[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4763 Introduced in House (IH)]

<DOC>






118th CONGRESS
  1st Session
                                H. R. 4763

    To provide for a system of regulation of digital assets by the 
 Commodity Futures Trading Commission and the Securities and Exchange 
                  Commission, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 20, 2023

  Mr. Thompson of Pennsylvania (for himself, Mr. Hill, Mr. Johnson of 
  South Dakota, Mr. Davidson, and Mr. Emmer) introduced the following 
bill; which was referred to the Committee on Financial Services, and in 
     addition to the Committee on Agriculture, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
    To provide for a system of regulation of digital assets by the 
 Commodity Futures Trading Commission and the Securities and Exchange 
                  Commission, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial 
Innovation and Technology for the 21st Century Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
       TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION

Sec. 101. Definitions under the Securities Act of 1933.
Sec. 102. Definitions under the Commodity Exchange Act.
Sec. 103. Definitions under this Act.
Sec. 104. Joint rulemakings.
Sec. 105. Notice of intent to register for digital commodity exchanges, 
                            brokers, and dealers.
Sec. 106. Notice of intent to register for digital asset brokers, 
                            dealers, and trading systems.
Sec. 107. Commodity Exchange Act savings provisions.
Sec. 108. International harmonization.
Sec. 109. Implementation.
                   TITLE II--DIGITAL ASSET EXEMPTIONS

Sec. 201. Exempted transactions in digital assets.
Sec. 202. Requirements to transact in certain digital assets.
Sec. 203. Enhanced disclosure requirements.
Sec. 204. Certification of certain digital assets.
Sec. 205. Effective date.
    TITLE III--REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES AT THE 
                   SECURITIES AND EXCHANGE COMMISSION

Sec. 301. Treatment of digital commodities and other digital assets.
Sec. 302. Antifraud authority over permitted payment stablecoins.
Sec. 303. Registration of digital asset trading systems.
Sec. 304. Requirements for digital asset trading systems.
Sec. 305. Registration of digital asset brokers and digital asset 
                            dealers.
Sec. 306. Requirements of digital asset brokers and digital asset 
                            dealers.
Sec. 307. Rules related to conflicts of interest.
Sec. 308. Treatment of certain digital assets in connection with 
                            federally regulated intermediaries.
Sec. 309. Dual registration.
Sec. 310. Exclusion for ancillary activities.
Sec. 311. Registration and requirements for notice-registered digital 
                            asset clearing agencies.
Sec. 312. Treatment of custody activities by banking institutions.
    TITLE IV--REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES AT THE 
                  COMMODITY FUTURES TRADING COMMISSION

Sec. 401. Commission jurisdiction over digital commodity transactions.
Sec. 402. Requiring futures commission merchants to use qualified 
                            digital commodity custodians.
Sec. 403. Trading certification and approval for digital commodities.
Sec. 404. Registration of digital commodity exchanges.
Sec. 405. Qualified digital commodity custodians.
Sec. 406. Registration and regulation of digital commodity brokers and 
                            dealers.
Sec. 407. Registration of associated persons.
Sec. 408. Registration of commodity pool operators and commodity 
                            trading advisors.
Sec. 409. Exclusion for ancillary activities.
Sec. 410. Effective date.
            TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

Sec. 501. Codification of the SEC Strategic Hub for Innovation and 
                            Financial Technology.
Sec. 502. Codification of LabCFTC.
Sec. 503. CFTC-SEC Joint Advisory Committee on Digital Assets.
Sec. 504. Modernization of the Securities and Exchange Commission 
                            mission.
Sec. 505. Study on decentralized finance.
Sec. 506. Study on non-fungible digital assets.
Sec. 507. Study on financial market infrastructure improvements.

       TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION

SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF 1933.

    Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is 
amended by adding at the end the following:
            ``(20) Affiliated persons.--The term `affiliated person' 
        means a person (including a related person) that--
                    ``(A) with respect to a digital asset issuer--
                            ``(i) directly, or indirectly through one 
                        or more intermediaries, controls, or is 
                        controlled by, or is under common control with, 
                        such digital asset issuer; and
                            ``(ii) was described under clause (i) at 
                        any point in the previous 3-month period; or
                    ``(B) with respect to any digital asset--
                            ``(i) beneficially owns 5 percent or more 
                        of the units of such digital asset that are 
                        then outstanding; and
                            ``(ii) was described under clause (i) at 
                        any point in the previous 3-month period.
            ``(21) Blockchain.--The term `blockchain' means any 
        technology--
                    ``(A) where data is--
                            ``(i) shared across a network to create a 
                        public ledger of verified transactions or 
                        information among network participants;
                            ``(ii) linked using cryptography to 
                        maintain the integrity of the public ledger and 
                        to execute other functions; and
                            ``(iii) distributed among network 
                        participants in an automated fashion to 
                        concurrently update network participants on the 
                        state of the public ledger and any other 
                        functions; and
                    ``(B) composed of source code that is publicly 
                available.
            ``(22) Blockchain protocol.--The term `blockchain protocol' 
        means any executable software deployed to a blockchain composed 
        of source code that is publicly available and accessible, 
        including a smart contract or any network of smart contracts.
            ``(23) Blockchain system.--The term `blockchain system' 
        means any blockchain or blockchain protocol.
            ``(24) Decentralized network.--With respect to a blockchain 
        system to which a digital asset relates, the term 
        `decentralized network' means the following conditions are met:
                    ``(A) During the previous 12-month period, no 
                person--
                            ``(i) had the unilateral authority, 
                        directly or indirectly, through any contract, 
                        arrangement, understanding, relationship, or 
                        otherwise, to control or materially alter the 
                        functionality or operation of the blockchain 
                        system; or
                            ``(ii) had the unilateral authority to 
                        restrict or prohibit any person who is not a 
                        digital asset issuer, related person, or an 
                        affiliated person from--
                                    ``(I) using, earning, or 
                                transmitting the digital asset;
                                    ``(II) deploying software that uses 
                                or integrates with the blockchain 
                                system;
                                    ``(III) participating in a 
                                decentralized governance system with 
                                respect to the blockchain system; or
                                    ``(IV) operating a node, validator, 
                                or other form of computational 
                                infrastructure with respect to the 
                                blockchain system.
                    ``(B) During the previous 12-month period--
                            ``(i) no digital asset issuer or affiliated 
                        person beneficially owned, in the aggregate, 20 
                        percent or more of the total amount of units of 
                        such digital asset that--
                                    ``(I) can be created, issued, or 
                                distributed in such blockchain system; 
                                and
                                    ``(II) were freely transferrable or 
                                otherwise used or available to be used 
                                for the purposes of such blockchain 
                                network;
                            ``(ii) no digital asset issuer or 
                        affiliated person had the unilateral authority 
                        to direct the voting, in the aggregate, of 20 
                        percent or more of the outstanding voting power 
                        of such digital asset or related decentralized 
                        governance system; or
                            ``(iii) the digital asset did not include 
                        voting power.
                    ``(C) During the previous 3-month period, the 
                digital asset issuer, any affiliated person, or any 
                related person has not implemented or contributed any 
                intellectual property to the source code of the 
                blockchain system that materially alters the 
                functionality or operation of the blockchain system, 
                unless such implementation or contribution to the 
                source code--
                            ``(i) addressed vulnerabilities, errors, 
                        regular maintenance, cybersecurity risks, or 
                        other technical improvements to the blockchain 
                        system; or
                            ``(ii) were adopted through the consensus 
                        or agreement of a decentralized governance 
                        system.
                    ``(D) During the previous 3-month period, neither 
                any digital asset issuer nor any affiliated person 
                described under paragraph (20)(A) has marketed to the 
                public the digital assets as an investment.
                    ``(E) During the previous 12-month period, all 
                issuances of units of such digital asset were end user 
                distributions made through the programmatic functioning 
                of the blockchain system.
            ``(25) Decentralized governance system.--
                    ``(A) In general.--The term `decentralized 
                governance system' means, with respect to a blockchain 
                system, any rules-based system permitting persons using 
                the blockchain system or the digital assets related to 
                such blockchain system to form consensus or reach 
                agreement in the development, provision, publication, 
                management, or administration of such blockchain 
                system.
                    ``(B) Relationship of persons to decentralized 
                governance systems.--Persons acting through a 
                decentralized governance system shall be treated as 
                separate persons unless such persons are under common 
                control.
                    ``(C) Exclusion.--The term `decentralized 
                governance system' does not include a system in which--
                            ``(i) a person or group of persons under 
                        common control have the ability to--
                                    ``(I) unilaterally alter the rules 
                                of consensus or agreement for the 
                                blockchain system; or
                                    ``(II) determine the final outcome 
                                of decisions related to the 
                                development, provision, publication, 
                                management, or administration of such 
                                blockchain system;
                            ``(ii) a person or group of persons is 
                        directly engaging in an activity that requires 
                        registration with the Commission or the 
                        Commodity Futures Trading Commission other 
                        than--
                                    ``(I) developing, providing, 
                                publishing, managing, or administering 
                                a blockchain system; or
                                    ``(II) an activity with respect to 
                                which the organization is exempt from 
                                such registration; or
                            ``(iii) a person or group of persons 
                        seeking to knowingly evade the requirements 
                        imposed on a digital asset issuer, a related 
                        person, an affiliated person, or any other 
                        person registered (or required to be 
                        registered) under this Act, the Financial 
                        Innovation and Technology for the 21st Century 
                        Act, or the Commodity Exchange Act.
            ``(26) Digital asset.--
                    ``(A) In general.--The term `digital asset' means 
                any fungible digital representation of value that can 
                be exclusively possessed and transferred, person to 
                person, without necessary reliance on an intermediary, 
                and is recorded on a cryptographically secured public 
                distributed ledger.
                    ``(B) Exclusions.--The term `digital asset' does 
                not include--
                            ``(i) any note, stock, treasury stock, 
                        security future, security-based swap, bond, 
                        debenture, evidence of indebtedness, 
                        certificate of interest or participation in any 
                        profit-sharing agreement, collateral-trust 
                        certificate, preorganization certificate or 
                        subscription, or transferable share; or
                            ``(ii) any asset which represents, operates 
                        as the functional equivalent of, or otherwise 
                        has embedded functionality or characteristics 
                        which make it an agreement, contract, or 
                        transaction that is--
                                    ``(I) a contract of sale of a 
                                commodity (as defined under section 1a 
                                of the Commodity Exchange Act) for 
                                future delivery or an option thereon;
                                    ``(II) a security futures product;
                                    ``(III) a swap;
                                    ``(IV) an agreement, contract, or 
                                transaction described in section 
                                2(c)(2)(C)(i) or 2(c)(2)(D)(i) of the 
                                Commodity Exchange Act;
                                    ``(V) a commodity option authorized 
                                under section 4c of the Commodity 
                                Exchange Act; or
                                    ``(VI) a leverage transaction 
                                authorized under section 19 of the 
                                Commodity Exchange Act.
                    ``(C) Relationship to a blockchain system.--A 
                digital asset is considered to relate to a blockchain 
                system if the digital asset is intrinsically linked to 
                the blockchain system, including--
                            ``(i) where the digital asset's value is 
                        reasonably expected to be generated by the 
                        programmatic functioning of the blockchain 
                        system;
                            ``(ii) where the asset has voting rights 
                        with respect to the blockchain system; or
                            ``(iii) where the digital asset is issued 
                        through the programmatic functioning of the 
                        blockchain system.
                    ``(D) Treatment of certain digital assets sold 
                pursuant to an investment contract.--A digital asset 
                sold or transferred or intended to be sold or 
                transferred pursuant to an investment contract is not 
                and does not become a security as a result of being 
                sold or otherwise transferred pursuant to that 
                investment contract.
            ``(27) Digital asset issuer.--With respect to a digital 
        asset, the term `digital asset issuer'--
                    ``(A) means--
                            ``(i) any person that, in exchange for any 
                        consideration--
                                    ``(I) issues or causes to be issued 
                                a unit of such digital asset to a 
                                person; or
                                    ``(II) offers or sells a right to a 
                                future issuance of a unit of such 
                                digital asset to a person; or
                            ``(ii) any person who seeks to knowingly 
                        evade classification as a `digital asset 
                        issuer' and facilitate an arrangement for the 
                        primary purpose of effecting a sale, 
                        distribution, or other issuance of such digital 
                        asset, by--
                                    ``(I) the granting of a license or 
                                assignment of intellectual property;
                                    ``(II) the making available of free 
                                software or open source licenses; or
                                    ``(III) the granting of other 
                                rights or transfer of assets material 
                                to execution of such sale, 
                                distribution, or other issuance; and
                    ``(B) does not include any person solely because 
                such person, for the purpose of such person 
                participating in operations of a blockchain system, 
                deploys source code to create units of a digital asset 
                which are incentive-based rewards--
                            ``(i) to users of the digital asset or any 
                        blockchain system to which the digital asset 
                        relates; or
                            ``(ii) for activities directly related to 
                        the operation of the blockchain system, such as 
                        mining, validating, staking, or other activity 
                        directly tied to the operation of the 
                        blockchain system.
            ``(28) Digital asset maturity date.--The term `digital 
        asset maturity date' means, with respect to any units of a 
        digital asset, the first date on which 20 percent or more of 
        the total units of such digital asset that are then outstanding 
        as of such date are--
                    ``(A) digital commodities; or
                    ``(B) digital assets that have been registered with 
                the Commission.
            ``(29) Digital commodity.--The term `digital commodity' has 
        the meaning given that term under section 1a of the Commodity 
        Exchange Act (7 U.S.C. 1a).
            ``(30) End user distribution.--The term `end user 
        distribution' means an issuance of a unit of a digital asset 
        that--
                    ``(A) does not involve an exchange of more than a 
                nominal value of cash, property, or other assets; and
                    ``(B) is distributed in a broad, equitable, and 
                non-discretionary manner based on conditions capable of 
                being satisfied by any participant in the blockchain 
                system, including, as incentive-based rewards--
                            ``(i) to users of the digital asset or any 
                        blockchain system to which the digital asset 
                        relates;
                            ``(ii) for activities directly related to 
                        the operation of the blockchain system, such as 
                        mining, validating, staking, or other activity 
                        directly tied to the operation of the 
                        blockchain system; or
                            ``(iii) to the existing holders of another 
                        digital asset, in proportion to the total units 
                        of such other digital asset as are held by each 
                        person.
            ``(31) Functional network.--With respect to a blockchain 
        system to which a digital asset relates, the term `functional 
        network' means the network allows network participants to use 
        such digital asset for--
                    ``(A) the transmission and storage of value on the 
                blockchain system;
                    ``(B) the participation in services provided by or 
                an application running on the blockchain system; or
                    ``(C) the participation in governance of the 
                blockchain system.
            ``(32) Permitted payment stablecoin.--The term `permitted 
        payment stablecoin'--
                    ``(A) means a digital asset--
                            ``(i) that is or is designed to be used as 
                        a means of payment or settlement;
                            ``(ii) the issuer of which--
                                    ``(I) is obligated to convert, 
                                redeem, or repurchase for a fixed 
                                amount of monetary value; and
                                    ``(II) represents will maintain or 
                                creates the reasonable expectation that 
                                it will maintain a stable value 
                                relative to the value of a fixed amount 
                                of monetary value; and
                            ``(iii) that is subject to regulation by a 
                        Federal or State regulator with authority over 
                        entities that issue payment stablecoins; and
                    ``(B) that is not--
                            ``(i) a national currency; or
                            ``(ii) a security issued by an investment 
                        company registered under section 8(a) of the 
                        Investment Company Act of 1940 (15 U.S.C. 80a-
                        8(a)).
            ``(33) Related person.--With respect to a digital asset 
        issuer, the term `related person' means--
                    ``(A) a founder, promoter, employee, consultant, 
                advisor, or person serving in a similar capacity;
                    ``(B) any person that is or was in the previous 6-
                month period an executive officer, director, trustee, 
                general partner, advisory board member, or person 
                serving in a similar capacity;
                    ``(C) any equity holder or other security holder of 
                a digital asset issuer; or
                    ``(D) any other person that received a unit of 
                digital asset from such digital asset issuer through--
                            ``(i) an exempt offering, other than an 
                        offering made in reliance on section 4(a)(8); 
                        or
                            ``(ii) a distribution that is not an end 
                        user distribution described under section 
                        42(d)(1) of the Securities Exchange Act of 
                        1934.
            ``(34) Restricted digital asset.--
                    ``(A) In general.--The term `restricted digital 
                asset' means--
                            ``(i) any unit of a digital asset held by a 
                        person, other than a digital asset issuer, a 
                        related person, or an affiliated person, prior 
                        to the first date on which each blockchain 
                        system to which the digital asset relates is a 
                        functional network and certified to be a 
                        decentralized network under section 44 of the 
                        Securities Exchange Act of 1934, that was--
                                    ``(I) issued to such person through 
                                a distribution, other than an end user 
                                distribution described under section 
                                42(d)(1) of the Securities Exchange Act 
                                of 1934; or
                                    ``(II) acquired by such person in a 
                                transaction that was not executed on a 
                                digital commodity exchange;
                            ``(ii) any digital asset held by a related 
                        person or an affiliated person during any 
                        period when any blockchain system to which the 
                        digital asset relates is not a functional 
                        network or not certified to be a decentralized 
                        network under section 44 of the Securities 
                        Exchange Act of 1934; or
                            ``(iii) any unit of a digital asset held by 
                        the digital asset issuer.
                    ``(B) Exclusion.--The term `restricted digital 
                asset' does not include a permitted payment stablecoin.
            ``(35) Securities laws.--The term `securities laws' has the 
        meaning given that term under section 3(a) of the Securities 
        Exchange Act of 1934 (15 U.S.C. 78c(a)).
            ``(36) Source code.--With respect to a blockchain system, 
        the term `source code' means a listing of commands to be 
        compiled or assembled into an executable computer program.''.

SEC. 102. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.

    Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
            (1) in paragraph (10)(A)--
                    (A) by redesignating clauses (iii) and (iv) as 
                clauses (iv) and (v), respectively; and
                    (B) by inserting after clause (ii) the following:
                            ``(iii) digital commodity;'';
            (2) in paragraph (11)--
                    (A) in subparagraph (A)(i)--
                            (i) by redesignating subclauses (III) and 
                        (IV) as subclauses (IV) and (V), respectively; 
                        and
                            (ii) by inserting after subclause (II) the 
                        following:
                                    ``(III) digital commodity;''; and
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C) and inserting after subparagraph (A) 
                the following:
                    ``(B) Exclusion.--The term `commodity pool 
                operator' does not include--
                            ``(i) a decentralized governance system; or
                            ``(ii) ancillary activities, as defined in 
                        section 4v.'';
            (3) in paragraph (12)(A)(i)--
                    (A) in subclause (II), by adding at the end a 
                semicolon;
                    (B) by redesignating subclauses (III) and (IV) as 
                subclauses (IV) and (V), respectively; and
                    (C) by inserting after subclause (II) the 
                following:
                                    ``(III) a digital commodity;'';
            (4) in paragraph (40)--
                    (A) by striking ``and'' at the end of subparagraph 
                (E);
                    (B) by striking the period at the end of 
                subparagraph (F) and inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(G) a digital commodity exchange registered under 
                section 5i.''; and
            (5) by adding at the end the following:
            ``(52) Associated person of a digital commodity broker.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `associated person of a 
                digital commodity broker' means a person who is 
                associated with a digital commodity broker as a 
                partner, officer, employee, or agent (or any person 
                occupying a similar status or performing similar 
                functions) in any capacity that involves--
                            ``(i) the solicitation or acceptance of a 
                        contract for sale of a digital commodity; or
                            ``(ii) the supervision of any person 
                        engaged in the solicitation or acceptance of a 
                        contract for sale of a digital commodity.
                    ``(B) Exclusion.--The term `associated person of a 
                digital commodity broker' does not include any person 
                associated with a digital commodity broker the 
                functions of which are solely clerical or ministerial.
            ``(53) Associated person of a digital commodity dealer.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `associated person of a 
                digital commodity dealer' means a person who is 
                associated with a digital commodity dealer as a 
                partner, officer, employee, or agent (or any person 
                occupying a similar status or performing similar 
                functions) in any capacity that involves--
                            ``(i) the solicitation or acceptance of a 
                        contract for sale of a digital commodity; or
                            ``(ii) the supervision of any person 
                        engaged in the solicitation or acceptance of a 
                        contract for sale of a digital commodity.
                    ``(B) Exclusion.--The term `associated person of a 
                digital commodity dealer' does not include any person 
                associated with a digital commodity dealer the 
                functions of which are solely clerical or ministerial.
            ``(54) Bank secrecy act.--The term `Bank Secrecy Act' 
        means--
                    ``(A) section 21 of the Federal Deposit Insurance 
                Act (12 U.S.C. 1829b);
                    ``(B) chapter 2 of title I of Public Law 91-508 (12 
                U.S.C. 1951 et seq.); and
                    ``(C) subchapter II of chapter 53 of title 31, 
                United States Code.
            ``(55) Digital commodity.--
                    ``(A) In general.--The term `digital commodity' 
                means--
                            ``(i) any unit of a digital asset held by a 
                        person, other than a digital asset issuer, a 
                        related person, or an affiliated person, before 
                        the first date on which each blockchain system 
                        to which the digital asset relates is a 
                        functional network and certified to be a 
                        decentralized network under section 44 of the 
                        Securities Exchange Act of 1934, that was--
                                    ``(I) issued to the person through 
                                an end user distribution described 
                                under section 42(d)(1) of the 
                                Securities Exchange Act of 1934; or
                                    ``(II) acquired by such person in a 
                                transaction that was executed on a 
                                digital commodity exchange; or
                            ``(ii) any unit of a digital asset held by 
                        a person, other than a digital asset issuer, a 
                        related person, or an affiliated person, after 
                        the first date on which each blockchain system 
                        to which the digital asset relates is a 
                        functional network and certified to be a 
                        decentralized network under section 44 of the 
                        Securities Exchange Act of 1934; and
                            ``(iii) any unit of a digital asset held by 
                        a related person or an affiliated person during 
                        any period when any blockchain system to which 
                        the digital asset relates is a functional 
                        network and certified to be a decentralized 
                        network under section 44 of the Securities 
                        Exchange Act of 1934.
                    ``(B) Exclusion.--The term `digital commodity' does 
                not include a permitted payment stablecoin.
            ``(56) Digital commodity broker.--
                    ``(A) In general.--The term `digital commodity 
                broker' means any person who, in a digital commodity 
                cash or spot market, is--
                            ``(i) engaged in soliciting or accepting 
                        orders for the purchase or sale of a unit of a 
                        digital commodity from a customer that is not 
                        an eligible contract participant;
                            ``(ii) engaged in soliciting or accepting 
                        orders for the purchase or sale of a unit of a 
                        digital commodity from a customer on or subject 
                        to the rules of a registered entity; or
                            ``(iii) registered with the Commission as a 
                        digital commodity broker.
                    ``(B) Exceptions.--The term `digital commodity 
                broker' does not include a person solely because the 
                person--
                            ``(i) enters into a digital commodity 
                        transaction the primary purpose of which is to 
                        make, send, receive, or facilitate payments, 
                        whether involving a payment service provider or 
                        on a peer-to-peer basis; or
                            ``(ii) validates a digital commodity 
                        transaction, operates a node, or engages in 
                        similar activity to participate in 
                        facilitating, operating, or securing a 
                        blockchain system.
            ``(57) Digital commodity custodian.--The term `digital 
        commodity custodian' means a bank or trust company in the 
        business of holding, maintaining, or safeguarding digital 
        commodities.
            ``(58) Digital commodity dealer.--
                    ``(A) In general.--The term `digital commodity 
                dealer' means any person who--
                            ``(i) in digital commodity cash or spot 
                        markets--
                                    ``(I) holds itself out as a dealer 
                                in a digital commodity;
                                    ``(II) makes a market in a digital 
                                commodity;
                                    ``(III) regularly enters into 
                                digital commodity transactions with 
                                counterparties as an ordinary course of 
                                business for its own account; or
                                    ``(IV) engages in any activity 
                                causing the person to be commonly known 
                                in the trade as a dealer or market 
                                maker in a digital commodity;
                            ``(ii) regularly enters into any agreement, 
                        contract, or transaction described in 
                        subsection (c)(2)(D)(i) involving a digital 
                        commodity; or
                            ``(iii) is registered with the Commission 
                        as a digital commodity dealer.
                    ``(B) Exception.--The term `digital commodity 
                dealer' does not include a person solely because the 
                person--
                            ``(i) enters into a digital commodity 
                        transaction with an eligible contract 
                        participant;
                            ``(ii) enters into a digital commodity 
                        transaction on or through a registered digital 
                        commodity exchange;
                            ``(iii) enters into a digital commodity 
                        transaction for the person's own account, 
                        either individually or in a fiduciary capacity, 
                        but not as a part of a regular business;
                            ``(iv) enters into a digital commodity 
                        transaction the primary purpose of which is to 
                        make, send, receive, or facilitate payments, 
                        whether involving a payment service provider or 
                        on a peer-to-peer basis; or
                            ``(v) validates a digital commodity 
                        transaction, operates a node, or engages in 
                        similar activity to participate in 
                        facilitating, operating, or securing a 
                        blockchain system.
            ``(59) Digital commodity exchange.--The term `digital 
        commodity exchange' means a trading facility that offers or 
        seeks to offer a cash or spot market in at least 1 digital 
        commodity.
            ``(60) Digital asset-related definitions.--
                    ``(A) Securities act of 1933.--The terms 
                `affiliated person', `blockchain system', 
                `decentralized governance system', `decentralized 
                network', `digital asset', `digital asset issuer', `end 
                user distribution', `functional network', `permitted 
                payment stablecoin', `related person', and `restricted 
                digital asset' have the meaning given the terms, 
                respectively, under section 2(a) of the Securities Act 
                of 1933 (15 U.S.C. 77b(a)).
                    ``(B) Securities exchange act of 1934.--The terms 
                `digital asset broker' and `digital asset dealer' have 
                the meaning given those terms, respectively, under 
                section 3(a) of the Securities Exchange Act of 1934 (15 
                U.S.C. 78c(a)).
            ``(61) Mixed digital asset transaction.--The term `mixed 
        digital asset transaction' has the meaning given that term 
        under section 3(a) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78c(a)).''.

SEC. 103. DEFINITIONS UNDER THIS ACT.

    In this Act:
            (1) Alternative trading system.--The term ``alternative 
        trading system'' has the meaning given that term under section 
        242.300 of title 17, Code of Federal Regulations.
            (2) Definitions under the commodity exchange act.--The 
        terms ``digital commodity'', ``digital commodity broker'', and 
        ``digital commodity exchange'' have the meaning given those 
        terms, respectively, under section 1a of the Commodity Exchange 
        Act (7 U.S.C. 1a).
            (3) Definitions under the securities act of 1933.--The 
        terms ``affiliated person'', ``blockchain'', ``blockchain 
        system'', ``blockchain protocol'', ``decentralized network'', 
        ``digital asset'', ``digital asset issuer'', ``digital asset 
        maturity date'', ``digital asset trading system'', ``end user 
        distribution'', ``functional network'', ``permitted payment 
        stablecoin'', ``restricted digital asset'', ``securities 
        laws'', and ``source code'' have the meaning given those terms, 
        respectively, under section 2(a) of the Securities Act of 1933 
        (15 U.S.C. 77b(a)).
            (4) Definitions under the securities exchange act of 
        1934.--The terms ``digital asset broker'', ``digital asset 
        dealer'', ``digital asset trading system'', ``mixed digital 
        asset transaction'', and ``self-regulatory organization'' have 
        the meaning given those terms, respectively, under section 3(a) 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

SEC. 104. JOINT RULEMAKINGS.

    (a) Definitions.--The Commodity Futures Trading Commission and the 
Securities and Exchange Commission shall, jointly, issue rules to 
further define the following terms:
            (1) The terms ``affiliated person'', ``blockchain'', 
        ``blockchain system'', ``blockchain protocol'', ``decentralized 
        network'', ``decentralized governance system'', ``digital 
        asset'', ``digital asset issuer'', ``digital asset maturity 
        date'', ``end user distribution'', ``functional network'', 
        ``related person'', ``restricted digital asset'', and ``source 
        code'', as defined under section 2(a) of the Securities Act of 
        1933.
            (2) The term ``mixed digital asset transaction'', as 
        defined under section 3(a) of the Securities Exchange Act of 
        1934.
            (3) The term ``digital commodity'', as defined under 
        section 1a of the Commodity Exchange Act.
    (b) Joint Rulemaking for Exchanges.--The Commodity Futures Trading 
Commission and the Securities and Exchange Commission shall, jointly, 
issue rules to exempt persons dually registered with the Commodity 
Futures Trading Commission as a digital commodity exchange and with the 
Securities and Exchange Commission as a digital asset trading system 
from duplicative, conflicting, or unduly burdensome provisions of this 
Act, the securities laws, and the Commodity Exchange Act and the rules 
thereunder, to the extent such exemption would foster the development 
of fair and orderly markets in digital assets, be necessary or 
appropriate in the public interest, and be consistent with the 
protection of investors.
    (c) Joint Rulemaking for Mixed Digital Asset Transactions.--The 
Commodity Futures Trading Commission and the Securities and Exchange 
Commission shall, jointly, issue rules applicable to mixed digital 
asset transactions under this Act and the amendments made by this Act.
    (d) Prohibition.--The Securities Exchange Commission and the 
Commodity Futures Trading Commission shall not issue a rule, a 
regulation, an order, or guidance, or take any other administrative 
action, which would restrict the ability of an individual to use 
hardware or software to facilitate the custody or safekeeping by the 
individual of any digital asset of the individual.

SEC. 105. NOTICE OF INTENT TO REGISTER FOR DIGITAL COMMODITY EXCHANGES, 
              BROKERS, AND DEALERS.

    (a) In General.--
            (1) Notice of intent to register.--Any person may file a 
        notice of intent to register with the Commodity Futures Trading 
        Commission (in this subsection referred to as the 
        ``Commission'') as a--
                    (A) digital commodity exchange, for a person 
                intending to register as a digital commodity exchange 
                under section 5i of the Commodity Exchange Act;
                    (B) digital commodity broker, for a person 
                intending to register as a digital commodity broker 
                under section 4u of such Act; or
                    (C) digital commodity dealer, for a person 
                intending to register as a digital commodity dealer 
                under section 4u of such Act.
            (2) Filing.--A person desiring to file a notice of intent 
        to register under paragraph (1) shall be in compliance with 
        this section if the person submits to the Commission--
                    (A) a statement of the nature of the registrations 
                the filer intends to pursue;
                    (B) the information required by subsections (b) and 
                (c).
    (b) Disclosure of General Information.--A person filing a notice of 
intent to register under subsection (a) shall disclose to the 
Commission the following:
            (1) Information concerning the management of the person, 
        including information describing--
                    (A) the ownership and management of the person;
                    (B) the financial condition of the person;
                    (C) affiliated entities; and
                    (D) potential conflicts of interest.
            (2) Information concerning the operations of the person, 
        including--
                    (A) any rulebook or other customer order fulfilment 
                rules;
                    (B) risk management procedures; and
                    (C) a description of the product listing process.
    (c) Listing Information.--A person filing a notice of intent to 
register under subsection (a) shall provide to the Commission and the 
Securities and Exchange Commission a detailed description of the 
product listing determination made by the person for each asset listed 
or offered for trading by the person.
    (d) Requirements.--A person filing a notice of intent to register 
under subsection (a) shall comply with the following requirements:
            (1) Books and records.--The person shall keep their books 
        and records open to inspection and examination by the 
        Commission.
            (2) Customer disclosures.--The person shall disclose to 
        consumers--
                    (A) information about the material risks and 
                characteristics of the assets listed for trading on the 
                person; and
                    (B) information about the material risks and 
                characteristics of the transactions facilitated by the 
                person.
            (3) Customer assets.--
                    (A) In general.--The person shall--
                            (i) hold customer money, assets, and 
                        property in a manner to minimize the risk of 
                        loss to the customer or unreasonable delay in 
                        customer access to money, assets, and property 
                        of the customer;
                            (ii) treat and deal with all money, assets, 
                        and property, including any rights associated 
                        with any such money, assets, or property, of 
                        any customer received as belonging to the 
                        customer;
                            (iii) segregate all money, assets, and 
                        property received from any customer of the 
                        person from the funds of the person, except 
                        that--
                                    (I) the money, assets, and property 
                                of any customer may be commingled with 
                                that of any other customer, if 
                                separately accounted for; and
                                    (II) the share of the money, 
                                assets, and property, as in the normal 
                                course of business are necessary to 
                                margin, guarantee, secure, transfer, 
                                adjust, or settle a contract of sale of 
                                a commodity asset, may be withdrawn and 
                                applied to do so, including the payment 
                                of commissions, brokerage, interest, 
                                taxes, storage, and other charges 
                                lawfully accruing in connection with 
                                the contract of sale of a digital 
                                commodity.
                    (B) Additional resources.--
                            (i) In general.--This section shall not 
                        prevent or be construed to prevent the person 
                        from adding to the customer money, assets, and 
                        property required to be segregated under 
                        subparagraph (A), additional amounts of money, 
                        assets, or property from the account of the 
                        person as the person determines necessary to 
                        prevent the account of a customer from becoming 
                        under-segregated.
                            (ii) Treatment as customer funds.--Any 
                        money, assets, or property deposited pursuant 
                        to clause (i) shall be considered customer 
                        property within the meaning of this subsection.
    (e) Compliance and Enforcement.--
            (1) In general.--A person who has filed a notice of intent 
        to register under this section and is in compliance with this 
        section shall not be subject to an enforcement action by the 
        Securities and Exchange Commission for--
                    (A) listing or offering a digital asset deemed a 
                security; or
                    (B) failing to register as a national securities 
                exchange, broker, dealer, or clearing agency, for 
                activities related to digital assets deemed a security.
            (2) Noncompliance.--Paragraph (1) shall not apply if, after 
        notice from the Commission and a reasonable opportunity to 
        correct the deficiency, a person who has submitted a notice of 
        intent to register is not in compliance with this section.
            (3) Antifraud and antimanipulation.--Paragraph (1) shall 
        not be construed to limit any antimanipulation, antifraud, or 
        false reporting enforcement authority of the Commission or the 
        Securities and Exchange Commission.
            (4) Delisting.--Paragraph (1) shall not be construed to 
        limit the authority of the Commission or the Securities and 
        Exchange Commission to require a person to delist an asset for 
        trading if the Commission or the Securities and Exchange 
        Commission determines that the listing is inconsistent with the 
        Commodity Exchange Act, the securities laws (including 
        regulations under those laws), or this Act.
    (f) Final Registration.--
            (1) In general.--A person may not file a notice of intent 
        to register with the Commission after the Commission has 
        finalized its rules for the registration of digital commodity 
        exchanges, digital commodity brokers, or digital commodity 
        dealers, as appropriate.
            (2) Transition to final registration.--
                    (A) Ongoing deferral for entities registered with 
                the commission.--Subsection (e)(1) shall continue to 
                apply to a person who has submitted a notice of intent 
                to register while the person is registered with the 
                Commission as a digital commodity exchange, a digital 
                commodity broker, or a digital commodity dealer, as 
                appropriate.
                    (B) End of deferral.--Subsection (e)(1) shall not 
                apply to a person who has submitted a notice of intent 
                to register if--
                            (i) the Commission--
                                    (I) determines that the person has 
                                failed to comply with the requirements 
                                of this section; or
                                    (II) denies the application of the 
                                person to register; or
                            (ii) the digital commodity exchange, 
                        digital commodity broker, or digital commodity 
                        dealer that filed a notice of intent to 
                        register failed to register as such with the 
                        Commission within 180 days after the Commission 
                        finalized the rules of the Commission for the 
                        registration of digital commodity exchanges, 
                        digital commodity brokers, or digital commodity 
                        dealers, as appropriate.
    (g) Liability of the Filer.--It shall be unlawful for any person to 
provide false information in support of a filing under this section if 
the person knowingly or reasonably should have known that the 
information was false.

SEC. 106. NOTICE OF INTENT TO REGISTER FOR DIGITAL ASSET BROKERS, 
              DEALERS, AND TRADING SYSTEMS.

    (a) In General.--
            (1) Notice of intent to register.--Any person may file a 
        notice of intent to register with the Securities and Exchange 
        Commission (in this subsection referred to as the 
        ``Commission'') as a--
                    (A) digital asset trading system, for a person 
                intending to register as a digital asset trading system 
                under section 6(m) of the Securities Exchange Act of 
                1934;
                    (B) digital asset broker, for a person intending to 
                register as a digital asset broker under section 15H of 
                the Securities Exchange Act of 1934; or
                    (C) digital asset dealer, for a person intending to 
                register as a digital asset dealer under section 15H of 
                the Securities Exchange Act of 1934.
            (2) Filing.--A person desiring to file a notice of intent 
        to register under paragraph (1) shall be in compliance with 
        this section if the person submits to the Commission--
                    (A) a statement of the nature of the registrations 
                the filer intends to pursue;
                    (B) the information required by subsections (b) and 
                (c).
    (b) Disclosure of General Information.--A person filing a notice of 
intent to register under subsection (a) shall disclose to the 
Commission the following:
            (1) Information concerning the management of the person, 
        including information describing--
                    (A) the ownership and management of the person;
                    (B) the financial condition of the person;
                    (C) affiliated entities; and
                    (D) potential conflicts of interest.
            (2) Information concerning the operations of the person, 
        including--
                    (A) any rulebook or other customer order fulfilment 
                rules;
                    (B) risk management procedures; and
                    (C) a description of the product listing process.
    (c) Listing Information.--A person filing a notice of intent to 
register under subsection (a) shall provide to the Commission and the 
Commodity Futures Trading Commission a detailed description of the 
product listing determination made by the person for each asset listed 
or offered for trading by the person.
    (d) Requirements.--A person filing a notice of intent to register 
under subsection (a) shall comply with the following requirements:
            (1) Books and records.--The person shall keep their books 
        and records open to inspection and examination by the 
        Commission.
            (2) Customer disclosures.--The person shall disclose to 
        consumers--
                    (A) information about the material risks and 
                characteristics of the assets listed for trading on the 
                person; and
                    (B) information about the material risks and 
                characteristics of the transactions facilitated by the 
                person.
            (3) Customer assets.--
                    (A) In general.--The person shall--
                            (i) hold customer money, assets, and 
                        property in a manner to minimize the risk of 
                        loss to the customer or unreasonable delay in 
                        customer access to money, assets, and property 
                        of the customer;
                            (ii) treat and deal with all money, assets, 
                        and property, including any rights associated 
                        with any such money, assets, or property, of 
                        any customer received as belonging to the 
                        customer;
                            (iii) segregate all money, assets, and 
                        property received from any customer of the 
                        person from the funds of the person, except 
                        that--
                                    (I) the money, assets, and property 
                                of any customer may be commingled with 
                                that of any other customer, if 
                                separately accounted for; and
                                    (II) the share of the money, 
                                assets, and property, as in the normal 
                                course of business are necessary to 
                                margin, guarantee, secure, transfer, 
                                adjust, or settle a contract of sale of 
                                a commodity asset, may be withdrawn and 
                                applied to do so, including the payment 
                                of commissions, brokerage, interest, 
                                taxes, storage, and other charges 
                                lawfully accruing in connection with 
                                the contract of sale of a digital 
                                commodity.
                    (B) Additional resources.--
                            (i) In general.--This section shall not 
                        prevent or be construed to prevent the person 
                        from adding to the customer money, assets, and 
                        property required to be segregated under 
                        subparagraph (A) additional amounts of money, 
                        assets, or property from the account of the 
                        person as the person determines necessary to 
                        prevent the account of a customer from becoming 
                        under-segregated.
                            (ii) Treatment as customer funds.--Any 
                        money, assets, or property deposited pursuant 
                        to clause (i) shall be considered customer 
                        property within the meaning of this subsection.
    (e) Compliance and Enforcement.--
            (1) In general.--A person who has filed a notice of intent 
        to register under this section and is in compliance with this 
        section shall not be subject to an enforcement action by the 
        Commission for--
                    (A) listing or offering a digital asset deemed a 
                security; or
                    (B) failing to register as a national securities 
                exchange, alternative trading system, broker, dealer, 
                or clearing agency, for activities related to digital 
                assets deemed a security.
            (2) Noncompliance.--Paragraph (1) shall not apply if, after 
        notice from the Commission and a reasonable opportunity to 
        correct the deficiency, a person who has submitted a notice of 
        intent to register is not in compliance with this section.
            (3) Antifraud and antimanipulation.--Paragraph (1) shall 
        not be construed to limit any antimanipulation, antifraud, or 
        false reporting enforcement authority of the Commission or the 
        Commodity Futures Trading Commission.
            (4) Delisting.--Paragraph (1) shall not be construed to 
        limit the authority of the Commission or the Commodity Futures 
        Trading Commission to require a person to delist an asset for 
        trading if the Commission or the Commodity Futures Trading 
        Commission determines that the listing is inconsistent with the 
        Commodity Exchange Act, the securities laws (including 
        regulations under those laws), or this Act.
    (f) Final Registration.--
            (1) In general.--A person may not file a notice of intent 
        to register with the Commission after the Commission has 
        finalized its rules for the registration of digital asset 
        brokers, digital asset dealers, and digital asset trading 
        systems, as appropriate.
            (2) Transition to final registration.--
                    (A) Ongoing deferral for entities registered with 
                the commission.--Subsection (e)(1) shall continue to 
                apply to a person who has submitted a notice of intent 
                to register while the person is registered with the 
                Commission as a digital asset broker, digital asset 
                dealer, or digital asset trading system, as 
                appropriate.
                    (B) End of deferral.--Subsection (e)(1) shall not 
                apply to a person who has submitted a notice of intent 
                to register if--
                            (i) the Commission--
                                    (I) determines that the person has 
                                failed to comply with the requirements 
                                of this section; or
                                    (II) denies the application of the 
                                person to register; or
                            (ii) the digital asset broker, digital 
                        asset dealer, or digital asset trading system 
                        that filed a notice of intent to register 
                        failed to register as such with the Commission 
                        within 180 days after the Commission finalized 
                        the rules of the Commission for the 
                        registration of digital asset brokers, digital 
                        asset dealers, and digital asset trading 
                        systems, as appropriate.
    (g) Liability of the Filer.--It shall be unlawful for any person to 
provide false information in support of a filing under this section if 
the person knowingly or reasonably should have known that the 
information was false.

SEC. 107. COMMODITY EXCHANGE ACT SAVINGS PROVISIONS.

    (a) In General.--Nothing in this Act shall affect or apply to, or 
be interpreted to affect or apply to--
            (1) any agreement, contract, or transaction that is subject 
        to regulation under the Commodity Exchange Act as--
                    (A) a contract of sale of a commodity for future 
                delivery or an option on such a contract;
                    (B) a swap;
                    (C) a security futures product;
                    (D) an option authorized under section 4c of such 
                Act;
                    (E) an agreement, contract, or transaction 
                described in section 2(c)(2)(C)(i) of such Act; or
                    (F) a leverage transaction authorized under section 
                19 of such Act; or
            (2) the activities of any person with respect to any such 
        agreement, contract, or transaction.
    (b) Prohibitions on Spot Digital Commodity Entities.--Nothing in 
this Act authorizes, or shall be interpreted to authorize, a digital 
commodity exchange, digital commodity broker, or digital commodity 
dealer to engage in any activities involving any transaction, contract, 
or agreement described in subsection (a)(1), solely by virtue of being 
registered or filing notice of intent to register as a digital 
commodity exchange, digital commodity broker, or digital commodity 
dealer.
    (c) Definitions.--In this section, each term shall have the meaning 
provided in the Commodity Exchange Act or the regulations prescribed 
under such Act.

SEC. 108. INTERNATIONAL HARMONIZATION.

    In order to promote effective and consistent global regulation of 
digital assets, the Commodity Futures Trading Commission and the 
Securities and Exchange Commission, as appropriate--
            (1) shall consult and coordinate with foreign regulatory 
        authorities on the establishment of consistent international 
        standards with respect to the regulation of digital assets, 
        restricted digital assets, and digital commodities; and
            (2) may agree to such information-sharing arrangements as 
        may be deemed to be necessary or appropriate in the public 
        interest or for the protection of investors, customers, and 
        users of digital assets.

SEC. 109. IMPLEMENTATION.

    (a) Global Rulemaking Timeframe.--Unless otherwise provided in this 
Act or an amendment made by this Act, the Commodity Futures Trading 
Commission and the Securities and Exchange Commission, or both, shall 
individually, and jointly where required, promulgate rules and 
regulations required of each Commission under this Act or an amendment 
made by this Act not later than 360 days after the date of enactment of 
this Act.
    (b) Rules and Registration Before Final Effective Dates.--
            (1) In general.--In order to prepare for the implementation 
        of this Act, the Commodity Futures Trading Commission and the 
        Securities and Exchange Commission may, before any effective 
        date provided in this Act--
                    (A) promulgate rules, regulations, or orders 
                permitted or required by this Act;
                    (B) conduct studies and prepare reports and 
                recommendations required by this Act;
                    (C) register persons under this Act; and
                    (D) exempt persons, agreements, contracts, or 
                transactions from provisions of this Act, under the 
                terms contained in this Act.
            (2) Limitation on effectiveness.--An action by the 
        Commodity Futures Trading Commission or the Securities and 
        Exchange Commission under paragraph (1) shall not become 
        effective before the effective date otherwise applicable to the 
        action under this Act.

                   TITLE II--DIGITAL ASSET EXEMPTIONS

SEC. 201. EXEMPTED TRANSACTIONS IN DIGITAL ASSETS.

    (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.) 
is amended--
            (1) in section 4(a), by adding at the end the following:
            ``(8) transactions involving the offer or sale of units of 
        a digital asset by a digital asset issuer, if--
                    ``(A) the aggregate amount of units of the digital 
                asset sold by the digital asset issuer in reliance on 
                the exemption provided under this paragraph, during the 
                12-month period preceding the date of such transaction, 
                including the amount sold in such transaction, is not 
                more than $75,000,000 (as such amount is annually 
                adjusted by the Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers published 
                by the Bureau of Labor Statistics of the Department of 
                Labor);
                    ``(B) with respect to a transaction involving the 
                purchase of units of a digital asset by a person who is 
                not an accredited investor, the aggregate amount of all 
                units of digital assets purchased by such person during 
                the 12-month period preceding the date of such 
                transaction, including the unit of a digital asset 
                purchased in such transaction, does not exceed the 
                greater of--
                            ``(i) 10 percent of the person's annual 
                        income or joint income with that person's 
                        spouse or spousal equivalent; or
                            ``(ii) 10 percent of the person's net worth 
                        or joint net worth with the person's spouse or 
                        spousal equivalent;
                    ``(C) after the completion of the transaction, the 
                purchaser does not own more than 10 percent of the 
                total amount of the units of the digital asset sold in 
                reliance on the exemption under this paragraph;
                    ``(D) the transaction does not involve the offer or 
                sale of any digital asset not offered as part of an 
                investment contract;
                    ``(E) the transaction does not involve the offer or 
                sale of a unit of a digital asset by a digital asset 
                issuer that--
                            ``(i) is not organized under the laws of a 
                        State, a territory of the United States or the 
                        District of Columbia;
                            ``(ii) is a development stage company that 
                        either--
                                    ``(I) has no specific business plan 
                                or purpose; or
                                    ``(II) has indicated that the 
                                business plan of the company is to 
                                merge with or acquire an unidentified 
                                company;
                            ``(iii) is an investment company, as 
                        defined in section 3 of the Investment Company 
                        Act of 1940 (15 U.S.C. 80a-3), or is excluded 
                        from the definition of investment company by 
                        section 3(b) or section 3(c) of that Act (15 
                        U.S.C. 80a-3(b) or 80a-3(c));
                            ``(iv) is issuing fractional undivided 
                        interests in oil or gas rights, or a similar 
                        interest in other mineral rights;
                            ``(v) is, or has been, subject to any order 
                        of the Commission entered pursuant to section 
                        12(j) of the Securities Exchange Act of 1934 
                        during the 5-year period before the filing of 
                        the offering statement; or
                            ``(vi) is disqualified pursuant to section 
                        230.262 of title 17, Code of Federal 
                        Regulations; and
                    ``(F) the issuer meets the requirements of section 
                4B(a).''; and
            (2) by inserting after section 4A the following:

``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL ASSET 
              TRANSACTIONS.

    ``(a) Requirements for Digital Asset Issuers.--
            ``(1) Information required in statement.--A digital asset 
        issuer offering or selling a unit of digital asset in reliance 
        on section 4(a)(8) shall file with the Commission a statement 
        containing the following information:
                    ``(A) The name, legal status (including the 
                jurisdiction in which the issuer is organized and the 
                date of organization), and website of the digital asset 
                issuer.
                    ``(B) A certification that the digital asset issuer 
                meets the relevant requirements described under section 
                4(a)(8).
                    ``(C) An overview of the material aspects of the 
                offering.
                    ``(D) A description of the purpose and intended use 
                of the offering proceeds.
                    ``(E) A description of the plan of distribution of 
                any unit of a digital asset that is to be offered.
                    ``(F) A description of the material risks 
                surrounding ownership of a unit of a digital asset.
                    ``(G) A description of exempt offerings conducted 
                within the past three years by the digital asset 
                issuer.
                    ``(H) A description of the digital asset issuer and 
                the current number of employees of the digital asset 
                issuer.
                    ``(I) A description of any material transactions or 
                relationships between the digital asset issuer and 
                affiliated persons.
                    ``(J) A description of exempt offerings conducted 
                within the past three years.
            ``(2) Information required for purchasers.--A digital asset 
        issuer shall disclose the information described under section 
        43 of the Securities Exchange Act of 1934 on a freely 
        accessible public website.
            ``(3) Ongoing disclosure requirements.--A digital asset 
        issuer that has filed a statement under paragraph (1) to offer 
        and sell a unit of a digital asset in reliance on section 
        4(a)(8) shall file the following with the Commission:
                    ``(A) Annual reports.--An annual report that 
                includes any material changes to the information 
                described under paragraph (2) for the current fiscal 
                year and for any fiscal year thereafter, unless the 
                issuer is no longer obligated to file such annual 
                report pursuant to paragraph (4).
                    ``(B) Semiannual reports.--Along with each annual 
                report required under subparagraph (A), and separately 
                six months thereafter, a report containing--
                            ``(i) an updated description of the current 
                        state and timeline for the development of the 
                        blockchain system to which the digital asset 
                        relates, showing how and when the blockchain 
                        system intends or intended to be considered a 
                        functional network and a decentralized network;
                            ``(ii) the amount of money raised by the 
                        digital asset issuer in reliance on section 
                        4(a)(8), how much of that money has been spent, 
                        and the general categories and amounts on which 
                        that money has been spent; and
                            ``(iii) any material changes to the 
                        information in the most recent annual report.
                    ``(C) Current reports.--A current report shall be 
                filed with the Commission reflecting any material 
                changes to the information previously reported to the 
                Commission by the digital asset issuer.
            ``(4) Termination of reporting requirements.--
                    ``(A) In general.--The ongoing reporting 
                requirements under paragraph (3) shall not apply to a 
                digital asset issuer 180 days after the end of the 
                covered fiscal year.
                    ``(B) Covered fiscal year defined.--In this 
                paragraph, the term `covered fiscal year' means the 
                first fiscal year of an issuer in which the blockchain 
                system to which the digital asset relates is a 
                functional network and certified to be a decentralized 
                network under section 44 of the Securities Exchange Act 
                of 1934.
    ``(b) Requirements for Intermediaries.--
            ``(1) In general.--A person acting as an intermediary in a 
        transaction involving the offer or sale of a unit of a digital 
        asset in reliance on section 4(a)(8) shall--
                    ``(A) register with the Commission as a broker 
                under section 15(b) of the Securities Exchange Act of 
                1934 (15 U.S.C. 78o(b)); and
                    ``(B) be a member of a national securities 
                association registered under section 15A of the 
                Securities Exchange Act of 1934 (15 U.S.C. 78o-3).
            ``(2) Purchaser qualification.--
                    ``(A) In general.--Each time, before accepting any 
                commitment (including any additional commitment from 
                the same person), an intermediary or digital asset 
                issuer shall have a reasonable basis for believing that 
                the purchaser satisfies the requirements of section 
                4(a)(8).
                    ``(B) Reliance on purchaser's representations.--For 
                purposes of subparagraph (A), an intermediary or 
                digital asset issuer may rely on a purchaser's 
                representations concerning the purchaser's annual 
                income and net worth and the amount of the purchaser's 
                other investments made, unless the intermediary or 
                digital asset issuer has reason to question the 
                reliability of the representation.
                    ``(C) Reliance on intermediary.--For purposes of 
                determining whether a transaction meets the 
                requirements described under subparagraph (A) through 
                (C) of section 4(a)(8), a digital asset issuer may rely 
                on the efforts of an intermediary.
    ``(c) Additional Provisions.--
            ``(1) Acceptance of written offers; sales.--After an issuer 
        files a statement under paragraph (1) to offer and sell a 
        digital asset in reliance on section 4(a)(8)--
                    ``(A) written offers of the digital asset may be 
                made; and
                    ``(B) the issuer may sell the digital assets in 
                reliance on section 4(a)(8), if such sales meet all 
                other requirements.
            ``(2) Solicitation of interest.--
                    ``(A) In general.--At any time before the filing of 
                a statement under paragraph (1), a digital asset issuer 
                may communicate orally or in writing to determine 
                whether there is any interest in a contemplated 
                offering. Such communications are deemed to be an offer 
                of a unit of a digital asset for sale for purposes of 
                the antifraud provisions of the Federal securities 
                laws. No solicitation or acceptance of money or other 
                consideration, nor of any commitment, binding or 
                otherwise, from any person is permitted until the 
                statement is filed.
                    ``(B) Conditions.--In any communication described 
                under subparagraph (A), the digital asset issuer 
                shall--
                            ``(i) state that no money or other 
                        consideration is being solicited, and if sent 
                        in response, will not be accepted;
                            ``(ii) state that no offer to buy a unit of 
                        a digital asset can be accepted and no part of 
                        the purchase price can be received until the 
                        statement is filed and then only through an 
                        intermediary; and
                            ``(iii) state that a person's indication of 
                        interest involves no obligation or commitment 
                        of any kind.
                    ``(C) Indications of interest.--Any written 
                communication described under subparagraph (A) may 
                include a means by which a person may indicate to the 
                digital asset issuer that such person is interested in 
                a potential offering. A digital asset issuer may 
                require a name, address, telephone number, or email 
                address in any response form included with a 
                communication described under subparagraph (A).
            ``(3) Disqualification provisions.--The Commission shall 
        issue rules to apply the disqualification provisions under 
        section 230.262 of title 17, Code of Federal Regulations, to 
        the exemption provided under section 4(a)(8).
            ``(4) Digital assets deemed restricted digital asset.--A 
        unit of a digital asset acquired directly or indirectly from 
        the digital asset issuer in reliance on the exemption provided 
        under section 4(a)(8) is deemed a restricted digital asset.''.
    (b) Additional Exemptions.--
            (1) Certain registration requirements.--Section 12(g)(6) of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is 
        amended by striking ``under section 4(6)'' and inserting 
        ``under section 4(a)(6) or 4(a)(8)''.
            (2) Exemption from state regulation.--Section 18(b)(4) of 
        the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
                    (A) in section (B), by striking ``section 4(4)'' 
                and inserting ``section 4(a)(4)'';
                    (B) in section (C), by striking ``section 4(6)'' 
                and inserting ``section 4(a)(6)'';
                    (C) in subparagraph (F)--
                            (i) by striking ``section 4(2)'' each place 
                        such term appears and inserting ``section 
                        4(a)(2)'';
                            (ii) by striking ``or'' at the end;
                    (D) in subparagraph (G), by striking the period and 
                inserting ``; or''; and
                    (E) by adding at the end the following:
                    ``(H) section 4(a)(8).''.

SEC. 202. REQUIREMENTS TO TRANSACT IN CERTAIN DIGITAL ASSETS.

    Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.) is amended by adding at the end the following:

``SEC. 42. REQUIREMENTS TO TRANSACT IN CERTAIN DIGITAL ASSETS.

    ``(a) Transactions in Certain Restricted Digital Assets.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, subject to paragraph (2), a restricted digital asset may 
        be offered and sold on an alternative trading system by any 
        person other than a digital asset issuer if, at the time of 
        such offer or sale, any blockchain system to which the 
        restricted digital asset relates is a functional network and 
        the information described in section 43 has been certified and 
        made publicly available for any blockchain system to which the 
        restricted digital asset relates.
            ``(2) Additional rules for related and affiliated 
        persons.--A restricted digital asset owned by a related person 
        or an affiliated person may only be offered or sold after 12 
        months after the later of--
                    ``(A) the date on which such restricted digital 
                asset was acquired; or
                    ``(B) the digital asset maturity date.
    ``(b) Transactions in Certain Digital Commodities.--
            ``(1) In general.--Subject to paragraph (2), a digital 
        commodity may be offered and sold by any person other than a 
        digital asset issuer.
            ``(2) Rules for related and affiliated persons.--A digital 
        commodity may only be offered or sold by a related person or an 
        affiliated person if--
                    ``(A) the holder of the digital commodity owned the 
                digital commodity while it was a restricted digital 
                asset for 12 months after the later of--
                            ``(i) the date on which such restricted 
                        digital asset was acquired; or
                            ``(ii) the digital asset maturity date;
                    ``(B) any blockchain system to which the digital 
                commodity relates is certified to be a decentralized 
                network under section 44; and
                    ``(C) the digital commodity is offered or sold on 
                or subject to the rules of a digital commodity exchange 
                registered under section 5i of the Commodity Exchange 
                Act.
            ``(3) Not a security.--
                    ``(A) In general.--Except as provided under 
                subparagraph (B), for purposes of the securities laws, 
                a transaction in a digital commodity made in compliance 
                with paragraph (1) or (2) shall not be a transaction in 
                a security.
                    ``(B) Exception.--Subparagraph (A) does not apply 
                to a transaction in a digital commodity if the 
                transaction--
                            ``(i) is a mixed digital asset transaction; 
                        or
                            ``(ii) is made pursuant to an investment 
                        contract or in conjunction with any other 
                        security.
    ``(c) Sales Restrictions for Affiliated Persons.--A digital asset 
may be offered or sold by an affiliated person under subsection (a) or 
(b) if--
            ``(1) the aggregate amount of such digital assets sold in 
        any 3-month period by the affiliated person is not greater than 
        one percent of the digital assets then outstanding; or
            ``(2) the affiliated person promptly, following the 
        placement of an order to sell one percent of the digital assets 
        then outstanding during any 3-month period, reports the sale 
        to--
                    ``(A) the Commodity Futures Trading Commission, in 
                the case of an order to sell a digital commodity on or 
                subject to the rules of a digital commodity exchange; 
                or
                    ``(B) the Securities and Exchange Commission, in 
                the case of a sell order for a restricted digital asset 
                placed with an alternative trading system.
    ``(d) Treatment of Certain End User Distributions Under the 
Securities Laws.--
            ``(1) In general.--With respect to a digital asset, an end 
        user distribution is described under this paragraph if--
                    ``(A) each blockchain system to which such digital 
                asset relates is a functional network; and
                    ``(B) with respect to the digital asset and each 
                blockchain system to which such digital asset relates, 
                the information described in section 43 has been 
                certified and made publicly available.
            ``(2) Not a security.--For purposes of the securities laws, 
        an end user distribution described under paragraph (1) shall 
        not be a transaction in a security.
            ``(3) Exemption.--Section 5 of the Securities Act of 1933 
        (15 U.S.C. 77e) shall not apply to an end user distribution 
        described under paragraph (1) or a transaction in a unit of 
        digital asset issued in such a distribution.''.

SEC. 203. ENHANCED DISCLOSURE REQUIREMENTS.

    Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.), as amended by section 202, is further amended by adding at the 
end the following:

``SEC. 43. ENHANCED DISCLOSURE REQUIREMENTS WITH RESPECT TO DIGITAL 
              ASSETS.

    ``(a) Disclosure Information.--With respect to a digital asset and 
any blockchain system to which the digital asset relates, the 
information described under this section is as follows:
            ``(1) Source code.--The source code for any blockchain 
        system to which the digital asset relates.
            ``(2) Transaction history.--A description of the steps 
        necessary to independently access, search, and verify the 
        transaction history of any blockchain system to which the 
        digital asset relates.
            ``(3) Digital asset economics.--A description of the 
        purpose of any blockchain system to which the digital asset 
        relates and the operation of any such blockchain system, 
        including--
                    ``(A) information explaining the launch and supply 
                process, including the number of digital assets to be 
                issued in an initial allocation, the total number of 
                digital assets to be created, the release schedule for 
                the digital assets, and the total number of digital 
                assets then outstanding;
                    ``(B) information on any applicable consensus 
                mechanism or process for validating transactions, 
                method of generating or mining digital assets, and any 
                process for burning or destroying digital assets on the 
                blockchain system;
                    ``(C) an explanation of governance mechanisms for 
                implementing changes to the blockchain system or 
                forming consensus among holders of such digital assets; 
                and
                    ``(D) sufficient information for a third party to 
                create a tool for verifying the transaction history of 
                the digital asset.
            ``(4) Plan of development.--The current state and timeline 
        for the development of any blockchain system to which the 
        digital asset relates, showing how and when the blockchain 
        system intends or intended to be considered a functional 
        network and decentralized network.
            ``(5) Development disclosures.--A list of all persons who 
        are related persons or affiliated persons who have been issued 
        a unit of a digital asset by a digital asset issuer or have a 
        right to a unit of a digital asset from a digital asset issuer.
            ``(6) Risk factor disclosures.--Where appropriate, provide 
        under the caption `Risk Factors' a description of the material 
        risks surrounding ownership of a unit of a digital asset. This 
        discussion shall be organized logically with relevant headings 
        and each risk factor shall be set forth under a subcaption that 
        adequately describes the risk.
    ``(b) Certification.--With respect to a digital asset and any 
blockchain system to which the digital asset relates, the information 
required to be made available under this section has been certified if 
the digital asset issuer, an affiliated person, or a decentralized 
governance system (or, if no digital asset issuer, affiliated person, 
or decentralized governance system are identifiable, an alternative 
trading system or digital commodity exchange) certifies on a quarterly 
basis to the Securities and Exchange Commission and Commodity Futures 
Trading Commission that the information is true and correct.''.

SEC. 204. CERTIFICATION OF CERTAIN DIGITAL ASSETS.

    Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.), as amended by section 203, is further amended by adding at the 
end the following:

``SEC. 44. CERTIFICATION OF CERTAIN DIGITAL ASSETS.

    ``(a) Certification.--Any person may certify to the Securities and 
Exchange Commission that the blockchain system to which a digital asset 
relates is a decentralized network.
    ``(b) Filing Requirements.--A certification described under 
subsection (a) shall be filed with the Commission, and include--
            ``(1) information regarding the person making the 
        certification;
            ``(2) a description of the blockchain system and the 
        digital asset which relates to such blockchain system, 
        including--
                    ``(A) the operation of the blockchain system;
                    ``(B) the functionality of the related digital 
                asset;
                    ``(C) any decentralized governance system which 
                relates to the blockchain system; and
                    ``(D) the process to develop consensus or agreement 
                within such decentralized governance system;
            ``(3) a description of the development of the blockchain 
        system and the digital asset which relates to the blockchain 
        system, including--
                    ``(A) a history of the development of the 
                blockchain system and the digital asset which relates 
                to such blockchain system;
                    ``(B) a description of the issuance process for the 
                digital asset which relates to the blockchain system;
                    ``(C) information identifying the digital asset 
                issuer of the digital asset which relates to the 
                blockchain system; and
                    ``(D) a list of any affiliated person related to 
                the digital asset issuer;
            ``(4) an analysis of the factors on which such person based 
        the certification that the blockchain system is a decentralized 
        network, including--
                    ``(A) an explanation of the protections and 
                prohibitions available during the previous 12 months 
                against any one person being able to--
                            ``(i) control or materially alter the 
                        blockchain system;
                            ``(ii) exclude any other person from using 
                        or participating on the blockchain system; and
                            ``(iii) exclude any other person from 
                        participating in a decentralized governance 
                        system;
                    ``(B) information regarding the beneficial 
                ownership of the digital asset which relates to such 
                blockchain system and any the distribution of voting 
                power in any decentralized governance system during the 
                previous 12 months;
                    ``(C) information regarding the history of upgrades 
                to the source code for such blockchain system during 
                the previous 3 months, including--
                            ``(i) a description of any consensus or 
                        agreement process utilized to process or 
                        approve changes to the source code;
                            ``(ii) a list of any material changes to 
                        the source code, the purpose and effect of the 
                        changes, and the contributor of the changes, if 
                        known; and
                            ``(iii) any changes to the source code made 
                        by the digital asset issuer, a related person, 
                        or an affiliated person;
                    ``(D) information regarding any activities 
                conducted to market the digital asset which relates to 
                the blockchain system during the previous 3 months by 
                the digital asset issuer or an affiliated person of the 
                digital asset issuer; and
                    ``(E) information regarding any issuance of a unit 
                of the digital asset which relates to such blockchain 
                system during the previous 12 months;
            ``(5) with respect to a blockchain system for which a 
        certification has previously been rebutted or withdrawn under 
        this section, specific information relating to the analysis 
        provided in subsection (f)(2) or (g)(3), as applicable, in 
        connection with such rebuttal or withdrawal.
    ``(c) Rebuttable Presumption.--The Commission may rebut a 
certification described under subsection (a) with respect to a 
blockchain system if the Commission, within 30 days of receiving such 
certification, determines that the blockchain system is not a 
decentralized network.
    ``(d) Certification Review.--
            ``(1) In general.--Any blockchain system that relates to a 
        digital asset for which a certification has been made under 
        subsection (a) shall be considered a decentralized network 30 
        days after the date on which the Commission receives a 
        certification under subsection (a), unless the Commission 
        notifies the person who made the certification within such time 
        that the Commission is staying the certification due to--
                    ``(A) an inadequate explanation by the person 
                making the certification; or
                    ``(B) any novel or complex issues which require 
                additional time to consider.
            ``(2) Public notice.--The Commission shall make the 
        following available to the public and provide a copy to the 
        Commodity Futures Trading Commission:
                    ``(A) Each certification received under subsection 
                (a).
                    ``(B) Each stay of the Commission under this 
                section, and the reasons therefore.
                    ``(C) Any response from a person making a 
                certification under subsection (a) to a stay of the 
                certification by the Commission.
            ``(3) Consolidation.--The Commission may consolidate and 
        treat as one submission multiple certifications made under 
        subsection (a) for the same blockchain system which relates to 
        a digital asset which are received during the review period 
        provided under this subsection.
    ``(e) Stay of Certification.--
            ``(1) In general.--A notification by the Commission 
        pursuant to subsection (d)(1) shall stay the certification once 
        for up to an additional 90 days from the date of the 
        notification.
            ``(2) Public comment period.--Before the end of the 30-day 
        period described under subsection (d)(1), the Commission may 
        begin a public comment period of at least 30 days in 
        conjunction with a stay under this section.
    ``(f) Disposition of Certification.--
            ``(1) In general.--A certification made under subsection 
        (a) shall--
                    ``(A) become effective--
                            ``(i) upon the publication of a 
                        notification from the Commission to the person 
                        who made the certification that the Commission 
                        does not object to the certification; or
                            ``(ii) at the expiration of the 
                        certification review period; and
                    ``(B) not become effective upon the publication of 
                a notification from the Commission to the person who 
                made the certification that the Commission has rebutted 
                the certification.
            ``(2) Detailed analysis included with rebuttal.--The 
        Commission shall include, with each publication of a 
        notification of rebuttal described under paragraph (1)(B), a 
        detailed analysis of the factors on which the decision was 
        based.
    ``(g) Withdrawal of Certification.--
            ``(1) Determination by a digital commodity exchange.--With 
        respect to a certification of a blockchain system that becomes 
        effective pursuant to subsection (f), if a digital commodity 
        exchange determines that the blockchain system may not be a 
        decentralized network, the digital commodity exchange shall 
        notify the Commodity Futures Trading Commission of such 
        determination.
            ``(2) Withdrawal process.--With respect to each 
        notification received under paragraph (1), the Commodity 
        Futures Trading Commission shall initiate a withdrawal process 
        under which the Commodity Futures Trading Commission shall--
                    ``(A) publish a notice announcing the proposed 
                withdrawal;
                    ``(B) provide a 30-day comment period with respect 
                to the proposed withdrawal; and
                    ``(C) after the end of the 30-day comment required 
                under subparagraph (B), publish either--
                            ``(i) a notification of withdrawal of the 
                        applicable certification; or
                            ``(ii) a notice that the Commodity Futures 
                        Trading Commission is not withdrawing the 
                        certification.
            ``(3) Detailed analysis required.--The Commodity Futures 
        Trading Commission shall include, with each publication of a 
        notification of withdrawal described under paragraph (2)(C)(i), 
        a detailed analysis of the factors on which the decision was 
        based.
    ``(h) Recertification.--With respect to a blockchain system for 
which a certification has been rebutted or withdrawn under this 
section, no person may make a certification under subsection (a) with 
respect to such blockchain system during the 90-day period beginning on 
the date of such rebuttal or withdrawal.
    ``(i) Appeal of Rebuttal or Withdrawal.--
            ``(1) In general.--If a certification is rebutted or 
        withdrawn under this section, the person making such 
        certification may appeal the decision to the United States 
        Court of Appeals for the District of Columbia, not later than 
        60 days after the notice of rebuttal or withdrawal is made.
            ``(2) Review.--In an appeal under paragraph (1), the court 
        shall have de novo review of the determination to rebut or 
        withdraw the certification.
    ``(j) Liability for Providing False Information.--It shall be 
unlawful for any person to provide false information in support of a 
certification under this section if such person knowingly or reasonably 
should have known such information was false.''.

SEC. 205. EFFECTIVE DATE.

    Unless otherwise provided in this title, this title and the 
amendments made by this title shall take effect 360 days after the date 
of enactment of this Act, except that, to the extent a provision of 
this title requires a rulemaking, the provision shall take effect on 
the later of--
            (1) 360 days after the date of enactment of this Act; or
            (2) 60 days after the publication in the Federal Register 
        of the final rule implementing the provision.

    TITLE III--REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES AT THE 
                   SECURITIES AND EXCHANGE COMMISSION

SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND OTHER DIGITAL ASSETS.

    (a) Securities Act of 1933.--Section 2(a)(1) of the Securities Act 
of 1933 (15 U.S.C. 77b(a)(1)) is amended by adding at the end the 
following: ``The term does not include a digital commodity or permitted 
payment stablecoin.''.
    (b) Securities Exchange Act of 1934.--Section 3(a) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--
            (1) in paragraph (1), by adding at the end the following: 
        ``The term `exchange' does not include a digital asset trading 
        system, blockchain protocol, or any person or group of persons 
        solely because of their development of a blockchain 
        protocol.'';
            (2) in paragraph (2), by adding at the end the following: 
        ``A digital asset trading system is not a `facility' of an 
        exchange.'';
            (3) in paragraph (4)(A), by inserting ``, other than 
        restricted digital assets,'' after ``securities'';
            (4) in paragraph (5)(A), by inserting ``restricted digital 
        assets or'' after ``not including'';
            (5) in paragraph (26) by inserting ``(other than a notice-
        registered digital asset clearing agency)'' after ``or 
        registered clearing agency'';
            (6) in paragraph (28) by inserting ``(other than a notice-
        registered digital asset clearing agency)'' after ``registered 
        clearing agency'';
            (7) in paragraph (10), by adding at the end the following: 
        ``Subject to subsection (i), the term does not include a 
        digital commodity or permitted payment stablecoin.'';
            (8) by redesignating the second paragraph (80) (relating to 
        funding portals) as paragraph (81); and
            (9) by adding at the end the following:
            ``(81) Bank secrecy act.--The term `Bank Secrecy Act' 
        means--
                    ``(A) section 21 of the Federal Deposit Insurance 
                Act (12 U.S.C. 1829b);
                    ``(B) chapter 2 of title I of Public Law 91-508 (12 
                U.S.C. 1951 et seq.); and
                    ``(C) subchapter II of chapter 53 of title 31, 
                United States Code.
            ``(82) Digital asset broker.--The term `digital asset 
        broker'--
                    ``(A) means any person engaged in the business of 
                effecting transactions in restricted digital assets for 
                the account of others; and
                    ``(B) does not include a blockchain protocol or a 
                person or group of persons solely because of their 
                development of a blockchain protocol.
            ``(83) Digital asset dealer.--The term `digital asset 
        dealer'--
                    ``(A) means any person engaged in the business of 
                buying and selling digital assets for such person's own 
                account through a broker or otherwise; and
                    ``(B) does not include--
                            ``(i) a person that buys or sells digital 
                        assets for such person's own account, either 
                        individually or in a fiduciary capacity, but 
                        not as a part of a regular business; or
                            ``(ii) a blockchain protocol or a person or 
                        group of persons solely because of their 
                        development of a blockchain protocol.
            ``(84) Digital asset trading system.--The term `digital 
        asset trading system'--
                    ``(A) means any organization, association, person, 
                or group of persons, whether incorporated or 
                unincorporated, that constitutes, maintains, or 
                provides a market place or facilities for bringing 
                together purchasers and sellers of restricted digital 
                assets or for otherwise performing with respect to 
                digital assets the functions commonly performed by a 
                stock exchange within the meaning of section 240.3b-16 
                of title 17, Code of Federal Regulations, as in effect 
                on the date of enactment of this paragraph; and
                    ``(B) does not include a blockchain protocol or a 
                person or group of persons solely because of their 
                development of a blockchain protocol.
            ``(85) Mixed digital asset transaction.--The term `mixed 
        digital asset transaction' means an agreement, contract, or 
        transaction involving a restricted digital asset and a digital 
        commodity.
            ``(86) Notice-registered digital asset clearing agency.--
        The term `notice-registered digital asset clearing agency' 
        means a clearing agency that has registered with the Commission 
        pursuant to section 17A(b)(9).
            ``(87) Additional digital asset-related terms.--
                    ``(A) Securities act of 1933.--The terms 
                `affiliated person', `blockchain system', 
                `decentralized governance system', `decentralized 
                network', `digital asset', `digital asset issuer', 
                `digital asset maturity date', `end user distribution', 
                `functional network', `mixed digital asset 
                transaction', `permitted payment stablecoin', `related 
                person', `restricted digital asset', and `source code' 
                have the meaning given those terms, respectively, under 
                section 2(a) of the Securities Act of 1933 (15 U.S.C. 
                77b(a)).
                    ``(B) Commodity exchange act.--The terms `digital 
                commodity', `digital commodity broker', `digital 
                commodity dealer', and `digital commodity exchange' 
                have the meaning given those terms, respectively, under 
                section 1a of the Commodity Exchange Act (7 U.S.C. 
                1a).''.
    (c) Investment Advisers Act of 1940.--Section 202(a) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-2) is amended--
            (1) in paragraph (18), by adding at the end the following: 
        ``The term does not include a digital commodity or permitted 
        payment stablecoin.'';
            (2) by redesignating the second paragraph (29) (relating to 
        commodity pools) as paragraph (31);
            (3) by adding at the end, the following:
            ``(32) Digital asset-related terms.--The terms `digital 
        commodity' and `permitted payment stablecoin' have the meaning 
        given those terms, respectively, under section 2(a) of the 
        Securities Act of 1933 (15 U.S.C. 77b(a)).''.
    (d) Investment Company Act of 1940.--Section 2(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2) is amended--
            (1) in paragraph (36), by adding at the end the following: 
        ``The term does not include a digital commodity or permitted 
        payment stablecoin.''; and
            (2) by adding at the end the following:
            ``(55) Digital asset-related terms.--The terms `digital 
        commodity' and `permitted payment stablecoin' have the meaning 
        given those terms, respectively, under section 2(a) of the 
        Securities Act of 1933 (15 U.S.C. 77b(a)).''.

SEC. 302. ANTIFRAUD AUTHORITY OVER PERMITTED PAYMENT STABLECOINS.

    Section 10 of the Securities Exchange Act of 1934 (15 U.S.C. 78j) 
is amended--
            (1) by moving subsection (c) so as to appear after 
        subsection (b);
            (2) by designating the undesignated matter at the end of 
        that section as subsection (d); and
            (3) by adding at the end the following:
    ``(e)(1) Rules promulgated under subsection (b) that prohibit 
fraud, manipulation, or insider trading (but not rules imposing or 
specifying reporting or recordkeeping requirements, procedures, or 
standards as prophylactic measures against fraud, manipulation, or 
insider trading), and judicial precedents decided under subsection (b) 
and rules promulgated thereunder that prohibit fraud, manipulation, or 
insider trading, shall apply to permitted payment stablecoins with 
respect to those circumstances in which the permitted payment 
stablecoins are brokered, traded, or custodied by a broker, dealer, 
digital asset broker, or digital asset dealer or through an alternative 
trading system or digital asset trading platform to the same extent as 
they apply to securities.
    ``(2) Judicial precedents decided under section 17(a) of the 
Securities Act of 1933 and sections 9, 15, 16, 20, and 21A of this 
title, and judicial precedents decided under applicable rules 
promulgated under such sections, shall apply to permitted payment 
stablecoins with respect to those circumstances in which the permitted 
payment stablecoins are brokered, traded, or custodied by a digital 
asset broker, digital asset dealer, or digital asset trading platform 
to the same extent as they apply to securities.
    ``(3) Nothing in this subsection may be construed to provide the 
Commission authority to make any rule, regulation, requirement, or 
obligation on a permitted payment stablecoin issuer regarding the 
operations of a permitted payment stablecoin issuer or a permitted 
payment stablecoin, including requirements or obligations regarding--
            ``(A) design;
            ``(B) structure;
            ``(C) issuance;
            ``(D) redemption;
            ``(E) financial resources;
            ``(F) collateral; or
            ``(G) any other aspect of the operation of a permitted 
        payment stablecoin issuer or permitted payment stablecoin.''.

SEC. 303. REGISTRATION OF DIGITAL ASSET TRADING SYSTEMS.

    Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 
amended by adding at the end the following:
    ``(m) Digital Asset Trading System.--
            ``(1) In general.--It shall be unlawful for any digital 
        asset trading system to make use of the mails or any means or 
        instrumentality of interstate commerce within or subject to the 
        jurisdiction of the United States to effect any transaction in 
        a digital asset, unless such digital asset trading system is 
        registered with the Commission.
            ``(2) Application.--A person desiring to register as a 
        digital asset trading system shall submit to the Commission an 
        application in such form and containing such information as the 
        Commission may require for the purpose of making the 
        determinations required for approval.
            ``(3) Exemptions.--A digital asset trading system that 
        offers or seeks to offer at least one digital asset shall not 
        be required to register under this section (and subparagraph 
        (A) shall not apply to such digital asset trading system) if 
        the trading system satisfies any of the exemptions set forth in 
        section 240.3b-16(b) of title 17, Code of Federal 
        Regulations.''.

SEC. 304. REQUIREMENTS FOR DIGITAL ASSET TRADING SYSTEMS.

    Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.) is amended by inserting after section 6 the following:

``SEC. 6A. REQUIREMENTS FOR DIGITAL ASSET TRADING SYSTEMS.

    ``(a) Holding of Customer Assets.--
            ``(1) In general.--Subject to paragraph (2), a digital 
        asset trading system, in its capacity as such, may not hold 
        custody of customer money, assets, or property.
            ``(2) Custody in other capacity.--Nothing in this Act shall 
        prohibit a person registered as a digital asset trading system 
        from holding custody of customer money, assets, or property in 
        any other permitted capacity, including as a digital asset 
        broker or digital asset dealer, in compliance with the 
        requirements of section 15H.
    ``(b) Rulemaking.--The Commission shall prescribe rules for digital 
asset trading systems relating to the following:
            ``(1) Notice.--Notice to the Commission of the initial 
        operation of a digital asset trading system or any material 
        change to the operation of the digital asset trading system.
            ``(2) Order display.--The thresholds at which a digital 
        asset trading system is required to display the orders of the 
        digital asset trading system, and the manner of such display.
            ``(3) Fair access.--The thresholds at which a digital asset 
        trading system is required to have policies regarding providing 
        fair access to the digital asset trading system.
            ``(4) Capacity, integrity, and security of automated 
        systems.--Policies and procedures reasonably designed to ensure 
        the capacity, integrity, and security of the digital asset 
        trading system, taking into account the particular nature of 
        digital asset trading systems.
            ``(5) Examinations, inspections, and investigations.--The 
        examination and inspection of the premises, systems, and 
        records of the digital asset trading system by the Commission 
        or by a self-regulatory organization of which such digital 
        asset trading system is a member.
            ``(6) Recordkeeping.--The making, keeping current, and 
        preservation of records related to trading activity on the 
        digital asset trading system.
            ``(7) Reporting.--The reporting of transactions in digital 
        assets that occur through the digital asset trading system.
            ``(8) Procedures.--The establishment of adequate written 
        safeguards and written procedures to protect confidential 
        trading information.
    ``(c) Name Requirement.--A digital asset trading system may not use 
the word `exchange' in the name of the digital asset trading system, 
unless the digital asset trading system--
            ``(1) is operated by a registered national securities 
        exchange; and
            ``(2) is clearly indicated as being provided outside of the 
        system's capacity as a national securities exchange.
    ``(d) Treatment Under the Bank Secrecy Act.--A digital asset 
trading system shall be treated as a financial institution for purposes 
of the Bank Secrecy Act.''.

SEC. 305. REGISTRATION OF DIGITAL ASSET BROKERS AND DIGITAL ASSET 
              DEALERS.

    The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by inserting after section 15G the following:

``SEC. 15H. REGISTRATION OF DIGITAL ASSET BROKERS AND DIGITAL ASSET 
              DEALERS.

    ``(a) Registration.--
            ``(1) In general.--It shall be unlawful for any digital 
        asset broker or digital asset dealer (other than a natural 
        person associated with a digital asset broker or digital asset 
        dealer, and other than such a digital asset broker or digital 
        asset dealer whose business is exclusively intrastate and who 
        does not make use of any facility of a digital asset trading 
        platform) to make use of the mails or any means or 
        instrumentality of interstate commerce to effect any 
        transactions in, or to induce or attempt to induce the purchase 
        or sale of, any digital asset unless such digital asset broker 
        or digital asset dealer is registered in accordance with this 
        section.
            ``(2) Application.--A person desiring to register as a 
        digital asset broker or digital asset dealer shall submit to 
        the Commission an application in such form and containing such 
        information as the Commission may require for the purpose of 
        making the determinations required for approval.
    ``(b) National Securities Association Membership.--
            ``(1) In general.--A digital asset broker or digital asset 
        dealer may not register or maintain registration under this 
        section unless such digital asset broker or digital asset 
        dealer is a member of a national securities association 
        registered under section 15A.
            ``(2) Exception.--A digital asset broker or digital asset 
        dealer may register under this section without obtaining 
        membership in a national securities association until the end 
        of the 360-day period beginning on the date the first national 
        securities association adopts rules to admit digital asset 
        brokers or digital asset dealers as members.
    ``(c) Additional Registrations With the Commodity Futures Trading 
Commission.--A registered digital asset broker or digital asset dealer 
shall be permitted to maintain any other registration with the 
Commodity Futures Trading Commission relating to the other activities 
of the registered digital asset broker or registered digital asset 
dealer, including as a digital commodity broker or digital commodity 
dealer, to list or trade contracts of sale for digital commodities.''.

SEC. 306. REQUIREMENTS OF DIGITAL ASSET BROKERS AND DIGITAL ASSET 
              DEALERS.

    Section 15H of the Securities Exchange Act of 1934, as added by 
section 205, is amended by adding at the end the following:
    ``(d) Antifraud.--No digital asset broker or digital asset dealer 
shall make use of the mails or any means or instrumentality of 
interstate commerce to effect any transaction in, or to induce or 
attempt to induce the purchase or sale of, any digital asset that is 
not a digital commodity by means of any manipulative, deceptive, or 
other fraudulent device or contrivance.
    ``(e) Holding of Customer Assets.--
            ``(1) In general.--A digital asset broker or digital asset 
        dealer shall hold customer money, assets, and property in a 
        manner to minimize the risk of loss to the customer or 
        unreasonable delay in the access to the money, assets, and 
        property of the customer.
            ``(2) Rulemaking.--Not later than 180 days after the date 
        of enactment of this section, the Commission shall issue rules 
        to provide that a registered digital asset broker or digital 
        asset dealer will be considered to satisfy the requirements of 
        paragraph (1), with respect to digital assets, so long as the 
        digital asset broker or digital asset dealer--
                    ``(A) holds such digital asset at a bank that--
                            ``(i) is recognized by the appropriate 
                        Federal banking agency or State bank supervisor 
                        (as such terms are defined, respectively, in 
                        section 3 of the Federal Deposit Insurance Act 
                        (12 U.S.C. 1813)) as having custody over such 
                        assets;
                            ``(ii) delivers the digital asset to the 
                        digital asset broker or digital asset dealer 
                        without requiring the payment of money or 
                        value; and
                            ``(iii) has acknowledged in writing that 
                        the digital asset in the custody or control of 
                        the bank is free of charge, lien, or claim of 
                        any kind in favor of such bank or any person 
                        claiming through the bank;
                    ``(B) establishes, maintains, and enforces written 
                policies, procedures, and controls reasonably designed 
                to demonstrate that the digital asset broker or digital 
                asset dealer--
                            ``(i) has control over the digital asset 
                        that the digital asset broker or digital asset 
                        dealer holds in custody to protect against the 
                        theft, loss, or unauthorized use of the private 
                        keys necessary to access and transfer such 
                        digital asset;
                            ``(ii) has identified the steps that will 
                        be taken in the wake of certain events that 
                        could affect the custody of the digital assets 
                        by the digital asset broker or digital asset 
                        dealer;
                            ``(iii) can comply with a court-ordered 
                        freeze or seizure; and
                            ``(iv) has established arrangements to 
                        allow for the transfer of the digital asset 
                        held by such digital asset broker or digital 
                        asset dealer to another digital asset broker or 
                        digital asset dealer, a trustee, receiver, 
                        liquidator, or person performing a similar 
                        function, or to another appropriate person, in 
                        the event such digital asset broker or digital 
                        asset dealer can no longer continue as a going 
                        concern and self-liquidates or is subject to a 
                        formal bankruptcy, receivership, liquidation, 
                        or similar proceeding; or
                    ``(C) complies with such other requirements as the 
                Commission may permit.
            ``(3) Segregation of funds.--
                    ``(A) In general.--A digital asset broker or 
                digital asset dealer shall treat and deal with all 
                money, assets, and property held for a customer of the 
                digital asset broker or digital asset dealer, or that 
                accrues to a customer as a result of trading in digital 
                assets, as belonging to the customer.
                    ``(B) Commingling prohibited.--Money, assets, and 
                property of a customer described in subparagraph (A) 
                shall be separately accounted for and shall not be 
                commingled with the funds of the digital asset broker 
                or digital asset dealer or be used to margin, secure, 
                or guarantee any trades of any person other than the 
                customer of the digital asset broker or digital asset 
                dealer for whom the same are held.
            ``(4) Exceptions.--
                    ``(A) Use of funds.--
                            ``(i) In general.--Notwithstanding 
                        paragraph (3), money, assets, and property of 
                        customers of a digital asset broker or digital 
                        asset dealer described in paragraph (3) may be 
                        maintained and deposited in the same account or 
                        accounts with any bank, trust company, digital 
                        asset broker, or digital asset dealer, if the 
                        money, assets, and property remain segregated 
                        from the money, assets, and property of the 
                        digital asset broker or digital asset dealer.
                            ``(ii) Withdrawal.--Notwithstanding 
                        paragraph (3), such share of the money, assets, 
                        and property described in paragraph (3) as in 
                        the normal course of business shall be 
                        necessary to transfer, adjust, or settle a 
                        digital asset transaction pursuant to a 
                        customer's instruction (standing or otherwise) 
                        may be withdrawn and applied to such purposes, 
                        including the withdrawal and payment of 
                        commissions, brokerage, interest, taxes, 
                        storage, and other charges lawfully accruing in 
                        connection with a digital asset transaction.
                            ``(iii) Commission action.--In accordance 
                        with such terms and conditions as the 
                        Commission may prescribe by rule, regulation, 
                        or order, any money, assets, or property of a 
                        customer of a digital asset broker or digital 
                        asset dealer described in paragraph (3) may be 
                        commingled and deposited as provided in this 
                        section with any other money, assets, or 
                        property received by the digital asset broker 
                        or digital asset dealer and required by the 
                        Commission to be separately accounted for and 
                        treated and dealt with as belonging to the 
                        customer of the digital asset broker or digital 
                        asset dealer.
                    ``(B) Participation in blockchain services.--
                            ``(i) In general.--A customer shall have 
                        the right to waive the restrictions in 
                        paragraph (3) for any unit of a digital asset, 
                        by affirmatively electing, in writing to the 
                        digital asset broker or digital asset dealer, 
                        to waive the restrictions.
                            ``(ii) Use of funds.--Customer digital 
                        assets removed from segregation under clause 
                        (i) may be pooled and used by the digital asset 
                        broker or digital asset dealer or its designee 
                        to provide a blockchain service for a 
                        blockchain system to which the unit of the 
                        digital asset removed from segregation under 
                        clause (i) relates.
                            ``(iii) Limitations.--The Commission may, 
                        by rule, establish notice and disclosure 
                        requirements, and any other limitations and 
                        rules related to the waiving of any 
                        restrictions under this subparagraph that are 
                        reasonably necessary to protect customers.
                            ``(iv) Blockchain service defined.--In this 
                        subparagraph, the term `blockchain service' 
                        means any activity relating to validating 
                        transactions on a blockchain system, providing 
                        security for a blockchain system, or other 
                        similar activity required for the ongoing 
                        operation of a blockchain system.
            ``(5) Further limitations.--No person shall treat or deal 
        with a digital asset held on behalf of any customer pursuant to 
        paragraph (3) by utilizing any unit of such digital asset to 
        participate in a blockchain service (as defined in paragraph 
        (4)(B)(iv)) or a decentralized governance system associated 
        with the digital asset or the blockchain system to which the 
        digital asset relates in any manner other than that which is 
        expressly directed by the customer from which such unit of a 
        digital asset was received.
    ``(f) Capital Requirements.--
            ``(1) In general.--Each registered digital asset broker and 
        registered digital asset dealer shall meet such minimum capital 
        requirements as the Commission may prescribe to ensure that the 
        digital asset broker or digital asset dealer is able to--
                    ``(A) conduct an orderly wind-down of the 
                activities of the digital asset broker or digital asset 
                dealer; and
                    ``(B) fulfill the customer obligations of the 
                digital asset broker or digital asset dealer.
            ``(2) Calculation.--For purposes of any Commission rule or 
        order adopted under this section or any interpretation thereof 
        regulating a digital asset broker or digital asset dealer's 
        financial responsibility obligations and capital requirements, 
        a registered digital asset broker or digital asset dealer that 
        maintains control of customer digital assets in a manner that 
        satisfies the rules issued by the Commission under subsection 
        (e)(2) shall not be required to include the value of such 
        digital assets as assets or liabilities of the digital asset 
        broker or digital asset dealer.
            ``(3) Coordination of capital requirements.--
                    ``(A) Commission rule.--The Commission shall, by 
                rule, provide appropriate offsets to any applicable 
                capital requirement for a person with multiple 
                registrations, including as a broker, dealer, digital 
                asset broker, or digital asset dealer.
                    ``(B) Joint rule.--The Commission and the Commodity 
                Futures Trading Commission shall jointly, by rule, 
                provide appropriate offsets to any applicable capital 
                requirement for a person with multiple registrations, 
                including as a digital asset broker, digital asset 
                dealer, digital asset trading system, digital commodity 
                broker, digital commodity dealer, or digital commodity 
                exchange.
    ``(g) Reporting and Recordkeeping.--Each registered digital asset 
broker and digital asset dealer--
            ``(1) shall make such reports as are required by the 
        Commission by rule or regulation regarding the transactions, 
        positions, and financial condition of the digital asset broker 
        or digital asset dealer;
            ``(2) shall keep books and records in such form and manner 
        and for such period as may be prescribed by the Commission by 
        rule or regulation; and
            ``(3) shall keep the books and records open to inspection 
        and examination by any representative of the Commission.
    ``(h) Treatment Under the Bank Secrecy Act.--A digital asset broker 
and a digital asset dealer shall be treated as a financial institution 
for purposes of the Bank Secrecy Act.''.

SEC. 307. RULES RELATED TO CONFLICTS OF INTEREST.

    The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by inserting after section 10D the following:

``SEC. 10E. CONFLICTS OF INTEREST RELATED TO DIGITAL ASSETS.

    ``Each registered digital asset trading system, registered digital 
asset broker, registered digital asset dealer, and notice-registered 
digital asset clearing agency shall establish, maintain, and enforce 
written policies and procedures reasonably designed, taking into 
consideration the nature of such person's business, to mitigate any 
conflicts of interest and transactions or arrangements with 
affiliates.''.

SEC. 308. TREATMENT OF CERTAIN DIGITAL ASSETS IN CONNECTION WITH 
              FEDERALLY REGULATED INTERMEDIARIES.

    Section 18(b) of the Securities Act of 1933 (15 U.S.C. 77r(b)) is 
amended by adding at the end the following:
            ``(5) Exemption for certain digital assets in connection 
        with federally regulated intermediaries.--A digital asset is a 
        covered security with respect to a transaction that is exempt 
        from registration under this Act when--
                    ``(A) it is brokered, traded, custodied, or cleared 
                by a digital asset broker or digital asset dealer 
                registered under section 15H of the Securities Exchange 
                Act of 1934; or
                    ``(B) traded through a digital asset trading system 
                (as defined under section 242.301 of title 17, Code of 
                Federal Regulations).''.

SEC. 309. DUAL REGISTRATION.

    Any person that is registered with the Securities and Exchange 
Commission as a digital asset broker, digital asset dealer, or digital 
asset trading system may register with the Commodity Futures Trading 
Commission, as appropriate, as--
            (1) a digital commodity exchange under section 5i of the 
        Commodity Exchange Act (7 U.S.C. 1 et seq.), as added by this 
        Act, if the person offers or seeks to offer a cash or spot 
        market in at least one digital commodity;
            (2) a digital commodity broker under section 4u of the 
        Commodity Exchange Act, as added by this Act, if the person is 
        engaged in soliciting or accepting orders in digital commodity 
        cash or spot markets; or
            (3) a digital commodity dealer under section 4u of the 
        Commodity Exchange Act, as added by this Act, if the person 
        holds themself out as a dealer in digital commodity cash or 
        spot markets.

SEC. 310. EXCLUSION FOR ANCILLARY ACTIVITIES.

    The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by inserting after section 15G the following:

``SEC. 15H. EXCLUSION FOR ANCILLARY ACTIVITIES.

    ``(a) In General.--Notwithstanding any other provision of this Act, 
a person shall not be subject to this Act and the regulations 
thereunder solely based on the person undertaking any ancillary 
activities.
    ``(b) Exceptions.--Subsection (a) shall not be construed to apply 
to the antimanipulation and antifraud authorities of the Commission.
    ``(c) Ancillary Activities Defined.--In this section, the term 
`ancillary activities' means any of the following activities related to 
the operation of a blockchain system:
            ``(1) Compiling network transactions, operating a pool, 
        relaying, searching, sequencing, validating, or acting in a 
        similar capacity with respect to a restricted digital asset.
            ``(2) Providing computational work, operating a node, or 
        procuring, offering, or utilizing network bandwidth, or other 
        similar incidental services with respect to a restricted 
        digital asset.
            ``(3) Providing a user interface that enables a user to 
        read and access data about a blockchain system, send messages, 
        or otherwise interact with a blockchain system.
            ``(4) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing a blockchain system.
            ``(5) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing software or systems that 
        create or deploy a hardware or software wallet or other system 
        facilitating an individual user's own personal ability to keep, 
        safeguard, or custody the user's restricted digital assets or 
        related private keys.''.

SEC. 311. REGISTRATION AND REQUIREMENTS FOR NOTICE-REGISTERED DIGITAL 
              ASSET CLEARING AGENCIES.

    Section 17A(b) of the Securities Exchange Act of 1934 (15 U.S.C. 
78q-1(b)) is amended--
            (1) in subsection (1), by inserting ``(other than a notice-
        registered digital asset clearing agency)'' after ``unlawful 
        for any clearing agency''; and
            (2) by adding at the end, the following:
            ``(9) Registration and requirements for notice-registered 
        digital asset clearing agency.--
                    ``(A) Eligibility.--A person may register with the 
                Commission as a notice-registered digital asset 
                clearing agency if the person--
                            ``(i) is otherwise registered as a digital 
                        asset broker or digital asset dealer with the 
                        Commission and is engaging in a business 
                        involving digital assets that are not digital 
                        commodities, in compliance with Commission 
                        rules pursuant to section 15H(e); or
                            ``(ii) is a bank engaging in a business 
                        involving digital assets, in compliance with 
                        applicable banking law and regulation relating 
                        to the custody and safekeeping of such assets.
                    ``(B) Registration.--A person may register with the 
                Commission as a notice-registered digital asset 
                clearing agency by providing the Commission with notice 
                of the activities of the person or planned activities 
                in such form as the Commission determines appropriate.
                    ``(C) Rulemaking.--The Commission may adopt rules, 
                which may not take effect until at least 360 days 
                following the date of enactment of this paragraph, with 
                regard to the activities of notice-registered digital 
                asset clearing agencies, taking into account the nature 
                of digital assets.''.

SEC. 312. TREATMENT OF CUSTODY ACTIVITIES BY BANKING INSTITUTIONS.

    (a) Treatment of Custody Activities.--The appropriate Federal 
banking agency (as defined under section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813)), the National Credit Union 
Administration (in the case of a credit union), and the Securities and 
Exchange Commission may not require a depository institution, national 
bank, Federal credit union, State credit union, or trust company, or 
any affiliate thereof--
            (1) to include assets held in custody as a liability on any 
        financial statement or balance sheet, including payment 
        stablecoin custody or safekeeping activities;
            (2) to hold additional regulatory capital against assets in 
        custody or safekeeping, except as necessary to mitigate against 
        operational risks inherent with the custody or safekeeping 
        services, as determined by--
                    (A) the appropriate Federal banking agency;
                    (B) the National Credit Union Administration (in 
                the case of a credit union);
                    (C) a State bank supervisor (as defined under 
                section 3 of the Federal Deposit Insurance Act (12 
                U.S.C. 1813)); or
                    (D) a State credit union supervisor (as defined 
                under section 6003 of the Anti-Money Laundering Act of 
                2020); or
            (3) to recognize a liability for any obligations related to 
        activities or services performed for digital assets that the 
        entity does not own if that liability would exceed the expense 
        recognized in the income statement as a result of the 
        corresponding obligation.
    (b) Definitions.--In this section:
            (1) Depository institution.--The terms ``depository 
        institution'' has the meaning given that term under section 3 
        of the Federal Deposit Insurance Act.
            (2) Credit union terms.--The terms ``Federal credit union'' 
        and ``State credit union'' have the meaning given those terms, 
        respectively, under section 101 of the Federal Credit Union 
        Act.

    TITLE IV--REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES AT THE 
                  COMMODITY FUTURES TRADING COMMISSION

SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.

    (a) In General.--Section 2(a)(1) of the Commodity Exchange Act (7 
U.S.C. 2(a)(1)) is amended by adding at the end the following:
                    ``(J) Except as expressly provided in this Act, 
                nothing in the Financial Innovation and Technology for 
                the 21st Century Act shall affect or apply to, or be 
                interpreted to affect or apply to--
                            ``(i) any agreement, contract, or 
                        transaction that is subject to regulation under 
                        this Act as--
                                    ``(I) a contract of sale of a 
                                commodity for future delivery or an 
                                option on such a contract;
                                    ``(II) a swap;
                                    ``(III) a security futures product;
                                    ``(IV) an option authorized under 
                                section 4c of this Act;
                                    ``(V) an agreement, contract, or 
                                transaction described in subparagraph 
                                (C)(i) or (D)(i) of subsection (c)(2) 
                                of this section; or
                                    ``(VI) a leverage transaction 
                                authorized under section 19 of this 
                                Act; or
                            ``(ii) the activities of any person with 
                        respect to any such an agreement, contract, or 
                        transaction.''.
    (b) In General.--Section 2(c)(1) of the Commodity Exchange Act (7 
U.S.C. 2(c)(1)) is amended--
            (1) in subparagraph (F), by striking ``or'' at the end;
            (2) in subparagraph (G), by striking the period and 
        inserting ``; or''; and
            (3) by adding at the end the following:
                    ``(H) permitted payment stablecoins.''.
    (c) In General.--Section 2(c)(2) of the Commodity Exchange Act (7 
U.S.C. 2(c)(2)) is amended--
            (1) in subparagraph (D)(ii)--
                    (A) in subclause (III), in the matter that precedes 
                item (aa), by inserting ``of a commodity, other than a 
                digital commodity,'' before ``that''; and
                    (B) by redesignating subclauses (IV) and (V) as 
                subclauses (V) and (VI) and inserting after subclause 
                (III) the following:
                                    ``(IV) a contract of sale of a 
                                digital commodity that--
                                            ``(aa) results in actual 
                                        delivery, as the Commission 
                                        shall by rule determine, within 
                                        2 days or such other period as 
                                        the Commission may determine by 
                                        rule or regulation based upon 
                                        the typical commercial practice 
                                        in cash or spot markets for the 
                                        digital commodity involved; or
                                            ``(bb) is executed with a 
                                        registered digital commodity 
                                        dealer--

                                                    ``(AA) directly;

                                                    ``(BB) through a 
                                                registered digital 
                                                commodity broker; or

                                                    ``(CC) on or 
                                                subject to the rules of 
                                                a registered digital 
                                                commodity exchange;''; 
                                                and

            (2) by adding at the end the following:
    ``(F) Commission Jurisdiction With Respect to Digital Commodity 
Transactions.--
            ``(i) In general.--Subject to sections 6d and 12(e), the 
        Commission shall have exclusive jurisdiction with respect to 
        any account, agreement, contract, or transaction involving a 
        contract of sale of a digital commodity in interstate commerce, 
        including in a digital commodity cash or spot market, that is 
        offered, solicited, traded, facilitated, executed, cleared, 
        reported, or otherwise dealt in--
                    ``(I) on or subject to the rules of a registered 
                entity or an entity that is required to be registered 
                as a registered entity; or
                    ``(II) by any other entity registered, or required 
                to be registered, with the Commission.
            ``(ii) Limitations.--Clause (i) shall not apply with 
        respect to custodial or depository activities for a digital 
        commodity, or custodial or depository activities for any 
        promise or right to a future digital commodity, of an entity 
        regulated by an appropriate Federal banking agency or a State 
        bank supervisor (within the meaning of section 3 of the Federal 
        Deposit Insurance Act).
            ``(iii) Mixed digital asset transactions.--
                    ``(I) In general.--Clause (i) shall not apply to a 
                mixed digital asset transaction.
                    ``(II) Oversight of mixed digital asset 
                transactions.--
                            ``(aa) On a cftc regulated platform.--A 
                        mixed digital asset transaction that occurs on 
                        or subject to the rules of a registered entity 
                        or by any other entity registered with the 
                        Commission--
                                    ``(AA) shall not occur except on or 
                                subject to the rules of a registered 
                                entity or by any other entity that is 
                                dually registered with the Commission 
                                and the Securities and Exchange 
                                Commission; and
                                    ``(BB) shall be subject to the 
                                jurisdiction of the Commission and the 
                                Securities and Exchange Commission.
                            ``(bb) Off exchange.--A mixed digital asset 
                        transaction that does not occur on or subject 
                        to the rules of a registered entity or by any 
                        other entity registered with the Commission 
                        shall be subject to the exclusive jurisdiction 
                        of the Securities and Exchange Commission.
                    ``(III) Reports on mixed digital asset 
                transactions.--A digital asset issuer, related person, 
                affiliated person, or other person registered with the 
                Securities and Exchange Commission that engages in a 
                mixed digital asset transaction, shall, on request, 
                open to inspection and examination by the Commodity 
                Futures Trading Commission all books and records 
                relating to the mixed digital asset transaction, 
                subject to the confidentiality and disclosure 
                requirements of section 8.
    ``(G) Agreements, Contracts, and Transactions in Stablecoins.--
            ``(i) Treatment of permitted payment stablecoins on 
        commission-registered entities.--Except as provided in clauses 
        (ii) and (iii), the Commission shall only have jurisdiction 
        over a cash or spot agreement, contract, or transaction in a 
        permitted payment stablecoin that is offered, offered to enter 
        into, entered into, executed, confirmed the execution of, 
        solicited, or accepted--
                    ``(I) on or subject to the rules of a registered 
                entity; or
                    ``(II) by any other entity registered by the 
                Commission.
            ``(ii) Permitted payment stablecoin transaction rules.--
        This Act shall only apply to a transaction described in clause 
        (i) for the purposes of regulating the offer, execution, 
        solicitation, or acceptance of a cash or spot permitted payment 
        stablecoin transaction on a registered entity or other entity 
        registered by the Commission with respect to requirements 
        imposed with respect to--
                    ``(I) recordkeeping;
                    ``(II) custody;
                    ``(III) segregation;
                    ``(IV) reporting;
                    ``(V) trading procedures and trade processing 
                requirements;
                    ``(VI) information sharing;
                    ``(VII) conflicts of interest;
                    ``(VIII) antifraud, antimanipulation, or false 
                reporting; or
                    ``(IX) any other transaction level requirement 
                imposed on the registered entity or other entity 
                registered by the Commission that the Commission by 
                rule determines would foster the development of fair 
                and orderly cash or spot markets in digital 
                commodities, be necessary or appropriate in the public 
                interest, and be consistent with the protection of 
                customers.
            ``(iii) No authority over permitted payment stablecoins.--
        Notwithstanding clause (ii), the Commission shall not make a 
        rule or regulation, impose a requirement or obligation on a 
        registered entity or other entity registered by the Commission, 
        or impose a requirement or obligation on a permitted payment 
        stablecoin issuer, regarding the operation of a permitted 
        payment stablecoin issuer or a permitted payment stablecoin, 
        including a requirement or obligation regarding--
                    ``(I) design;
                    ``(II) structure;
                    ``(III) issuance;
                    ``(IV) redemption;
                    ``(V) financial resources;
                    ``(VI) collateral; or
                    ``(VII) any other aspect of such an operation or 
                such a stablecoin.''.
    (d) Conforming Amendment.--Section 2(a)(1)(A) of such Act (7 U.S.C. 
2(a)(1)(A)) is amended in the 1st sentence by inserting ``subsection 
(c)(2)(F) of this section or'' before ``section 19''.

SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE QUALIFIED 
              DIGITAL COMMODITY CUSTODIANS.

    Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended--
            (1) in subsection (a)(2)--
                    (A) in the 1st proviso, by striking ``any bank or 
                trust company'' and inserting ``any bank, trust 
                company, or qualified digital commodity custodian''; 
                and
                    (B) by inserting ``: Provided further, That any 
                such property that is a digital commodity shall be held 
                in a qualified digital commodity custodian'' before the 
                period at the end; and
            (2) in subsection (f)(3)(A)(i), by striking ``any bank or 
        trust company'' and inserting ``any bank, trust company, or 
        qualified digital commodity custodian''.

SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL COMMODITIES.

    Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is 
amended--
            (1) in subsection (a), by striking ``5(d) and 5b(c)(2)'' 
        and inserting ``5(d), 5b(c)(2), and 5i(c)'';
            (2) in subsection (b)--
                    (A) in each of paragraphs (1) and (2), by inserting 
                ``digital commodity exchange,'' before ``derivatives''; 
                and
                    (B) in paragraph (3), by inserting ``digital 
                commodity exchange,'' before ``derivatives'' each place 
                it appears;
            (3) in subsection (c)--
                    (A) in paragraph (2), by inserting ``or 
                participants'' before ``(in'';
                    (B) in paragraph (4)(B), by striking ``1a(10)'' and 
                inserting ``1a(9)''; and
                    (C) in paragraph (5), by adding at the end the 
                following:
                    ``(D) Special rules for digital commodity 
                contracts.--In certifying any new rule or rule 
                amendment, or listing any new contract or instrument, 
                in connection with a contract of sale of a commodity 
                for future delivery, option, swap, or other agreement, 
                contract, or transaction, that is based on or 
                references a digital commodity, a registered entity 
                shall make or rely on a certification under subsection 
                (d) for the digital commodity.''; and
            (4) by inserting after subsection (c) the following:
    ``(d) Certifications for Digital Commodity Trading.--
            ``(1) In general.--Notwithstanding subsection (c), for the 
        purposes of listing or offering a digital commodity for trading 
        in a digital commodity cash or spot market, an eligible entity 
        shall issue a written certification that the digital commodity 
        meets the requirements of this Act (including regulations 
        thereunder).
            ``(2) Contents of the certification.--
                    ``(A) In general.--In making a written 
                certification under this paragraph, the eligible entity 
                shall furnish to the Commission--
                            ``(i) an analysis of how the digital 
                        commodity meets the requirements of section 
                        5i(c)(3);
                            ``(ii) information about the digital 
                        commodity regarding--
                                    ``(I) its purpose and use;
                                    ``(II) its unit creation or release 
                                process;
                                    ``(III) its consensus mechanism;
                                    ``(IV) its governance structure;
                                    ``(V) its participation and 
                                distribution; and
                                    ``(VI) its current and proposed 
                                functionality; and
                            ``(iii) any other information, analysis, or 
                        documentation the Commission may, by rule, 
                        require.
                    ``(B) Reliance on prior disclosures.--In making a 
                certification under this subsection, an eligible entity 
                may rely on the records and disclosures of any relevant 
                person registered with the Securities and Exchange 
                Commission or other State or Federal agency.
            ``(3) Modifications.--
                    ``(A) In general.--An eligible entity shall modify 
                a certification made under paragraph (1) to--
                            ``(i) account for significant changes in 
                        any information provided to the Commission 
                        under paragraph (2)(A)(ii); or
                            ``(ii) permit or restrict trading in units 
                        of a digital commodity asset held by a related 
                        person or an affiliated person.
                    ``(B) Recertification.--Modifications required by 
                this subsection shall be subject to the same 
                disapproval and review process as a new certification 
                under paragraphs (4) and (5).
            ``(4) Disapproval.--
                    ``(A) In general.--The written certification 
                described in paragraph (1) shall become effective 
                unless the Commission finds that the digital asset does 
                not meet the requirements of this Act or the rules and 
                regulations thereunder.
                    ``(B) Analysis required.--The Commission shall 
                include, with any findings referred to in subparagraph 
                (A), a detailed analysis of the factors on which the 
                decision was based.
                    ``(C) Public findings.--The Commission shall make 
                public any disapproval decision, and any related 
                findings and analysis, made under this paragraph.
            ``(5) Review.--
                    ``(A) In general.--Unless the Commission makes a 
                disapproval decision under paragraph (4), the written 
                certification described in paragraph (1) shall become 
                effective, pursuant to the certification by the 
                eligible entity and notice of the certification to the 
                public (in a manner determined by the Commission) on 
                the date that is--
                            ``(i) 20 business days after the date the 
                        Commission receives the certification (or such 
                        shorter period as determined by the Commission 
                        by rule or regulation), in the case of a 
                        digital commodity that has not been certified 
                        under this section or for which a certification 
                        is being modified under paragraph (3); or
                            ``(ii) 2 business days after the date the 
                        Commission receives the certification (or such 
                        shorter period as determined by the Commission 
                        by rule or regulation) for any digital 
                        commodity that has been certified under this 
                        section.
                    ``(B) Extensions.--The time for consideration under 
                subparagraph (A) may be extended through notice to the 
                eligible entity that there are novel or complex issues 
                that require additional time to analyze, that the 
                explanation by the submitting eligible entity is 
                inadequate, or of a potential inconsistency with this 
                Act--
                            ``(i) once, for 30 business days, through 
                        written notice to the eligible entity by the 
                        Chairman; and
                            ``(ii) once, for an additional 30 business 
                        days, through written notice to the digital 
                        commodity exchange from the Commission that 
                        includes a description of any deficiencies with 
                        the certification, including any--
                                    ``(I) novel or complex issues which 
                                require additional time to analyze;
                                    ``(II) missing information or 
                                inadequate explanations; or
                                    ``(III) potential inconsistencies 
                                with this Act.
            ``(6) Certification required.--Notwithstanding any other 
        requirement of this Act, a registered entity or other entity 
        registered with the Commission shall not list for trading, 
        accept for clearing, offer to enter into, enter into, execute, 
        confirm the execution of, or conduct any office or business 
        anywhere in the United States, its territories or possessions, 
        for the purpose of soliciting, or accepting any order for, or 
        otherwise dealing in, any transaction in, or in connection 
        with, a digital asset, unless a certification has been made 
        under this section for the digital asset.
            ``(7) Eligible entity defined.--In this subsection, the 
        term `eligible entity' means a registered entity or group of 
        registered entities acting jointly.''.

SEC. 404. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.

    The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by 
inserting after section 5h the following:

``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.

    ``(a) In General.--
            ``(1) Registration.--
                    ``(A) In general.--A trading facility that offers 
                or seeks to offer a cash or spot market in at least 1 
                digital commodity shall register with the Commission as 
                a digital commodity exchange.
                    ``(B) Application.--A person desiring to register 
                as a digital commodity exchange shall submit to the 
                Commission an application in such form and containing 
                such information as the Commission may require for the 
                purpose of making the determinations required for 
                approval.
                    ``(C) Exemptions.--A trading facility that offers 
                or seeks to offer a cash or spot market in at least 1 
                digital commodity shall not be required to register 
                under this section if the trading facility--
                            ``(i) permits no more than a de minimis 
                        amount of trading activity; or
                            ``(ii) serves only customers in a single 
                        State or territory.
            ``(2) Additional registrations.--
                    ``(A) With the commission.--
                            ``(i) In general.--A registered digital 
                        commodity exchange may also register as--
                                    ``(I) a designated contract market; 
                                or
                                    ``(II) a swap execution facility.
                            ``(ii) Rules.--For an entity with multiple 
                        registrations under clause (i), the 
                        Commission--
                                    ``(I) shall prescribe rules to 
                                exempt the entity from duplicative, 
                                conflicting, or unduly burdensome 
                                provisions of this Act and the rules 
                                under this Act, to the extent such an 
                                exemption would foster the development 
                                of fair and orderly cash or spot 
                                markets in digital commodities, be 
                                necessary or appropriate in the public 
                                interest, and be consistent with the 
                                protection of customers; and
                                    ``(II) may, after an analysis of 
                                the risks and benefits, prescribe rules 
                                to provide for portfolio margining, as 
                                may be necessary to protect market 
                                participants, promote fair and 
                                equitable trading in digital commodity 
                                markets, and promote responsible 
                                economic or financial innovation.
                    ``(B) With the securities and exchange 
                commission.--A registered digital commodity exchange 
                may register with the Securities and Exchange 
                Commission as a digital asset trading system to list or 
                trade contracts of sale for digital assets deemed 
                securities.
                    ``(C) With a registered futures association.--
                            ``(i) In general.--A registered digital 
                        commodity exchange shall also be a member of a 
                        registered futures association and comply with 
                        rules related to such activity, if the 
                        registered digital commodity exchange accepts 
                        customer funds required to be segregated under 
                        subsection (d).
                            ``(ii) Rulemaking required.--The Commission 
                        shall require any registered futures 
                        association with a digital commodity exchange 
                        as a member to provide such rules as may be 
                        necessary to further compliance with subsection 
                        (d), protect customers, and promote the public 
                        interest.
                    ``(D) Registration required.--A person required to 
                be registered as a digital commodity exchange under 
                this section shall register with the Commission as such 
                regardless of whether the person is registered as such 
                with another State or Federal regulator.
    ``(b) Trading.--
            ``(1) Prohibition on certain trading practices.--
                    ``(A) Section 4b shall apply to any agreement, 
                contract, or transaction in a digital commodity as if 
                the agreement, contract, or transaction were a contract 
                of sale of a commodity for future delivery.
                    ``(B) Section 4c shall apply to any agreement, 
                contract, or transaction in a digital commodity as if 
                the agreement, contract, or transaction were a 
                transaction involving the purchase or sale of a 
                commodity for future delivery.
            ``(2) Prohibition on acting as a counterparty.--A 
        registered digital commodity exchange or any affiliate of such 
        an exchange shall not act as counterparty to any transaction 
        executed on or subject to the rules of the registered digital 
        commodity exchange.
            ``(3) Trading securities.--A registered digital commodity 
        exchange that is also registered with the Securities and 
        Exchange Commission may offer a contract of sale of a digital 
        asset deemed a security.
            ``(4) Rules for certain digital asset sales.--The digital 
        commodity exchange shall have in place such rules as may be 
        necessary to reasonably ensure the orderly sale of any unit of 
        a digital commodity sold by a related person or an affiliated 
        person.
    ``(c) Core Principles for Digital Commodity Exchanges.--
            ``(1) Compliance with core principles.--
                    ``(A) In general.--To be registered, and maintain 
                registration, as a digital commodity exchange, a 
                digital commodity exchange shall comply with--
                            ``(i) the core principles described in this 
                        subsection; and
                            ``(ii) any requirement that the Commission 
                        may impose by rule or regulation pursuant to 
                        section 8a(5).
                    ``(B) Reasonable discretion of a digital commodity 
                exchange.--Unless otherwise determined by the 
                Commission by rule or regulation, a digital commodity 
                exchange described in subparagraph (A) shall have 
                reasonable discretion in establishing the manner in 
                which the digital commodity exchange complies with the 
                core principles described in this subsection.
            ``(2) Compliance with rules.--A digital commodity exchange 
        shall--
                    ``(A) establish and enforce compliance with any 
                rule of the digital commodity exchange, including--
                            ``(i) the terms and conditions of the 
                        trades traded or processed on or through the 
                        digital commodity exchange; and
                            ``(ii) any limitation on access to the 
                        digital commodity exchange;
                    ``(B) establish and enforce trading, trade 
                processing, and participation rules that will deter 
                abuses and have the capacity to detect, investigate, 
                and enforce those rules, including means--
                            ``(i) to provide market participants with 
                        impartial access to the market; and
                            ``(ii) to capture information that may be 
                        used in establishing whether rule violations 
                        have occurred; and
                    ``(C) establish rules governing the operation of 
                the exchange, including rules specifying trading 
                procedures to be used in entering and executing orders 
                traded or posted on the facility.
            ``(3) Listing standards for digital commodities.--
                    ``(A) In general.--A digital commodity exchange 
                shall permit trading only in a digital commodity that 
                is not readily susceptible to manipulation.
                    ``(B) Public information requirements.--
                            ``(i) In general.--A digital commodity 
                        exchange shall permit trading only in a digital 
                        commodity if the information required in clause 
                        (ii) is correct, current, and available to the 
                        public.
                            ``(ii) Required information.-- With respect 
                        to a digital commodity and each blockchain 
                        system to which the digital commodity relates 
                        for which the digital commodity exchange will 
                        make the digital commodity available to the 
                        customers of the digital commodity exchange, 
                        the information required in this clause is as 
                        follows:
                                    ``(I) Source code.--The source code 
                                for any blockchain system to which the 
                                digital commodity relates.
                                    ``(II) Transaction history.--A 
                                narrative description of the steps 
                                necessary to independently access, 
                                search, and verify the transaction 
                                history of any blockchain system to 
                                which the digital commodity relates.
                                    ``(III) Digital asset economics.--A 
                                narrative description of the purpose of 
                                any blockchain system to which the 
                                digital asset relates and the operation 
                                of any such blockchain system, 
                                including--
                                            ``(aa) information 
                                        explaining the launch and 
                                        supply process, including the 
                                        number of digital assets to be 
                                        issued in an initial 
                                        allocation, the total number of 
                                        digital assets to be created, 
                                        the release schedule for the 
                                        digital assets, and the total 
                                        number of digital assets then 
                                        outstanding;
                                            ``(bb) information 
                                        detailing any applicable 
                                        consensus mechanism or process 
                                        for validating transactions, 
                                        method of generating or mining 
                                        digital assets, and any process 
                                        for burning or destroying 
                                        digital assets on the 
                                        blockchain system;
                                            ``(cc) an explanation of 
                                        governance mechanisms for 
                                        implementing changes to the 
                                        blockchain system or forming 
                                        consensus among holders of the 
                                        digital assets; and
                                            ``(dd) sufficient 
                                        information for a third party 
                                        to create a tool for verifying 
                                        the transaction history of the 
                                        digital asset.
                                    ``(IV) Additional information.--
                                Such additional information as the 
                                Commission may, by rule, determine to 
                                be necessary for a customer to 
                                understand the financial and 
                                operational risks of a digital 
                                commodity, and to be in the public 
                                interest or in furtherance of the 
                                requirements of this Act.
                    ``(C) Additional listing considerations.--In 
                addition to the requirements of subparagraphs (A) and 
                (B), a digital commodity exchange shall consider--
                            ``(i) if a sufficient percentage of the 
                        units of the digital asset are units of a 
                        digital commodity to permit robust price 
                        discovery;
                            ``(ii) if it is reasonably unlikely that 
                        the transaction history can be fraudulently 
                        altered by any person or group of persons 
                        acting collectively;
                            ``(iii) if the operating structure and 
                        system of the digital commodity is secure from 
                        cybersecurity threats;
                            ``(iv) if the functionality of the digital 
                        commodity will protect holders from operational 
                        failures;
                            ``(v) if sufficient public information 
                        about the operation, functionality, and use of 
                        the digital commodity is available; and
                            ``(vi) any other factor which the 
                        Commission has, by rule, determined to be in 
                        the public interest or in furtherance of the 
                        requirements of this Act.
                    ``(D) Restricted digital assets.--A digital 
                commodity exchange shall not permit the trading of a 
                unit of a digital asset that is a restricted digital 
                asset.
            ``(4) Treatment of customer assets.--A digital commodity 
        exchange shall establish standards and procedures that are 
        designed to protect and ensure the safety of customer money, 
        assets, and property.
            ``(5) Monitoring of trading and trade processing.--
                    ``(A) In general.--A digital commodity exchange 
                shall provide a competitive, open, and efficient market 
                and mechanism for executing transactions that protects 
                the price discovery process of trading on the exchange.
                    ``(B) Protection of markets and market 
                participants.--A digital commodity exchange shall 
                establish and enforce rules--
                            ``(i) to protect markets and market 
                        participants from abusive practices committed 
                        by any party, including abusive practices 
                        committed by a party acting as an agent for a 
                        participant; and
                            ``(ii) to promote fair and equitable 
                        trading on the exchange.
                    ``(C) Trading procedures.--A digital commodity 
                exchange shall--
                            ``(i) establish and enforce rules or terms 
                        and conditions defining, or specifications 
                        detailing--
                                    ``(I) trading procedures to be used 
                                in entering and executing orders traded 
                                on or through the facilities of the 
                                digital commodity exchange; and
                                    ``(II) procedures for trade 
                                processing of digital commodities on or 
                                through the facilities of the digital 
                                commodity exchange; and
                            ``(ii) monitor trading in digital 
                        commodities to prevent manipulation, price 
                        distortion, and disruptions of the delivery or 
                        cash settlement process through surveillance, 
                        compliance, and disciplinary practices and 
                        procedures, including methods for conducting 
                        real-time monitoring of trading and 
                        comprehensive and accurate trade 
                        reconstructions.
            ``(6) Ability to obtain information.--A digital commodity 
        exchange shall--
                    ``(A) establish and enforce rules that will allow 
                the facility to obtain any necessary information to 
                perform any of the functions described in this section;
                    ``(B) provide the information to the Commission on 
                request; and
                    ``(C) have the capacity to carry out such 
                international information-sharing agreements as the 
                Commission may require.
            ``(7) Emergency authority.--A digital commodity exchange 
        shall adopt rules to provide for the exercise of emergency 
        authority, in consultation or cooperation with the Commission 
        or a registered entity, as is necessary and appropriate, 
        including the authority to facilitate the liquidation or 
        transfer of open positions in any digital commodity or to 
        suspend or curtail trading in a digital commodity.
            ``(8) Timely publication of trading information.--
                    ``(A) In general.--A digital commodity exchange 
                shall make public timely information on price, trading 
                volume, and other trading data on digital commodities 
                to the extent prescribed by the Commission.
                    ``(B) Capacity of digital commodity exchange.--A 
                digital commodity exchange shall have the capacity to 
                electronically capture and transmit trade information 
                with respect to transactions executed on the exchange.
            ``(9) Recordkeeping and reporting.--
                    ``(A) In general.--A digital commodity exchange 
                shall--
                            ``(i) maintain records of all activities 
                        relating to the business of the facility, 
                        including a complete audit trail, in a form and 
                        manner acceptable to the Commission for a 
                        period of 5 years;
                            ``(ii) report to the Commission, in a form 
                        and manner acceptable to the Commission, such 
                        information as the Commission determines to be 
                        necessary or appropriate for the Commission to 
                        perform the duties of the Commission under this 
                        Act; and
                            ``(iii) keep any such records of digital 
                        commodities which relate to a security open to 
                        inspection and examination by the Securities 
                        and Exchange Commission.
                    ``(B) Information sharing.--Subject to section 8, 
                and on request, the Commission shall share information 
                collected under subparagraph (A) with--
                            ``(i) the Board;
                            ``(ii) the Securities and Exchange 
                        Commission;
                            ``(iii) each appropriate Federal banking 
                        agency;
                            ``(iv) each appropriate State bank 
                        supervisor (within the meaning of section 3 of 
                        the Federal Deposit Insurance Act);
                            ``(v) the Financial Stability Oversight 
                        Council;
                            ``(vi) the Department of Justice; and
                            ``(vii) any other person that the 
                        Commission determines to be appropriate, 
                        including--
                                    ``(I) foreign financial supervisors 
                                (including foreign futures 
                                authorities);
                                    ``(II) foreign central banks; and
                                    ``(III) foreign ministries.
                    ``(C) Confidentiality agreement.--Before the 
                Commission may share information with any entity 
                described in subparagraph (B), the Commission shall 
                receive a written agreement from the entity stating 
                that the entity shall abide by the confidentiality 
                requirements described in section 8 relating to the 
                information on digital commodities that is provided.
                    ``(D) Providing information.--A digital commodity 
                exchange shall provide to the Commission (including any 
                designee of the Commission) information under 
                subparagraph (A) in such form and at such frequency as 
                is required by the Commission.
            ``(10) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a digital 
        commodity exchange shall not--
                    ``(A) adopt any rules or take any actions that 
                result in any unreasonable restraint of trade; or
                    ``(B) impose any material anticompetitive burden on 
                trading.
            ``(11) Conflicts of interest.--A registered digital 
        commodity exchange shall implement conflict-of-interest systems 
        and procedures that--
                    ``(A) establish structural and institutional 
                safeguards--
                            ``(i) to minimize conflicts of interest 
                        that might potentially bias the judgment or 
                        supervision of the digital commodity exchange 
                        and contravene the principles of fair and 
                        equitable trading and the business conduct 
                        standards described in this Act, including 
                        conflicts arising out of transactions or 
                        arrangements with affiliates (including 
                        affiliates engaging in digital commodity 
                        activities) which may include information 
                        partitions and the legal separation of 
                        different persons or entities involved in 
                        digital commodity activities; and
                            ``(ii) to ensure that the activities of any 
                        person within the digital commodity exchange or 
                        any affiliated entity relating to research or 
                        analysis of the price or market for any digital 
                        commodity or acting in a role of providing 
                        dealing, brokering, or advising activities are 
                        separated by appropriate informational 
                        partitions within the digital commodity 
                        exchange or any affiliated entity from the 
                        review, pressure, or oversight of persons whose 
                        involvement in pricing, trading, exchange, or 
                        clearing activities might potentially bias 
                        their judgment or supervision and contravene 
                        the core principles of open access and the 
                        business conduct standards described in this 
                        Act; and
                    ``(B) address such other issues as the Commission 
                determines to be appropriate.
            ``(12) Financial resources.--
                    ``(A) In general.--A digital commodity exchange 
                shall have adequate financial, operational, and 
                managerial resources, as determined by the Commission, 
                to discharge each responsibility of the digital 
                commodity exchange.
                    ``(B) Minimum amount of financial resources.--A 
                digital commodity exchange shall possess financial 
                resources that, at a minimum, exceed the total amount 
                that would enable the digital commodity exchange to 
                conduct an orderly wind-down of its activities.
            ``(13) Disciplinary procedures.--A digital commodity 
        exchange shall establish and enforce disciplinary procedures 
        that authorize the digital commodity exchange to discipline, 
        suspend, or expel members or market participants that violate 
        the rules of the digital commodity exchange, or similar methods 
        for performing the same functions, including delegation of the 
        functions to third parties.
            ``(14) Governance fitness standards.--
                    ``(A) Governance arrangements.--A digital commodity 
                exchange shall establish governance arrangements that 
                are transparent to fulfill public interest 
                requirements.
                    ``(B) Fitness standards.--A digital commodity 
                exchange shall establish and enforce appropriate 
                fitness standards for--
                            ``(i) directors; and
                            ``(ii) any individual or entity with direct 
                        access to, or control of, customer assets.
            ``(15) System safeguards.--A digital commodity exchange 
        shall--
                    ``(A) establish and maintain a program of risk 
                analysis and oversight to identify and minimize sources 
                of operational and security risks, through the 
                development of appropriate controls and procedures, and 
                automated systems, that--
                            ``(i) are reliable and secure; and
                            ``(ii) have adequate scalable capacity;
                    ``(B) establish and maintain emergency procedures, 
                backup facilities, and a plan for disaster recovery 
                that allow for--
                            ``(i) the timely recovery and resumption of 
                        operations; and
                            ``(ii) the fulfillment of the 
                        responsibilities and obligations of the digital 
                        commodity exchange; and
                    ``(C) periodically conduct tests to verify that the 
                backup resources of the digital commodity exchange are 
                sufficient to ensure continued--
                            ``(i) order processing and trade matching;
                            ``(ii) price reporting;
                            ``(iii) market surveillance; and
                            ``(iv) maintenance of a comprehensive and 
                        accurate audit trail.
    ``(d) Holding of Customer Assets.--
            ``(1) In general.--A digital commodity exchange shall hold 
        customer money, assets, and property in a manner to minimize 
        the risk of loss to the customer or unreasonable delay in the 
        access to the money, assets, and property of the customer.
                    ``(A) Segregation of funds.--
                            ``(i) In general.--A digital commodity 
                        exchange shall treat and deal with all money, 
                        assets, and property that is received by the 
                        digital commodity exchange, or accrues to a 
                        customer as the result of trading in digital 
                        commodities, as belonging to the customer.
                            ``(ii) Commingling prohibited.--Money, 
                        assets, and property of a customer described in 
                        clause (i) shall be separately accounted for 
                        and shall not be commingled with the funds of 
                        the digital commodity exchange or be used to 
                        margin, secure, or guarantee any trades or 
                        accounts of any customer or person other than 
                        the person for whom the same are held.
                    ``(B) Exceptions.--
                            ``(i) Use of funds.--
                                    ``(I) In general.--Notwithstanding 
                                subparagraph (A), money, assets, and 
                                property of customers of a digital 
                                commodity exchange described in 
                                subparagraph (A) may, for convenience, 
                                be commingled and deposited in the same 
                                account or accounts with any bank, 
                                trust company, derivatives clearing 
                                organization, or qualified digital 
                                commodity custodian.
                                    ``(II) Withdrawal.--Notwithstanding 
                                subparagraph (A), such share of the 
                                money, assets, and property described 
                                in item (aa) as in the normal course of 
                                business shall be necessary to margin, 
                                guarantee, secure, transfer, adjust, or 
                                settle a contract of sale of a digital 
                                commodity with a registered entity may 
                                be withdrawn and applied to such 
                                purposes, including the payment of 
                                commissions, brokerage, interest, 
                                taxes, storage, and other charges, 
                                lawfully accruing in connection with 
                                the contract of sale of a digital 
                                commodity.
                            ``(ii) Commission action.--Notwithstanding 
                        subparagraph (A), in accordance with such terms 
                        and conditions as the Commission may prescribe 
                        by rule, regulation, or order, any money, 
                        assets, or property of the customers of a 
                        digital commodity exchange described in 
                        subparagraph (A) may be commingled and 
                        deposited in customer accounts with any other 
                        money, assets, or property received by the 
                        digital commodity exchange and required by the 
                        Commission to be separately accounted for and 
                        treated and dealt with as belonging to the 
                        customer of the digital commodity exchange.
            ``(2) Permitted investments.--Money described in 
        subparagraph (A) may be invested in obligations of the United 
        States, in general obligations of any State or of any political 
        subdivision of a State, and in obligations fully guaranteed as 
        to principal and interest by the United States, or in any other 
        investment that the Commission may by rule or regulation 
        prescribe, and such investments shall be made in accordance 
        with such rules and regulations and subject to such conditions 
        as the Commission may prescribe.
            ``(3) Customer protection during bankruptcy.--
                    ``(A) Customer property.--All assets held on behalf 
                of a customer by a digital commodity exchange, and all 
                money, assets, and property of any customer received by 
                a digital commodity exchange registered under section 
                5i of this Act for trading or custody, or to 
                facilitate, margin, guarantee, or secure contracts of 
                sale of a digital commodity (including money, assets, 
                or property accruing to the customer as the result of 
                the transactions), shall be considered customer 
                property for purposes of section 761 of title 11, 
                United States Code.
                    ``(B) Transactions.--A transaction involving a unit 
                of a digital commodity occurring on or subject to the 
                rules of a digital commodity exchange shall be 
                considered a `contract for the purchase or sale of a 
                commodity for future delivery, on or subject to the 
                rules of, a contract market or board of trade' for the 
                purposes of the definition of a `commodity contract' in 
                section 761 of title 11, United States Code.
                    ``(C) Exchanges.--A digital commodity exchange 
                shall be considered a futures commission merchant for 
                purposes of section 761 of title 11, United States 
                Code.
            ``(4) Misuse of customer property.--
                    ``(A) In general.--It shall be unlawful--
                            ``(i) for any digital commodity exchange 
                        that has received any customer money, assets, 
                        or property for custody to dispose of, or use 
                        any such money, assets, or property as 
                        belonging to the digital commodity exchange; or
                            ``(ii) for any other person, including any 
                        depository, other digital commodity exchange, 
                        or digital commodity custodian that has 
                        received any customer money, assets, or 
                        property for deposit, to hold, dispose of, or 
                        use any such money, assets, or property, or 
                        property, as belonging to the depositing 
                        digital commodity exchange or any person other 
                        than the customers of the digital commodity 
                        exchange.
                    ``(B) Use further defined.--For purposes of this 
                section, `use' of a digital commodity includes 
                utilizing any unit of a digital asset to participate in 
                a blockchain service defined in paragraph (5) or a 
                decentralized governance system associated with the 
                digital commodity or the blockchain system to which the 
                digital commodity relates in any manner other than that 
                expressly directed by the customer from whom the unit 
                of a digital commodity was received.
            ``(5) Participation in blockchain services.--
                    ``(A) In general.--A customer shall have the right 
                to waive the restrictions in paragraph (1) for any unit 
                of a digital commodity, by affirmatively electing, in 
                writing to the digital commodity exchange, to waive the 
                restrictions.
                    ``(B) Use of funds.--Customer digital commodities 
                removed from segregation under subparagraph (A) may be 
                pooled and used by the digital commodity exchange or 
                its designee to provide a blockchain service for a 
                blockchain system to which the unit of the digital 
                asset removed from segregation in subparagraph (A) 
                relates.
                    ``(C) Limitations.--The Commission may, by rule, 
                establish notice and disclosure requirements, and any 
                other limitations and rules related to the waiving of 
                any restrictions under this paragraph that are 
                reasonably necessary to protect customers, including 
                eligible contract participants, non-eligible contract 
                participants, or any other class of customers.
                    ``(D) Blockchain service defined.--In this 
                subparagraph, the term `blockchain service' means any 
                activity relating to validating transactions on a 
                blockchain system, providing security for a blockchain 
                system, or other similar activity required for the 
                ongoing operation of a blockchain system.
    ``(e) Market Access Requirements.--
            ``(1) In general.--A digital commodity exchange shall 
        require any person who is not an eligible contract participant 
        to access trading on the exchange through a digital commodity 
        broker.
            ``(2) Affiliated commodity brokers.--A registered digital 
        commodity exchange may maintain an affiliated digital commodity 
        broker to facilitate access to the digital commodity exchange, 
        if--
                    ``(A) no other digital commodity brokers are 
                permitted to facilitate access to the exchange;
                    ``(B) the affiliated digital commodity broker 
                limits its activities only to providing customer access 
                to the digital commodity exchange; and
                    ``(C) the affiliated digital commodity broker is 
                not also registered as a digital commodity dealer.
            ``(3) Direct access for eligible contract participants.--
        Nothing in this section shall prohibit a digital commodity 
        exchange in compliance with this section from permitting direct 
        access for eligible contract participants.
            ``(4) Additional requirements.--
                    ``(A) In general.--The Commission may, by rule, 
                impose any additional requirements related to the 
                operations and activities of the digital commodity 
                exchange and the affiliated digital commodity broker 
                necessary to protect market participants, promote fair 
                and equitable trading on the digital commodity 
                exchange, and promote responsible economic or financial 
                innovation.
                    ``(B) Delegation of authority.--The Commission may 
                delegate to a registered futures association such 
                oversight and regulatory requirements as the Commission 
                determines are necessary to--
                            ``(i) supervise the activities of the 
                        digital commodity exchange and an affiliated 
                        digital commodity broker; and
                            ``(ii) protect market participants, promote 
                        fair and equitable trading on the digital 
                        commodity exchange, and promote responsible 
                        economic or financial innovation.
    ``(f) Designation of Chief Compliance Officer.--
            ``(1) In general.--A digital commodity exchange shall 
        designate an individual to serve as a chief compliance officer.
            ``(2) Duties.--The chief compliance officer shall--
                    ``(A) report directly to the board or to the senior 
                officer of the exchange;
                    ``(B) review compliance with the core principles in 
                this subsection;
                    ``(C) in consultation with the board of the 
                exchange, a body performing a function similar to that 
                of a board, or the senior officer of the exchange, 
                resolve any conflicts of interest that may arise;
                    ``(D) establish and administer the policies and 
                procedures required to be established pursuant to this 
                section;
                    ``(E) ensure compliance with this Act and the rules 
                and regulations issued under this Act, including rules 
                prescribed by the Commission pursuant to this section; 
                and
                    ``(F) establish procedures for the remediation of 
                noncompliance issues found during compliance office 
                reviews, look backs, internal or external audit 
                findings, self-reported errors, or through validated 
                complaints.
            ``(3) Requirements for procedures.--In establishing 
        procedures under paragraph (2)(F), the chief compliance officer 
        shall design the procedures to establish the handling, 
        management response, remediation, retesting, and closing of 
        noncompliance issues.
            ``(4) Annual reports.--
                    ``(A) In general.--In accordance with rules 
                prescribed by the Commission, the chief compliance 
                officer shall annually prepare and sign a report that 
                contains a description of--
                            ``(i) the compliance of the digital 
                        commodity exchange with this Act; and
                            ``(ii) the policies and procedures, 
                        including the code of ethics and conflict of 
                        interest policies, of the digital commodity 
                        exchange.
                    ``(B) Requirements.--The chief compliance officer 
                shall--
                            ``(i) submit each report described in 
                        subparagraph (A) with the appropriate financial 
                        report of the digital commodity exchange that 
                        is required to be submitted to the Commission 
                        pursuant to this section; and
                            ``(ii) include in the report a 
                        certification that, under penalty of law, the 
                        report is accurate and complete.
    ``(g) Appointment of Trustee.--
            ``(1) In general.--If a proceeding under section 5e results 
        in the suspension or revocation of the registration of a 
        digital commodity exchange, or if a digital commodity exchange 
        withdraws from registration, the Commission, on notice to the 
        digital commodity exchange, may apply to the appropriate United 
        States district court where the digital commodity exchange is 
        located for the appointment of a trustee.
            ``(2) Assumption of jurisdiction.--If the Commission 
        applies for appointment of a trustee under paragraph (1)--
                    ``(A) the court may take exclusive jurisdiction 
                over the digital commodity exchange and the records and 
                assets of the digital commodity exchange, wherever 
                located; and
                    ``(B) if the court takes jurisdiction under 
                subparagraph (A), the court shall appoint the 
                Commission, or a person designated by the Commission, 
                as trustee with power to take possession and continue 
                to operate or terminate the operations of the digital 
                commodity exchange in an orderly manner for the 
                protection of customers subject to such terms and 
                conditions as the court may prescribe.
    ``(h) Qualified Digital Commodity Custodian.--A digital commodity 
exchange shall hold in a qualified digital commodity custodian each 
unit of a digital commodity that is--
            ``(1) the property of a customer of the digital commodity 
        exchange;
            ``(2) required to be held by the digital commodity exchange 
        under subsection (c)(12) of this section; or
            ``(3) otherwise so required by the Commission to reasonably 
        protect customers or promote the public interest.
    ``(i) Exemptions.--In order to promote responsible economic or 
financial innovation and fair competition, or protect customers, the 
Commission may (on its own initiative or on application of the 
registered digital commodity exchange) exempt, either unconditionally 
or on stated terms or conditions or for stated periods and either 
retroactively or prospectively, or both, a registered digital commodity 
exchange from the requirements of this section, if the Commission 
determines that--
            ``(1)(A) the exemption would be consistent with the public 
        interest and the purposes of this Act; and
            ``(B) the exemption will not have a material adverse effect 
        on the ability of the Commission or the digital commodity 
        exchange to discharge regulatory or self-regulatory duties 
        under this Act; or
            ``(2) the digital commodity exchange is subject to 
        comparable, comprehensive supervision and regulation by the 
        appropriate government authorities in the home country of the 
        exchange.
    ``(j) Customer Defined.--In this section, the term `customer' means 
any person that maintains an account for the trading of digital 
commodities directly with a digital commodity exchange (other than a 
person that is owned or controlled, directly or indirectly, by the 
digital commodity exchange) for its own behalf or on behalf of other 
any person.
    ``(k) Federal Preemption.--Notwithstanding any other provision of 
law, the Commission shall have exclusive jurisdiction over any digital 
commodity exchange registered under this section.
    ``(l) Treatment Under the Bank Secrecy Act.--A registered digital 
commodity exchange shall be treated as a financial institution for 
purposes of the Bank Secrecy Act.''.

SEC. 405. QUALIFIED DIGITAL COMMODITY CUSTODIANS.

    The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the 
preceding provisions of this Act, is amended by inserting after section 
5i the following:

``SEC. 5J. QUALIFIED DIGITAL COMMODITY CUSTODIANS.

    ``(a) In General.--For purposes of this Act, a qualified digital 
commodity custodian is a digital commodity custodian who meets the 
following conditions:
            ``(1) Supervision.--The digital commodity custodian is 
        subject to adequate supervision and appropriate regulation.
            ``(2) No prohibition.--The digital commodity custodian is--
                    ``(A) subject to the supervision of--
                            ``(i) an appropriate Federal banking 
                        agency;
                            ``(ii) a State bank supervisor (within the 
                        meaning of section 3 of the Federal Deposit 
                        Insurance Act); or
                            ``(iii) an appropriate foreign governmental 
                        authority in the home country of the digital 
                        commodity custodian; and
                    ``(B) not prohibited by the applicable supervisor 
                referred to in subparagraph (A) from engaging in any 
                activity with respect to the holding of digital 
                commodities.
            ``(3) Information sharing.--
                    ``(A) In general.--The digital commodity custodian 
                agrees to such periodic sharing of information 
                regarding customer accounts the digital commodity 
                custodian holds on behalf of an entity registered with 
                the Commission, as the Commission determines by rule 
                shall be reasonably necessary to effectuate any of the 
                provisions, or to accomplish any of the purposes, of 
                this Act.
                    ``(B) Provision of information.--Any person that is 
                subject to regulation and examination by a prudential 
                regulator may satisfy any information request described 
                in subparagraph (A), by providing the Commission with a 
                detailed listing, in writing, of the digital 
                commodities of a customer within the custody or use of 
                the person.
    ``(b) Adequate Supervision and Appropriate Regulation Further 
Defined.--
            ``(1) In general.--In subsection (a), the terms `adequate 
        supervision' and `appropriate regulation' mean such minimum 
        standards for supervision and regulation as are reasonably 
        necessary to protect the digital commodities of customers of an 
        entity registered with the Commission, including minimum 
        standards relating to--
                    ``(A) accessibility of customer assets;
                    ``(B) financial resources;
                    ``(C) risk management requirements;
                    ``(D) governance arrangements;
                    ``(E) fitness standards;
                    ``(F) recordkeeping;
                    ``(G) information sharing; and
                    ``(H) conflicts of interest.
            ``(2) Deemed compliance.--For purposes of subsection (a), a 
        bank subject to the supervision of an appropriate Federal 
        banking agency or a State bank supervisor (within the meaning 
        of section 3 of the Federal Deposit Insurance Act) is deemed to 
        be subject to adequate supervision and appropriate regulation.
            ``(3) Rulemaking authority.--For purposes of subsection 
        (a), the Commission, by rule or order, may further define the 
        terms `adequate supervision' and `appropriate regulation' as 
        necessary in the public interest, as appropriate for the 
        protection of customers, and consistent with the purposes of 
        this Act.
    ``(c) Authority To Temporarily Suspend Standards.--The Commission 
may, by rule or order, temporarily suspend, in whole or in part, any 
requirement imposed under, or any standard referred to in, this section 
if the Commission determines that the suspension would be consistent 
with the public interest and the purposes of this Act.''.

SEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND 
              DEALERS.

    The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the 
preceding provisions of this Act, is amended by inserting after section 
4t the following:

``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY BROKERS AND 
              DEALERS.

    ``(a) Registration.--It shall be unlawful for any person to act as 
a digital commodity broker or digital commodity dealer unless the 
person is registered as such with the Commission.
    ``(b) Requirements.--
            ``(1) In general.--A person shall register as a digital 
        commodity broker or digital commodity dealer by filing a 
        registration application with the Commission.
            ``(2) Contents.--
                    ``(A) In general.--The application shall be made in 
                such form and manner as is prescribed by the 
                Commission, and shall contain such information as the 
                Commission considers necessary concerning the business 
                in which the applicant is or will be engaged.
                    ``(B) Continual reporting.--A person that is 
                registered as a digital commodity broker or digital 
                commodity dealer shall continue to submit to the 
                Commission reports that contain such information 
                pertaining to the business of the person as the 
                Commission may require.
            ``(3) Transition.--Within 180 days after the date of the 
        enactment of this section, the Commission shall prescribe rules 
        providing for the registration of digital commodity brokers and 
        digital commodity dealers under this section.
            ``(4) Statutory disqualification.--Except to the extent 
        otherwise specifically provided by rule, regulation, or order, 
        it shall be unlawful for a digital commodity broker or digital 
        commodity dealer to permit any person who is associated with a 
        digital commodity broker or a digital commodity dealer and who 
        is subject to a statutory disqualification to effect or be 
        involved in effecting a contract for sale of a digital 
        commodity on behalf of the digital commodity broker or the 
        digital commodity dealer, respectively, if the digital 
        commodity broker or digital commodity dealer, respectively, 
        knew, or in the exercise of reasonable care should have known, 
        of the statutory disqualification.
            ``(5) Limitations on certain assets.--A registered digital 
        commodity broker or registered digital commodity dealer shall 
        not offer, offer to enter into, enter into, or facilitate any 
        contract for sale of a digital commodity that has not been 
        certified under section 5c(d).
    ``(c) Additional Registrations.--
            ``(1) With the commission.--Any person required to be 
        registered as a digital commodity broker or digital commodity 
        dealer may also be registered as a futures commission merchant, 
        introducing broker, or swap dealer.
            ``(2) With the securities and exchange commission.--Any 
        person required to be registered as a digital commodity broker 
        or digital commodity dealer under this section may register 
        with the Securities and Exchange Commission as a digital asset 
        broker or digital asset dealer, pursuant to section 15(b) of 
        the Securities Exchange Act of 1934, as applicable, if the 
        digital asset broker or digital asset dealer limits its 
        solicitation of orders, acceptance of orders, or execution of 
        orders, or placing of orders on behalf of others involving any 
        contract of sale of digital assets.
            ``(3) With membership in a registered futures 
        association.--Any person required to be registered as a digital 
        commodity broker or digital commodity dealer under this section 
        shall be a member of a registered futures association.
            ``(4) Registration required.--Any person required to be 
        registered as a digital commodity broker or digital commodity 
        dealer under this section shall register with the Commission as 
        such regardless of whether the person is registered as such 
        with another State or Federal regulator.
    ``(d) Rulemaking.--
            ``(1) In general.--The Commission shall prescribe such 
        rules applicable to registered digital commodity brokers and 
        registered digital commodity dealers as are appropriate to 
        carry out this section, including rules in the public interest 
        that limit the activities of digital commodity brokers and 
        digital commodity dealers.
            ``(2) Multiple registrants.--The Commission shall prescribe 
        rules or regulations permitting, or may otherwise authorize, 
        exemptions or additional requirements applicable to persons 
        with multiple registrations under this Act, including as 
        futures commission merchants, introducing brokers, digital 
        commodity brokers, digital commodity dealers, or swap dealers, 
        as may be in the public interest to reduce compliance costs and 
        promote customer protection.
    ``(e) Capital Requirements.--
            ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall meet such minimum 
        capital requirements as the Commission may prescribe to ensure 
        that the digital commodity broker or digital commodity dealer, 
        respectively, is able to--
                    ``(A) meet, and continue to meet, at all times, the 
                obligations of such a registrant;
                    ``(B) conduct an orderly wind-down of the 
                activities of the digital commodity broker or digital 
                commodity dealer, respectively; and
                    ``(C) in the case of a digital commodity dealer, 
                fulfill the customer obligations of the digital 
                commodity dealer for any margined, leveraged, or 
                financed transactions.
            ``(2) Rule of construction.--Nothing in this section shall 
        limit, or be construed to limit, the authority of the 
        Securities and Exchange Commission to set financial 
        responsibility rules for a broker or dealer registered pursuant 
        to section 15(b) of the Securities Exchange Act of 1934 (15 
        U.S.C. 78o(b)) (except for section 15(b)(11) of such Act (15 
        U.S.C. 78o(b)(11)) in accordance with section 15(c)(3) of such 
        Act (15 U.S.C. 78o(c)(3)).
            ``(3) Futures commission merchants and other dealers.--
                    ``(A) In general.--Each futures commission 
                merchant, introducing broker, digital commodity broker, 
                digital commodity dealer, broker, and dealer shall 
                maintain sufficient capital to comply with the stricter 
                of any applicable capital requirements to which the 
                futures commission merchant, introducing broker, 
                digital commodity broker, digital commodity dealer, 
                broker, or dealer, respectively, is subject under this 
                Act or the Securities Exchange Act of 1934 (15 U.S.C. 
                78a et seq.).
                    ``(B) Coordination of capital requirements.--
                            ``(i) Commission rule.--The Commission 
                        shall, by rule, provide appropriate offsets to 
                        any applicable capital requirement for a person 
                        with multiple registrations as a digital 
                        commodity dealer, digital commodity broker, 
                        futures commission merchant, or introducing 
                        broker.
                            ``(ii) Joint rule.--The Commission and the 
                        Securities and Exchange Commission shall 
                        jointly, by rule, provide appropriate offsets 
                        to any applicable capital requirement for a 
                        person with multiple registrations as a digital 
                        commodity dealer, digital commodity broker, 
                        futures commission merchant, introducing 
                        broker, broker, or dealer.
    ``(f) Reporting and Recordkeeping.--Each registered digital 
commodity broker and registered digital commodity dealer--
            ``(1) shall make such reports as are required by the 
        Commission by rule or regulation regarding the transactions, 
        positions, and financial condition of the digital commodity 
        broker or digital commodity dealer, respectively;
            ``(2) shall keep books and records in such form and manner 
        and for such period as may be prescribed by the Commission by 
        rule or regulation; and
            ``(3) shall keep the books and records open to inspection 
        and examination by any representative of the Commission.
    ``(g) Daily Trading Records.--
            ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall maintain daily 
        trading records of the transactions of the digital commodity 
        broker or digital commodity dealer, respectively, and all 
        related records (including related forward or derivatives 
        transactions) and recorded communications, including electronic 
        mail, instant messages, and recordings of telephone calls, for 
        such period as the Commission may require by rule or 
        regulation.
            ``(2) Information requirements.--The daily trading records 
        shall include such information as the Commission shall require 
        by rule or regulation.
            ``(3) Counterparty records.--Each registered digital 
        commodity broker and registered digital commodity dealer shall 
        maintain daily trading records for each customer or 
        counterparty in a manner and form that is identifiable with 
        each digital commodity transaction.
            ``(4) Audit trail.--Each registered digital commodity 
        broker and registered digital commodity dealer shall maintain a 
        complete audit trail for conducting comprehensive and accurate 
        trade reconstructions.
    ``(h) Business Conduct Standards.--
            ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall conform with such 
        business conduct standards as the Commission, by rule or 
        regulation, prescribes related to--
                    ``(A) fraud, manipulation, and other abusive 
                practices involving spot or margined, leveraged, or 
                financed digital commodity transactions (including 
                transactions that are offered but not entered into);
                    ``(B) diligent supervision of the business of the 
                registered digital commodity broker or digital 
                commodity dealer, respectively; and
                    ``(C) such other matters as the Commission deems 
                appropriate.
            ``(2) Business conduct requirements.--The Commission shall, 
        by rule, prescribe business conduct requirements which--
                    ``(A) require disclosure by a registered digital 
                commodity broker and registered digital commodity 
                dealer to any counterparty to the transaction (other 
                than an eligible contract participant) of--
                            ``(i) information about the material risks 
                        and characteristics of the digital commodity; 
                        and
                            ``(ii) information about the material risks 
                        and characteristics of the transaction;
                    ``(B) establish a duty for such a digital commodity 
                broker and such a digital commodity dealer to 
                communicate in a fair and balanced manner based on 
                principles of fair dealing and good faith;
                    ``(C) establish standards governing digital 
                commodity platform marketing and advertising, including 
                testimonials and endorsements; and
                    ``(D) establish such other standards and 
                requirements as the Commission may determine are--
                            ``(i) in the public interest;
                            ``(ii) appropriate for the protection of 
                        customers; or
                            ``(iii) otherwise in furtherance of the 
                        purposes of this Act.
            ``(3) Prohibition on fraudulent practices.--It shall be 
        unlawful for a registered digital commodity broker or 
        registered digital commodity dealer to--
                    ``(A) employ any device, scheme, or artifice to 
                defraud any customer or counterparty;
                    ``(B) engage in any transaction, practice, or 
                course of business that operates as a fraud or deceit 
                on any customer or counterparty; or
                    ``(C) engage in any act, practice, or course of 
                business that is fraudulent, deceptive, or 
                manipulative.
    ``(i) Duties.--
            ``(1) Risk management procedures.--Each registered digital 
        commodity broker and registered digital commodity dealer shall 
        establish robust and professional risk management systems 
        adequate for managing the day-to-day business of the digital 
        commodity broker or digital commodity dealer, respectively.
            ``(2) Disclosure of general information.--Each registered 
        digital commodity broker and registered digital commodity 
        dealer shall disclose to the Commission information 
        concerning--
                    ``(A) the terms and conditions of the transactions 
                of the digital commodity broker or digital commodity 
                dealer, respectively;
                    ``(B) the trading operations, mechanisms, and 
                practices of the digital commodity broker or digital 
                commodity dealer, respectively;
                    ``(C) financial integrity protections relating to 
                the activities of the digital commodity broker or 
                digital commodity dealer, respectively; and
                    ``(D) other information relevant to trading in 
                digital commodities by the digital commodity broker or 
                digital commodity dealer, respectively.
            ``(3) Ability to obtain information.--Each registered 
        digital commodity broker and registered digital commodity 
        dealer shall--
                    ``(A) establish and enforce internal systems and 
                procedures to obtain any necessary information to 
                perform any of the functions described in this section; 
                and
                    ``(B) provide the information to the Commission, on 
                request.
            ``(4) Conflicts of interest.--Each registered digital 
        commodity broker and digital commodity dealer shall implement 
        conflict-of-interest systems and procedures that--
                    ``(A) establish structural and institutional 
                safeguards--
                            ``(i) to minimize conflicts of interest 
                        that might potentially bias the judgment or 
                        supervision of the digital commodity broker or 
                        digital commodity dealer, respectively, and 
                        contravene the principles of fair and equitable 
                        trading and the business conduct standards 
                        described in this Act, including conflicts 
                        arising out of transactions or arrangements 
                        with affiliates (including affiliates acting as 
                        digital asset issuers, digital commodity 
                        dealers, or qualified digital commodity 
                        custodians), which may include information 
                        partitions and the legal separation of 
                        different digital commodity transaction 
                        intermediaries; and
                            ``(ii) to ensure that the activities of any 
                        person within the digital commodity broker or 
                        digital commodity dealer relating to research 
                        or analysis of the price or market for any 
                        digital commodity or acting in a role of 
                        providing exchange activities or making 
                        determinations as to accepting exchange 
                        customers are separated by appropriate 
                        informational partitions within the digital 
                        commodity broker or digital commodity dealer 
                        from the review, pressure, or oversight of 
                        persons whose involvement in pricing, trading, 
                        exchange, or clearing activities might 
                        potentially bias their judgment or supervision 
                        and contravene the core principles of open 
                        access and the business conduct standards 
                        described in this Act; and
                    ``(B) address such other issues as the Commission 
                determines to be appropriate.
            ``(5) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a digital 
        commodity broker or digital commodity dealer shall not--
                    ``(A) adopt any process or take any action that 
                results in any unreasonable restraint of trade; or
                    ``(B) impose any material anticompetitive burden on 
                trading or clearing.
    ``(j) Designation of Chief Compliance Officer.--
            ``(1) In general.--Each registered digital commodity broker 
        and registered digital commodity dealer shall designate an 
        individual to serve as a chief compliance officer.
            ``(2) Duties.--The chief compliance officer shall--
                    ``(A) report directly to the board or to the senior 
                officer of the registered digital commodity broker or 
                registered digital commodity dealer;
                    ``(B) review the compliance of the registered 
                digital commodity broker or registered digital 
                commodity dealer with respect to the registered digital 
                commodity broker and registered digital commodity 
                dealer requirements described in this section;
                    ``(C) in consultation with the board of directors, 
                a body performing a function similar to the board, or 
                the senior officer of the organization, resolve any 
                conflicts of interest that may arise;
                    ``(D) be responsible for administering each policy 
                and procedure that is required to be established 
                pursuant to this section;
                    ``(E) ensure compliance with this Act (including 
                regulations), including each rule prescribed by the 
                Commission under this section;
                    ``(F) establish procedures for the remediation of 
                noncompliance issues identified by the chief compliance 
                officer through any--
                            ``(i) compliance office review;
                            ``(ii) look-back;
                            ``(iii) internal or external audit finding;
                            ``(iv) self-reported error; or
                            ``(v) validated complaint; and
                    ``(G) establish and follow appropriate procedures 
                for the handling, management response, remediation, 
                retesting, and closing of noncompliance issues.
            ``(3) Annual reports.--
                    ``(A) In general.--In accordance with rules 
                prescribed by the Commission, the chief compliance 
                officer shall annually prepare and sign a report that 
                contains a description of--
                            ``(i) the compliance of the registered 
                        digital commodity broker or registered digital 
                        commodity dealer with respect to this Act 
                        (including regulations); and
                            ``(ii) each policy and procedure of the 
                        registered digital commodity broker or 
                        registered digital commodity dealer of the 
                        chief compliance officer (including the code of 
                        ethics and conflict of interest policies).
                    ``(B) Requirements.--The chief compliance officer 
                shall ensure that a compliance report under 
                subparagraph (A)--
                            ``(i) accompanies each appropriate 
                        financial report of the registered digital 
                        commodity broker or registered digital 
                        commodity dealer that is required to be 
                        furnished to the Commission pursuant to this 
                        section; and
                            ``(ii) includes a certification that, under 
                        penalty of law, the compliance report is 
                        accurate and complete.
    ``(k) Segregation of Digital Commodities.--
            ``(1) Holding of customer assets.--
                    ``(A) In general.--Each registered digital 
                commodity broker and registered digital commodity 
                dealer shall hold customer money, assets, and property 
                in a manner to minimize the risk of loss to the 
                customer or unreasonable delay in customer access to 
                the money, assets, and property of the customer.
                    ``(B) Qualified digital commodity custodian.--Each 
                registered digital commodity broker and registered 
                digital commodity dealer shall hold in a qualified 
                digital commodity custodian each unit of a digital 
                commodity that is--
                            ``(i) the property of a customer or 
                        counterparty of the digital commodity broker or 
                        digital commodity dealer, respectively; or
                            ``(ii) otherwise so required by the 
                        Commission to reasonably protect customers or 
                        promote the public interest.
            ``(2) Segregation of funds.--
                    ``(A) In general.--Each registered digital 
                commodity broker and registered digital commodity 
                dealer shall treat and deal with all money, assets, and 
                property that is received by the registered digital 
                commodity broker or registered digital commodity 
                dealer, or accrues to a customer as the result of 
                trading in digital commodities, as belonging to the 
                customer.
                    ``(B) Commingling prohibited.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), each registered digital commodity 
                        broker and registered digital commodity dealer 
                        shall separately account for money, assets, and 
                        property of a digital commodity customer, and 
                        shall not commingle any such money, assets, or 
                        property with the funds of the digital 
                        commodity broker or digital commodity dealer, 
                        respectively, or use any such money, assets, or 
                        property to margin, secure, or guarantee any 
                        trades or accounts of any customer or person 
                        other than the person for whom the money, 
                        assets, or property are held.
                            ``(ii) Exceptions.--
                                    ``(I) Use of funds.--
                                            ``(aa) In general.--A 
                                        registered digital commodity 
                                        broker or registered digital 
                                        commodity dealer may, for 
                                        convenience, commingle and 
                                        deposit in the same account or 
                                        accounts with any bank, trust 
                                        company, derivatives clearing 
                                        organization, or qualified 
                                        digital commodity custodian 
                                        money, assets, and property of 
                                        customers.
                                            ``(bb) Withdrawal.--The 
                                        share of the money, assets, and 
                                        property described in item (aa) 
                                        as in the normal course of 
                                        business shall be necessary to 
                                        margin, guarantee, secure, 
                                        transfer, adjust, or settle a 
                                        contract for sale of a digital 
                                        commodity with a registered 
                                        entity may be withdrawn and 
                                        applied to such purposes, 
                                        including the payment of 
                                        commissions, brokerage, 
                                        interest, taxes, storage, and 
                                        other charges, lawfully 
                                        accruing in connection with the 
                                        contract.
                                    ``(II) Commission action.--In 
                                accordance with such terms and 
                                conditions as the Commission may 
                                prescribe by rule, regulation, or 
                                order, any money, assets, or property 
                                of the customers of a registered 
                                digital commodity broker or registered 
                                digital commodity dealer may be 
                                commingled and deposited in customer 
                                accounts with any other money, assets, 
                                or property received by the digital 
                                commodity broker or digital commodity 
                                dealer, respectively, and required by 
                                the Commission to be separately 
                                accounted for and treated and dealt 
                                with as belonging to the customer of 
                                the digital commodity broker or digital 
                                commodity dealer, respectively.
            ``(3) Permitted investments.--Money described in paragraph 
        (2) may be invested in obligations of the United States, in 
        general obligations of any State or of any political 
        subdivision of a State, in obligations fully guaranteed as to 
        principal and interest by the United States, or in any other 
        investment that the Commission may by rule or regulation allow.
            ``(4) Customer protection during bankruptcy.--
                    ``(A) Customer property.--All money, assets, or 
                property described in paragraph (2) shall be considered 
                customer property for purposes of section 761 of title 
                11, United States Code.
                    ``(B) Transactions.--A transaction involving a unit 
                of a digital commodity occurring with a digital 
                commodity dealer shall be considered a `contract for 
                the purchase or sale of a commodity for future 
                delivery, on or subject to the rules of, a contract 
                market or board of trade' for purposes of the 
                definition of a `commodity contract' in section 761 of 
                title 11, United States Code.
                    ``(C) Brokers and dealers.--A registered digital 
                commodity dealer and a registered digital commodity 
                broker shall be considered a futures commission 
                merchant for purposes of section 761 of title 11, 
                United States Code.
                    ``(D) Assets removed from segregation.--Assets 
                removed from segregation due to a customer election 
                under paragraph (5) shall not be considered customer 
                property for purposes of section 761 of title 11, 
                United States Code.
            ``(5) Misuse of customer property.--
                    ``(A) In general.--It shall be unlawful--
                            ``(i) for any digital commodity broker or 
                        digital commodity dealer that has received any 
                        customer money, assets, or property for custody 
                        to dispose of, or use any such money, assets, 
                        or property as belonging to the digital 
                        commodity broker or digital commodity dealer, 
                        respectively; or
                            ``(ii) for any other person, including any 
                        depository, digital commodity exchange, other 
                        digital commodity broker, other digital 
                        commodity dealer, or digital commodity 
                        custodian that has received any customer money, 
                        assets, or property for deposit, to hold, 
                        dispose of, or use any such money, assets, or 
                        property, as belonging to the depositing 
                        digital commodity broker or digital commodity 
                        dealer or any person other than the customers 
                        of the digital commodity broker or digital 
                        commodity dealer, respectively.
                    ``(B) Use further defined.--For purposes of this 
                section, `use' of a digital commodity includes 
                utilizing any unit of a digital asset to participate in 
                a blockchain service defined in paragraph (5) or a 
                decentralized governance system associated with the 
                digital commodity or the blockchain system to which the 
                digital commodity relates in any manner other than that 
                expressly directed by the customer from whom the unit 
                of a digital commodity was received.
            ``(6) Participation in blockchain services.--
                    ``(A) In general.--A customer shall have the right 
                to waive the restrictions in paragraph (1) for any unit 
                of a digital commodity, by affirmatively electing, in 
                writing to the digital commodity broker or digital 
                commodity dealer, to waive the restrictions.
                    ``(B) Use of funds.--Customer digital commodities 
                removed from segregation under subparagraph (A) may be 
                pooled and used by the digital commodity broker or 
                digital commodity dealer, or one of their designees, to 
                provide a blockchain service for a blockchain system to 
                which the unit of the digital asset removed from 
                segregation in subparagraph (A) relates.
                    ``(C) Limitations.--The Commission may, by rule, 
                establish notice and disclosure requirements, and any 
                other limitations and rules related to the waiving of 
                any restrictions under this paragraph that are 
                reasonably necessary to protect customers, including 
                eligible contract participants, non-eligible contract 
                participants, or any other class of customers.
                    ``(D) Blockchain service defined.--In this 
                subparagraph, the term `blockchain service' means any 
                activity relating to validating transactions on a 
                blockchain system, providing security for a blockchain 
                system, or other similar activity required for the 
                ongoing operation of a blockchain system.
    ``(l) Federal Preemption.--Notwithstanding any other provision of 
law, the Commission shall have exclusive jurisdiction over any digital 
commodity broker or digital commodity dealer registered under this 
section.
    ``(m) Exemptions.--In order to promote responsible economic or 
financial innovation and fair competition, or protect customers, the 
Commission may (on its own initiative or on application of the 
registered digital commodity broker or registered digital commodity 
dealer) exempt, unconditionally or on stated terms or conditions, or 
for stated periods, and retroactively or prospectively, or both, a 
registered digital commodity broker or registered digital commodity 
dealer from the requirements of this section, if the Commission 
determines that--
            ``(1)(A) the exemption would be consistent with the public 
        interest and the purposes of this Act; and
            ``(B) the exemption will not have a material adverse effect 
        on the ability of the Commission or the digital commodity 
        broker or digital commodity dealer to discharge regulatory 
        duties under this Act; or
            ``(2) the registered digital commodity broker or registered 
        digital commodity dealer is subject to comparable, 
        comprehensive supervision and regulation by the appropriate 
        government authorities in the home country of the registered 
        digital commodity broker or registered digital commodity 
        dealer, respectively.
    ``(n) Treatment Under the Bank Secrecy Act.--A registered digital 
commodity broker and a registered digital commodity dealer shall be 
treated as a financial institution for purposes of the Bank Secrecy 
Act.''.

SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.

    (a) In General.--Section 4k of the Commodity Exchange Act (7 U.S.C. 
6k) is amended--
            (1) by redesignating subsections (4) through (6) as 
        subsections (5) through (7), respectively; and
            (2) by inserting after subsection (3) the following:
    ``(4) It shall be unlawful for any person to act as an associated 
person of a digital commodity broker or an associated person of a 
digital commodity dealer unless the person is registered with the 
Commission under this Act and such registration shall not have expired, 
been suspended (and the period of suspension has not expired), or been 
revoked. It shall be unlawful for a digital commodity broker or a 
digital commodity dealer to permit such a person to become or remain 
associated with the digital commodity broker or digital commodity 
dealer if the digital commodity broker or digital commodity dealer knew 
or should have known that the person was not so registered or that the 
registration had expired, been suspended (and the period of suspension 
has not expired), or been revoked.''; and
            (3) in subsection (5) (as so redesignated), by striking 
        ``or of a commodity trading advisor'' and inserting ``of a 
        commodity trading advisor, of a digital commodity broker, or of 
        a digital commodity dealer''.
    (b) Conforming Amendments.--The Commodity Exchange Act (7 U.S.C. 1a 
et seq.) is amended by striking ``section 4k(6)'' each place it appears 
and inserting ``section 4k(7)''.

SEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND COMMODITY 
              TRADING ADVISORS.

    Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 6m(3)) is 
amended--
            (1) in subparagraph (A)--
                    (A) by striking ``any commodity trading advisor'' 
                and inserting ``a commodity pool operator or commodity 
                trading advisor''; and
                    (B) by striking ``acting as a commodity trading 
                advisor'' and inserting ``acting as a commodity pool 
                operator or commodity trading advisor''; and
            (2) in subparagraph (C), by inserting ``digital 
        commodities,'' after ``physical commodities,''.

SEC. 409. EXCLUSION FOR ANCILLARY ACTIVITIES.

    The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended by the 
preceding provisions of this Act, is amended by inserting after section 
4u the following:

``SEC. 4V. EXCLUSION FOR ANCILLARY ACTIVITIES.

    ``(a) In General.--Notwithstanding any other provision of this Act, 
a person shall not be subject to this Act and the regulations 
promulgated under this Act solely based on the person undertaking any 
ancillary activities.
    ``(b) Exceptions.--Subsection (a) shall not be construed to apply 
to the antimanipulation, antifraud, or false reporting enforcement 
authorities of the Commission.
    ``(c) Ancillary Activities Defined.--In this section, the term 
`ancillary activities' means any of the following activities related to 
the operation of a blockchain system:
            ``(1) Compiling network transactions, operating a pool, 
        relaying, searching, sequencing, validating, or acting in a 
        similar capacity with respect to a digital commodity 
        transaction.
            ``(2) Providing computational work, operating a node, or 
        procuring, offering, or utilizing network bandwidth, or other 
        similar incidental services with respect to a digital commodity 
        transaction.
            ``(3) Providing a user interface that enables a user to 
        read, and access data about a blockchain system, send messages, 
        or otherwise interact with a blockchain system.
            ``(4) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing a blockchain system.
            ``(5) Developing, publishing, constituting, administering, 
        maintaining, or otherwise distributing software or systems that 
        create or deploy hardware or software, including wallets or 
        other systems, facilitating an individual user's own personal 
        ability to keep, safeguard, or custody a user's digital 
        commodities or related private keys.''.

SEC. 410. EFFECTIVE DATE.

    Unless otherwise provided in this title, this title and the 
amendments made by this title shall take effect 360 days after the date 
of enactment of this Act, except that, to the extent a provision of 
this title requires a rulemaking, the provision shall take effect on 
the later of--
            (1) 360 days after the date of enactment of this Act; or
            (2) 60 days after the publication in the Federal Register 
        of the final rule implementing the provision.

            TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

SEC. 501. CODIFICATION OF THE SEC STRATEGIC HUB FOR INNOVATION AND 
              FINANCIAL TECHNOLOGY.

    Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is 
amended by adding at the end the following:
    ``(l) Strategic Hub for Innovation and Financial Technology.--
            ``(1) Office established.--There is established within the 
        Commission the Strategic Hub for Innovation and Financial 
        Technology (referred to in this section as the `FinHub').
            ``(2) Purposes.--The purposes of FinHub are as follows:
                    ``(A) To assist in shaping the approach of the 
                Commission to technological advancements in the 
                financial industry.
                    ``(B) To examine financial technology innovations 
                within capital markets, market participants, and 
                investors.
                    ``(C) To coordinate the response of the Commission 
                to emerging technologies in financial, regulatory, and 
                supervisory systems.
            ``(3) Director of finhub.--FinHub shall have a Director who 
        shall be appointed by the Commission, from among individuals 
        having experience in both emerging technologies and Federal 
        securities law and serve at the pleasure of the Commission. The 
        Director shall report directly to the Commission and perform 
        such functions and duties as the Commission may prescribe.
            ``(4) Responsibilities.--FinHub shall--
                    ``(A) foster responsible technological innovation 
                and fair competition within the Commission, including 
                around financial technology, regulatory technology, and 
                supervisory technology;
                    ``(B) provide internal education and training to 
                the Commission regarding financial technology;
                    ``(C) advise the Commission regarding financial 
                technology that would serve the Commission's oversight 
                functions;
                    ``(D) analyze technological advancements and the 
                impact of regulatory requirements on financial 
                technology companies;
                    ``(E) advise the Commission with respect to 
                rulemakings or other agency or staff action regarding 
                financial technology;
                    ``(F) provide businesses working in emerging 
                financial technology fields with information on the 
                Commission, its rules and regulations; and
                    ``(G) encourage firms working in emerging 
                technology fields to engage with the Commission and 
                obtain feedback from the Commission on potential 
                regulatory issues.
            ``(5) Access to documents.--The Commission shall ensure 
        that FinHub has full access to the documents and information of 
        the Commission and any self-regulatory organization, as 
        necessary to carry out the functions of FinHub.
            ``(6) Report to congress.--
                    ``(A) In general.--Not later than October 31 of 
                each year after 2024, FinHub shall submit to the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives a report on the activities of 
                FinHub during the immediately preceding fiscal year.
                    ``(B) Contents.--Each report required under 
                subparagraph (A) shall include--
                            ``(i) the total number of persons that met 
                        with FinHub;
                            ``(ii) the total number of market 
                        participants FinHub met with, including the 
                        classification of those participants;
                            ``(iii) a summary of general issues 
                        discussed during meetings with persons;
                            ``(iv) information on steps FinHub has 
                        taken to improve Commission services, including 
                        responsiveness to the concerns of persons;
                            ``(v) recommendations--
                                    ``(I) with respect to the 
                                regulations of the Commission and the 
                                guidance and orders of the Commission; 
                                and
                                    ``(II) for such legislative actions 
                                as the FinHub determines appropriate; 
                                and
                            ``(vi) any other information, as determined 
                        appropriate by the Director of FinHub.
                    ``(C) Confidentiality.--A report under subparagraph 
                (A) may not contain confidential information.
            ``(7) Systems of records.--
                    ``(A) In general.--The Commission shall establish a 
                detailed system of records (as defined under section 
                552a of title 5, United States Code) to assist FinHub 
                in communicating with interested parties.
                    ``(B) Entities covered by the system.--Entities 
                covered by the system required under subparagraph (A) 
                include entities or persons submitting requests or 
                inquiries and other information to Commission through 
                FinHub.
                    ``(C) Security and storage of records.--FinHub 
                shall store--
                            ``(i) electronic records--
                                    ``(I) in the system required under 
                                subparagraph (A); or
                                    ``(II) on the secure network or 
                                other electronic medium, such as 
                                encrypted hard drives or back-up media, 
                                of the Commission; and
                            ``(ii) paper records in secure facilities.
            ``(8) Effective date.--This subsection shall take effect on 
        the date that is 180 days after the date of the enactment of 
        this subsection.''.

SEC. 502. CODIFICATION OF LABCFTC.

    (a) In General.--Section 18 of the Commodity Exchange Act (7 U.S.C. 
22) is amended by adding at the end the following:
    ``(c) LabCFTC.--
            ``(1) Establishment.--There is established in the 
        Commission LabCFTC.
            ``(2) Purpose.--The purposes of LabCFTC are to--
                    ``(A) promote responsible financial technology 
                innovation and fair competition for the benefit of the 
                American public;
                    ``(B) serve as an information platform to inform 
                the Commission about new financial technology 
                innovation; and
                    ``(C) provide outreach to financial technology 
                innovators to discuss their innovations and the 
                regulatory framework established by this Act and the 
                regulations promulgated thereunder.
            ``(3) Director.--LabCFTC shall have a Director, who shall 
        be appointed by the Commission and serve at the pleasure of the 
        Commission. Notwithstanding section 2(a)(6)(A), the Director 
        shall report directly to the Commission and perform such 
        functions and duties as the Commission may prescribe.
            ``(4) Duties.--LabCFTC shall--
                    ``(A) advise the Commission with respect to 
                rulemakings or other agency or staff action regarding 
                financial technology;
                    ``(B) provide internal education and training to 
                the Commission regarding financial technology;
                    ``(C) advise the Commission regarding financial 
                technology that would bolster the Commission's 
                oversight functions;
                    ``(D) engage with academia, students, and 
                professionals on financial technology issues, ideas, 
                and technology relevant to activities under this Act;
                    ``(E) provide persons working in emerging 
                technology fields with information on the Commission, 
                its rules and regulations, and the role of a registered 
                futures association; and
                    ``(F) encourage persons working in emerging 
                technology fields to engage with the Commission and 
                obtain feedback from the Commission on potential 
                regulatory issues.
            ``(5) Access to documents.--The Commission shall ensure 
        that LabCFTC has full access to the documents and information 
        of the Commission and any self-regulatory organization or 
        registered futures association, as necessary to carry out the 
        functions of LabCFTC.
            ``(6) Report to congress.--
                    ``(A) In general.--Not later than October 31 of 
                each year after 2024, LabCFTC shall submit to the 
                Committee on Agriculture of the House of 
                Representatives and the Committee on Agriculture, 
                Nutrition, and Forestry of the Senate a report on its 
                activities.
                    ``(B) Contents.--Each report required under 
                paragraph (1) shall include--
                            ``(i) the total number of persons that met 
                        with LabCFTC;
                            ``(ii) a summary of general issues 
                        discussed during meetings with the person;
                            ``(iii) information on steps LabCFTC has 
                        taken to improve Commission services, including 
                        responsiveness to the concerns of persons;
                            ``(iv) recommendations made to the 
                        Commission with respect to the regulations, 
                        guidance, and orders of the Commission and such 
                        legislative actions as may be appropriate; and
                            ``(v) any other information determined 
                        appropriate by the Director of LabCFTC.
                    ``(C) Confidentiality.--A report under paragraph 
                (A) shall abide by the confidentiality requirements in 
                section 8.
            ``(7) Systems of records.--
                    ``(A) In general.--The Commission shall establish a 
                detailed system of records (as defined in section 552a 
                of title 5, United States Code) to assist LabCFTC in 
                communicating with interested parties.
                    ``(B) Persons covered by the system.--The persons 
                covered by the system of records shall include persons 
                submitting requests or inquiries and other information 
                to the Commission through LabCFTC.
                    ``(C) Security and storage of records.--The system 
                of records shall store records electronically or on 
                paper in secure facilities, and shall store electronic 
                records on the secure network of the Commission and on 
                other electronic media, such as encrypted hard drives 
                and back-up media, as needed.''.
    (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act (7 
U.S.C. 2(a)(6)(A)) is amended--
            (1) by striking ``paragraph and in'' and inserting 
        ``paragraph,''; and
            (2) by inserting ``and section 18(c)(3),'' before ``the 
        executive''.
    (c) Effective Date.--The Commodity Futures Trading Commission shall 
implement the amendments made by this section (including complying with 
section 18(c)(7) of the Commodity Exchange Act) within 180 days after 
the date of the enactment of this Act.

SEC. 503. CFTC-SEC JOINT ADVISORY COMMITTEE ON DIGITAL ASSETS.

    (a) Establishment.--The Commodity Futures Trading Commission and 
the Securities and Exchange Commission (in this section referred to as 
the ``Commissions'') shall jointly establish the Joint Advisory 
Committee on Digital Assets (in this section referred to as the 
``Committee'').
    (b) Purpose.--
            (1) In general.--The Committee shall--
                    (A) provide the Commissions with advice on the 
                rules, regulations, and policies of the Commissions 
                related to digital assets;
                    (B) further the regulatory harmonization of digital 
                asset policy between the Commissions;
                    (C) examine and disseminate methods for describing, 
                measuring, and quantifying digital asset--
                            (i) decentralization;
                            (ii) functionality;
                            (iii) information asymmetries; and
                            (iv) transaction and network security;
                    (D) examine the potential for digital assets, 
                blockchain systems, and distributed ledger technology 
                to improve efficiency in the operation of financial 
                market infrastructure and better protect financial 
                market participants, including services and systems 
                which provide--
                            (i) greater transparency regarding customer 
                        funds;
                            (ii) reduced transaction cost; and
                            (iii) increased access to financial market 
                        services; and
                    (E) discuss the implementation by the Commissions 
                of this Act and the amendments made by this Act.
            (2) Review by agencies.--Each Commission shall--
                    (A) review the findings and recommendations of the 
                Committee;
                    (B) each time the Committee submits a finding or 
                recommendation to a Commission, promptly issue a public 
                statement--
                            (i) assessing the finding or recommendation 
                        of the Committee;
                            (ii) disclosing the action or decision not 
                        to take action made by the Commission in 
                        response to a finding or recommendation; and
                            (iii) the reasons for the action or 
                        decision not to take action; and
                    (C) each time the Committee submits a finding or 
                recommendation to a Commission, provide the Committee 
                with a formal response to the finding or recommendation 
                not later than 3 months after the date of the 
                submission of the finding or recommendation.
    (c) Membership and Leadership.--
            (1) Non-federal members.--
                    (A) In general.--The Commissions shall appoint at 
                least 20 nongovernmental stakeholders with a wide 
                diversity of opinion and who represent a broad spectrum 
                of interests representing the digital asset ecosystem, 
                equally divided between the Commissions, to serve as 
                members of the Committee. The appointees shall 
                include--
                            (i) digital asset issuers;
                            (ii) persons registered with the 
                        Commissions and engaged in digital asset 
                        related activities;
                            (iii) individuals engaged in academic 
                        research relating to digital assets; and
                            (iv) digital asset users.
                    (B) Members not commission employees.--Members 
                appointed under subparagraph (A) shall not be deemed to 
                be employees or agents of a Commission solely by reason 
                of membership on the Committee.
            (2) Co-designated federal officers.--
                    (A) Number; appointment.--There shall be 2 co-
                designated Federal officers of the Committee, as 
                follows:
                            (i) The Director of LabCFTC of the 
                        Commodity Futures Trading Commission.
                            (ii) The Director of the Strategic Hub for 
                        Innovation and Financial Technology.
                    (B) Duties.--The duties required by chapter 10 of 
                title 5, United States Code, to be carried out by a 
                designated Federal officer with respect to the 
                Committee shall be shared by the co-designated Federal 
                officers of the Committee.
            (3) Committee leadership.--
                    (A) Composition; election.--The Committee members 
                shall elect, from among the Committee members--
                            (i) a chair;
                            (ii) a vice chair;
                            (iii) a secretary; and
                            (iv) an assistant secretary.
                    (B) Term of office.--Each member elected under 
                subparagraph (A) in a 2-year period referred to in 
                section 1013(b)(2) of title 5, United States Code, 
                shall serve in the capacity for which the member was so 
                elected, until the end of the 2-year period.
    (d) No Compensation for Committee Members.--
            (1) Non-federal members.--All Committee members appointed 
        under subsection (d)(1) shall--
                    (A) serve without compensation; and
                    (B) while away from the home or regular place of 
                business of the member in the performance of services 
                for the Committee, be allowed travel expenses, 
                including per diem in lieu of subsistence, in the same 
                manner as persons employed intermittently in the 
                Government service are allowed expenses under section 
                5703(b) of title 5, United States Code.
            (2) No compensation for co-designated federal officers.--
        The co-designated Federal officers shall serve without 
        compensation in addition to that received for their services as 
        officers or employees of the United States.
    (e) Frequency of Meetings.--The Committee shall meet--
            (1) not less frequently than twice annually; and
            (2) at such other times as either Commission may request.
    (f) Duration.--Section 1013(a)(2) of title 5, United States Code, 
shall not apply to the Committee.
    (g) Time Limits.--The Commissions shall--
            (1) adopt a joint charter for the Committee within 90 days 
        after the date of the enactment of this section;
            (2) appoint members to the Committee within 120 days after 
        such date of enactment; and
            (3) hold the initial meeting of the Committee within 180 
        days after such date of enactment.
    (h) Funding.--The Commissions may jointly fund the Committee.

SEC. 504. MODERNIZATION OF THE SECURITIES AND EXCHANGE COMMISSION 
              MISSION.

    (a) Securities Act of 1933.--Section 2(b) of the Securities Act of 
1933 (15 U.S.C. 77(b)) is amended--
            (1) in the heading, by inserting ``Innovation,'' after 
        ``Efficiency,''; and
            (2) by inserting ``innovation,'' after ``efficiency,''.
    (b) Securities Exchange Act of 1934.--Section 3(f) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78(c)) is amended--
            (1) in the heading, by inserting ``Innovation,'' after 
        ``Efficiency,''; and
            (2) by inserting ``innovation,'' after ``efficiency,''.
    (c) Investment Advisers Act of 1940.--Section 202(c) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-2) is amended--
            (1) in the heading, by inserting ``Innovation,'' after 
        ``Efficiency,''; and
            (2) by inserting ``innovation,'' after ``efficiency,''.
    (d) Investment Company Act of 1940.--Section 2(c) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2) is amended--
            (1) in the heading, by inserting ``Innovation,'' after 
        ``Efficiency,''; and
            (2) by inserting ``innovation,'' after ``efficiency,''.

SEC. 505. STUDY ON DECENTRALIZED FINANCE.

    (a) In General.--The Securities and Exchange Commission and the 
Commodity Futures Trading Commission shall jointly carry out a study on 
decentralized finance that analyzes--
            (1) the nature, size, role, and use of decentralized 
        finance blockchain protocols;
            (2) the operation of blockchain protocols that comprise 
        decentralized finance;
            (3) the interoperability of blockchain protocols and 
        blockchain systems;
            (4) the interoperability of blockchain protocols and 
        software-based systems, including websites and wallets;
            (5) the decentralized governance systems through which 
        blockchain protocols may be developed, published, constituted, 
        administered, maintained, or otherwise distributed, including--
                    (A) whether the systems enhance or detract from--
                            (i) the decentralization of the 
                        decentralized finance; and
                            (ii) the inherent risks of the 
                        decentralized governance system; and
                    (B) any procedures or requirements that would 
                mitigate the risks identified in subparagraph (A)(ii);
            (6) the benefits of decentralized finance, including--
                    (A) operational resilience and interoperability of 
                blockchain-based systems;
                    (B) market competition and innovation;
                    (C) transaction efficiency;
                    (D) transparency and traceability of transactions; 
                and
                    (E) disintermediation; and
            (7) the risks of decentralized finance, including--
                    (A) pseudonymity of users and transactions;
                    (B) disintermediation; and
                    (C) cybersecurity vulnerabilities;
            (8) the extent to which decentralized finance has 
        integrated with the traditional financial markets and any 
        potential risks to stability of the markets;
            (9) how the levels of illicit activity in decentralized 
        finance compare with the levels of illicit activity in 
        traditional financial markets;
            (10) how decentralized finance may increase the 
        accessibility of cross-border transactions; and
            (11) the feasibility of embedding self-executing compliance 
        and risk controls into decentralized finance.
    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Securities and Exchange Commission and the Commodity 
Futures Trading Commission shall jointly submit to the relevant 
congressional committees a report that includes the results of the 
study required by subsection (a).
    (c) GAO Study.--The Comptroller General of the United States 
shall--
            (1) carry out a study on decentralized finance that 
        analyzes the information described under paragraphs (1) through 
        (10) of subsection (a); and
            (2) not later than 1 year after the date of enactment of 
        this Act, submit to the relevant congressional committees a 
        report that includes the results of the study required by 
        paragraph (1).
    (d) Definitions.--In this section:
            (1) Decentralized finance.--
                    (A) In general.--The term ``decentralized finance'' 
                means blockchain protocols that allow users to engage 
                in financial transactions in a self-directed manner so 
                that a third-party intermediary does not effectuate the 
                transactions or take custody of digital assets of a 
                user during any part of the transactions.
                    (B) Relationship to ancillary activities.--The term 
                ``decentralized finance'' shall not be interpreted to 
                limit or exclude any activity from the meaning of 
                ``ancillary activities'', as defined in section 15H(c) 
                of the Securities Exchange Act of 1934 or section 4v(c) 
                of the Commodity Exchange Act.
            (2) Relevant congressional committees.--The term ``relevant 
        congressional committees'' means--
                    (A) the Committees on Financial Services and 
                Agriculture of the House of Representatives; and
                    (B) the Committees on Banking, Housing, and Urban 
                Affairs and Agriculture, Nutrition, and Forestry of the 
                Senate.

SEC. 506. STUDY ON NON-FUNGIBLE DIGITAL ASSETS.

    (a) The Comptroller General of the United States shall carry out a 
study of non-fungible digital assets that analyzes--
            (1) the nature, size, role, purpose, and use of non-
        fungible digital assets;
            (2) the similarities and differences between non-fungible 
        digital assets and other digital assets, including digital 
        commodities and payments stablecoins, and how the markets for 
        those digital assets intersect with each other;
            (3) how non-fungible digital assets are minted by issuers 
        and subsequently administered to purchasers;
            (4) how non-fungible digital assets are stored after being 
        purchased by a consumer;
            (5) the interoperability of non-fungible digital assets 
        between different blockchain systems;
            (6) the scalability of different non-fungible digital asset 
        marketplaces;
            (7) the benefits of non-fungible digital assets, including 
        verifiable digital ownership;
            (8) the risks of non-fungible tokens, including--
                    (A) intellectual property rights;
                    (B) cybersecurity risks; and
                    (C) market risks;
            (9) whether and how non-fungible digital assets have 
        integrated with traditional marketplaces, including those for 
        music, real estate, gaming, events, and travel;
            (10) whether non-fungible tokens can be used to facilitate 
        commerce or other activities through the representation of 
        documents, identification, contract, licenses, and other 
        commercial, government, or personal records;
            (11) any potential risks to such traditional markets from 
        such integration; and
            (12) the levels and types of illicit activity in non-
        fungible digital asset markets.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Secretary of Commerce, shall make publicly available a 
report that includes the results of the study required by subsection 
(a).

SEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE IMPROVEMENTS.

    (a) In General.--The Securities and Exchange Commission and the 
Commodity Futures Trading Commission shall jointly conduct a study to 
assess whether additional guidance or rules are necessary to facilitate 
the development of tokenized securities and derivatives products, and 
to the extent such rules would foster the development of fair and 
orderly financial markets, be necessary or appropriate in the public 
interest, and be consistent with the protection of investors.
    (b) Report.--
            (1) Time limit.--Not later than 1 year after the date of 
        enactment of this Act, the Securities and Exchange Commission 
        and the Commodity Futures Trading Commission shall jointly 
        submit to the relevant congressional committees a report that 
        includes the results of the study required by subsection (a).
            (2) Relevant congressional committees defined.--In this 
        section, the term ``relevant congressional committees'' means--
                    (A) the Committees on Financial Services and on 
                Agriculture of the House of Representatives; and
                    (B) the Committees on Banking, Housing, and Urban 
                Affairs and on Agriculture, Nutrition, and Forestry of 
                the Senate.
                                 <all>