[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2281 Introduced in Senate (IS)]

<DOC>






118th CONGRESS
  1st Session
                                S. 2281

     To provide for consumer protection and responsible financial 
innovation, to bring crypto assets within the regulatory perimeter, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 12, 2023

 Ms. Lummis (for herself and Mrs. Gillibrand) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To provide for consumer protection and responsible financial 
innovation, to bring crypto assets within the regulatory perimeter, 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 ``Lummis-Gillibrand 
Responsible Financial Innovation Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
                          TITLE I--DEFINITIONS

Sec. 101. Definitions.
              TITLE II--PUTTING CONSUMER PROTECTION FIRST

Sec. 201. Sense of Congress relating to crypto asset enforcement 
                            powers.
Sec. 202. Enforcement of consumer protection requirements.
Sec. 203. Mandatory proof of reserves; annual verification.
Sec. 204. Plain language crypto asset customer agreements.
Sec. 205. Basic consumer protection standards for crypto assets.
Sec. 206. Cleaning up crypto asset lending.
Sec. 207. Settlement finality.
Sec. 208. Advertisements of crypto asset intermediaries and certain 
                            other persons.
Sec. 209. Cybersecurity standards for crypto asset intermediaries.
                  TITLE III--COMBATING ILLICIT FINANCE

Sec. 301. Higher penalties for crypto asset crimes.
Sec. 302. Anti-money laundering examination standards.
Sec. 303. Crypto asset kiosks.
Sec. 304. Independent Financial Technology Working Group to Combat 
                            Terrorism and Illicit Financing.
Sec. 305. Sanctions compliance responsibilities of payment stablecoin 
                            issuers.
Sec. 306. Crypto asset mixers and tumblers.
Sec. 307. Financial Crimes Enforcement Network Innovation Laboratory.
              TITLE IV--RESPONSIBLE COMMODITIES REGULATION

Sec. 401. Definitions.
Sec. 402. Reporting and recordkeeping.
Sec. 403. Jurisdiction over crypto asset transactions.
Sec. 404. Registration of crypto asset exchanges.
Sec. 405. Supervision of affiliates.
Sec. 406. Violations.
Sec. 407. Market reports.
Sec. 408. Bankruptcy treatment of crypto assets.
Sec. 409. Identified banking products.
Sec. 410. Financial institutions definition.
Sec. 411. Offsetting the costs of crypto asset regulation.
               TITLE V--RESPONSIBLE SECURITIES REGULATION

Sec. 501. Securities offerings involving certain intangible assets.
Sec. 502. Guidance relating to satisfactory control location.
      TITLE VI--CUSTOMER PROTECTION AND MARKET INTEGRITY AUTHORITY

Sec. 601. Customer protection and market integrity authority.
Sec. 602. Registration, rulemaking, and supervision of customer 
                            protection and market integrity 
                            authorities.
Sec. 603. Records and reports; duties and powers of customer protection 
                            and market integrity authorities.
               TITLE VII--RESPONSIBLE PAYMENTS INNOVATION

Sec. 701. Issuance of payment stablecoins.
Sec. 702. Treatment of endogenously referenced crypto assets.
Sec. 703. Certificate of authority to commence banking.
Sec. 704. Holding company supervision of covered depository 
                            institutions.
Sec. 705. Codifying custodial principles for financial institutions.
Sec. 706. Implementation rules to preserve adequate competition in 
                            payment stablecoins.
Sec. 707. Study on use of distributed ledger technology for reduction 
                            of risk in depository institutions.
Sec. 708. Clarifying application review times with respect to the 
                            Federal banking agencies.
Sec. 709. Conforming amendments.
           TITLE VIII--RESPONSIBLE TAXATION OF CRYPTO ASSETS

Sec. 801. De minimis gain from sale or exchange of crypto assets.
Sec. 802. Information reporting requirements imposed on brokers with 
                            respect to crypto assets.
Sec. 803. Sources of income.
Sec. 804. Tax treatment of crypto asset lending agreements and related 
                            matters.
Sec. 805. Loss from wash sales of crypto assets.
Sec. 806. Mark-to-market election.
Sec. 807. Forks, airdrops, and subsidiary value.
Sec. 808. Crypto asset mining and staking.
Sec. 809. Charitable contributions and qualified appraisals.
             TITLE IX--RESPONSIBLE INTERAGENCY COORDINATION

Sec. 901. Timeline for interpretive guidance issued by Federal 
                            financial agencies.
Sec. 902. State money transmission coordination relating to crypto 
                            assets.
Sec. 903. Information sharing among Federal and State financial 
                            regulators.
Sec. 904. Report on energy consumption in crypto asset markets.
Sec. 905. Analysis of energy consumption by distributed ledger 
                            technologies.
Sec. 906. Report on distributed ledger applications in energy.
Sec. 907. Permitting Federal Government employees to gain experience 
                            with crypto asset technologies.
Sec. 908. Advisory Committee on Financial Innovation.
     TITLE X--EQUIPPING AGENCIES TO PROTECT CONSUMERS AND PROMOTE 
                         RESPONSIBLE INNOVATION

Sec. 1001. Executive Office of the President appropriations.
Sec. 1002. Financial Crimes Enforcement Network appropriations.
Sec. 1003. Commodity Futures Trading Commission appropriations.
Sec. 1004. Securities and Exchange Commission appropriations.
Sec. 1005. Federal Trade Commission appropriations.
Sec. 1006. Advisory Commission on Financial Innovation appropriations.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Commodity.--The term ``commodity'' has the meaning 
        given the term in section 1a of the Commodity Exchange Act (7 
        U.S.C. 1a).
            (2) Crypto asset; crypto asset intermediary; distributed 
        ledger technology; payment stablecoin; smart contract.--The 
        terms ``crypto asset'', ``crypto asset intermediary'', 
        ``distributed ledger technology'', ``payment stablecoin'' and 
        ``smart contract'' have the meanings given the terms in section 
        9801 of title 31, United States Code, as added by section 101 
        of this Act.
            (3) Security.--Except as otherwise expressly provided, the 
        term ``security'' has the meaning given the term in section 
        3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

                          TITLE I--DEFINITIONS

SEC. 101. DEFINITIONS.

    (a) In General.--Subtitle VI of title 31, United States Code, is 
amended by adding after chapter 97 the following:

                      ``CHAPTER 98--CRYPTO ASSETS

``Sec.
``9801. Definitions.
``Sec. 9801. Definitions
    ``In this chapter:
            ``(1) Appropriate commission.--The term `appropriate 
        commission' means the Commodity Futures Trading Commission or 
        the Securities and Exchange Commission, or both, if applicable, 
        based on the commission that has statutory jurisdiction over a 
        crypto asset intermediary and acts as the primary registration 
        or licensing authority for that intermediary.
            ``(2) Crypto asset.--The term `crypto asset'--
                    ``(A) means a natively electronic asset that--
                            ``(i) confers economic, proprietary, or 
                        access rights or powers;
                            ``(ii) is recorded using cryptographically 
                        secured distributed ledger technology, or any 
                        similar analogue; and
                            ``(iii) does not represent, derive value 
                        from, or maintain backing by, a financial asset 
                        (except other crypto assets); and
                    ``(B) does not include--
                            ``(i) a payment stablecoin, except as 
                        otherwise provided by this chapter; and
                            ``(ii) other interests in financial assets 
                        (except other crypto assets) represented on a 
                        distributed ledger or any similar analogue.
            ``(3) Crypto asset intermediary.--The term `crypto asset 
        intermediary'--
                    ``(A) means--
                            ``(i) a person who holds a license, 
                        registration, or other similar authorization, 
                        as specified by this chapter, the Commodity 
                        Exchange Act (7 U.S.C. 1 et seq.), the 
                        Securities Act of 1933 (15 U.S.C. 77a et seq.), 
                        the Corporation of Foreign Bondholders Act, 
                        1933 (15 U.S.C. 77bb et seq.), the Trust 
                        Indenture Act of 1939 (15 U.S.C. 77aaa et 
                        seq.), the Securities Exchange Act of 1934 (15 
                        U.S.C. 78a et seq.), the Securities Investor 
                        Protection Act of 1970 (15 U.S.C. 78aaa et 
                        seq.), the Investment Company Act of 1940 (15 
                        U.S.C. 80a-1 et seq.), the Investment Advisers 
                        Act of 1940 (15 U.S.C. 80b-1), or the Omnibus 
                        Small Business Capital Formation Act of 1980 
                        (15 U.S.C. 80c), that conducts market 
                        activities relating to crypto assets; or
                            ``(ii) a person who is required by law to 
                        hold a license, registration, or other similar 
                        authorization described in clause (i); and
                    ``(B) does not include a depository institution.
            ``(4) Depository institution.--The term `depository 
        institution' has the meaning given the term in section 19(b)(1) 
        of the Federal Reserve Act (12 U.S.C. 461(b)(1)).
            ``(5) Distributed ledger technology.--The term `distributed 
        ledger technology' means technology that enables the operation 
        and use of a ledger that--
                    ``(A) is shared across a set of distributed nodes 
                that participate in a network and store a complete or 
                partial replica of the ledger;
                    ``(B) is synchronized between the nodes;
                    ``(C) has data appended to the ledger by following 
                the specified consensus mechanism of the ledger;
                    ``(D) may be accessible to anyone or restricted to 
                a subset of participants; and
                    ``(E) may require participants to have 
                authorization to perform certain actions or require no 
                authorization.
            ``(6) Payment stablecoin.--The term `payment stablecoin' 
        means a claim represented on a distributed ledger or a similar 
        analogue that is--
                    ``(A) redeemable, on demand, on a 1-to-1 basis for 
                instruments denominated in United States dollars;
                    ``(B) issued by a business entity;
                    ``(C) accompanied by a statement from the issuer 
                that the asset is redeemable, as specified in 
                subparagraph (A), from the issuer or another identified 
                person;
                    ``(D) backed by 1 or more financial assets 
                (excluding other crypto assets), consistent with 
                subparagraph (A); and
                    ``(E) intended to be used as a medium of exchange.
            ``(7) Security.--The term `security' has the meaning given 
        the term in section 3(a) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78c(a)).
            ``(8) Smart contract.--The term `smart contract'--
                    ``(A) means--
                            ``(i) computer code deployed to a 
                        distributed ledger technology network that 
                        executes an instruction based on the occurrence 
                        or nonoccurrence of specified conditions; or
                            ``(ii) any similar analogue; and
                    ``(B) includes taking possession or control of a 
                crypto asset and transferring the asset or issuing 
                executable instructions for these actions.''.
    (b) Technical and Conforming Amendment.--The table of contents for 
subtitle VI of title 31, United States Code, is amended by adding at 
the end the following:

``98. Crypto assets.........................................    9801''.

              TITLE II--PUTTING CONSUMER PROTECTION FIRST

SEC. 201. SENSE OF CONGRESS RELATING TO CRYPTO ASSET ENFORCEMENT 
              POWERS.

            (1) Congress finds the following relating to the authority 
        of the Commodity Futures Trading Commission:
                    (A) The Commodity Futures Trading Commission has 
                enforcement tools to ensure compliance with the 
                commodities laws of the United States, which Congress 
                has designed to promote responsible innovation through 
                a principles-based approach and to police fraud, scams, 
                and wrongdoing.
                    (B) The authority of the Commodity Futures Trading 
                Commission described in subparagraph (A) includes the 
                following:
                            (i) Recommending criminal prosecution to 
                        the Department of Justice and State prosecutors 
                        for fraud and conspiracy.
                            (ii) Bringing civil actions to enjoin 
                        violations of this Act and other commodities 
                        laws.
                            (iii) Seeking civil monetary penalties, 
                        disgorgement of benefits, and restitution and 
                        freezing assets.
                            (iv) Revoking exchange trading privileges, 
                        registration, licenses, and other 
                        authorizations.
                            (v) Issuing cease and desist orders.
                    (C) Congress has granted the authorities described 
                in this paragraph to the Commodity Futures Trading 
                Commission to--
                            (i) ensure fair and transparent commodities 
                        markets with accurate price discovery and 
                        appropriate risk management; and
                            (ii) facilitate responsible innovation.
                    (D) The Commodity Futures Trading Commission has a 
                duty to use the authorities provided to the Commission 
                to protect all market participants, regardless of 
                sophistication level, from fraud, scams, and wrongdoing 
                relating to crypto assets that are not securities, as 
                defined in this Act, the Commodity Exchange Act (7 
                U.S.C. 1 et seq.), and case law.
            (2) Congress finds the following relating to the authority 
        of the Securities and Exchange Commission:
                    (A) The Securities and Exchange Commission has 
                enforcement tools to--
                            (i) ensure compliance with the securities 
                        laws of the United States, which have made 
                        United States markets the envy of the world; 
                        and
                            (ii) police fraud, scams, and wrongdoing.
                    (B) The authority of the Securities and Exchange 
                Commission described in subparagraph (A) includes the 
                following:
                            (i) Recommending criminal proceedings to 
                        the Department of Justice or State prosecutors 
                        for fraud, investment scams, insider trading, 
                        conspiracy, and other violations of the 
                        securities laws of the United States.
                            (ii) Bringing civil actions to enjoin 
                        violations of this Act and the other securities 
                        laws.
                            (iii) Seeking civil monetary penalties, 
                        disgorgement of profits, and restitution.
                            (iv) Barring individuals from the 
                        securities industry and from serving as an 
                        officer or director of a particular company.
                            (v) Revoking registrations, licenses, or 
                        other authorizations.
                            (vi) Issuing cease and desist orders.
                    (C) Congress has granted the authorities described 
                in this paragraph to the Securities and Exchange 
                Commission to ensure fair, honest, and transparent 
                securities markets that enable robust capital formation 
                and a thriving economy.
                    (D) The Securities and Exchange Commission has a 
                duty to use the authorities provided to the Commission 
                appropriately and proportionately to protect consumers 
                from fraud, scams, and wrongdoing relating to crypto 
                assets that are securities, as defined in this Act, the 
                Securities Act of 1933 (15 U.S.C. 77a et seq.), the 
                Securities Exchange Act of 1934 (15 U.S.C. 78a et 
                seq.), and case law, while providing clear guidance to 
                innovators and market participants so that those 
                innovators and market participants are able to clearly 
                determine their legal obligations pursuant to the laws 
                enacted by Congress.

SEC. 202. ENFORCEMENT OF CONSUMER PROTECTION REQUIREMENTS.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
added by section 101(a) of this Act, is amended by adding at the end 
the following:
``Sec. 9802. Enforcement; rules
    ``(a) Enforcement of Standards.--Except as otherwise provided by 
this chapter, the standards of this chapter shall be enforced in an 
appropriate manner, commensurate with other customer protection 
standards--
            ``(1) in the case of a crypto asset intermediary, if a 
        crypto asset customer protection and market integrity authority 
        has been chartered, by that authority;
            ``(2) in the case of crypto asset intermediary, if a crypto 
        asset customer protection and market integrity authority has 
        not been chartered, by the Federal or State licensing, 
        registration, or chartering authority of the intermediary; and
            ``(3) in the case of a depository institution or other 
        chartered financial institution, by the appropriate State or 
        Federal banking supervisor.
    ``(b) Rulemaking.--The Federal agencies specified in paragraphs (2) 
and (3) of subsection (a) shall promulgate final rules to implement 
this title not later than 2 years after the date of enactment of this 
section.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as added by section 101(a) 
of this Act, is amended by adding at the end the following:

``9802. Enforcement; rules.''.

SEC. 203. MANDATORY PROOF OF RESERVES; ANNUAL VERIFICATION.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 202 of this Act, is amended by adding at the end the 
following:
``Sec. 9803. Mandatory proof of reserves; annual verification
    ``(a) Mandatory Proof of Reserves.--A crypto asset intermediary 
shall maintain a system, and the requisite policies and procedures, to 
demonstrate cryptographically verifiable possession or control of all 
crypto assets under custody or otherwise provided for safekeeping by a 
customer to the intermediary. A system created under this subsection 
shall be protected against disclosure of customer data, proprietary 
intermediary information, and other data which may lead to operational 
or cybersecurity risk.
    ``(b) Regular Financial Audit.--An independent public accountant 
retained by the intermediary shall annual verify possession or control 
of all crypto assets under custody, or otherwise provided for 
safekeeping by the intermediary, consistent with subsection (a). This 
verification shall include an examination of the system and the 
policies and procedures required by subsection (a) and shall take place 
pursuant to a written agreement between the intermediary and the 
accountant, at a time chosen by the accountant without prior notice 
which is irregular from year to year.
    ``(c) Report and Material Discrepancies.--Within 120 days of 
conducting a verification under subsection (b), the independent public 
accountant retained under subsection (b) shall file a report with the 
appropriate commission and the applicable customer protection and 
market integrity authority, stating that the accountant has verified 
proof of reserves consistent with this section. If material 
discrepancies in the verification have been found by the independent 
public accountant, the accountant shall inform the appropriate 
commission and the customer protection and market integrity authority 
within 1 day of the conclusion of the verification.
    ``(d) Standards.--The Public Company Accounting Oversight Board 
shall adopt standards to implement subsections (a) and (b), in 
consultation with the Securities and Exchange Commission and Commodity 
Futures Trading Commission.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 202, 
is amended by adding at the end the following:

``9803. Mandatory proof of reserves; annual verification.''.

SEC. 204. PLAIN LANGUAGE CRYPTO ASSET CUSTOMER AGREEMENTS.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 203 of this Act, is amended by adding at the end the 
following:
``Sec. 9804. Plain language crypto asset customer agreements
    ``(a) Plain Language Customer Agreements.--In consultation with the 
Securities and Exchange Commission and the Commodity Futures Trading 
Commission, the Bureau of Consumer Financial Protection shall issue 
guidance setting forth best practices for crypto asset intermediary 
standard customer agreements and all disclosures required to be made 
under title II of the Lummis-Gillibrand Responsible Financial 
Innovation Act and other applicable law, which shall require the 
customer agreements and disclosures, in accordance with applicable law, 
to be written in plain language that is easily comprehensible to 
customers. Not later than 180 days after the date of enactment of this 
section, the Bureau shall create a publicly available database for the 
filing of all required documents under this section.
    ``(b) Ancillary Asset Disclosures.--
            ``(1) In general.--The Securities and Exchange Commission, 
        in consultation with the Bureau of Consumer Financial 
        Protection, shall issue guidance setting forth best practices 
        for issuers under section 42 of the Securities Exchange Act of 
        1934 to create plain language summaries of disclosures required 
        to be made to customers under that section.
            ``(2) Contents.--Each summary described in paragraph (1) 
        shall be--
                    ``(A) not more than 2 pages in length; and
                    ``(B) filed by the applicable issuer with the 
                Securities and Exchange Commission at the same time as 
                disclosures are filed under section 42 of the 
                Securities Exchange Act of 1934.
    ``(c) Requirement To File.--Crypto asset intermediaries shall file 
the following with the Bureau of Consumer Financial Protection:
            ``(1) Not later than 180 days after the date of enactment 
        of this section, the standard customer agreement used by the 
        intermediary on the date of enactment.
            ``(2) Any standard customer agreement used after the date 
        of enactment of this section, but before the database under 
        subsection (a) becomes operational, to be filed not more than 
        60 days after the date on which the database under subsection 
        (a) becomes operational.
            ``(3) Any standard customer agreement used after the 
        database under subsection (a) becomes operational, not more 
        than 30 days after the date on which the agreement is first 
        used by customers.
            ``(4) For all crypto assets supported by the crypto asset 
        intermediary, all disclosures made under section 42 of the 
        Securities Exchange Act of 1934 and the accompanying summaries.
            ``(5) Any other document that contains required disclosures 
        under title II of the Lummis-Gillibrand Responsible Financial 
        Innovation Act, not more than 30 days after the date on which 
        the document is made available to customers.
    ``(d) Filing and Summary.--When filing a standard customer 
agreement under subsection (c), a crypto asset intermediary shall 
include a summary of changes (as compared to the previous filed 
version) that is in plain language, as determined by the Bureau of 
Consumer Financial Protection.
    ``(e) Rule of Construction.--A filing under this section may not be 
construed to permit the Bureau of Consumer Financial Protection to 
approve the contents of any standard customer agreement.
    ``(f) Rules.--The Bureau of Consumer Financial Protection shall 
adopt rules to implement this section, with a comment period of not 
less than 90 days.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 203 
of this Act, is amended by adding at the end the following:

``9804. Plain language crypto asset customer agreements.''.

SEC. 205. BASIC CONSUMER PROTECTION STANDARDS FOR CRYPTO ASSETS.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 203 of this Act, is amended by adding at the end the 
following:
``Sec. 9805. Basic consumer protection standards for crypto assets
    ``(a) In General.--Each crypto asset intermediary shall ensure that 
the scope of permissible transactions that may be undertaken with 
crypto assets belonging to a customer is disclosed clearly in a 
customer agreement.
    ``(b) Notice.--Each crypto asset intermediary shall provide clear 
notice to each customer and require acknowledgment of the following:
            ``(1) Whether customer crypto assets are segregated from 
        other customer assets and the manner of segregation.
            ``(2) How the crypto assets of the customer would be 
        treated in a bankruptcy or insolvency scenario and the risk of 
        loss.
            ``(3) The time period and manner in which the intermediary 
        is obligated to return the crypto asset of the customer upon 
        request.
            ``(4) Applicable fees imposed on a customer.
            ``(5) The dispute resolution process of the intermediary.
    ``(c) Subsidiary Proceeds.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Agreement.--The term `agreement' includes the 
                standard terms of service of a crypto asset 
                intermediary.
                    ``(B) Subsidiary proceeds.--The term `subsidiary 
                proceeds' includes forks, airdrops, staking, and other 
                gains that accrue to a crypto asset through market 
                transactions as a financial asset or as a result of 
                being held in custody or safekeeping by a crypto asset 
                intermediary.
            ``(2) Accrual to customer.--Except as otherwise specified 
        by an agreement with a customer, all subsidiary proceeds 
        relating to crypto asset services provided to a customer shall 
        accrue to the benefit of the customer in accordance with 
        paragraph (3).
            ``(3) Election.--A crypto asset intermediary may elect not 
        to collect certain subsidiary proceeds if the election is 
        disclosed in an agreement with the customer.
            ``(4) Withdrawal.--A customer may request return of a 
        crypto asset from an intermediary in a method that permits the 
        collection of the subsidiary proceeds of the crypto asset.
            ``(5) Agreement.--A crypto asset intermediary shall enter 
        into an agreement with a customer, if desired by the customer, 
        regarding the manner in which to invest subsidiary proceeds or 
        other gains attributable to the crypto assets of the customer.
    ``(d) CEO Attestations.--Each year, the chief executive officer of 
a crypto asset intermediary shall, under penalty of perjury, certify 
compliance with the following, to the best of the knowledge and belief 
of the chief executive officer:
            ``(1) Applicable anti-money laundering, customer 
        identification, prevention of terrorist financing, and 
        sanctions laws.
            ``(2) Applicable custodial and safekeeping laws, including 
        proof of reserve requirements.
            ``(3) The other provisions of this chapter.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 204 
of this Act, is amended by adding at the end the following:

``9805. Basic consumer protection standards for crypto assets.''.

SEC. 206. CLEANING UP CRYPTO ASSET LENDING.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 205 of this Act, is amended by adding at the end the 
following:
``Sec. 9806. Crypto asset lending arrangements
    ``(a) Lending Arrangements.--A crypto asset intermediary shall 
ensure that any lending arrangements relating to crypto assets are--
            ``(1) clearly disclosed to customers before any lending 
        services take place, including the potential bankruptcy 
        treatment of customer assets in the event of insolvency;
            ``(2) subject to the affirmative consent of the customer;
            ``(3) fully enforceable as a matter of State commercial 
        law, including the Uniform Commercial Code;
            ``(4) accompanied by full disclosures of applicable terms 
        and risks, yield, and the manner in which the yield is 
        calculated;
            ``(5) accompanied by appropriate disclosures relating to 
        collateral requirements and policies, including--
                    ``(A) possible reductions in value and 
                overcollateralization requirements with respect to a 
                crypto asset;
                    ``(B) collateral the intermediary accepts when 
                calling for additional collateral from a customer, 
                including collateral substitution;
                    ``(C) whether customer collateral is commingled 
                with the collateral of other customers or of the 
                intermediary; and
                    ``(D) how customer collateral is invested and 
                whether the yield belongs to the customer or to the 
                intermediary;
            ``(6) accompanied by disclosures of mark-to-market and 
        monitoring arrangements, including--
                    ``(A) the frequency of mark-to-market monitoring 
                and how frequently the intermediary will call for 
                additional collateral from a customer;
                    ``(B) the time period in which the customer must 
                supply additional collateral to the intermediary after 
                a collateral call is conducted consistent with 
                subparagraph (A);
                    ``(C) whether the intermediary permits failures to 
                deliver customer crypto assets or other collateral; and
                    ``(D) in the event of a failure to deliver, the 
                period of time in which the failure must be cured; and
            ``(7) compliant with all applicable Federal and State laws.
    ``(b) Rehypothecation.--
            ``(1) Definition.--In this subsection, the term 
        `rehypothecation' means the pledging of an asset as collateral 
        for a financial transaction multiple times by a person, 
        including the pledging of a customer asset by a crypto asset 
        intermediary as collateral for a subsequent financial 
        transaction after delivery of the crypto asset to the 
        intermediary by a customer.
            ``(2) Rehypothecation.--No rehypothecation of crypto assets 
        by a crypto asset intermediary shall be permitted.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 202, 
is amended by adding at the end the following:

``9806. Crypto asset lending arrangements.''.

SEC. 207. SETTLEMENT FINALITY.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 206 of this Act, is amended by adding at the end the 
following:
``Sec. 9807. Settlement finality
    ``To promote legal certainty and customer protection, a crypto 
asset intermediary and a customer shall, upon the opening of an 
account, agree on the terms of settlement finality for all transactions 
with respect to crypto assets, including the following:
            ``(1) The conditions under which a crypto asset may be 
        deemed fully transferred, provided that those legal conditions 
        may diverge from operational conditions under which crypto 
        assets are considered transferred, based on the distributed and 
        probabilistic nature of crypto assets.
            ``(2) The exact moment of transfer of a crypto asset.
            ``(3) The discharge of any obligations upon transfer of a 
        crypto asset.
            ``(4) Conformity to applicable provisions of the Uniform 
        Commercial Code.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 206 
of this Act, is amended by adding at the end the following:

``9807. Settlement finality.''.

SEC. 208. ADVERTISEMENTS OF CRYPTO ASSET INTERMEDIARIES AND CERTAIN 
              OTHER PERSONS.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 207 of this Act, is amended by adding at the end the 
following:
``Sec. 9808. Advertising of crypto asset intermediaries and certain 
              other persons
    ``(a) Definitions.--In this section:
            ``(1) Commissions.--The term `Commissions' means the 
        Securities and Exchange Commission and the Commodity Futures 
        Trading Commission, acting jointly.
            ``(2) Covered advertisement.--The term `covered 
        advertisement'--
                    ``(A) means a communication that--
                            ``(i) relates to--
                                    ``(I) the desirability of 
                                purchasing or entering into a 
                                transaction for a crypto asset; or
                                    ``(II) the availability of crypto 
                                asset-related services; and
                            ``(ii) is widely available to the general 
                        public, as specified by rule of the 
                        Commissions; and
                    ``(B) includes any script, slide, handout, or other 
                written (including electronic) material used in 
                connection with a public appearance with respect to a 
                crypto asset or the availability of crypto asset-
                related services.
    ``(b) Approval by Officer.--Before a crypto asset intermediary may 
make a covered advertisement available to the public, an officer of the 
crypto asset intermediary shall be required to approve that covered 
advertisement and certify compliance with the requirements of this 
section.
    ``(c) Procedures.--
            ``(1) In general.--Each crypto asset intermediary shall 
        establish written procedures, which are appropriate and 
        reasonable to the business, size, structure, and customers of 
        the crypto asset intermediary, for the approval of covered 
        advertisements, as required under subsection (b), which shall 
        include--
                    ``(A) provisions for the education and training of 
                applicable employees of the crypto asset intermediary 
                regarding the procedures of the crypto asset 
                intermediary governing covered advertisements;
                    ``(B) documentation of the education and training 
                required under subparagraph (A); and
                    ``(C) surveillance and follow-up measures to ensure 
                that the crypto asset intermediary implements and 
                adheres to those procedures.
            ``(2) Recordkeeping.--
                    ``(A) Period of maintenance.--Each crypto asset 
                intermediary shall maintain the records required under 
                this subsection for not less than 5 years.
                    ``(B) Types of records.--The types of records that 
                a crypto asset intermediary is required to maintain 
                under subparagraph (A) include, with respect to each 
                covered advertisement made by the crypto asset 
                intermediary--
                            ``(i) a copy of the covered advertisement;
                            ``(ii) the dates of the first and, if 
                        applicable, last use of the covered 
                        advertisement;
                            ``(iii) the name of the officer of the 
                        crypto asset intermediary who approved the 
                        covered advertisement, as required under 
                        subsection (b), including the date on which the 
                        officer gave that approval;
                            ``(iv) information concerning the source of 
                        all data, statistical tables, charts, graphs, 
                        or other illustrations or outside sources used 
                        in the covered advertisement; and
                            ``(v) for a covered advertisement that 
                        includes or incorporates a performance ranking 
                        or comparison with another crypto asset 
                        intermediary, a copy of the ranking or 
                        performance used.
    ``(d) Requirements for Covered Advertisements.--Each covered 
advertisement shall adhere to the following standards:
            ``(1) The covered advertisement shall--
                    ``(A) be based on principles of fair dealing and 
                good faith; and
                    ``(B) provide a sound basis for evaluating the 
                facts with respect to any particular crypto asset or 
                type of crypto asset, industry, or service that is the 
                subject of the covered advertisement.
            ``(2) The covered advertisement does not omit any material 
        fact or qualification if that omission, in light of the context 
        of the material presented, would cause the covered 
        advertisement to be misleading.
            ``(3) The covered advertisement does not make any false, 
        exaggerated, unwarranted, promissory, or misleading statement 
        or claim.
            ``(4) Information may be placed in a legend or footnote 
        within the covered advertisement only if that placement would 
        not inhibit understanding of the covered advertisement.
            ``(5) The covered advertisement shall be consistent with 
        risks that are present with respect to the subject matter of 
        the covered advertisement, including volatility with respect to 
        the value of crypto assets, the amount of potential returns, 
        and operational risks for crypto asset intermediaries.
            ``(6) The covered advertisement shall--
                    ``(A) consider the nature of the audience to which 
                the covered advertisement will be directed; and
                    ``(B) provide details and explanations that are 
                appropriate for the audience described in subparagraph 
                (A).
            ``(7)(A) The covered advertisement may not predict or 
        project performance, imply that past performance will recur, or 
        make any exaggerated or unwarranted claim, opinion, or 
        forecast.
            ``(B) Nothing in subparagraph (A) may be construed to 
        prohibit the use of--
                    ``(i) a hypothetical illustration of mathematical 
                principles, if that illustration does not predict or 
                project the performance of a particular strategy;
                    ``(ii) an analysis tool or a written report 
                produced by an analysis tool; or
                    ``(iii) a price target contained in a research 
                report, if the target has a reasonable basis, the 
                report discloses the valuation methods used to 
                determine the price target, and the price target is 
                accompanied by a disclosure concerning the risks that 
                may impede achievement of the price target.
            ``(8) Any comparison in the covered advertisement between 
        crypto assets, crypto asset intermediaries, or crypto asset-
        related services shall disclose key material differences 
        between the applicable items, including, as applicable, 
        differences with respect to return objectives, costs and 
        expenses, liquidity, safety, guarantees or insurance, 
        volatility, and tax features.
            ``(9) The covered advertisement shall prominently disclose 
        the following:
                    ``(A) The fact that the covered advertisement is 
                governed by this section and is subject to Federal law.
                    ``(B) The name of the applicable crypto asset 
                intermediary.
                    ``(C) Any relationship between the applicable 
                crypto asset intermediary and any person that appears 
                in the covered advertisement or any compensation 
                offered by that crypto asset intermediary to such a 
                person.
                    ``(D) Registrations, licenses, or other 
                authorizations in good standing that are held by the 
                applicable crypto asset intermediary.
            ``(10)(A) In the covered advertisement, any reference to 
        tax-free or tax-exempt income shall indicate which taxes apply, 
        or which do not, unless income is free from all applicable 
        taxes.
            ``(B) For the purposes of subparagraph (A), the covered 
        advertisement may not characterize income or returns as tax-
        free or exempt from income tax if tax liability is merely 
        postponed or deferred, such as when taxes are payable upon 
        redemption.
            ``(C) The Commissions may, by rule, adopt further standards 
        regarding tax considerations that appear in covered 
        advertisements.
            ``(11) The covered advertisement shall disclose the amounts 
        of the following fees with respect to the crypto asset or 
        crypto asset-related services that are the subject of the 
        covered advertisement, which shall be set forth prominently 
        and, in any print advertisement, in a prominent text box that 
        contains only such information:
                    ``(A) Custody fees.
                    ``(B) Account fees.
                    ``(C) Applicable bank fees.
            ``(12) If any testimonial in the covered advertisement 
        concerns a technical aspect of purchasing or otherwise entering 
        into a transaction for crypto assets--
                    ``(A) the person making the testimonial shall have 
                the knowledge and experience to form a valid opinion 
                regarding the issue; and
                    ``(B) the testimonial, if the testimonial concerns 
                the advisability of purchasing crypto assets or the 
                performance of a crypto asset, shall prominently 
                disclose--
                            ``(i) the fact that the testimonial may not 
                        be representative of the experience of other 
                        customers;
                            ``(ii) the fact that the testimonial is no 
                        guarantee of future performance or success; and
                            ``(iii) if more than $1,000 in value is 
                        paid for the testimonial--
                                    ``(I) the fact that the testimonial 
                                is a paid testimonial; and
                                    ``(II) the amount and type of 
                                compensation paid, which shall include, 
                                if compensation was paid in crypto 
                                assets, an identification of each 
                                specific crypto asset.
            ``(13) If the covered advertisement includes a 
        recommendation to purchase, or otherwise transact in, a crypto 
        asset, the covered advertisement shall--
                    ``(A) have a reasonable basis for the 
                recommendation; and
                    ``(B) if applicable, disclose--
                            ``(i) that, at the time the covered 
                        advertisement was published or distributed, the 
                        applicable crypto asset intermediary was 
                        conducting trading activities in the crypto 
                        asset;
                            ``(ii) that the applicable crypto asset 
                        intermediary--
                                    ``(I) is directly and materially 
                                involved in the preparation of the 
                                content of the covered advertisement; 
                                and
                                    ``(II) has a financial interest the 
                                crypto assets being recommended; and
                            ``(iii) the nature of any financial 
                        interest disclosed under clause (ii), including 
                        whether that financial interest consists of any 
                        option, right, warrant, future, or long or 
                        short position, unless the extent of that 
                        financial interest is nominal.
            ``(14)(A) Except as otherwise provided by subparagraph (B), 
        the covered advertisement may not refer, directly or 
        indirectly, to past specific recommendations made by the 
        applicable crypto asset intermediary that were or would have 
        been profitable to any person.
            ``(B) The covered advertisement may set out or offer to 
        furnish a list of all recommendations as to the same type of 
        crypto assets made by the applicable crypto asset intermediary 
        during the 1-year period preceding the date on which the 
        covered advertisement is released, if the communication or 
        list--
                    ``(i) states the name of each crypto asset 
                recommended, the date and nature of each such 
                recommendation (such as whether to buy, sell, or hold 
                the crypto asset), the market price (as of the date of 
                the recommendation), the price at which a person was 
                meant to act upon the recommendation, and the market 
                price of each such crypto asset, as of the most recent 
                practicable date; and
                    ``(ii) contains the following warning, which shall 
                appear prominently within the communication or list: 
                `It should not be assumed that recommendations made in 
                the future will be profitable or will equal the 
                performance of the crypto assets in this list.'.
    ``(e) Sources Supporting a Recommendation.--
            ``(1) In general.--A crypto asset intermediary shall 
        provide, or offer to provide upon request, available 
        information or sources supporting any recommendation described 
        in subsection (d)(13).
            ``(2) Price disclosure.--When a crypto asset intermediary 
        recommends a crypto asset in a covered advertisement, as 
        described in subsection (d)(13), the crypto asset intermediary 
        shall provide the price of the crypto asset, as of the date on 
        which the recommendation is made.
    ``(f) Information Provided in Public Appearances.--
            ``(1) In general.--When an officer or employee of a crypto 
        asset intermediary is sponsoring or participating in a seminar, 
        forum, or broadcast, or when such an individual is otherwise 
        engaged in a public appearance or speaking activity, paragraphs 
        (1), (2), and (3) of subsection (d), shall apply to that 
        appearance to the same extent as those provisions apply to a 
        covered advertisement.
            ``(2) Recommendations.--If an officer or employee of a 
        crypto asset intermediary recommends a crypto asset in a public 
        appearance, that individual shall--
                    ``(A) have a reasonable basis for the 
                recommendation; and
                    ``(B) disclose, as applicable--
                            ``(i) whether the individual has a 
                        financial interest in the crypto asset 
                        recommended;
                            ``(ii) the nature of the financial interest 
                        disclosed under clause (i), including whether 
                        that financial interest consists of any option, 
                        right, warrant, future, or long- or short- 
                        position, unless the extent of that financial 
                        interest is nominal; and
                            ``(iii) any other actual, material conflict 
                        of interest of which the individual knows or 
                        has reason to know at the time of the public 
                        appearance.
    ``(g) Procedures for Public Appearances.--Each crypto asset 
intermediary shall establish written procedures that are appropriate 
and reasonable to the business, size, structure, and customers of the 
crypto asset intermediary in order to supervise the public appearances 
of the officers and employees of the crypto asset intermediary, which 
shall include--
            ``(1) provisions for the education and training of 
        employees of the crypto asset intermediary regarding those 
        procedures;
            ``(2) documentation of the education and training required 
        under paragraph (1); and
            ``(3) surveillance and follow-up measures to ensure that 
        the crypto asset intermediary implements and adheres to those 
        procedures.
    ``(h) Enforcement by Commissions.--
            ``(1) In general.--The Securities and Exchange Commission, 
        the Commodity Futures Trading Commission, or a customer 
        protection and market integrity authority operating under 
        delegated authority by the appropriate commission, as 
        applicable to a crypto asset intermediary, shall regularly 
        ascertain the compliance with this section by the crypto asset 
        intermediary (and applicable individuals) at the time of each 
        regular examination of the intermediary by the applicable 
        entity.
            ``(2) Investigations.--The appropriate commission or 
        customer protection and market integrity authority, as 
        applicable, may conduct an investigation into a suspected 
        violation of this section and take enforcement action outside 
        of a regular examination of a crypto asset intermediary, which 
        shall be comprised of the following:
                    ``(A) With respect to such a violation by that 
                crypto asset intermediary, the following:
                            ``(i) For an initial violation of this 
                        section, the imposition of a civil monetary 
                        penalty in an amount that is not more than 
                        $100,000.
                            ``(ii) For any subsequent violation of this 
                        section, the imposition of a civil monetary 
                        penalty in an amount that is not more than 
                        $1,000,000.
                            ``(iii) The enjoinment of future violations 
                        of this section by the crypto asset 
                        intermediary and the requirement that the 
                        crypto asset intermediary submit to the 
                        enforcing entity appropriate remediation plans.
                    ``(B) For repeated, knowing violations of this 
                section by an individual, the imposition of a temporary 
                or permanent bar from the crypto asset industry with 
                respect to that individual.
    ``(i) Applicability to Disclosures.--A document filed with the 
Securities and Exchange Commission, as otherwise required by law or 
regulation, is not subject to the requirements of this section.
    ``(j) Rules.--The Commissions, after not less than a 120-day 
comment period, shall adopt rules to implement this section.''.
    (b) Technical and Conforming Amendment.--The table of section for 
chapter 98 of title 31, United States Code, as amended by section 206, 
is amended by adding at the end the following:

``9808. Advertising of crypto asset intermediaries and certain other 
                            persons.''.

SEC. 209. CYBERSECURITY STANDARDS FOR CRYPTO ASSET INTERMEDIARIES.

    (a) Applicability of Cyber Incident Reporting for Cyber Incident 
Reporting for Critical Infrastructure Act of 2002.--
            (1) Definitions.--Section 2240 of the Homeland Security Act 
        of 2002 (6 U.S.C. 681) is amended by striking paragraph (4) and 
        inserting the following:
            ``(4) Covered entity.--The term `covered entity'--
                    ``(A) means an entity in a critical infrastructure 
                sector, as defined in Presidential Policy Directive 21, 
                that satisfies the definition established by the 
                Director in the final rule issued pursuant to section 
                2242(b); and
                    ``(B) includes a crypto asset intermediary, as 
                defined in section 9801 of title 31, United States 
                Code.''.
            (2) Required reporting.--If a crypto asset intermediary 
        makes a required report under section 2242 of the Homeland 
        Security Act of 2002 (6 U.S.C. 681b), the crypto asset 
        intermediary shall make a copy of that report available to the 
        Federal or State financial regulator responsible for licensing 
        or supervising the crypto asset intermediary.
    (b) Requirement.--Not later than 18 months after the date of 
enactment of this Act, the Commodity Futures Trading Commission and the 
Securities and Exchange Commission, in consultation with the Secretary 
of the Treasury and the Director of the Cybersecurity and 
Infrastructure Security Agency, shall develop comprehensive, 
principles-based guidance relating to cybersecurity for crypto asset 
intermediaries that account for, with respect to such a crypto asset 
intermediary--
            (1) the internal governance, and organizational culture, of 
        the cybersecurity program of the crypto asset intermediary;
            (2) security operations of the crypto asset intermediary, 
        including threat identification, incident response, and 
        mitigation;
            (3) risk identification and measurement by the crypto asset 
        intermediary;
            (4) the mitigation of risk by the crypto asset 
        intermediary, including policies of the crypto asset 
        intermediary, controls implemented by the crypto asset 
        intermediary, change management with respect to the crypto 
        asset intermediary, and the supply chain integrity of the 
        crypto asset intermediary;
            (5) assurance provided by, and testing conducted by, the 
        crypto asset intermediary, including penetration testing and 
        independent audits so conducted; and
            (6) the potential for crypto asset intermediaries to be 
        used to facilitate illicit activities, including sanctions 
        avoidance.
    (c) Consumer Best Practices.--Not later than 18 months after the 
date of enactment of this Act, the Securities and Exchange Commission 
and the Commodity Futures Trading Commission, in consultation with 
industry and the Director of the Cybersecurity and Infrastructure 
Security Agency, shall adopt plain-language cybersecurity guidance for 
customers to safely transact in crypto assets.

                  TITLE III--COMBATING ILLICIT FINANCE

SEC. 301. HIGHER PENALTIES FOR CRYPTO ASSET CRIMES.

    Section 127 of Public Law 91-508 (12 U.S.C. 1957) is amended by 
inserting ``in relation to a transaction principally composed of crypto 
assets or'' after ``committed''.

SEC. 302. ANTI-MONEY LAUNDERING EXAMINATION STANDARDS.

    (a) Treasury.--Not later than 2 years after the date of enactment 
of this Act, the Secretary of the Treasury, in consultation with the 
Conference of State Bank Supervisors and the Federal Financial 
Institutions Examination Council, shall establish a risk-focused 
examination and review process for money service businesses, as defined 
in section 1010.100 of title 31, Code of Federal Regulations, to 
assess--
            (1) the adequacy of reporting obligations and anti-money 
        laundering programs under subsections (g) and (h) of section 
        5318 of title 31, United States Code, respectively as applied 
        to those businesses; and
            (2) compliance of those businesses with anti-money 
        laundering and countering the financing of terrorism 
        requirements under subchapter II of chapter 53 of title 31, 
        United States Code.
    (b) Securities Exchange Commission.--Not later than 2 years after 
the date of enactment of this Act, the Securities and Exchange 
Commission shall establish a dedicated risk-focused examination and 
review process for entities regulated by the Commission to assess--
            (1) the adequacy of reporting obligations and anti-money 
        laundering programs under subsections (g) and (h) of section 
        5318 of title 31, United States Code, respectively as applied 
        to those entities; and
            (2) compliance of those entities with anti-money laundering 
        and countering the financing of terrorism requirements under 
        subchapter II of chapter 53 of title 31, United States Code.
    (c) Commodity Futures Trading Commission.--Not later than 2 years 
after the date of enactment of this Act, the Commodity Futures Trading 
Commission shall establish a dedicated risk-focused examination and 
review process for entities regulated by the Commodity Futures Trading 
Commission to assess--
            (1) the adequacy of reporting obligations and anti-money 
        laundering programs under subsections (g) and (h) of section 
        5318 of title 31, United States Code, respectively, as applied 
        to those entities; and
            (2) compliance of those entities with anti-money laundering 
        and countering the financing of terrorism requirements under 
        subchapter II of chapter 53 of title 31, United States Code.

SEC. 303. CRYPTO ASSET KIOSKS.

    (a) Definition.--In this section, the term ``crypto asset kiosk'' 
means a stand-alone machine, including a crypto asset automated teller 
machine, which facilitates the buying, selling, or exchange of crypto 
assets.
    (b) Update.--Beginning not later than 2 years after the date of 
enactment of this Act, the Director of the Financial Crimes Enforcement 
Network of the Department of the Treasury shall require crypto asset 
kiosk owners and administrators to submit and update the physical 
addresses of the kiosks owned or operated by the owner or 
administrator, as applicable, once every 120 days.
    (c) Rulemaking.--Not later than 2 years after the date of enactment 
of this Act, the Director of the Financial Crimes Enforcement Network 
of the Department of the Treasury shall issue rules requiring crypto 
asset kiosk owners and administrators to verify the identity of each 
customer using a valid form of government-issued identification or 
other documentary method, as determined by the Secretary of the 
Treasury.
    (d) Reports.--
            (1) Financial crimes enforcement network.--Not later than 
        180 days after the date of enactment of this Act, the Director 
        of the Financial Crimes Enforcement Network of the Department 
        of the Treasury shall issue a public report identifying 
        unlicensed kiosk operators and administrators, including 
        identification of known unlicensed operators and estimates of 
        the number and locations of suspected unlicensed operators, as 
        applicable.
            (2) Drug enforcement agency.--Not later than 1 year after 
        the date of enactment of this Act, the Drug Enforcement 
        Administration shall issue a report to Congress identifying 
        recommendations to reduce drug trafficking with crypto asset 
        kiosks.

SEC. 304. INDEPENDENT FINANCIAL TECHNOLOGY WORKING GROUP TO COMBAT 
              TERRORISM AND ILLICIT FINANCING.

    (a) Definitions.--In this section:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                    (A) the Committee on Banking, Housing, and Urban 
                Affairs, the Committee on Homeland Security and 
                Governmental Affairs, the Committee on the Judiciary, 
                the Select Committee on Intelligence, and the Committee 
                on Foreign Relations of the Senate; and
                    (B) the Committee on Financial Services, the 
                Committee on Homeland Security, the Committee on the 
                Judiciary, the Permanent Select Committee on 
                Intelligence, and the Committee on Foreign Affairs of 
                the House of Representatives.
            (2) Distributed ledger intelligence companies.--The term 
        ``distributed ledger intelligence companies'' means any 
        business providing software, research, or other services such 
        as but not limited to distributed ledger tracing tools, 
        geofencing, transaction screening, the collection of business 
        data, and sanctions screening, which supports private and 
        public sector investigations and risk management activities 
        involving cryptographically secured distributed ledgers or any 
        similar analogue.
            (3) Foreign terrorist organization.--The term ``foreign 
        terrorist organization'' means an organization that is 
        designated as a foreign terrorist organization under section 
        219 of the Immigration and Nationality Act (8 U.S.C. 1189).
            (4) Illicit use.--The term ``illicit use'' includes fraud, 
        darknet marketplace transactions, money laundering, the 
        purchase and sale of illicit goods, sanctions evasion, theft of 
        funds, funding of illegal activities, transactions related to 
        child sexual abuse material, and any other financial 
        transaction involving the proceeds of specified unlawful 
        activity (as defined in section 1956(c) of title 18, United 
        States Code).
            (5) Terrorist.--The term ``terrorist'' includes a person 
        carrying out domestic terrorism or international terrorism (as 
        those terms are defined in section 2331 of title 18, United 
        States Code).
            (6) Working group.--The term ``Working Group'' means the 
        Independent Financial Technology Working Group to Combat 
        Terrorism and Illicit Financing established under subsection 
        (b).
    (b) Establishment.--There is established the Independent Financial 
Technology Working Group to Combat Terrorism and Illicit Financing, 
which shall consist of the following:
            (1) The Secretary of the Treasury, acting through the Under 
        Secretary for Terrorism and Financial Intelligence, who shall 
        serve as the chair of the Working Group.
            (2) A senior-level representative from each of the 
        following:
                    (A) Each of the following components of the 
                Department of the Treasury:
                            (i) The Financial Crimes Enforcement 
                        Network.
                            (ii) The Internal Revenue Service.
                            (iii) The Office of Foreign Assets Control.
                    (B) The Department of Justice and each of the 
                following components of the Department:
                            (i) The Federal Bureau of Investigation.
                            (ii) The Drug Enforcement Administration.
                    (C) The Department of Homeland Security and the 
                United States Secret Service.
                    (D) The Department of State.
            (3) Five individuals appointed by the Under Secretary for 
        Terrorism and Financial Intelligence to represent the 
        following:
                    (A) Financial technology companies.
                    (B) Distributed ledger intelligence companies.
                    (C) Financial institutions.
                    (D) Institutions or organizations engaged in 
                research.
    (c) Duties.--The Working Group shall--
            (1) conduct independent research on terrorist and illicit 
        use of new financial technologies, including crypto assets;
            (2) analyze how crypto assets and emerging technologies may 
        bolster the national security and economic competitiveness of 
        the United States in financial innovation; and
            (3) develop legislative and regulatory proposals to improve 
        anti-money laundering, counter-terrorist, and other counter-
        illicit financing efforts in the United States.
    (d) Reports.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, and annually for the 2 years thereafter, 
        the Working Group shall submit to the Secretary of the 
        Treasury, the heads of each agency represented in the Working 
        Group pursuant to subsection (b)(2), and the appropriate 
        congressional committees a report containing the findings and 
        determinations made by the Working Group in the previous year 
        and any legislative and regulatory proposals developed by the 
        Working Group.
            (2) Final report.--Before the date on which the Working 
        Group terminates under subsection (f)(1), the Working Group 
        shall submit to the appropriate congressional committees a 
        final report detailing the findings, recommendations, and 
        activities of the Working Group.
    (e) Travel Expenses.--Members of the Working Group shall serve 
without pay, but shall receive travel expenses in accordance with 
sections 5702 and 5703 of title 5, United States Code.
    (f) Sunset.--
            (1) In general.--The Working Group shall, subject to 
        paragraph (3), terminate on the date that is 4 years after the 
        date of the enactment of this Act.
            (2) Expiration and return of appropriated funds.--On the 
        date on which the Working Group terminates under paragraph 
        (1)--
                    (A) all authorities granted to the Working Group 
                under this section shall expire, subject to paragraph 
                (3); and
                    (B) any funds appropriated for the Working Group 
                that are available for obligation as of that date shall 
                be returned to the Treasury.
            (3) Authority to wind up activities.--The termination of 
        the Working Group under paragraph (1) and the expiration of 
        authorities under paragraph (2) shall not affect any 
        investigations, research, or other activities of the Working 
        Group ongoing as of the date on which the Working Group 
        terminates under paragraph (1). Such investigations, research, 
        and activities may continue until their completion.
    (g) Report and Strategy With Respect to Crypto Assets and Other 
Related Emerging Technologies.--
            (1) In general.--Not later than 180 days after the date of 
        the enactment of this section, the President, acting through 
        the Secretary of the Treasury, and in consultation with the 
        head of each agency represented on the Working Group under 
        subsection (b), shall submit to the appropriate congressional 
        committees a report that describes--
                    (A) to the extent not currently disclosed in other 
                reports, the potential uses of crypto assets and other 
                related emerging technologies by states, non-state 
                actors, and foreign terrorist organizations to evade 
                sanctions, finance terrorism, or launder monetary 
                instruments, and threaten United States national 
                security; and
                    (B) a strategy how the United States will mitigate 
                and prevent the illicit use of crypto assets and other 
                related emerging technologies.
            (2) Form of report; public availability.--
                    (A) In general.--The report required by paragraph 
                (1) shall be submitted in unclassified form, but may 
                include a classified annex.
                    (B) Public availability.--The unclassified portion 
                of the report required by paragraph (1) shall be made 
                available to the public and posted on a publicly 
                accessible website of the Department of the Treasury--
                            (i) in precompressed, easily downloadable 
                        versions, in all appropriate formats; and
                            (ii) in machine-readable format, if 
                        applicable.
            (3) Sources of information.--In preparing the report 
        required by paragraph (1), the President may utilize any 
        credible publication, database, or web-based resource, and any 
        credible information compiled by any government agency, 
        nongovernmental organization, or other entity that is made 
        available to the President.
    (h) Briefing.--Not later than 2 years after the date of the 
enactment of this Act, the Secretary of the Treasury shall brief the 
appropriate congressional committees on the implementation of the 
strategy required by subsection (g)(1).

SEC. 305. SANCTIONS COMPLIANCE RESPONSIBILITIES OF PAYMENT STABLECOIN 
              ISSUERS.

    Not later than 120 days after the date of the enactment of this 
Act, the Secretary of the Treasury shall adopt guidance clarifying the 
sanctions compliance responsibilities and liability of an issuer of a 
payment stablecoin with respect to downstream transactions relating to 
the stablecoin that take place after the stablecoin is first provided 
to a customer of the issuer.

SEC. 306. CRYPTO ASSET MIXERS AND TUMBLERS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Director of the Financial Crimes Enforcement Network 
of the Department of the Treasury 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 that 
analyzes the following issues:
            (1) Current (as of the date on which the report is 
        submitted) typologies of crypto asset mixers and tumblers and 
        historical transaction volume.
            (2) Estimates of the percentage of transactions relating to 
        mixers and tumblers which are used by actors engaged in illicit 
        finance.
            (3) An assessment of potential non-illicit uses of mixers 
        and tumblers described in paragraph (1).
            (4) Analysis of regulatory approaches employed by other 
        jurisdictions relating to mixers and tumblers.
            (5) Recommendations for legislation or regulation relating 
        to mixers and tumblers.

SEC. 307. FINANCIAL CRIMES ENFORCEMENT NETWORK INNOVATION LABORATORY.

    Section 310 of title 31, United States Code, is amended--
            (1) by redesignating subsections (k) and (l) as subsections 
        (l) and (m), respectively; and
            (2) by inserting after subsection (j) the following:
    ``(k) Innovation Laboratory.--
            ``(1) In general.--There is established within the 
        Financial Crimes Enforcement Network an Innovation Laboratory 
        to promote regulatory dialogue, data sharing between the 
        Financial Crimes Enforcement Network and financial companies, 
        and an assessment of potential changes in law, rules, or 
        policies to facilitate the appropriate supervision of financial 
        technology and the laws under the jurisdiction of the bureau.
            ``(2) Chief innovation officer.--The Innovation Officer 
        appointed within the Financial Crimes Enforcement Network under 
        section 6208 of the Anti-Money Laundering Act of 2020 (31 
        U.S.C. 5311 note) shall manage the Innovation Laboratory 
        established under paragraph (1).
            ``(3) Pilot projects.--The Innovation Laboratory 
        established under paragraph (1) shall, as appropriate, conduct 
        pilot projects with financial companies to more effectively 
        facilitate the supervision of financial technology, consistent 
        with applicable law.''.

              TITLE IV--RESPONSIBLE COMMODITIES REGULATION

SEC. 401. DEFINITIONS.

    Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
            (1) in paragraph (9), by striking ``and frozen concentrated 
        orange juice'' and inserting ``frozen concentrated orange 
        juice, and a crypto asset (consistent with section 
        2(c)(2)(F))'';
            (2) by redesignating paragraphs (15) through (37), (38), 
        (39), and (40) through (51) as paragraphs (18) through (40), 
        (42), (43), and (45) through (56), respectively;
            (3) by inserting after paragraph (14) the following:
            ``(15) Crypto asset.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `crypto asset' has the 
                meaning given the term in section 9801 of title 31, 
                United States Code.
                    ``(B) Exclusion.--The term `crypto asset' does not 
                include an asset that provides the holder of the asset 
                with any of the following rights in a business entity:
                            ``(i) A debt or equity interest in that 
                        entity.
                            ``(ii) Liquidation rights with respect to 
                        that entity.
                            ``(iii) An entitlement to an interest or 
                        dividend payment from that entity.
                            ``(iv) Any other financial interest in that 
                        entity.
            ``(16) Crypto asset exchange.--The term `crypto asset 
        exchange' means a trading facility that lists for trading at 
        least 1 crypto asset.
            ``(17) Decentralized crypto asset exchange.--
                    ``(A) In general.--The term `decentralized crypto 
                asset exchange' means software that--
                            ``(i) comprises predetermined and publicly 
                        disclosed code deployed to a public distributed 
                        ledger;
                            ``(ii) permits a user or group of users to 
                        create a pool or group of pools for crypto 
                        assets;
                            ``(iii) enables a user or group of users to 
                        conduct crypto asset transactions from a pool 
                        or group of pools, with such transactions 
                        occurring pursuant to the code described in 
                        clause (i); and
                            ``(iv) no person, or group of persons, 
                        known to one another who have entered into an 
                        agreement (implied or otherwise) to act in 
                        concert, can unilaterally control or cause to 
                        control the software protocol through altering 
                        transactions, functions, or actions on the 
                        protocol, or blocking or approving transactions 
                        on the protocol.
                    ``(B) Rule of construction.--For the purposes of 
                subparagraph (A)(iv), the term `control' shall not 
                include mining, validation, or the communication of 
                transactions to a distributed ledger.'';
            (4) in paragraph (31)(A)(i) (as so redesignated)--
                    (A) in subclause (I)--
                            (i) in item (aa)--
                                    (I) in subitem (EE), by striking 
                                ``or'' at the end; and
                                    (II) by adding at the end the 
                                following:

                                                    ``(GG) the purchase 
                                                or sale of a crypto 
                                                asset that is traded on 
                                                or subject to the rules 
                                                of a registered 
                                                entity;'';

                            (ii) in item (bb), by striking ``and'' at 
                        the end and inserting ``or''; and
                            (iii) by adding at the end the following:
                                            ``(cc) acting as a 
                                        counterparty (not on a 
                                        principal basis) to any cash or 
                                        spot agreement, contract, or 
                                        transaction involving a crypto 
                                        asset, which may include a 
                                        payment stablecoin, with a 
                                        person who is not an eligible 
                                        contract participant, unless 
                                        the activity is--

                                                    ``(AA) conducted in 
                                                compliance with the 
                                                laws of the State in 
                                                which the activity 
                                                occurs;

                                                    ``(BB) subject to 
                                                regulation by another 
                                                Federal authority; or

                                                    ``(CC) separately 
                                                regulated under this 
                                                Act; and''; and

                    (B) in subclause (II), by striking ``items (aa) or 
                (bb)'' and inserting ``item (aa), (bb), or (cc)'';
            (5) by inserting after paragraph (40) (as so redesignated) 
        the following:
            ``(41) Payment stablecoin.--The term `payment stablecoin' 
        has the meaning given the term in section 9801 of title 31, 
        United States Code.'';
            (6) by inserting after paragraph (43) (as so redesignated) 
        the following:
            ``(44) Registered crypto asset exchange.--The term 
        `registered crypto asset exchange' means a crypto asset 
        exchange registered under section 5i.'';
            (7) in paragraph (45) (as so redesignated)--
                    (A) in subparagraph (E), by striking ``and'' at the 
                end;
                    (B) by redesignating subparagraph (F) as 
                subparagraph (G); and
                    (C) by inserting after subparagraph (E) the 
                following:
                    ``(F) a registered crypto asset exchange; and''; 
                and
            (8) in paragraph (56)(B)(i) (as so redesignated), by 
        inserting ``or a decentralized crypto asset exchange'' after 
        ``execution algorithm''.

SEC. 402. REPORTING AND RECORDKEEPING.

    Section 4g of the Commodity Exchange Act (7 U.S.C. 6g) is amended--
            (1) in subsection (a), by inserting ``crypto assets or'' 
        before ``commodities''; and
            (2) in subsection (d), in the second sentence, by striking 
        ``commodity futures'' and inserting ``commodities''.

SEC. 403. JURISDICTION OVER CRYPTO ASSET TRANSACTIONS.

    (a) Commission Jurisdiction Over Retail Crypto Asset 
Transactions.--
            (1) In general.--Section 2(c)(2) of the Commodity Exchange 
        Act (7 U.S.C. 2(c)(2)) is amended--
                    (A) in subparagraph (D)(ii)--
                            (i) in subclause (III), in the matter 
                        preceding item (aa), by inserting ``of a 
                        commodity, other than a crypto asset,'' after 
                        ``sale'';
                            (ii) by redesignating subclauses (IV) and 
                        (V) as subclauses (V) and (VI), respectively; 
                        and
                            (iii) by inserting after subclause (III) 
                        the following:
                                    ``(IV) a contract of sale of a 
                                crypto asset that--
                                            ``(aa) results in actual 
                                        delivery within 2 days or such 
                                        other period as the Commission 
                                        may determine by rule based 
                                        upon the typical commercial 
                                        practice in cash or spot 
                                        markets for the crypto asset 
                                        involved; or
                                            ``(bb) is executed on or 
                                        subject to the rules of a 
                                        registered crypto asset 
                                        exchange or with a registered 
                                        futures commission merchant;''; 
                                        and
                    (B) by adding at the end the following:
                    ``(F) Commission jurisdiction over crypto asset 
                transactions.--
                            ``(i) In general.--
                                    ``(I) Jurisdiction.--Subject to 
                                sections 6d and 12(e) and section 403 
                                of the Commodity Futures Modernization 
                                Act of 2000 (7 U.S.C. 27a) and except 
                                as provided in subclauses (II) and 
                                (III), the Commission shall have 
                                exclusive jurisdiction over any 
                                agreement, contract, or transaction 
                                involving a contract of sale of a 
                                crypto asset in or affecting interstate 
                                commerce, including--
                                            ``(aa) ancillary assets 
                                        that are in compliance with the 
                                        requirements of section 42 of 
                                        the Securities Exchange Act of 
                                        1934; and
                                            ``(bb) all activities 
                                        relating to a payment 
                                        stablecoin conducted by an 
                                        entity registered under this 
                                        Act, including brokering, 
                                        trading, and custodial 
                                        activities relating to payment 
                                        stablecoins.
                                    ``(II) Exceptions.--Subclause (I) 
                                shall not apply to specified periodic 
                                reporting requirements made by an 
                                issuer that provided the holder of a 
                                security with an ancillary asset under 
                                section 42(b)(4) of the Securities 
                                Exchange Act of 1934 and the security 
                                that constitutes an investment contract 
                                (within the meaning of section 2(a)(1) 
                                of the Securities Act of 1933 (15 
                                U.S.C. 77b(a)(1))) with respect to that 
                                ancillary asset.
                                    ``(III) Fungibility requirement.--
                                The Commission shall only exercise 
                                jurisdiction over an agreement, 
                                contract, or transaction involving a 
                                contract of sale of a crypto asset that 
                                is commercially fungible, which shall 
                                not include digital collectibles and 
                                other unique crypto assets.
                            ``(ii) Withholding of rulemaking authority 
                        over certain transactions.--Nothing in this 
                        subparagraph authorizes the Commission to issue 
                        any rule regarding any agreement, contract, or 
                        transaction that is not offered, solicited, 
                        traded, facilitated, executed, cleared, 
                        reported, or otherwise dealt in--
                                    ``(I) on or subject to the rules of 
                                a registered entity (with the exception 
                                of entities required to register under 
                                this Act); or
                                    ``(II) by any other entity 
                                registered by the Commission.
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply to custodial activities with respect to a 
                        crypto asset of an entity supervised or 
                        regulated by a State or other Federal 
                        regulatory agency.''.
            (2) Conforming amendment.--Section 2(a)(1)(A) of the 
        Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is amended, in the 
        first sentence, by striking ``section 19 of this Act'' and 
        inserting ``subsection (c)(2)(F) or section 19''.
    (b) Segregation of Crypto Assets.--Section 4d of the Commodity 
Exchange Act (7 U.S.C. 6d) is amended by adding at the end the 
following:
    ``(i) Segregation of Crypto Assets.--
            ``(1) Holding of customer assets.--
                    ``(A) In general.--Each futures commission merchant 
                shall hold customer money, assets, and property in a 
                manner to minimize the customer's risk of loss of, or 
                unreasonable delay in the access to, the money, assets, 
                and property.
                    ``(B) Custodian.--A futures commission merchant 
                shall hold the property of a customer of the futures 
                commission merchant with a separate licensed, 
                chartered, or registered entity subject to regulation 
                or supervision by 1 of the following agencies:
                            ``(i) The Commission.
                            ``(ii) The Securities and Exchange 
                        Commission.
                            ``(iii) An appropriate Federal banking 
                        agency (as defined in section 3 of the Federal 
                        Deposit Insurance Act (12 U.S.C. 1813)).
                            ``(iv) A State bank supervisor (as defined 
                        in that section).
                            ``(v) An appropriate foreign governmental 
                        authority in the home country of the custodian.
            ``(2) Segregation of funds.--
                    ``(A) Definition of crypto asset customer.--In this 
                paragraph, the term `crypto asset customer' means a 
                customer involved in a cash or spot, leveraged, 
                margined, or financed crypto asset transaction, which 
                may include a payment stablecoin, in which the futures 
                commission merchant is acting as the counterparty.
                    ``(B) Requirements.--
                            ``(i) In general.--A futures commission 
                        merchant shall treat and deal with all money, 
                        assets, and property of any crypto asset 
                        customer received as belonging to the customer.
                            ``(ii) Commingling prohibited.--Money, 
                        assets, and property of a crypto asset customer 
                        described in clause (i)--
                                    ``(I) shall be separately accounted 
                                for; and
                                    ``(II) shall not be--
                                            ``(aa) commingled with the 
                                        funds of the futures commission 
                                        merchant; or
                                            ``(bb) used to margin, 
                                        secure, or guarantee any trades 
                                        or accounts of any customer or 
                                        person other than the person 
                                        for whom the money, assets, or 
                                        property are held.
                    ``(C) Exceptions.--
                            ``(i) Use of funds.--
                                    ``(I) In general.--Notwithstanding 
                                subparagraph (B), money, assets, and 
                                property of a crypto asset customer 
                                may, for the purposes described in 
                                subclause (II), be commingled and 
                                deposited in the same account or 
                                accounts with an entity described in 
                                paragraph (1)(B).
                                    ``(II) Withdrawal.--Notwithstanding 
                                subparagraph (B), the share of the 
                                money, assets, and property described 
                                in subclause (I) as in the normal 
                                course of business is necessary to 
                                margin, guarantee, secure, transfer, 
                                adjust, or settle a crypto asset 
                                transaction with a registered entity 
                                may be withdrawn and applied to those 
                                purposes, including the payment of 
                                commissions, brokerage, interest, 
                                taxes, storage, and other charges, 
                                lawfully accruing in connection with 
                                the crypto asset transaction.
                            ``(ii) Commission action.--Notwithstanding 
                        subparagraph (B), in accordance with such terms 
                        and conditions as the Commission may prescribe 
                        by rule or order, any money, assets, or 
                        property of a crypto asset customer may be 
                        commingled and deposited in customer accounts 
                        with any other money, assets, or property 
                        received by the futures commission merchant and 
                        required by the Commission to be separately 
                        accounted for and treated and dealt with as 
                        belonging to the crypto asset customer.
                    ``(D) Permitted investments.--Money of a crypto 
                asset customer may be invested--
                            ``(i) in--
                                    ``(I) obligations of the United 
                                States;
                                    ``(II) general obligations of any 
                                State or of any political subdivision 
                                of a State that are investment-grade;
                                    ``(III) obligations fully 
                                guaranteed as to principal and interest 
                                by the United States; or
                                    ``(IV) any other investment that 
                                the Commission may by rule prescribe; 
                                and
                            ``(ii) in accordance with such rules and 
                        subject to such conditions as the Commission 
                        may prescribe.
                    ``(E) Prohibition.--It shall be unlawful for any 
                person, including any derivatives clearing organization 
                or depository institution, that has received any money, 
                assets, or property for deposit in a separate account 
                or accounts as required by subparagraph (B) to hold, 
                dispose of, or use any of the money, assets, or 
                property that belongs to the depositing futures 
                commission merchant or any person other than the crypto 
                asset customer of the futures commission merchant.
            ``(3) Customer right to opt out.--
                    ``(A) In general.--A customer shall have the right 
                to waive any requirement under this subsection by 
                affirmatively electing, in writing to the futures 
                commission merchant, to waive the requirement.
                    ``(B) Limitations.--The Commission may, by rule, 
                establish notice and disclosure requirements, 
                segregation requirements, investment limitations, and 
                other rules relating to the waiving of any requirement 
                under this subsection that are reasonably necessary to 
                protect customers, including eligible contract 
                participants, non-eligible contract participants, and 
                any other class of customers.''.
    (c) Limitation on Futures Commission Merchants Acting as a 
Counterparty in Crypto Asset Transactions.--Section 4d of the Commodity 
Exchange Act (7 U.S.C. 6d) (as amended by subsection (b)) is amended by 
adding at the end the following:
    ``(j) Risk Management Standards for Decentralized Crypto Asset 
Exchanges.--
            ``(1) In general.--Prior to conducting trading activity 
        (including routing orders and directed trading) through a 
        decentralized crypto asset exchange, or otherwise providing 
        customer access to a decentralized crypto asset exchange, a 
        futures commission merchant shall implement risk management 
        standards with respect to trading activity through that 
        decentralized crypto asset exchange.
            ``(2) Requirements.--A futures commission merchant shall--
                    ``(A) implement an effective risk-based procedure 
                for determining whether to execute, reject, or suspend 
                an incoming or outgoing transaction relating to a 
                decentralized crypto asset exchange, including a 
                determination based on suspected money laundering, 
                sanctions evasion, fraud, or market manipulation;
                    ``(B) conduct an effective risk-based analysis of 
                the code of the decentralized crypto asset exchange to 
                determine whether crypto asset transactions can occur 
                on the exchange securely, consistently, and immutably;
                    ``(C) verify that the code for the decentralized 
                crypto asset exchange is widely available to the 
                public;
                    ``(D) verify that there are appropriate developer 
                documents relating to the decentralized crypto asset 
                exchange that appropriately disclose all risks of the 
                software;
                    ``(E) conduct an effective risk analysis with 
                respect to the decentralized crypto asset exchange, 
                including--
                            ``(i) money laundering and sanctions 
                        evasion;
                            ``(ii) settlement;
                            ``(iii) fraud and market manipulation; and
                            ``(iv) operational and cybersecurity risk, 
                        including--
                                    ``(I) the use of multi-signature 
                                wallets;
                                    ``(II) integration with third-party 
                                software or vendors;
                                    ``(III) any material efforts to 
                                alter the functionality of the 
                                protocol; and
                                    ``(IV) all other material risks;
                    ``(F) implement robust policies and procedures to 
                mitigate the risks identified in subparagraph (E);
                    ``(G) disclose the risks identified in subparagraph 
                (E) using plain language to customers;
                    ``(H) maintain robust capability to detect market 
                manipulation, fraud, money laundering, and sanctions 
                evasion occurring on the decentralized crypto asset 
                exchange, including through the use of tools that will 
                properly target those risks, including through 
                distributed ledger intelligence companies;
                    ``(I) ensure that the merchant is not trading with 
                a decentralized crypto asset exchange on a principal 
                basis, but solely on an agency basis at the request of 
                a customer; and
                    ``(J) consistent with this subsection, implement 
                other standards the Commission may require by rule.
    ``(k) Risk Management Standards for Self-Hosted Wallets.--
            ``(1) In general.--The Commission shall adopt risk 
        management standards relating to money laundering, customer 
        identification and sanctions for self-hosted wallets that 
        conduct transactions with a futures commission merchant.
            ``(2) Definition of self-hosted wallet.--In this 
        subsection, the term `self-hosted wallet' means a digital 
        interface used to secure and transfer crypto assets, in which 
        the owner of the assets retains independent control in a manner 
        that is secured by that interface.''.
    ``(l) Limitation on Futures Commission Merchants Acting as a 
Counterparty in Crypto Asset Transactions.--A registered futures 
commission merchant shall not act as a counterparty in any agreement, 
contract, or transaction involving a crypto asset that has not been 
listed for trading on a registered crypto asset exchange.
    ``(m) Applicability of Other Core Principles.--The Commission may 
require a registered futures commission merchant to comply with other 
standards of section 5i, including the core principles described in 
that section, if appropriate based on the activities and risk profile 
of the merchant.''.
    (d) Common Provisions Applicable to Registered Entities.--Section 
5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is amended--
            (1) in subsection (a)(1), by striking ``5(d) and 5b(c)(2)'' 
        and inserting ``5(d), 5b(c)(2), and 5i(c)'';
            (2) in subsection (b), by inserting ``registered crypto 
        asset exchange,'' before ``derivatives'' each place it appears; 
        and
            (3) in subsection (c)--
                    (A) in paragraph (2), by inserting ``or 
                participants'' before ``(in a'';
                    (B) in paragraph (4)(B), by striking ``1a(10)'' and 
                inserting ``1a(9)''; and
                    (C) in paragraph (5), by adding at the end the 
                following:
                    ``(D) Special rules for the listing of certain 
                crypto assets.--
                            ``(i) In general.--In the case of a listing 
                        for trading a crypto asset that has not 
                        previously been listed for trading on another 
                        registered entity--
                                    ``(I) paragraphs (2) and (3) shall 
                                apply as if the listing were a rule; 
                                and
                                    ``(II) paragraph (2) shall be 
                                applied by substituting `20 business 
                                days' for `10 business days'.
                            ``(ii) Transitional extension.--During the 
                        18-month period beginning on the date of the 
                        registration of the first crypto asset 
                        exchange, the Commission shall have an 
                        additional 20 business days to review any 
                        certification under clause (i).
                            ``(iii) Consideration of comments.--In 
                        conducting a review under clause (i), the 
                        Commission shall consider any comments provided 
                        by the Securities and Exchange Commission with 
                        respect to the legal classification of a crypto 
                        asset.''.

SEC. 404. REGISTRATION OF CRYPTO ASSET EXCHANGES.

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

``SEC. 5I. REGISTRATION OF CRYPTO ASSET EXCHANGES.

    ``(a) Definition of Customer.--In this section, the term `customer' 
means any person that maintains an account for the trading of crypto 
assets or payment stablecoins directly with a registered crypto asset 
exchange (other than a person that is owned or controlled, directly or 
indirectly, by the registered crypto asset exchange).
    ``(b) Registration.--
            ``(1) In general.--Any trading facility that offers or 
        seeks to offer a market in crypto assets or payment stablecoins 
        shall register with the Commission as a crypto asset exchange 
        by submitting to the Commission an application in such form and 
        containing such information as the Commission may require for 
        the purpose of making the determinations required for approval 
        under subsections (d) and (f).
            ``(2) Deemed registration.--A registered designated 
        contract market or registered swap execution facility that 
        fulfills the requirements of this section may elect to be 
        considered a registered crypto asset exchange, in such form and 
        manner as the Commission shall prescribe.
            ``(3) Additional registration.--A registered crypto asset 
        exchange shall be registered with the Secretary of the Treasury 
        as a money services business and with a customer protection and 
        market integrity authority registered under section 9809 of 
        title 31, United States Code.
    ``(c) Trading.--
            ``(1) In general.--A registered crypto asset exchange may 
        make available for trading any crypto asset or payment 
        stablecoin, that is not readily susceptible to manipulation, 
        subject to this subsection.
            ``(2) Requirements.--
                    ``(A) Ancillary assets.--An ancillary asset shall 
                not be made available for trading on a registered 
                crypto asset exchange unless the asset is in compliance 
                with section 42 of the Securities Exchange Act of 1934.
                    ``(B) Confirmation.--A registered crypto asset 
                exchange shall have a duty to confirm an ancillary 
                asset is in compliance before making the asset 
                available for trading.
            ``(3) Rules governing margined or leveraged trading.--The 
        Commission may make, promulgate, and enforce such additional 
        rules governing margined, leveraged, or financed transactions 
        as are reasonably necessary to protect market participants and 
        promote the orderly settlement of transactions with respect 
        to--
                    ``(A) disclosure;
                    ``(B) recordkeeping;
                    ``(C) capital, margin, and other financial 
                resources;
                    ``(D) reporting;
                    ``(E) business conduct;
                    ``(F) documentation; and
                    ``(G) such other matters as the Commission 
                determines to be necessary.
            ``(4) Prohibition.--
                    ``(A) In general.--Registration as a crypto asset 
                exchange shall not permit a trading facility to offer 
                any contract of sale of a commodity for future 
                delivery, option, or swap for trading without also 
                being registered as a designated contract market or 
                swap execution facility.
                    ``(B) Proprietary trading.--A registered crypto 
                asset exchange shall not conduct proprietary trading, 
                but may conduct market making under standards 
                established by the Commission by rule.
    ``(d) Core Principles for Crypto Asset Exchanges.--
            ``(1) Compliance with core principles.--
                    ``(A) In general.--To be registered, and maintain 
                registration, as a crypto asset exchange, the 
                registered crypto asset exchange shall comply with--
                            ``(i) the core principles described in this 
                        subsection, and annually certify such 
                        compliance; and
                            ``(ii) any requirement that the Commission 
                        may impose by rule pursuant to section 8a(5).
                    ``(B) Reasonable discretion of crypto asset 
                exchange.--Unless otherwise determined by the 
                Commission by rule, a registered crypto asset exchange 
                described in subparagraph (A) shall have reasonable 
                discretion in establishing the manner in which the 
                registered crypto asset exchange complies with the core 
                principles described in this subsection.
            ``(2) Compliance with rules.--A registered crypto asset 
        exchange shall--
                    ``(A) establish and enforce compliance with 1 or 
                more rules of the registered crypto asset exchange, 
                including--
                            ``(i) the terms and conditions of the 
                        trades traded or processed on or through the 
                        registered crypto asset exchange; and
                            ``(ii) any limitation on access to the 
                        registered crypto asset exchange;
                    ``(B) establish and enforce compliance with 
                trading, trade processing, and participation rules that 
                will deter abuses and have the capacity to detect, 
                investigate, and enforce violations of those rules, 
                including means--
                            ``(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 registered crypto asset exchange, including rules 
                specifying trading procedures to be used in entering 
                and executing orders traded or posted on the registered 
                crypto asset exchange.
            ``(3) Crypto assets not readily susceptible to 
        manipulation.--
                    ``(A) In general.--A registered crypto asset 
                exchange shall permit trading only in assets that are 
                not readily susceptible to manipulation.
                    ``(B) Listing restrictions.--A registered crypto 
                asset exchange shall not permit trading in a crypto 
                asset or payment stablecoin if it is reasonably likely 
                that--
                            ``(i) the transaction history of the asset 
                        can be fraudulently altered by any person or 
                        group of persons acting collectively; or
                            ``(ii) the functionality or operation of 
                        the asset can be materially altered by any 
                        person or group of persons under common 
                        control.
                    ``(C) Considerations.--In assessing a crypto asset 
                or payment stablecoin under this paragraph, a 
                registered crypto asset exchange shall consider--
                            ``(i) the purpose and use of the asset;
                            ``(ii) the creation or release process of 
                        the asset;
                            ``(iii) the consensus mechanism of the 
                        asset;
                            ``(iv) the governance structure of the 
                        asset;
                            ``(v) the participation and distribution of 
                        the asset;
                            ``(vi) the current and proposed 
                        functionality of the asset;
                            ``(vii) the legal classification of the 
                        asset; and
                            ``(viii) any other factor required by the 
                        Commission.
            ``(4) Treatment of customer assets.--
                    ``(A) Required standards and procedures.--A 
                registered crypto asset exchange shall establish 
                standards and procedures that are designed to protect 
                and ensure the safety of customer money, assets, and 
                property.
                    ``(B) Holding of customer assets.--
                            ``(i) In general.--A registered crypto 
                        asset exchange shall hold customer money, 
                        assets, and property in a manner to minimize 
                        the customer's risk of loss of, or unreasonable 
                        delay in the access to, the money, assets, and 
                        property.
                            ``(ii) Segregation of funds.--
                                    ``(I) In general.--A registered 
                                crypto asset exchange shall treat and 
                                deal with all money, assets, and 
                                property of any customer received as 
                                belonging to the customer.
                                    ``(II) Commingling prohibited.--
                                Money, assets, and property of a 
                                customer described in subclause (I)--
                                            ``(aa) shall be separately 
                                        accounted for; and
                                            ``(bb) shall not be--

                                                    ``(AA) commingled 
                                                with the funds of the 
                                                registered crypto asset 
                                                exchange; or

                                                    ``(BB) used to 
                                                margin, secure, or 
                                                guarantee any trades or 
                                                accounts of any 
                                                customer or person 
                                                other than the person 
                                                for whom the money, 
                                                assets, or property are 
                                                held.

                            ``(iii) Exceptions.--
                                    ``(I) Use of funds.--
                                            ``(aa) In general.--
                                        Notwithstanding clause (ii), 
                                        money, assets, and property of 
                                        customers of a registered 
                                        crypto asset exchange may, for 
                                        the purposes described in item 
                                        (bb), be commingled and 
                                        deposited with an entity 
                                        described in section 
                                        4d(i)(1)(B).
                                            ``(bb) Withdrawal.--
                                        Notwithstanding clause (ii), 
                                        the share of the money, assets, 
                                        and property described in item 
                                        (aa) as in the normal course of 
                                        business is necessary to 
                                        margin, guarantee, secure, 
                                        transfer, adjust, or settle a 
                                        crypto asset transaction with a 
                                        registered entity may be 
                                        withdrawn and applied to those 
                                        purposes, including the payment 
                                        of commissions, brokerage, 
                                        interest, taxes, storage, and 
                                        other charges, lawfully 
                                        accruing in connection with the 
                                        crypto asset transaction.
                                    ``(II) Commission action.--
                                Notwithstanding clause (ii), in 
                                accordance with such terms and 
                                conditions as the Commission may 
                                prescribe by rule or order, any money, 
                                assets, or property of the customers of 
                                a registered crypto asset exchange may 
                                be commingled and deposited in customer 
                                accounts with any other money, assets, 
                                or property received by the registered 
                                crypto asset exchange and required by 
                                the Commission to be separately 
                                accounted for and treated and dealt 
                                with as belonging to the customer of 
                                the registered crypto asset exchange.
                    ``(C) Permitted investments.--Money referred to in 
                subparagraph (B)(ii)(I) may be invested--
                            ``(i) in--
                                    ``(I) obligations of the United 
                                States;
                                    ``(II) general obligations of any 
                                State or of any political subdivision 
                                of a State that are investment-grade;
                                    ``(III) obligations fully 
                                guaranteed as to principal and interest 
                                by the United States; or
                                    ``(IV) any other investment that 
                                the Commission may by rule prescribe; 
                                and
                            ``(ii) in accordance with such rules and 
                        subject to such conditions as the Commission 
                        may prescribe.
                    ``(D) Misuse of customer property.--It shall be 
                unlawful--
                            ``(i) for any registered crypto asset 
                        exchange that has received any customer money, 
                        assets, or property for custody to dispose of, 
                        or use any of the money, assets, or property as 
                        belonging to the registered crypto asset 
                        exchange; or
                            ``(ii) for any other person, including any 
                        other registered crypto asset exchange or 
                        custodian that has received any customer money, 
                        assets, or property for deposit, to hold, 
                        dispose of, or use any of the money, assets, or 
                        property as belonging to--
                                    ``(I) the registered crypto asset 
                                exchange that deposited the money, 
                                assets, or property; or
                                    ``(II) any person other than the 
                                customers of the registered crypto 
                                asset exchange.
                    ``(E) Customer right to opt out.--
                            ``(i) In general.--A customer shall have 
                        the right to waive any requirement under 
                        subparagraph (B) by affirmatively electing, in 
                        writing to the registered crypto asset 
                        exchange, to waive the requirement.
                            ``(ii) Limitations.--The Commission may, by 
                        rule, establish notice and disclosure 
                        requirements, segregation requirements, 
                        investment limitations, and other rules 
                        relating to the waiving of any requirement 
                        under this paragraph that is reasonably 
                        necessary to protect customers, including 
                        eligible contract participants, non-eligible 
                        contract participants, or any other class of 
                        customers.
            ``(5) Monitoring of trading and trade processing.--
                    ``(A) In general.--A registered crypto asset 
                exchange shall provide a competitive, open, and 
                efficient market and mechanism for executing 
                transactions that protects the price discovery process 
                of trading on the registered crypto asset exchange.
                    ``(B) Protection of markets and market 
                participants.--A registered crypto asset exchange shall 
                establish and enforce compliance with 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 registered crypto asset 
                        exchange.
                    ``(C) Procedures and monitoring.--A registered 
                crypto asset exchange shall--
                            ``(i) establish and enforce compliance with 
                        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 
                                registered crypto asset exchange; and
                                    ``(II) procedures for trade 
                                processing of crypto assets on or 
                                through the facilities of the 
                                registered crypto asset exchange; and
                            ``(ii) monitor trading in crypto assets to 
                        prevent manipulation, price distortion, and 
                        disruptions of the delivery or cash settlement 
                        process through surveillance, and compliance, 
                        including methods for conducting real-time 
                        monitoring of trading and comprehensive and 
                        accurate trade reconstructions.
            ``(6) Ability to obtain information.--A registered crypto 
        asset exchange shall--
                    ``(A) establish and enforce rules that will allow 
                the registered crypto asset exchange 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 registered crypto asset 
        exchange shall adopt rules to provide for the exercise of 
        emergency authority, in consultation or cooperation with the 
        Commission or a registered entity, as is necessary and 
        appropriate, including the authority to facilitate the 
        liquidation or transfer of open positions in any crypto asset 
        or to suspend or curtail trading in a crypto asset.
            ``(8) Reporting requirements.--
                    ``(A) In general.--A registered crypto asset 
                exchange shall provide to the Commission information 
                that is determined by the Commission to be necessary to 
                perform any responsibility of the Commission under this 
                Act.
                    ``(B) Timely publication of trading information.--
                            ``(i) In general.--
                                    ``(I) Publication.--A registered 
                                crypto asset exchange shall make public 
                                timely information on price, trading 
                                volume, and other trading data on 
                                crypto assets to the extent prescribed 
                                by the Commission.
                                    ``(II) Accessibility.--A registered 
                                crypto asset exchange may make trading 
                                data freely accessible to the public 
                                under rules established by the 
                                Commission.
                            ``(ii) Capacity of crypto asset exchange.--
                        A registered crypto asset exchange shall be 
                        required to have the capacity to electronically 
                        capture and transmit trade information with 
                        respect to transactions executed on the 
                        registered crypto asset exchange.
            ``(9) Recordkeeping and reporting.--
                    ``(A) In general.--A registered crypto asset 
                exchange shall--
                            ``(i) maintain records of all activities 
                        relating to the business of the registered 
                        crypto asset exchange, including a complete 
                        audit trail, in a form and manner acceptable to 
                        the Commission for a period of 5 years;
                            ``(ii) report to the Commission, in a form 
                        and manner acceptable to the Commission, such 
                        information as the Commission determines to be 
                        necessary or appropriate for the Commission to 
                        perform the duties of the Commission under this 
                        Act; and
                            ``(iii) keep any records relating to 
                        ancillary assets 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) a customer protection and market 
                        integrity authority or other entity delegated 
                        regulatory and disciplinary authority by a 
                        governmental agency;
                            ``(ii) the Securities and Exchange 
                        Commission;
                            ``(iii) an appropriate Federal banking 
                        agency (as defined in section 3 of the Federal 
                        Deposit Insurance Act (12 U.S.C. 1813));
                            ``(iv) a State bank supervisor (as defined 
                        in that section);
                            ``(v) a State securities or commodities 
                        regulator;
                            ``(vi) the Financial Stability Oversight 
                        Council;
                            ``(vii) the Department of Justice; and
                            ``(viii) 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 
                enter into a written agreement with each entity stating 
                that the entity shall abide by the confidentiality 
                requirements described in section 8 relating to the 
                information on crypto asset transactions that is 
                provided.
                    ``(D) Providing information.--Each registered 
                crypto asset exchange shall provide to the Commission 
                (including any designee of the Commission) information 
                under subparagraph (A) in such form and at such 
                frequency as is required by the Commission.
            ``(10) Antitrust considerations.--Unless necessary or 
        appropriate to achieve the purposes of this Act, a registered 
        crypto asset 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 crypto asset 
        exchange shall--
                    ``(A) establish and enforce rules to minimize 
                conflicts of interest in the decisionmaking process of 
                the registered crypto asset exchange;
                    ``(B) establish a process for resolving conflicts 
                of interest described in subparagraph (A); and
                    ``(C) disclose fee arrangements from affiliates and 
                third-party service providers, and crypto assets traded 
                on the exchange in which the exchange may have a 
                financial interest.
            ``(12) Financial resources.--
                    ``(A) In general.--A registered crypto asset 
                exchange shall have adequate financial, operational, 
                and managerial resources, as determined by the 
                Commission, to discharge each responsibility of the 
                registered crypto asset exchange.
                    ``(B) Minimum amount of financial resources.--A 
                registered crypto asset exchange shall possess 
                financial resources that, at a minimum, exceed the 
                total amount that would enable the registered crypto 
                asset exchange to conduct an orderly wind-down of the 
                activities of the registered crypto asset exchange.
                    ``(C) Additional financial resources for leverage 
                trading.--The Commission may require such additional 
                financial resources as are necessary to enable a 
                registered crypto asset exchange that offers margined, 
                leveraged, or financed transactions to fulfill the 
                customer obligations of the registered crypto asset 
                exchange.
            ``(13) Governance fitness standards.--
                    ``(A) Governance arrangements.--A registered crypto 
                asset exchange shall--
                            ``(i) establish governance arrangements 
                        that are transparent to fulfill public interest 
                        requirements; and
                            ``(ii) at all times, maintain a chief 
                        compliance officer and an appropriate 
                        compliance and risk management function.
                    ``(B) Fitness standards.--A registered crypto asset 
                exchange shall establish and enforce appropriate 
                fitness standards for--
                            ``(i) directors;
                            ``(ii) any individual or entity with legal 
                        or technological authority to execute the 
                        settlement activities of the registered crypto 
                        asset exchange;
                            ``(iii) any individual or entity with 
                        direct access to any custodian affiliated with 
                        the registered crypto asset exchange;
                            ``(iv) any entity offering affiliated 
                        services for the registered crypto asset 
                        exchange; and
                            ``(v) any party affiliated with any 
                        individual or entity described in clauses (i) 
                        through (iv).
            ``(14) System safeguards.--A registered crypto asset 
        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 
                        registered crypto asset exchange; and
                    ``(C) periodically conduct tests to verify that the 
                backup resources of the registered crypto asset 
                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.
            ``(15) Decentralized crypto asset exchanges.--
                    ``(A) In general.--Prior to conducting trading 
                activity (including routing orders and directed 
                trading) through a decentralized crypto asset exchange, 
                or otherwise providing customer access to a 
                decentralized crypto asset exchange, a crypto asset 
                exchange shall implement risk management standards with 
                respect to its trading activity using that 
                decentralized crypto asset exchange.
                    ``(B) Requirements.--A crypto asset exchange 
                shall--
                            ``(i) implement an effective risk-based 
                        procedure for determining whether to execute, 
                        reject, or suspend an incoming or outgoing 
                        transaction relating to a decentralized crypto 
                        asset exchange, including a determination based 
                        on suspected money laundering, sanctions 
                        evasion, fraud, or market manipulation;
                            ``(ii) conduct an effective risk-based 
                        analysis of the code of the decentralized 
                        crypto asset exchange to determine whether 
                        crypto asset transactions can occur on the 
                        exchange securely, consistently, and immutably;
                            ``(iii) verify that the code for the 
                        decentralized crypto asset exchange is widely 
                        available to the public;
                            ``(iv) verify that there are appropriate 
                        developer documents relating to the 
                        decentralized crypto asset exchange that 
                        appropriately disclose all risks of the 
                        software;
                            ``(v) conduct an effective risk analysis 
                        with respect to the decentralized crypto asset 
                        exchange, including--
                                    ``(I) money laundering and 
                                sanctions evasion;
                                    ``(II) settlement;
                                    ``(III) fraud and market 
                                manipulation; and
                                    ``(IV) operational and 
                                cybersecurity risk, including--
                                            ``(aa) the use of multi-
                                        signature wallets;
                                            ``(bb) integration with 
                                        third-party software or 
                                        vendors;
                                            ``(cc) any material efforts 
                                        to alter the functionality of 
                                        the protocol; and
                                            ``(dd) all other material 
                                        risks;
                            ``(vi) implement robust policies and 
                        procedures to mitigate the risks identified 
                        under clause (v);
                            ``(vii) disclose the risks identified under 
                        clause (v) using plain language to customers;
                            ``(viii) maintain robust capability to 
                        detect market manipulation, fraud, money 
                        laundering, and sanctions evasion occurring on 
                        the decentralized crypto asset exchange, 
                        including through the use of alternative tools 
                        that will properly target those risks, 
                        including through distributed ledger 
                        intelligence companies;
                            ``(ix) ensure that the merchant is not 
                        trading with a decentralized crypto asset 
                        exchange on a principal basis, but solely on an 
                        agency basis at the request of a customer; and
                            ``(x) consistent with this subsection, 
                        implement other standards which may be required 
                        by the Commission by rule.
    ``(e) Risk Management Standards for Self-Hosted Wallets.--
            ``(1) In general.--The Commission shall adopt risk 
        management standards relating to money laundering, customer 
        identification, and sanctions for self-hosted wallets that 
        conduct transactions with a registered crypto asset exchange, 
        which shall be consistent with standards under section 4d(k).
            ``(2) Definition of self-hosted wallet.--In this 
        subsection, the term `self-hosted wallet' means a digital 
        interface used to secure and transfer crypto assets, in which 
        the owner of the assets retains independent control in a manner 
        that is secured by that interface.
    ``(f) Appointment of Trustee.--
            ``(1) In general.--If a proceeding under section 5e results 
        in the suspension or revocation of the registration of a crypto 
        asset exchange, or if a crypto asset exchange withdraws from 
        registration, the Commission, after providing notice to the 
        crypto asset exchange, may apply to the district court of the 
        United States for the judicial district in which the crypto 
        asset exchange is located for the appointment of a trustee.
            ``(2) Assumption of jurisdiction.--If the Commission 
        applies to a court for appointment of a trustee under paragraph 
        (1)--
                    ``(A) the court may take exclusive jurisdiction 
                over--
                            ``(i) the crypto asset exchange; and
                            ``(ii) the records and assets of the crypto 
                        asset exchange, wherever those records and 
                        assets are 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 crypto 
                asset exchange in an orderly manner for the protection 
                of customers, subject to such terms and conditions as 
                the court may prescribe.
    ``(g) Custodian.--A registered crypto asset exchange shall deposit 
with an entity described in section 4d(i)(1)(B) each crypto asset that 
is--
            ``(1) the property of a customer of the registered crypto 
        asset exchange;
            ``(2) required to be held by the registered crypto asset 
        exchange under subsection (c)(3) or (d)(12); or
            ``(3) otherwise required by the Commission to be so held to 
        reasonably protect customers or promote the public interest.
    ``(h) Change in Control.--
            ``(1) In general.--No person, acting directly or 
        indirectly, or through or in concert with 1 or more persons, 
        shall acquire control of a crypto asset exchange unless--
                    ``(A) the person has provided to the Commission 
                prior notice of the proposed acquisition; and
                    ``(B) the Commission has not disapproved the 
                acquisition during the 60-day period beginning on the 
                date of the notice under subparagraph (A).
            ``(2) Voting securities.--No person who has been approved 
        to acquire control of a crypto asset exchange and who has 
        maintained that control shall acquire, directly or indirectly, 
        or through or in concert with 1 or more persons, voting 
        securities of the exchange if the ownership, control, or power 
        to vote of that person will increase from less than 25 percent 
        to 25 percent or more of any class of voting securities of the 
        exchange unless--
                    ``(A) the person has provided to the Commission 
                prior notice of the proposed acquisition; and
                    ``(B) the Commission has not disapproved the 
                acquisition during the 60-day period beginning on the 
                date of the notice under subparagraph (A).
            ``(3) Information.--The Commission may, by rule, specify 
        information relating to a proposed acquisition described in 
        paragraph (1) or (2), which shall be submitted with an 
        application.
            ``(4) Public notice.--As specified by the Commission, 
        public notice of a proposed acquisition described in paragraph 
        (1) or (2) shall be given at the time an application is filed.
            ``(5) Approval.--The Commission shall approve a proposed 
        acquisition described in paragraph (1) or (2) unless, by order, 
        it finds either of the following:
                    ``(A) The proposed acquisition would pose an 
                unacceptable risk to customers or to the operation of 
                the exchange.
                    ``(B) The proposed acquisition would otherwise 
                violate Federal law.
            ``(6) Definition of control.--In this subsection, the term 
        `control' means the power, directly or indirectly, to direct 
        the management or policies of a crypto asset exchange, to vote 
        25 percent or more of any class of voting securities of the 
        exchange or control in any manner the election of a majority of 
        the directors of the exchange, as may be provided by rule.
    ``(i) Jurisdiction.--Except as otherwise provided by Federal law, 
the Commission shall have exclusive jurisdiction over the regulation, 
supervision, and all other activities of a registered crypto asset 
exchange.
    ``(j) Implementation.--The Commission shall prescribe rules to 
implement this section.''.
    (b) Certain Crypto Asset Exchange Functions Not Sufficient To 
Trigger Requirement To Register as Futures Commission Merchant.--
Section 4f(c) of the Commodity Exchange Act (7 U.S.C. 6f(c)) is amended 
by adding at the end the following:
    ``(12) Clarification of Scope of Registration Requirement.--A 
registered crypto asset exchange shall not be required to register as a 
futures commission merchant for any activity for which the registered 
crypto asset exchange is regulated under section 5i.''.

SEC. 405. SUPERVISION OF AFFILIATES.

    (a) In General.--The Commodity Exchange Act (7 U.S.C. 1 et seq.) 
(as amended by section 404(a)) is amended by inserting after section 5i 
the following:

``SEC. 5J. COMMISSION SUPERVISION OF CRYPTO ASSET AFFILIATES.

    ``(a) Definition of Covered Affiliate.--In this section, `covered 
affiliate' means, based on the totality of the facts and circumstances 
as determined by the Commission, a person with a substantial legal or 
financial relationship to an entity registered under this Act that is 
primarily engaged in crypto asset activities, based on the following 
factors:
            ``(1) The degree to which conflicts of interest may be 
        present, or the financial interests of the entity may come into 
        conflict with the fiduciary duty of the entity to customers or 
        the prudent operation of the entity.
            ``(2) The legal relationship between the entity and the 
        affiliate.
            ``(3) The overall financing requirements of the entity and 
        the affiliate, and the degree, if any, to which the entity and 
        the affiliate are financially dependent on each other.
            ``(4) The degree, if any, to which the entity or its 
        customers rely on the affiliate for operational support or 
        services in connection with the business of the entity.
            ``(5) The level of market, credit, or other risk present in 
        the activities of the affiliate.
            ``(6) The extent to which the affiliate has the authority 
        or the ability to cause a withdrawal of capital from the 
        entity.
            ``(7) Any other factor determined by the Commission by rule 
        to be material.
    ``(b) Commission Designation of Covered Affiliates.--
            ``(1) In general.--In consultation with an entity 
        registered under this Act, not later than 1 year after the date 
        of enactment of this section, and not less frequently than 90 
        days before the examination of an entity by the Commission or a 
        customer protection and market integrity authority registered 
        under section 9809 of title 31, United States Code, the 
        Commission shall designate the covered affiliates of the 
        entity.
            ``(2) Requirement.--Each covered affiliate of the entity 
        shall be required to provide to the Commission, by not later 
        than the date on which an examination of the entity by the 
        Commission or a customer protection and market integrity 
        authority registered under section 9809 of title 31, United 
        States Code, begins, the following:
                    ``(A) A description of all activities the affiliate 
                is engaged with relating to the entity.
                    ``(B) The most recent audited financial statements 
                of the affiliate.
                    ``(C) All legal agreements entered into between the 
                affiliate and the entity.
                    ``(D) A description of all transactions between the 
                affiliate and the entity since the last examination.
                    ``(E) Any other information that may be determined 
                to be material by the Commission.
    ``(c) Remedial Measures.--If the Commission finds that it is in the 
public interest and has good cause to believe it is necessary to 
protect the customers of an entity registered under this Act that is 
primarily engaged in crypto asset activities, the Commission may, by 
order--
            ``(1) conduct an examination of a covered affiliate;
            ``(2) require a person with control of an entity to divest 
        or sever their relationship with the entity; or
            ``(3) limit covered affiliates from providing services to 
        an entity or entering into legal relationships or specified 
        transactions with an entity.
    ``(d) Rules.--Not later than 18 months after the date of enactment 
of this section, the Commission shall issue rules to implement this 
section.''.

SEC. 406. VIOLATIONS.

    Section 9 of the Commodity Exchange Act (7 U.S.C. 13) is amended--
            (1) in subsection (a)(2), by striking ``subsection 4c'' and 
        inserting ``section 4c''; and
            (2) in subsection (e)--
                    (A) in paragraph (1), by inserting ``contracts for 
                the sale of crypto assets,'' after ``options 
                thereon,''; and
                    (B) in paragraph (2), by inserting ``or contracts 
                for the sale of crypto assets'' after ``options 
                thereon''.

SEC. 407. MARKET REPORTS.

    Section 16(a) of the Commodity Exchange Act (7 U.S.C. 20(a)) is 
amended--
            (1) in the first sentence, by striking ``which are the 
        subject of futures contracts,'' and inserting ``under the 
        jurisdiction of the Commission,''; and
            (2) in the second sentence, by striking ``futures 
        markets.'' and inserting ``markets under the jurisdiction of 
        the Commission.''.

SEC. 408. BANKRUPTCY TREATMENT OF CRYPTO ASSETS.

    (a) In General.--Section 20(a) of the Commodity Exchange Act (7 
U.S.C. 24(a)) is amended in paragraphs (1) and (2) by inserting 
``crypto assets, payment stablecoins,'' after ``securities,'' each 
place it appears.
    (b) Commodity Broker Definition.--Section 101(6) of title 11, 
United States Code, is amended by inserting ``registered crypto asset 
exchange, as defined in section 1a of the Commodity Exchange Act,'' 
before ``foreign''.
    (c) Commodities Contracts.--Section 556 of title 11, United States 
Code, is amended by inserting ``a registered crypto asset exchange, as 
defined in section 1a of the Commodity Exchange Act,'' before ``a 
contract''.
    (d) Contractual Rights.--Section 561 of title 11, United States 
Code, is amended by inserting ``, a registered crypto asset exchange, 
as defined in section 1a of the Commodity Exchange Act,'' after 
``designated under the Commodity Exchange Act'' each place it appears.
    (e) Definitions.--Section 761 of title 11, United States Code, is 
amended--
            (1) in paragraph (4)--
                    (A) in subparagraph (A), by inserting ``crypto 
                asset, payment stablecoin, or a'' before ``commodity'';
                    (B) in subparagraph (I), by striking ``or'' at the 
                end;
                    (C) in subparagraph (J), by adding ``or'' at the 
                end; and
                    (D) by adding at the end the following:
                    ``(K) a contract for the sale of a crypto asset or 
                payment stablecoin by a registered crypto asset 
                exchange;''; and
            (2) in paragraph (10)--
                    (A) in the matter preceding subparagraph (A)--
                            (i) by inserting ``a crypto asset, payment 
                        stablecoin,'' after ``a security,''; and
                            (ii) by inserting ``crypto asset, payment 
                        stablecoin,'' after ``cash, security,'';
                    (B) in subparagraph (A)--
                            (i) in clause (vi), by inserting ``a crypto 
                        asset, payment stablecoin'' after ``a 
                        security,''; and
                            (ii) in clause (vii)--
                                    (I) by inserting ``payment 
                                stablecoin or a crypto asset'' before 
                                ``held as property'';
                                    (II) by inserting ``payment 
                                stablecoin or crypto asset'' after 
                                ``such security''; and
                                    (III) by inserting ``payment 
                                stablecoin or crypto asset'' after 
                                ``based on a security''; and
                    (C) in subparagraph (B)--
                            (i) by striking ``not including property'' 
                        and inserting ``not including--
                            ``(i) property'';
                            (ii) in clause (i), as so designated, by 
                        adding ``and'' at the end; and
                            (iii) by adding at the end the following:
                            ``(ii) money, assets, or property with 
                        respect to which any requirement under 
                        subsection (i) of section 4d of the Commodity 
                        Exchange Act (7 U.S.C. 6d) is waived pursuant 
                        to paragraph (3) of that subsection, or any 
                        requirement under subparagraph (B) of paragraph 
                        (4) of section 5i(d) of that Act is waived 
                        pursuant to subparagraph (E) of that 
                        paragraph;''.
    (f) Voidable Transfers.--Section 764(b)(1) of title 11, United 
States Code, is amended by inserting ``, crypto assets'' before ``, or 
other property''.
    (g) Treatment of Customer Property.--Section 766 of title 11, 
United States Code, is amended--
            (1) in subsection (b)(1), by striking ``physical commodity 
        underlying'' and inserting ``commodity underlying'';
            (2) in subsection (c), by inserting ``crypto asset, payment 
        stablecoin'' before ``or commodity contract'' each place the 
        term appears;
            (3) in subsection (d), by inserting ``crypto asset, payment 
        stablecoin'' before ``or commodity contract'' each place the 
        term appears;
            (4) in subsection (f)--
                    (A) in striking ``and other property'' and 
                inserting ``crypto assets, payment stablecoins and 
                other property''; and
                    (B) by striking ``or property'' and inserting ``, 
                crypto assets, payment stablecoins or property'';
            (5) in subsection (g), by striking ``security or property'' 
        and inserting ``security, crypto asset, payment stablecoin or 
        property''; and
            (6) in subsection (h)(2), by inserting ``crypto assets, 
        payment stablecoins,'' after ``customer securities,''.

SEC. 409. IDENTIFIED BANKING PRODUCTS.

    Section 206(a) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) 
is amended--
            (1) in paragraph (5)(B)(ii), by striking ``or'' at the end;
            (2) in paragraph (6), by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding at the end the following:
            ``(7) a payment stablecoin issued by a depository 
        institution under section 722A, except as provided under 
        section 2(c)(2)(F) of the Commodity Exchange Act (7 U.S.C. 
        2(c)(2)(F)).''.

SEC. 410. FINANCIAL INSTITUTIONS DEFINITION.

    Section 5312(c)(1) of title 31, United States Code, is amended by 
adding at the end the following:
                    ``(B) A registered crypto asset exchange, as 
                defined in section 1a of the Commodity Exchange Act.''.

SEC. 411. OFFSETTING THE COSTS OF CRYPTO ASSET REGULATION.

    The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by 
adding at the end the following:

``SEC. 24. OFFSETTING THE COSTS OF CRYPTO ASSET REGULATION.

    ``(a) Recovery of Certain Costs of Annual Appropriation.--
            ``(1) In general.--Effective beginning October 1, 2024, the 
        Commission may, by rule, collect fees--
                    ``(A) to fund expenses relating to regulation of 
                crypto asset cash and spot markets; and
                    ``(B) that are designed to recover the costs to the 
                Federal Government of the annual appropriation to the 
                Commission by Congress.
            ``(2) Registered entities.--Fees under paragraph (1) shall 
        only be imposed--
                    ``(A) on registered entities engaged in cash or 
                spot crypto asset activities; and
                    ``(B) in relation to the regulation of those 
                activities under this Act.
            ``(3) Fee rates.--Fees under paragraph (1) shall--
                    ``(A) be strictly related to the cost to the 
                Commission of the regulation of crypto asset cash and 
                spot markets;
                    ``(B) be reduced for newly registered entities with 
                less than $100,000,000 in daily trading volume; and
                    ``(C)(i) minimize negative impacts on market 
                liquidity; and
                    ``(ii) maintain the efficiency, competitiveness, 
                and financial integrity of crypto asset markets.
            ``(4) Collection of fees.--The Commission shall collect 
        fees under this subsection in such manner and within such time 
        as may be specified by the Commission by rule.
    ``(b) Fee Rate Orders.--
            ``(1) In general.--Not later than 60 days after the date on 
        which a law providing a regular appropriation to the Commission 
        for a fiscal year is enacted, the Commission shall adopt an 
        order setting rates for fees to be collected under subsection 
        (a) for that fiscal year.
            ``(2) Publication.--The Commission shall publish in the 
        Federal Register the order adopted under paragraph (1), 
        including--
                    ``(A) projections on which the fees are based; and
                    ``(B) an explanation of the method used for 
                calculating applicable fee rates.
    ``(c) Deposit of Fees.--
            ``(1) Offsetting collections.--Fees collected under 
        subsection (a) for any fiscal year--
                    ``(A) shall be deposited and credited as offsetting 
                collections to the account providing appropriations to 
                the Commission; and
                    ``(B) shall not be collected or available for 
                obligation for any fiscal year except to the extent 
                provided in advance in appropriation Acts.
            ``(2) General revenues prohibited.--No fees collected under 
        subsection (a) shall be deposited and credited as general 
        revenue of the Treasury.
    ``(d) Lapse of Appropriations.--If a regular appropriation to the 
Commission has not been enacted on the first day of a fiscal year, the 
Commission shall continue to collect fees under this section at the 
rates in effect on September 30 of the preceding fiscal year.
    ``(e) Limitations.--
            ``(1) Leveraged, margined, or financed transactions.--
        Nothing in this section authorizes the imposition of fees on a 
        registered entity relating to leveraged, margined, or financed 
        transactions under this Act, including those activities 
        relating to crypto assets.
            ``(2) Other appropriations.--Notwithstanding any other 
        provision of law, the Commission may use appropriations 
        otherwise made available by law to fund expenses relating to 
        the regulation of crypto asset cash and spot markets.
    ``(f) Ceiling on Fees.--Unless otherwise provided by law, fees 
collected under this section shall not exceed $30,000,000.
    ``(g) Authorization Required.--The authority under this section to 
impose and collect fees shall only be in effect during a period that a 
legislative authorization of the Commission is in effect, as otherwise 
provided by law.''.

               TITLE V--RESPONSIBLE SECURITIES REGULATION

SEC. 501. SECURITIES OFFERINGS INVOLVING CERTAIN INTANGIBLE 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. SECURITIES OFFERINGS INVOLVING CERTAIN INTANGIBLE ASSETS.

    ``(a) Definitions.--In this section:
            ``(1) Ancillary asset.--
                    ``(A) In general.--The term `ancillary asset' means 
                an intangible, fungible asset that is offered, sold, or 
                otherwise provided to a person in connection with the 
                purchase and sale of a security through an arrangement 
                or scheme that constitutes an investment contract, as 
                that term is used in section 2(a)(1) of the Securities 
                Act of 1933 (15 U.S.C. 77b(a)(1)).
                    ``(B) Exclusion.--The term `ancillary asset' does 
                not include an asset that provides the holder of the 
                asset with any of the following rights in a business 
                entity:
                            ``(i) A debt or equity interest in that 
                        entity.
                            ``(ii) Liquidation rights with respect to 
                        that entity.
                            ``(iii) An entitlement to an interest or 
                        dividend payment from that entity.
                            ``(iv) Any other financial interest in that 
                        entity.
            ``(2) Business entity.--The term `business entity' means--
                    ``(A) a corporation, limited liability company, or 
                other entity that is created by filing a document with 
                the Secretary of State of a State (or a similar 
                office); or
                    ``(B) a foreign entity that is eligible for 
                registration, or that is registered to do business, 
                under the laws of a State or Indian Tribe.
            ``(3) Foreign private issuer.--The term `foreign private 
        issuer' means a foreign issuer, other than a foreign 
        government, except that the term does not include a foreign 
        issuer that, as of the last business day of the most recently 
        completed fiscal quarter of the issuer, satisfies the following 
        conditions:
                    ``(A) More than 50 percent of the outstanding 
                voting securities of the issuer are directly or 
                indirectly owned by residents of the United States.
                    ``(B) Any of the following:
                            ``(i) The majority of the executive 
                        officers or directors of the issuer are 
                        citizens or residents of the United States.
                            ``(ii) More than 50 percent of the assets 
                        of the issuer are located in the United States.
                            ``(iii) The business of the issuer is 
                        principally administered in the United States.
    ``(b) Disclosure Requirements.--
            ``(1) Initial compliance with specified periodic disclosure 
        requirements.--Subject to paragraphs (4) and (5), an issuer 
        engaged in business in or affecting interstate commerce, or 
        that is organized outside of the United States and is not a 
        foreign private issuer, that offers, sells, or otherwise 
        provides a security through an arrangement or scheme that 
        constitutes an investment contract, as that term is used in 
        section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 
        77b(a)(1)), and that provides or proposes to provide any holder 
        of the security with an ancillary asset, shall be subject to 
        the periodic disclosure requirements under subsection (c) for 
        the 1-year period beginning on the date that is 180 days after 
        the first date on which the security is offered, sold, or 
        otherwise provided by the issuer, if--
                    ``(A) the average daily aggregate value of all 
                ancillary assets offered, sold, or otherwise provided 
                by the issuer in relation to the offer, sale, or 
                provision of the security in all spot markets open to 
                the public in the United States (based on the knowledge 
                of the issuer after due inquiry) is greater than 
                $5,000,000 for the 180-day period immediately 
                succeeding the date of that first offer, sale, or 
                provision; and
                    ``(B) during the 180-day period described in 
                subparagraph (A), the issuer, or any person owning not 
                less than 10 percent of any class of equity securities 
                of the issuer, engaged in entrepreneurial or managerial 
                efforts that primarily determined the value of the 
                ancillary asset.
            ``(2) Ongoing compliance with specified periodic disclosure 
        requirements.--Subject to paragraphs (4) and (5), an issuer 
        that is engaged in business in or affecting interstate 
        commerce, or that is organized outside of the United States and 
        is not a foreign private issuer, that offers, sells, or 
        otherwise provides a security through an arrangement or scheme 
        that constitutes an investment contract, as that term is used 
        in section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 
        77b(a)(1)), and that provides the holder of the security with 
        an ancillary asset in connection with the acquisition of the 
        security, shall be subject to the periodic disclosure 
        requirements under subsection (c) for a given fiscal year of 
        that issuer, if, in the immediately preceding fiscal year of 
        the issuer (or any portion thereof)--
                    ``(A) the average daily aggregate value of all 
                trading in the ancillary asset in all spot markets open 
                to the public in the United States was greater than 
                $5,000,000, based on the knowledge of the issuer after 
                due inquiry; and
                    ``(B) the issuer, or any person owning not less 
                than 10 percent of any class of equity securities of 
                the issuer, engaged in entrepreneurial or managerial 
                efforts that primarily determined the value of the 
                ancillary asset.
            ``(3) Transition rule.--Subject to paragraphs (4) and (5), 
        an issuer that is engaged in business in or affecting 
        interstate commerce, or that is organized outside of the United 
        States and is not a foreign private issuer, that offers, sells, 
        or otherwise provides a security through an arrangement or 
        scheme that constitutes an investment contract, as that term is 
        used in section 2(a)(1) of the Securities Act of 1933 (15 
        U.S.C. 77b(a)(1)), and that provides the holder of the security 
        with an ancillary asset before January 1, 2025, in connection 
        with the acquisition of the security shall be subject to the 
        periodic disclosure requirements under subsection (c) beginning 
        in the first fiscal year of the issuer that begins on or after 
        that date, if, in the immediately preceding fiscal year of the 
        issuer--
                    ``(A) the average daily aggregate value of trading 
                in the ancillary asset in all spot markets open to the 
                public for which trading volume is generally available 
                was greater than $5,000,000, based on the knowledge of 
                the issuer after due inquiry; and
                    ``(B) the issuer, or any person owning not less 
                than 10 percent of any class of equity securities of 
                the issuer, engaged in entrepreneurial or managerial 
                efforts that primarily determined the value of the 
                ancillary asset.
            ``(4) Treatment of ancillary assets.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, if an issuer issues a security 
                through an arrangement or scheme that constitutes an 
                investment contract, as that term is used in section 
                2(a)(1) of the Securities Act of 1933 (15 U.S.C. 
                77b(a)(1)), is subject to paragraph (1), (2), or (3), 
                and has complied with the periodic disclosure 
                requirements under subsection (c), to the extent 
                applicable, an ancillary asset owned by the issuer, or 
                any person affiliated with the issuer, shall be 
                presumed--
                            ``(i) to be a commodity, consistent with 
                        section 2(c)(2)(F) of the Commodity Exchange 
                        Act (7 U.S.C. 2(c)(2)(F)); and
                            ``(ii) not to be a security under--
                                    ``(I) section 3(a);
                                    ``(II) such section 2(a)(1);
                                    ``(III) section 2(a) of the 
                                Investment Company Act of 1940 (15 
                                U.S.C. 80a-2(a));
                                    ``(IV) section 202(a) of the 
                                Investment Advisers Act of 1940 (15 
                                U.S.C. 80b-2(a)); or
                                    ``(V) any applicable provision of 
                                State law.
                    ``(B) Other persons.--A person who is not an 
                issuer, an entity controlled by an issuer (including a 
                person that acquires an ancillary asset from such an 
                issuer for the purpose of resale or distribution of the 
                ancillary asset), or a person acting at the direction 
                or on the behalf of an issuer shall be not required to 
                treat an ancillary asset provided by, or on behalf of, 
                an issuer as a security under this Act or any provision 
                of law described in subparagraph (A)(ii).
                    ``(C) Exception.--
                            ``(i) In general.--Subparagraph (A) shall 
                        not apply to an ancillary asset if the United 
                        States Court of Appeals for the District of 
                        Columbia Circuit, after an appropriate 
                        proceeding, issues an order finding by clear 
                        and convincing evidence that the ancillary 
                        asset meets not less than 1 of the bases for 
                        exclusion under subsection (a)(1)(B).
                            ``(ii) Rules of construction.--Nothing in 
                        this subparagraph shall be construed to 
                        preclude the Commission from entering into a 
                        settlement agreement relating to violations or 
                        alleged violations of this section. Compliance 
                        under this section shall not be used in any 
                        administrative or judicial proceeding as 
                        evidence that an ancillary asset is a security.
            ``(5) Calculation.--For the purposes of paragraphs (1), 
        (2), and (3), the calculation of daily aggregate value shall be 
        based on data disclosed by spot markets or otherwise available 
        to the public for inspection.
    ``(c) Specified Periodic Disclosure Requirements.--If an issuer is 
subject to paragraph (1), (2), or (3) of subsection (b), the issuer 
shall file, or cause the relevant affiliate to file, with the 
Commission, on a semi-annual basis, information that the Commission 
may, by rule, require relating to the issuer and any relevant ancillary 
asset, as necessary or appropriate in the public interest or for the 
protection of investors, which shall be exclusively comprised of the 
following:
            ``(1) Basic corporate information regarding the issuer, 
        including the following:
                    ``(A) The experience of the issuer in developing 
                assets similar to the ancillary asset.
                    ``(B) If the issuer has previously provided 
                ancillary assets to purchasers of securities, 
                information on the subsequent history of those 
                previously provided ancillary assets, including price 
                history, if the information is publicly available.
                    ``(C) The activities that the issuer has taken in 
                the relevant disclosure period, and is projecting to 
                take in the 1-year period following the submission of 
                the disclosure, with respect to promoting the use, 
                value, or resale of the ancillary asset (including any 
                activity to facilitate the creation or maintenance of a 
                trading market for the ancillary asset and any network 
                or system that utilizes the ancillary asset).
                    ``(D) The anticipated cost of the activities of the 
                issuer in subparagraph (C) and whether the issuer has 
                unencumbered, liquid funds equal to that amount.
                    ``(E) To the extent the ancillary asset involves 
                the use of a particular technology, the experience of 
                the issuer with the use of that technology.
                    ``(F) The backgrounds of the board of directors (or 
                equivalent body), senior management, and key employees 
                of the issuer, the experience or functions of whom are 
                material to the value of the ancillary asset, as well 
                as any personnel changes relating to the issuer during 
                the period covered by the disclosure.
                    ``(G) A description of the assets and liabilities 
                of the issuer, to the extent material to the value of 
                the ancillary asset.
                    ``(H) A description of any legal proceedings in 
                which the issuer is engaged (including inquiries by 
                governmental agencies into the activities of the 
                issuer), to the extent material to the value of the 
                ancillary asset.
                    ``(I) Risk factors relating to the impact of the 
                issuer on, or unique knowledge relating to, the value 
                of the ancillary asset.
                    ``(J) Information relating to ownership of the 
                ancillary asset by--
                            ``(i) persons owning not less than 10 
                        percent of any class of equity security of the 
                        issuer; and
                            ``(ii) the management of the issuer.
                    ``(K) Information relating to transactions 
                involving the ancillary asset by the issuer with 
                related persons, promoters, and control persons.
                    ``(L) Recent sales or similar dispositions of 
                ancillary assets by the issuer and affiliates of the 
                issuer.
                    ``(M) Purchases or similar dispositions of 
                ancillary assets by the issuer and affiliates of the 
                issuer.
                    ``(N) A going concern statement from the chief 
                financial officer of the issuer or equivalent official, 
                signed under penalty of perjury, stating whether the 
                issuer maintains the financial resources to continue 
                business as a going concern for the 1-year period 
                following the submission of the disclosure, absent a 
                material change in circumstances.
            ``(2) Information relating to the ancillary asset, 
        including the following:
                    ``(A) A general description of the ancillary asset, 
                including the standard unit of measure with respect to 
                the ancillary asset, the intended or known 
                functionality and uses of the ancillary asset, the 
                market for the ancillary asset, other assets or 
                services that may compete with the ancillary asset, and 
                the total supply of the ancillary asset or the manner 
                and rate of the ongoing production or creation of the 
                ancillary asset.
                    ``(B) If ancillary assets have been offered, sold, 
                or otherwise provided by the issuer to investors, 
                intermediaries, or resellers, a description of the 
                amount of assets offered, sold, or provided, the terms 
                of each such transaction, and any contractual or other 
                restrictions on the resale of the assets by 
                intermediaries.
                    ``(C) If ancillary assets were distributed without 
                charge, a description of each distribution, including 
                the identity of any recipient that received more than 5 
                percent of the total amount of the ancillary assets in 
                any such distribution.
                    ``(D) The amount of ancillary assets owned by the 
                issuer.
                    ``(E) For the 1-year period following the 
                submission of the disclosure, a description of the 
                plans of the issuer to support (or to cease supporting) 
                the use or development of the ancillary asset, 
                including markets for the ancillary asset and each 
                platform or system that uses the ancillary asset.
                    ``(F) Each third party not affiliated with the 
                issuer, the activities of which may have a material 
                impact on the value of the ancillary asset.
                    ``(G) Risk factors known to the issuer that may 
                limit demand for, or interest in, the ancillary asset.
                    ``(H) The names and locations of the markets in 
                which the ancillary asset is known by the issuer to be 
                available for sale or purchase.
                    ``(I) To the extent available to the issuer, the 
                average daily price for a constant unit of value of the 
                ancillary asset during the relevant reporting period, 
                as well as the 12-month high and low prices for the 
                ancillary asset.
                    ``(J) If applicable, information relating to any 
                external audit of the code and functionality of the 
                ancillary asset, including the entity performing the 
                audit and the experience of the entity in conducting 
                similar audits.
                    ``(K) If applicable, any valuation report or 
                economic analysis commissioned by the issuer regarding 
                the ancillary asset or the projected market of the 
                ancillary asset.
                    ``(L) If the ancillary asset is intangible, 
                information relating to custody by the owner of the 
                ancillary asset or a third party.
                    ``(M) Information on intellectual property rights 
                claimed or disputed relating to the ancillary asset.
                    ``(N) A description of the technology underlying 
                the issuance and trading of the ancillary asset.
                    ``(O) Any material tax considerations applicable to 
                owning, storing, using, or trading the ancillary asset.
                    ``(P) Any material legal or regulatory 
                considerations applicable to owning, storing, using, or 
                trading the ancillary asset, including any legal 
                proceeding that may impact the value of the ancillary 
                asset.
                    ``(Q) Any other material factor or information that 
                may impact the value of the ancillary asset and about 
                which the issuer is reasonably aware.
    ``(d) Application to Successor Entities and Certain Affiliates.--
            ``(1) In general.--If an issuer would otherwise be subject 
        to specified periodic disclosure requirements under subsection 
        (c) and is no longer in operation, any successor entity that 
        directly or indirectly received not less than 50 percent of the 
        remaining proceeds raised by the sale of the related securities 
        of that issuer shall file, or cause to be filed, with the 
        Commission the information required under that subsection.
            ``(2) Certain affiliates.--If an entity controlled by an 
        issuer is subject to specified periodic disclosure requirements 
        under subsection (c) and is engaged in entrepreneurial or 
        managerial efforts that primarily determine the value of an 
        ancillary asset, the entity may file with the Commission the 
        information required under that subsection.
    ``(e) Voluntary Disclosure.--An issuer that is not subject to the 
specified periodic disclosure requirements under subsection (c) and 
that offers or sells a security through an arrangement or scheme that 
constitutes an investment contract, as that term is used in section 
2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)), and that 
provides the holder of that security with an ancillary asset in 
connection with the acquisition of the security may voluntarily file 
with the Commission the information required under that subsection if 
the issuer believes that it is reasonably likely that the issuer will 
become subject to those requirements in the future.
    ``(f) Exemptions.--The Commission may, by order, exempt an 
ancillary asset from the specified periodic disclosure requirements 
under subsection (c) if the Commission determines that the public 
policy goals of disclosure and consumer protection are not satisfied by 
requiring disclosures relating to an ancillary asset.
    ``(g) Rule of Construction.--If an issuer fails to comply with a 
provision of this section, an ancillary asset provided by the issuer 
shall not be presumed to be a security under a provision of law 
described in subsection (b)(4)(A)(ii), solely because of such failure.
    ``(h) Liability for False and Misleading Statements.--Any statement 
made in a disclosure, application, or other document filed under this 
section shall be subject to section 18.
    ``(i) Termination of Specified Periodic Disclosure Requirements.--
            ``(1) In general.--The obligation of an issuer to file the 
        information required under subsection (c) shall terminate on 
        the date that is 90 days, or such shorter period as the 
        Commission may determine, after the date on which the issuer 
        files a certification described in paragraph (2).
            ``(2) Certification.--
                    ``(A) In general.--A certification described in 
                this paragraph shall be supported by reasonable 
                evidence, based on the knowledge of the issuer filing 
                the certification, after due inquiry, that--
                            ``(i) the average daily aggregate value of 
                        all trading in the applicable ancillary asset 
                        in all spot markets open to the public in the 
                        United States in the 12-month period preceding 
                        the date on which the certification is filed 
                        was not greater than $5,000,000; or
                            ``(ii) during the 12-month period preceding 
                        the date on which the certification is filed, 
                        neither the applicable issuer, nor any entity 
                        controlled by the applicable issuer, engaged in 
                        entrepreneurial or managerial efforts that 
                        primarily determined the value of the ancillary 
                        asset.
                    ``(B) Denial.--
                            ``(i) In general.--Subject to subparagraph 
                        (C)(ii), the Commission may, by majority vote 
                        and after notice and opportunity for hearing, 
                        deny a certification filed under paragraph (1) 
                        if the Commission finds that the certification 
                        is not supported by substantial evidence.
                            ``(ii) Effect.--The denial, under clause 
                        (i), of a certification filed under paragraph 
                        (1)--
                                    ``(I) shall terminate the 
                                certification so filed; and
                                    ``(II) shall not prevent the 
                                applicable issuer from filing another 
                                certification under paragraph (1), if 
                                the re-filed certification is filed not 
                                earlier than 180 days after the date on 
                                which the original certification is 
                                denied.
                    ``(C) Pending status.--
                            ``(i) In general.--Termination of the 
                        disclosure requirements described in paragraph 
                        (1) applicable to an issuer that has filed a 
                        certification under that paragraph shall be 
                        deferred pending review by the Commission of 
                        the evidence supporting the certification.
                            ``(ii) Effect of delay.--If, as of the date 
                        that is 90 days after receiving a certification 
                        filed under paragraph (1), the Commission has 
                        not requested additional evidence with respect 
                        to the certification from the applicable 
                        issuer, the disclosure obligations that are the 
                        subject of the certification shall terminate.
    ``(j) Rules.--The Commission may adopt rules and guidance to 
implement this section, consistent with the statutory intent of this 
section.''.

SEC. 502. GUIDANCE RELATING TO SATISFACTORY CONTROL LOCATION.

    Not later than 180 days after the date of the enactment of this 
Act, the Securities and Exchange Commission shall issue guidance 
relating to section 240.15c3-3 of title 17, Code of Federal 
Regulations, or any successor regulation, providing that the 
requirement to designate a satisfactory control location for a crypto 
asset that is, or may represent ownership of, a security may be 
satisfied by protecting the crypto asset through commercially 
reasonable cybersecurity practices to maintain control of sufficient 
private key material to transfer control of the crypto asset to another 
person, or to cause another person to obtain control of the crypto 
asset, including by means of a smart contract that generates private 
key material without the involvement of a natural person.

      TITLE VI--CUSTOMER PROTECTION AND MARKET INTEGRITY AUTHORITY

SEC. 601. CUSTOMER PROTECTION AND MARKET INTEGRITY AUTHORITY.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 208, is amended by adding at the end the following:
``Sec. 9809. Customer protection and market integrity authorities
    ``(a) Definitions.--In this section:
            ``(1) Nonmember professional.--The term `nonmember 
        professional' means any person that--
                    ``(A) is a crypto asset intermediary; and
                    ``(B) is a not a member of a customer protection 
                and market integrity authority or affiliated 
                organization.
            ``(2) Registration information.--The term `registration 
        information' means the information reported in connection with 
        the licensing, registration, or other authorization of crypto 
        asset intermediaries and their associated persons, including--
                    ``(A) disciplinary actions, regulatory, judicial, 
                and arbitration proceedings, and other information 
                required by law or authority rule; and
                    ``(B) the source and status of the information 
                described in subparagraph (A).
    ``(b) Registration; Application.--An association of crypto asset 
intermediaries may be registered as a customer protection and market 
integrity authority, under the terms and conditions provided in this 
section, and in accordance with the provisions of this section and 
section 9810, by jointly filing with the Securities and Exchange 
Commission and the Commodity Futures Trading Commission an application 
for registration, in such form as the commissions may require, 
containing the rules of the authority and such other information and 
documents that may be prescribed as necessary or appropriate in the 
public interest or for customer protection.
    ``(c) Determinations by Commissions Requisite to Registration.--An 
association of crypto asset intermediaries may not be registered as a 
customer protection and market integrity authority under subsection (b) 
unless a majority of the members of each of the Securities and Exchange 
Commission and the Commodity Futures Trading Commission, voting 
separately, determine that each of the following is satisfied:
            ``(1) By reason of the number and the scope of the 
        transactions of the authority, the authority will be able to 
        carry out the purposes of this section.
            ``(2) The authority is so organized, and has the capacity, 
        to--
                    ``(A) be able to carry out the purposes of this 
                section and other applicable State and Federal laws; 
                and
                    ``(B) subject to any rule or order of the 
                appropriate commission, enforce compliance by members 
                of the authority (and persons associated with those 
                members) with the provisions of applicable law, the 
                rules under those provisions, and the rules of the 
                authority.
            ``(3) The rules of the authority provide that any crypto 
        asset intermediary may become a member of the authority and any 
        person may become associated with a member of the authority.
            ``(4) The rules of the authority provide for the following 
        allocation of a 13-member board of directors:
                    ``(A) 3 governmental directors, as follows:
                            ``(i) The Director of the Office of 
                        Financial Innovation of the Commodity Futures 
                        Trading Commission, or the designee of the 
                        Director.
                            ``(ii) The Director of the Office of 
                        Financial Innovation of the Securities and 
                        Exchange Commission, or the designee of the 
                        Director.
                            ``(iii) The Director of the Financial 
                        Crimes Enforcement Network, or the designee of 
                        the Director.
                    ``(B) 4 independent directors--
                            ``(i) who are appointed by the President, 
                        with specializations in financial technology, 
                        consumer protection, and financial markets, 
                        except that those 4 directors shall not be 
                        affiliated, through a close relative or a 
                        financial interest with any member of the 
                        authority; and
                            ``(ii) 1 of whom is designated by the 
                        President as chair of the authority.
                    ``(C) 6 directors appointed by the members of the 
                prospective authority.
            ``(5) The rules of the authority provide for the equitable 
        allocation of reasonable dues, fees, and other charges among 
        members of the authority and other persons using any facility 
        or system that the authority operates or controls.
            ``(6) The rules of the authority--
                    ``(A) are designed to--
                            ``(i) prevent fraudulent and manipulative 
                        acts and practices in order to promote just and 
                        equitable principles of trade;
                            ``(ii) foster cooperation and coordination 
                        with persons engaged in regulating, clearing, 
                        settling, processing information with respect 
                        to, and facilitating transactions in crypto 
                        assets;
                            ``(iii) remove impediments to, and perfect 
                        the mechanism of, a free and open market; and
                            ``(iv) protect customers and the public 
                        interest; and
                    ``(B) are not designed to--
                            ``(i) permit unfair discrimination between 
                        customers and crypto asset intermediaries;
                            ``(ii) fix minimum profits;
                            ``(iii) impose any schedule or fix rates of 
                        commissions, allowances, discounts, or other 
                        fees to be charged by the members of the 
                        authority; or
                            ``(iv) regulate by virtue of any authority 
                        conferred by law matters not related to the 
                        purposes of this section or the administration 
                        of the authority.
            ``(7) The rules of the authority provide that, subject to 
        any rule or order of the appropriate commission, the members of 
        the authority (and persons associated with those members) shall 
        be appropriately disciplined for a violation of any provision 
        of applicable law, the rules under such a provision, or the 
        rules of the authority by expulsion, suspension, limitation of 
        activities, functions, and operations, fine, censure, a 
        suspension or bar from being associated with a member, or any 
        other fitting sanction.
            ``(8) The rules of the authority are consistent with the 
        provisions of subsection (h) and, in general, provide a fair 
        procedure for--
                    ``(A) the disciplining of members and persons 
                associated with members;
                    ``(B) the denial of membership to any person 
                seeking membership in the authority;
                    ``(C) the barring of any person from becoming 
                associated with a member of the authority; and
                    ``(D) the prohibition or limitation by the 
                authority of any person with respect to access to 
                services offered by the authority or a member of the 
                authority.
            ``(9) The rules of the authority do not impose any burden 
        on competition not necessary or appropriate in furtherance of 
        the purposes of this section.
            ``(10) The requirements of subsection (d), as applicable, 
        are satisfied.
            ``(11) The rules of the authority include provisions 
        governing the form and content of quotations relating to crypto 
        assets, which shall be designed to--
                    ``(A) produce fair and informative quotations;
                    ``(B) prevent fictitious or misleading quotations; 
                and
                    ``(C) promote orderly procedures for collecting, 
                distributing, and publishing quotations.
    ``(d) Rules; Provision for Registration of Affiliated 
Organization.--
            ``(1) In general.--The Securities and Exchange Commission 
        and the Commodity Futures Trading Commission may permit or 
        require the rules of an authority applying for registration 
        under subsection (b) to provide for the admission of an 
        organization registered as an affiliated organization pursuant 
        to subsection (e), to participate in the applicant authority as 
        an affiliate of the applicant authority, under terms permitting 
        powers and responsibilities to the affiliate, and under such 
        other appropriate terms and conditions, as may be provided by 
        the rules of the applicant authority, if those rules appear to 
        the commissions jointly to be necessary or appropriate in the 
        public interest or for customer protection and to carry out the 
        purposes of this section.
            ``(2) Duties and powers of the commissions.--The duties and 
        powers of the Securities and Exchange Commission and the 
        Commodity Futures Trading Commission with respect to any 
        authority or affiliate organization shall in no way be limited 
        by reason of any such affiliation.
    ``(e) Registration as Affiliated Organization; Prerequisites; 
Authority Rules.--
            ``(1) In general.--An applicant organization shall not be 
        registered as an affiliated organization, unless--
                    ``(A) the organization, notwithstanding that the 
                organization does not satisfy the requirements under 
                subsection (c)(1), will, upon the registration of the 
                organization under this subsection, be admitted to 
                affiliation with an organization registered as an 
                authority pursuant to subsection (c), in the manner and 
                under the terms and conditions provided by the rules of 
                the customer protection and market integrity authority 
                in accordance with subsection (d); and
                    ``(B) the organization and the rules of the 
                organization satisfy the requirements under paragraphs 
                (2) through (11) of subsection (c).
            ``(2) Exception.--Any restrictions upon membership of an 
        applicant organization shall not be less stringent than in the 
        case of the customer protection and market integrity authority 
        with which the organization is to be affiliated.
    ``(f) Dealings With Nonmember Professionals.--
            ``(1) In general.--The rules of a customer protection and 
        market integrity authority may provide that no member of the 
        authority may deal with any nonmember professional except at 
        the same prices, for the same commissions or fees, and on the 
        same terms and conditions the member accords to the general 
        public.
            ``(2) Rule of construction.--Nothing in this subsection may 
        be construed to prevent any member of a customer protection and 
        market integrity authority from granting to any other member of 
        any other such authority any discount, allowance, commission, 
        or special terms in connection with a crypto asset transaction.
    ``(g) Denial of Membership.--
            ``(1) In general.--Membership in a customer protection and 
        market integrity authority under this section shall be limited 
        to crypto asset intermediaries.
            ``(2) Denial for public interest or consumer protection.--
                    ``(A) In general.--A customer protection and market 
                integrity authority may, and the appropriate 
                commission, by order, may direct such an authority to, 
                as necessary or appropriate in the public interest or 
                for customer protection, deny membership to any person, 
                and bar from becoming associated with a member any 
                person, that is subject to a statutory disqualification 
                within the laws under the jurisdiction of that 
                commission.
                    ``(B) Notice.--A customer protection and market 
                integrity authority shall file notice with the 
                appropriate commission, in such form and containing 
                such information as the appropriate commission shall 
                require, not less than 30 days before admitting any 
                person to membership or permitting any person to become 
                associated with a member, if the authority knew, or in 
                the exercise of reasonable care should have known, that 
                such person was subject to a statutory 
                disqualification.
            ``(3) Procedure.--
                    ``(A) In general.--A customer protection and market 
                integrity authority may--
                            ``(i) deny membership to, or condition the 
                        membership of, a crypto asset intermediary, 
                        if--
                                    ``(I) the intermediary does not 
                                meet such standards of financial 
                                responsibility or operational 
                                capability, or such intermediary or any 
                                individual associated with the 
                                intermediary does not meet such 
                                standards of training, experience, and 
                                competence, as are prescribed by the 
                                rules of the authority; or
                                    ``(II) the intermediary or person 
                                associated with the intermediary has 
                                engaged, and there is a reasonable 
                                likelihood the intermediary or person 
                                will again engage, in acts or practices 
                                inconsistent with just and equitable 
                                principles of trade; and
                            ``(ii) examine and verify the 
                        qualifications of an applicant to become a 
                        member and the individuals associated with the 
                        applicant in accordance with procedures 
                        established by the rules of the authority.
                    ``(B) Authority.--A customer protection and market 
                integrity authority may--
                            ``(i) bar an individual from becoming 
                        associated with a member, or condition the 
                        association of an individual with a member, if 
                        that individual--
                                    ``(I) does not meet such standards 
                                of training, experience, and competence 
                                as are prescribed by the rules of the 
                                authority; or
                                    ``(II) has engaged, and there is a 
                                reasonable likelihood the individual 
                                will again engage, in acts or practices 
                                inconsistent with just and equitable 
                                principles of trade;
                            ``(ii) examine and verify the 
                        qualifications of an applicant to become a 
                        person associated with a member in accordance 
                        with procedures established by the rules of the 
                        authority; and
                            ``(iii) require an individual associated 
                        with a member, or any class of such 
                        individuals, to be registered with the 
                        authority in accordance with procedures so 
                        established.
                    ``(C) Bar on association.--A customer protection 
                and market integrity authority may bar any person from 
                becoming associated with a member if that person does 
                not agree--
                            ``(i) to supply the authority with such 
                        information with respect to the relationship 
                        and dealings of the person with the member as 
                        may be specified in the rules of the authority; 
                        and
                            ``(ii) to permit examination of the records 
                        of the person to verify the accuracy of any 
                        information supplied by the person under clause 
                        (i).
            ``(4) Denial for type of business.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                customer protection and market integrity authority may 
                deny membership to a crypto asset intermediary not 
                engaged in a type of business in which the rules of the 
                authority require members to be engaged.
                    ``(B) Condition.--No customer protection and market 
                integrity authority may deny membership to a crypto 
                asset intermediary by reason of the amount of such type 
                of business done by such intermediary or the other 
                types of business in which the intermediary is engaged.
    ``(h) Discipline of Customer Protection and Market Integrity 
Authority Members and Persons Associated With Members; Summary 
Proceedings.--
            ``(1) Discipline.--
                    ``(A) Notification.--In any proceeding by a 
                customer protection and market integrity authority to 
                determine whether a member, or a person associated with 
                a member, should be disciplined (other than a summary 
                proceeding pursuant to paragraph (3)), the authority 
                shall bring specific charges, notify such member or 
                person of (and give the person an opportunity to defend 
                against) those charges, and keep a record.
                    ``(B) Statement.--A determination by a customer 
                protection and market integrity authority to impose 
                discipline in a proceeding under subparagraph (A) shall 
                be supported by a statement setting forth--
                            ``(i) any act or practice in which the 
                        member, or person associated with a member, has 
                        been found to have engaged, or that such member 
                        or person has been found to have omitted;
                            ``(ii) the specific provision of law, the 
                        rules under such a provision, or the rules of 
                        the authority that an act or practice described 
                        in clause (i), or omission to act, is charged 
                        with violating; and
                            ``(iii) the sanction imposed and a 
                        justification for the sanction.
            ``(2) Denial of membership or services.--
                    ``(A) Notification.--In any proceeding by a 
                customer protection and market integrity authority to 
                determine whether a person shall be denied membership, 
                barred from becoming associated with a member, or 
                prohibited or limited with respect to access to 
                services offered by the authority or a member of the 
                authority (other than a summary proceeding pursuant to 
                paragraph (3)), the authority shall--
                            ``(i) notify that person and give the 
                        person an opportunity to be heard;
                            ``(ii) provide the person the specific 
                        grounds for denial, bar, or prohibition or 
                        limitation under consideration; and
                            ``(iii) maintain a record.
                    ``(B) Statement.--A determination by a customer 
                protection and market integrity authority to deny 
                membership, bar a person from becoming associated with 
                a member, or prohibit or limit a person with respect to 
                access to services offered by the authority or a member 
                under subparagraph (A) shall be supported by a 
                statement setting forth the specific grounds on which 
                the denial, bar, or prohibition or limitation is based.
            ``(3) Summary proceeding.--
                    ``(A) In general.--A customer protection and market 
                integrity authority may summarily--
                            ``(i) suspend a member of the authority, or 
                        a person associated with such a member, that 
                        is--
                                    ``(I) expelled or suspended from 
                                any other authority or entity delegated 
                                regulatory and disciplinary authority 
                                by a governmental agency; or
                                    ``(II) barred or suspended from 
                                being associated with a member of 
                                another authority;
                            ``(ii) suspend a member of the authority 
                        that is in such financial or operating 
                        difficulty that the authority determines (and 
                        so notifies the appropriate commission) that 
                        the member cannot be permitted to continue to 
                        do business as a member, in order to protect 
                        customers, creditors, other members, or the 
                        authority; or
                            ``(iii) limit or prohibit any person from 
                        accessing services offered by the authority if 
                        clause (i) or (ii) is applicable to that 
                        person, or, in the case of a person that is not 
                        a member of the authority, if the authority 
                        determines that the person--
                                    ``(I) does not meet the 
                                qualification requirements or other 
                                prerequisites for that access; and
                                    ``(II) cannot be permitted to 
                                continue to have such access with 
                                safety, in order to protect customers, 
                                creditors, members, or the authority.
                    ``(B) Opportunity for hearing.--Any person 
                aggrieved by a summary action under subparagraph (A) 
                shall be promptly afforded an opportunity for a hearing 
                by the applicable authority in accordance with the 
                provisions of paragraph (1) or (2).
                    ``(C) Stay.--The appropriate commission, by order, 
                may stay a summary action described in subparagraph (A) 
                on the motion of the commission or upon application by 
                any person aggrieved by the summary action, if the 
                commission determines summarily or after notice and 
                opportunity for hearing (which may consist solely of 
                the submission of affidavits or presentation of oral 
                arguments) that the stay is consistent with the public 
                interest and customer protection.
    ``(i) Obligation To Maintain Registration, Disciplinary, and Other 
Data.--
            ``(1) Maintenance of system to respond to inquiries.--A 
        customer protection and market integrity authority shall 
        establish and maintain--
                    ``(A) a system for collecting and retaining 
                registration information; and
                    ``(B) a website, including an application 
                programming interface, to receive and promptly respond 
                to inquiries regarding registration information on the 
                members of the authority and associated persons with 
                respect to those members.
            ``(2) Recovery of costs.--A customer protection and market 
        integrity authority may charge persons making inquiries 
        described in paragraph (1)(B), other than individual customers 
        of crypto asset intermediaries, reasonable fees for responses.
            ``(3) Process for disputed information.--Each customer 
        protection and market integrity authority shall adopt rules 
        establishing a process for disputing the accuracy of 
        information provided in response to inquiries under this 
        subsection.
            ``(4) Limitation on liability.--A customer protection and 
        market integrity authority, or any crypto asset intermediary 
        reporting information to such an authority, shall not have any 
        liability to any person for any actions taken or omitted in 
        good faith under this subsection.
    ``(j) Avoidance of Duplicative Rules.--
            ``(1) In general.--Each customer protection and market 
        integrity authority registered under subsection (b) shall issue 
        rules as necessary to avoid duplicative or conflicting rules 
        applicable to any crypto asset intermediary that is a member of 
        a national securities exchange, board of trade, contract 
        market, registered securities association, registered futures 
        association, or similar entity.
            ``(2) Other membership.--A crypto asset intermediary shall 
        not be required to become a member of another entity delegated 
        regulatory and disciplinary authority by a governmental agency 
        unless the intermediary performs activities with financial 
        assets other than crypto assets.
            ``(3) Non-crypto asset activities.--
                    ``(A) Rules by commissions.--The Securities and 
                Exchange Commission and the Commodity Futures Trading 
                Commission shall jointly prescribe rules under which a 
                crypto asset intermediary that is a member or affiliate 
                of a customer protection and market integrity authority 
                registered under this section may perform activities 
                with financial assets other than crypto assets, if 
                those activities are not a majority of the business of 
                an intermediary and are conducted in a responsible 
                manner, without membership in another entity delegated 
                regulatory and disciplinary authority by a governmental 
                agency.
                    ``(B) Rules by customer protection and market 
                integrity authority.--A customer protection and market 
                integrity authority under this section shall adopt 
                rules governing activities with financial assets other 
                than crypto assets, which shall be consistent with 
                existing law, rule, guidance or industry best practices 
                or the rules of other entities delegated regulatory and 
                disciplinary authority by a governmental agency.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 208, 
is amended by adding at the end the following:

``9809. Customer protection and market integrity authorities.''.

SEC. 602. REGISTRATION, RULEMAKING, AND SUPERVISION OF CUSTOMER 
              PROTECTION AND MARKET INTEGRITY AUTHORITIES.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 601, is amended by adding at the end the following:
``Sec. 9810. Registration, rulemaking, and supervision of customer 
              protection and market integrity authorities
    ``(a) Registration Procedures; Notice of Filing; Other Regulatory 
Agencies.--
            ``(1) Publication of notice.--
                    ``(A) In general.--The Securities and Exchange 
                Commission and Commodity Futures Trading Commission 
                shall, upon the filing of an application for 
                registration as a customer protection and market 
                integrity authority under section 9809, publish notice 
                of that filing and afford interested persons an 
                opportunity to submit written data, views, and 
                arguments concerning the application.
                    ``(B) Requirements.--Not later than 90 days after 
                the date on which notice is published under 
                subparagraph (A), or within a longer period to which 
                the applicable applicant consents, the Securities and 
                Exchange Commission and Commodity Futures Trading 
                Commission shall--
                            ``(i) by joint order, grant registration of 
                        the customer protection and market integrity 
                        authority; or
                            ``(ii) institute proceedings to determine 
                        whether registration should be denied.
                    ``(C) Proceedings.--
                            ``(i) In general.--Proceedings instituted 
                        under subparagraph (B)(ii) shall include notice 
                        of the grounds for denial under consideration 
                        and opportunity for hearing before the joint 
                        commissions.
                            ``(ii) Hearing.--A hearing described in 
                        clause (i) shall be concluded not later than 
                        180 days after the date on which notice of the 
                        filing of the application for registration is 
                        published under subparagraph (A).
                            ``(iii) Further proceedings.--
                                    ``(I) Separate votes.--At the 
                                conclusion of a hearing conducted under 
                                this subparagraph, and not later than 
                                the end of the 180-day period described 
                                in clause (ii), the Securities and 
                                Exchange Commission and Commodity 
                                Futures Trading Commission, voting 
                                separately, shall act to grant or deny 
                                the applicable registration.
                                    ``(II) Effect of failure to issue 
                                joint order.--The failure of the 
                                Securities and Exchange Commission and 
                                Commodity Futures Trading Commission to 
                                issue a joint order during the period 
                                described in subclause (I) shall be 
                                deemed to be a denial of the applicable 
                                registration.
                    ``(D) Considerations.--With respect to an 
                application for registration described in this 
                paragraph, the Securities and Exchange Commission and 
                Commodity Futures Trading Commission shall--
                            ``(i) grant registration if all statutory 
                        requirements have been met and the rules under 
                        those statutory provisions with respect to the 
                        applicant are satisfied; and
                            ``(ii) deny such registration if the 
                        commissions do not make the findings described 
                        in clause (i).
            ``(2) Withdrawal from registration.--
                    ``(A) In general.--A customer protection and market 
                integrity authority may, upon such terms and conditions 
                as the Securities and Exchange Commission and Commodity 
                Futures Trading Commission, by rule, determine 
                necessary or appropriate in the public interest or for 
                the protection of customers, withdraw from registration 
                described in paragraph (1) by filing a written notice 
                of withdrawal with the commissions.
                    ``(B) Considerations.--If the Securities and 
                Exchange Commission and Commodity Futures Trading 
                Commission, voting separately, each finds that a 
                customer protection and market integrity authority is 
                no longer in existence or has ceased to do business in 
                the capacity specified in the application for 
                registration submitted by the authority, the 
                commissions may cancel the registration of the 
                authority.
                    ``(C) Effect of withdrawal, cancellation, 
                suspension, or revocation.--Upon withdrawal by 
                registration or the cancellation, suspension, or 
                revocation of the registration of a customer protection 
                and market integrity authority, the registration of any 
                affiliate shall automatically terminate.
    ``(b) Proposed Rule Changes; Notice; Proceedings.--
            ``(1) In general.--Except as otherwise provided in 
        paragraph (2)--
                    ``(A) a customer protection and market integrity 
                authority shall file with the appropriate commission, 
                in accordance with the rules of that commission, copies 
                of any proposed rule or any proposed change in, 
                addition to, or deletion from the rules of such 
                customer protection and market integrity authority 
                accompanied by a concise general statement of the basis 
                and purpose of such proposed rule change;
                    ``(B) the appropriate commission shall--
                            ``(i) as soon as practicable after the date 
                        on which a proposed rule change is filed under 
                        subparagraph (A), publish notice of that filing 
                        together with the terms of substance of the 
                        proposed rule change or a description of the 
                        subjects and issues involved; and
                            ``(ii) give interested persons an 
                        opportunity to submit written data, views, and 
                        arguments concerning that proposed rule change;
                    ``(C) no proposed rule change described in 
                subparagraph (A) shall take effect unless approved by 
                the appropriate commission or otherwise permitted in 
                accordance with the provisions of this subsection; and
                    ``(D) no proposed rule change described in 
                subparagraph (A) relating to a matter under the 
                jurisdiction of more than 1 commission may be filed.
            ``(2) Approval process.--
                    ``(A) Approval process established.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), not later than 30 days after the 
                        date on which notice of a proposed rule change 
                        is published under paragraph (1), the 
                        appropriate commission shall--
                                    ``(I) by order, approve or 
                                disapprove the proposed rule change; or
                                    ``(II) institute proceedings under 
                                subparagraph (B) to determine whether 
                                the proposed rule change should be 
                                disapproved.
                            ``(ii) Extension of time period.--The 
                        appropriate commission may extend the period 
                        established under clause (i) by not more than 
                        an additional 30 days, if--
                                    ``(I) the commission determines 
                                that a longer period is appropriate and 
                                publishes the reasons for that 
                                determination; or
                                    ``(II) the customer protection and 
                                market integrity authority that filed 
                                the proposed rule change consents to a 
                                longer period.
                    ``(B) Proceedings.--
                            ``(i) Notice and hearing.--If the 
                        appropriate commission does not approve or 
                        disapprove a proposed rule change under 
                        subparagraph (A), the commission shall provide 
                        to the customer protection and market integrity 
                        authority that filed the proposed rule change--
                                    ``(I) notice of the grounds for 
                                disapproval under consideration; and
                                    ``(II) opportunity for hearing, to 
                                be concluded not later than 180 days 
                                after the date of publication of notice 
                                of the filing of the proposed rule 
                                change.
                            ``(ii) Order of approval or disapproval.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), not later 
                                than 180 days after the date on which 
                                notice is published under paragraph 
                                (1), the appropriate commission shall 
                                issue an order approving or 
                                disapproving the proposed rule change 
                                that is the subject of the notice.
                                    ``(II) Extension of time period.--
                                The appropriate commission may extend 
                                the period for issuance under clause 
                                (I) by not more than 60 days, if--
                                            ``(aa) the commission 
                                        determines that a longer period 
                                        is appropriate and publishes 
                                        the reasons for such 
                                        determination; or
                                            ``(bb) the customer 
                                        protection and market integrity 
                                        authority that filed the 
                                        proposed rule change consents 
                                        to the longer period.
                    ``(C) Standards for approval and disapproval.--
                            ``(i) Approval.--The appropriate commission 
                        shall approve a proposed rule change of a 
                        customer protection and market integrity 
                        authority if the commission finds that the 
                        proposed rule change is consistent with law.
                            ``(ii) Time for approval.--The appropriate 
                        commission may not approve a proposed rule 
                        change earlier than 30 days after the date of 
                        publication of notice with respect to the 
                        proposed rule change under paragraph (1), 
                        unless the commission finds good cause for so 
                        doing and publishes the reason for the finding.
                    ``(D) Result of failure to institute or conclude 
                proceedings.--A proposed rule change shall be deemed to 
                have been approved by the appropriate commission, if--
                            ``(i) the commission does not approve or 
                        disapprove the proposed rule change, or begin 
                        proceedings under subparagraph (B), within the 
                        period described in subparagraph (A); or
                            ``(ii) the commission does not issue an 
                        order approving or disapproving the proposed 
                        rule change under subparagraph (B) within the 
                        period described in subparagraph (B)(ii).
                    ``(E) Publication date based on federal register 
                publishing.--
                            ``(i) In general.--For purposes of this 
                        paragraph, if, after filing a proposed rule 
                        change with the appropriate commission under 
                        paragraph (1), a customer protection and market 
                        integrity authority publishes a notice of the 
                        filing of that proposed rule change, together 
                        with the substantive terms of that proposed 
                        rule change, on a publicly accessible website, 
                        the commission shall send the notice to the 
                        Federal Register for publication of the 
                        proposed rule change under paragraph (1) not 
                        later than 5 days after the date on which that 
                        website publication is made.
                            ``(ii) Effect of failing to send.--If the 
                        appropriate commission fails to send notice 
                        under clause (i) during the 5-day period 
                        described in that clause, the date of 
                        publication shall be deemed to be the date on 
                        which the applicable website publication is 
                        made.
            ``(3) Internal governance.--With respect to a proposed rule 
        relating to the internal operation, governance, and procedures 
        of a customer protection and market integrity authority, or a 
        proposed rule relating to the determination of the legal 
        character of a crypto asset--
                    ``(A) the proposed rule shall be--
                            ``(i) subject to approval by the Securities 
                        and Exchange Commission and the Commodity 
                        Futures Trading Commission; and
                            ``(ii) deemed to be approved on the date 
                        that is 5 days after the date on which the 
                        proposed rule is submitted, unless either 
                        commission objects to the proposed rule change; 
                        and
                    ``(B) if a commission objects to the proposed rule 
                change under subparagraph (A)(ii)--
                            ``(i) the commission shall, in a public 
                        format, provide to the authority and the non-
                        objecting commission the reasons for the 
                        objection;
                            ``(ii) the authority, and interested 
                        members of the public, may provide written 
                        comments to the commissions during the 20-day 
                        period beginning on the date on which the 
                        objection is noted; and
                            ``(iii) the Securities and Exchange 
                        Commission and the Commodity Futures Trading 
                        Commission, voting separately, shall jointly 
                        issue an order approving or disapproving the 
                        proposed rule, with the failure to issue such a 
                        joint order being deemed to be approval of the 
                        proposed rule.
            ``(4) Exception.--
                    ``(A) In general.--Notwithstanding paragraphs (2) 
                and (3), a proposed rule change shall take effect upon 
                filing if self-certified by an authority as--
                            ``(i) constituting a stated policy, 
                        practice, or interpretation with respect to the 
                        meaning, administration, or enforcement of an 
                        existing rule of the authority;
                            ``(ii) establishing or changing a due, fee, 
                        or other charge imposed by the authority on any 
                        person, whether or not the person is a member 
                        of the authority; or
                            ``(iii) notwithstanding any other provision 
                        of this subsection, necessary for customer 
                        protection, the maintenance of fair and orderly 
                        markets, or the safeguarding of crypto assets, 
                        customer funds, or other property, in which 
                        case the proposed rule change under shall be 
                        filed promptly thereafter in accordance with 
                        paragraph (1).
                    ``(B) Enforcement.--
                            ``(i) In general.--Any proposed rule change 
                        of an authority that has taken effect under 
                        subparagraph (A) may be enforced by the 
                        authority to the extent the rule change is not 
                        inconsistent with applicable law.
                            ``(ii) Suspension.--
                                    ``(I) In general.--At any time 
                                during the 60-day period beginning on 
                                the date on which a proposed rule 
                                change is filed under paragraph (1), 
                                the appropriate commission may 
                                temporarily and summarily suspend the 
                                change in the rules of the authority on 
                                a temporary basis, if the commission 
                                determines that such action is 
                                necessary or appropriate in the public 
                                interest, for customer protection, or 
                                to otherwise comply with applicable 
                                law.
                                    ``(II) Requirements.--If a 
                                commission takes action under subclause 
                                (I), the commission shall institute 
                                proceedings under paragraph (2)(B) to 
                                determine whether the applicable 
                                proposed rule should be approved or 
                                disapproved.
                            ``(iii) Rule of construction.--Action under 
                        this subparagraph shall not affect the validity 
                        or force of a proposed rule change during the 
                        period the rule change was in effect and shall 
                        not be reviewable in a judicial proceeding, nor 
                        deemed to be final agency action for purposes 
                        of section 704 of title 5.
            ``(5) Rule of construction relating to filing date of 
        proposed rule changes.--
                    ``(A) In general.--For purposes of this subsection, 
                the date of filing of a proposed rule change shall be 
                deemed to be the date on which the applicable 
                commission receives the proposed rule change.
                    ``(B) Exception.--
                            ``(i) In general.--Subject to clause (ii), 
                        a proposed rule has not been received by the 
                        applicable commission for purposes of 
                        subparagraph (A), if, not later than 7 business 
                        days after the date on which the commission 
                        receives the rule, the commission notifies the 
                        authority that the proposed rule change does 
                        not comply with the rules of the commission 
                        relating to the required form of a proposed 
                        rule change.
                            ``(ii) Lengthy and complex proposed rule 
                        changes.--
                                    ``(I) In general.--If the 
                                applicable commission determines that a 
                                proposed rule change is unusually 
                                lengthy, and is complex or raises novel 
                                regulatory issues, the commission shall 
                                inform the authority of that 
                                determination not later than 7 business 
                                days after the date on which the 
                                commission receives the rule.
                                    ``(II) Deadline.--For the purposes 
                                of subparagraph (A), a proposed rule 
                                change described in subclause (I) has 
                                not been received by the applicable 
                                commission, if, not later than 21 days 
                                after the date on which the commission 
                                receives the rule, the commission 
                                notifies the applicable authority that 
                                the proposed rule change does not 
                                comply with the rules of the commission 
                                relating to the required form of a 
                                proposed rule change.
                    ``(C) Applicability.--This paragraph shall not 
                apply to a rule relating to the internal operations, 
                governance, and procedure of an authority.
    ``(c) Amendment of Rules of Authorities.--
            ``(1) In general.--The appropriate commission may, by rule, 
        abrogate, add to, and delete from the rules of an authority as 
        the commission determines necessary or appropriate to ensure 
        the fair administration of the authority or to conform the 
        rules of the authority to law or applicable rule, in the 
        following manner:
                    ``(A) The appropriate commission shall notify the 
                authority and publish notice of the proposed rulemaking 
                in the Federal Register, which shall include the text 
                of the proposed amendment to the rules of the authority 
                and a statement of the reasons of the commission, 
                including any pertinent facts, for commencing the 
                proposed rulemaking.
                    ``(B)(i) The appropriate commission shall give 
                interested persons an opportunity for the oral 
                presentation of data, views, and arguments, in addition 
                to an opportunity to make written submissions.
                    ``(ii) A transcript shall be kept of any oral 
                presentation under clause (i).
                    ``(C) A rule adopted pursuant to this paragraph 
                shall incorporate the text of the amendment to the 
                rules of the authority and a statement of the 
                appropriate commission regarding the basis for 
                amendment of the rule, which shall include an 
                identification of any facts on which the determination 
                of the commission to amend the rules of the authority 
                is based, including the reasons for the conclusions of 
                the commission relating to any facts that were disputed 
                in the rulemaking.
            ``(2) Rule of construction.--Nothing in this subsection may 
        be construed to impair or limit the authority of the 
        appropriate commission to make, or to modify or alter the 
        procedures the commission may follow in making, rules pursuant 
        to any other authority granted by law that is consistent with 
        this subsection.
            ``(3) Effect of rules.--Any amendment to the rules of an 
        authority made by the appropriate commission under this 
        subsection shall be considered for all purposes to be part of 
        the rules of that authority and shall not be considered to be a 
        rule of that commission.
            ``(4) Consultations.--With respect to rules described in 
        subsection (b)(4)(A)(iii), the appropriate commission shall 
        consult with and consider the views of the other commission and 
        the Secretary of the Treasury before abrogating, adding to, and 
        deleting from those rules, except where the commission 
        determines that an emergency exists requiring expeditious or 
        summary action and publishes the reasons of the commission for 
        taking that action.
    ``(d) Notice of Disciplinary Action Taken by Authority Against a 
Member or Participant; Review of Action by Appropriate Commission; 
Procedure.--
            ``(1) In general.--If an authority imposes any final 
        disciplinary sanction on any member of the authority, or any 
        participant with respect to the authority, denies membership or 
        participation to any applicant, prohibits or limits any person 
        from accessing services offered by the authority or a member of 
        the authority, imposes any final disciplinary sanction on any 
        person associated with a member, or bars any person from 
        becoming associated with a member, the authority shall promptly 
        file notice of that action with the appropriate commission.
            ``(2) Review.--
                    ``(A) In general.--Any action with respect to which 
                an authority is required to file notice under paragraph 
                (1) shall be subject to review by the appropriate 
                commission for the applicable member, participant, 
                applicant, or other person, on its own motion, or upon 
                application by any person aggrieved by that action if 
                filed not later than 30 days after the date on which 
                the notice was filed with the appropriate commission 
                and received by the aggrieved person, or within such 
                longer period as the appropriate commission may 
                determine.
                    ``(B) Application.--Application to the appropriate 
                commission for review, or the institution of review by 
                the commission on its own motion, shall not operate as 
                a stay of an action described in subparagraph (A) 
                unless the appropriate commission otherwise orders, 
                summarily or after notice and opportunity for hearing 
                on the question of a stay, which may consist solely of 
                the submission of affidavits or presentation of oral 
                arguments.
                    ``(C) Stays.--For the purposes of this paragraph, 
                each of the appropriate commissions shall establish for 
                appropriate cases an expedited procedure for 
                consideration and determination of the question of a 
                stay.
            ``(3) Applicability.--This subsection shall apply only to 
        the extent that an authority imposes any final disciplinary 
        sanction for--
                    ``(A) a violation of Federal law or the rules 
                issued under Federal law; or
                    ``(B) a violation of a rule of the authority, as to 
                which a proposed change would be required to be filed 
                under this section.
    ``(e) Disposition of Review; Cancellation, Reduction, or Remission 
of Sanction.--
            ``(1) In general.--In any proceeding to review a final 
        disciplinary sanction imposed by an authority on a member, a 
        participant with respect to the authority, or a person 
        associated with such a member, after notice and opportunity for 
        hearing, which may consist solely of consideration of the 
        record before the authority and opportunity for the 
        presentation of supporting reasons to affirm, modify, or set 
        aside the sanction--
                    ``(A) if the appropriate commission finds that such 
                member, participant, or person associated with a member 
                has engaged in such acts or practices, or has omitted 
                such acts, as the authority has found that person to 
                have engaged in or omitted, that such acts or 
                practices, or omissions to act, are in violation of 
                law, the rules thereunder, or the rules of the 
                authority, and that such provisions are, and were 
                applied in a manner, consistent with law, the 
                commission, by order, shall--
                            ``(i) make a declaration regarding that 
                        finding; and
                            ``(ii) as appropriate--
                                    ``(I) affirm the sanction imposed 
                                by the authority;
                                    ``(II) modify the sanction in 
                                accordance with paragraph (2); or
                                    ``(III) remand to the authority for 
                                further proceedings; or
                    ``(B) if the appropriate commission does not make a 
                finding described in subparagraph (A), the commission 
                shall, by order--
                            ``(i) set aside the sanction imposed by the 
                        authority; and
                            ``(ii) if appropriate, remand to the 
                        authority for further proceedings.
            ``(2) Modification.--If the appropriate commission for a 
        member, participant, or person associated with a member, having 
        due regard for the public interest and customer protection, 
        finds, after a proceeding under paragraph (1), that a sanction 
        imposed by a authority upon that member, participant, or person 
        associated with a member imposes any burden on competition not 
        necessary or appropriate or is excessive or oppressive, the 
        commission may cancel, reduce, or require the remission of that 
        sanction.
    ``(f) Dismissal of Review Proceeding.--
            ``(1) In general.--In any proceeding to review the denial 
        of membership or participation in an authority to any 
        applicant, the barring of any person from becoming associated 
        with a member of an authority, or the prohibition or limitation 
        by an authority of any person from accessing services offered 
        by the authority or any member, if the appropriate commission, 
        after notice and opportunity for hearing, which may consist 
        solely of consideration of the record before the authority and 
        opportunity for the presentation of supporting reasons to 
        dismiss the proceeding or set aside the action of the 
        authority, finds that the specific grounds on which that 
        denial, bar, or prohibition or limitation is based exist in 
        fact, that such denial, bar, or prohibition or limitation is in 
        accordance with the rules of the authority, and that such rules 
        are, and were applied in a manner, consistent with law, the 
        appropriate commission, by order, shall dismiss the proceeding.
            ``(2) Failure to make finding.--If the appropriate 
        commission does not make a finding described in paragraph (1), 
        or if the commission finds that the applicable denial, bar, 
        prohibition, or limitation imposes any burden on competition 
        not necessary or appropriate, the commission, by order, shall 
        set aside the action of the authority and require the authority 
        to admit the applicable applicant to membership or 
        participation, permit that person to become associated with a 
        member, or grant that person access to services offered by the 
        authority or a member.
    ``(g) Suspension or Revocation of Authority Registration; Other 
Sanctions.--
            ``(1) In general.--If necessary or appropriate in the 
        public interest, for customer protection, or otherwise in 
        furtherance of the purposes of this section, the appropriate 
        commissions, voting separately, may issue a joint order 
        suspending for a period not exceeding 1 year or revoking the 
        registration of an authority, or censuring or imposing 
        limitations upon the activities, functions, and operations of 
        an authority, if, the commissions find, on the record after 
        notice and opportunity for hearing, that the authority--
                    ``(A) has violated or is unable to comply with any 
                provision of law, rule, or the rules of the authority 
                without reasonable justification or excuse; or
                    ``(B) has failed to enforce compliance with any 
                provision by a member of the authority or a person 
                associated with a member of the authority.
            ``(2) Expulsion.--The appropriate commission may, by order, 
        if necessary or appropriate in the public interest, for 
        customer protection, or otherwise in furtherance of the 
        purposes of this section, to suspend for a period not exceeding 
        1 year or expel from an authority, any member of an authority, 
        or participant with respect to an authority, if such member or 
        participant is subject to an order of the commission or if the 
        commission, on the record after notice and opportunity for 
        hearing, determines that the member or participant has 
        willfully violated, or has effected any transaction for any 
        other person who the member or participant had reason to 
        believe was violating, with respect to such transaction any 
        applicable provision of law under the jurisdiction of the 
        commission.
            ``(3) Bar on association.--The applicable commission may, 
        by order, if necessary or appropriate in the public interest, 
        for customer protection, or otherwise in furtherance of the 
        purposes of this section, to suspend for a period not exceeding 
        1 year or to bar any person from being associated with a member 
        of such authority, if the person is subject to an order of the 
        appropriate commission or if the appropriate commission finds, 
        on the record after notice and opportunity for hearing, that 
        the person has willfully violated, or has effected any 
        transaction for any other person who the person associated with 
        a member had reason to believe was violating, with respect to 
        the transaction any applicable provision of law under the 
        jurisdiction of the commission.
            ``(4) Removal from office.--If necessary or appropriate in 
        the public interest, for customer protection, or otherwise in 
        furtherance of the purposes of this section, the Securities and 
        Exchange Commission and the Commodity Futures Trading 
        Commission, voting separately, may, by joint order, remove from 
        office or censure any person who is, or at the time of the 
        alleged misconduct was, an officer or director of an authority, 
        if the commissions find, on the record after notice and 
        opportunity for a hearing before an impartial hearing officer, 
        that such person has willfully violated any provision of law, 
        the rules thereunder, or the rules of such authority, willfully 
        abused the authority of the person, or without reasonable 
        justification or excuse has failed to enforce compliance with 
        any provision of law by any member or person associated with a 
        member.
    ``(h) Interagency Working Group.--The Securities and Exchange 
Commission and the Commodity Futures Trading Commission shall each 
appoint an equal number of employees, under the supervision of the 
Chairman of the respective commissions, to an interagency working 
group, which shall coordinate and facilitate the responsibilities and 
powers of the respective commissions under this chapter.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 601, 
is amended by adding at the end the following:

``9810. Registration, rulemaking, and supervision of customer 
                            protection and market integrity 
                            authorities.''.

SEC. 603. RECORDS AND REPORTS; DUTIES AND POWERS OF CUSTOMER PROTECTION 
              AND MARKET INTEGRITY AUTHORITIES.

    (a) In General.--Chapter 98 of title 31, United States Code, as 
amended by section 602, is amended by adding at the end the following:
``Sec. 9811. Records and reports; duties and powers of customer 
              protection and market integrity authorities
    ``(a) In General.--Each customer protection and market integrity 
authority shall--
            ``(1) with respect to the members of the authority, 
        ascertain and enforce compliance with the rules of the 
        authority, Federal and State law to which those members are 
        subject, and any rules issued by any such member, including any 
        rule issued under section 5i of the Commodity Exchange Act (5 
        U.S.C. 7i);
            ``(2) discipline members of the authority and other persons 
        subject to the jurisdiction of the authority under this 
        chapter; and
            ``(3) make, and keep for prescribed periods, such 
        electronic records and disseminate reports as the customer 
        protection and market integrity authority, by rule, prescribes 
        as necessary or appropriate in the public interest.
    ``(b) Records Subject to Examination.--
            ``(1) Procedures for cooperation with other agencies.--
                    ``(A) In general.--All records of a member 
                described in subsection (a) are subject at any time, or 
                from time to time, to reasonable periodic, special, or 
                other examinations by the customer protection and 
                market integrity authority of the member.
                    ``(B) Notice.--Before conducting an examination 
                under subparagraph (A), the examining authority shall--
                            ``(i) inform all other relevant regulatory 
                        agencies and entities with jurisdiction over 
                        the member regarding the proposed examination; 
                        and
                            ``(ii) consult concerning the feasibility 
                        and desirability of coordinating such 
                        examination with examinations conducted by 
                        other entities with a view to avoiding 
                        unnecessary duplication and undue regulatory 
                        burden.
                    ``(C) Examinations of members.--Upon a showing of 
                good cause, the Securities and Exchange Commission or 
                the Commodity Futures Trading Commission, as 
                applicable, may conduct a special examination of a 
                customer protection and market integrity authority or a 
                member of such an authority.
                    ``(D) Report.--With respect to an examination under 
                this paragraph, the examining authority shall share 
                such information, including reports of the examination, 
                customer complaint information, and other nonpublic 
                regulatory information, as may be appropriate to foster 
                a coordinated approach to regulatory oversight for 
                members that are subject to examination by more than 1 
                examining authority.
                    ``(E) Requirements when examination not ongoing.--A 
                customer protection and market integrity authority, at 
                all times when an examination under this paragraph is 
                not in progress, shall conduct ongoing supervision of 
                members of the authority, as may be provided by the 
                rules of the authority.
            ``(2) Examination standards.--A customer protection and 
        market integrity authority shall--
                    ``(A) adopt tailored supervision and examination 
                standards commensurate with the size and complexity of 
                the authority and risks faced by members of the 
                authority; and
                    ``(B) develop standard form customer agreements for 
                the execution of crypto asset transactions.
    ``(c) Authorities.--
            ``(1) In general.--The Securities and Exchange Commission 
        and Commodity Futures Trading Commission, shall, by rule or 
        order, in order to foster cooperation and coordination--
                    ``(A) with respect to any person that is a member 
                of or participant in more than 1 customer protection 
                and market integrity authority or other entity 
                delegated regulatory and disciplinary authority by a 
                governmental agency or, relieve the authority or entity 
                of any responsibility--
                            ``(i) to receive regulatory reports from 
                        the person;
                            ``(ii) to examine the person for 
                        compliance; or
                            ``(iii) to carry out other specified 
                        regulatory functions with respect to the 
                        person; and
                    ``(B) allocate among entities the authority to 
                adopt rules with respect to matters as to which, in the 
                absence of the allocation, such entities share 
                authority.
            ``(2) Considerations.--
                    ``(A) In general.--In making a rule, or entering an 
                order, under paragraph (1), the appropriate commission 
                shall take into consideration the regulatory 
                capabilities and procedures of the entities, 
                availability of staff, convenience of location, 
                unnecessary regulatory duplication, and all other 
                factors applicable to customer protection, cooperation 
                and coordination, and the development of a healthy 
                crypto asset market, which may include providing for 
                the acceptance of examination reports prepared by a 
                customer protection and market integrity authority 
                under this chapter with respect to a crypto asset 
                intermediary for which crypto asset activities 
                constitute a majority of business, in lieu of 
                examinations conducted by other entities.
                    ``(B) Notification requirement.--The Securities and 
                Exchange Commission or Commodity Futures Trading 
                Commission, by rule or order, may require that an 
                authority relieved of any responsibility under this 
                paragraph, and any person with respect to which that 
                responsibility relates, take such steps as are 
                specified in any rule or order to notify customers of, 
                and persons doing business with, the person of the 
                limited nature of the responsibility of that registered 
                authority for the acts, practices, and course of 
                business of the person.
    ``(d) Missing and Stolen Crypto Assets.--Each member of a customer 
protection and market integrity authority or other financial 
institution conducting crypto asset transactions shall report to the 
Financial Crimes Enforcement Network of the Department of the Treasury 
such information as may be required by rule relating to crypto asset 
theft or missing private keys for the possession or control of crypto 
assets.
    ``(e) Confidentiality.--
            ``(1) Sharing of information.--
                    ``(A) In general.--Section 24 of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78x) shall apply to the 
                sharing of information by the Securities and Exchange 
                Commission and Commodity Futures Trading Commission in 
                accordance with this subsection.
                    ``(B) Protection from inappropriate disclosure.--
                The commissions and a customer protection and market 
                integrity authority shall ensure that all confidential 
                information is not inappropriately disclosed pursuant 
                to subparagraph (A).
            ``(2) Appropriate disclosure not prohibited.--Nothing in 
        this subsection may be construed to authorize the Securities 
        and Exchange Commission and Commodity Futures Trading 
        Commission or a customer protection and market integrity 
        authority to--
                    ``(A) withhold information from Congress; or
                    ``(B) prevent the commissions, an authority or 
                other entity delegated regulatory and disciplinary 
                authority by a governmental agency from complying 
                with--
                            ``(i) a request for information from any 
                        Federal or State department or agency 
                        requesting the information for purposes within 
                        the scope of the jurisdiction of that 
                        department or agency; or
                            ``(ii) an order of a court of the United 
                        States in an action brought by the United 
                        States or the commissions.
    ``(f) Best Execution.--A customer protection and market integrity 
authority, in consultation with members of the authority, the 
Securities and Exchange Commission, and the Commodity Futures Trading 
Commission, shall develop rules governing the best execution of crypto 
asset transactions.
    ``(g) Initial Determination of Legal Character.--
            ``(1) In general.--
                    ``(A) Initial determination.--A customer protection 
                and market integrity authority may make an initial 
                determination of the legal character of a crypto asset 
                as a security, an ancillary asset, a commodity (as 
                defined in section 1a of the Commodity Exchange Act (7 
                U.S.C. 1a)), or as otherwise provided by law, upon the 
                written request of a member of the authority.
                    ``(B) Consultation; hearings.--Upon receipt of a 
                request under subparagraph (A), a customer protection 
                and market integrity authority--
                            ``(i) shall consult with the commissions 
                        and make an initial determination regarding the 
                        request, after public notice and comment, not 
                        later than 45 days after the date on which the 
                        authority receives the request; and
                            ``(ii) may hold a public hearing with 
                        respect to an initial determination described 
                        in clause (i), if--
                                    ``(I) the matter is of significant 
                                precedential value or complex; or
                                    ``(II) holding such a hearing is 
                                otherwise in the public interest.
            ``(2) Publication.--A customer protection and market 
        integrity authority shall publish all determinations made under 
        paragraph (1) on the website of the authority.
    ``(h) Objection to Initial Determination.--
            ``(1) In general.--
                    ``(A) Deadline for objection.--Not later than 30 
                days after the date on which an initial determination 
                is made under subsection (g), the Securities and 
                Exchange Commission or Commodity Futures Trading 
                Commission may object to the initial determination of 
                the customer protection and market integrity authority 
                by issuing an order, after public notice, comment, and 
                a hearing.
                    ``(B) Effect of objection.--Upon an objection under 
                subparagraph (A), the initial determination to which 
                the objection applies shall be held in abeyance.
            ``(2) Order.--
                    ``(A) Deadline for objection.--Not later than 30 
                days after the date on which an initial determination 
                is made under subsection (g), the Securities and 
                Exchange Commission or the Commodity Futures Trading 
                Commission may object to the initial determination by 
                issuing an order, after public notice, comment, and a 
                hearing.
                    ``(B) Effect of objection.--Upon an objection under 
                subparagraph (A), the initial determination to which 
                the objection applies shall be held in abeyance, 
                pending resolution under section 42(b)(4)(C) of the 
                Securities Exchange Act of 1934.''.
    (b) Technical and Conforming Amendment.--The table of sections for 
chapter 98 of title 31, United States Code, as amended by section 602, 
is amended by adding at the end the following:

``9811. Records and reports; duties and powers of customer protection 
                            and market integrity authorities.''.

               TITLE VII--RESPONSIBLE PAYMENTS INNOVATION

SEC. 701. ISSUANCE OF PAYMENT STABLECOINS.

    Subtitle C of title VII of the Gramm-Leach-Bliley Act (Public Law 
106-102; 113 Stat. 1470) is amended by adding at the end the following:

``SEC. 722A. ISSUANCE OF PAYMENT STABLECOINS.

    ``(a) Prohibitions.--
            ``(1) In general.--It shall be unlawful for any person 
        other than a depository institution in accordance with this 
        section, or subsidiary thereof, to issue a payment stablecoin.
            ``(2) Knowing participation.--Whoever knowingly 
        participates in a violation of this section shall be fined not 
        more than $1,000,000, imprisoned for not more than 5 years, or 
        both.
            ``(3) Offer or sale.--It shall be unlawful for any person 
        to offer or sell a payment stablecoin through the use of any 
        medium or by any means of access in interstate commerce in the 
        United States or to offer or sell a payment stablecoin to a 
        United States person unless such payment stablecoin is issued 
        by a depository institution under this section, except as 
        otherwise provided by the Board of Governors of the Federal 
        Reserve System.
            ``(4) Extraterritorial effect.--This subsection is intended 
        to have extraterritorial effect.
            ``(5) Civil action.--The Board of Governors of the Federal 
        Reserve System may bring an action in the appropriate district 
        court of the United States or the court of any territory of the 
        United States for the enforcement of this section and such 
        courts shall have jurisdiction and power to order and require 
        compliance herewith, including through injunctive relief.
    ``(b) Activities.--A depository institution may issue, redeem, and 
conduct all incidental activities relating to payment stablecoins in 
accordance with this section.
    ``(c) Required Payment Stablecoin Assets.--A depository 
institution, or a subsidiary thereof, shall maintain high-quality 
liquid assets under this section equal to not less than 100 percent of 
the face amount of the liabilities of the institution on payment 
stablecoins issued by the institution. In the case of a depository 
institution described in subsection (n)(1)(A) that engages in the 
business of banking other than the issuance of a payment stablecoin and 
related activities under this section, issuance of the payment 
stablecoin and all related activities shall take place within a wholly 
owned subsidiary of the depository institution, within the same holding 
company structure. Payment stablecoin assets may not be pledged, 
rehypothecated, or reused, except for the purpose of creating liquidity 
to meet reasonable expectations of requests to redeem payment 
stablecoins. The provisions of section 24(j) of the Federal Deposit 
Insurance Act (12 U.S.C. 18131a(j)) shall apply to a subsidiary in the 
same manner as the depository institution. High-quality liquid assets 
that a bank is permitted to maintain under this section shall include 
the following:
            ``(1) United States coins and currency and any other 
        instrument that is legal tender, as defined in section 5103 of 
        title 31, United States Code.
            ``(2) Demand deposits at a depository institution, except 
        that deposits in an insured depository institution shall not 
        exceed the limit of deposit or share insurance available for 
        that account, or shall be maintained in a special, custodial, 
        or trust account or other off-balance sheet account held by the 
        insured depository institution.
            ``(3) Balances held at a Federal Reserve bank, which may be 
        held in a master account or segregated balance account.
            ``(4) Foreign withdrawable reserves, as defined in section 
        249.3 of title 12, Code of Federal Regulations, consistent with 
        any foreign unit of account in which the payment stablecoin is 
        denominated or pegged.
            ``(5) A security that is issued by, or unconditionally 
        guaranteed as to the timely payment of principal and interest 
        by, the Department of the Treasury, with an original maturity 
        of 1 year or less.
            ``(6) A reserve repurchase agreement relating to a security 
        described in paragraph (5).
            ``(7) Any other high-quality, liquid asset determined to be 
        consistent with safe and sound banking practices, as determined 
        by the appropriate Federal banking agency or State bank 
        supervisor.
    ``(d) Disclosures.--Not later than 10 business days after the end 
of each month, a depository institution shall disclose, in a publicly 
accessible manner, a summary description of the assets backing the 
payment stablecoin, the value of the assets, and the number of 
outstanding payment stablecoins, as of the last day of the month. Such 
explanation shall be filed with the Secretary of the Treasury under 
penalty of perjury by the chief financial officer of the institution, 
and made available on a website of the Department of the Treasury, not 
less than 10 business days after filing. The depository institution 
shall also report on the summary description any instances in which the 
institution failed to comply with any requirement of subsection (b). As 
applicable, the appropriate Federal banking agency or State bank 
supervisor shall, as part of a regular examination of the depository 
institution, at the frequency otherwise required by law, verify the 
composition of the assets and the accuracy of the summary descriptions 
made under this subsection and reports under subsection (d). Depository 
institutions shall clearly disclose to customers that a payment 
stablecoin is not guaranteed by the United States Government or subject 
to deposit insurance by the Federal Deposit Insurance Corporation or by 
share insurance of the National Credit Union Administration. 
Misrepresentation that a payment stablecoin is guaranteed by the United 
States Government or subject to deposit or share insurance shall be a 
violation of section 18(a)(4) of the Federal Deposit Insurance Act (12 
U.S.C. 1828(a)(4)) or section 709 of title 18, United States Code, as 
applicable.
    ``(e) Call Report.--As applicable, the appropriate Federal banking 
agency or State bank supervisor shall require a depository institution 
that issues a payment stablecoin to report, in detail, on the 
composition of the assets and liabilities in each periodic report of 
condition, or in an alternative format approved by the Federal 
Financial Institutions Examination Council, at the frequency otherwise 
required by law.
    ``(f) Permission.--A depository institution shall, as applicable, 
obtain permission from the appropriate Federal banking agency and State 
bank supervisor, with an application submitted not less than 6 months 
before intended issuance of the payment stablecoin, but which may be 
submitted as part of a charter application. A depository institution 
under subsection (n)(1)(B) chartered by the Office of the Comptroller 
of the Currency or a State bank supervisor, consistent with the 
standards of this section, shall, upon approval by the chartering 
authority, become a member bank of the Federal Reserve System, and be 
subject to supervision by the appropriate Federal Reserve bank. As part 
of an application under this section, a depository institution shall 
develop a tailored recovery and resolution plan, consistent with the 
standards adopted under subsection (k)(1)(F), that would permit the 
orderly resumption of a safe and sound operation or the orderly wind-
down of operations in the event of distress, including the redemption 
of all outstanding payment stablecoins. The application shall also 
contain a draft customer agreement, flow of funds explanation, a robust 
information technology plan and operational design of the payment 
stablecoin. As applicable, the appropriate Federal banking agency or 
State bank supervisor shall render a written decision, with appropriate 
findings, on the application within 4 months of the date of filing, and 
shall approve the application unless--
            ``(1) the payment stablecoin activities are not likely to 
        be able to operate in a safe and sound manner;
            ``(2) the depository institution does not have the required 
        resources and expertise to manage the operation of the payment 
        stablecoin, commensurate with the size and scale of projected 
        operations; or
            ``(3) the depository institution does not have required 
        policies and procedures relating to material areas of the 
        operation of the payment stablecoin activities.
    ``(g) Redemption of Payment Stablecoins.--Upon the demand of a 
customer, a depository institution shall redeem an outstanding payment 
stablecoin at par in the coins, currency, or other instruments that are 
legal tender, as defined in section 5103 of title 31, United States 
Code, or the similar laws of the jurisdiction of the unit of account in 
which the payment stablecoin is denominated or to which the value of 
the payment stablecoin is pegged. A depository institution may redeem a 
payment stablecoin issued by another depository institution at par, 
upon demand. The Board of Governors of the Federal Reserve System, 
through the Federal Reserve banks, shall provide for the clearing and 
settlement of payment stablecoin liabilities among depository 
institutions under this section and shall ensure competitive equality 
in all clearing, settlement and related services.
    ``(h) Collateral Availability in the Capital Markets.--The 
appropriate Federal banking agencies, in consultation with State bank 
supervisors, the Securities and Exchange Commission, and Commodity 
Futures Trading Commission, shall monitor use of the high-quality 
liquid assets authorized under subsection (b) and the impact on 
collateral availability and the efficient functioning of the capital 
markets.
    ``(i) Receivership Priority.--In the event of the receivership of a 
depository institution that has issued a payment stablecoin under this 
section, a person that has a valid claim on a payment stablecoin issued 
by that institution shall have priority over all other claims on the 
institution with respect to any required payment stablecoin assets, 
including claims with respect to insured deposits, other than 
administrative costs incurred by the appropriate Federal banking agency 
and State bank supervisor, as applicable, relating to the receivership 
of the institution, if applicable. Consistent with subsection (f), a 
depository institution that redeems a payment stablecoin issued by a 
depository institution in receivership shall be considered to have a 
valid claim, with corresponding priority under this subsection, on a 
payment stablecoin issued by the institution in receivership.
    ``(j) Incidental Activities.--A depository institution may conduct 
all incidental activities relating to the issuance and redemption of 
payment stablecoins, which shall include the following:
            ``(1) Management of required payment stablecoin assets in 
        accordance with subsection (b).
            ``(2) Custodial services.
            ``(3) Settlement and clearing.
            ``(4) Post-trade services.
            ``(5) All other activities consistent with a safe and sound 
        operation, as determined by the appropriate Federal banking 
        agency or State bank supervisor.
    ``(k) Applicability of Data Privacy Provisions.--Title V of this 
Act shall apply to the payment stablecoin activities of a depository 
institution under this section.
    ``(l) Rules.--
            ``(1) In general.--The appropriate Federal banking 
        agencies, in consultation with State bank supervisors, shall 
        adopt rules to implement this section, including--
                    ``(A) capital treatment for depository institutions 
                described in subsection (n)(1) in accordance with 
                paragraph (2);
                    ``(B) liquidity, leverage, and interest rate risk;
                    ``(C) third-party service provider activities--
                            ``(i) including custodial wallet providers; 
                        and
                            ``(ii) not including licensing or capital 
                        requirements for third-party service providers;
                    ``(D) management practices with respect to required 
                payment stablecoin assets;
                    ``(E) appropriate operational, compliance, and 
                information technology risk management;
                    ``(F) tailored recovery and resolution standards 
                relating to payment stablecoins; and
                    ``(G) any other material topic.
            ``(2) Significant differences.--In accordance with section 
        5169(c)(3)(A) of the Revised Statutes, in determining capital 
        and leverage requirements applicable to a depository 
        institution that has no material assets other than required 
        payment stablecoin assets under this section--
                    ``(A) the depository institution shall not be 
                subject to section 171 of the Financial Stability Act 
                of 2010 (12 U.S.C. 5371); and
                    ``(B) the appropriate Federal banking agencies 
                shall take into account the significant differences 
                between the risks of the assets of the institution and 
                those of depository institutions with assets that 
                consist primarily of commercial or consumer loans.
    ``(m) Rule of Construction.--Nothing in this section may be 
construed as--
            ``(1) preventing a State bank supervisor from imposing 
        additional or more strict regulatory standards on a bank 
        permitted to issue payment stablecoins;
            ``(2) superseding any requirement of State law relating to 
        money transmitting businesses operating in that State, other 
        than for payment stablecoin issuers under this section; or
            ``(3) limiting the authority of an insured depository 
        institution to engage in activities permissible pursuant to 
        applicable State and Federal law, including accepting or 
        receiving deposits represented on a distributed ledger or any 
        similar analogue.
    ``(n) Definitions.--In this section:
            ``(1) Depository institution.--The term `depository 
        institution' has the meaning given the term in section 19(b)(1) 
        of the Federal Reserve Act (12 U.S.C. 461(b)(1)) and includes--
                    ``(A) an insured depository institution; or
                    ``(B) a depository institution operating under 
                subsection (c) of section 5169 of the Revised Statutes 
                (12 U.S.C. 27), or a substantially similar State law, 
                which is exclusively engaged in issuing payment 
                stablecoins, providing safekeeping, trust or custodial 
                services, or activities incidental to the foregoing.
            ``(2) Payment stablecoin.--The term `payment stablecoin' 
        has the meaning given the term in section 9801 of title 31, 
        United States Code.
            ``(3) Segregated balance account.--The term `segregated 
        balance account' includes an account of a depository 
        institution with a Federal Reserve bank or a foreign central 
        bank to which only required payment stablecoin assets are 
        credited.''.

SEC. 702. TREATMENT OF ENDOGENOUSLY REFERENCED CRYPTO ASSETS.

    (a) Definition.--As used in this section, ``endogenously referenced 
crypto asset'' means a crypto asset that--
            (1) its originator has represented will be converted, 
        redeemed, or repurchased for a fixed amount of monetary value, 
        or a mechanism exists or is provided to achieve any of the 
        preceding; and
            (2) one of the following:
                    (A) The crypto asset relies solely on the value of 
                another crypto asset to maintain the fixed amount of 
                monetary value.
                    (B) The crypto asset relies on algorithmic means to 
                maintain the fixed amount of monetary value.
                    (C) A combination of subparagraphs (A) and (B).
    (b) Legal Classification.--Endogenously referenced crypto assets 
are hybrid instruments, as defined in section 1a of the Commodity 
Exchange Act (7 U.S.C. 1a).
    (c) Prohibition on Use of Term Stablecoin.--Endogenously referenced 
crypto assets shall not use the term ``payment stablecoin'' or 
``stablecoin'' in advertising or marketing materials.

SEC. 703. CERTIFICATE OF AUTHORITY TO COMMENCE BANKING.

    Section 5169 of the Revised Statutes (12 U.S.C. 27) is amended--
            (1) in subsection (a), in the third sentence, by striking 
        ``to those of a trust company and activities related thereto.'' 
        and inserting the following: ``to--
            ``(1) those of a trust company and fiduciary activities 
        related thereto; or
            ``(2) those of a depository institution required to 
        maintain assets valued at not less than 100 percent of the 
        deposits of the institution, for the purposes of issuing a 
        payment stablecoin (as defined in section 9801 of title 31, 
        United States Code) and activities related thereto consistent 
        with subsection (c) of this section and without the requirement 
        to maintain deposit insurance under the Federal Deposit 
        Insurance Act (12 U.S.C. 1811 et seq.).''; and
            (2) by adding at the end the following:
    ``(c)(1) Notwithstanding any other provision of law, a National 
Bank Association described in subsection (a) may not engage in maturity 
transformation or facilitate consumer lending through third parties.
    ``(2) Restrictions on affiliate transactions applicable for insured 
depository institutions shall apply to such depository institutions.
    ``(3) The Comptroller of the Currency, in close consultation with 
the Board of Governors of the Federal Reserve System and State bank 
supervisors, shall develop the following:
            ``(A) A simplified capital framework based on the 
        following:
                    ``(i) Payment system risk.
                    ``(ii) The greater of--
                            ``(I) all projected costs of receivership; 
                        or
                            ``(II) 3 years of projected operating 
                        expenses.
            ``(B) Appropriate standards for the depository institution 
        to develop a community contribution plan, which may include 
        consumer education, financial literacy, charitable donations, 
        volunteerism, job training and internships or similar 
        involvement.
            ``(C) A tailored recovery and resolution plan that would 
        permit the orderly resumption of a safe and sound operation or 
        the orderly wind-down of operations relating to a payment 
        stablecoin in the event of distress.
            ``(D) Tailored holding company supervision, as specified by 
        section 15 of the Bank Holding Company Act of 1956.
            ``(4) In designing the simplified capital framework 
        required by paragraph (3)(A), the Comptroller of the Currency--
                    ``(A) shall not subject depository institutions to 
                the standards of section 171 of the Financial Stability 
                Act of 2010 (12 U.S.C. 5371); and
                    ``(B) shall take into account the significant 
                differences between the risks of the assets of the 
                institution and those of depository institutions with 
                assets that consist primarily of commercial or consumer 
                loans.
    ``(d) The Comptroller of the Currency may promulgate rules to carry 
out this section.''.

SEC. 704. HOLDING COMPANY SUPERVISION OF COVERED DEPOSITORY 
              INSTITUTIONS.

    The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
amended--
            (1) in section 2(c) (12 U.S.C. 1841(c)), by striking 
        paragraph (2) and by inserting the following:
            ``(2) Exceptions.--The term `bank' does not include a 
        covered depository institution subject to tailored holding 
        company supervision under section 15.''; and
            (2) by adding at the end the following:

``SEC. 15. HOLDING COMPANY SUPERVISION FOR CERTAIN DEPOSITORY 
              INSTITUTIONS.

    ``(a) Definitions.--In this section:
            ``(1) Appropriate banking supervisor.--The term 
        `appropriate banking supervisor' means the Comptroller of the 
        Currency, a State bank supervisor, in the case of a State 
        member bank, the Board, or in the case of an insured bank, the 
        Federal Deposit Insurance Corporation, as applicable.
            ``(2) Controlling interest.--The term `controlling 
        interest' means a circumstance when a person, directly or 
        indirectly, or acting through or in concert with 1 or more 
        persons--
                    ``(A) owns, controls, or has the power to vote 25 
                percent or more of any class of voting securities of a 
                covered depository institution;
                    ``(B) controls in any manner the election of a 
                majority of the directors of the covered depository 
                institution; or
                    ``(C) has the power to exercise a controlling 
                influence over the management or policies of the 
                covered depository institution.
            ``(3) Covered depository institution.--The term `covered 
        depository institution' means a depository institution 
        operating under subsection (c) of section 5169 of the Revised 
        Statutes (12 U.S.C. 27), or a substantially similar State law, 
        other than a bank, as defined in section 2 of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1841), or an insured depository 
        institution, as defined in section 3 of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813), which is exclusively engaged in 
        issuing payment stablecoins, providing safekeeping, trust or 
        custodial services, or activities incidental to the foregoing.
    ``(b) Controlling Interest.--A person with a controlling interest 
in a covered depository institution shall--
            ``(1) submit annual audited financial statements and other 
        information as otherwise reasonably required by the appropriate 
        banking supervisor; and
            ``(2) provide a description of all affiliated or parent 
        entities and their relationships with the institution, 
        including annual updates.
    ``(c) Tax Allocation Agreement.--The appropriate banking supervisor 
may require a legal entity with a controlling interest in a covered 
depository institution to execute a tax allocation agreement with the 
institution that--
            ``(1) expressly states that an agency relationship exists 
        between the person and the institution with respect to tax 
        assets generated by the institution, and that the assets are 
        held in trust by the person for the benefit of the institution 
        and will be promptly remitted to the institution; and
            ``(2) may provide that the amount and timing of any 
        payments or refunds to the institution by the person should be 
        no less favorable than if the institution were a separate 
        taxpayer.
    ``(d) Prohibition on Controlling Interests.--A person that is a 
commercial firm, as defined in section 602 of the Bank and Savings 
Association Holding Company and Depository Institution Regulatory 
Improvements Act of 2010 (12 U.S.C. 1815 note), shall not obtain a 
controlling interest in a covered depository institution.
    ``(e) Public Interest.--If the appropriate banking supervisor finds 
that it is in the public interest and has reasonable cause to believe 
it is necessary to protect the customers of a covered depository 
institution, the supervisor may--
            ``(1) conduct an examination of a legal entity with a 
        controlling interest in a covered depository institution or 
        otherwise require information from the person; and
            ``(2) require a person with a controlling interest in a 
        covered depository institution to divest or sever their 
        relationship with the institution, if necessary to maintain 
        safety and soundness.''.

SEC. 705. CODIFYING CUSTODIAL PRINCIPLES FOR FINANCIAL INSTITUTIONS.

    (a) Findings.--Congress finds the following:
            (1) The laws surrounding custody of financial assets is 
        largely customary, uncodified, and poorly understood.
            (2) Lack of uniformity amongst various jurisdictions' laws 
        relating to custody has largely not been addressed by 
        regulators, can contribute to risk, and is producing 
        uncertainty for innovators.
            (3) Codifying basic principles around custody of financial 
        assets will reduce systemic risk, clearly define the rights and 
        duties of both custodian and customer, and contribute to a more 
        uniform and effective banking system.
    (b) Definition.--In this section, the term ``custody'' means the 
safekeeping, servicing and management of customer financial assets, 
including currency, securities and commodities, on an off-balance sheet 
basis.
    (c) Custody.--
            (1) In general.--Except as provided in paragraph (2), 
        custody of financial assets is accomplished by a bailment and 
        established by a written customer agreement. Custody shall not 
        be a fiduciary or trust activity unless the custodian is 
        providing substantial discretionary services with respect to an 
        account, including through investment advice or investment 
        discretion, and the custodian owes a customer a higher standard 
        of care or duty with respect to the customer of that account.
            (2) Exception.--A custodian and customer may establish a 
        legal relationship other than a bailment pursuant to a written 
        customer agreement.
    (d) Proper Documentation.--A custodial account shall be properly 
documented in a customer agreement, with a clearly defined legal 
relationship between the custodian and customer. Custodial assets shall 
be properly identified and segregated from the assets of the custodian, 
with proper documentation of asset segregation.
    (e) Not Assets or Liabilities.--Assets properly held in a custodial 
account under this section are not assets or liabilities of the 
custodian and shall be maintained on an off-balance sheet basis, 
including for the purpose of accounting treatment for the custodian, 
notwithstanding the form in which the assets are maintained.
    (f) Applicability.--This section shall apply to all depository 
institutions, as defined in section 19(b)(1) of the Federal Reserve Act 
(12 U.S.C. 461(b)(1)), and non-depository trust companies chartered 
under section 5169 of the Revised Statutes (12 U.S.C. 27).

SEC. 706. IMPLEMENTATION RULES TO PRESERVE ADEQUATE COMPETITION IN 
              PAYMENT STABLECOINS.

    (a) In General.--The application of a non-depository trust company 
or the holder of a State license that only persons engaged in crypto 
asset activities may obtain, which was chartered or issued under the 
laws of a State or the National Bank Act before the date of enactment 
of this Act, to receive a charter as a depository institution and to 
operate under subsection (c) of section 5169 of the Revised Statutes 
(12 U.S.C. 27), as added by section 703 of this Act, shall be decided 
upon by the Comptroller of the Currency before an application for a 
charter to operate under that section from another entity that is filed 
on or after the date of enactment of this Act.
    (b) Application.--The application of a covered depository 
institution, as defined in section 15(a) of the Bank Holding Company 
Act of 1956 (12 U.S.C. 1853(a)), chartered before the date of enactment 
of this Act to become a State member bank in the Federal Reserve System 
or for access to Federal Reserve services under section 11A of the 
Federal Reserve Act (12 U.S.C. 248a) shall be decided upon by the Board 
of Governors of the Federal Reserve System, or a Federal Reserve bank, 
as applicable, before any application to become a State member bank or 
for Federal Reserve services from any other entity which seeks to 
operate as a covered depository institution and which is filed on or 
after the date of enactment of this Act.
    (c) Decision.--The applications described in subsections (a) and 
(b) of this section shall be decided upon by the appropriate Federal 
banking agency (as defined in section 3 of the Federal Deposit 
Insurance Act (12 U.S.C. 1813)) or Federal Reserve bank, as applicable, 
before an insured depository institution in operation before the 
enactment date of this Act may issue a payment stablecoin in accordance 
with section 722A of the Gramm-Leach-Bliley Act, as added by section 
601 of this Act.

SEC. 707. STUDY ON USE OF DISTRIBUTED LEDGER TECHNOLOGY FOR REDUCTION 
              OF RISK IN DEPOSITORY INSTITUTIONS.

    Not later than 180 days after the date of enactment of this Act, 
the Board of Governors of the Federal Reserve System shall complete a 
study and submit to the Committee on Banking, Housing, and Urban 
Affairs of the Senate and the Committee on Financial Services of the 
House of Representatives a report regarding the manner in which 
distributed ledger technology may reduce risk for depository 
institutions, as defined in section 19(b)(1) of the Federal Reserve Act 
(12 U.S.C. 461(b)(1)), including settlement risk, operational risk and 
capital requirements.

SEC. 708. CLARIFYING APPLICATION REVIEW TIMES WITH RESPECT TO THE 
              FEDERAL BANKING AGENCIES.

    Section 343 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (12 U.S.C. 4807) is amended by striking 
subsections (a) and (b) and inserting the following:
    ``(a) Final Action.--
            ``(1) Definition.--In this subsection, the term `completed 
        application'--
                    ``(A) means the information requested by the 
                Federal banking agency at the outset of an application 
                through application forms or similar means; and
                    ``(B) does not include supplemental information 
                requested by the agency after filing of an application.
            ``(2) Action.--Each Federal banking agency, including 
        Federal Reserve banks, shall take final action on any 
        application to the agency before the end of the 1-year period 
        beginning on the date on which a completed application is 
        received by the agency.
    ``(b) Report.--Each Federal banking agency, including the Federal 
Reserve banks, shall annually report to Congress a list of the 
applications that have been pending for 12 months or longer since the 
date of the initial application filed by an applicant, and the date on 
which a completed application was received. Such list--
            ``(1) shall disclose the reason why the application has not 
        yet been approved or denied by the Federal banking agency; and
            ``(2) shall not contain confidential supervisory 
        information.
    ``(c) Waiver by Applicant Authorized.--Any person submitting an 
application to a Federal banking agency may waive the applicability of 
subsection (a) with respect to such application at any time.''.

SEC. 709. CONFORMING AMENDMENTS.

    (a) Federal Deposit Insurance Act.--Section 12 of the Federal 
Deposit Insurance Act (12 U.S.C. 1822) is amended by adding at the end 
the following:
    ``(g) Appointment of Receiver.--
            ``(1) Definition.--In this subsection, the term `covered 
        depository institution' has the meaning given the term in 
        section 15(a) of the Bank Holding Company Act of 1956.
            ``(2) Appointment.--The Corporation may be appointed as 
        receiver of a covered depository institution, as defined in 
        section 15(a) of the Bank Holding Company Act of 1956.
            ``(3) Premiums.--A covered depository institution may not 
        be charged deposit insurance premiums for the purpose of this 
        subsection, but the Corporation may use the capital of the 
        covered depository institution to fund the costs of the 
        receivership.
            ``(4) Rules.--The Corporation may promulgate rules to carry 
        out this subsection, which shall--
                    ``(A) be substantially consistent with the rules 
                for receivership of an insured depository institution; 
                and
                    ``(B) account for the limited activities, capital, 
                and the required tailored recovery and resolution plan 
                of the covered depository institution.''.
    (b) Federal Reserve Act.--The Federal Reserve Act (12 U.S.C. 221 et 
seq.) is amended--
            (1) in section 19(b)(1)(A) (12 U.S.C. 461(b)(1)(A))--
                    (A) in clause (vi), by striking ``and'' at the end;
                    (B) in clause (vii), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
                            ``(viii) a covered depository institution, 
                        as defined in section 15(a) of the Bank Holding 
                        Company Act of 1956.''; and
            (2) in the first undesignated paragraph of section 9 (12 
        U.S.C. 321), in the first sentence, by inserting ``, covered 
        depository institutions, as defined in section 15(a) of the 
        Bank Holding Company Act of 1956 (12 U.S.C. 1853(a)),'' after 
        ``Plan banks''.

           TITLE VIII--RESPONSIBLE TAXATION OF CRYPTO ASSETS

SEC. 801. DE MINIMIS GAIN FROM SALE OR EXCHANGE OF CRYPTO ASSETS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139I the following new section:

``SEC. 139J. DE MINIMIS GAIN FROM SALE OR EXCHANGE OF CRYPTO ASSETS.

    ``(a) In General.--Subject to subsection (b), gross income shall 
not include gain from the sale or exchange of any crypto asset (as 
defined in section 9801 of title 31, United States Code), unless the 
sale or exchange is for--
            ``(1) cash or cash equivalents,
            ``(2) any property used by the taxpayer in the active 
        conduct of a trade or business, or
            ``(3) any property held by the taxpayer for the production 
        of income (as described in section 212(2)).
    ``(b) Limitation.--
            ``(1) In general.--Subsection (a) shall not apply in the 
        case of any sale or exchange for which--
                    ``(A) the total value of such sale or exchange 
                exceeds $200, or
                    ``(B) the total gain which would otherwise be 
                recognized with respect to such sale or exchange 
                exceeds $200.
            ``(2) Aggregation rule.--For purposes of this subsection, 
        all sales or exchanges which are part of the same transaction 
        (or a series of related transactions) shall be treated as one 
        sale or exchange.
    ``(c) Inflation Adjustment.--In the case of any taxable year 
beginning in a calendar year after 2024, each dollar amount in 
subsection (b)(1) shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the cost-of-living adjustment determined under 
        section 1(f)(3) for the calendar year in which the taxable year 
        begins, determined by substituting `calendar year 2023' for 
        `calendar year 2016' in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded 
to the nearest multiple of $10.''.
    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 139I the 
following new item:

``Sec. 139J. De minimis gain from sale or exchange of crypto assets.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2024.

SEC. 802. INFORMATION REPORTING REQUIREMENTS IMPOSED ON BROKERS WITH 
              RESPECT TO CRYPTO ASSETS.

    (a) Clarification of Definition of Broker.--
            (1) In general.--Section 6045(c)(1)(D) of the Internal 
        Revenue Code of 1986 is amended to read as follows:
                    ``(D) any person who (for consideration) stands 
                ready in the ordinary course of a trade or business to 
                effect sales of crypto assets at the direction of their 
                customers.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to returns required to be filed and statements 
        required to be furnished after December 31, 2025.
    (b) Reporting of Crypto Assets.--
            (1) Applicable date.--Section 6045(g)(3) of the Internal 
        Revenue Code of 1986 is amended--
                    (A) in subparagraph (B)(iv), by striking ``digital 
                asset'' and inserting ``crypto asset'',
                    (B) in subparagraph (C), by striking clause (iii) 
                and inserting the following:
                            ``(iii) January 1, 2025, in the case of any 
                        specified security which is a crypto asset, 
                        and'', and
                    (C) by striking subparagraph (D) and inserting the 
                following:
                    ``(D) Crypto asset.--The term `crypto asset' has 
                the meaning given such term in section 9801 of title 
                31, United States Code.''.
            (2) Furnishing of information.--Section 6045A(d) of such 
        Code is amended to read as follows:
    ``(d) Return Requirement for Certain Transfers of Crypto Assets Not 
Otherwise Subject to Reporting.--Any broker, with respect to any 
transfer (which is not part of a sale or exchange executed by such 
broker) during a calendar year of a covered security which is a crypto 
asset (as defined in section 9801 of title 31, United States Code) from 
an account wholly controlled and maintained by such broker to an 
account which is not maintained by, or an address not associated with, 
a person that such broker knows or has reason to know is also a broker, 
shall make a return for such calendar year, in such form as determined 
by the Secretary, showing the information otherwise required to be 
furnished with respect to transfers subject to subsection (a). 
Information reported by brokers under this section shall be limited to 
customer information that is voluntarily provided by the customer and 
held by the broker for a legitimate business purpose.''.
            (3) Delayed effective date for certain information 
        reporting changes; reversal of certain additions to 6050i.--
                    (A) In general.--Section 6050I(d) of such Code is 
                amended--
                            (i) in paragraph (1), by adding ``and'' at 
                        the end,
                            (ii) in paragraph (2), by striking ``, 
                        and'' and inserting a period, and
                            (iii) by striking paragraph (3).
                    (B) Delayed effective date.--Section 80603(c) of 
                the Infrastructure Investment and Jobs Act is amended 
                by striking ``December 31, 2023'' and inserting 
                ``December 31, 2025''.
            (4) Effective dates.--
                    (A) The amendments made by paragraphs (1) and (2) 
                shall apply to returns required to be filed and 
                statements required to be furnished after December 31, 
                2025.
                    (B) The amendments made by paragraph (3) shall take 
                effect as if included in the enactment of section 80603 
                of the Infrastructure Investment and Jobs Act.

SEC. 803. SOURCES OF INCOME.

    (a) In General.--Paragraph (2) of section 864(b) of the Internal 
Revenue Code of 1986 is amended by redesignating subparagraph (C) as 
subparagraph (D) and by inserting after subparagraph (B) the following 
new subparagraph:
                    ``(C) Crypto assets.--
                            ``(i) In general.--Trading in crypto assets 
                        through a resident broker, commission agent, 
                        custodian, crypto asset exchange, or other 
                        independent agent.
                            ``(ii) Trading for taxpayer's own 
                        account.--Trading in crypto assets for the 
                        taxpayer's own account, whether by the taxpayer 
                        or the taxpayer's employees or through a 
                        resident broker, commission agent, custodian, 
                        crypto asset exchange, or other agent, and 
                        whether or not any such employee or agent has 
                        discretionary authority to make decisions in 
                        effecting the transactions. This clause shall 
                        not apply in the case of a dealer in crypto 
                        assets.
                            ``(iii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Crypto asset exchange.--The 
                                term `crypto asset exchange' means a 
                                centralized or decentralized platform 
                                which facilitates the transfer of 
                                crypto assets.
                                    ``(II) Crypto asset.--The term 
                                `crypto asset' has the meaning given 
                                such term in section 9801 of title 31, 
                                United States Code.
                            ``(iv) Limitation.--This subparagraph shall 
                        apply only if the crypto assets are of a kind 
                        customarily dealt in on a crypto asset exchange 
                        and if the transaction is of a kind customarily 
                        consummated at such exchange.''.
    (b) Conforming Amendment.--Subparagraph (D) of section 864(b)(2) of 
the Internal Revenue Code of 1986, as redesignated by subsection (a), 
is amended by striking ``(A)(i) and (B)(i)'' and inserting ``(A)(i), 
(B)(i), and (C)(i)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.

SEC. 804. TAX TREATMENT OF CRYPTO ASSET LENDING AGREEMENTS AND RELATED 
              MATTERS.

    (a) In General.--Subsection (a) of section 1058 of the Internal 
Revenue Code of 1986 is amended by striking ``(as defined in section 
1236(c))''.
    (b) Fixed Term.--Paragraph (1) of subsection (b) of section 1058 of 
the Internal Revenue Code of 1986 is amended by inserting ``, including 
a fixed-term transfer that occurs in the ordinary course of a 
securities lending or investment management business'' after 
``transferred''.
    (c) Basis.--Subsection (c) of section 1058 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following: ``All 
appropriate basis adjustments to an agreement under subsection (b) 
shall be made, as determined by the Secretary, including upon the 
return of the lent securities to the taxpayer.''.
    (d) Securities.--Section 1058 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsections:
    ``(d) Securities.--For purposes of this section, the term 
`securities' has the meaning given such term by section 1236(c), except 
that such term includes any crypto asset (as defined in section 9801 of 
title 31, United States Code) and, with respect to a crypto asset, does 
not require a call option.
    ``(e) Income.--An amount equal to the income which would otherwise 
accrue to the lender but for a lending transaction under this section 
shall be included in the gross income of the lender.''.
    (e) Rule of Construction.--Nothing in this section, or any 
amendments made by this section, shall be construed to create any 
inference with respect to the classification of any crypto asset as a 
security under the Securities Act of 1933 (15 U.S.C. 77a et seq.) or 
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
    (f) Rulemaking Authority.--The Secretary of the Treasury (or the 
Secretary's delegate) may adopt rules to implement the amendments made 
by this section, including the application of the amendments made by 
this section to forks, airdrops, and similar subsidiary value.
    (g) Effective Date.--The amendments made by this section shall 
apply to sales and exchanges in taxable years beginning after the date 
of enactment of this Act.

SEC. 805. LOSS FROM WASH SALES OF CRYPTO ASSETS.

    (a) In General.--Section 1091 of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 1091. LOSS FROM WASH SALES OF SPECIFIED ASSETS.

    ``(a) Disallowance of Loss Deduction.--
            ``(1) In general.--No deduction shall be allowed with 
        respect to any loss claimed to have been sustained from any 
        sale or other disposition (including any termination) of 
        specified assets where it appears that, within a period 
        beginning 30 days before the date of such sale or other 
        disposition and ending 30 days after such date, the taxpayer 
        has--
                    ``(A) acquired (by purchase, by an exchange on 
                which the entire amount of gain or loss was recognized 
                by law, or by entering into) substantially identical 
                specified assets, or
                    ``(B) entered into a contract or option to acquire, 
                or long notional principal contract in respect of, 
                substantially identical specified assets.
            ``(2) Exception for dealers.--Paragraph (1) shall not apply 
        if--
                    ``(A) the taxpayer is a dealer in specified assets,
                    ``(B) the loss is sustained in a transaction made 
                in the ordinary course of its business as a dealer, and
                    ``(C) the acquisition (or the entering into of the 
                contract or option to acquire or long notional 
                principal contract) which (without regard to this 
                paragraph) would have resulted in the non-deductibility 
                of the loss was similarly made in the ordinary course 
                of such business.
    ``(b) Specified Assets Acquired Less Than Specified Assets Sold.--
If the amount of specified assets acquired (or covered by the contract 
or option to acquire or long notional principal contract) is less than 
the amount of specified assets sold or otherwise disposed of, then the 
particular specified assets the loss from the sale or other disposition 
of which is not deductible shall be determined under regulations 
prescribed by the Secretary.
    ``(c) Specified Assets Acquired Not Less Than Specified Assets 
Sold.--If the amount of specified assets acquired (or covered by the 
contract or option to acquire or long notional principal contract) is 
not less than the amount of specified assets sold or otherwise disposed 
of, then the particular specified assets the acquisition of which (or 
the entering into of the contract or option to acquire or long notional 
principal contract of which) resulted in the non-deductibility of the 
loss shall be determined under regulations prescribed by the Secretary.
    ``(d) Adjustment to Basis in Case of Wash Sale.--
            ``(1) In general.--The basis of the specified asset 
        acquired (or the contract, option, or long notional principal 
        contract entered into) shall be increased by the amount of the 
        deduction disallowed under subsection (a) (reduced by any 
        amount of such deduction taken into account under this 
        subsection to increase the basis of any specified asset 
        previously acquired or any contract, option, or long notional 
        principal contract previously entered into).
            ``(2) Rules with respect to certain acquisitions.--
                    ``(A) In general.--In any case in which--
                            ``(i) the taxpayer enters into a contract 
                        or option to acquire, or long notional 
                        principal contract in respect of, substantially 
                        identical specified assets (within the period 
                        specified in subsection (a)), and
                            ``(ii) the taxpayer also acquires (within 
                        the period specified in subsection (a)) 
                        substantially identical specified assets and 
                        such acquisition would, but for the entering 
                        into of the contract, option, or long notional 
                        principal contract described in clause (i), 
                        have triggered a disallowance under subsection 
                        (a),
                 then, subject to such exceptions as the Secretary may 
                prescribe, paragraph (1) shall apply to the 
                substantially identical specified assets described in 
                clause (ii) and not to the contract, option, or long 
                term principal contract described in clause (i).
                    ``(B) Special rule for contracts and options.--
                Subject to such exceptions as the Secretary may 
                prescribe, if the acquisition of any substantially 
                identical specified asset is pursuant to a contract or 
                option described in subparagraph (A)(i), then, 
                notwithstanding whether such asset was acquired within 
                the period specified in subsection (a), paragraph (1) 
                shall apply to the substantially identical specified 
                asset acquired pursuant to the contract or option and 
                not to the contract or option.
    ``(e) Certain Short Sales of Specified Assets and Contracts To 
Sell.--Rules similar to the rules of subsection (a) shall apply to any 
loss realized on the closing of a short sale of (or the sale, 
disposition, or termination of a contract or option to sell or a short 
notional principal contract in respect of) specified assets if, within 
a period beginning 30 days before the date of such closing and ending 
30 days after such date, another such short sale of (or contract or 
option to sell or short notional principal contract in respect of) 
substantially identical specified assets was entered into by the 
taxpayer.
    ``(f) Cash Settlement.--This section shall not fail to apply to a 
contract or option to acquire or sell specified assets solely by reason 
of the fact that the contract or option settles in (or could be settled 
in) cash or property other than such specified assets.
    ``(g) Specified Asset.--For purposes of this section, the term 
`specified asset' means any of the following:
            ``(1) Any security (as defined in section 475(c)(2)).
            ``(2) Except as otherwise provided by the Secretary--
                    ``(A) any crypto asset (as defined in section 9801 
                of title 31, United States Code) which is actively 
                traded (within the meaning of section 1092(d)(1)),
                    ``(B) any notional principal contract with respect 
                to any crypto asset described in subparagraph (A), and
                    ``(C) any evidence of an interest in, or a 
                derivative instrument in, any crypto asset described in 
                subparagraph (A) or (B), including any option, forward 
                contract, futures contract, short position, and any 
                similar instrument in such a crypto asset.
Such term shall, except as provided in regulations, include contracts 
or options to acquire or sell, or notional principal contracts in 
respect of, any specified assets.
    ``(h) Exception for Business Needs and Hedging Transactions.--
            ``(1) In general.--Except as provided in regulations 
        prescribed by the Secretary, in the case of a specified asset 
        to which this subsection applies, subsection (a) shall not 
        apply to the extent that both the sale or other disposition of 
        such asset and the acquisition of (or the entering into of the 
        contract or option to acquire or long notional principal 
        contract in respect of) are--
                    ``(A) directly related to the business needs of a 
                trade or business of the taxpayer (other than the trade 
                or business of trading specified assets described in 
                subsection (g)(2)), or
                    ``(B) part of a hedging transaction (as defined in 
                section 1221(b)(2) or 988(d)(2)).
            ``(2) Specified asset to which this subsection applies.--To 
        the extent provided by the Secretary, this subsection applies 
        to assets described in subsection (g)(2).
    ``(i) Regulations.--The Secretary shall prescribe such regulations 
or other guidance as may be necessary to carry out the purposes of this 
section, including regulations or other guidance for determining 
whether specified assets are substantially identical.''.
    (b) Conforming Amendments.--
            (1) Section 1223(3) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking ``stock or securities'' the first 
                place it appears and inserting ``specified assets (as 
                defined in section 1091(g))'',
                    (B) by striking ``stock or securities'' the second 
                and third place it appears and inserting ``specified 
                assets (as so defined)'', and
                    (C) by striking ``(or the contract or option to 
                acquire which)'' and inserting ``(or the entering into 
                of a contract or option to acquire or long notional 
                principal contract in respect of which)''.
            (2) Section 6045(g)(2)(B) of such Code is amended--
                    (A) in clause (i)(I)--
                            (i) by striking ``security (other than 
                        stock'' and inserting ``covered security (other 
                        than stock'', and
                            (ii) by striking ``stock sold or 
                        transferred'' and inserting ``covered security 
                        sold or transferred'', and
                    (B) in clause (ii)--
                            (i) by striking ``stock or securities'' and 
                        inserting ``specified assets'', and
                            (ii) by striking ``identical securities'' 
                        and inserting ``identical specified assets (as 
                        defined in section 1091(g))''.
            (3) The table of sections for part VII of subchapter O of 
        chapter 1 of such Code is amended by striking the item relating 
        to section 1091 and inserting the following new item:

``Sec. 1091. Loss from wash sales of specified assets.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales, dispositions, and terminations in taxable years 
beginning after the date of enactment of this Act.

SEC. 806. MARK-TO-MARKET ELECTION.

    (a) In General.--Section 475(e)(2)(A) of the Internal Revenue Code 
of 1986 is amended by inserting ``(as defined in section 1a of the 
Commodity Exchange Act (7 U.S.C. 1a))'' after ``commodity''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of enactment of this Act.

SEC. 807. FORKS, AIRDROPS, AND SUBSIDIARY VALUE.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting before section 72 
the following new section:

``SEC. 71. FORKS, AIRDROPS, AND SUBSIDIARY VALUE.

    ``(a) In General.--In the case of any applicable asset received by 
a taxpayer for which the taxpayer has taken affirmative steps relating 
to control of such asset, the value of such asset shall be included in 
gross income for the taxable year in which such asset is sold or 
otherwise disposed of by the taxpayer.
    ``(b) Character of Income.--For purposes of this subtitle, the 
amount included in gross income under this section shall be treated as 
ordinary income (as defined in section 64).
    ``(c) Applicable Asset.--For purposes of this section, the term 
`applicable asset' means--
            ``(1) a crypto asset fork,
            ``(2) a crypto asset airdrop, or
            ``(3) any other similar form of subsidiary value relating 
        to a crypto asset (as defined in section 9801 of title 31, 
        United States Code).
    ``(d) Regulations.--Not later than 12 months after the date of 
enactment of this Act, the Secretary shall prescribe such regulations 
or other guidance as may be necessary to carry out the purposes of this 
section.''.
    (b) Conforming Amendment.--The table of sections of part II of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting before the item relating to section 72 the 
following new item:

``Sec. 71. Forks, airdrops, and subsidiary value.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of enactment of this 
Act.

SEC. 808. CRYPTO ASSET MINING AND STAKING.

    (a) In General.--Section 451 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(l) Deferral of Income Recognition for Crypto Asset Activities.--
In the case of a taxpayer who conducts crypto asset mining or staking 
activities, the amount of income relating to such activities shall not 
be included in the gross income of the taxpayer until the taxable year 
of the sale or other disposition of the assets produced or received in 
connection with the mining or staking activities.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of enactment of this Act.

SEC. 809. CHARITABLE CONTRIBUTIONS AND QUALIFIED APPRAISALS.

    (a) In General.--Section 170(f)(11)(A)(ii)(I) of the Internal 
Revenue Code of 1986 is amended by inserting ``actively traded crypto 
assets (as defined in section 9801 of title 31, United States Code),'' 
before ``and any qualified vehicle''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made in taxable years beginning after the date of 
enactment of this Act.

             TITLE IX--RESPONSIBLE INTERAGENCY COORDINATION

SEC. 901. TIMELINE FOR INTERPRETIVE GUIDANCE ISSUED BY FEDERAL 
              FINANCIAL AGENCIES.

    (a) In General.--Title 31, United States Code, is amended by adding 
after chapter 98, as added by section 101(a) of this Act, the 
following:

           ``CHAPTER 99--RESPONSIBLE INTERAGENCY COORDINATION

``Sec.
``9901. Timeline for interpretive guidance issues by Federal financial 
                            agencies.
``Sec. 9901. Timeline for interpretive guidance issues by Federal 
              financial agencies
    ``(a) In General.--In this section:
            ``(1) Federal financial regulator.--The term `Federal 
        financial regulator' means--
                    ``(A) Board of Governors of the Federal Reserve 
                System and the Federal Reserve banks;
                    ``(B) Commodity Futures Trading Commission;
                    ``(C) Department of the Treasury;
                    ``(D) Federal Deposit Insurance Corporation;
                    ``(E) Federal Housing Finance Agency;
                    ``(F) National Credit Union Administration;
                    ``(G) Office of the Comptroller of the Currency;
                    ``(H) Consumer Financial Protection Bureau; and
                    ``(I) Securities and Exchange Commission.
            ``(2) Requesting person.--The term `requesting person'--
                    ``(A) means any entity that is required to be 
                chartered, licensed, supervised or registered by that 
                agency; and
                    ``(B) includes State agencies, a customer 
                protection and market integrity authority, and any 
                other entity delegated regulatory and disciplinary 
                authority by a governmental agency.
    ``(b) Response.--Not later than 180 days after filing a written 
request for individualized interpretive guidance with respect to the 
application of a statute, rule or policy under the jurisdiction of a 
Federal financial regulator, the agency shall provide a final, complete 
and written response to the requesting person. This subsection shall 
not apply to requests for guidance that the Federal financial regulator 
determine lack substance.
    ``(c) Other Matters.--With respect to matters delegated or 
otherwise under the jurisdiction of a customer protection and market 
integrity authority or other entity delegated regulatory and 
disciplinary authority by a government agency, including national 
securities exchanges and boards of trade, the entity shall be subject 
to the same requirements as a Federal financial regulator under this 
section.''.

SEC. 902. STATE MONEY TRANSMISSION COORDINATION RELATING TO CRYPTO 
              ASSETS.

    (a) In General.--In order to increase uniformity, reduce regulatory 
burden, and enhance consumer protection, the States, through the 
Conference of State Bank Supervisors and the Money Transmission 
Regulators Association, shall, not later than 2 years after the date of 
enactment of this Act, ensure uniform treatment of crypto assets for 
the purposes of State money transmission laws on the following matters:
            (1) Whether crypto assets are subject to money transmission 
        licensing requirements, as appropriate, which shall include the 
        exchange of crypto assets for legal tender.
            (2) Treatment of payment stablecoins.
            (3) Non-applicability to persons or software that engage in 
        validation of transactions, non-custodial wallet providers, or 
        software or hardware development.
            (4) Tangible net worth and permissible investment 
        requirements.
            (5) Disclosures, reporting, and recordkeeping.
            (6) Common examination and examiner training standards, 
        including common customer identification, anti-money 
        laundering, and sanctions best practices developed in 
        consultation with the Financial Crimes Enforcement Network and 
        the Office of Foreign Assets Control.
    (b) Regulations.--If the Director of the Bureau of Consumer 
Financial Protection determines that a State does not have the 
requirements of subsection (a) in effect by law (including regulations) 
that are substantively consistent with the requirements of the several 
States on the date that is 2 years after the date of enactment of this 
section, the Director shall adopt rules applicable to that State that 
achieve the purposes of subsection (a) and that are consistent with the 
standards adopted in the States that have the requirements of 
subsection (a) in effect. The Director may extend the deadline under 
this section for not more than 1 year if a State has shown a good faith 
effort towards implementation. The Director may promulgate regulations 
to monitor State compliance with this subsection.

SEC. 903. INFORMATION SHARING AMONG FEDERAL AND STATE FINANCIAL 
              REGULATORS.

    Subtitle C of title VII of the Gramm-Leach-Bliley Act (Public Law 
106-102; 113 Stat. 1470), as amended by section 701 of this Act, is 
amended by adding at the end the following:

``SEC. 722B. INFORMATION SHARING AMONG FEDERAL AND STATE FINANCIAL 
              REGULATORS.

    ``(a) Confidentiality.--Notwithstanding any other provision of law, 
any requirement under Federal or State law regarding the privacy or 
confidentiality of any information or materials exchanged among 
financial regulators and any privilege arising under Federal or State 
law (including the rules of any Federal or State court) with respect to 
such information or material, shall continue to apply to such 
information or material after the information or material has been 
disclosed to any State or Federal financial regulator.
    ``(b) Non-Applicability of Certain Requirements.--Information or 
material that is subject to privilege or confidentiality under 
subsection (a) shall not be subject to--
            ``(1) disclosure under any Federal or State law governing 
        the disclosure to the public of information held by an officer 
        or an agency of the Federal Government or the respective State; 
        or
            ``(2) subpoena or discovery, or admission into evidence, in 
        any private civil action or administrative process, unless with 
        respect to any privilege held by the Nationwide Mortgage 
        Licensing System and Registry or the Director with respect to 
        such information or material, the person to whom such 
        information or material pertains waives that privilege, in 
        whole or in part, based on the discretion of such person.
    ``(c) Coordination With Other Law.--Any State or Federal law, 
including any State open records law, relating to the disclosure of 
confidential supervisory information or any information or material 
described in subsection (a) that is inconsistent with subsection (a) 
shall be superseded by the requirements of such provision to the extent 
the State or Federal law provides less confidentiality or a weaker 
privilege.
    ``(d) Conference of State Bank Supervisors.--The Conference of 
State Bank Supervisors shall be considered the agent of the State 
financial regulators for the purposes of sharing information under this 
provision.
    ``(e) Definition.--In this section, the term `financial regulator' 
means--
            ``(1) the Board of Governors of the Federal Reserve System 
        and the Federal Reserve banks;
            ``(2) the Commodity Futures Trading Commission;
            ``(3) the Department of the Treasury, including the 
        Financial Crimes Enforcement Network and the Office of Foreign 
        Assets Control;
            ``(4) the Federal Deposit Insurance Corporation;
            ``(5) the Federal Housing Finance Agency;
            ``(6) the National Credit Union Administration;
            ``(7) the Office of the Comptroller of the Currency;
            ``(8) the Bureau of Consumer Financial Protection;
            ``(9) the Securities and Exchange Commission; and
            ``(10) State agencies that regulate, supervise, or license 
        banks, trust companies, credit unions, consumer credit, 
        consumer protection, money transmission, securities, 
        commodities, and similar areas.''.

SEC. 904. REPORT ON ENERGY CONSUMPTION IN CRYPTO ASSET MARKETS.

    (a) In General.--Not later than December 31 of each year, the 
Administrator of the Energy Information Administration shall submit to 
the Committees on Energy and Natural Resources and Environment and 
Public Works of the Senate and the Committees on Energy and Commerce 
and Natural Resources of the House of Representatives, and make 
publicly available in a machine-readable format, a report containing an 
analysis of the following topics with respect to crypto assets:
            (1) Energy consumption for mining and staking of crypto 
        asset transactions in the financial services industry.
            (2) The effect of energy consumption described in paragraph 
        (1) on national, regional, and local energy prices.
            (3) The effects of mining and staking of crypto asset 
        transactions on baseload power levels.
            (4) The use of renewable energy sources or nonrenewable 
        energy sources for powering crypto asset mining operations that 
        would otherwise be expended.
            (5) A comparison of crypto asset market energy consumption 
        with the energy consumption of the financial services industry 
        and economy as a whole.
            (6) The sources and reliability of the data used to analyze 
        the topics described in paragraphs (1) through (5).
    (b) Consultation.--The Administrator of the Energy Information 
Administration shall prepare the report under subsection (a) in 
consultation with the Commodity Futures Trading Commission and the 
Securities and Exchange Commission.

SEC. 905. ANALYSIS OF ENERGY CONSUMPTION BY DISTRIBUTED LEDGER 
              TECHNOLOGIES.

    (a) Agreement.--The Director of the National Institute of Standards 
and Technology shall seek to enter into an agreement with the National 
Academies of Sciences, Engineering, and Medicine (in this section 
referred to as the ``National Academies'') to conduct the analysis 
under subsection (b) and submit the report under subsection (c).
    (b) Analysis.--Under an agreement between the Director and the 
National Academies entered into pursuant to subsection (a), the 
National Academies shall conduct an analysis of matters relating to 
energy consumption by distributed ledger technologies, including 
analysis of the following topics as they pertain to such technologies:
            (1) Evidence-based analysis of energy consumption by proof 
        of stake and proof of work consensus mechanisms relating to 
        distributed ledger technology generally.
            (2) Industry best practices to reduce energy consumption 
        using proof of stake and proof of work consensus mechanisms.
            (3) Recommendations for legislative or administrative 
        action to reduce energy consumption and incentivize energy 
        efficiency across related industries.
    (c) Report.--Under an agreement entered into between the Director 
and the National Academies under subsection (a), the National Academies 
shall, not later than 1 year after the date of the enactment of this 
Act, submit to the Director, the Secretary of Energy, the Committee on 
Energy and Natural Resources and the Committee on Environment and 
Public Works of the Senate, and the Committee on Energy and Commerce 
and the Committee on Natural Resources of the House of Representatives 
a report containing the findings of the National Academies with respect 
to the analysis under subsection (b) and a detailed description of such 
analysis.

SEC. 906. REPORT ON DISTRIBUTED LEDGER APPLICATIONS IN ENERGY.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary of Energy shall submit to the Committees on 
Energy and Natural Resources and Environment and Public Works of the 
Senate and the Committees on Energy and Commerce and Natural Resources 
of the House of Representatives a report containing--
            (1) an analysis of, with respect to distributed ledger 
        technology in energy--
                    (A) existing, developing, and potential use cases 
                of distributed ledger technology in energy development 
                and transmission, and related topics, as determined by 
                the Secretary; and
                    (B) industry best practices to implement 
                distributed ledger technology; and
            (2) recommendations for any necessary guidelines for the 
        usage of distributed ledger technology.
    (b) Consultation.--The Secretary of Energy shall prepare the report 
under subsection (a) in consultation with the National Institute of 
Standards and Technology and the Secretary of Commerce.

SEC. 907. PERMITTING FEDERAL GOVERNMENT EMPLOYEES TO GAIN EXPERIENCE 
              WITH CRYPTO ASSET TECHNOLOGIES.

    (a) In General.--Solely for the purposes of section 2640.202 of 
title 5, Code of Federal Regulations, or any successor regulation, 
crypto assets listed for traded on a crypto asset exchange registered 
under the Commodity Exchange Act (7 U.S.C. et seq.) shall be considered 
to be publicly traded securities, except that the de minimis exemption 
under paragraph (a)(2) of that section, after aggregation of all crypto 
assets, shall be $1,000.
    (b) Legal Opinions.--The legal advisories issued by the Office of 
Government Ethics entitled ``Guidance for Reporting Virtual Currency on 
Financial Disclosure Reports'' (LA-18-06; issued June 18, 2018) and 
``Application of the Securities and Mutual Fund Exemptions to 
Cryptocurrency, Stablecoins, and Related Investments'' (LA-22-04; 
issued July 5, 2022) shall have no force or effect to the extent that 
either such advisory is inconsistent with subsection (a).

SEC. 908. ADVISORY COMMITTEE ON FINANCIAL INNOVATION.

    (a) Establishment.--There is established the Advisory Committee on 
Financial Innovation (in this section referred to as the 
``Committee'').
    (b) Membership.--
            (1) Composition.--The Committee shall be composed of 11 
        members, as follows:
                    (A) 2 members appointed by the President from the 
                financial technology industry.
                    (B) 4 members appointed by the President with 
                specializations in consumer protection, consumer 
                education, financial literacy, or financial inclusion.
                    (C) The Director of the Office of Financial 
                Innovation of the Commodity Futures Trading Commission.
                    (D) The Director of the Office of Financial 
                Innovation of the Securities and Exchange Commission.
                    (E) A member of the Board of Governors of the 
                Federal Reserve System, as voted upon by the Board.
                    (F) A State banking supervisor, as designated by 
                the Conference of State Bank Supervisors.
                    (G) A State securities regulator, as designated by 
                the National Association of State Securities 
                Administrators.
            (2) Political affiliation.--Not more than 4 of the members 
        of the Committee shall be from the same political party.
            (3) Appointment date.--The appointments of the members of 
        the Committee shall be made not later than 60 days after the 
        date of enactment of this Act.
            (4) Period of appointment; vacancies.--
                    (A) In general.--A member of the Committee shall be 
                appointed for a term of 4 years.
                    (B) Vacancies.--A vacancy in the Committee--
                            (i) shall not affect the powers of the 
                        Committee; and
                            (ii) shall be filled in the same manner as 
                        the original appointment.
            (5) Meetings.--
                    (A) Initial meeting.--Not later than 60 days after 
                the date on which all members of the Committee have 
                been appointed, the Committee shall hold its first 
                meeting.
                    (B) Frequency.--The Committee shall meet at the 
                call of the Chair.
                    (C) Quorum.--A majority of the members of the 
                Committee shall constitute a quorum, but a lesser 
                number of members may hold hearings.
            (6) Chairperson.--The members described in subparagraphs 
        (C) and (D) of paragraph (1) shall alternate, on a yearly 
        basis, as Chairperson of the Committee, with the member 
        described in such subparagraph (D) serving as the Chair for the 
        1-year period following establishment of the Committee.
    (c) Duties.--
            (1) Matters studied.--The matters studied by the Committee 
        shall include--
                    (A) crypto assets;
                    (B) consumer education and financial literacy;
                    (C) innovations in the securities and commodities 
                markets;
                    (D) innovations banking, payments, and settlement;
                    (E) consumer credit;
                    (F) financial inclusion, including reducing the 
                cost of financial services for all people of the United 
                States and promoting access to those services;
                    (G) efficiency in the financial system;
                    (H) reduction of systemic risk;
                    (I) competition in financial services; and
                    (J) the State-Federal partnership in financial 
                services regulation.
            (2) Report.--On an annual basis, or as otherwise determined 
        necessary by the Chair of the Committee, the Committee shall 
        report to the President and to Congress on, and provide 
        recommendations for legislation, regulation, and supervision 
        relating to innovation in, the matters studied under paragraph 
        (1).
    (d) Powers.--
            (1) Hearings.--The Committee shall hold not less than 2 
        hearings per calendar year to hear from interested parties and 
        to discuss the work of the Committee.
            (2) Information from federal agencies.--
                    (A) In general.--The Committee may secure directly 
                from a Federal department or agency such information as 
                the Committee considers necessary to carry out this 
                section.
                    (B) Furnishing information.--On request of the 
                Chair of the Committee, the head of the department or 
                agency shall furnish the information to the Committee.
            (3) Postal services.--The Committee may use the United 
        States mails in the same manner and under the same conditions 
        as other departments and agencies of the Federal Government.
    (e) Compensation.--
            (1) In general.--All members of the Committee shall serve 
        without compensation in addition to that received for their 
        services as officers or employees of the United States, and all 
        other members of the Committee shall serve without 
        compensation.
            (2) Travel expenses.--Each member of the Committee may be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, in accordance with sections 5702 and 5703 of title 
        5, United States Code, while away from their homes or regular 
        places of business in performance of services for the Council.
    (f) Staff.--
            (1) In general.--The Chair of the Committee may, without 
        regard to the civil service laws (including regulations), 
        appoint and terminate an executive director and such other 
        additional personnel as may be necessary to enable the 
        Committee to perform its duties, except that the employment of 
        an executive director shall be subject to confirmation by the 
        Committee.
            (2) Compensation.--The Chair of the Committee may fix the 
        compensation of the executive director and other personnel 
        without regard to chapter 51 and subchapter III of chapter 53 
        of title 5, United States Code, relating to classification of 
        positions and General Schedule pay rates, except that the rate 
        of pay for the executive director and other personnel may not 
        exceed the rate payable for level V of the Executive Schedule 
        under section 5316 of that title.
    (g) Detail of Government Employees.--A Federal Government employee 
may be detailed to the Committee without reimbursement, and such detail 
shall be without interruption or loss of civil service status or 
privilege.
    (h) Procurement of Temporary and Intermittent Services.--The Chair 
of the Committee may procure temporary and intermittent services under 
section 3109(b) of title 5, United States Code, at rates for 
individuals that do not exceed the daily equivalent of the annual rate 
of basic pay prescribed for level V of the Executive Schedule under 
section 5316 of that title.
    (i) Termination.--Section 14 of the Federal Advisory Committee Act 
(5 U.S.C. App.) shall not apply to the Committee.

     TITLE X--EQUIPPING AGENCIES TO PROTECT CONSUMERS AND PROMOTE 
                         RESPONSIBLE INNOVATION

SEC. 1001. EXECUTIVE OFFICE OF THE PRESIDENT APPROPRIATIONS.

    (a) Office of Science and Technology Policy.--For the purposes of 
hiring specialist positions within the Office of Science and Technology 
Policy to coordinate Federal activities and advise the President on 
matters of research and development relating to crypto assets, 
distributed ledger technology, artificial intelligence and other 
innovative financial technologies, including funding the position 
created by section 10671 of 136 Stat. 1688 and coordinating the 
national research and development strategy required by section 5913 of 
136 Stat. 2395, there is authorized to be appropriated to the Executive 
Office of the President the following:
            (1) $2,500,000 for fiscal year 2023, to remain available 
        until September 30, 2024.
            (2) $2,500,000 for fiscal year 2024, to remain available 
        until September 30, 2025.
            (3) $2,500,000 for fiscal year 2025, to remain available 
        until September 30, 2026.
            (4) $2,500,000 for fiscal year 2026, to remain available 
        until September 30, 2027.
            (5) $2,500,000 for fiscal year 2027, to remain available 
        until September 30, 2028.
    (b) National Economic Council.--For the purposes of hiring 
specialist positions within the National Economic Council to coordinate 
Federal activities and advise the President on matters of financial and 
economic policy relating to crypto assets, distributed ledger 
technology, artificial intelligence and other innovative financial 
technologies, there is authorized to be appropriated to the Executive 
Office of the President the following:
            (1) $2,500,000 for fiscal year 2023, to remain available 
        under September 30, 2024.
            (2) $2,500,000 for fiscal year 2024, to remain available 
        until September 30, 2025.
            (3) $2,500,000 for fiscal year 2025, to remain available 
        until September 30, 2026.
            (4) $2,500,000 for fiscal year 2026, to remain available 
        until September 30, 2027.
            (5) $2,500,000 for fiscal year 2027, to remain available 
        until September 30, 2028.

SEC. 1002. FINANCIAL CRIMES ENFORCEMENT NETWORK APPROPRIATIONS.

    (a) Authorization of Appropriations.--For the purposes of 
developing policy relating to crypto assets, acquiring information 
technology resources, establishing the Financial Crimes Enforcement 
Network Innovation Laboratory and enforcement of the laws within its 
jurisdiction relating to crypto assets, there is authorized to be 
appropriated to the Financial Crimes Enforcement Network of the 
Department of the Treasury the following:
            (1) $30,000,000 for fiscal year 2023, to remain available 
        until September 30, 2024.
            (2) $30,000,000 for fiscal year 2024, to remain available 
        until September 30, 2025.
            (3) $30,000,000 for fiscal year 2025, to remain available 
        until September 30, 2026.
            (4) $30,000,000 for fiscal year 2026, to remain available 
        until September 30, 2027.
            (5) $30,000,000 for fiscal year 2027, to remain available 
        until September 30, 2028.
    (b) Incentive Premium for Highly Qualified Individuals.--
Notwithstanding any other provision of law or regulation, the Director 
of the Financial Crimes Enforcement Network of the Department of the 
Treasury may pay an annual incentive premium of not more than 20 
percent of the annual rate of basic pay for a position if necessary to 
attract highly qualified individuals for positions that the Director 
has certified to the Director of the Office of Personnel Managements 
reflect the needs of the Financial Crimes Enforcement Network.

SEC. 1003. COMMODITY FUTURES TRADING COMMISSION APPROPRIATIONS.

    (a) Office of Financial Innovation.--
            (1) In general.--There is established within the Commodity 
        Futures Trading Commission (referred to in this subsection as 
        the ``Commission'') the Office of Financial Innovation 
        (referred to in this subsection as the ``Office'').
            (2) Director.--The Commission shall appoint a Director of 
        the Office--
                    (A) to manage the duties of the Office; and
                    (B) to serve as the principal advisor to the 
                Commission on matters relating to responsible financial 
                innovation.
            (3) Duties.--The duties of the Office shall be--
                    (A) to coordinate the activities of the Commission 
                with respect to responsible financial innovation, 
                including protection of consumers;
                    (B) to ensure the global competitiveness of the 
                United States financial system;
                    (C) to conduct research; and
                    (D) to carry out any other duties as otherwise 
                provided by law.
    (b) Authorization of Appropriations.--
            (1) In general.--There is authorized to be appropriated to 
        the Commodity Futures Trading Commission $100,000,000 for each 
        of fiscal years 2023 through 2027 for the purposes of--
                    (A) implementing this Act and the amendments made 
                by this Act;
                    (B) developing policy relating to crypto assets;
                    (C) establishing the Office of Financial Innovation 
                under subsection (a);
                    (D) hiring experts;
                    (E) rulemaking;
                    (F) administrative and shared services; and
                    (G) acquiring information technology resources 
                relating to crypto assets.
            (2) Availability.--Amounts made available pursuant to 
        paragraph (1) shall remain available for a period of 1 fiscal 
        year.
            (3) Limitations.--Amounts made available pursuant to 
        paragraph (1)--
                    (A) with the exception of appropriations made 
                available for fiscal year 2024, shall not be available 
                until a customer protection and market integrity 
                authority has been registered under section 9809 of 
                title 31, United States Code; and
                    (B) may not be used for enforcement activities, 
                unless otherwise provided by law.

SEC. 1004. SECURITIES AND EXCHANGE COMMISSION APPROPRIATIONS.

    (a) Office of Financial Innovation.--
            (1) Establishment.--There is established within the 
        Securities and Exchange Commission (referred to in this section 
        as the ``Commission'') the Office of Financial Innovation 
        (referred to in this section as the ``Office'') to coordinate 
        the activities of the Commission with respect to responsible 
        financial innovation, including--
                    (A) with respect to the protection of consumers; 
                and
                    (B) by--
                            (i) conducting research;
                            (ii) ensuring the global competitiveness of 
                        the financial system of the United States; and
                            (iii) performing duties as otherwise 
                        provided by law.
            (2) Director.--The Commission shall appoint a Director--
                    (A) to--
                            (i) manage the duties of the Office; and
                            (ii) serve as principal advisor to the 
                        Commission on matters relating to responsible 
                        financial innovation; and
                    (B) who shall be accountable to the Commission.
    (b) Authorization of Appropriations.--Subject to subsection (c), 
for the purposes of implementing this Act, developing policy relating 
to crypto assets, establishing the Office, appointing individuals who 
are experts in their fields, conducting rulemakings, carrying out 
administrative and shared services, and acquiring information 
technology resources within the jurisdiction of the Commission relating 
to crypto assets, there is authorized to be appropriated to the 
Commission the following:
            (1) $100,000,000 for fiscal year 2023, to remain available 
        until September 30, 2024.
            (2) $100,000,000 for fiscal year 2024, to remain available 
        until September 30, 2025.
            (3) $100,000,000 for fiscal year 2025, to remain available 
        until September 30, 2026.
            (4) $100,000,000 for fiscal year 2026, to remain available 
        until September 30, 2027.
            (5) $100,000,000 for fiscal year 2027, to remain available 
        until September 30, 2028.
    (c) Limitations.--With respect to amounts that are appropriated 
pursuant to the authorization under subsection (b), those amounts--
            (1) except with respect to amounts that are made available 
        for fiscal year 2024, shall not be available until a customer 
        protection and market integrity authority has been registered 
        under section 9809 of title 31, United States Code, as added by 
        section 601; and
            (2) may not be used for enforcement activities, unless 
        otherwise provided by law.

SEC. 1005. FEDERAL TRADE COMMISSION APPROPRIATIONS.

    (a) Findings.--Congress finds the following:
            (1) It is important that the United States remains a leader 
        in innovation.
            (2) Crypto assets and distributed ledger technology are 
        driving innovation and providing consumers with increased 
        choice and convenience.
            (3) The use of crypto assets and distributed ledger 
        technology is likely to increase in the future.
            (4) The Federal Trade Commission is responsible for 
        protecting consumers from unfair or deceptive acts or 
        practices, including relating to crypto assets.
            (5) The Federal Trade Commission has previously taken 
        action against unscrupulous companies and individuals that 
        committed unfair or deceptive acts or practices involving 
        crypto assets.
            (6) To bolster the ability of the Federal Trade Commission 
        to enforce against unfair or deceptive acts or practices 
        involving crypto assets, the Commission should ensure staff 
        have appropriate training and resources to identify and pursue 
        such cases.
    (b) Authorization of Appropriations.--For the purposes of executing 
the duties set forth in subsection (c) of this section, there is 
authorized to be appropriated to the Federal Trade Commission the 
following:
            (1) $30,000,000 for fiscal year 2023, to remain available 
        until September 30, 2024.
            (2) $30,000,000 for fiscal year 2024, to remain available 
        until September 30, 2025.
            (3) $30,000,000 for fiscal year 2025, to remain available 
        until September 30, 2026.
            (4) $30,000,000 for fiscal year 2026, to remain available 
        until September 30, 2027.
            (5) $30,000,000 for fiscal year 2027, to remain available 
        until September 30, 2028.
    (c) Purposes.--The Federal Trade Commission shall use the funds 
appropriated under subsection (b) for the following purposes:
            (1) Enforcement relating to unfair or deceptive acts or 
        practices by persons in the crypto asset industry which are not 
        currently supervised by a Federal or State financial regulator.
            (2) Highlighting best practices by lawful crypto asset 
        businesses.
            (3) Promoting responsible innovation.
            (4) Consumer education relating to fraudulent crypto asset 
        activity.
            (5) Investigating unlawful restraints of trade in the 
        crypto asset industry.
            (6) Operations of the Office of Crypto Asset Consumer 
        Protection, as specified by subsection (d).
    (d) Office of Crypto Asset Consumer Protection.--There is created 
within the Federal Trade Commission the Office of Crypto Asset Consumer 
Protection. The Office shall conduct consumer education relating to 
crypto assets and develop best practices for consumer protection for 
the crypto asset industry, and recommend enforcement action, as 
appropriate, to the Division of Enforcement of the Commission.
    (e) Report to Congress.--Not later than September 30 of each year 
for which an appropriation was made available under subsection (a), the 
Federal Trade Commission shall provide a report of activities conducted 
pursuant to subsection (b) of this section to the following committees 
of Congress:
            (1) The Committee on Commerce, Science, and Transportation 
        of the Senate.
            (2) The Committee on Appropriations of the Senate.
            (3) The Committee on Energy and Commerce of the House of 
        Representatives.
            (4) The Committee on Appropriations of the House of 
        Representatives.

SEC. 1006. ADVISORY COMMISSION ON FINANCIAL INNOVATION APPROPRIATIONS.

    To carry out the duties of the Advisory Committee on Financial 
Innovation created by section 908 of this Act, there is appropriated:
            (1) $2,500,000 for fiscal year 2023, to remain available 
        until September 30, 2024.
            (2) $2,500,000 for fiscal year 2024, to remain available 
        until September 30, 2025.
            (3) $2,500,000 for fiscal year 2025, to remain available 
        until September 30, 2026.
            (4) $2,500,000 for fiscal year 2026, to remain available 
        until September 30, 2027.
            (5) $2,500,000 for fiscal year 2027, to remain available 
        until September 30, 2028.
                                 <all>