC484397D93B2EE8DC8FC7"><clause id="idB638F8F5B96F47118E8DE33E58920CF2"><enum>(i)</enum><text>property</text></clause><after-quoted-block>;</after-quoted-block></quoted-block></clause><clause id="id477930FD9E2B4A5F8226A05053493AD6"><enum>(ii)</enum><text>in clause (i), as so designated, by adding <quote>and</quote> at the end; and</text></clause><clause id="idF211B09313734186888D3B141FA286E0"><enum>(iii)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idEEAF8E1A4DDF4A07AFC0F5485CDA7A08"><clause id="id31C5F683D56A4977B045730F6A4D2568"><enum>(ii)</enum><text>money, assets, or property with respect to which any requirement under subsection (i) of section 4d of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6d">7 U.S.C. 6d</external-xref>) is waived pursuant to paragraph (3) of that subsection, or any requirement under subparagraph (B) of paragraph (4) of section 5i(d) of that Act is waived pursuant to subparagraph (E) of that paragraph;</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></clause></subparagraph></paragraph></subsection><subsection id="idAE3616FB4AB542889B9F1559148CF551"><enum>(f)</enum><header>Voidable transfers</header><text>Section 764(b)(1) of title 11, United States Code, is amended by inserting <quote>, digital assets</quote> before <quote>, or other property</quote>.</text></subsection><subsection id="id108FCEC899F3424EA90CBD4DFADCA3F7"><enum>(g)</enum><header>Treatment of customer property</header><text>Section 766 of title 11, United States Code, is amended—</text><paragraph id="id283C8486EBE6415C8337205CD7E5A222"><enum>(1)</enum><text>in subsection (b)(1), by striking <quote>physical commodity underlying</quote> and inserting <quote>commodity underlying</quote>;</text></paragraph><paragraph id="id962D18C6776B4C7E81416274D2242FDD"><enum>(2)</enum><text>in subsection (c), by inserting <quote>digital asset,</quote> before <quote>or commodity contract</quote> each place the term appears;</text></paragraph><paragraph id="id59F47D3E325A41D68EB43E92C8E771B7"><enum>(3)</enum><text>in subsection (d), by inserting <quote>digital asset,</quote> before <quote>or commodity contract</quote> each place the term appears;</text></paragraph><paragraph id="id17921B959A464995BAA7C968A93B6AFE"><enum>(4)</enum><text>in subsection (f)—</text><subparagraph id="idA193A78AAC4B4C22AE82AA66A9C70A07"><enum>(A)</enum><text>in striking <quote>and other property</quote> and inserting <quote>digital assets, and other property</quote>; and</text></subparagraph><subparagraph id="id8B9D8FBEFF594CFCBF23A6C66DF60FCF"><enum>(B)</enum><text>by striking <quote>or property</quote> and inserting <quote>, digital assets, or property</quote>;</text></subparagraph></paragraph><paragraph id="idE6990F46F43F454A80682F73472ABC56"><enum>(5)</enum><text>in subsection (g), by striking <quote>security or property</quote> and inserting <quote>security, digital asset, or property</quote>; and</text></paragraph><paragraph id="id64192E9A0D57411AA81B2768BEF8F428" commented="no" display-inline="no-display-inline"><enum>(6)</enum><text>in subsection (h)(2), by inserting <quote>digital assets,</quote> after <quote>customer securities,</quote>. </text></paragraph></subsection></section><section id="idCF954A79F5874649957EFC24B7105B36"><enum>408.</enum><header>Identified banking products</header><text display-inline="no-display-inline">Section 206(a) of the Gramm-Leach-Bliley Act (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c</external-xref> note) is amended—</text><paragraph id="iddccfe1daed094d61b066474c37dc24d5"><enum>(1)</enum><text>in paragraph (5)(B)(ii), by striking <quote>or</quote> at the end;</text></paragraph><paragraph id="id08ae1a641e7f47efaea620b0efcf593f"><enum>(2)</enum><text>in paragraph (6), by striking the period at the end and inserting <quote>; or</quote>; and</text></paragraph><paragraph id="idfcdfa6880d6541e7a2140fc22f443fb2"><enum>(3)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id9f70656935894e7ebd4a35f33cb49435"><paragraph id="id32827500fa234bf0871a5d69ede4a470"><enum>(7)</enum><text>a payment stablecoin issued by a depository institution under section 722A.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="id714ced1b835d4213924e65c673064e7c"><enum>409.</enum><header>Financial institutions definition</header><text display-inline="no-display-inline">Section 5312(c)(1) of title 31, United States Code, is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id32ec932d682c4a57bc3764d39e2521af"><subparagraph id="id55012326a6ba48bf95096254a88d3bb7"><enum>(B)</enum><text>A registered digital asset exchange, as defined in section 1a of the Commodity Exchange Act.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="idD4A3FCCC31824E86B0FE0827C671F4AF"><enum>410.</enum><header>Offsetting the costs of digital asset regulation</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>) is amended by adding at the end the following:</text><quoted-block id="id0BCAD20447AE4D899D4DE29F6239C5D0" display-inline="no-display-inline" style="OLC"><section id="idF8937C0D3CEA42F39469B88869EC79D9"><enum>24.</enum><header>Offsetting the costs of digital asset regulation</header><subsection id="id387A2F3808B64EEAA1A71D52F27B92C2"><enum>(a)</enum><header>Recovery of certain costs of annual appropriation</header><paragraph id="idB00E470FC51344F6A3C4DA5D7DA307C8"><enum>(1)</enum><header>In general</header><text>Effective beginning October 1, 2023, the Commission may, by rule, collect fees—</text><subparagraph id="id86E76A0A36B34EEF84AE37B26D291D9E"><enum>(A)</enum><text>to fund expenses relating to regulation of digital asset cash and spot markets; and</text></subparagraph><subparagraph id="id2F26F861AF634F9997813E33434B4F68"><enum>(B)</enum><text>that are designed to recover the costs to the Federal Government of the annual appropriation to the Commission by Congress.</text></subparagraph></paragraph><paragraph id="id06499E65C551486A9A94D847032E03CE"><enum>(2)</enum><header>Registered entities</header><text>Fees under paragraph (1) shall only be imposed—</text><subparagraph id="idA46B32FA28B04FAB975AE45EE05880C8"><enum>(A)</enum><text>on registered entities engaged in cash or spot digital asset activities; and</text></subparagraph><subparagraph id="idE97594B54C2A4734B208EED8FBF332C7"><enum>(B)</enum><text>in relation to the regulation of those activities under this Act.</text></subparagraph></paragraph><paragraph id="id70530BE848E142CCA64B80B31DAF36CB"><enum>(3)</enum><header>Fee rates</header><text>Fees under paragraph (1) shall—</text><subparagraph id="idAE172805A8D540FDA8DC9CDBA9442286"><enum>(A)</enum><text>be strictly related to the cost to the Commission of the regulation of digital asset cash and spot markets;</text></subparagraph><subparagraph id="id5AF63E70EFF14D6F9272C68A566E303D"><enum>(B)</enum><text>be reduced for newly registered entities with less than $100,000,000 in daily trading volume; and</text></subparagraph><subparagraph id="id7BB3B35DC8B841F58618D5011289C6A7"><enum>(C)</enum><clause commented="no" display-inline="yes-display-inline" id="id41E13536FFC1419A86F1C131C9052DA5"><enum>(i)</enum><text>minimize negative impacts on market liquidity; and </text></clause><clause id="id5A96148D544345EDA42A0FAB9969EBF5" indent="up1"><enum>(ii)</enum><text>maintain the efficiency, competitiveness, and financial integrity of digital asset markets.</text></clause></subparagraph></paragraph><paragraph id="idD44C7AD891EB4C2281AA82F5557F5D9A"><enum>(4)</enum><header>Collection of fees</header><text>The Commission shall collect fees under this subsection in such manner and within such time as may be specified by the Commission by rule.</text></paragraph></subsection><subsection id="id32D30D1FDD33444593892077481FD630"><enum>(b)</enum><header>Fee rate orders</header><paragraph id="idF05D4554A4AB4E99A8499B0DF9158B15"><enum>(1)</enum><header>In general</header><text>Not later than 60 days after the date on which a law providing a regular appropriation to the Commission for a fiscal year is enacted, the Commission shall adopt an order setting rates for fees to be collected under subsection (a) for that fiscal year. </text></paragraph><paragraph id="idD0F3A859230D40FAAD7AA62EB937ED9C"><enum>(2)</enum><header>Publication</header><text>The Commission shall publish in the Federal Register the order adopted under paragraph (1), including—</text><subparagraph id="idE96FA05E901741938E2214C991721DAF"><enum>(A)</enum><text>projections on which the fees are based; and </text></subparagraph><subparagraph id="idA25C66A9386B4CD3B655D4CA387EF704"><enum>(B)</enum><text>an explanation of the method used for calculating applicable fee rates.</text></subparagraph></paragraph></subsection><subsection id="id85FFDF9E4AEA4A68AECACA57F7C8FF51"><enum>(c)</enum><header>Deposit of fees</header><paragraph id="id14A0755858784FEAA5ADC113E80134B7"><enum>(1)</enum><header>Offsetting collections</header><text>Fees collected under subsection (a) for any fiscal year—</text><subparagraph id="id7A6278E1C7B04D6396F698B5DF63E7E2"><enum>(A)</enum><text>shall be deposited and credited as offsetting collections to the account providing appropriations to the Commission; and</text></subparagraph><subparagraph id="id75CCFE43F9464906BBD1F17FFC9E637E"><enum>(B)</enum><text>shall not be collected or available for obligation for any fiscal year except to the extent provided in advance in appropriation Acts.</text></subparagraph></paragraph><paragraph id="id86CE5465B1A440E792AE463743F1CE4C"><enum>(2)</enum><header>General revenues prohibited</header><text>No fees collected under subsection (a) shall be deposited and credited as general revenue of the Treasury.</text></paragraph></subsection><subsection id="id1B8CE2074C9649269F3610330D31AA85"><enum>(d)</enum><header>Lapse of appropriations</header><text>If a regular appropriation to the Commission has not been enacted on the first day of a fiscal year, the Commission shall continue to collect fees under this section at the rates in effect on September 30 of the preceding fiscal year.</text></subsection><subsection id="id0EDC141B4B534D10AEB3B360B9C11574"><enum>(e)</enum><header>Limitations</header><paragraph id="id6F9B593B0B8741F299A14B0C49E0F7A4"><enum>(1)</enum><header>Leveraged, margined, or financed transactions</header><text>Nothing in this section authorizes the imposition of fees on a registered entity relating to leveraged, margined, or financed transactions under this Act, including those activities relating to digital assets. </text></paragraph><paragraph id="id216E78EC27ED4404B7C2FDF025F01974"><enum>(2)</enum><header>Other appropriations</header><text>Notwithstanding any other provision of law, the Commission may use appropriations otherwise made available by law to fund expenses relating to the regulation of digital asset cash and spot markets.</text></paragraph></subsection><subsection id="id6671E08021DD4477AF712E5A687EE0E0"><enum>(f)</enum><header>Ceiling on Fees</header><text>Unless otherwise provided by law, fees collected under this section shall not exceed $30,000,000.</text></subsection><subsection id="idB86C45236D4F48D08D26BDD5C616542F" commented="no" display-inline="no-display-inline"><enum>(g)</enum><header>Authorization required</header><text>The authority under this section to impose and collect fees shall only be in effect during a period that a legislative authorization of the Commission is in effect, as otherwise provided by law.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>V</enum><header>Responsible consumer protection</header><section id="id29FA5537782449819C8F7B4C8285F6ED"><enum>501.</enum><header>Responsible consumer protection</header><text display-inline="no-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/98">Chapter 98</external-xref> of title 31, United States Code, as added by section 101(a) of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="id42C63F13EF66487CAF2B22498BFC2172"><section id="id452A6166D07249C5B97EC6451D3FE1BD"><enum>9802.</enum><header>Consumer protection standards for digital assets</header><subsection id="id0b09a8d0817d49b28ad447c49ba3f32f"><enum>(a)</enum><header>In general</header><text>A person or protocol that provides digital asset services shall ensure that the scope of permissible transactions that may be undertaken with customer digital assets is disclosed clearly in a customer agreement.</text></subsection><subsection id="id98fa2081d4db44aa947972255cf2edf4"><enum>(b)</enum><header>Notice</header><text>A person who provides digital asset services shall provide clear notice to each customer, and require acknowledgment, of the following:</text><paragraph id="id310098b5df5441d38c71f548372d3215"><enum>(1)</enum><text>Prior to the implementation of any updates, material source code version changes relating to digital assets, except in emergencies, which may include security vulnerabilities.</text></paragraph><paragraph id="id49688e33d46140f3a68f71ac753551e9"><enum>(2)</enum><text>Whether customer digital assets are segregated from other customer assets and the manner of segregation.</text></paragraph><paragraph id="id8a43f63e741946bc9c232b57f665b040"><enum>(3)</enum><text>How the assets of the customer would be treated in a bankruptcy or insolvency scenario and the risks of loss.</text></paragraph><paragraph id="id4bfcdaea71dd408c964bd02e85e25c75"><enum>(4)</enum><text>The time period and manner in which the person is obligated to return the digital asset of the customer upon the request of the customer.</text></paragraph><paragraph id="id2b8b41c30f6a44568377e2fd387fcc00"><enum>(5)</enum><text>Applicable fees.</text></paragraph><paragraph id="idc64e41e039294c4598237de1402b793a"><enum>(6)</enum><text>The dispute resolution process of the person. </text></paragraph></subsection><subsection id="idd600544641cb408e965c0b933f39be2c"><enum>(c)</enum><header>Subsidiary proceeds</header><paragraph id="id8357DF738726410CBFC261A1B9A66D2F"><enum>(1)</enum><header>Definitions</header><text>In this subsection:</text><subparagraph id="idE4DF3B8BE5E74C639E65AA9BF44572F9"><enum>(A)</enum><header>Subsidiary proceeds</header><text>The term <term>subsidiary proceeds</term> includes forks, airdrops, staking, and other gains that accrue to a digital asset through market transactions, use as a financial asset, or being held in custody or safekeeping by a person who provides digital asset services.</text></subparagraph><subparagraph id="id5de067d9329e4c278101b40045861709"><enum>(B)</enum><header>Terms of service</header><text>The term <term>agreement</term> includes the standard terms of service of the person who provides digital asset services. </text></subparagraph></paragraph><paragraph id="id5B43D9479D764BB3981E834AD7A8C150"><enum>(2)</enum><header>Accrual to customer</header><text>Except as otherwise specified by an agreement with a customer, all ancillary or subsidiary proceeds relating to digital asset services provided to a customer shall accrue to the benefit of the customer in accordance with paragraph (3).</text></paragraph><paragraph id="idf651bb93e8324fd58c02b557e9757aab"><enum>(3)</enum><header>Election</header><text>A person who provides digital asset services may elect not to collect certain subsidiary proceeds if the election is disclosed in an agreement with the customer.</text></paragraph><paragraph id="ida595c52c216f44d38d334e4b20cfdf1d"><enum>(4)</enum><header>Withdrawal</header><text>A customer may withdraw digital assets in a method that permits the collection of the subsidiary proceeds.</text></paragraph><paragraph id="idac3019f8dc14472b96c339b0928b16e6"><enum>(5)</enum><header>Agreement</header><text>A person who provides digital asset services shall enter into an agreement with a customer, if desired by the customer, regarding the manner in which to invest subsidiary proceeds or other gains attributable to the digital assets of the customer.</text></paragraph></subsection><subsection id="idd1c0e44e76d54dfe934740f9175a42fa"><enum>(d)</enum><header>Lending arrangements</header><text>A person who provides digital asset services shall ensure any lending arrangements relating to digital assets are—</text><paragraph id="idda3e0248f12341b79b305dd187b1d24a"><enum>(1)</enum><text>clearly disclosed to customers before any lending services take place;</text></paragraph><paragraph id="id0b35b421d18949fb8f6a605ebb3e680c"><enum>(2)</enum><text>subject to the affirmative consent of the customer;</text></paragraph><paragraph id="id119ff7de127345fb8085424902e91fa2"><enum>(3)</enum><text>fully enforceable as a matter of commercial law;</text></paragraph><paragraph id="id0782fe6f15ec40e6840197611448037b"><enum>(4)</enum><text>accompanied by full disclosures of applicable terms and risks, yield, and the manner in which the yield is calculated;</text></paragraph><paragraph id="id183e62511fdc4d0588bfa56fdb6527ab"><enum>(5)</enum><text>accompanied by appropriate disclosures relating to collateral requirements and policies, including—</text><subparagraph id="id91e350f4c9ce49dca983575fc2e84e56"><enum>(A)</enum><text>haircuts and overcollateralization requirements;</text></subparagraph><subparagraph id="idbc7494421c11474890dc87b045d753be"><enum>(B)</enum><text>collateral the person accepts when calling for additional collateral from a customer, including collateral substitution;</text></subparagraph><subparagraph id="idf0340413f4c94fe68f51ec0831a63a31"><enum>(C)</enum><text>whether customer collateral is commingled with the collateral of other customers or of the person; and</text></subparagraph><subparagraph id="idae2c49e78f184637bc2302e4b864641e"><enum>(D)</enum><text>how customer collateral is invested, and whether the yield belongs to the customer or to the person;</text></subparagraph></paragraph><paragraph id="id6c32912b31c24be889f25003f2121459"><enum>(6)</enum><text>accompanied by disclosures of mark-to-market and monitoring arrangements, including—</text><subparagraph id="id607865fec65f466692be81532cc781ad"><enum>(A)</enum><text>the frequency of mark-to-market monitoring and how frequently the person will call for additional collateral from a customer;</text></subparagraph><subparagraph id="id681f434470444c479c96986682afaead"><enum>(B)</enum><text>the time period in which the customer must supply additional collateral to the person after a collateral call; and</text></subparagraph><subparagraph id="ida3aeae43fbf548cdb2400132ae2d1019"><enum>(C)</enum><text>whether the person permits failures to deliver such collateral, and in the event of a failure to deliver the period of time in which the customer must cure the failure to deliver before the customer’s position is closed; and</text></subparagraph></paragraph><paragraph id="id1af9115aa21e4cc8821baf0e48f76143"><enum>(7)</enum><text>compliant with all applicable Federal and State laws.</text></paragraph></subsection><subsection id="ida561a8be071c47b094afe983c883af1a"><enum>(e)</enum><header>Rehypothecation</header><paragraph id="id13c9f533a52a49f5860fc351bd3f3aab"><enum>(1)</enum><header>Definition</header><text>In this subsection, the term <term>rehypothecation</term> means the pledging of an asset as collateral for a financial transaction by a person after the pledging of the asset as collateral by a customer of that person.</text></paragraph><paragraph id="idd898efbc5972407d91224d59470c4399"><enum>(2)</enum><header>Rehypothecation</header><text>Before rehypothecating a digital asset, a person who provides digital asset services to a customer shall clearly disclose policies on rehypothecation to customers, including a clear definition of rehypothecation that is accessible to consumers. The person who provides digital asset services to a customer shall obtain affirmative consent and consider the following factors to appropriately mitigate risk relating to rehypothecation:</text><subparagraph id="id47d855d5d17c4c82991b5d5e2d43fc47"><enum>(A)</enum><text>The liquidity and volatility of a digital asset.</text></subparagraph><subparagraph id="id28c7e14803af47f6a1af223f8a09d9ab"><enum>(B)</enum><text>Past failures to deliver a particular digital asset.</text></subparagraph><subparagraph id="idbacaebf39c8743d8a1d880a9beec7cae"><enum>(C)</enum><text>Concentration risk.</text></subparagraph><subparagraph id="idbc3016b935494d9e9bd2e0ff7e448250"><enum>(D)</enum><text>Whether an issuer or lender of last resort relating to a digital asset exists, including for virtual currency with a finite supply.</text></subparagraph><subparagraph id="id0be7fa52bfe8440a814147176078b8a4"><enum>(E)</enum><text>The capital, leverage and market position of the person.</text></subparagraph><subparagraph id="idfe968a844be3436abc15bd983a7daba3"><enum>(F)</enum><text>The legal obligations of the person to customers and other persons in the market who provide digital asset services.</text></subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="idA484568343E7472F8993EB42F9127699"><enum>502.</enum><header>Source code version of digital assets</header><text display-inline="no-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/98">Chapter 98</external-xref> of title 31, United States Code, as amended by section 501 of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="id7864B47BE5794AAB8D8D0E28A64BF4E0"><section id="iddb02b7c0ea8c4645ae82df84cfe79d71"><enum>9803.</enum><header>Source code version of digital assets</header><subsection id="id751a3587f1064a2ca2358ebfd715d472"><enum>(a)</enum><header>In general</header><text>A customer and a person who provides digital asset services shall, at the initiation of a contractual relationship, agree in writing regarding the source code version the person will use for each digital asset and the treatment of each asset under the law, including securities and commodities laws and the Uniform Commercial Code applicable to the transaction. </text></subsection><subsection id="id3cd99d46d8474ba9b42130611b46d12e"><enum>(b)</enum><header>Determination</header><text>A person who provides digital asset services—</text><paragraph id="idA0EEFE4CD6784F4E97AD9D183332CA91"><enum>(1)</enum><text>may periodically determine whether to implement a source code version that uses validation rules different than those of the source code version specified in a customer agreement, including in circumstances where it is not possible to predict in advance whether utilization of the different source code version will be in the best interests of the customer; </text></paragraph><paragraph id="id2243D943B17B41A7A66DEEC07700A642"><enum>(2)</enum><text>shall consider the nature of proposed changes to source code versions with potential effects resulting from third-party actors that may create different source code versions resulting in new networks that could create economic value for customers;</text></paragraph><paragraph id="idA4F3DDB2A4DB4D7BA499C9A7C3312424"><enum>(3)</enum><text>shall not be required to support digital assets and source code versions that the person has not entered into an agreement with customers to support; and</text></paragraph><paragraph id="id1EE1C099519542DF9647074D26766903"><enum>(4)</enum><text>shall not capriciously redefine a digital asset or the corresponding source code or alter customer agreements with respect to this subsection.</text></paragraph></subsection><subsection id="idd0c1307efaba4b86bbbe33fd9fbc7347" commented="no"><enum>(c)</enum><header>Standards</header><text>A person who provides digital asset services—</text><paragraph id="id939F2D9DBCBC454E970C80745D8695DB" commented="no"><enum>(1)</enum><text>shall adopt and maintain standards for changes to digital asset source code versions that use differing validation rules than those of the source code version specified in the customer agreement, which shall include customer notice and approval, as appropriate based on the circumstances; and</text></paragraph><paragraph id="idF7A8D6D328B544AFA4EA13AA939966FB" commented="no"><enum>(2)</enum><text>may specify differing standards based on source code changes which occur as the result of emergencies, including security vulnerabilities.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section commented="no" id="id7D492DAFC7C64A0CA6C17ADF133A93F4"><enum>503.</enum><header>Settlement finality</header><text display-inline="no-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/98">Chapter 98</external-xref> of title 31, United States Code, as amended by section 502 of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="id5ED272739EC4466C9B8F6E2E67452AA0"><section id="id714d84c078fa4047a863ed0e3ac10f7b"><enum>9804.</enum><header>Settlement finality</header><text display-inline="no-display-inline">To promote legal certainty and customer protection, a person who provides digital asset services and a customer shall agree on the terms of settlement finality for all transactions, including the following: </text><paragraph id="id479104e2e90443ae8dc2fcd2d345358a"><enum>(1)</enum><text>The conditions under which a digital asset may be deemed fully transferred, provided that these legal conditions may diverge from operational conditions under which digital assets are considered transferred, based on the distributed and probabilistic nature of digital assets.</text></paragraph><paragraph id="id90e72e32c7394b44adea50f0d9bdefd2"><enum>(2)</enum><text>The exact moment of transfer of a digital asset.</text></paragraph><paragraph id="id3f8f682a07ab488ab105158b3b6e3460"><enum>(3)</enum><text>The discharge of any obligations upon transfer of a digital asset.</text></paragraph><paragraph id="idc285d8c44e0c4aaa8fea98b2d4daa095"><enum>(4)</enum><text>Conformity to applicable provisions of the Uniform Commercial Code.</text></paragraph></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="idBD98BFA6F4D343E08DA3E7366C7EB088"><enum>504.</enum><header>Notice to customers; enforcement</header><text display-inline="no-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/98">Chapter 98</external-xref> of title 31, United States Code, as amended by section 503 of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="idF57523635F8346B4BB5FAB7BCE62A946"><section id="id93875d719faf44aa8cfe114b8ca16dbf"><enum>9805.</enum><header>Notice to customers; enforcement</header><subsection id="id76a29606c05940a0b46c5bd83c911754"><enum>(a)</enum><header>In general</header><text>In providing disclosures and carrying out other duties under this chapter, a person who provides digital asset services in or affecting interstate commerce shall have a duty to provide higher standards of customer notice and acknowledgment if there is likely to be a material impact on the economic value of the digital asset of a customer. </text></subsection><subsection id="idD8466CC31AC64817A9FE69E6DC976FEF"><enum>(b)</enum><header>Enforcement of standards</header><text>The standards under this chapter shall be enforced in an appropriate manner, commensurate with other customer protection standards—</text><paragraph id="id1fbbf923799b406cbdb47ffa701d54e0"><enum>(1)</enum><text>in the case of a digital asset intermediary, by the Federal or State licensing, registration, or chartering authority of the intermediary; and</text></paragraph><paragraph id="idd4b6905e110947328f53889605705da2"><enum>(2)</enum><text>in the case of a depository institution or other financial institution, by the appropriate State or Federal banking supervisor.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="idba3574fc6891426dbc0dbafef3ea3225"><enum>505.</enum><header>Right to individual management of digital assets</header><text display-inline="no-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/98">Chapter 98</external-xref> of title 31, United States Code, as amended by section 504 of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="id0669f4bcac794f6abbf882ed62124822"><section id="id36bc0a9bc76646278454dfe25a35e09b" section-type="section-one"><enum>9806.</enum><header>Right to individual management of digital assets</header><subsection id="id78257067259b45e9b1d4565530b5989e"><enum>(a)</enum><header>In general</header><text>Except as otherwise required by law, no person shall be required to use an intermediary for the safekeeping of digital assets legally owned, and possessed or controlled, by that person.</text></subsection><subsection id="idb68c23d2a3164db69076a6db5a6b23fe"><enum>(b)</enum><header>Rule of construction</header><text>This section shall not be construed to—</text><paragraph id="ideda85ec8cc5244ed992ede73cc77afd0"><enum>(1)</enum><text>permit a person to engage in market activity for which authorization is required under Federal or State law; or</text></paragraph><paragraph id="id3a4e0d0439d54458b1621a68e9f99b74"><enum>(2)</enum><text>restrict a person from freely entering into an agreement for digital asset services with a third party.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="idffb250b4ec7b47528d58d37fcc5db6bb"><enum>506.</enum><header>Technical and conforming amendments</header><text display-inline="no-display-inline">The table of sections of chapter 98, as added by section 101(a) of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" id="idbf1066ad-2d55-45c0-89bd-8cdbd67a9550"><toc><toc-entry level="section" idref="id452A6166D07249C5B97EC6451D3FE1BD">9802. Consumer protection standards for digital assets. </toc-entry><toc-entry level="section" idref="iddb02b7c0ea8c4645ae82df84cfe79d71">9803. Source code version of digital assets. </toc-entry><toc-entry level="section" idref="id714d84c078fa4047a863ed0e3ac10f7b">9804. Settlement finality. </toc-entry><toc-entry level="section" idref="id93875d719faf44aa8cfe114b8ca16dbf">9805. Notice to customers; enforcement. </toc-entry><toc-entry level="section" idref="id36bc0a9bc76646278454dfe25a35e09b">9806. Right to individual management of digital assets.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>VI</enum><header>Responsible payments innovation</header><section id="idce30b4d250cc4912b51c0b1ff159e0eb"><enum>601.</enum><header>Issuance of payment stablecoins</header><text display-inline="no-display-inline">Subtitle C of title VII of the Gramm-Leach-Bliley Act (<external-xref legal-doc="public-law" parsable-cite="pl/106/102">Public Law 106–102</external-xref>; 113 Stat. 1470) is amended by adding at the end the following: </text><quoted-block style="OLC" display-inline="no-display-inline" id="idAB570656B9FD46C080DCC361657CAA53"><section id="id8A2B472AB6C146A89DD216D9E3987506"><enum>722A.</enum><header>Issuance of payment stablecoins</header><subsection id="id4983db051d5a458fbabcc81e5ed6895d"><enum>(a)</enum><header>In general</header><text>A depository institution may issue, redeem, and conduct all incidental activities relating to payment stablecoins in accordance with this section.</text></subsection><subsection id="id5187eeb19c744400b41a00afdc47c223"><enum>(b)</enum><header>Required payment stablecoin assets</header><text>A depository institution shall maintain high-quality liquid assets under this section equal to not less than 100 percent of the face amount of the liabilities of the institution on payment stablecoins issued by the institution. In the case of an insured depository institution described in subsection (m)(1)(A) that engages in on-balance sheet lending activities, assets under this subsection shall equal not less than 100 percent of the face amount of the liabilities of the institution on payment stablecoins issued by the institution, with the assets held in balances at a Federal Reserve bank (which may include a segregated balance account), or, in the case of foreign withdrawable reserves, at a foreign central bank, in a special, custodial, or trust account, other off-balance sheet account, or in another equivalent manner that ensures the segregation of the assets in the event of receivership. An insured depository institution may segregate the issuance and management of payment stablecoins into a separate depository institution affiliate under the same holding company structure. Eligible high-quality liquid assets under this section shall be comprised of the following:</text><paragraph id="id2692c39ea52a4a22a10bc17a67c27a59"><enum>(1)</enum><text>United States coins and currency and any other instrument that is legal tender, as defined in section 5103 of title 31, United States Code.</text></paragraph><paragraph id="id54e3422f470048baaf0e7f04f8a83e44"><enum>(2)</enum><text>Demand deposits at a depository institution, except that deposits in an insured depository institution shall not exceed the limit of deposit or share insurance available for that account, which may include pass through insurance, or shall be maintained in a special, custodial, or trust account or other off-balance sheet account held by the insured depository institution.</text></paragraph><paragraph id="id42aaa8302bb54ca2ae07c10fdd4be5cd"><enum>(3)</enum><text>Balances held at a Federal Reserve bank, which may be held in a master account or segregated balance account.</text></paragraph><paragraph id="ided7d628213ad460cb181157f89749000"><enum>(4)</enum><text>Foreign withdrawable reserves, as defined in section 249.3 of title 12, Code of Federal Regulations, consistent with any foreign unit of account in which the payment stablecoin is denominated or pegged.</text></paragraph><paragraph id="idb293a69000884f4b8d69660cf0f1aa5c"><enum>(5)</enum><text>A security that is issued by, or unconditionally guaranteed as to the timely payment of principal and interest by, the Department of the Treasury, with an original maturity of 1 year or less.</text></paragraph><paragraph id="id0676d869892c4946a463c1b736cb121a"><enum>(6)</enum><text>A reserve repurchase agreement relating to a security described in paragraph (5).</text></paragraph><paragraph id="id8836cca1e6c7442aa3c03e0df249949c"><enum>(7)</enum><text>Any other high-quality, liquid asset determined to be consistent with safe and sound banking practices, as determined by the appropriate Federal banking agency or State bank supervisor.</text></paragraph></subsection><subsection id="id3fe2b08dd2ba43dba99b46574a18ff31"><enum>(c)</enum><header>Disclosures</header><text>Not later than 10 business days after the end of each month, a depository institution shall disclose, in a publicly accessible manner, a summary description of the assets backing the payment stablecoin, the value of the assets, and the number of outstanding payment stablecoins, as of the last day of the month. Such explanation shall be filed with the appropriate Federal banking agency or State bank supervisor under penalty of perjury by the chief financial officer of the institution. The depository institution shall also report on the summary description any instances in which the institution failed to comply with any requirement of subsection (b). As applicable, the appropriate Federal banking agency or State bank supervisor shall, as part of a regular examination of the depository institution, at the frequency otherwise required by law, verify the composition of the assets and the accuracy of the summary descriptions made under this subsection and reports under subsection (d).</text></subsection><subsection id="id5c816d66a1fb475ebb7997ffbe47019e"><enum>(d)</enum><header>Call report</header><text>As applicable, the appropriate Federal banking agency or State bank supervisor shall require a depository institution that issues a payment stablecoin to report, in detail, on the composition of the assets in each periodic report of condition, or in an alternative format approved by the Federal Financial Institutions Examination Council, at the frequency otherwise required by law.</text></subsection><subsection id="idcc29691943d24caca5c14040c2c3c54b"><enum>(e)</enum><header>Permission</header><text>A depository institution shall, as applicable, obtain permission from the appropriate Federal banking agency or State bank supervisor, with an application submitted not less than 6 months before intended issuance of the payment stablecoin, but which may be submitted as part of a charter application. As part of an application under this section, a depository institution shall develop a tailored recovery and resolution plan, consistent with the standards adopted under subsection (k)(1)(F), that would permit the orderly resumption of a safe and sound operation or the orderly wind-down of operations in the event of distress, including the redemption of all outstanding payment stablecoins. The application shall also contain a draft customer agreement, flow of funds explanation, a robust information technology plan and operational design of the payment stablecoin. As applicable, the appropriate Federal banking agency or State bank supervisor shall render a decision on the application within 4 months of the date of filing, and shall approve the application unless—</text><paragraph id="id0c726d47a61a44cea3597e934b574cfd"><enum>(1)</enum><text>the payment stablecoin activities are not likely to be able to operate in a safe and sound manner;</text></paragraph><paragraph id="id5d9402392eb344c3af9a211e4ecd028f"><enum>(2)</enum><text>the depository institution does not have the required resources and expertise to manage the operation of the payment stablecoin, commensurate with the size and scale of projected operations; or</text></paragraph><paragraph id="id2d1966c30a7e4853a7200aaf95ce4c6d"><enum>(3)</enum><text>the depository institution does not have required policies and procedures relating to material areas of the operation of the payment stablecoin activities.</text></paragraph></subsection><subsection id="id05e4586a97b54a348637b437ed5038d3"><enum>(f)</enum><header>Redemption of payment stablecoins</header><text>Upon the demand of a customer, a depository institution shall redeem an outstanding payment stablecoin at par in the coins, currency, or other instruments that are legal tender, as defined in section 5103 of title 31, United States Code, or the similar laws of the jurisdiction of the unit of account in which the payment stablecoin is denominated or to which the value of the payment stablecoin is pegged. A depository institution may redeem a payment stablecoin issued by another depository institution at par, upon demand. The Board of Governors of the Federal Reserve System, through the Federal Reserve banks, shall provide for the clearing and settlement of payment stablecoin liabilities among depository institutions under this section and shall ensure competitive equality in all clearing, settlement and related services. A depository institution shall also assess its ability to fulfill large redemptions without placing downward pressure on the market value of the payment stablecoin.</text></subsection><subsection id="idc7e2b494e4a04422979398587bf27111"><enum>(g)</enum><header>Collateral availability in the capital markets</header><text>The appropriate Federal banking agencies, in consultation with State bank supervisors, the Securities and Exchange Commission, and Commodity Futures Trading Commission, shall monitor use of the high-quality liquid assets authorized under subsection (b) and the impact on collateral availability and the efficient functioning of the capital markets.</text></subsection><subsection id="ida117a30194a54c5f84d15f2803293105"><enum>(h)</enum><header>Receivership priority</header><text>In the event of the receivership of a depository institution that has issued a payment stablecoin under this section, a person that has a valid claim on a payment stablecoin issued by that institution shall have priority over all other claims on the institution with respect to any required payment stablecoin assets, including claims with respect to insured deposits, other than administrative costs incurred by the appropriate Federal banking agency or State bank supervisor, as applicable, relating to the receivership of the institution, if applicable. Consistent with subsection (f), a depository institution that redeems a payment stablecoin issued by a depository institution in receivership shall be considered to have a valid claim, with corresponding priority under this subsection, on a payment stablecoin issued by the institution in receivership.</text></subsection><subsection id="idfc4533b5d6304a99ac78377d1e9bd799"><enum>(i)</enum><header>Incidental activities</header><text>A depository institution may conduct all incidental activities relating to the issuance and redemption of payment stablecoins, which shall include the following:</text><paragraph id="id412c44af759a4db187b32b425c3c17d4"><enum>(1)</enum><text>Management of required payment stablecoin assets in accordance with subsection (b).</text></paragraph><paragraph id="id5df657ded8e74feb95922fdb12506bbb"><enum>(2)</enum><text>Making a market in payment stablecoins.</text></paragraph><paragraph id="id47cabd3ef22d4b6b886a6c59852a5492"><enum>(3)</enum><text>Custodial services.</text></paragraph><paragraph id="id7c43b3dcffb54a2a8bba433355c4e587"><enum>(4)</enum><text>Settlement and clearing.</text></paragraph><paragraph id="id5dad6e5c6bea4fc7b68a38fe10ed3210"><enum>(5)</enum><text>Post-trade services.</text></paragraph><paragraph id="idbb6918c2d9334383aebf406c31f365b5"><enum>(6)</enum><text>All other activities consistent with a safe and sound operation, as determined by the appropriate Federal banking agency or State bank supervisor.</text></paragraph></subsection><subsection id="id35d01680347d450fb0827cdfaa8faa2d"><enum>(j)</enum><header>Applicability of Gramm-Leach-Bliley data privacy provisions</header><text>Title V of the Gramm-Leach-Bliley Act (<external-xref legal-doc="usc" parsable-cite="usc/12/6801">12 U.S.C. 6801 et seq.</external-xref>) shall apply to the payment stablecoin activities of a depository institution under this section. </text></subsection><subsection id="id2028fb1173c84e2db3c10b0db31fee63"><enum>(k)</enum><header>Rules</header><paragraph id="id231304C8C6D34CC88D3408993C8598D9"><enum>(1)</enum><header>In general</header><text>The appropriate Federal banking agencies, in consultation with State bank supervisors, shall adopt rules to implement this section, including—</text><subparagraph id="id57264fd749ef47eca7e70571d83d2c65"><enum>(A)</enum><text>capital treatment for depository institutions described in subsection (m)(1) in accordance with paragraph (2);</text></subparagraph><subparagraph id="idc022b0774aaa4b349de94ffd1da6a615"><enum>(B)</enum><text>liquidity, leverage, and interest rate risk;</text></subparagraph><subparagraph id="idb3ce29e776364837af69916106cbf509"><enum>(C)</enum><text>third-party service provider activities—</text><clause id="idbc2cd5f284a14f56bc5a963f6677a47c"><enum>(i)</enum><text>including custodial wallet providers; and</text></clause><clause id="id8a66e73c2d1344529e825889707fa483"><enum>(ii)</enum><text>not including licensing or capital requirements for third-party service providers;</text></clause></subparagraph><subparagraph id="idb6bc97ebd8344c1990e083affbfd1ea7"><enum>(D)</enum><text>management practices with respect to required payment stablecoin assets;</text></subparagraph><subparagraph id="id675217ebd6b14ba399040e7934dc2027"><enum>(E)</enum><text>appropriate operational, compliance, and information technology risk management;</text></subparagraph><subparagraph id="idb5f78189fc844cd29c2687942abe18c6"><enum>(F)</enum><text>tailored recovery and resolution standards relating to payment stablecoins; and</text></subparagraph><subparagraph id="idcbbe1d2f3be34634a810772bb03f71a6"><enum>(G)</enum><text>any other material topic.</text></subparagraph></paragraph><paragraph id="idbae91920fcbd4981a8cd49b3f18626e0"><enum>(2)</enum><header>Significant differences</header><text>In accordance with section 5169(c)(3)(A) of the Revised Statutes, in determining capital and leverage requirements applicable to a depository institution that has no material assets other than required payment stablecoin assets under this section—</text><subparagraph id="id980E7AA5EAF744D9BEB62CF8981573D1"><enum>(A)</enum><text>the depository institution shall not be subject to section 171 of the Financial Stability Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/12/5371">12 U.S.C. 5371</external-xref>); and</text></subparagraph><subparagraph id="id94158595F4D740E59B68C89C20EFEF3E"><enum>(B)</enum><text>the appropriate Federal banking agencies shall take into account the significant differences between the risks of the assets of the institution and those of depository institutions with assets that consist primarily of commercial or consumer loans.</text></subparagraph></paragraph></subsection><subsection id="id1f5b635cb39343788319e6107edd4bae"><enum>(l)</enum><header>Non-Depository institution payment stablecoin issuers</header><text>Nothing in this section shall be construed to prohibit an entity operating under a State or Federal charter or license that is not a depository institution from issuing and redeeming a payment stablecoin and conducting all activities related to the management of such payment stablecoin consistent with a safe and sound operation, as determined by the appropriate regulator of the entity. The entity shall—</text><paragraph id="idDF579A7645704218B9EB2BD090AE7D7E"><enum>(1)</enum><text>be subject to the requirements of subsections (b) and (c); and</text></paragraph><paragraph id="idBDB6F1A0E8C54065856970DB3401B76D"><enum>(2)</enum><text>redeem an outstanding payment stablecoin at par in the coins, currency, or other instruments that are legal tender, as defined in section 5103, or the similar laws of the jurisdiction of the unit of account in which the payment stablecoin is denominated or to which the value of the payment stablecoin is pegged.</text></paragraph></subsection><subsection id="id0f1d41e10b70495fb4c3d4f46ea05615"><enum>(m)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idafaa8832cd1942bbb956909da091d245"><enum>(1)</enum><header>Depository institution</header><text>The term <term>depository institution</term> has the meaning given the term in section 19(b)(1) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)</external-xref>) and includes—</text><subparagraph id="id2b16fd6c8c8f473e8229bd0ebefe873c"><enum>(A)</enum><text>an insured depository institution; or</text></subparagraph><subparagraph id="iddaf6aa06eb6748fe87260347c138c327"><enum>(B)</enum><text>a depository institution operating under subsection (c) of section 5169 of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/27">12 U.S.C. 27</external-xref>), or a substantially similar State law, which is exclusively engaged in issuing payment stablecoins, providing safekeeping, trust or custodial services, or activities incidental to the foregoing.</text></subparagraph></paragraph><paragraph id="id33fc98bd8b5e4cb5a79cc169e9669600"><enum>(2)</enum><header>Payment stablecoin</header><text>The term <term>payment stablecoin</term> has the meaning given the term in section 9801 of title 31, United States Code.</text></paragraph><paragraph id="id7A1FE6FF092C411CB9BA154709ABDCCF"><enum>(3)</enum><header>Segregated balance account</header><text>The term <term>segregated balance account</term> includes an account of a depository institution with a Federal Reserve bank or a foreign central bank to which only required payment stablecoin assets are credited.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="id0c7d51279a25471b864923cdbc5c4012"><enum>602.</enum><header>Sanctions compliance responsibilities of payment stablecoin issuers</header><text display-inline="no-display-inline">Not later than 120 days after the date of the enactment of this Act, the Secretary of the Treasury shall adopt final guidance clarifying the sanctions compliance responsibilities and liability of an issuer of a payment stablecoin with respect to downstream transactions relating to the stablecoin that take place after the stablecoin is first provided to a customer of the issuer.</text></section><section id="id8c66285f54f341aeb0dff8e979b0523d"><enum>603.</enum><header>Use of the official digital currency of the People’s Republic of China on Government devices</header><subsection id="id8fbcabed66e842549c9e8c0bb804368c"><enum>(a)</enum><header>Definitions</header><text>In this section—</text><paragraph id="id67467cbbe2b6435894d474937e4d579f"><enum>(1)</enum><text>the term <term>digital yuan</term> means the official central bank digital currency of the People’s Republic of China;</text></paragraph><paragraph id="idb04658dfc8c84a76b1c1eefcde251535"><enum>(2)</enum><text>the term <term>executive agency</term> has the meaning given that term in section 133 of title 41, United States Code; and</text></paragraph><paragraph id="id37c04e5dfa214937b180b3bb30a2a632"><enum>(3)</enum><text>the term <term>information technology</term> has the meaning given that term in section 11101 of title 40, United States Code.</text></paragraph></subsection><subsection id="idcfcca5190628496e9acfe5626bc59caa" commented="no" display-inline="no-display-inline"><enum>(b)</enum><header>Use of digital yuan</header><text>Not later than 60 days after the date of enactment of this Act, the Director of the Office of Management and Budget, in consultation with the Administrator of General Services, the Director of the Cybersecurity and Infrastructure Security Agency, the Director of National Intelligence, and the Secretary of Defense, and consistent with the information security requirements under subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/44/35">chapter 35</external-xref> of title 44, United States Code, shall develop standards and guidelines for executive agencies which require adequate security measures for use of the digital yuan on Government information technology devices. </text></subsection></section><section id="id529516996c3a4cf5aee4569edb24d282" commented="no"><enum>604.</enum><header>Certificate of authority to commence banking</header><text display-inline="no-display-inline">Section 5169 of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/27">12 U.S.C. 27</external-xref>) is amended—</text><paragraph id="idcde4da979ce1448ea4b66e6db29642c9"><enum>(1)</enum><text>in subsection (a), in the third sentence, by striking <quote>to those of a trust company and activities related thereto.</quote> and inserting the following: </text><quoted-block style="OLC" id="H4391F5008DD54EF2A07929EC7933E43E" display-inline="yes-display-inline"><text>to—</text><paragraph id="idbe9840e02e6749ff87f1b6695b964a12"><enum>(1)</enum><text>those of a trust company and fiduciary activities related thereto; or</text></paragraph><paragraph id="id498a6847b0f24db3998a6e0f0e912b4e"><enum>(2)</enum><text>those of a depository institution required to maintain assets valued at not less than 100 percent of the deposits of the institution, for the purposes of issuing a payment stablecoin (as defined in section 9801 of title 31, United States Code) and activities related thereto consistent with subsection (c) of this section and without the requirement to maintain deposit insurance under the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1811">12 U.S.C. 1811 et seq.</external-xref>).</text></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="ide7f26eb9b4a9459d91d5ab041114f454"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id581d2082cc1a496ab56b210c637ec426"><subsection id="idd11d2de7ee4f49748d1b1d21b930b501"><enum>(c)</enum><paragraph commented="no" display-inline="yes-display-inline" id="idf8c9f4c1b4c24541af2736d5d1185b15"><enum>(1)</enum><text>Notwithstanding any other provision of law, a National Bank Association described in subsection (a) may not engage in maturity transformation or facilitate consumer lending through third parties.</text></paragraph><paragraph id="id8962d99a19bc424daa4dbf6fc336e7bb" indent="up1"><enum>(2)</enum><text>Restrictions on affiliate transactions applicable for insured depository institutions shall apply to such depository institutions.</text></paragraph><paragraph id="id419dfe6d092748308b7c4bb3e3bcdd95" indent="up1"><enum>(3)</enum><text>The Comptroller of the Currency, in close consultation with the Board of Governors of the Federal Reserve System and State bank supervisors, shall develop the following:</text><subparagraph id="id8e427df9094347d8ad57ca6b0423d179"><enum>(A)</enum><text>A simplified capital framework based on the following:</text><clause id="idf69168dc405d46299a9a6dcbf77b1b64"><enum>(i)</enum><text>Payment system risk.</text></clause><clause id="id51237a61fa28416fa60ffe90136e67ea"><enum>(ii)</enum><text>The greater of—</text><subclause id="ide2feebece88a425f8ee904df945b7c31"><enum>(I)</enum><text>all projected costs of receivership; or</text></subclause><subclause id="idade6fff7ecdf42948c424bf151b9dc23"><enum>(II)</enum><text>3 years of projected operating expenses.</text></subclause></clause></subparagraph><subparagraph id="idef40f4f924ea4d4aace2743f587c9f9e"><enum>(B)</enum><text>Appropriate standards for the depository institution to develop a community contribution plan, which may include consumer education, financial literacy, charitable donations, volunteerism, job training and internships or similar involvement.</text></subparagraph><subparagraph id="idbc8fa1a0acb0440cb5dbd414c8c34daf"><enum>(C)</enum><text>A tailored recovery and resolution plan that would permit the orderly resumption of a safe and sound operation or the orderly wind-down of operations relating to a payment stablecoin in the event of distress.</text></subparagraph><subparagraph id="id8bc5945a9c614544b9acff5413a469f8"><enum>(D)</enum><text>Tailored holding company supervision, as specified by section 15 of the Bank Holding Company Act of 1956.</text></subparagraph></paragraph><paragraph id="id2e17d7c0d1444ae8b48d0147a265935d"><enum>(4)</enum><text>In designing the simplified capital framework required by paragraph (3)(A), the Comptroller of the Currency—</text><subparagraph id="idb0e435651a7d4f839034ad68a5899264"><enum>(A)</enum><text>shall not subject depository institutions to the standards of section 171 of the Financial Stability Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/12/5371">12 U.S.C. 5371</external-xref>); and</text></subparagraph><subparagraph id="id173bd4c7702a4d3492dbf82dd0c3533b"><enum>(B)</enum><text>shall take into account the significant differences between the risks of the assets of the institution and those of depository institutions with assets that consist primarily of commercial or consumer loans.</text></subparagraph></paragraph></subsection><subsection id="id6562873fde814b7aa1c3a6e22e04b2b7"><enum>(d)</enum><text>The Comptroller of the Currency may promulgate rules to carry out this section.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="ide6a520106bad4e6ca5f6fb67cd0cbc8a"><enum>605.</enum><header>Holding company supervision of covered depository institutions</header><text display-inline="no-display-inline">The Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1841">12 U.S.C. 1841 et seq.</external-xref>) is amended—</text><paragraph id="id6744167e2cf8403ca9f57d4be0d2bd49"><enum>(1)</enum><text>in section 2(c) (<external-xref legal-doc="usc" parsable-cite="usc/12/1841">12 U.S.C. 1841(c)</external-xref>), by striking paragraph (2) and by inserting the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id4f7f189a578a46de9096c25c21aee1f5"><paragraph id="idd4d547535e98411ead69e04d584a1796"><enum>(2)</enum><header>Exceptions</header><text>The term <term>bank</term> does not include a covered depository institution subject to tailored holding company supervision under section 15.</text></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="ida57f28eb412d46a6993a9cf54f9b276c"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id22640f8c33574aefa32e5bb265f2513e"><section id="id7369e8a551034ad68de32821d1ed90a9"><enum>15.</enum><header>Tailored holding company supervision for covered depository institutions</header><subsection id="idd3a688750cb04acdb8a8336dab16c47a"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idac17056923174ce9bb03564f8d8eaa9b"><enum>(1)</enum><header>Appropriate banking supervisor</header><text>The term <term>appropriate banking supervisor</term> means the Comptroller of the Currency, a State bank supervisor, in the case of a State member bank, the Board, or in the case of an insured bank, the Federal Deposit Insurance Corporation, as applicable.</text></paragraph><paragraph id="idd7dd8621d9f94617a1f4b8a6fcd31999"><enum>(2)</enum><header>Controlling interest</header><text>The term <term>controlling interest</term> means a circumstance when a person, directly or indirectly, or acting through or in concert with 1 or more persons—</text><subparagraph id="idb6435f15d43f46f18498739c08bbff55"><enum>(A)</enum><text>owns, controls, or has the power to vote 25 percent or more of any class of voting securities of a covered depository institution;</text></subparagraph><subparagraph id="id68ef337957f64de4b41512cc8b547a26"><enum>(B)</enum><text>controls in any manner the election of a majority of the directors of the covered depository institution; or</text></subparagraph><subparagraph id="id993b5aaeaaae4bb6bfdf7d98eddb19ad"><enum>(C)</enum><text>has the power to exercise a controlling influence over the management or policies of the covered depository institution.</text></subparagraph></paragraph><paragraph id="id81394e57e8ef41698bd3f086c143241f"><enum>(3)</enum><header>Covered depository institution</header><text>The term <term>covered depository institution</term> means a depository institution operating under subsection (c) of section 5169 of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/27">12 U.S.C. 27</external-xref>), or a substantially similar State law, other than a bank, as defined in section 2 of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1841">12 U.S.C. 1841</external-xref>), or an insured depository institution, as defined in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>), which is exclusively engaged in issuing payment stablecoins, providing safekeeping, trust or custodial services, or activities incidental to the foregoing. </text></paragraph></subsection><subsection id="id2ede1cb477594c97821b9bb38fdeb7b9"><enum>(b)</enum><header>Controlling interest</header><text>A person with a controlling interest in a covered depository institution shall—</text><paragraph id="idd4a69fdd1ed84b23a2fd26ab5cc0651c"><enum>(1)</enum><text>submit annual audited financial statements and other information as otherwise reasonably required by the appropriate banking supervisor; and</text></paragraph><paragraph id="idb15412efe48843e4be452434b8092bc5"><enum>(2)</enum><text>provide a description of all affiliated or parent entities and their relationships with the institution, including annual updates.</text></paragraph></subsection><subsection id="id5c0c67f9d6fe4d7d955bce084dd06704"><enum>(c)</enum><header>Tax allocation agreement</header><text>The appropriate banking supervisor may require a legal entity with a controlling interest in a covered depository institution to execute a tax allocation agreement with the institution that—</text><paragraph id="id183a0c2b116d4c41b78452561bd03e0a"><enum>(1)</enum><text>expressly states that an agency relationship exists between the person and the institution with respect to tax assets generated by the institution, and that the assets are held in trust by the person for the benefit of the institution and will be promptly remitted to the institution; and</text></paragraph><paragraph id="ide8eef03b72f74621b4001b5abcb9ce47"><enum>(2)</enum><text>may provide that the amount and timing of any payments or refunds to the institution by the person should be no less favorable than if the institution were a separate taxpayer.</text></paragraph></subsection><subsection id="idb2dcae1731544e3ea65c8709b8f7685d"><enum>(d)</enum><header>Prohibition on controlling interests</header><text>A person that is a commercial firm, as defined in section 602 of the Bank and Savings Association Holding Company and Depository Institution Regulatory Improvements Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/12/1815">12 U.S.C. 1815</external-xref> note), may not obtain a controlling interest in a covered depository institution.</text></subsection><subsection id="id6f93a04417bd4483b45d400f087948ac"><enum>(e)</enum><header>Public interest</header><text>If the appropriate banking supervisor finds that it is in the public interest and has reasonable cause to believe it is necessary to protect the customers of a covered depository institution, the supervisor may—</text><paragraph id="idc365e21ad630422186099b29bd605a0f"><enum>(1)</enum><text>conduct an examination of a legal entity with a controlling interest in a covered depository institution or otherwise require information from the person; and</text></paragraph><paragraph id="ide8ba808bc17849ef986912f0dbb3fa5f"><enum>(2)</enum><text>require a person with a controlling interest in a covered depository institution to divest or sever their relationship with the institution, if necessary to maintain safety and soundness.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="id2e92d17b2f644aac8c7121604b1180ce"><enum>606.</enum><header>Implementation rules to preserve adequate competition in payment stablecoins</header><subsection id="id4942646059ec421c8efe9899310ae040"><enum>(a)</enum><header>In general</header><text>The application of a non-depository trust company or the holder of a State license that only persons engaged in digital asset activities may obtain, which was chartered or issued under the laws of a State or the National Bank Act before the date of enactment of this Act, to receive a charter as a depository institution and to operate under subsection (c) of section 5169 of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/27">12 U.S.C. 27</external-xref>), as added by section 604 of this Act, shall be decided upon by the Comptroller of the Currency before an application for a charter to operate under that section from another entity that is filed on or after the date of enactment of this Act.</text></subsection><subsection id="idc6af3299c05c440492874b191502eb72"><enum>(b)</enum><header>Application</header><text>The application of a covered depository institution, as defined in section 15(a) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1853">12 U.S.C. 1853(a)</external-xref>), chartered before the date of enactment of this Act to become a State member bank in the Federal Reserve System or for access to Federal Reserve services under section 11A of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/248a">12 U.S.C. 248a</external-xref>) shall be decided upon by the Board of Governors of the Federal Reserve System, or a Federal Reserve bank, as applicable, before any application to become a State member bank or for Federal Reserve services from any other entity which seeks to operate as a covered depository institution and which is filed on or after the date of enactment of this Act.</text></subsection><subsection id="id3c0e91cb772749b88c9016814609034e"><enum>(c)</enum><header>Decision</header><text>The applications described in subsections (a) and (b) of this section shall be decided upon by the appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>)) or Federal Reserve bank, as applicable, before an insured depository institution in operation before the enactment date of this Act may issue a payment stablecoin in accordance with section 722A of the Gramm-Leach-Bliley Act, as added by section 601 of this Act.</text></subsection></section><section id="idb9f863a487ec48729165f963a8a16d91"><enum>607.</enum><header>Financial Crimes Enforcement Network Innovation Laboratory</header><text display-inline="no-display-inline">Section 310 of title 31, United States Code, is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id69a06feba8c74627bd8dbc7fc6c8a6e8"><subsection id="id15ff840eda1048678b544935302d993e"><enum>(m)</enum><header>Innovation laboratory</header><paragraph id="idbb30bc1d564e4358a25876a1206249a6"><enum>(1)</enum><header>In general</header><text>There is established within the Financial Crimes Enforcement Network an Innovation Laboratory to promote regulatory dialogue, data sharing between the Financial Crimes Enforcement Network and financial companies, and an assessment of potential changes in law, rules, or policies to facilitate the appropriate supervision of financial technology and the laws under the jurisdiction of the agency.</text></paragraph><paragraph id="id96733554fef64a859acf7f71f3508b9d"><enum>(2)</enum><header>Chief innovation officer</header><text>The innovation officer appointed under section 6208 of the Anti-Money Laundering Act of 2020 (<external-xref legal-doc="usc" parsable-cite="usc/31/5311">31 U.S.C. 5311</external-xref> note) by the Director of the Financial Crimes Enforcement Network shall manage the Innovation Laboratory.</text></paragraph><paragraph id="id1bf4a293abbc4ed2938ae279b61d7add"><enum>(3)</enum><header>Duties</header><text>The Innovation Laboratory, as appropriate, shall study changes in financial technology and make recommendations to Congress, the Secretary, and the Director for appropriate changes in laws, rules, or policies that can more effectively facilitate the supervision of financial technology with respect to the laws under the jurisdiction of the Financial Crimes Enforcement Network, including digital assets, distributed ledger technology and decentralized finance.</text></paragraph><paragraph id="id55c5a838c94841078eb30bb6c18c74ad"><enum>(4)</enum><header>Pilot projects</header><text>The Innovation Laboratory, as appropriate, shall conduct pilot projects with financial companies to more effectively facilitate the supervision of financial technology, consistent with applicable law.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>VII</enum><header>Responsible banking innovation</header><section id="id9c892c0703b04796b715a12584db2a68"><enum>701.</enum><header>Study on use of distributed ledger technology for reduction of risk in depository institutions</header><text display-inline="no-display-inline">Not later than 180 days after the date of enactment of this Act, the Board of Governors of the Federal Reserve System shall complete a study and submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report regarding the manner in which distributed ledger technology may reduce risk for depository institutions, as defined in section 19(b)(1) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)</external-xref>), including settlement risk, operational risk and capital requirements.</text></section><section id="id28ad78b48a4c49699282349b3ac836d6"><enum>702.</enum><header>Eligibility for Federal Reserve services to depository institutions</header><subsection id="id97f878376dab4b12aa6c614e4f08aabe"><enum>(a)</enum><header>Findings</header><text>Congress finds the following:</text><paragraph id="id7e9870d03b1c41988a67255402906f10"><enum>(1)</enum><text>Final settlement of transactions in central bank money reduces risk in the financial system, including through the reduction of counterparty exposure.</text></paragraph><paragraph id="id8cb9b03f78d8497784216851e9cd32d0"><enum>(2)</enum><text>Digital assets settle with finality in seconds or minutes, whereas traditional financial transactions may take days to settle.</text></paragraph><paragraph id="id526ce61ee98e4744adc6029613ef9437"><enum>(3)</enum><text>This mismatch in the settlement window of digital assets and traditional financial assets creates risk in the economy that may be reduced through the ability of depository institutions to simultaneously conduct digital asset transactions and settle, with finality, the United States dollar component of these transactions. </text></paragraph><paragraph id="idbd96d080f2064992be5493b6f5c5b092"><enum>(4)</enum><text>The Federal Reserve Act specifies that a depository institution, as defined in section 19(b)(1) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)</external-xref>), upon receiving a charter from the Office of the Comptroller of the Currency, National Credit Union Administration or State bank supervisor, is required to be made available services from Federal Reserve banks under section 11A of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/248a">12 U.S.C. 248a</external-xref>), including currency and coin services, wire transfer services, automated clearinghouse services and settlement services.</text></paragraph><paragraph id="id93144b797da9488e8274f69ca1245efc"><enum>(5)</enum><text>Numerous Federal courts have found that the provision of services to depository institutions under section 11A of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/248a">12 U.S.C. 248a</external-xref>) is a ministerial duty imposed by Congress with respect to all depository institutions.</text></paragraph><paragraph id="id3763976d22934cebb85dfd56439041bf"><enum>(6)</enum><text>The Board of Governors of the Federal Reserve System has long interpreted the Federal Reserve Act to mean that the Federal Reserve banks must provide services to all depository institutions, noting that it has a duty <quote>to ensure the provision of payment services to all depository institutions on an equitable basis, and to do so in an atmosphere of competitive fairness</quote>.</text></paragraph><paragraph id="id644d6d15584b4e76874e979bb5e1f4b8"><enum>(7)</enum><text>The Federal Reserve banks have, on occasion, provided services to non-depository, non-insured institutions without appropriate statutory authority.</text></paragraph><paragraph id="id76cd3b9ca3ae4667931ddc239ab9187b"><enum>(8)</enum><text>Certain novel legal positions that conflict with or frustrate these precedents are not in the best traditions of the Federal Reserve Act, our dual banking system, and the imperatives of Congress.</text></paragraph><paragraph id="id4cc07dffa7354a8aa38b6b93fd096c53"><enum>(9)</enum><text>The statutory independence of the Board of Governors and the Federal Reserve banks under the Constitution of the United States is properly rooted in absolute fidelity to the laws enacted by Congress.</text></paragraph><paragraph id="id8b65da661e534d2ea021d7e6d3c06766"><enum>(10)</enum><text>It is appropriate for Congress to reaffirm its existing statutory intent to ensure that all depository institutions may access services under the Federal Reserve Act <quote>on an equitable basis, and to do so in an atmosphere of competitive fairness</quote>.</text></paragraph></subsection><subsection id="id4e657b8e0f104aaaab7bb5e14657b104"><enum>(b)</enum><header>Pricing of services</header><text>Section 11A of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/248a">12 U.S.C. 248a</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idf401154bc1d9424484c29a25e1b97d5d"><subsection id="id18b017a8526c423083a6d0b085021f2b"><enum>(f)</enum><text>A Federal Reserve bank shall provide a segregated balance account to a depository institution upon the request of any institution that receives services under this section.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id11a8c75151bb4664ac3b9698e213c9cf"><enum>(c)</enum><header>Deposits; exchange and collection; member and nonmember banks or other depository institutions; charges</header><text>Section 13 of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/342">12 U.S.C. 342</external-xref>) is amended to read as follows:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idd3a9cbb417d54142bd7581690ba52b3e"><section id="id8366D05AC1284E70A066250D889F4059" section-type="undesignated-section"><text>Any Federal Reserve bank shall receive from any of its member banks or other depository institutions, and from the United States, deposits of current funds in lawful money, national-bank notes, Federal reserve notes, or checks, and drafts, payable upon presentation or other items, and also, for collection, maturing notes and bills; or, solely for purposes of exchange or of collection, shall receive from other Federal Reserve banks deposits of current funds in lawful money, national-bank notes, or checks upon other Federal Reserve banks, and checks and drafts, payable upon presentation within its district or other items, and maturing notes and bills payable within its district; or, solely for the purposes of exchange or of collection, shall receive from any nonmember bank or trust company or other depository institution deposits of current funds in lawful money, national-bank notes, Federal reserve notes, checks and drafts payable upon presentation or other items, or maturing notes and bills: <italic>Provided,</italic> Such nonmember bank or trust company or other depository institutions maintains with the Federal Reserve bank of its district a balance in such amount as the Board determines taking into account items in transit, services provided by the Federal Reserve bank, and other factors as the Board may deem appropriate: <italic>Provided further,</italic> That nothing in this or any other section of this Act shall be construed as prohibiting a member or nonmember bank or other depository institution from making reasonable charges, to be determined and regulated by the Board of Governors, but in no case to exceed 10 cents per $100 or fraction thereof, based on the total of checks and drafts presented at any one time, for collection or payment of checks and drafts and remission therefor by exchange or otherwise; but no such charges shall be made against the Federal Reserve banks.</text></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><section id="id9f3d5f4b7b9d4461ab249506e1b694c8"><enum>703.</enum><header>Routing transit number issuance</header><text display-inline="no-display-inline">Not later than 2 years after the date of enactment of this Act, the Board of Governors of the Federal Reserve System shall assume responsibility for issuing routing transit numbers to depository institutions for all purposes relating to the clearing of transactions and the services required to be made available to all depository institutions under section 11A of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/248a">12 U.S.C. 248a</external-xref>).</text></section><section id="id0de51b74a3b34c7b8cc0fd2167ae4479"><enum>704.</enum><header>Clarifying application review times with respect to the Federal banking agencies</header><text display-inline="no-display-inline">Section 343 of the Riegle Community Development and Regulatory Improvement Act of 1994 (<external-xref legal-doc="usc" parsable-cite="usc/12/4807">12 U.S.C. 4807</external-xref>) is amended by striking subsection (a) and inserting the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id78f9db25363c4199bad32da0697ea08c"><subsection id="idc3e833078d214696b19e33cc2498ad05"><enum>(a)</enum><header>Final action</header><paragraph id="id88583f0934d8463d89ffa8fedb1a1d9d"><enum>(1)</enum><header>Definition</header><text>In this subsection, the term <term>completed application</term>—</text><subparagraph id="id60ee6e8b065b4f90abc302e9e8c5e02d"><enum>(A)</enum><text>means the information requested by the Federal banking agency at the outset of an application through application forms or similar means; and</text></subparagraph><subparagraph id="id80f53e54de594f739903da395065e340"><enum>(B)</enum><text>does not include supplemental information requested by the agency after filing of an application.</text></subparagraph></paragraph><paragraph id="id334f060662b8428ba27dda12b03d9097"><enum>(2)</enum><header>Action</header><text>Each Federal banking agency, including Federal Reserve banks, shall take final action on any application to the agency before the end of the 1-year period beginning on the date on which a completed application is received by the agency.</text></paragraph></subsection><subsection id="id07d037cc21ec41068133263bbe8b4872"><enum>(b)</enum><header>Report</header><text>Each Federal banking agency, including the Federal Reserve banks, shall annually report to Congress a list of the applications that have been pending for 9 months or longer since the date of the initial application filed by an applicant. Such list—</text><paragraph id="idB0E6CC8FABAD4ED69F26812B3FB5F170"><enum>(1)</enum><text>shall disclose the reason why the application has not yet been approved or denied by the Federal banking agency; and</text></paragraph><paragraph id="id634A8200165B4CF5B28193E52CEA9644"><enum>(2)</enum><text>shall not contain confidential supervisory information.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="id0fe4dbde11b64ddfb524cd2f86d3b053"><enum>705.</enum><header>Examination standards for digital asset activities</header><subsection id="id109fe4f075a24f3f8dd6c4167114cf45"><enum>(a)</enum><header>In general</header><text>Not later than 18 months after the date of enactment of this Act, the Federal Financial Institutions Examination Council, in consultation with the Financial Crimes Enforcement Network, shall publish final guidance and examiner handbooks for depository institutions, as defined in section 19(b)(1) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)</external-xref>), on the following topics related to digital assets:</text><paragraph id="idf1472ef57d7d4921a05deb2bdf65f8ec"><enum>(1)</enum><text>Anti-money laundering, customer identification, beneficial ownership, and sanctions compliance, including with respect to payment stablecoin activities and subsidiary value (as defined in section 9802(c) of title 31, United States Code).</text></paragraph><paragraph id="id2250c9b44d264320a62ff18063bf74ca"><enum>(2)</enum><text>Custody.</text></paragraph><paragraph id="id735f21a7d98648bc9a73d177001850b2"><enum>(3)</enum><text>Fiduciary and capital markets activities.</text></paragraph><paragraph id="idce44591e87a8487aa2a6c61709cdc1d3"><enum>(4)</enum><text>Information technology standards.</text></paragraph><paragraph id="id4e3594e166b04c34b39f734a0475696b"><enum>(5)</enum><text>Payment system risk.</text></paragraph><paragraph id="id452085f1aa8c4676b7ae1075fbbafb5f"><enum>(6)</enum><text>Consumer protection.</text></paragraph></subsection><subsection id="idcf2f8e1bb5c24bb69fe607ea7abe0da0"><enum>(b)</enum><header>Final guidance</header><text>Not later than 18 months after the date of enactment of this Act, Securities and Exchange Commission and Commodity Futures Trading Commission, in consultation with the Financial Crimes Enforcement Network, shall publish final guidance and examiner handbooks relating to digital asset intermediaries regarding the topics described in paragraphs (1) and (4) of subsection (a).</text></subsection></section><section id="id7f607f1a3b1b4ca28fb3b90cdb62aa91"><enum>706.</enum><header>Asset custody for depository institutions and certain other entities</header><subsection id="id9c44d4ff73f2481fb6774d087a85f425"><enum>(a)</enum><header>Findings</header><text>Congress finds the following:</text><paragraph id="id2e45bc253f184a06a76a3ae44180def2"><enum>(1)</enum><text>The laws surrounding custody of financial assets is largely customary, uncodified, and poorly understood.</text></paragraph><paragraph id="idabef9c5572614ae5b70f4606a1239889"><enum>(2)</enum><text>Lack of uniformity amongst various jurisdictions’ laws relating to custody has largely not been addressed by regulators, can contribute to risk, and is producing uncertainty for innovators.</text></paragraph><paragraph id="id8c4efd136e694f94818684dc1f47e30f"><enum>(3)</enum><text>Codifying basic principles around custody of financial assets will reduce systemic risk, clearly define the rights and duties of both custodian and customer, and contribute to a more uniform and effective banking system.</text></paragraph></subsection><subsection id="id0914d685ea864d14836e50a21e116de6"><enum>(b)</enum><header>Definition</header><text>In this section, the term <term>custody</term> means the safekeeping, servicing and management of customer financial assets, including currency, securities and commodities, on an off-balance sheet basis.</text></subsection><subsection id="id491ade67dae44964b17b6b0340d7359c"><enum>(c)</enum><header>Custody</header><paragraph id="id3072538175154e9f8eed9db998aad3c8"><enum>(1)</enum><header>In general</header><text>Except as provided in paragraph (2), custody of financial assets is accomplished by a bailment and established by a written customer agreement. Custody shall not be a fiduciary or trust activity unless the custodian is providing substantial discretionary services with respect to an account, including through investment advice or investment discretion, and the custodian owes a customer a higher standard of care or duty with respect to the customer of that account.</text></paragraph><paragraph id="id2ac06e54ab2e41f2aaf3318999320e5e"><enum>(2)</enum><header>Exception</header><text>A custodian and customer may establish a legal relationship other than a bailment pursuant to a written customer agreement.</text></paragraph></subsection><subsection id="id1e09fcf923944a84b32577611e4f34e2"><enum>(d)</enum><header>Proper documentation</header><text>A custodial account shall be properly documented in a customer agreement, with a clearly defined legal relationship between the custodian and customer. Custodial assets shall be properly identified and segregated from the assets of the custodian, with proper documentation of asset segregation.</text></subsection><subsection id="idd6e96d234ddc4b2a8e114810682bc9cf"><enum>(e)</enum><header>Not assets or liabilities</header><text>Assets properly held in a custodial account under this section are not assets or liabilities of the custodian and shall be maintained on an off-balance sheet basis, including for the purpose of accounting treatment for the custodian and the customers of the custodian, notwithstanding the form in which the assets are maintained.</text></subsection><subsection id="idcd16bfb0fc2b4c54a6d83fa795ff3661"><enum>(f)</enum><header>Applicability</header><text>This section shall apply to depository institutions, as defined in section 19(b)(1) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)</external-xref>), and non-depository trust companies chartered under section 5169 of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/27">12 U.S.C. 27</external-xref>).</text></subsection></section><section id="id107a244eb03f4404aaa15ee8cf36a282"><enum>707.</enum><header>Reputation risk; requirements for account termination requests and orders</header><subsection id="id341791cfbe4e445e9df52a09c6a77325"><enum>(a)</enum><header>Reputation risk</header><text>An appropriate Federal banking agency may not formally or informally request or order a depository institution to terminate a specific customer account or group of customer accounts unless the agency has a valid reason for such request or order, consistent with subsections (b) and (c).</text></subsection><subsection id="ide1f188ebdcae483580f6e47085e60596"><enum>(b)</enum><header>No restriction</header><text>An appropriate Federal banking agency shall not restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers based on reputation risk, including through the examinations and ratings of the depository institution.</text></subsection><subsection id="iddfbe89373a5e4c71ae93348a9120d641"><enum>(c)</enum><header>Treatment of national security threats</header><text>If an appropriate Federal banking agency believes a specific customer or group of customers is, or acting as a conduit for, an entity which—</text><paragraph id="id6ccbc3ccd9c8475f8594fcd2e76add10"><enum>(1)</enum><text>poses a threat to national security;</text></paragraph><paragraph id="id86a791d7747541e3b995f413fee2fba8"><enum>(2)</enum><text>is involved in terrorist financing;</text></paragraph><paragraph id="ida4d8a79f461545fba622823f69e56f24"><enum>(3)</enum><text>is an agency of the Government of Iran, North Korea, Syria, or any country listed from time to time on the State Sponsors of Terrorism list;</text></paragraph><paragraph id="id55a59b22adbe43caabadf3aa0d973fef"><enum>(4)</enum><text>is located in, or is subject to the jurisdiction of, any country specified in paragraph (3); or</text></paragraph><paragraph id="id825596d683a4467996a203ace2c2b86e"><enum>(5)</enum><text>does business with any entity described in paragraph (3) or (4), unless the appropriate Federal banking agency determines that the customer or group of customers has used due diligence to avoid doing business with that entity, such belief shall satisfy the requirement under subsection (a).</text></paragraph></subsection><subsection id="id0d4215c6903b4c54a492986ca049b6a7"><enum>(d)</enum><header>Notice requirement</header><paragraph id="idcaaa5065726b41708e4d5f52c771dea6"><enum>(1)</enum><header>In general</header><text>If an appropriate Federal banking agency formally requests or orders a depository institution to terminate a specific customer account or a group of customer accounts, the agency shall—</text><subparagraph id="idd23b8f027d2f4d9c95255de9633ada01"><enum>(A)</enum><text>provide such request or order to the institution in writing; and</text></subparagraph><subparagraph id="idc4793684d85049768148b63178ed4028"><enum>(B)</enum><text>accompany such request or order with a written justification for why such termination is needed, including any specific laws or rules the agency believes are being violated by the customer or group of customers.</text></subparagraph></paragraph><paragraph id="id3368bd36acd442098816e86849d7647f"><enum>(2)</enum><header>Justification requirement</header><text>Consistent with subsection (b), the justification described in paragraph (1)(B) may not be based on reputation risk to the depository institution.</text></paragraph></subsection><subsection id="idcd3686d7a9394049a92788f5e599dd34"><enum>(e)</enum><header>Customer notice</header><paragraph id="idf654fa49b5264127a732262f6175caae"><enum>(1)</enum><header>Notice required</header><text>Except as provided under paragraph (2) or as otherwise prohibited from being disclosed by law, if an appropriate Federal banking agency orders a depository institution to terminate a specific customer account or a group of customer accounts, the depository institution shall inform the specific customer or group of customers of the justification for the customer’s account termination described under subsection (b).</text></paragraph><paragraph id="idb99c4a7d76c84e16aa1e8ba01dfa12bb"><enum>(2)</enum><header>Notice prohibited</header><subparagraph id="id97072086d08c42ef816346205033b352"><enum>(A)</enum><header>Notice prohibited in cases of national security</header><text>If an appropriate Federal banking agency requests or orders a depository institution to terminate a specific customer account or a group of customer accounts based on a belief that the customer or customers pose a threat to national security, or are otherwise described under subsection (a)(2), neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the customer’s account termination.</text></subparagraph><subparagraph id="id4568ce8baf544ebd992612f0e655402a"><enum>(B)</enum><header>Notice prohibited in other cases</header><text>If an appropriate Federal banking agency determines that the notice required under paragraph (1) may interfere with an authorized criminal investigation, neither the depository institution nor the appropriate Federal banking agency may inform the specific customer or group of customers of the justification for the customer’s account termination.</text></subparagraph></paragraph></subsection><subsection id="id3e168bb594cb47b9b0ab5b5168015621"><enum>(f)</enum><header>Reporting requirement</header><text>Each appropriate Federal banking agency shall issue an annual report to Congress stating—</text><paragraph id="id3002d3d59b024cd9be030962b4964ca8"><enum>(1)</enum><text>the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the previous year; and</text></paragraph><paragraph id="id98c389fed6de43ef98762295d197d611"><enum>(2)</enum><text>the legal authority on which the agency relied in making such requests and orders and the frequency on which the agency relied on each such authority.</text></paragraph></subsection><subsection id="ide004c39d60e14612bf93b2fde51e302b"><enum>(g)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idc2b06611e1e3463f83757c866b866a4e"><enum>(1)</enum><header>Appropriate federal banking agency</header><text>The term <term>appropriate Federal banking agency</term> means—</text><subparagraph id="id57cb7327938c4792a97802fbea7644a4"><enum>(A)</enum><text>the appropriate Federal banking agency, as defined in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>); and</text></subparagraph><subparagraph id="id97033eccb48d4a6b86da30102b38fa14"><enum>(B)</enum><text>the National Credit Union Administration, in the case of an insured credit union.</text></subparagraph></paragraph><paragraph id="id7a4e537773084548b97126ab0ac993b2"><enum>(2)</enum><header>Depository institution</header><text>The term <term>depository institution</term> has the meaning given the term in section 19(b)(1) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)(A)</external-xref>). </text></paragraph></subsection></section><section id="id99091eedcd3c44b9beb63a85922123f0"><enum>708.</enum><header>Conforming amendments</header><subsection id="id2aaaa200abdf4aae942a4f008c3606f5"><enum>(a)</enum><header>Federal deposit insurance act</header><text>Section 12 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1822">12 U.S.C. 1822</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idac0da9c4aadd4bd39049dfa4f72332e8"><subsection id="id6b369b9cfee549b789c71f2077ed59c5"><enum>(g)</enum><header>Appointment of receiver</header><paragraph id="id8c9665eb63c54977b15e49084fbdf583"><enum>(1)</enum><header>Definition</header><text>In this subsection, the term <term>covered depository institution</term> has the meaning given the term in section 15(a) of the Bank Holding Company Act of 1956.</text></paragraph><paragraph id="id715b82c0e2424fbe83f509fc973996ae"><enum>(2)</enum><header>Appointment</header><text>The Corporation may be appointed as receiver of a covered depository institution, as defined in section 15(a) of the Bank Holding Company Act of 1956.</text></paragraph><paragraph id="idf74fcc53edff4a58b34a173c4514bd1c"><enum>(3)</enum><header>Premiums</header><text>A covered depository institution may not be charged deposit insurance premiums for the purpose of this subsection, but the Corporation may use the capital of the covered depository institution to fund the costs of the receivership.</text></paragraph><paragraph id="idcc2d420f87a843f188946bd0fb3b36b2"><enum>(4)</enum><header>Rules</header><text>The Corporation may promulgate rules to carry out this subsection, which shall—</text><subparagraph id="idbf5b92db88034b6fbbb8f0c160dfd0ab"><enum>(A)</enum><text>be substantially consistent with the rules for receivership of an insured depository institution; and</text></subparagraph><subparagraph id="id91272196389a4b418baeb76aecb6089d"><enum>(B)</enum><text>account for the limited activities, capital, and the required tailored recovery and resolution plan of the covered depository institution.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="ida5bcdaf58f7a46ea9dec244abd38d701"><enum>(b)</enum><header>Federal Reserve Act</header><text>The Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/221">12 U.S.C. 221 et seq.</external-xref>) is amended—</text><paragraph id="ida9a778da96be4f9a9bddf3eddb46247c"><enum>(1)</enum><text>in section 19(b)(1)(A) (<external-xref legal-doc="usc" parsable-cite="usc/12/461">12 U.S.C. 461(b)(1)(A)</external-xref>)—</text><subparagraph id="id4c1932be24fe45c1bb7b1911dffce613"><enum>(A)</enum><text>in clause (vi), by striking <quote>and</quote> at the end;</text></subparagraph><subparagraph id="id908bac7f689a4e1b80798ef8bbe11246"><enum>(B)</enum><text>in clause (vii), by striking the period at the end and inserting <quote>; and</quote>; and</text></subparagraph><subparagraph id="id058503f5c05a42b79f3dd693b66702ed"><enum>(C)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id317183a497f742e7995b92b7e105d6f5"><clause id="idc3bed01587ba4d3f9237ee0ceacf2fb3"><enum>(viii)</enum><text>a covered depository institution, as defined in section 15(a) of the Bank Holding Company Act of 1956.</text></clause><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="idab2c1008b906476f902e5365146c5179" commented="no" display-inline="no-display-inline"><enum>(2)</enum><text>in the first undesignated paragraph of section 9 (<external-xref legal-doc="usc" parsable-cite="usc/12/321">12 U.S.C. 321</external-xref>), in the first sentence, by inserting <quote>, covered depository institutions, as defined in section 15(a) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1853">12 U.S.C. 1853(a)</external-xref>),</quote> after <quote>Plan banks</quote>. </text></paragraph></subsection></section><enum>VIII</enum><header>Responsible interagency coordination</header><section id="id2c8e9c51e035411f8b255cfedf90467c" commented="no"><enum>801.</enum><header>Timeline for interpretive guidance issued by Federal financial agencies</header><subsection commented="no" id="id0BD25F30DDDE4718B0E40DAA0398B84B"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Title 31, United States Code, is amended by adding after chapter 98, as added by section 101(a) of this Act, the following: </text><quoted-block style="USC" display-inline="no-display-inline" id="id0623CE09E5604495ADFBC965AF95A095"><chapter id="idAB2156A24C964E2598F3F70F7FFAC453" style="OLC"><enum>99</enum><header>Responsible interagency coordination</header><toc><toc-entry level="section">Sec. </toc-entry><toc-entry level="section" idref="id29694B69C3584AB9BDC379A2796A26AA">9901. Timeline for interpretive guidance issues by Federal financial agencies. </toc-entry><toc-entry level="section" idref="idA32857EA612E4B9B8BE31BFEF167E5B4">9902. Interstate sandbox activities. </toc-entry></toc><section section-type="subsequent-section" id="id29694B69C3584AB9BDC379A2796A26AA"><enum>9901.</enum><header>Timeline for interpretive guidance issues by Federal financial agencies</header><subsection id="id061292c2f1114c18aa8fae12d1ea5088" commented="no"><enum>(a)</enum><header>In general</header><text>In this section:</text><paragraph commented="no" id="idD8A59050294F41C68C780642A88355F4"><enum>(1)</enum><header>Federal financial regulator</header><text>The term <term>Federal financial regulator</term> means—</text><subparagraph id="id7854b556eece4d838650773d8697d602" commented="no"><enum>(A)</enum><text>Board of Governors of the Federal Reserve System and the Federal Reserve banks;</text></subparagraph><subparagraph id="id44aa02f819e84e2aac85177ff72bfca9" commented="no"><enum>(B)</enum><text>Commodity Futures Trading Commission;</text></subparagraph><subparagraph id="id203a23d3e74f4651bf0778ec9d631ca2" commented="no"><enum>(C)</enum><text>Department of the Treasury;</text></subparagraph><subparagraph id="idd90e5b1533804308b7f5e8404f6e2d1b" commented="no"><enum>(D)</enum><text>Federal Deposit Insurance Corporation;</text></subparagraph><subparagraph id="idd07ce92b81ef4795a4b48575ab901fda" commented="no"><enum>(E)</enum><text>Federal Housing Finance Agency;</text></subparagraph><subparagraph id="id32397392d125416ab81b379c65e85437" commented="no"><enum>(F)</enum><text>National Credit Union Administration;</text></subparagraph><subparagraph id="id7e1880632d24436880b6f6abffcd4260" commented="no"><enum>(G)</enum><text>Office of the Comptroller of the Currency;</text></subparagraph><subparagraph id="id69ecd45aad244bd7a75d75d8ad78aa50" commented="no"><enum>(H)</enum><text>Consumer Financial Protection Bureau; and</text></subparagraph><subparagraph id="id08e5993a41df4a8cad3918b12cd488ce" commented="no"><enum>(I)</enum><text>Securities and Exchange Commission.</text></subparagraph></paragraph><paragraph id="id3be8d4f49a704988b24386dbaf1098d5" commented="no"><enum>(2)</enum><header>Requesting person</header><text>The term <term>requesting person</term>—</text><subparagraph commented="no" id="id75A2FB99CC39442AA2992BCC76DDD338"><enum>(A)</enum><text>means any entity that is required to be chartered, licensed, supervised or registered by that agency; and</text></subparagraph><subparagraph commented="no" id="id2AFF96FA10A04DA8AFB7C40CFEF537A3"><enum>(B)</enum><text>includes State agencies and self-regulatory organizations. </text></subparagraph></paragraph></subsection><subsection commented="no" id="id399846F8E37F443181A58926E243CEE9"><enum>(b)</enum><header>Response</header><text>Not later than 180 days after filing a written request for individualized interpretive guidance with respect to the application of a statute, rule or policy under the jurisdiction of a Federal financial regulator, the agency shall provide a final, complete and written response to the requesting person. This subsection shall not apply to requests for guidance that the Federal financial regulator determine lack substance. </text></subsection><subsection id="id694da53e4a0745e4834b2350ad29bf8a" commented="no"><enum>(c)</enum><header>Other matters</header><text>With respect to matters delegated or otherwise under the jurisdiction of self-regulatory organizations, including national securities exchanges, boards of trade, and similar entities, the self-regulatory organization shall be subject to the same requirements as a Federal financial regulator under this section.</text></subsection></section></chapter><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><section commented="no" id="id5A6CDAF8389145F78513895978682859"><enum>802.</enum><header>Interstate sandbox activities</header><subsection commented="no" id="id4D8C44FBD3734808AB9F4A70EF1EEFE8"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline"><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/99">Chapter 99</external-xref> of title 31, United States Code, as added by section 701 of this Act, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="idF0959AC09EDC4E89BDCB2C0955AD3BF3"><section commented="no" id="idA32857EA612E4B9B8BE31BFEF167E5B4"><enum>9902.</enum><header>Interstate sandbox activities</header><subsection id="id4b7072fd88584405bce88480c7bd7a71" commented="no"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ide620e736f79740dd9ca03cdf90101178" commented="no"><enum>(1)</enum><header>Federal financial regulator</header><text>The term <term>Federal financial regulator</term> means the Federal agency described in section 9901(a)(1) that would typically exercise jurisdiction over the product or service made available in the State financial regulatory sandbox, or the Department of the Treasury, in the case of a matter only within the jurisdiction of a State.</text></paragraph><paragraph id="ide8d63bfd3fb14f288f6bac9c4b34515f" commented="no"><enum>(2)</enum><header>Financial company</header><text>The term <term>financial company</term> means a business entity primarily engaged in activities that are financial in nature, as described in section 4(k)(4) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1843">12 U.S.C. 1843(k)(4)</external-xref>).</text></paragraph><paragraph id="id087dad6600dd4e7abf719e8adfc75092" commented="no"><enum>(3)</enum><header>Host State</header><text>The term <term>host State</term> means a State in which a financial company is not operating in the State financial regulatory sandbox of that State.</text></paragraph><paragraph id="idd1c4fc47967a4dd2aac692eb18d549d4" commented="no"><enum>(4)</enum><header>Innovative</header><text>The term <term>innovative</term> means new or emerging technology, or new uses of existing technology, that—</text><subparagraph commented="no" id="id22FC5F67719940B4B73D45C5996BF84A"><enum>(A)</enum><text>provides a financial product, service, business model, or delivery mechanism to the public; and</text></subparagraph><subparagraph commented="no" id="idE7C44F1BF24242BA80E41BE0537D591A"><enum>(B)</enum><text>has no substantially comparable, widely available analogue in common use in the United States.</text></subparagraph></paragraph><paragraph id="idfa246849bdb84fa3b9e85eb762658036" commented="no"><enum>(5)</enum><header>State financial regulator</header><text>The term <term>State financial regulator</term> includes State agencies that regulate, supervise, or license banks, trust companies, credit unions, consumer credit, consumer protection, money transmission, securities, commodities, and similar areas. </text></paragraph><paragraph id="id5ca1b27f427649589d17a88d850574f0" commented="no"><enum>(6)</enum><header>State financial regulatory sandbox</header><text>The term <term>State financial regulator sandbox</term> means a program created under State law that allows a financial company to make an innovative financial product or service available to customers within that State during a defined period in order to permit regulatory dialogue, data sharing amongst regulators and financial companies, and to promote an assessment of potential changes in law, rule, or policy to facilitate the appropriate supervision of financial technology. </text></paragraph></subsection><subsection id="id59b91a1bddf34d5c8d7a6ba88ddf6eb0"><enum>(b)</enum><header>Business conducted</header><text>Upon joint approval under subsection (d), a financial company in good standing in a State financial regulatory sandbox and operating for not less than 6 months in that sandbox program, may do business across State lines under the standards of this section. If approved, the State financial regulator and the Federal financial regulator may agree upon reasonable adjustments to the number of customers that may be served, increased bonding or collateral requirements, and similar conditions which may be appropriate for conducting business nationally.</text></subsection><subsection id="id6ff86729751143849dfc25c806844aae"><enum>(c)</enum><header>State sandbox requirements</header><text>A State financial regulatory sandbox shall contain the following components for financial companies to be eligible to do business across State lines under this section:</text><paragraph id="id56fd031cfdda4b50aa4db025114a26f3"><enum>(1)</enum><text>A limited sandbox period of not more than 24 months.</text></paragraph><paragraph id="id6da9ebe09914480d87a4ae71151e0fab"><enum>(2)</enum><text>Consumer protection requirements, which may include disclosures, bonding, insurance requirements, and financial literacy programs for specified consumers.</text></paragraph><paragraph id="idb56a364f0fa849a9bf676a721ef50143"><enum>(3)</enum><text>Authority to conduct examinations of the financial company.</text></paragraph><paragraph id="id2df1dc6ab8b14721b9b683a83a4ddc7d"><enum>(4)</enum><text>A background investigation of the financial company and its officers, directors, members, managers and key employees, prior to commencing business.</text></paragraph></subsection><subsection id="id6835d11210ed43de8bec5b84777095c3"><enum>(d)</enum><header>Decision</header><text>Upon submission of an application by a financial company to conduct business across State lines under subsection (b), the State financial regulator and Federal financial regulator shall jointly issue a decision within 120 days with respect to that application, irrespective of any supplemental information with respect to the application that may be requested after initial filing. The Federal financial regulator shall have the authority to conduct a joint examination of any financial company doing business under this section.</text></subsection><subsection id="idecc0e8060d6142a8bbe2b674b47966e0"><enum>(e)</enum><header>Factors</header><text>The State financial regulator and Federal financial regulator shall consider the following factors in rendering a decision on the application:</text><paragraph id="iddc5396ed2fb940fe976c9d5451b740c8"><enum>(1)</enum><text>Whether the product or service offered may be offered in a safe and sound manner across State lines.</text></paragraph><paragraph id="ide829a6910956480caa1f962e154010c6"><enum>(2)</enum><text>Whether the management and capital of the financial company is commensurate with the scale of the company.</text></paragraph><paragraph id="id8450d6750570487794442b9be8975f8d"><enum>(3)</enum><text>Risk management plans of the financial company.</text></paragraph><paragraph id="idab75fde5cc62401bbd485a8ec80091eb"><enum>(4)</enum><text>Conduct of the financial company to date in the State regulatory sandbox, and any past regulatory actions, including actions against officers, directors, members, managers and key employees.</text></paragraph><paragraph id="id08d173867bab4852844e8e693773ab63"><enum>(5)</enum><text>Plans for consumer education and financial literacy, including partnerships with local educational institutions and community colleges to provide financial literacy classes or resources.</text></paragraph><paragraph id="id285D6E5B074A47A98AAFFEF0A61FF48B"><enum>(6)</enum><text>Other factors determined by the State and Federal financial regulators to be material.</text></paragraph></subsection><subsection id="id597f37694daf4c40b9314c96cc16da13"><enum>(f)</enum><header>Election</header><text>A host State may elect not to permit financial companies operating under this section to do business in their State through issuance of an executive order by the Governor of that State.</text></subsection><subsection id="idf4ae19d5edc14a0abceb566dba65b472"><enum>(g)</enum><header>Innovative</header><text>A product or service made available under this section through a State financial regulatory sandbox shall be innovative.</text></subsection><subsection id="idd2ccbc5891574d1db3dda0f7f707f881"><enum>(h)</enum><header>Rules of construction</header><text>This section shall not be construed to extend to permit—</text><paragraph id="idbe4fbe49fad4428498c5691e4a75e6a6"><enum>(1)</enum><text>a financial company to engage in any activities for which a charter, license, registration or for which permission would be required under Federal or State law but for the innovative financial product or service being offered by the company, except to the extent the financial company would be required to obtain a charter, license or other authorization required in a host State;</text></paragraph><paragraph id="ide19ea5a5d468423eae596b0b7729f458"><enum>(2)</enum><text>failure to comply with any applicable portion of State law required by the State financial regulatory sandbox, or failure to comply with any applicable portion of Federal law, unless authorized on a limited basis by the Federal financial regulator to achieve the purposes of this section and the State financial regulatory sandbox; or</text></paragraph><paragraph id="idf1cae258846941e2af9e3a3aec7d9692"><enum>(3)</enum><text>lending activities in excess of the maximum statutory rate of interest permissible in a State.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id743B68653A564620A34ABA76FB3F98F8"><enum>(b)</enum><header>Technical and conforming amendment</header><text>The table of contents for subtitle VI of title 31, United States Code, as amended by section 101(b) of this Act, is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id3A9D951E94EF4BA3BE6F989F88E03297"><toc><multi-column-toc-entry level="chapter" bold="on"><toc-enum>99.</toc-enum><level-header level="chapter"> Responsible interagency coordination</level-header><target>9901</target></multi-column-toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><section id="id9A91CAEF98DF46EB94F16221DF548BBD"><enum>803.</enum><header>State money transmission coordination relating to digital assets</header><subsection id="ida57d92795edd48aca0b0544c6bcdb7c8" commented="no"><enum>(a)</enum><header>In general</header><text>In order to increase uniformity, reduce regulatory burden, and enhance consumer protection, the States, through the Conference of State Bank Supervisors and the Money Transmission Regulators Association, shall, not later than 2 years after the date of enactment of this Act, ensure uniform treatment of digital assets for the purposes of State money transmission laws on the following matters:</text><paragraph id="id28ae64382bb04473a56ba5b1ce387d1e" commented="no"><enum>(1)</enum><text>Whether digital assets are subject to money transmission licensing requirements, as appropriate, which shall include the exchange of digital assets for legal tender.</text></paragraph><paragraph id="ida077396711d448b085801cdc1a4e8d8f" commented="no"><enum>(2)</enum><text>Treatment of payment stablecoins.</text></paragraph><paragraph id="id851c3fa6acde43da925c5706b4a4a834" commented="no"><enum>(3)</enum><text>Non-applicability to persons or software that engage in validation of transactions, non-custodial wallet providers, or software or hardware development.</text></paragraph><paragraph id="id5926cfde2e884f05a60a39990de8a0d6" commented="no"><enum>(4)</enum><text>Tangible net worth and permissible investment requirements.</text></paragraph><paragraph id="idb097237350624260824072ae74026426" commented="no"><enum>(5)</enum><text>Disclosures, reporting, and recordkeeping.</text></paragraph><paragraph id="ida5041ad8d57f411ab751232f461ae775" commented="no"><enum>(6)</enum><text>Common examination and examiner training standards, including common customer identification, anti-money laundering, and sanctions best practices developed in consultation with the Financial Crimes Enforcement Network and the Office of Foreign Assets Control.</text></paragraph></subsection><subsection id="id5aaabc809d3b4da4a7d2cfa8b4bab075" commented="no" display-inline="no-display-inline"><enum>(b)</enum><header>Regulations</header><text>If the Director of the Bureau of Consumer Financial Protection determines that a State does not have the requirements of subsection (a) in effect by law (including regulations) that are substantively consistent with the requirements of the several States on the date that is 2 years after the date of enactment of this section, the Director shall adopt rules applicable to that State that achieve the purposes of subsection (a) and that are consistent with the standards adopted in the States that have the requirements of subsection (a) in effect. The Director may extend the deadline under this section for not more than 1 year if a State has shown a good faith effort towards implementation. The Director may promulgate regulations to monitor State compliance with this subsection. </text></subsection></section><section id="id7a5677d450384d8fa01f59bfa6da0312"><enum>804.</enum><header>Information sharing among Federal and State financial regulators</header><text display-inline="no-display-inline">Subtitle C of title VII of the Gramm-Leach-Bliley Act (<external-xref legal-doc="public-law" parsable-cite="pl/106/102">Public Law 106–102</external-xref>; 113 Stat. 1470), as amended by section 601 of this Act, is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id6C96D8EC82614BE794AE1666CFC2C7FC"><section id="idCD3A0063A68047FEB4CFC82EACA99C04"><enum>722B.</enum><header>Information sharing among Federal and State financial regulators</header><subsection id="id1c0a05da665043b991f2e32d67c49798"><enum>(a)</enum><header>Confidentiality</header><text>Notwithstanding any other provision of law, any requirement under Federal or State law regarding the privacy or confidentiality of any information or materials exchanged among financial regulators and any privilege arising under Federal or State law (including the rules of any Federal or State court) with respect to such information or material, shall continue to apply to such information or material after the information or material has been disclosed to any State or Federal financial regulator.</text></subsection><subsection id="id152accc33c2b4a168fa0bc8bb688d8a5"><enum>(b)</enum><header>Non-Applicability of certain requirements</header><text>Information or material that is subject to privilege or confidentiality under subsection (a) shall not be subject to—</text><paragraph id="idd57ff706aa914826b215ae52f905698b"><enum>(1)</enum><text>disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or an agency of the Federal Government or the respective State; or</text></paragraph><paragraph id="id7d917b0ad5ed4aa4893abb76d2a487ec"><enum>(2)</enum><text>subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry or the Director with respect to such information or material, the person to whom such information or material pertains waives that privilege, in whole or in part, based on the discretion of such person.</text></paragraph></subsection><subsection id="id5b109d1d7c044a5e90c42a0175f7a777"><enum>(c)</enum><header>Coordination with other law</header><text>Any State or Federal law, including any State open records law, relating to the disclosure of confidential supervisory information or any information or material described in subsection (a) that is inconsistent with subsection (a) shall be superseded by the requirements of such provision to the extent the State or Federal law provides less confidentiality or a weaker privilege.</text></subsection><subsection id="id57beb51a9120429a8b3dee282576e6b8"><enum>(d)</enum><header>Conference of State Bank Supervisors</header><text>The Conference of State Bank Supervisors shall be considered the agent of the State financial regulators for the purposes of sharing information under this provision.</text></subsection><subsection id="id282803b1fa4e43c288450d4b90193c80"><enum>(e)</enum><header>Definition</header><text>In this section, the term <term>financial regulator</term> means—</text><paragraph id="id3cbcb2da85824efda5eafd9015745d5c"><enum>(1)</enum><text>the Board of Governors of the Federal Reserve System and the Federal Reserve banks;</text></paragraph><paragraph id="id8566ce3beb964868b7ab8c67f1ddbb8b"><enum>(2)</enum><text>the Commodity Futures Trading Commission;</text></paragraph><paragraph id="id7bd4f0c9f7e94e2299cbd3261d59e850"><enum>(3)</enum><text>the Department of the Treasury, including the Financial Crimes Enforcement Network and the Office of Foreign Assets Control;</text></paragraph><paragraph id="ida6f78b4aa5e749ee8537d9c72aee796b"><enum>(4)</enum><text>the Federal Deposit Insurance Corporation;</text></paragraph><paragraph id="idbd9746b2faf04c92be329cb11e95bbb1"><enum>(5)</enum><text>the Federal Housing Finance Agency;</text></paragraph><paragraph id="idff74d308fe774dc59905d1d1a8074375"><enum>(6)</enum><text>the National Credit Union Administration;</text></paragraph><paragraph id="id637fa89ed69d45cb9f6297692b9a85bd"><enum>(7)</enum><text>the Office of the Comptroller of the Currency;</text></paragraph><paragraph id="id8ba253541f6d450ebf0ef065d1ef4922"><enum>(8)</enum><text>the Bureau of Consumer Financial Protection;</text></paragraph><paragraph id="id5e7992f42aa6414eb1f23429889659f3"><enum>(9)</enum><text>the Securities and Exchange Commission; and</text></paragraph><paragraph id="id99af72ad40c8406e921c0f684796ab0f"><enum>(10)</enum><text>State agencies that regulate, supervise, or license banks, trust companies, credit unions, consumer credit, consumer protection, money transmission, securities, commodities, and similar areas.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="id83a228e2f0b94ab3860e3e7d46099330"><enum>805.</enum><header>Analysis of decentralized finance markets and technologies</header><text display-inline="no-display-inline">Not later than 1 year after the date of enactment of this Act, the Secretary of the Treasury, in consultation with the Commodity Futures Trading Commission, Securities and Exchange Commission, and private sector developers and participants in decentralized protocols, digital assets, and digital asset exchanges, shall—</text><paragraph id="id372E223AD5C042C3B374C4A971D8E2EB"><enum>(1)</enum><text display-inline="yes-display-inline">analyze the market position of decentralized finance technologies with respect to digital assets; and</text></paragraph><paragraph id="idDB10495CD4F449DE92D9DE06A49FAFC9"><enum>(2)</enum><text display-inline="yes-display-inline">submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Financial Services and the Committee on Agriculture of the House of Representatives a report on—</text><subparagraph id="id70fb6ba787e548a68ffa63b3a222e802"><enum>(A)</enum><text>current development and use of decentralized finance protocols in the United States and other countries;</text></subparagraph><subparagraph id="idd96598618e0f426396314a27b8ffacb6"><enum>(B)</enum><text>opportunities, benefits, and challenges relating to decentralized finance protocols and self-custody of digital assets;</text></subparagraph><subparagraph id="idce9de5a0011c4232b28d25f1a6e9eb58"><enum>(C)</enum><text>a comparison of operational friction, fees, liquidity and trading opportunities in decentralized finance protocols, digital asset markets, and traditional markets;</text></subparagraph><subparagraph id="idf47355a6031642f19264eefe7d56691d"><enum>(D)</enum><text>transparency, prevention of manipulation, and customer protection;</text></subparagraph><subparagraph id="id3f9926e5baf44ad78df00ae6e9e649fa"><enum>(E)</enum><text>cybersecurity and resiliency; and</text></subparagraph><subparagraph id="id4b492f3641fe49c1ad1e23ef63392637"><enum>(F)</enum><text>ensuring the accuracy of information regarding the underlying smart contracts of a decentralized finance protocol and the transactions facilitated by such contracts, as the information appears on a website or other similar means relating to the protocol.</text></subparagraph></paragraph></section><section id="iddedc1a42ad6f466c9019a598a2f306ad"><enum>806.</enum><header>Analysis of energy consumption in digital asset markets</header><subsection id="id321D0E661CF842409F78DF5F58FEAD36"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Each year, the Federal Energy Regulatory Commission, in consultation with the Commodity Futures Trading Commission and Securities and Exchange Commission, shall analyze the following topics with respect to digital asset markets:</text><paragraph id="id25cd47d8dc134b678d3c1ee86fd696de"><enum>(1)</enum><text>Energy consumption for mining and staking of digital asset transactions.</text></paragraph><paragraph id="idbfa6fd63a11a4add9796945301deade6"><enum>(2)</enum><text>The effect of energy consumption described in paragraph (1) on national, regional, and local energy prices.</text></paragraph><paragraph id="idb763c587f65b4450945ef3067d628dcf"><enum>(3)</enum><text>The effects of mining and staking of digital asset transactions on baseload power levels.</text></paragraph><paragraph id="id4e30b24479624d86865b4ec5203c97e2"><enum>(4)</enum><text>The use of renewable energy sources, including use of nonrenewable sources that would otherwise be wasted, and a comparison of digital asset market energy consumption with the financial services industry and economy as a whole.</text></paragraph><paragraph id="id107f006ef64246b4bd1d4d20675d83e6"><enum>(5)</enum><text>The sources and reliability of the data used under this subsection.</text></paragraph><paragraph id="id07a98083df50454985aeca77e16975c8"><enum>(6)</enum><text>A process for regulated entities to make information publicly available regarding energy consumption, including sources of energy and amount, and, if appropriate, recommendations to Congress to establish such a process. </text></paragraph></subsection><subsection id="id6BDDD99838BE4C18B1BC586CFBD3184F"><enum>(b)</enum><header>Report</header><text>Not later than December 31 of each year, the Federal Energy Regulatory Commission shall submit to the Committee on Energy and Natural Resources and the Committee on Environment and Public Works of the Senate and the Committee on Energy and Commerce and the Committee on Natural Resources of the House of Representatives a report containing the analysis required by subsection (a).</text></subsection></section><section id="id47E8276C66FA475284F3ABBF6658D365"><enum>807.</enum><header>Analysis of self-regulation and registered digital asset associations</header><subsection id="id9b5654792c99463897207891e013ba16"><enum>(a)</enum><header>In general</header><text>Not later than 180 days after the date of enactment of this Act, the Commodity Futures Trading Commission and Securities and Exchange Commission, in consultation with digital asset intermediaries, as defined in section 9801 of title 31, United States Code, as added by section 101 of this Act, and standard-setting associations representing the digital asset industry, shall conduct a study and submit to the Committee on Banking, Housing, and Urban Affairs and the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Financial Services and the Committee on Agriculture of the House of Representatives a report setting forth principles for self-regulation for digital asset markets and a proposal for the establishment of registered digital asset associations for digital asset markets based on delegated authority from the Commodity Futures Trading Commission and Securities and Exchange Commission to facilitate innovative, efficient, and orderly markets for digital assets in accordance with this Act, and the amendments made by this Act, including—</text><paragraph id="idc6593673650343169fe27df33a8345df"><enum>(1)</enum><text>standard setting, corporate transparency requirements, and rulemaking relating to digital asset market conduct;</text></paragraph><paragraph id="idbfae53f9449343cc8d2b63f38936117b"><enum>(2)</enum><text>regular consultation between the Commodity Futures Trading Commission and Securities and Exchange Commission with respect to rules governing digital asset market conduct and the governance of registered digital asset associations;</text></paragraph><paragraph id="id2afe6c72ebf149d283e1b4b0b6efae3a"><enum>(3)</enum><text>appropriate investigatory and disciplinary powers of registered digital asset associations and registered digital asset exchanges, respectively;</text></paragraph><paragraph id="idcf72dce53b5b435d80b37ba322697e41"><enum>(4)</enum><text>the authority of digital asset intermediaries to conduct activities relating to traditional assets;</text></paragraph><paragraph id="idbba5e8a645654560a5552a3fe4d37704"><enum>(5)</enum><text>consumer education and financial literacy;</text></paragraph><paragraph id="idc8a1d1e086094cafa84589ea73f99de9"><enum>(6)</enum><text>professional accreditation and education;</text></paragraph><paragraph id="id6debf7d17d9c481c8836b229cf7396c9"><enum>(7)</enum><text>market surveillance and oversight, including use of technology to facilitate shared trade practices and market surveillance;</text></paragraph><paragraph id="idbc16b508959b45ef8bf00cf2ec8defa9"><enum>(8)</enum><text>risk-based examination authority;</text></paragraph><paragraph id="id5b52c6673388441e8d4f1194b4970e6f"><enum>(9)</enum><text>dispute resolution and arbitration;</text></paragraph><paragraph id="id1beeeb6dc5014f43ac584da3d2f10f9a"><enum>(10)</enum><text>membership of registered digital asset association members in other self-regulatory organizations and mutual recognition and acceptance of rules and examination reports amongst self-regulatory organizations;</text></paragraph><paragraph id="idd87e8819b4df45138aba5c92dee2207b"><enum>(11)</enum><text>voluntary and compulsory membership structures;</text></paragraph><paragraph id="id0e734dbb35ca4d13b0e7ac2138f218eb"><enum>(12)</enum><text>the initial determination of the legal classification of a digital asset by a registered digital asset association, subject to oversight by the Commodity Futures Trading Commission and Securities and Exchange Commission; and</text></paragraph><paragraph id="id9f33a3c5d9b9453e9e50ed821c45a227"><enum>(13)</enum><text>the funding of registered digital asset associations based on fees.</text></paragraph></subsection><subsection id="idBCC039D80EEF448993E6D5452ED9E3EB"><enum>(b)</enum><header>Interim rule</header><text>Not later than August 1, 2022, the Commodity Futures Trading Commission and Securities and Exchange Commission shall jointly adopt an interim final rule specifying the scope of the study under subsection (a), including topics of discussion and questions for digital asset intermediaries and associations representing the digital asset industry, and setting forth not fewer than 3 public meetings for staff of the Commodity Futures Trading Commission and the Securities and Exchange Commission to receive public comment. The interim final rule shall establish a comment period of not less than 120 days prior to publication of the report under subsection (a) and contain draft legislative text for the creation of registered digital asset associations by Congress. </text></subsection></section><section id="idD6EAF06FD00541CCB32CC88655ADD4D4"><enum>808.</enum><header>Cybersecurity standards for digital asset intermediaries</header><subsection id="id457CAA0D53FE4DA5A2AD8CB90B076F42"><enum>(a)</enum><header>Definition</header><text>In this section, the term <term>digital asset intermediary</term> has the meaning given the term in section 9801 of title 31, United States Code, as added by section 101 of this Act.</text></subsection><subsection id="idE1B60327C81C47789A376CDD8A39FDB6"><enum>(b)</enum><header>Requirement</header><text display-inline="yes-display-inline">Not later than 18 months after the date of enactment of this Act, the Commodity Futures Trading Commission and the Securities and Exchange Commission, in consultation with the Secretary of the Treasury and the Director of the National Institute of Standards and Technology, shall develop comprehensive, principles-based guidance relating to cybersecurity for digital asset intermediaries that account for, with respect to such a digital asset intermediary— </text><paragraph id="id51AF345E781F420BBB7A040602F7B6C4"><enum>(1)</enum><text>the internal governance, and organizational culture, of the cybersecurity program of the digital asset intermediary;</text></paragraph><paragraph id="id219F9B3184034A8D80F18A590E2BB0D3"><enum>(2)</enum><text>security operations of the digital asset intermediary, including threat identification, incident response, and mitigation;</text></paragraph><paragraph id="id5B35963A3B24411D84E1E0EC0E4E0113"><enum>(3)</enum><text>risk identification and measurement by the digital asset intermediary;</text></paragraph><paragraph id="id79CEB175AD9E4E7CA4BE125262F75673"><enum>(4)</enum><text>the mitigation of risk by the digital asset intermediary, including policies of the digital asset intermediary, controls implemented by the digital asset intermediary, change management with respect to the digital asset intermediary, and the supply chain integrity of the digital asset intermediary;</text></paragraph><paragraph id="idFFF0961971694C40B31BEC19798944C0" commented="no" display-inline="no-display-inline"><enum>(5)</enum><text>assurance provided by, and testing conducted by, the digital asset intermediary, including penetration testing and independent audits so conducted; and</text></paragraph><paragraph display-inline="no-display-inline" commented="no" id="idF00BF0C107AB4F93B24F63700C518E30"><enum>(6)</enum><text>the potential for digital asset intermediaries to be used to facilitate illicit activities, including sanctions avoidance.</text></paragraph></subsection></section><section id="id21e744829e7a46c095a9beea751018ee"><enum>809.</enum><header>Advisory Committee on Financial Innovation</header><subsection id="idb3e691f73047436cbb830296800390e8"><enum>(a)</enum><header>Establishment</header><text>There is established the Advisory Committee on Financial Innovation (in this section referred to as the <quote>Committee</quote>).</text></subsection><subsection id="id04f5e427422b41d69a8a567cdbe50aba"><enum>(b)</enum><header>Membership</header><paragraph id="id85E2EA5036714F5793F068ABB75F80B8"><enum>(1)</enum><header>Composition</header><text>The Committee shall be composed of 10 members, as follows: </text><subparagraph id="id87c65117c9a548d3b812a4c719fa3305"><enum>(A)</enum><text>2 members appointed by the President from the financial technology industry.</text></subparagraph><subparagraph id="ide53349bb56944d4fb7f5a0a94b67e0c0"><enum>(B)</enum><text>4 members appointed by the President with specializations in consumer protection, consumer education, financial literacy, or financial inclusion.</text></subparagraph><subparagraph id="idce043819b54844b98d5ac075d9a43bca"><enum>(C)</enum><text>A commissioner from the Securities and Exchange Commission, as designated by the Chair of the Commission.</text></subparagraph><subparagraph id="ide3b3879d766245c3b138d4fa26ff1cb3"><enum>(D)</enum><text>A commissioner from the Commodity Futures Trading Commission, as designated by the Chair of the Commission.</text></subparagraph><subparagraph id="idd8229e997d4a4a8192e601c2e4656b7a"><enum>(E)</enum><text>A member of the Board of Governors of the Federal Reserve System, as designated by the Chair of the Board.</text></subparagraph><subparagraph id="id54d6e23c3d3f479a98b6618eb1480e4b"><enum>(F)</enum><text>A State financial regulator, as jointly designated by the National Association of State Securities Administrators and the Conference of State Bank Supervisors.</text></subparagraph></paragraph><paragraph id="id167D2C8B9FEE4657B66A40CF691DB463"><enum>(2)</enum><header>Political affiliation</header><text>Not more than 4 of the members of the Committee shall be from the same political party.</text></paragraph><paragraph id="ID4F911B8DB59248E29F059E5131713461"><enum>(3)</enum><header>Appointment date</header><text>The appointments of the members of the Committee shall be made not later than 60 days after the date of enactment of this Act. </text></paragraph><paragraph id="ID49FC1DF7437F4D65827F32F3B59A5C61"><enum>(4)</enum><header>Period of appointment; vacancies</header><subparagraph id="id074CAA8C186848F69A84BF8EB7E8B53B"><enum>(A)</enum><header>In general</header><text>A member of the Committee shall be appointed for a term of 4 years. </text></subparagraph><subparagraph id="id2ABA6BEF0A7647CD9CF8FFBE31E586FA"><enum>(B)</enum><header>Vacancies</header><text>A vacancy in the Committee—</text><clause id="id76B0CB8404734FF6A1DF2A252ED8694F"><enum>(i)</enum><text>shall not affect the powers of the Committee; and</text></clause><clause id="id484DA57A7CD74ED1BC86CBF65528ABB5" commented="no" display-inline="no-display-inline"><enum>(ii)</enum><text>shall be filled in the same manner as the original appointment. </text></clause></subparagraph></paragraph><paragraph id="idCF0A1C97534F42D0AE40072C4235EF91"><enum>(5)</enum><header>Meetings</header><subparagraph id="ID713A12DE7D79416DBEBDD4057F256299"><enum>(A)</enum><header>Initial meeting</header><text>Not later than 60 days after the date on which all members of the Committee have been appointed, the Committee shall hold its first meeting.</text></subparagraph><subparagraph id="ID67F067576FFC463A842A5F7DA6A093C8"><enum>(B)</enum><header>Frequency</header><text>The Committee shall meet at the call of the Chair.</text></subparagraph><subparagraph id="ID7A3C368FA83449AD90220C7B181165BB"><enum>(C)</enum><header>Quorum</header><text>A majority of the members of the Committee shall constitute a quorum, but a lesser number of members may hold hearings.</text></subparagraph></paragraph><paragraph id="ID79CF96D103FD4274ADF268D788E44827" commented="no" display-inline="no-display-inline"><enum>(6)</enum><header>Chairperson</header><text>The members described in subparagraphs (C) and (D) of paragraph (1) shall alternate, on a yearly basis, as Chairperson of the Committee, with the member described in such subparagraph (D) serving as the Chair for the 1-year period following establishment of the Committee.</text></paragraph></subsection><subsection id="id3498816575624da5bcf06e2ed78b5069"><enum>(c)</enum><header>Duties</header><paragraph id="id4A491AE8E70A44AD8AC7E6022DADE6F8"><enum>(1)</enum><header>Matters studied</header><text>The matters studied by the Committee shall include—</text><subparagraph id="id245de5e4e5ee41e9b82aedc32329074e"><enum>(A)</enum><text>digital assets;</text></subparagraph><subparagraph id="id46340560256D492688CF4DFD8926AE11"><enum>(B)</enum><text>consumer education and financial literacy;</text></subparagraph><subparagraph id="id646338119c764ca3a0341fac813c6994"><enum>(C)</enum><text>market structure in the securities and commodities markets;</text></subparagraph><subparagraph id="idd799f4c0dae346a188af2f69e86a7e1a"><enum>(D)</enum><text>banking, payments and settlement;</text></subparagraph><subparagraph id="idd2ee5b7bb1e049298e11610b8eebfe97"><enum>(E)</enum><text>consumer credit;</text></subparagraph><subparagraph id="id2cd8da22ff0f46f6b82845683c92d96d"><enum>(F)</enum><text>financial inclusion, including reducing the cost of financial services for all people of the United States and promoting access to those services;</text></subparagraph><subparagraph id="id2ed90c4d382a4559b31b8c0fc8ba1d46"><enum>(G)</enum><text>efficiency in the financial system;</text></subparagraph><subparagraph id="id41e05f9e29c648b593066bf649f90d7a"><enum>(H)</enum><text>reduction of systemic risk;</text></subparagraph><subparagraph id="id61ac3d68eb984e698ea1cec42952530a"><enum>(I)</enum><text>competition in financial services; and</text></subparagraph><subparagraph id="id2187595850a546c78c7e8bcc520e567e"><enum>(J)</enum><text>the State-Federal partnership in financial services regulation. </text></subparagraph></paragraph><paragraph id="id8E792BA731D94E3DB867B0BACBE3E265"><enum>(2)</enum><header>Report</header><text>On an annual basis, or as otherwise determined necessary by the Chair of the Committee, the Committee shall report to the President and to Congress on, and provide recommendations for legislation, regulation, and supervision relating to innovation in, the matters studied under paragraph (1).</text></paragraph></subsection><subsection id="id94AF5367B53D4C848308CDC0652CAEE2"><enum>(d)</enum><header>Powers</header><paragraph id="id4c68b766352c4ed8935bd163263cdcbe"><enum>(1)</enum><header>Hearings</header><text>The Committee shall hold not less than 2 hearings per calendar year to hear from interested parties and to discuss the work of the Committee.</text></paragraph><paragraph commented="no" id="id385B0BF713C84647989A51A8BF846505"><enum>(2)</enum><header>Information from Federal agencies</header><subparagraph commented="no" id="id03B4F3592AD44AC5BB98277E37F689C3"><enum>(A)</enum><header>In general</header><text>The Committee may secure directly from a Federal department or agency such information as the Committee considers necessary to carry out this section.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idEEC5F6AA1ADB46588943EF27D3AC4D94"><enum>(B)</enum><header>Furnishing information</header><text>On request of the Chair of the Committee, the head of the department or agency shall furnish the information to the Committee.</text></subparagraph></paragraph><paragraph id="ID697F1CDBA8724CB4AD225E5D97B10BD6" commented="no"><enum>(3)</enum><header>Postal services</header><text>The Committee may use the United States mails in the same manner and under the same conditions as other departments and agencies of the Federal Government.</text></paragraph></subsection><subsection id="id33c019a3c3f04ced9c66ab77e2a023f5"><enum>(e)</enum><header>Compensation</header><paragraph id="id5E7121DE49D043CAACD09B1EFB6518D5"><enum>(1)</enum><header>In general</header><text>All members of the Committee shall serve without compensation in addition to that received for their services as officers or employees of the United States, and all other members of the Committee shall serve without compensation. </text></paragraph><paragraph id="id06485c6275314e9ea9104e8bbcf18c59"><enum>(2)</enum><header>Travel expenses</header><text>Each member of the Committee may be allowed travel expenses, including per diem in lieu of subsistence, in accordance with sections 5702 and 5703 of title 5, United States Code, while away from their homes or regular places of business in performance of services for the Council.</text></paragraph></subsection><subsection id="ID771CB422D4684EF88424586CBA7942C6"><enum>(f)</enum><header>Staff</header><paragraph id="ID99AD8891AD904A7EBF3A1D3EE5A99435"><enum>(1)</enum><header>In general</header><text>The Chair of the Committee may, without regard to the civil service laws (including regulations), appoint and terminate an executive director and such other additional personnel as may be necessary to enable the Committee to perform its duties, except that the employment of an executive director shall be subject to confirmation by the Committee.</text></paragraph><paragraph id="IDB23DD631FF0E49B589B943F8049F018B"><enum>(2)</enum><header>Compensation</header><text>The Chair of the Committee may fix the compensation of the executive director and other personnel without regard to chapter 51 and subchapter III of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/53">chapter 53</external-xref> of title 5, United States Code, relating to classification of positions and General Schedule pay rates, except that the rate of pay for the executive director and other personnel may not exceed the rate payable for level V of the Executive Schedule under section 5316 of that title.</text></paragraph></subsection><subsection id="IDA9D71553FE6B470ABBF61FBF5DCE8D94"><enum>(g)</enum><header>Detail of government employees</header><text>A Federal Government employee may be detailed to the Committee without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.</text></subsection><subsection id="IDD761928855434025A0BC6D8D636885FE" commented="no" display-inline="no-display-inline"><enum>(h)</enum><header>Procurement of temporary and intermittent services</header><text>The Chair of the Committee may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals that do not exceed the daily equivalent of the annual rate of basic pay prescribed for level V of the Executive Schedule under section 5316 of that title.</text></subsection><subsection id="id81CFA4461985444981BC4EBD3AC383D4"><enum>(i)</enum><header>Termination</header><text>Section 14 of the Federal Advisory Committee Act (5 U.S.C. App.) shall not apply to the Committee.</text></subsection><subsection id="id909FAADC55664C19A2326F2834DC54B2" commented="no" display-inline="no-display-inline"><enum>(j)</enum><header>Authorization of appropriations</header><text>There is authorized to be appropriated to the Committee to carry out this section $2,000,000 for fiscal year 2023, to remain available through fiscal year 2024.</text></subsection></section>