[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.
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