    [Congressional Bills 119th Congress]
    [From the U.S. Government Publishing Office]
    [H.R. 3633 Reported in House (RH)]

    <DOC>

                                                     Union Calendar No. 134
    119th CONGRESS
      1st Session
                                    H. R. 3633

                      [Report No. 119-168, Parts I and II]

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

    _______________________________________________________________________

                        IN THE HOUSE OF REPRESENTATIVES

                                  May 29, 2025

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

                                 June 23, 2025

     Additional sponsors: Mr. Gottheimer, Mr. Huizenga, Mr. Nunn of Iowa,
       Mr. Lawler, Mr. Meuser, Mr. Carter of Georgia, Mr. Moore of West
     Virginia, Mr. Begich, Ms. McDonald Rivet, Mr. Thanedar, Mr. Messmer,
                         Mr. Bresnahan, and Ms. Stevens

                                 June 23, 2025

          Reported from the Committee on Agriculture with an amendment
     [Strike out all after the enacting clause and insert the part printed
                                   in italic]

                                 June 23, 2025

     Reported from the Committee on Financial Services with an amendment;
    committed to the Committee of the Whole House on the State of the Union
                           and ordered to be printed
     [Strike out all after the enacting clause and insert the part printed
                               in boldface roman]
    [For text of introduced bill, see copy of bill as introduced on May 29,
                                     2025]

    _______________________________________________________________________

                                     A BILL

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

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

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This Act may be cited as the ``Digital Asset
    Market Clarity Act of 2025'' or the ``CLARITY Act of 2025''.
        (b) Table of Contents.--The table of contents for this Act is as
    follows:

    Sec. 1. Short title; table of contents.

           TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION

    Sec. 101. Definitions under the Securities Act of 1933.
    Sec. 102. Definitions under the Securities Exchange Act of 1934.
    Sec. 103. Definitions under the Commodity Exchange Act.
    Sec. 104. Definitions under this Act.
    Sec. 105. Rulemakings.
    Sec. 106. Registration for digital commodity exchanges, brokers, and
                                dealers; provisional status.
    Sec. 107. Commodity Exchange Act and securities laws savings
                                provisions.
    Sec. 108. Administrative requirements.
    Sec. 109. International cooperation.
    Sec. 110. Application of the Bank Secrecy Act.
    Sec. 111. Implementation.

               TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES

    Sec. 201. Treatment of investment contract assets.
    Sec. 202. Exempted primary transactions in digital commodities.
    Sec. 203. Treatment of secondary transactions in digital commodities
                                that originally involved investment
                                contracts.
    Sec. 204. Requirements for offers and sales of digital commodities by
                                digital commodity related persons and
                                digital commodity affiliated persons.
    Sec. 205. Mature blockchain system requirements.
    Sec. 206. Effective date.

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

    Sec. 301. Treatment of digital commodities and permitted payment
                                stablecoins.
    Sec. 302. Anti-fraud authority over permitted payment stablecoins and
                                certain digital commodity transactions.
    Sec. 303. Eligibility of alternative trading systems.
    Sec. 304. Operation of alternative trading systems.
    Sec. 305. Modernization of recordkeeping requirements.
    Sec. 306. Exemptive authority.
    Sec. 307. Additional registrations with the Commodity Futures Trading
                                Commission.
    Sec. 308. Exempting digital commodities from State securities laws.
    Sec. 309. Exclusion for decentralized finance activities.
    Sec. 310. Treatment of custody activities by banking institutions.
    Sec. 311. Digital commodity activities that are financial in nature.
    Sec. 312. Effective date; administration.
    Sec. 313. Studies on foreign adversary participation.

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

    Sec. 401. Commission jurisdiction over digital commodity transactions.
    Sec. 402. Requiring futures commission merchants to use qualified
                                digital asset custodians.
    Sec. 403. Trading certification and approval for digital commodities.
    Sec. 404. Registration of digital commodity exchanges.
    Sec. 405. Qualified digital asset custodians.
    Sec. 406. Registration and regulation of digital commodity brokers and
                                dealers.
    Sec. 407. Registration of associated persons.
    Sec. 408. Registration of commodity pool operators and commodity
                                trading advisors.
    Sec. 409. Exclusion for decentralized finance activities.
    Sec. 410. Resources for implementation and enforcement.
    Sec. 411. Digital commodity activities by SEC-registered entities.
    Sec. 412. Requirements related to control persons.
    Sec. 413. Other tradable assets.
    Sec. 414. Effective date.
    Sec. 415. Sense of Congress.

                TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

    Sec. 501. Findings; sense of Congress.
    Sec. 502. Modernization of the Securities and Exchange Commission
                                mission.
    Sec. 503. Strategic Hub for Innovation and Financial Technology.
    Sec. 504. Codification of LabCFTC.
    Sec. 505. Study on decentralized finance.
    Sec. 506. Study on non-fungible tokens.
    Sec. 507. Study on expanding financial literacy amongst digital
                                commodity holders.
    Sec. 508. Study on financial market infrastructure improvements.
    Sec. 509. Study on illicit use of digital assets.
    Sec. 510. Conflict of interest rulemaking.

           TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION

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

        Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is
    amended by adding at the end the following:
                ``(20) Blockchain.--The term `blockchain' means--
                        ``(A) any technology--
                                ``(i) where data is--
                                        ``(I) shared across a network to
                                    create a distributed ledger of
                                    independently verifiable transactions
                                    or information among network
                                    participants;
                                        ``(II) linked using cryptography to
                                    maintain the integrity of the
                                    distributed ledger and to execute other
                                    functions; and
                                        ``(III) propagated among network
                                    participants to reach consensus on the
                                    state of the distributed ledger and any
                                    other functions; and
                                ``(ii) composed of source code that is
                            publicly available; and
                        ``(B) any similar technology to the technology
                    described in subparagraph (A).
                ``(21) Blockchain application.--The term `blockchain
            application' means any executable software deployed to a
            blockchain composed of source code that is publicly available,
            including a smart contract or any network of smart contracts,
            or other similar technology.
                ``(22) Blockchain protocol.--The term `blockchain protocol'
            means the freely and publicly available source code of a
            blockchain that is executed by the network participants of a
            blockchain to facilitate its functioning, or other similar
            technology.
                ``(23) Blockchain system.--The term `blockchain system'
            means any blockchain, together with its blockchain protocol or
            any blockchain application or network of blockchain
            applications.
                ``(24) Decentralized governance system.--
                        ``(A) In general.--The term `decentralized
                    governance system' means, with respect to a blockchain
                    system, any transparent, rules-based system permitting
                    persons to form consensus or reach agreement in the
                    development, provision, publication, management, or
                    administration of such blockchain system, where
                    participation is not limited to, or under the effective
                    control of, any person or group of persons under common
                    control.
                        ``(B) Relationship of persons to decentralized
                    governance systems.--With respect to a decentralized
                    governance system, the decentralized governance system
                    and any persons participating in the decentralized
                    governance system shall be treated as separate persons
                    unless such persons are under common control.
                        ``(C) Legal entities for decentralized governance
                    systems.--The term `decentralized governance system'
                    shall include a legal entity used to implement the
                    rules-based system described in subparagraph (A),
                    provided that the organizing and governing laws of such
                    legal entity do not create or require centralized and
                    hierarchical management of such legal entity. For the
                    purposes of this subparagraph, the delegation of
                    ministerial or administrative authority at the
                    direction of the participants in a decentralized
                    governance system shall not be construed to be
                    centralized and hierarchical management.
                ``(25) Digital asset.--The term `digital asset' means any
            digital representation of value which is recorded on a
            cryptographically-secured distributed ledger or other similar
            technology.
                ``(26) Digital commodity.--The term `digital commodity' has
            the meaning given that term under section 1a of the Commodity
            Exchange Act (7 U.S.C. 1a).
                ``(27) Digital commodity affiliated person.--The term
            `digital commodity affiliated person' means a person (including
            a digital commodity related person) that, with respect to any
            digital commodity--
                        ``(A) acquires 5 percent or more of the total
                    outstanding units of such digital commodity from a
                    digital commodity issuer;
                        ``(B) is a founder of the digital commodity issuer;
                    or
                        ``(C) is an executive director, director, trustee,
                    or general partner of the digital commodity issuer or
                    held such role at any point in the previous 12-month
                    period.
                ``(28) Digital commodity issuer.--With respect to a digital
            commodity, the term `digital commodity issuer' means any person
            that--
                        ``(A) proposes, issues, or causes to be issued a
                    unit of such digital commodity to a person; or
                        ``(B) offers or sells a right to a future issuance
                    of a unit of such digital commodity to a person.
                ``(29) Digital commodity related person.--
                        ``(A) In general.--With respect to a digital
                    commodity issuer, the term `digital commodity related
                    person' means--
                                ``(i) a person that is or was in the
                            previous 6-month period a promoter, senior
                            employee, advisory board member, consultant,
                            advisor, or person serving in a similar
                            capacity; and
                                ``(ii) a person that acquires 1 percent or
                            more of the total outstanding units of such
                            digital commodity from a digital commodity
                            issuer.
                        ``(B) Senior employee defined.--In this paragraph
                    and with respect to a digital commodity issuer, the
                    term `senior employee' means any employee materially
                    involved in the management or planning of the digital
                    commodity issuer or the development of the blockchain
                    system to which the digital commodity relates.
                ``(30) End user distribution.--The term `end user
            distribution' means a distribution of a unit of a digital
            commodity that--
                        ``(A) does not involve an exchange of more than a
                    nominal value of cash, property, or other assets; and
                        ``(B) is distributed in a broad and equitable
                    manner based on conditions capable of being satisfied
                    by any participant in the blockchain system, including,
                    as incentive-based rewards--
                                ``(i) to users of the digital commodity or
                            any blockchain system to which the digital
                            commodity relates;
                                ``(ii) for activities directly related to
                            the operation of the blockchain system, such as
                            mining, validating, staking, or other activity
                            directly tied to the operation of the
                            blockchain system; or
                                ``(iii) to the existing holders of another
                            digital commodity, in proportion to the total
                            units of such other digital commodity as are
                            held by each person.
                ``(31) Mature blockchain system.--The term `mature
            blockchain system' means a blockchain system, together with its
            related digital commodity, that is not controlled by any person
            or group of persons under common control.
                ``(32) Permitted payment stablecoin.--
                        ``(A) In general.--The term `permitted payment
                    stablecoin' means a digital asset--
                                ``(i) that is or is designed to be used as
                            a means of payment or settlement;
                                ``(ii) that is denominated in a national
                            currency;
                                ``(iii) the issuer of which is subject to
                            the regulatory and supervisory authority of a
                            State or Federal agency;
                                ``(iv) the issuer of which--
                                        ``(I) is obligated to convert,
                                    redeem, or repurchase for a fixed
                                    amount of monetary value; or
                                        ``(II) represents that the digital
                                    asset will maintain or creates the
                                    reasonable expectation that the digital
                                    asset will maintain a stable value
                                    relative to the value of a fixed amount
                                    of monetary value; and
                                ``(v) that is not--
                                        ``(I) a national currency;
                                        ``(II) a security issued by--
                                                ``(aa) an investment
                                            company registered under
                                            section 8(a) of the Investment
                                            Company Act of 1940 (15 U.S.C.
                                            80a-8(a)); or
                                                ``(bb) a person that would
                                            be an investment company under
                                            the Investment Company Act of
                                            1940 but for paragraphs (1) and
                                            (7) of section 3(c) of that Act
                                            (15 U.S.C. 80a-3(c));
                                        ``(III) a deposit (as defined under
                                    section 3 of the Federal Deposit
                                    Insurance Act (12 U.S.C. 1813)),
                                    regardless of the technology used to
                                    record such deposit; or
                                        ``(IV) an account (as defined in
                                    section 101 of the Federal Credit Union
                                    Act (12 U.S.C. 1752)), regardless of
                                    the technology used to record such
                                    account.
                        ``(B) Monetary value defined.--The term `monetary
                    value'--
                                ``(i) means--
                                        ``(I) a national currency;
                                        ``(II) a deposit (as defined in
                                    section 3 of the Federal Deposit
                                    Insurance Act (12 U.S.C. 1813)) that is
                                    denominated in a national currency; or
                                        ``(III) an account (as defined in
                                    section 101 of the Federal Credit Union
                                    Act (12 U.S.C. 1752)); and
                                ``(ii) does not include any agricultural or
                            other physical commodity (as defined in section
                            1a of the Commodity Exchange Act (7 U.S.C.
                            1a)).
                ``(33) Securities laws.--The term `securities laws' has the
            meaning given that term under section 3(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78c(a)).''.

    SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.

        Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
    78c(a)) is amended--
                (1) by redesignating the second paragraph (80) (relating to
            funding portals) as paragraph (81); and
                (2) by adding at the end the following:
                ``(82) Bank secrecy act.--The term `Bank Secrecy Act'
            means--
                        ``(A) section 21 of the Federal Deposit Insurance
                    Act (12 U.S.C. 1829b);
                        ``(B) chapter 2 of title I of Public Law 91-508 (12
                    U.S.C. 1951 et seq.); and
                        ``(C) subchapter II of chapter 53 of title 31,
                    United States Code.
                ``(83) Additional digital commodity-related terms.--
                        ``(A) Securities act of 1933.--The terms
                    `blockchain system', `decentralized governance system',
                    `digital asset', `digital commodity affiliated person',
                    `digital commodity issuer', `digital commodity related
                    person', `end user distribution', `mature blockchain
                    system', and `permitted payment stablecoin', have the
                    meaning given those terms, respectively, under section
                    2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).
                        ``(B) Commodity exchange act.--The terms `digital
                    commodity', `digital commodity broker', `digital
                    commodity dealer', `digital commodity exchange',
                    `decentralized finance messaging system', and
                    `decentralized finance trading protocol' have the
                    meaning given those terms, respectively, under section
                    1a of the Commodity Exchange Act (7 U.S.C. 1a).''.

    SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.

        (a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
    1a) is amended--
                (1) in paragraph (10)--
                        (A) in subparagraph (A)--
                                (i) by redesignating clauses (iii) and (iv)
                            as clauses (iv) and (v), respectively; and
                                (ii) by inserting after clause (ii) the
                            following:
                                ``(iii) digital commodity;''; and
                        (B) by redesignating subparagraph (B) as
                    subparagraph (C) and inserting after subparagraph (A)
                    the following:
                        ``(B) Exclusion.--For purposes of this paragraph,
                    the term `trading in commodity interests' shall not
                    include transacting in digital commodities for the
                    purpose of--
                                ``(i) acting as a digital commodity
                            custodian;
                                ``(ii) establishing, maintaining, or
                            managing inventory or payment instruments for
                            commercial purposes; or
                                ``(iii) maintaining or supporting the
                            operation of, or validating transactions on, a
                            blockchain system.'';
                (2) in paragraph (11)--
                        (A) in subparagraph (A)(i)--
                                (i) by redesignating subclauses (III) and
                            (IV) as subclauses (IV) and (V), respectively;
                            and
                                (ii) by inserting after subclause (II) the
                            following:
                                        ``(III) digital commodity;''; and
                        (B) by redesignating subparagraph (B) as
                    subparagraph (C) and inserting after subparagraph (A)
                    the following:
                        ``(B) Exclusion.--For purposes of this paragraph,
                    the term `trading in commodity interests' shall not
                    include transacting in digital commodities for the
                    purpose of--
                                ``(i) acting as a digital commodity
                            custodian;
                                ``(ii) establishing, maintaining, or
                            managing inventory or payment instruments for
                            commercial purposes; or
                                ``(iii) maintaining or supporting the
                            operation of, or validating transactions on, a
                            blockchain system.'';
                (3) in paragraph (12)(A)(i)--
                        (A) in subclause (II), by adding at the end a
                    semicolon;
                        (B) by redesignating subclauses (III) and (IV) as
                    subclauses (IV) and (V), respectively; and
                        (C) by inserting after subclause (II) the
                    following:
                                        ``(III) a digital commodity;'';
                (4) by redesignating paragraphs (16) through (51) as
            paragraphs (17) through (52), respectively, and inserting after
            paragraph (15) the following:
                ``(16) Terms related to digital commodities.--
                        ``(A) Associated person of a digital commodity
                    broker.--
                                ``(i) In general.--Except as provided in
                            clause (ii), the term `associated person of a
                            digital commodity broker' means a person who is
                            associated with a digital commodity broker as a
                            partner, officer, employee, or agent (or any
                            person occupying a similar status or performing
                            similar functions) in any capacity that
                            involves--
                                        ``(I) the solicitation or
                                    acceptance of an order for the purchase
                                    or sale of a digital commodity; or
                                        ``(II) the supervision of any
                                    person engaged in the solicitation or
                                    acceptance of an order for the purchase
                                    or sale of a digital commodity.
                                ``(ii) Exclusion.--The term `associated
                            person of a digital commodity broker' does not
                            include any person associated with a digital
                            commodity broker the functions of which are
                            solely clerical or ministerial.
                        ``(B) Associated person of a digital commodity
                    dealer.--
                                ``(i) In general.--Except as provided in
                            clause (ii), the term `associated person of a
                            digital commodity dealer' means a person who is
                            associated with a digital commodity dealer as a
                            partner, officer, employee, or agent (or any
                            person occupying a similar status or performing
                            similar functions) in any capacity that
                            involves--
                                        ``(I) the solicitation or
                                    acceptance of a contract for the
                                    purchase or sale of a digital
                                    commodity; or
                                        ``(II) the supervision of any
                                    person engaged in the solicitation or
                                    acceptance of a contract for the
                                    purchase or sale of a digital
                                    commodity.
                                ``(ii) Exclusion.--The term `associated
                            person of a digital commodity dealer' does not
                            include any person associated with a digital
                            commodity dealer the functions of which are
                            solely clerical or ministerial.
                        ``(C) Bank secrecy act.--The term `Bank Secrecy
                    Act' means--
                                ``(i) section 21 of the Federal Deposit
                            Insurance Act (12 U.S.C. 1829b);
                                ``(ii) chapter 2 of title I of Public Law
                            91-508 (12 U.S.C. 1951 et seq.); and
                                ``(iii) subchapter II of chapter 53 of
                            title 31, United States Code.
                        ``(D) Decentralized finance messaging system.--
                                ``(i) In general.--The term `decentralized
                            finance messaging system' means a software
                            application that provides a user with the
                            ability to create or submit an instruction,
                            communication, or message to a decentralized
                            finance trading protocol for the purpose of
                            executing a transaction by the user.
                                ``(ii) Additional requirements.--The term
                            `decentralized finance messaging system' does
                            not include any system that provides any person
                            other than the user with control over--
                                        ``(I) the funds of the user; or
                                        ``(II) the execution of the
                                    transaction of the user.
                        ``(E) Decentralized finance trading protocol.--
                                ``(i) In general.--The term `decentralized
                            finance trading protocol' means a blockchain
                            system through which multiple participants can
                            execute a financial transaction--
                                        ``(I) in accordance with an
                                    automated rule or algorithm that is
                                    predetermined and non-discretionary;
                                    and
                                        ``(II) without reliance on any
                                    other person to maintain control of the
                                    digital assets of the user during any
                                    part of the financial transaction.
                                ``(ii) Exclusions.--
                                        ``(I) In general.--The term
                                    `decentralized finance trading
                                    protocol' does not include a blockchain
                                    system if--
                                                ``(aa) a person or group of
                                            persons under common control or
                                            acting pursuant to an agreement
                                            to act in concert has the
                                            authority, directly or
                                            indirectly, through any
                                            contract, arrangement,
                                            understanding, relationship, or
                                            otherwise, to control or
                                            materially alter the
                                            functionality, operation, or
                                            rules of consensus or agreement
                                            of the blockchain system; or
                                                ``(bb) the blockchain
                                            system does not operate,
                                            execute, and enforce its
                                            operations and transactions
                                            based solely on pre-
                                            established, transparent rules
                                            encoded directly within the
                                            source code of the blockchain
                                            system.
                                        ``(II) Special rule.--For purposes
                                    of subclause (I), a decentralized
                                    governance system shall not be
                                    considered to be a person or a group of
                                    persons under common control or acting
                                    pursuant to an agreement to act in
                                    concert.
                        ``(F) Digital commodity.--
                                ``(i) In general.--The term `digital
                            commodity' means a digital asset that is
                            intrinsically linked to a blockchain system,
                            and the value of which is derived from or is
                            reasonably expected to be derived from the use
                            of the blockchain system.
                                ``(ii) Relationship to a blockchain
                            system.--For purposes of this subparagraph, a
                            digital asset is intrinsically linked to a
                            blockchain system if the digital asset is
                            directly related to the functionality or
                            operation of the blockchain system or to the
                            activities or services for which the blockchain
                            system is created or utilized, including where
                            the digital asset is--
                                        ``(I) issued or generated by the
                                    programmatic functioning of the
                                    blockchain system;
                                        ``(II) used to transfer value
                                    between participants in the blockchain
                                    system;
                                        ``(III) used to access the
                                    activities or services of the
                                    blockchain system;
                                        ``(IV) used to participate in the
                                    decentralized governance system of the
                                    blockchain system;
                                        ``(V) used or removed from
                                    circulation in whole or in part to pay
                                    fees or otherwise verify or validate
                                    transactions on the blockchain system;
                                        ``(VI) used as payment or incentive
                                    to participants in the blockchain
                                    system to engage in the activities of
                                    the blockchain system, provide services
                                    to other participants in the blockchain
                                    system, or otherwise participate in the
                                    functionality of the blockchain system;
                                    or
                                        ``(VII) used as payment or
                                    incentive to participants in the
                                    blockchain system to validate
                                    transactions, secure the blockchain
                                    system, provide computational services,
                                    maintain or distribute information, or
                                    otherwise participate in the operations
                                    of the blockchain system.
                                ``(iii) Exclusion.--The term `digital
                            commodity' does not include any of the
                            following:
                                        ``(I) Security.--
                                                ``(aa) Any security, other
                                            than a note, an investment
                                            contract, or a certificate of
                                            interest or participation in
                                            any profit-sharing agreement.
                                                ``(bb) A note, an
                                            investment contract, or a
                                            certificate of interest or
                                            participation in any profit-
                                            sharing agreement that--

                                                        ``(AA) represents
                                                    or gives the holder an
                                                    ownership interest or
                                                    other interest in the
                                                    revenues, profits,
                                                    obligations, debts,
                                                    assets, or assets or
                                                    debts to be acquired of
                                                    the issuer of the
                                                    digital asset or
                                                    another person (other
                                                    than a decentralized
                                                    governance system);

                                                        ``(BB) makes the
                                                    holder a creditor of
                                                    the issuer of the
                                                    digital asset or
                                                    another person; or

                                                        ``(CC) represents
                                                    or gives the holder the
                                                    right to receive
                                                    interest or the return
                                                    of principal from the
                                                    issuer of the digital
                                                    asset or another
                                                    person.

                                        ``(II) Security derivative.--A
                                    digital asset that, based on its terms
                                    and other characteristics, is,
                                    represents, or is functionally
                                    equivalent to an agreement, contract,
                                    or transaction that is--
                                                ``(aa) a security future,
                                            as defined in section 2a of the
                                            Securities Act of 1933;
                                                ``(bb) a security-based
                                            swap, as defined in section 2a
                                            of the Securities Act of 1933;
                                                ``(cc) a put, call,
                                            straddle, option, or privilege
                                            on any security, certificate of
                                            deposit, or group or index of
                                            securities (including any
                                            interest therein or based on
                                            the value thereof), as defined
                                            in section 2a of the Securities
                                            Act of 1933; or
                                                ``(dd) a put, call,
                                            straddle, option, or privilege
                                            on any security, as defined in
                                            section 2a of the Securities
                                            Act of 1933.
                                        ``(III) Permitted payment
                                    stablecoin.--A digital asset that is a
                                    permitted payment stablecoin.
                                        ``(IV) Banking deposit.--
                                                ``(aa) A deposit (as
                                            defined under section 3 of the
                                            Federal Deposit Insurance Act
                                            (12 U.S.C. 1813)), regardless
                                            of the technology used to
                                            record the deposit.
                                                ``(bb) An account (as
                                            defined in section 101 of the
                                            Federal Credit Union Act (12
                                            U.S.C. 1752)), regardless of
                                            the technology used to record
                                            the account.
                                        ``(V) Commodity.--A digital asset
                                    that references, represents an interest
                                    in, or is functionally equivalent to--
                                                ``(aa) an agricultural
                                            commodity;
                                                ``(bb) an excluded
                                            commodity, other than a
                                            security; or
                                                ``(cc) an exempt commodity,
                                            other than the digital
                                            commodity itself, as shall be
                                            further defined by the
                                            Commission.
                                        ``(VI) Commodity derivative.--A
                                    digital asset that, based on its terms
                                    and other characteristics, is,
                                    represents, or is functionally
                                    equivalent to an agreement, contract,
                                    or transaction that is--
                                                ``(aa) a contract of sale
                                            of a commodity for future
                                            delivery or an option thereon;
                                                ``(bb) a security futures
                                            product;
                                                ``(cc) a swap;
                                                ``(dd) an agreement,
                                            contract, or transaction
                                            described in section
                                            2(c)(2)(C)(i) or 2(c)(2)(D)(i);
                                                ``(ee) a commodity option
                                            authorized under section 4c; or
                                                ``(ff) a leverage
                                            transaction authorized under
                                            section 19.
                                        ``(VII) Pooled investment
                                    vehicle.--
                                                ``(aa) In general.--A
                                            digital asset that, based on
                                            its terms and other
                                            characteristics, is,
                                            represents, or is functionally
                                            equivalent to--

                                                        ``(AA) a commodity
                                                    pool, as defined in
                                                    this Act; or

                                                        ``(BB) a pooled
                                                    investment vehicle.

                                                ``(bb) Pooled investment
                                            vehicle defined.--In this
                                            subclause, the term `pooled
                                            investment vehicle' means--

                                                        ``(AA) any
                                                    investment company as
                                                    defined in section 3(a)
                                                    of the Investment
                                                    Company Act of 1940 (15
                                                    U.S.C. 80a-3(a));

                                                        ``(BB) any company
                                                    that would be an
                                                    investment company
                                                    under section 3(a) of
                                                    such Act but for the
                                                    exclusion provided from
                                                    that definition by
                                                    paragraph (1), (7), or
                                                    (9) of section 3(c) of
                                                    such Act (15 U.S.C.
                                                    80a-3(c)(1), (7), or
                                                    (9)); or

                                                        ``(CC) any entity
                                                    or person that is not
                                                    an investment company
                                                    but holds or will hold
                                                    assets other than
                                                    securities.

                                        ``(VIII) Good, collectible, and
                                    other non-commodity asset.--A digital
                                    asset that has value, utility, or
                                    significance beyond its mere existence
                                    as a digital asset, including the
                                    digital equivalent of a tangible or
                                    intangible good, such as--
                                                ``(aa) a work of art, a
                                            musical composition, a literary
                                            work, or other intellectual
                                            property;
                                                ``(bb) collectibles,
                                            merchandise, virtual land, and
                                            video game assets;
                                                ``(cc) affinity, rewards,
                                            or loyalty points, including
                                            airline miles or credit card
                                            points, that are not primarily
                                            speculative in nature; or
                                                ``(dd) rights, licenses,
                                            and tickets.
                                ``(iv) Rule of construction.--No
                            presumption shall exist that a digital asset is
                            a security, nor shall a digital asset be
                            excluded from being a digital commodity
                            pursuant to clause (iii)(I), solely due to--
                                        ``(I) the digital asset providing
                                    voting or economic rights with respect
                                    to the blockchain system to which the
                                    digital asset relates or the
                                    decentralized governance system of the
                                    blockchain system to which the digital
                                    asset relates;
                                        ``(II) the value of the digital
                                    asset having the potential to
                                    appreciate or depreciate in response to
                                    the efforts, operations, or financial
                                    performance of the blockchain system to
                                    which the digital asset relates or the
                                    decentralized governance system of the
                                    blockchain system to which the digital
                                    asset relates; or
                                        ``(III) the value of the digital
                                    asset appreciating or depreciating due
                                    to the use of the blockchain system to
                                    which the digital asset relates or the
                                    decentralized governance system of the
                                    blockchain system to which the digital
                                    asset relates.
                        ``(G) Digital commodity broker.--
                                ``(i) In general.--The term `digital
                            commodity broker' means any person who, as a
                            regular business--
                                        ``(I) is engaged in--
                                                ``(aa) soliciting or
                                            accepting an order from a
                                            customer for--

                                                        ``(AA) the purchase
                                                    or sale of a digital
                                                    commodity; or

                                                        ``(BB) an
                                                    agreement, contract, or
                                                    transaction described
                                                    in section
                                                    2(c)(2)(D)(iv); and

                                                ``(bb) in conjunction with
                                            the activities in item (aa),
                                            accepts or maintains control
                                            over--

                                                        ``(AA) the funds of
                                                    any customer; or

                                                        ``(BB) the
                                                    execution of any
                                                    transaction of a
                                                    customer;

                                        ``(II) is engaged in soliciting or
                                    accepting orders from a customer for
                                    the purchase or sale of a unit of a
                                    digital commodity on or subject to the
                                    rules of a registered entity; or
                                        ``(III) is registered with the
                                    Commission as a digital commodity
                                    broker.
                                ``(ii) Exceptions.--The term `digital
                            commodity broker' does not include a person
                            solely because the person--
                                        ``(I) solicits or accepts an order
                                    described in clause (i)(I)(aa)(AA) from
                                    a customer who is an eligible contract
                                    participant;
                                        ``(II) enters into 1 or more
                                    digital commodity transactions that are
                                    attributable or solely incidental to
                                    making, sending, receiving, or
                                    facilitating payments, whether
                                    involving a payment service provider or
                                    on a peer-to-peer basis; or
                                        ``(III) is a bank (as defined under
                                    section 3(a) of the Securities Exchange
                                    Act of 1934) engaging in certain
                                    banking activities with respect to a
                                    digital commodity in the same or a
                                    similar manner as a bank is excluded
                                    from the definition of a broker under
                                    such section, as determined by the
                                    Commission.
                                ``(iii) Further definition.--The
                            Commission, by rule or regulation, may exclude
                            from the term `digital commodity broker' any
                            person or class of persons if the Commission
                            determines that the rule or regulation will
                            effectuate the purposes of this Act.
                        ``(H) Digital commodity dealer.--
                                ``(i) In general.--The term `digital
                            commodity dealer' means any person who, as a
                            regular business--
                                        ``(I) is, or offers to be a
                                    counterparty to a person for the
                                    purchase or sale of a digital commodity
                                    as a regular business, and in
                                    conjunction with the activities,
                                    accepts or maintains control over the
                                    funds of any counterparty; or
                                        ``(II) is registered with the
                                    Commission as a digital commodity
                                    dealer.
                                ``(ii) Exception.--The term `digital
                            commodity dealer' does not include a person
                            solely because the person--
                                        ``(I) is or offers to be a
                                    counterparty to a person who is an
                                    eligible contract participant;
                                        ``(II) enters into a digital
                                    commodity transaction with an eligible
                                    contract participant;
                                        ``(III) enters into a digital
                                    commodity transaction on or through a
                                    registered digital commodity exchange,
                                    with a registered digital commodity
                                    broker, or through a decentralized
                                    finance trading protocol;
                                        ``(IV) enters into a digital
                                    commodity transaction for the person's
                                    own account, either individually or in
                                    a fiduciary capacity, but not as a part
                                    of a regular business;
                                        ``(V) enters into 1 or more digital
                                    commodity transactions that are
                                    attributable or solely incidental to
                                    making, sending, receiving, or
                                    facilitating payments, whether
                                    involving a payment service provider or
                                    on a peer-to-peer basis; or
                                        ``(VI) is a bank (as defined under
                                    section 3(a) of the Securities Exchange
                                    Act of 1934) engaging in certain
                                    banking activities with respect to a
                                    digital commodity in the same or a
                                    similar manner as a bank is excluded
                                    from the definition of a dealer under
                                    section 3(a)(5) of such Act, as
                                    determined by the Commission.
                                ``(iii) Further definition.--The
                            Commission, by rule or regulation, may exclude
                            from the term `digital commodity dealer' any
                            person or class of persons if the Commission
                            determines that the rule or regulation will
                            effectuate the purposes of this Act.
                        ``(I) Digital commodity exchange.--The term
                    `digital commodity exchange' means a trading facility
                    that offers or seeks to offer a cash or spot market in
                    at least 1 digital commodity.
                        ``(J) Mixed digital asset transaction.--The term
                    `mixed digital asset transaction' means a transaction
                    in which a digital commodity is traded for a security.
                        ``(K) Terms defined under the securities act of
                    1933.--The terms `blockchain system', `decentralized
                    governance system', `digital asset', `digital commodity
                    issuer', `digital commodity affiliated person',
                    `digital commodity related person', `end user
                    distribution', `mature blockchain system', and
                    `permitted payment stablecoin' have the meaning given
                    those terms, respectively, under section 2(a) of the
                    Securities Act of 1933 (15 U.S.C. 77b(a)).''; and
                (5) in paragraph (41) (as so redesignated by paragraph (4)
            of this subsection)--
                        (A) by striking ``and'' at the end of subparagraph
                    (E);
                        (B) by striking the period at the end of
                    subparagraph (F) and inserting ``; and''; and
                        (C) by adding at the end the following:
                        ``(G) a digital commodity exchange registered under
                    section 5i.''.
        (b) Conforming Amendments.--
                (1) Each of the following provisions of law is amended by
            striking ``1a(18)'' and inserting ``1a(19)'':
                        (A) Section 4s(h)(5)(A)(i) of the Commodity
                    Exchange Act (7 U.S.C. 6s(h)(5)(A)(i)).
                        (B) Section 5(e) of the Securities Act of 1933 (15
                    U.S.C. 77e(e)).
                        (C) Section 6(g)(5)(B) of the Securities Exchange
                    Act of 1934 (15 U.S.C. 78f(g)(5)(B)).
                        (D) Section 15F(h)(5)(A)(i) of the Securities
                    Exchange Act of 1934 (15 U.S.C. 78o-10(h)(5)(A)(i)).
                (2) Section 752 of the Wall Street Transparency and
            Accountability Act of 2010 (15 U.S.C. 8325) is amended by
            striking ``1a(39)'' and inserting ``1a(40)''.
                (3) Section 4s(f)(1)(D) of the Commodity Exchange Act (7
            U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)'' and
            inserting ``1a(48)(A)''.
                (4) Each of the following provisions of the Commodity
            Exchange Act is amended by striking ``1a(47)(A)(v)'' and
            inserting ``1a(48)(A)(v)'':
                        (A) Section 4t(b)(1)(C) (7 U.S.C. 6t(b)(1)(C)).
                        (B) Section 5(d)(23) (7 U.S.C. 7(d)(23)).
                        (C) Section 5b(k)(3) (7 U.S.C. 7a-1(k)(3)).
                        (D) Section 5h(f)(10)(A)(iii) (7 U.S.C. 7b-
                    3(f)(10)(A)(iii)).
                (5) Section 21(f)(4)(C) of the Commodity Exchange Act (7
            U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and
            inserting ``1a(49)''.
                (6) Section 403 of the Legal Certainty for Bank Products
            Act of 2000 (7 U.S.C. 27a) is amended--
                        (A) in subsection (a)(2), by striking
                    ``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)''; and
                        (B) in each of subsections (b)(1) and (c)(2), by
                    striking ``1a(47)'' and inserting ``1a(48)''.
                (7) Section 712 of the Wall Street Transparency and
            Accountability Act of 2010 (15 U.S.C. 8302) is amended--
                        (A) in subsection (a)(8), by striking ``1a(47)(D)''
                    each place it appears and inserting ``1a(48)(D)''; and
                        (B) in subsection (d)(1), by striking
                    ``1a(47)(A)(v)'' each place it appears and inserting
                    ``1a(48)(A)(v)''.

    SEC. 104. DEFINITIONS UNDER THIS ACT.

        In this Act:
                (1) Definitions under the commodity exchange act.--The
            terms ``decentralized finance messaging system'',
            ``decentralized finance trading protocol'', ``digital
            commodity'', ``digital commodity broker'', ``digital commodity
            dealer'', ``digital commodity exchange'', and ``mixed digital
            asset transaction'' have the meaning given those terms,
            respectively, under section 1a of the Commodity Exchange Act (7
            U.S.C. 1a).
                (2) Definitions under the securities act of 1933.--The
            terms ``blockchain'', ``blockchain system'', ``blockchain
            protocol'', ``decentralized governance system'', ``digital
            asset'', ``digital commodity issuer'', ``end user
            distribution'', ``mature blockchain system'', ``permitted
            payment stablecoin'', and ``securities laws'' have the meaning
            given those terms, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)).
                (3) Definitions under the securities exchange act of
            1934.--The terms ``Bank Secrecy Act'', ``securities laws'', and
            ``self-regulatory organization'' have the meaning given those
            terms, respectively, under section 3(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78c(a)).

    SEC. 105. RULEMAKINGS.

        (a) Definitions.--The Commodity Futures Trading Commission and the
    Securities and Exchange Commission shall jointly issue rules to further
    define the following terms:
                (1) The terms--
                        (A) ``blockchain'', ``blockchain application'',
                    ``blockchain system'', ``blockchain protocol'',
                    ``decentralized governance system'', ``digital
                    commodity affiliated person'', ``digital commodity
                    issuer'', ``digital commodity related person'', ``end
                    user distribution'', and ``mature blockchain system'',
                    as defined under section 2(a) of the Securities Act of
                    1933;
                        (B) ``unilateral authority'', as such term is used
                    in section 42 of the Securities Exchange Act of 1934
                    and section 1a of the Commodity Exchange Act; and
                        (C) ``programmatic functioning'', as such term is
                    used in sections 4C of the Securities Act of 1933,
                    section 42 of the Securities Exchange Act of 1934, and
                    section 1a of the Commodity Exchange Act.
                (2) The terms ``digital commodity'', ``decentralized
            finance messaging system'', and ``decentralized finance trading
            protocol'' as defined under section 1a of the Commodity
            Exchange Act.
        (b) Joint Rulemaking for Mixed Digital Asset Transactions.--The
    Securities and Exchange Commission and the Commodity Futures Trading
    Commission shall jointly issue rules applicable to mixed digital asset
    transactions under this Act and the amendments made by this Act,
    including by further defining such term.
        (c) Protection of Self-Custody.--
                (1) In general.--A United States individual shall retain
            the right to--
                        (A) maintain a hardware wallet or software wallet
                    for the purpose of facilitating the individual's own
                    lawful custody of digital assets; and
                        (B) engage in direct, peer-to-peer transactions in
                    digital assets with another individual or entity for
                    the individual's own lawful purposes using a hardware
                    wallet or software wallet, if--
                                (i) such other individual or entity is not
                            a financial institution (as defined in section
                            5312 of title 31, United States Code); and
                                (ii) the transactions do not involve any
                            property or interests in property that are
                            blocked pursuant to, or are otherwise
                            prohibited by, United States sanctions.
                (2) Application.--This subsection--
                        (A) applies solely to personal use by individuals;
                    and
                        (B) does not apply to individuals acting in a
                    custodial or fiduciary capacity for others.
                (3) Rule of construction.--Nothing in this subsection shall
            be construed to limit the authority of the Secretary of the
            Treasury, the Securities and Exchange Commission, the Commodity
            Futures Trading Commission, the Board of Governors of the
            Federal Reserve System, the Comptroller of the Currency, the
            Federal Deposit Insurance Corporation, or the National Credit
            Union Administration to carry out any enforcement action or
            special measure authorized under applicable law, including--
                        (A) the Bank Secrecy Act, section 9714 of the
                    Combating Russian Money Laundering Act (31 U.S.C. 5318A
                    note), and section 7213A of the Fentanyl Sanctions Act
                    (21 U.S.C. 2313a); or
                        (B) any other law relating to illicit finance,
                    money laundering, terrorism financing, or United States
                    sanctions.
        (d) Joint Rulemaking, Procedures, or Guidance for Delisting.--Not
    later than 180 days after the date of the enactment of this Act, the
    Commodity Futures Trading Commission and the Securities and Exchange
    Commission shall jointly issue rules, procedures, or guidance (as
    determined appropriate by the Commissions) regarding the process to
    delist an asset for trading under section 106 of this Act if the
    Commissions determine that the listing is inconsistent with the
    Commodity Exchange Act, the securities laws (including regulations
    under those laws), or this Act.
        (e) Joint Rules for Portfolio Margining Determinations.--
                (1) In general.--Not later than 360 days after the date of
            the enactment of this Act, the Commodity Futures Trading
            Commission and the Securities and Exchange Commission shall
            jointly issue rules describing the process for persons
            registered with either such Commission to seek a joint order or
            determination with respect to margin, customer protection,
            segregation, or other requirements as necessary to facilitate
            portfolio margining of securities (including related extensions
            of credit), security-based swaps, contracts for future
            delivery, options on a contract for future delivery, swaps, and
            digital commodities, or any subset thereof, in--
                        (A) a securities account carried by a registered
                    broker or dealer or a security-based swap account
                    carried by a registered security-based swap dealer;
                        (B) a futures or cleared swap account carried by a
                    registered futures commission merchant;
                        (C) a swap account carried by a swap dealer; or
                        (D) a digital commodity account carried by a
                    registered digital commodity broker or digital
                    commodity dealer that is also registered in such other
                    capacity as is necessary to also carry the other
                    customer or counterparty positions being held in the
                    account.
                (2) Process.--With respect to a joint order or
            determination described in paragraph (1), the rules required to
            be issued pursuant to paragraph (1) shall require--
                        (A) the joint order or determination to be issued
                    only if the order or determination is in the public
                    interest and provides for the appropriate protection of
                    customers;
                        (B) applicants to file a standard application, in a
                    form and manner determined by the Securities and
                    Exchange Commission and the Commodity Futures Trading
                    Commission, which shall include the information
                    necessary to make the joint order or determination;
                        (C) the Securities and Exchange Commission and the
                    Commodity Futures Trading Commission to make a final
                    determination not later than 270 days after the filing
                    of a completed application;
                        (D) the Securities and Exchange Commission and the
                    Commodity Futures Trading Commission to consider the
                    public interest of the joint order or determination
                    through the solicitation of public comments; and
                        (E) the Securities and Exchange Commission and the
                    Commodity Futures Trading Commission to consult with
                    other relevant foreign or domestic regulators,
                    including the Board of Governors of the Federal Reserve
                    System, the Federal Deposit Insurance Corporation, and
                    the Office of the Comptroller of the Currency, as
                    appropriate.

    SEC. 106. REGISTRATION FOR DIGITAL COMMODITY EXCHANGES, BROKERS, AND
                  DEALERS; PROVISIONAL STATUS.

        (a) Registration.--
                (1) In general.--Unless exempted from registration under
            section 5k of the Commodity Exchange Act, a person shall not
            act as a digital commodity broker, digital commodity dealer, or
            digital commodity exchange after the end of the 270-day period
            beginning on the date of the enactment of this Act, unless, as
            the case may be, the person is registered as a--
                        (A) digital commodity broker pursuant to section 4u
                    of the Commodity Exchange Act;
                        (B) digital commodity dealer pursuant to section 4u
                    of the Commodity Exchange Act; or
                        (C) digital commodity exchange pursuant to section
                    5i of the Commodity Exchange Act.
                (2) Expedited process.--Not less than 270 days after the
            date of the enactment of this Act, the Commodity Futures
            Trading Commission shall adopt, by rule, regulation, or order,
            a process for expedited registration of persons in provisional
            status pursuant to subsection (b).
        (b) Provisional Status.--
                (1) In general.--A person who is registered in accordance
            with subsection (a) of this section shall be in provisional
            status until--
                        (A) in the case of a digital commodity broker or
                    dealer, 270 days after the final effective date of the
                    rulemakings required under section 4u of the Commodity
                    Exchange Act; or
                        (B) in the case of a digital commodity exchange,
                    270 days after the final effective date of the
                    rulemakings required under section 5i of such Act.
                (2) Payment of fees.--A person in provisional status shall
            pay all fees and penalties required under section 410.
        (c) Operations Prior to Regulations.--
                (1) Requirements.--A person in provisional status shall
            apply and be subject to the statutory requirements of this Act
            and any rules or regulations promulgated under this Act, as
            applicable.
                (2) Listings.--
                        (A) In general.--Except as provided in subparagraph
                    (B), a person in provisional status may continue to
                    offer, solicit, trade, facilitate, execute, clear,
                    report, or otherwise deal in any digital asset offered
                    on or through the facilities of the person before the
                    date of registration under this section, until such
                    time as the joint rulemaking on definitions required
                    under section 105(a) is effective.
                        (B) Delisting.--Before the effective date of the
                    joint rulemaking on definitions under section 105(a),
                    person in provisional status shall cease offering,
                    soliciting, trading, facilitating, executing, clearing,
                    reporting, or otherwise dealing in any digital asset
                    required to be delisted pursuant to a joint delisting
                    process established under section 105(d).
                (3) Exemptive authority.--In order to promote responsible
            innovation and fair competition, or protect customers, the
            Commodity Futures Trading Commission may exempt any persons or
            class of persons registered pursuant to subsection (a) and in
            provisional status pursuant to subsection (b) from any
            requirements of this Act and any rules and regulations
            promulgated under this Act.
        (d) Customer Disclosure Before Registration.--
                (1) In general.--Beginning 30 days after the date of the
            enactment of this Act, any person acting as a digital commodity
            exchange, digital commodity broker, or digital commodity dealer
            shall disclose to the customers of the person so acting, in the
            disclosure documents, offering documents, and promotional
            material of the person so acting, in a prominent manner, that
            the person is not registered with or regulated by the Commodity
            Futures Trading Commission.
                (2) Expiration.--Paragraph (1) of this subsection shall not
            apply to any person who registers pursuant to subsection (a).

    SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
                  PROVISIONS.

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

    SEC. 108. ADMINISTRATIVE REQUIREMENTS.

        Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
    amended--
                (1) in paragraph (3)--
                        (A) in subparagraph (B), by striking ``or'' at the
                    end;
                        (B) in subparagraph (C), by striking the period and
                    inserting ``; or''; and
                        (C) by adding at the end the following:
                        ``(D) a contract of sale of a digital commodity.'';
                (2) in paragraph (4)--
                        (A) in subparagraph (A)--
                                (i) in clause (ii), by striking ``or'' at
                            the end;
                                (ii) in clause (iii), by striking the
                            period and inserting ``; or''; and
                                (iii) by adding at the end the following:
                                ``(iv) a contract of sale of a digital
                            commodity.'';
                        (B) in subparagraph (B)--
                                (i) in clause (ii), by striking ``or'' at
                            the end;
                                (ii) in clause (iii), by striking the
                            period and inserting ``; or''; and
                                (iii) by adding at the end the following:
                                ``(iv) a contract of sale of a digital
                            commodity.''; and
                        (C) in subparagraph (C)--
                                (i) in clause (ii), by striking ``or'' at
                            the end;
                                (ii) by striking ``(iii) a swap, provided
                            however,'' and inserting the following:
                                ``(iii) a swap; or
                                ``(iv) a contract of sale of a digital
                            commodity,
                    provided, however,''; and
                                (iii) by striking ``clauses (i), (ii), or
                            (iii)'' and insert ``any of clauses (i) through
                            (iv)''.

    SEC. 109. INTERNATIONAL COOPERATION.

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

    SEC. 110. APPLICATION OF THE BANK SECRECY ACT.

        (a) In General.--Section 5312(c)(1)(A) of title 31, United States
    Code, is amended--
                (1) by inserting ``digital commodity broker, digital
            commodity dealer,'' after ``futures commission merchant,''; and
                (2) by inserting before the period the following: ``and any
            digital commodity exchange registered, or required to register,
            under the Commodity Exchange Act which permits direct customer
            access''.
        (b) GAO Study.--
                (1) In general.--The Comptroller General of the United
            States, in consultation with the Secretary of the Treasury,
            shall conduct a study to--
                        (A) assess the risks posed by centralized
                    intermediaries that are primarily located in foreign
                    jurisdictions that provide services to U.S. persons
                    without regulatory requirements that are substantially
                    similar to the requirements of the Bank Secrecy Act;
                    and
                        (B) provide any regulatory or legislative
                    recommendations to address these risks under
                    subparagraph (A).
                (2) Report.--Not later than 1 year after the date of
            enactment of this Act, the Comptroller General shall issue a
            report to Congress containing all findings and determinations
            made in carrying out the study required under paragraph (1).

    SEC. 111. IMPLEMENTATION.

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

               TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES

    SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.

        (a) Securities Act of 1933.--Section 2(a) of the Securities Act of
    1933 (15 U.S.C. 77b(a)), as amended by section 101, is further
    amended--
                (1) in paragraph (1), by adding at the end the following:
            ``The term `investment contract' does not include an investment
            contract asset.''; and
                (2) by adding at the end the following:
                ``(36) The term `investment contract asset' means a digital
            commodity--
                        ``(A) that can be exclusively possessed and
                    transferred, person to person, without necessary
                    reliance on an intermediary, and is recorded on a
                    blockchain; and
                        ``(B) sold or otherwise transferred, or intended to
                    be sold or otherwise transferred, pursuant to an
                    investment contract.''.
        (b) Investment Advisers Act of 1940.--Section 202(a)(18) of the
    Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is amended by
    adding at the end the following: ``The term `investment contract' does
    not include an investment contract asset (as such term is defined under
    section 2(a) of the Securities Act of 1933).''.
        (c) Investment Company Act of 1940.--Section 2(a)(36) of the
    Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended by
    adding at the end the following: ``The term `investment contract' does
    not include an investment contract asset (as such term is defined under
    section 2(a) of the Securities Act of 1933).''.
        (d) Securities Exchange Act of 1934.--Section 3(a)(10) of the
    Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by
    adding at the end the following: ``The term `investment contract' does
    not include an investment contract asset (as such term is defined under
    section 2(a) of the Securities Act of 1933).''.
        (e) Securities Investor Protection Act of 1970.--Section 16(14) of
    the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
    amended by adding at the end the following: ``The term `investment
    contract' does not include an investment contract asset (as such term
    is defined under section 2(a) of the Securities Act of 1933).''.

    SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL COMMODITIES.

        (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
    is amended--
                (1) in section 4(a), by adding at the end the following:
                ``(8) the offer or sale of an investment contract involving
            units of a digital commodity by its digital commodity issuer
            (including all entities controlled by or under common control
            with the issuer), if--
                        ``(A) the blockchain system to which the digital
                    commodity relates, together with the digital commodity,
                    is certified as a mature blockchain system under
                    section 42 of the Securities Exchange Act of 1934 or
                    the issuer intends for the blockchain system to which
                    the digital commodity relates to be a mature blockchain
                    system by the later of--
                                ``(i) the date that is four years after the
                            first sale of the investment contract involving
                            such digital commodity; or
                                ``(ii) the date that is four years after
                            the effective date of this paragraph;
                        ``(B) the sum of all cash and other consideration
                    to be received by the digital commodity issuer in
                    reliance on the exemption provided under this
                    paragraph, during the 12-month period preceding the
                    date of such offering, including the amount received in
                    such offering, is not more than $75,000,000 (as such
                    amount is annually adjusted by the Commission to
                    reflect the change in the Consumer Price Index for All
                    Urban Consumers published by the Bureau of Labor
                    Statistics of the Department of Labor);
                        ``(C) after the completion of the transaction, a
                    purchaser does not own more than 10 percent of the
                    total amount of the outstanding units of the digital
                    commodity;
                        ``(D) the transaction does not involve the offer or
                    sale of an investment contract involving units of a
                    digital commodity by its digital commodity issuer
                    that--
                                ``(i) is not organized under the laws of a
                            State, a territory of the United States, or the
                            District of Columbia;
                                ``(ii) is a development stage company that
                            either--
                                        ``(I) has no specific business plan
                                    or purpose; or
                                        ``(II) has indicated that the
                                    business plan of the company is to
                                    merge with or acquire an unidentified
                                    company;
                                ``(iii) is an investment company, as
                            defined in section 3 of the Investment Company
                            Act of 1940 (15 U.S.C. 80a-3), or is excluded
                            from the definition of investment company by
                            section 3(b) or section 3(c) of that Act (15
                            U.S.C. 80a-3(b) or 80a-3(c));
                                ``(iv) is issuing fractional undivided
                            interests in oil or gas rights, or a similar
                            interest in other mineral rights;
                                ``(v) is, or has been, subject to any order
                            of the Commission entered pursuant to section
                            12(j) of the Securities Exchange Act of 1934
                            during the 5-year period before the filing of
                            the offering statement; or
                                ``(vi) is disqualified pursuant to section
                            230.262 of title 17, Code of Federal
                            Regulations; and
                        ``(E) the issuer meets the requirements of section
                    4B(b).''; and
                (2) by inserting after section 4A the following:

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

        ``(a) Commission Jurisdiction.--For the purposes of this section:
                ``(1) The Commission shall have jurisdiction and
            enforcement authority with respect to disclosures described in
            this section.
                ``(2) Section 17 shall apply to a statement made in an
            offering statement, disclosure, or report filed under this
            section to the same extent as such section 17 applies to a
            statement made in any other offering statement, disclosure, or
            report filed under this Act.
        ``(b) Requirements for Digital Commodity Issuers.--
                ``(1) Terms and conditions.--A digital commodity issuer
            offering or selling an investment contract involving units of a
            digital commodity in reliance on section 4(a)(8) shall file
            with the Commission an offering statement and any related
            documents, in such form and with such content as prescribed by
            the Commission, including financial information, a description
            of the issuer and the operations of the issuer, the financial
            condition of the issuer, a description of the plan of
            distribution of any unit of a digital commodity that is to be
            offered as well as the intended use of the offering proceeds,
            and a description of the development plan for the blockchain
            system, and the related digital commodity, to become a mature
            blockchain system, if such blockchain system is not already
            certified as a mature blockchain system pursuant to section 42
            of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
                ``(2) Information required for purchasers.--A digital
            commodity issuer that has filed a statement under paragraph (1)
            to offer and sell an investment contract involving a unit of a
            digital commodity in reliance on section 4(a)(8) shall include
            in such statement the following information:
                        ``(A) Maturity status.--Whether the blockchain
                    system to which the digital commodity relates has been
                    certified as a mature blockchain system pursuant to
                    section 42 of the Securities Exchange Act of 1934 (15
                    U.S.C. 78a et seq.) and, where such blockchain system
                    is not so certified, a statement of the digital
                    commodity issuer's intent for the blockchain system to
                    which the digital commodity relates to be a mature
                    blockchain system within the time period described in
                    section 4(a)(8)(A).
                        ``(B) Source code.--The source code, or a publicly
                    accessible webpage displaying such source code, for any
                    blockchain system to which the digital commodity
                    relates, and whether the source code was sourced from
                    an external third party, whether there are any existing
                    external dependencies, and whether the code underwent a
                    third-party security audit.
                        ``(C) Transaction history.--A description of the
                    steps necessary to independently access, search, and
                    verify the transaction history of any blockchain system
                    to which the digital commodity relates, to the extent
                    any such independent access, search, and verification
                    activities are technically feasible with respect to
                    such blockchain system.
                        ``(D) Digital commodity economics.--A description
                    of the purpose of any blockchain system to which the
                    digital commodity relates and the operation of any such
                    blockchain system, including--
                                ``(i) information explaining the launch and
                            supply process, including the number of units
                            of the digital commodity to be issued in an
                            initial allocation, the total number of units
                            of the digital commodity to be created, the
                            release schedule for the units of the digital
                            commodity, and the total number of units of the
                            digital commodity outstanding;
                                ``(ii) information explaining the technical
                            requirements for holding, accessing, and
                            transferring the digital commodity;
                                ``(iii) information on any applicable
                            consensus mechanism or process for validating
                            transactions, method of generating or mining
                            digital commodities, and any process for
                            burning or destroying units of the digital
                            commodity on the blockchain system;
                                ``(iv) an explanation of any mechanism for
                            driving value to the digital commodity of such
                            blockchain system; and
                                ``(v) an explanation of governance
                            mechanisms for implementing changes to the
                            blockchain system or forming consensus among
                            holders of units of such digital commodity.
                        ``(E) Plan of development.--The current state and
                    timeline for the development of any blockchain system
                    to which the digital commodity relates, detailing how
                    and when the blockchain system is intended to be a
                    mature blockchain system, if the blockchain system is
                    not yet certified as a mature blockchain system, and
                    the various roles that exist or are intended to exist
                    in connection with the blockchain system, such as
                    users, service providers, developers, transaction
                    validators, and governance participants, including a
                    discussion of any mechanisms by which control or
                    authority are exerted with respect to the blockchain
                    system or its related digital commodity, and any
                    critical operational dependencies of the blockchain
                    system or its related digital commodity.
                        ``(F) Ownership disclosures.--
                                ``(i) In general.--A list of all persons
                            who are digital commodity related persons or
                            digital commodity affiliated persons who have
                            been issued a unit of the digital commodity by
                            the digital commodity issuer or have a right to
                            a unit of the digital commodity from the
                            digital commodity issuer.
                                ``(ii) Confidentiality.--The Commission
                            shall keep each list described under clause (i)
                            confidential, consistent with what is necessary
                            or appropriate in the public interest or for
                            the protection of investors.
                        ``(G) Risk factor disclosures.--A description of
                    the material risks surrounding ownership of a unit of a
                    digital commodity.
                ``(3) Ongoing disclosure requirements for maturing
            blockchain systems.--Subject to paragraph (5), the issuer of a
            digital commodity related to a blockchain system that is not
            yet certified as a mature blockchain system that has filed a
            statement under paragraph (1) to offer and sell an investment
            contract involving a unit of a digital commodity in reliance on
            section 4(a)(8) shall file the following with the Commission:
                        ``(A) Semiannual reports.--Every 6 months, a report
                    containing--
                                ``(i) an updated description of the current
                            state and timeline for the development of the
                            blockchain system to which the digital
                            commodity relates, showing how and when the
                            blockchain is intended to be a mature
                            blockchain system;
                                ``(ii) a description of the efforts of the
                            issuer and digital commodity related persons in
                            developing the blockchain system to which the
                            digital commodity relates; and
                                ``(iii) the amount of money raised by the
                            digital commodity issuer in reliance on section
                            4(a)(8), how much of that money has been spent,
                            and the general categories of activities for
                            which that money has been spent and amounts
                            spent per category.
                        ``(B) Current reports.--A current report reflecting
                    any material changes relevant to the information
                    previously reported to the Commission by the digital
                    commodity issuer, which shall be filed as soon as
                    practicable after the material change occurred, in
                    accordance with such rules as the Commission may
                    prescribe as necessary or appropriate in the public
                    interest or for the protection of investors.
                ``(4) Rulemaking.--Not later than 360 days after the date
            of the enactment of this section, the Commission shall
            prescribe rules on requirements applicable to issuers of
            digital commodities in reliance on section 4(a)(8).
                ``(5) Termination of certain reporting requirements; post-
            maturity reporting requirements.--
                        ``(A) In general.--The ongoing reporting
                    requirements under paragraph (3) shall not apply to a
                    digital commodity issuer 180 days after the end of the
                    covered fiscal year, if the information with respect to
                    the digital commodity and the blockchain system to
                    which it relates described in subparagraphs (A) through
                    (C) of paragraph (2) is made publicly available and the
                    disclosure requirements under subparagraph (C) of this
                    paragraph are satisfied.
                        ``(B) Covered fiscal year defined.--In this
                    paragraph, the term `covered fiscal year' means, with
                    respect to a digital commodity, the first fiscal year
                    of a digital commodity issuer in which the blockchain
                    system to which such digital commodity relates is
                    certified as a mature blockchain system under section
                    42 of the Securities Exchange Act of 1934.
                        ``(C) Post-maturity reporting requirements.--After
                    the blockchain system to which a digital commodity
                    relates is certified as a mature blockchain system
                    under section 42 of the Securities Exchange Act of
                    1934, any digital commodity issuer that has filed a
                    statement under paragraph (1) to offer and sell an
                    investment contract involving a unit of a digital
                    commodity in reliance on section 4(a)(8) and is engaged
                    in material ongoing efforts related to the mature
                    blockchain system shall disclose, in a manner
                    reasonably calculated to inform the public, and at such
                    frequency as the Commission may prescribe, by rule, a
                    description of such efforts, including--
                                ``(i) any participation in a decentralized
                            governance system of such blockchain system;
                                ``(ii) any participation in alterations or
                            proposed alterations to the functionality or
                            operation of such blockchain system;
                                ``(iii) the use or planned use of any funds
                            raised in reliance on section 4(a)(8) or any
                            rulemaking pursuant to section 202(d) of the
                            CLARITY Act of 2025 in such efforts;
                                ``(iv) the amount of units of the digital
                            commodity, or rights thereto, owned and
                            controlled by such issuer and any use, sale,
                            trading, or other disposition thereof; and
                                ``(v) any affiliations of such issuer
                            material to the efforts of such issuer.
                        ``(D) Rule of construction.--Nothing in
                    subparagraph (C) may be construed to make any digital
                    commodity described in such subparagraph a security.
        ``(c) Requirements for Intermediaries.--A person acting as an
    intermediary in connection with the offer or sale of an investment
    contract involving units of a digital commodity in reliance on section
    4(a)(8) shall--
                ``(1) register with the Commission as a broker or dealer;
            and
                ``(2) be a member of a national securities association
            registered under section 15A of the Securities Exchange Act of
            1934 (15 U.S.C. 78o-3).
        ``(d) Disqualification Provisions.--The Commission shall issue
    rules to apply the disqualification provisions under section 230.262 of
    title 17, Code of Federal Regulations, to the exemption provided under
    section 4(a)(8).
        ``(e) Failure To Mature.--
                ``(1) In general.--Not later than 270 days after the date
            of the enactment of this section, the Commission shall issue
            rules applying such additional obligations and disclosures for
            the digital commodity issuers, digital commodity related
            persons, and digital commodity affiliated persons of a
            blockchain system described under subsection (b)(1) that does
            not become a mature blockchain system within the time period
            described in section 4(a)(8)(A) as are necessary or appropriate
            in the public interest or for the protection of investors. Such
            obligations and disclosures shall include the following:
                        ``(A) Disclosures.--Disclosures regarding the
                    following:
                                ``(i) Failure to mature.--The material
                            reasons that the blockchain system has not
                            become a mature blockchain system within the
                            time period described in section 4(a)(8)(A).
                                ``(ii) Development plans.--The future plans
                            of development of the blockchain system,
                            including information required under subsection
                            (b)(3).
                                ``(iii) Risk factor disclosures.--The
                            material risks surrounding ownership of a unit
                            of a digital commodity that relates to a
                            blockchain system described under subsection
                            (b)(1) that has not become a mature blockchain
                            system within the time period described in
                            section 4(a)(8)(A).
                        ``(B) Obligations.--Transaction reporting and
                    beneficial ownership disclosure obligations applicable
                    to digital commodity related persons and digital
                    commodity affiliated persons of such blockchain system.
                ``(2) Qualification required.--The Commission may not
            permit any additional raising of capital by the issuer of a
            digital commodity related to a blockchain system described
            under subsection (a)(1) that has not become a mature blockchain
            system within the time period described in section 4(a)(8)(A)
            unless the Commission has qualified any offering statement
            related to such additional raising of capital.''.
        (b) Additional Exemptions.--
                (1) Certain registration requirements.--Section 12(g)(6) of
            the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is
            amended by striking ``under section 4(6)'' and inserting
            ``under section 4(a)(6) or 4(a)(8)''.
                (2) Exemption from state regulation.--Section 18(b)(4) of
            the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
                        (A) in section (B), by striking ``section 4(4)''
                    and inserting ``section 4(a)(4)'';
                        (B) in section (C), by striking ``section 4(6)''
                    and inserting ``section 4(a)(6)'';
                        (C) in subparagraph (F)--
                                (i) by striking ``section 4(2)'' each place
                            such term appears and inserting ``section
                            4(a)(2)''; and
                                (ii) by striking ``or'' at the end;
                        (D) in subparagraph (G), by striking the period and
                    inserting ``; or''; and
                        (E) by adding at the end the following:
                        ``(H) section 4(a)(8).''.
        (c) Prior Issuers.--
                (1) Reporting exception.--With respect to a digital
            commodity, the digital commodity issuer shall not be required
            to file the reports otherwise required under section 4B(b)(3)
            of the Securities Act of 1933 (or, with respect to a digital
            commodity not issued in reliance on section 4(a)(8) of the
            Securities Act of 1933, a comparable set of reports specified
            by the Securities and Exchange Commission), if the digital
            commodity issuer--
                        (A) last offered or sold an investment contract
                    involving a unit of the digital commodity prior to
                    January 1, 2020; or
                        (B) both--
                                (i) last offered or sold an investment
                            contract involving a unit of the digital
                            commodity between January 1, 2020, and June 1,
                            2025; and
                                (ii) is no longer engaged in material
                            ongoing efforts related to the blockchain
                            system to which the digital commodity relates.
                (2) Reporting application date for certain prior issuers.--
            With respect to a digital commodity, if the digital commodity
            issuer is engaged in material ongoing efforts related to the
            blockchain system to which the digital commodity relates and
            last offered and sold an investment contract involving a unit
            of the digital commodity between January 1, 2020, and June 1,
            2025, the digital commodity issuer shall file with the
            Commission a comparable set of reports to the reports described
            under, as applicable, section 4B(b)(3) or 4B(b)(5)(C) of the
            Securities Act of 1933, where required by the Commission, not
            later than one year after the effective date of this section.
        (d) Use of Other Exemptions.--
                (1) Rule of construction.--Nothing in this section or the
            amendments made by this section may be construed as prohibiting
            the offer or sale of an investment contract involving units of
            a digital commodity in reliance on an exemption provided under
            section 3, 4(a), or 19 of the Securities Act of 1933 other than
            that provided under section 4(a)(8) of the Securities Act of
            1933.
                (2) Rulemaking.--The Securities and Exchange Commission may
            issue rules--
                        (A) to permit the issuer of a digital commodity
                    related to a blockchain system described under section
                    4B(b)(1) of the Securities Act of 1933 that has not
                    become a mature blockchain system within the time
                    period described in section 4(a)(8)(A) of such Act to
                    raise capital pursuant to an exempt offering, if the
                    Commission qualifies any offering statement related to
                    such raising of capital; and
                        (B) for the offer and sale of investment contracts
                    involving units of a digital commodity by issuers that
                    are not organized under the laws of a State, a
                    territory of the United States, or the District of
                    Columbia.

    SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL COMMODITIES
                  THAT ORIGINALLY INVOLVED INVESTMENT CONTRACTS.

        (a) Secondary Market Treatment.--Notwithstanding any other
    provision of law, the offer or sale of a digital commodity that
    originally involved an investment contract by a person other than the
    issuer of such digital commodity, or an agent or underwriter thereof,
    shall be deemed not to be an offer or sale of the investment contract
    originally involving the digital commodity between the issuer of the
    investment contract involving the digital commodity, or an agent or
    underwriter thereof, and the purchaser of such digital commodity
    under--
                (1) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
                (2) the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
            seq.);
                (3) the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
            seq.);
                (4) the Securities Exchange Act of 1934 (15 U.S.C. 78a et
            seq.);
                (5) the Securities Investor Protection Act of 1970 (15
            U.S.C. 78aaa et seq.); and
                (6) any applicable provisions of State law.
        (b) End User Distributions Not an Offer or Sale of a Security.--An
    end user distribution does not involve the offer or sale of a security.
        (c) Agent Defined.--In this section and with respect to a digital
    commodity issuer, the term ``agent'' means any person directly or
    indirectly controlled by the issuer or under direct or indirect common
    control with the issuer.

    SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
                  DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
                  AFFILIATED PERSONS.

        The Securities Act of 1933 (15 U.S.C. 77a et seq.), as amended by
    section 202, is further amended by inserting after section 4B the
    following:

    ``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
                  DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
                  AFFILIATED PERSONS.

        ``(a) In General.--It shall be a violation of this Act for a
    digital commodity affiliated person or a digital commodity related
    person to offer or sell a digital commodity acquired directly from its
    issuer, or an agent or underwriter thereof, pursuant to an investment
    contract in reliance on section 4(a)(8) or another exemption under this
    Act, other than as provided in this section.
        ``(b) Commission Jurisdiction.--
                ``(1) Where a digital commodity affiliated person or a
            digital commodity related person offers or sells a digital
            commodity acquired directly from its issuer, or an agent or
            underwriter thereof, pursuant to an investment contract in
            reliance on section 4(a)(8), or another exemption under this
            Act, other than as provided in this section, such digital
            commodity affiliated person or digital commodity related person
            shall be considered an issuer of such investment contract.
                ``(2) For the purposes of this section, the Commission
            shall have jurisdiction and enforcement authority with respect
            to an offer or sale of a digital commodity described in
            subsection (a).
        ``(c) Restrictions on Digital Commodity Related Persons and Digital
    Commodity Affiliated Persons.--
                ``(1) Prior to being a mature blockchain system.--Prior to
            the blockchain system to which a digital commodity relates
            being certified as a mature blockchain system under section 42
            of the Securities Exchange Act of 1934, units of the digital
            commodity acquired by a digital commodity related person or
            digital commodity affiliated person directly from its issuer,
            or an agent or underwriter thereof, pursuant to an investment
            contract in reliance on section 4(a)(8), or another exemption
            under this Act, may be offered or sold by such digital
            commodity related person or digital commodity affiliated person
            if--
                        ``(A) reports with respect to such digital
                    commodity, where required under section 4B(b)(3) (or,
                    with respect to a digital commodity not issued in
                    reliance on section 4(a)(8), a comparable set of
                    reports where required by the Commission) have been
                    filed with the Commission;
                        ``(B) the digital commodity related person or
                    digital commodity affiliated person has held the units
                    for not less than 12 months from the date the units
                    were delivered; and
                        ``(C) the aggregate amount of the units of the
                    digital commodity offered or sold by the digital
                    commodity related person or digital commodity
                    affiliated person is--
                                ``(i) in any 12-month period, not greater
                            than 15 percent of the total units of the
                            digital commodity acquired directly from its
                            issuer by the digital commodity related person
                            or digital commodity affiliated person; and
                                ``(ii) not greater than 50 percent of the
                            total units of the digital commodity acquired
                            directly from its issuer by the digital
                            commodity related person or digital commodity
                            affiliated person.
                ``(2) After becoming a mature blockchain system.--After the
            blockchain system to which a digital commodity relates is
            certified as a mature blockchain system under section 42 of the
            Securities Exchange Act of 1934, units of the digital commodity
            acquired by a digital commodity related person or digital
            commodity affiliated person directly from its issuer, or the
            issuer's agent or underwriter, pursuant to an investment
            contract in reliance on section 4(a)(8) or another exemption
            under this Act, may be--
                        ``(A) offered or sold by a digital commodity
                    related person; or
                        ``(B) offered or sold by a digital commodity
                    affiliated person if--
                                ``(i) information described in section
                            4B(b)(5)(C), where required (or, with respect
                            to a digital commodity not issued in reliance
                            on section 4(a)(8), a comparable set of
                            information, where required) is publicly
                            available;
                                ``(ii) the digital commodity affiliated
                            person has held the units for not less than the
                            earlier of--
                                        ``(I) 12 months from the date the
                                    units were delivered; or
                                        ``(II) 3 months following the date
                                    on which the blockchain system is
                                    certified as a mature blockchain system
                                    under section 42 of the Securities
                                    Exchange Act of 1934; and
                                ``(iii) the aggregate amount of the units
                            of the digital commodity offered or sold by the
                            digital commodity affiliated person in any 12-
                            month period does not exceed the greater of--
                                        ``(I) 8 percent of the total
                                    outstanding amount of the digital
                                    commodity; or
                                        ``(II) 25 percent of the total
                                    units of the digital commodity acquired
                                    directly from its issuer by the digital
                                    commodity affiliated person.
        ``(d) Use of a Digital Commodity in the Programmatic Functioning of
    the Blockchain System.--For purposes of this section, the use of a
    digital commodity in the programmatic functioning of the blockchain
    system to which it relates is not an offer or sale of a digital
    commodity.
        ``(e) Manipulative and Deceptive Devices; Reporting.--
                ``(1) In general.--It shall be unlawful for any digital
            commodity issuer, digital commodity related person, or digital
            commodity affiliated person, directly or indirectly, by the use
            of any means or instrumentality of interstate commerce or of
            the mails, to use or employ, in connection with the purchase or
            sale of any digital commodity, any manipulative or deceptive
            device or contrivance in contravention of such rules and
            regulations as the Commission may prescribe as necessary or
            appropriate in the public interest or for the protection of
            investors.
                ``(2) Affirmative defense.--Not later than 270 days after
            the date of the enactment of this section, the Commission shall
            issue rules to implement paragraph (1), including by providing
            any affirmative defenses to an enforcement action thereunder as
            the Commission may prescribe as necessary or appropriate in the
            public interest or for the protection of investors.
                ``(3) Reporting.--Not later than 270 days after the date of
            the enactment of this section, the Commission shall issue rules
            to prescribe such transaction reporting and beneficial
            ownership disclosure obligations applicable to digital
            commodity related persons and digital commodity affiliated
            persons, as necessary or appropriate in the public interest or
            for the protection of investors.
                ``(4) Differentiation between persons.--In issuing rules
            required under paragraphs (2) and (3), the Commission shall
            differentiate between digital commodity related persons and
            digital commodity affiliated persons as necessary or
            appropriate in the public interest or for the protection of
            investors.
        ``(f) Rules for Previously-Issued Digital Commodities.--
                ``(1) Units received prior to january 1, 2020.--If a unit
            of a digital commodity was received by a digital commodity
            related person or digital commodity affiliated person prior to
            January 1, 2020, the unit of the digital commodity may be
            offered or sold by the digital commodity related person or
            digital commodity affiliated person without condition.
                ``(2) Certain units related to a non-mature blockchain
            system.--If a unit of a digital commodity was received by a
            digital commodity related person or digital commodity
            affiliated person between January 1, 2020, and June 1, 2025,
            and the blockchain system to which the digital commodity
            relates is not certified as a mature blockchain system under
            section 42 of the Securities Exchange Act of 1934, the unit of
            the digital asset may be offered or sold by a digital commodity
            related person or digital commodity affiliated person if--
                        ``(A) reports with respect to such digital
                    commodity comparable to the reports described under
                    section 4B(b)(3), where required by the Commission,
                    have been filed with the Commission;
                        ``(B) the digital commodity related person or
                    digital commodity affiliated person meets any
                    requirements pursuant to subsection (e)(3); and
                        ``(C) the digital commodity related person or
                    digital commodity affiliated person has held the units
                    for not less than 12 months from the date the units
                    were delivered.
                ``(3) Certain units related to a mature blockchain
            system.--If a unit of a digital commodity was received by a
            digital commodity related person or digital commodity
            affiliated person between January 1, 2020, and June 1, 2025,
            and the blockchain system to which the digital commodity
            relates is certified as a mature blockchain system under
            section 42 of the Securities Exchange Act of 1934, it may be
            offered or sold by a digital commodity related person or
            digital commodity affiliated person if--
                        ``(A) information described in section 4B(b)(5)(C)
                    or comparable thereto, where required by the
                    Commission, is publicly available; and
                        ``(B) the digital commodity related person or
                    digital commodity affiliated person has held the units
                    for not less than 12 months from the date the units
                    were delivered.
        ``(g) Rulemaking on Further Usage of Digital Commodities.--Not
    later than 270 days after the date of enactment of this section, the
    Commission may issue rules to exempt, unconditionally or on stated
    terms or conditions, a digital commodity related person or a digital
    commodity affiliated person from the requirements of this section for
    the offer or sale of a digital commodity in order to foster the
    development of mature blockchain systems and fair and orderly
    markets.''.

    SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.

        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. MATURE BLOCKCHAIN SYSTEMS.

        ``(a) Certification of Blockchain Systems.--
                ``(1) Certification.--For purposes of sections 4(a)(8), 4B,
            and 4C of the Securities Act of 1933 any digital commodity
            issuer, digital commodity related person, digital commodity
            affiliated person, or decentralized governance system of the
            blockchain system may certify to the Securities and Exchange
            Commission that the blockchain system to which a digital
            commodity relates is a mature blockchain system.
                ``(2) Filing requirements.--A certification described under
            paragraph (1) shall be filed with the Commission, and include
            such information that is reasonably necessary to establish that
            the blockchain system is not controlled by any person or group
            of persons under common control, which may include information
            regarding--
                        ``(A) the operation of the blockchain system;
                        ``(B) the functionality of the related digital
                    commodity;
                        ``(C) how the market value of the digital commodity
                    is substantially derived from the programmatic
                    functioning of such blockchain system;
                        ``(D) any decentralized governance system which
                    relates to the blockchain system; and
                        ``(E) the current roles, if any, of the digital
                    commodity issuer, digital commodity affiliated persons,
                    and digital commodity related persons where such roles
                    are material to the development or operation of such
                    blockchain system or the decentralized governance
                    system of such blockchain system.
                ``(3) Rebuttable presumption.--The Commission may rebut a
            certification described under paragraph (1) with respect to a
            blockchain system if the Commission, within 60 days of
            receiving such certification, determines that the blockchain
            system is not a mature blockchain system.
                ``(4) Certification review.--
                        ``(A) In general.--Any blockchain system that
                    relates to a digital commodity for which a
                    certification has been made under paragraph (1) shall
                    be considered a mature blockchain system 60 days after
                    the date on which the Commission receives a
                    certification under paragraph (1), unless the
                    Commission notifies the person who made the
                    certification within such time that the Commission is
                    staying the certification due to--
                                ``(i) an inadequate explanation by the
                            person making the certification; or
                                ``(ii) any novel or complex issues which
                            require additional time to consider.
                        ``(B) Public notice.--The Commission shall make the
                    following available to the public and provide a copy to
                    the Commodity Futures Trading Commission:
                                ``(i) Each certification received under
                            paragraph (1).
                                ``(ii) Each stay of the Commission under
                            this subsection, and the reasons therefor.
                                ``(iii) Any response from a person making a
                            certification under paragraph (1) to a stay of
                            the certification by the Commission.
                        ``(C) Consolidation.--The Commission may
                    consolidate and treat as one submission multiple
                    certifications made under paragraph (1) for the same
                    blockchain system which relates to a digital commodity
                    which are received during the review period provided
                    under this paragraph.
                ``(5) Stay of certification.--
                        ``(A) In general.--A notification by the Commission
                    pursuant to paragraph (4)(A) shall stay the
                    certification once for up to an additional 120 days
                    from the date of the notification.
                        ``(B) Public comment period.--Before the end of the
                    60-day period described under paragraph (4)(A), the
                    Commission may begin a public comment period of at
                    least 30 days in conjunction with a stay under this
                    subsection.
                ``(6) Disposition of certification.--A certification made
            under paragraph (1) shall--
                        ``(A) become effective--
                                ``(i) upon the publication of a
                            notification from the Commission to the person
                            who made the certification that the Commission
                            does not object to the certification; or
                                ``(ii) at the expiration of the
                            certification review period; and
                        ``(B) not become effective upon the publication of
                    a notification from the Commission to the person who
                    made the certification that the Commission has rebutted
                    the certification.
                ``(7) Recertification.--With respect to a blockchain system
            for which a certification has been rebutted under this
            subsection, no person may make a certification under paragraph
            (1) with respect to such blockchain system during the 90-day
            period beginning on the date of such rebuttal.
                ``(8) Appeal of rebuttal.--
                        ``(A) In general.--If a certification is rebutted
                    under this section, the person making such
                    certification may appeal the decision to the United
                    States Court of Appeals for the District of Columbia,
                    not later than 60 days after the notice of rebuttal is
                    made.
                        ``(B) Review.--In an appeal under subparagraph (A),
                    the court shall have de novo review of the
                    determination to rebut the certification.
        ``(b) Maturity Criteria.--
                ``(1) Sense of congress.--It is the sense of the Congress
            that protecting investors, maintaining fair, orderly, and
            efficient markets, and facilitating capital formation
            necessitates establishing clear criteria for blockchain systems
            to be deemed mature, as well as enabling the Commission to
            develop, without prejudice to any such criteria codified in
            statute, alternative criteria by which blockchain systems may
            be considered not to be controlled by any person or group of
            persons under common control in order to accommodate changes in
            markets and technology.
                ``(2) In general.--The Commission may issue rules
            identifying conditions by which a blockchain system, together
            with its related digital commodity, shall be considered a
            mature blockchain system, consistent with the protection of
            investors, maintenance of fair, orderly, and efficient markets,
            and the facilitation of capital formation.
                ``(3) Rules of construction.--
                        ``(A) Nothing in this subsection may be construed
                    to permit the Commission to impose additional criteria
                    to the criteria in subsection (c) for certifying that a
                    blockchain system is a mature blockchain system
                    pursuant to subsection (c).
                        ``(B) Nothing in this subsection or subsection (c)
                    may be construed to limit the Commission's ability to
                    identify alternative conditions and criteria by which a
                    blockchain system may be considered a mature blockchain
                    system.
        ``(c) Deemed Mature.--
                ``(1) In general.--Notwithstanding subsection (b), for the
            purposes of subsection (a), a digital commodity issuer, digital
            commodity related person, digital commodity affiliated person,
            or decentralized governance system of the blockchain system may
            establish that a blockchain system, together with its related
            digital commodity, is not controlled by any person or group of
            persons under common control, if the blockchain system,
            together with its related digital asset, meets the requirements
            described in paragraph (2) or (3).
                ``(2) Criteria for any blockchain system.--The requirements
            described in this paragraph are the following:
                        ``(A) System value.--
                                ``(i) Market value.--The digital commodity
                            has a value that is substantially derived from
                            the adoption, use, and functioning of the
                            blockchain system.
                                ``(ii) Development of value mechanism
                            substantially completed.--Where the digital
                            commodity issuer has made public a development
                            plan describing how the digital commodity's
                            value is reasonably expected to be derived from
                            the programmatic functioning of the blockchain
                            system, the development of such mechanisms has
                            been substantially completed.
                        ``(B) Functional system.--The blockchain system
                    allows network participants to engage in the activities
                    the blockchain system is intended to provide,
                    including--
                                ``(i) using, transmitting, or storing
                            value, or otherwise executing transactions, on
                            the blockchain system;
                                ``(ii) deploying, executing, or accessing
                            software or services, or otherwise offering or
                            participating in services, deployed on or
                            integrated with the blockchain system;
                                ``(iii) participating in the consensus
                            mechanism, transaction validation process, or
                            decentralized governance system of the
                            blockchain system; or
                                ``(iv) operating any client, node,
                            validator, sequencer, or other form of
                            computational infrastructure with respect to
                            the blockchain system.
                        ``(C) Open and interoperable system.--The
                    blockchain system--
                                ``(i) is composed of source code that is
                            open source; and
                                ``(ii) does not restrict or prohibit based
                            on the exercise of unilateral authority any
                            person, other than a digital commodity issuer,
                            digital commodity related person, or a digital
                            commodity affiliated person from engaging in
                            the activities the blockchain system is
                            intended to provide, including the activities
                            described in subparagraph (B).
                        ``(D) Programmatic system.--The blockchain system
                    operates, executes, and enforces its operations and
                    transactions based solely on pre-established,
                    transparent rules encoded directly within the source
                    code of the blockchain system.
                        ``(E) System governance.--No person or group of
                    persons under common control--
                                ``(i) has the unilateral authority,
                            directly or indirectly, through any contract,
                            arrangement, understanding, relationship, or
                            otherwise, to control or materially alter the
                            functionality, operation, or rules of consensus
                            or agreement of the blockchain system or its
                            related digital commodity; or
                                ``(ii) has the unilateral authority to
                            direct the voting, in the aggregate, of 20
                            percent or more of the outstanding voting power
                            of such blockchain system by means of a related
                            digital commodity, nodes or validators, a
                            decentralized governance system, or otherwise,
                            in a blockchain system which can be altered by
                            a voting system.
                        ``(F) Impartial system.--No person or group of
                    persons under common control possesses a unique
                    permission or privilege to alter the functionality,
                    operation, or rules of consensus or agreement of the
                    blockchain system or its related digital commodity,
                    unless such alteration--
                                ``(i) addresses errors, regular
                            maintenance, or cybersecurity risks of the
                            blockchain system that affect the programmatic
                            functioning of the blockchain system; and
                                ``(ii) is adopted through the consensus or
                            agreement of a decentralized governance system.
                        ``(G) Distributed ownership.--No digital commodity
                    issuer, digital commodity related person, or digital
                    commodity affiliated person beneficially owns, in the
                    aggregate, 20 percent or more of the total amount of
                    units of the digital commodity.
                ``(3) Optional criteria for preexisting blockchain
            systems.--The requirements described in this paragraph are that
            the blockchain system--
                        ``(A) was created prior to the date of enactment of
                    this section;
                        ``(B) met the requirements of subparagraphs (A)
                    through (F) of paragraph (2) prior to January 1, 2020;
                    and
                        ``(C) at least 50 percent of the units of the
                    digital commodity related to the blockchain system are
                    held by persons other than the digital commodity
                    issuer, a digital commodity related person, or a
                    digital commodity affiliated person.
        ``(d) Decentralized Governance System.--
                ``(1) For the purposes of this section, a decentralized
            governance system is not a `person' or a `group of persons
            under common control'.
                ``(2) A blockchain system, together with its digital
            commodity, shall not be precluded from being considered a
            mature blockchain system solely based on a functional,
            administrative, clerical, or ministerial action of a
            decentralized governance system, including any such action
            taken by a person acting on behalf of and at the direction of
            the decentralized governance system, as determined by the
            Commission and consistent with the protection of investors,
            maintenance of fair, orderly, and efficient markets, and the
            facilitation of capital formation.
        ``(e) Rulemaking.--Not more than 270 days after the date of
    enactment of this section, the Commission shall issue rules to carry
    out this section.''.

    SEC. 206. EFFECTIVE DATE.

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

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

    SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED PAYMENT
                  STABLECOINS.

        (a) Securities Act of 1933.--Section 2(a)(1) of the Securities Act
    of 1933 (15 U.S.C. 77b(a)(1)) is amended by adding at the end the
    following: ``The term does not include a digital commodity or permitted
    payment stablecoin.''.
        (b) Securities Exchange Act of 1934.--Section 3(a)(10) of the
    Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding
    at the end the following: ``The term does not include a digital
    commodity or permitted payment stablecoin.''
        (c) Investment Advisers Act of 1940.--Section 202(a) of the
    Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--
                (1) in paragraph (18), by adding at the end the following:
            ``The term does not include a digital commodity or permitted
            payment stablecoin.'';
                (2) by redesignating the second paragraph (29) (relating to
            commodity pools) as paragraph (31); and
                (3) by adding at the end, the following:
                ``(32) Digital commodity-related terms.--The terms `digital
            commodity' and `permitted payment stablecoin' have the meaning
            given those terms, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)).''.
        (d) Investment Company Act of 1940.--Section 2(a) of the Investment
    Company Act of 1940 (15 U.S.C. 80a-2) is amended--
                (1) in paragraph (36), by adding at the end the following:
            ``The term does not include a digital commodity or permitted
            payment stablecoin.''; and
                (2) by adding at the end, the following:
                ``(55) Digital commodity-related terms.--The terms `digital
            commodity' and `permitted payment stablecoin' have the meaning
            given those terms, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)).''.
        (e) Securities Investor Protection Act of 1970.--Section 16(14) of
    the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
    amended by adding at the end the following: ``The term does not include
    a digital commodity or permitted payment stablecoin, as such terms are
    defined, respectively, under section 2(a) of the Securities Act of 1933
    (15 U.S.C. 77b(a))''.

    SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT STABLECOINS AND
                  CERTAIN DIGITAL COMMODITY TRANSACTIONS.

        (a) In General.--Section 10 of the Securities Exchange Act of 1934
    (15 U.S.C. 78j) is amended--
                (1) by moving subsection (c) so as to appear after
            subsection (b);
                (2) by designating the undesignated matter at the end of
            that section as subsection (d); and
                (3) by adding at the end the following:
        ``(e)(1) Rules promulgated under subsection (b) that prohibit
    fraud, manipulation, or insider trading (but not rules imposing or
    specifying reporting or recordkeeping requirements, procedures, or
    standards as prophylactic measures against fraud, manipulation, or
    insider trading), and judicial precedents decided under subsection (b)
    and rules promulgated thereunder that prohibit fraud, manipulation, or
    insider trading, shall apply with respect to permitted payment
    stablecoin and digital commodity transactions engaged in by a broker or
    dealer or through an alternative trading system or, as applicable, a
    national securities exchange to the same extent as they apply to
    securities transactions.
        ``(2) Judicial precedents decided under section 17(a) of the
    Securities Act of 1933 and sections 9, 15, 16, 20, and 21A of this
    title, and judicial precedents decided under applicable rules
    promulgated under such sections, shall apply to permitted payment
    stablecoins and digital commodities with respect to those circumstances
    in which the permitted payment stablecoins and digital commodities are
    brokered, traded, or custodied by a broker or dealer or through an
    alternative trading system or, as applicable, a national securities
    exchange to the same extent as they apply to securities.''.
        (b) Treatment of Permitted Payment Stablecoins.--Title I of the
    Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
    inserting after section 6 the following:

    ``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT STABLECOINS.

        ``(a) Authority To Broker, Trade, and Custody Permitted Payment
    Stablecoins.--Permitted payment stablecoins may be brokered, traded, or
    custodied by a broker, dealer or through an alternative trading system
    or national securities exchange.
        ``(b) Commission Jurisdiction.--The Commission shall only have
    jurisdiction over a transaction in a permitted payment stablecoin with
    respect to those circumstances in which a permitted payment stablecoin
    is brokered, traded, or custodied--
                ``(1) by a broker or dealer;
                ``(2) through a national securities exchange; or
                ``(3) through an alternative trading system.
        ``(c) Limitation.--Subsection (b) shall only apply to a transaction
    described in subsection (b) for the purposes of regulating the offer,
    execution, solicitation, or acceptance of a permitted payment
    stablecoin in those circumstances in which the permitted payment
    stablecoin is brokered, traded, or custodied--
                ``(1) by a broker or dealer;
                ``(2) through a national securities exchange; or
                ``(3) through an alternative trading system.
        ``(d) Rule of Construction.--Nothing in this section may be
    construed to prohibit permitted payment stablecoins from being
    custodied by any person or entity that is not a broker, dealer,
    alternative trading system, or national securities exchange.''.

    SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING SYSTEMS.

        (a) In General.--Section 5 of the Securities Exchange Act of 1934
    (15 U.S.C. 78e) is amended--
                (1) by striking ``It'' and inserting the following:
        ``(a) In General.--It'';
                (2) by adding at the end the following:
        ``(b) Digital Commodity Protections.--
                ``(1) In general.--The Commission may not preclude a
            trading platform from operating pursuant to a covered exemption
            on the basis that the assets traded or to be traded on such
            platform include--
                        ``(A) digital commodities or permitted payment
                    stablecoins; and
                        ``(B) securities.
                ``(2) Covered exemption.--In this subsection, the term
            `covered exemption' means an exemption--
                        ``(A) described in subsection (a)(2); or
                        ``(B) with respect to any other rule of the
                    Commission relating to the definition of `exchange'.''.
        (b) Securities Exchange Act of 1934.--Section 3(a)(2) of the
    Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by
    adding at the end the following: ``An alternative trading system
    primarily facilitating the trading of digital commodities, permitted
    payment stablecoins, or both, is not a `facility' of an exchange.''.
        (c) Rule of Construction.--Nothing in this section, the amendments
    made by this section, or section 304 may be construed to--
                (1) prohibit a national securities exchange from owning or
            operating any other type of alternative trading system; or
                (2) create a presumption that any other type of alternative
            trading system owned or operated by a national securities
            exchange is a facility of that exchange.

    SEC. 304. OPERATION OF ALTERNATIVE TRADING SYSTEMS.

        (a) Commission Authority.--The Securities and Exchange Commission
    shall have jurisdiction over digital commodity activities and
    transactions engaged in by--
                (1) a registered broker or registered dealer exempt from
            registration with the Commodity Futures Trading Commission
            pursuant to section 5k of the Commodity Exchange Act; and
                (2) a national securities exchange.
        (b) Rulemaking Authority.--The Securities and Exchange Commission
    shall have authority to issue rules governing any digital commodity
    activities and transactions engaged in by a broker, dealer, or national
    securities exchange registered with the Securities and Exchange
    Commission and exempt from registration with the Commodity Futures
    Trading Commission pursuant to section 5k of the Commodity Exchange
    Act, consistent with this section and what is necessary or appropriate
    in the public interest or for the protection of investors.
        (c) National Securities Exchanges.--Not later than 270 days after
    the date of the enactment of this Act, the Securities and Exchange
    Commission shall revise the covered regulations to permit a national
    securities exchange or affiliate thereof to operate an alternative
    trading system that permits the trading of digital commodities,
    permitted payment stablecoins, or both by registered brokers or
    registered dealers that are exempt from registration with the Commodity
    Futures Trading Commission pursuant section 5k of the Commodity
    Exchange Act, consistent with this section and what is necessary or
    appropriate in the public interest or for the protection of investors.
        (d) Registered Brokers and Registered Dealers.--Not later than 270
    days after the date of the enactment of this Act, the Securities and
    Exchange Commission shall revise the covered regulations to permit a
    registered broker or registered dealer that is exempt from registration
    with the Commodity Futures Trading Commission pursuant to section 5k of
    the Commodity Exchange Act to operate an alternative trading system
    that permits the trading of digital commodities, permitted payment
    stablecoins, or both, consistent with this section and what is
    necessary or appropriate in the public interest or for the protection
    of investors.
        (e) Permitted Trading.--
                (1) In general.--An alternative trading system operated
            pursuant to this section and the regulations promulgated
            hereunder shall be permitted to trade upon notice to the
            Securities and Exchange Commission in a manner prescribed by
            the Securities and Exchange Commission any digital commodity
            that has been listed by a digital commodity exchange in
            compliance with section 5i(c)(3) of the Commodity Exchange Act.
                (2) Commission authority.--Digital commodity transactions
            offered on an alternative trading system operating pursuant to
            this section shall be subject to the jurisdiction of the
            Securities and Exchange Commission. The Securities and Exchange
            Commission shall have authority to promulgate rules governing
            such digital commodity transactions of alternative trading
            systems, consistent with this section and what is necessary or
            appropriate in the public interest or for the protection of
            investors.
                (3) Suspension of trading.--The Securities and Exchange
            Commission may suspend the trading of a digital commodity by an
            alternative trading system operating pursuant to this section
            as is necessary or appropriate in the public interest and is
            consistent with the protection of investors.
        (f) Order Display and Execution Reporting.--Not later than 270 days
    after the date of the enactment of this Act, the Securities and
    Exchange Commission shall issue and revise rules, as necessary or
    appropriate in the public interest or for the protection of investors,
    regarding whether alternative trading systems operating pursuant to
    subsections (c) and (d) have an obligation to provide the prices and
    sizes of orders displayed to more than one person in such alternative
    trading system of digital commodities to self-regulatory organizations
    with members who trade in digital commodities or permitted payment
    stablecoins.
        (g) Principles of Trade.--Not later than 270 days after the date of
    the enactment of this Act, the Securities and Exchange Commission shall
    issue and revise rules, as necessary or appropriate in the public
    interest or for the protection of investors, to--
                (1) apply the rules and standards promulgated pursuant to
            paragraph (2) to the appropriate market participants,
            including--
                        (A) national securities exchanges operating an
                    alternative trading system described in subsection (c);
                    and
                        (B) registered brokers and registered dealers
                    operating or subscribing to an alternative trading
                    system described in subsection (d); and
                (2) apply, as appropriate to the market participants
            described in subparagraph (1) and customers thereof rules and
            standards to--
                        (A) prevent fraudulent and manipulative acts and
                    practices;
                        (B) foster cooperation and coordination with
                    persons engaged in regulating, settling, processing
                    information with respect to, and facilitating
                    transactions in digital commodities or permitted
                    payment stablecoins traded, as applicable, on or by any
                    alternative trading system operating pursuant to
                    subsection (c) or (d), or any registered broker or
                    registered dealer;
                        (C) remove impediments to and perfect the mechanism
                    of a free and open market in digital commodities or
                    permitted payment stablecoins traded, as applicable, on
                    or by any alternative trading system operating pursuant
                    to subsection (c) or (d), or any registered broker or
                    registered dealer;
                        (D) in general, protect investors and the public
                    interest; and
                        (E) prohibit any unfair discrimination between--
                                (i) customers;
                                (ii) any market participants described in
                            subparagraphs (A) and (B) of paragraph (1); or
                                (iii) issuers of digital commodities.
        (h) Implementing Organizations.--The Securities and Exchange
    Commission shall require any registered national securities association
    that has as a member a registered broker or registered dealer that
    operates an alternative trading system pursuant to subsection (d) or
    otherwise transacts in digital commodities or permitted payment
    stablecoins to adopt such rules as may be necessary to further
    compliance with this section, including subsection (g)(2), protect
    investors, maintain fair, orderly, and efficient markets, and
    facilitate capital formation.
        (i) Rule of Construction.--The enumeration of any category of rules
    or regulations in this section shall not be construed to limit the
    authority of the Securities and Exchange Commission to promulgate such
    rules as may be necessary or appropriate to implement this section and
    the purposes of this Act, including over--
                (1) system capacity, integrity, and security;
                (2) examinations, inspections, and investigations;
                (3) trade reporting; or
                (4) written procedures for the confidential treatment of
            trading information.
        (j) Memorandum of Understanding.--Consistent with section 5k of the
    Commodity Exchange Act and to carry out this Act, the Securities and
    Exchange Commission shall enter into a memorandum of understanding with
    the Commodity Futures Trading Commission to ensure--
                (1) requirements imposed on registered brokers or
            registered dealers operating an alternative trading system
            pursuant to subsection (c) or otherwise transacting in digital
            commodities or permitted payment stablecoins are consistent
            with the substantive requirements under section 4u of the
            Commodity Exchange Act;
                (2) requirements imposed on alternative trading systems
            operating pursuant to subsection (c) or (d) are not
            inconsistent with core principles of and are consistent with
            the other substantive requirements under section 5i of the
            Commodity Exchange Act; and
                (3) non-duplicative supervision and enforcement with
            respect to registrants of the Securities and Exchange
            Commission notice registered with the Commodity Futures Trading
            Commission.
        (k) Covered Regulations Defined.--In this section, the term
    ``covered regulations'' means sections 242.300, 242.301, 242.302,
    242.303, 242.304, and 242.1000 through 242.1007 of title 17, Code of
    Federal Regulations.
        (l) Rule of Construction.--Nothing in this section shall be
    construed to limit the anti-fraud, anti-manipulation, or false
    reporting enforcement authorities of the Commodity Futures Trading
    Commission with respect to a contract of sale of a commodity and
    persons effecting such contracts.

    SEC. 305. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.

        (a) In General.--For purposes of books and records requirements for
    brokers, dealers, and exchanges under the Securities and Exchange Act
    of 1934 (15 U.S.C. 78a et seq.), a person may consider records from a
    blockchain system.
        (b) Revision of Rules.--Not later than 180 days after the date of
    enactment of this Act, the Securities and Exchange Commission shall
    issue and revise such rules as may be necessary to implement this
    section.

    SEC. 306. EXEMPTIVE AUTHORITY.

        Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3) is
    amended by striking ``by rule or regulation'' and inserting ``by rule,
    regulation, or order''.

    SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES TRADING
                  COMMISSION.

        Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
    is amended by adding at the end the following:
        ``(p) Additional Registrations With the Commodity Futures Trading
    Commission.--A registered broker or registered dealer shall be
    permitted to maintain a registration with the Commodity Futures Trading
    Commission as a digital commodity broker or digital commodity dealer,
    to list or trade contracts of sale for digital commodities.''.

    SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES LAWS.

        Section 18(b) of the Securities Act of 1933 (15 U.S.C. 77r(b)) is
    amended by adding at the end the following:
                ``(5) Exemption in connection with digital commodities.--A
            digital commodity shall be treated as a covered security.''.

    SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.

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

    ``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.

        ``(a) In General.--Notwithstanding any other provision of this Act,
    a person shall not be subject to this Act and the regulations
    promulgated under this Act based on the person directly or indirectly
    engaging in any of the following activities, whether singly or in
    combination, in relation to the operation of a blockchain system or in
    relation to a decentralized finance trading protocol:
                ``(1) Compiling network transactions or relaying,
            searching, sequencing, validating, or acting in a similar
            capacity.
                ``(2) Providing computational work, operating a node or
            oracle service, or procuring, offering, or utilizing network
            bandwidth, or providing other similar incidental services.
                ``(3) Providing a user-interface that enables a user to
            read and access data about a blockchain system.
                ``(4) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a blockchain system or a
            decentralized finance trading protocol.
                ``(5) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a decentralized finance
            messaging system, or operating or participating in a liquidity
            pool, for the purpose of executing a contract of sale of a
            digital commodity.
                ``(6) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing software or systems that
            create or deploy hardware or software, including wallets or
            other systems, facilitating an individual user's own personal
            ability to keep, safeguard, or custody the user's digital
            assets or related private keys.
        ``(b) Exceptions.--Subsection (a) shall not apply to the anti-fraud
    and anti-manipulation authorities of the Commission.''.

    SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING INSTITUTIONS.

        (a) Treatment of Custody Activities.--The appropriate Federal
    banking agency, the National Credit Union Administration (in the case
    of a credit union), and the Securities and Exchange Commission may not
    require a depository institution, national bank, Federal credit union,
    State credit union, trust company, broker, or dealer, or any affiliate
    thereof (the ``entity'')--
                (1) to include assets held in custody that are not owned by
            the entity as a liability on the financial statement or balance
            sheet of the entity, including digital commodity or permitted
            payment stablecoin custody or safekeeping services;
                (2) to hold regulatory capital against assets, including
            reserves backing such assets, in custody or safekeeping, except
            as necessary to mitigate against operational risks inherent
            with the custody or safekeeping services, as determined by--
                        (A) the appropriate Federal banking agency;
                        (B) the National Credit Union Administration (in
                    the case of a credit union);
                        (C) a State bank supervisor;
                        (D) a State credit union supervisor (as defined in
                    section 6003 of the Anti-Money Laundering Act of 2020
                    (31 U.S.C. 5311 note)); or
                        (E) the Securities and Exchange Commission (in the
                    case of a broker or dealer); and
                (3) to recognize a liability for any obligations related to
            activities or services performed with respect to digital
            commodities that the entity does not own if that liability
            would exceed the expense recognized in the income statement as
            a result of the corresponding obligation.
        (b) Definitions.--In this section:
                (1) Banking terms.--The terms ``appropriate Federal banking
            agency'', ``depository institution'', ``national bank'', and
            ``State bank supervisor'' have the meaning given those terms,
            respectively, under section 3 of the Federal Deposit Insurance
            Act (12 U.S.C. 1813).
                (2) Credit union terms.--The terms ``Federal credit union''
            and ``State credit union'' have the meaning given those terms,
            respectively, under section 101 of the Federal Credit Union Act
            (12 U.S.C. 1752).

    SEC. 311. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN NATURE.

        Section 4(k)(4) of the Bank Holding Company Act of 1956 (12 U.S.C.
    1843(k)(4)) is amended--
                (1) in subparagraph (A), by striking ``or securities'' and
            inserting ``, securities, or digital commodities''; and
                (2) in subparagraph (E), by inserting ``or digital
            commodities'' before the period at the end.

    SEC. 312. EFFECTIVE DATE; ADMINISTRATION.

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

    SEC. 313. STUDIES ON FOREIGN ADVERSARY PARTICIPATION.

        (a) In General.--The Secretary of the Treasury, in consultation
    with the Commodity Futures Trading Commission and the Securities and
    Exchange Commission, shall, not later than 1 year after date of the
    enactment of this section, conduct a study and submit a report to the
    relevant congressional committees that--
                (1) identifies any digital commodity registrants which are
            owned by governments of foreign adversaries;
                (2) determines whether any governments of foreign
            adversaries are collecting personal data or trading data about
            United States persons in the digital commodity markets; and
                (3) evaluates whether any proprietary intellectual property
            of digital commodity registrants is being misused or stolen by
            any governments of foreign adversaries.
        (b) GAO Study and Report.--
                (1) In general.--The Comptroller General shall, not later
            than 1 year after date of the enactment of this section,
            conduct a study and submit a report to the relevant
            congressional committees that--
                        (A) identifies any digital commodity registrants
                    which are owned by governments of foreign adversaries;
                        (B) determines whether any governments of foreign
                    adversaries are collecting personal data or trading
                    data about United States persons in the digital
                    commodity markets; and
                        (C) evaluates whether any proprietary intellectual
                    property of digital commodity registrants is being
                    misused or stolen by any governments of foreign
                    adversaries.
        (c) Definitions.--In this section:
                (1) Digital commodity registrant.--The term ``digital
            commodity registrant'' means any person required to register as
            a digital commodity exchange, digital commodity broker, or
            digital commodity dealer under the Commodity Exchange Act.
                (2) Foreign adversaries.--The term ``foreign adversaries''
            means the foreign governments and foreign non-government
            persons determined by the Secretary of Commerce to be foreign
            adversaries under section 7.4(a) of title 15, Code of Federal
            Regulations.
                (3) Relevant congressional committees.--The term ``relevant
            congressional committees'' means--
                        (A) the Committees on Financial Services and
                    Agriculture of the House of Representatives; and
                        (B) the Committees on Banking, Housing, and Urban
                    Affairs and Agriculture, Nutrition, and Forestry of the
                    Senate.

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

    SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.

        (a) Savings Clause.--Section 2(a)(1) of the Commodity Exchange Act
    (7 U.S.C. 2(a)(1)) is amended by adding at the end the following:
                        ``(J) Except as expressly provided in this Act,
                    nothing in the CLARITY Act of 2025 shall affect or
                    apply to, or be interpreted to affect or apply to--
                                ``(i) any agreement, contract, or
                            transaction that is subject to this Act as--
                                        ``(I) a contract of sale of a
                                    commodity for future delivery or an
                                    option on such a contract;
                                        ``(II) a swap;
                                        ``(III) a security futures product;
                                        ``(IV) an option authorized under
                                    section 4c of this Act;
                                        ``(V) an agreement, contract, or
                                    transaction described in subparagraph
                                    (C)(i) or (D)(i) of subsection (c)(2)
                                    of this section; or
                                        ``(VI) a leverage transaction
                                    authorized under section 19; or
                                ``(ii) the activities of any person with
                            respect to any such an agreement, contract, or
                            transaction.''.
        (b) Limitation on Authority Over Permitted Payment Stablecoins.--
    Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C. 2(c)(1)) is
    amended--
                (1) in subparagraph (F), by striking ``or'' at the end;
                (2) in subparagraph (G), by striking the period and
            inserting ``; or''; and
                (3) by adding at the end the following:
                        ``(H) permitted payment stablecoins.''.
        (c) Commission Jurisdiction Over Financing Agreements.--Section
    2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended--
                (1) in subparagraph (D)--
                        (A) in clause (ii)(I), by inserting after
                    ``paragraph (1)'' the following: ``(other than an
                    agreement, contract, or transaction in a permitted
                    payment stablecoin)''; and
                        (B) by redesignating clause (iv) as clause (v) and
                    inserting after clause (iii) the following:
                                ``(iv) Agreements for margin financing.--
                            Notwithstanding clause (iii), a digital
                            commodity broker may, subject to the
                            requirements of section 4u(c)(2), offer to or
                            enter into an agreement for margin financing
                            with a customer for the purchase or sale of a
                            digital commodity, provided any purchase or
                            sale made pursuant to the agreement shall
                            result in the delivery of the digital commodity
                            into or from an account carried for the
                            customer, as determined by the Commission by
                            rule or regulation, based on commercial spot
                            market practices.''; and
                (2) by adding at the end the following:
                        ``(F) Commission jurisdiction with respect to
                    digital commodity transactions.--
                                ``(i) In general.--Subject to sections 6d
                            and 12(e), the Commission shall have exclusive
                            jurisdiction with respect to any account,
                            agreement, contract, or transaction involving a
                            contract of sale of a digital commodity in
                            interstate commerce, including in a digital
                            commodity cash or spot market, that is offered,
                            solicited, traded, facilitated, executed,
                            cleared, reported, or otherwise dealt in--
                                        ``(I) on or subject to the rules of
                                    a registered entity or an entity that
                                    is required to be registered as a
                                    registered entity; or
                                        ``(II) by any other entity
                                    registered, or required to be
                                    registered, with the Commission.
                                ``(ii) Limitations.--Clause (i) shall not
                            apply with respect to--
                                        ``(I) custodial or depository
                                    activities for a digital commodity of
                                    an entity regulated by an appropriate
                                    Federal banking agency or a State bank
                                    supervisor (within the meaning of
                                    section 3 of the Federal Deposit
                                    Insurance Act); or
                                        ``(II) an offer or sale of an
                                    investment contract involving a digital
                                    commodity or of a securities offer or
                                    sale involving a digital commodity.
                                ``(iii) Mixed digital asset transactions.--
                                        ``(I) In general.--Clause (i) shall
                                    not apply to a mixed digital asset
                                    transaction.
                                        ``(II) Reports on mixed digital
                                    asset transactions.--A digital
                                    commodity issuer, digital commodity
                                    related person, digital commodity
                                    affiliated person, or other person
                                    registered with the Securities and
                                    Exchange Commission that engages in a
                                    mixed digital asset transaction, shall,
                                    on request of the Commission, open to
                                    inspection and examination by the
                                    Commission all books and records
                                    relating to the mixed digital asset
                                    transaction, subject to the
                                    confidentiality and disclosure
                                    requirements of section 8.
                        ``(G) Agreements, contracts, and transactions in
                    stablecoins.--
                                ``(i) Treatment of permitted payment
                            stablecoins on commission-registered
                            entities.--Subject to clauses (ii) and (iii),
                            the Commission shall have jurisdiction over a
                            cash or spot agreement, contract, or
                            transaction in a permitted payment stablecoin
                            that is offered, offered to enter into, entered
                            into, executed, confirmed the execution of,
                            solicited, or accepted--
                                        ``(I) on or subject to the rules of
                                    a registered entity; or
                                        ``(II) by any other entity
                                    registered with the Commission.
                                ``(ii) Permitted payment stablecoin
                            transaction rules.--This Act shall apply to a
                            transaction described in clause (i) only for
                            the purpose of regulating the offer, execution,
                            solicitation, or acceptance of a cash or spot
                            permitted payment stablecoin transaction on a
                            registered entity or by any other entity
                            registered with the Commission, as if the
                            permitted payment stablecoin were a digital
                            commodity.
                                ``(iii) No authority over permitted payment
                            stablecoins.--Notwithstanding clauses (i) and
                            (ii), the Commission shall not make a rule or
                            regulation, impose a requirement or obligation
                            on a registered entity or other entity
                            registered with the Commission, or impose a
                            requirement or obligation on a permitted
                            payment stablecoin issuer, regarding the
                            operation of a permitted payment stablecoin
                            issuer or a permitted payment stablecoin.''.
        (d) Conforming Amendment.--Section 2(a)(1)(A) of such Act (7 U.S.C.
    2(a)(1)(A)) is amended in the 1st sentence by inserting ``subparagraphs
    (F) and (G) of subsection (c)(2) of this section or'' before ``section
    19''.

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

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

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

        Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
    amended--
                (1) in subsection (a), by striking ``5(d) and 5b(c)(2)''
            and inserting ``5(d), 5b(c)(2), and 5i(c)'';
                (2) in subsection (b)--
                        (A) in each of paragraphs (1) and (2), by inserting
                    ``digital commodity exchange,'' before ``derivatives'';
                    and
                        (B) in paragraph (3), by inserting ``digital
                    commodity exchange,'' before ``derivatives'' each place
                    it appears;
                (3) in subsection (c)--
                        (A) in paragraph (2), by inserting ``or
                    participants'' before ``(in 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 digital commodity
                    contracts.--In certifying any new rule or rule
                    amendment, or listing any new contract or instrument,
                    in connection with a contract of sale of a commodity
                    for future delivery, option, swap, or other agreement,
                    contract, or transaction, that is based on or
                    references a digital commodity, a registered entity
                    shall make or rely on a certification under subsection
                    (d) for the digital commodity.''; and
                (4) by inserting after subsection (c) the following:
        ``(d) Certifications for Digital Commodity Trading.--
                ``(1) In general.--Notwithstanding subsection (c), for the
            purposes of listing or offering a digital commodity for trading
            in a digital commodity cash or spot market, an eligible entity
            shall submit a written certification to the Commission that the
            digital commodity meets the requirements of this Act (including
            the regulations prescribed under this Act).
                ``(2) Contents of the certification.--
                        ``(A) In general.--In making a written
                    certification under this paragraph, the eligible entity
                    shall furnish to the Commission an analysis of how the
                    digital commodity meets the requirements of section
                    5i(c)(3).
                        ``(B) Reliance on prior disclosures.--In making a
                    certification under this subsection, an eligible entity
                    may rely on the records and disclosures of any relevant
                    person registered with the Securities and Exchange
                    Commission or other State or Federal agency.
                ``(3) Modifications.--
                        ``(A) In general.--An eligible entity shall modify
                    a certification made under paragraph (1) to--
                                ``(i) account for significant changes in
                            any information provided to the Commission
                            under paragraph (2)(A)(ii); or
                                ``(ii) permit or restrict trading in units
                            of a digital commodity held by a digital
                            commodity related person or a digital commodity
                            affiliated person.
                        ``(B) Recertification.--Modifications required by
                    this subsection shall be subject to the same
                    disapproval and review process as a new certification
                    under paragraphs (4) and (5).
                ``(4) Disapproval.--
                        ``(A) In general.--The written certification
                    described in paragraph (1) shall become effective
                    unless the Commission finds that the listing of the
                    digital commodity is inconsistent with the requirements
                    of this Act or the rules and regulations prescribed
                    under this Act.
                        ``(B) Analysis required.--The Commission shall
                    include, with any findings referred to in subparagraph
                    (A), a detailed analysis of the factors on which the
                    decision was based.
                        ``(C) Public findings.--The Commission shall make
                    public any disapproval decision, and any related
                    findings and analysis, made under this paragraph.
                ``(5) Review.--
                        ``(A) In general.--Unless the Commission makes a
                    disapproval decision under paragraph (4), the written
                    certification described in paragraph (1) shall become
                    effective, pursuant to the certification by the
                    eligible entity and notice of the certification to the
                    public (in a manner determined by the Commission) on
                    the date that is--
                                ``(i) 20 business days after the date the
                            Commission receives the certification (or such
                            shorter period as determined by the Commission
                            by rule or regulation), in the case of a
                            digital commodity that has not been certified
                            under this section or for which a certification
                            is being modified under paragraph (3); or
                                ``(ii) 1 business day after the date the
                            Commission receives the certification (or such
                            shorter period as determined by the Commission
                            by rule or regulation) for any digital
                            commodity that has been certified under this
                            section.
                        ``(B) Extensions.--The time for consideration under
                    subparagraph (A) may be extended through notice to the
                    eligible entity that there are novel or complex issues
                    that require additional time to analyze, that the
                    explanation by the submitting eligible entity is
                    inadequate, or of a potential inconsistency with this
                    Act--
                                ``(i) once, for 30 business days, through
                            written notice to the eligible entity by the
                            Commission; and
                                ``(ii) once, for an additional 30 business
                            days, through written notice to the eligible
                            entity from the Commission that includes a
                            description of any deficiencies with the
                            certification, including any--
                                        ``(I) novel or complex issues which
                                    require additional time to analyze;
                                        ``(II) missing information or
                                    inadequate explanations; or
                                        ``(III) potential inconsistencies
                                    with this Act.
                ``(6) Prior approval before registration.--
                        ``(A) In general.--A person applying for
                    registration with the Commission for the purposes of
                    listing or offering a digital commodity for trading in
                    a digital commodity cash or spot market may request
                    that the Commission grant prior approval for the person
                    to list or offer the digital commodity on being
                    registered with the Commission.
                        ``(B) Request for prior approval.--A person seeking
                    prior approval under subparagraph (A) shall furnish the
                    Commission with a written certification that the
                    digital commodity meets the requirements of this Act
                    (including the regulations prescribed under this Act)
                    and the information described in paragraph (2).
                        ``(C) Deadline.--The Commission shall take final
                    action on a request for prior approval not later than
                    90 business days after submission of the request,
                    unless the person submitting the request agrees to an
                    extension of the time limitation established under this
                    subparagraph.
                        ``(D) Disapproval.--
                                ``(i) In general.--The Commission shall
                            approve the listing of the digital commodity
                            unless the Commission finds that the listing is
                            inconsistent with this Act (including any
                            regulation prescribed under this Act).
                                ``(ii) Analysis required.--The Commission
                            shall include, with any findings made under
                            clause (i), a detailed analysis of the factors
                            on which the decision is based.
                                ``(iii) Public findings.--The Commission
                            shall make public any disapproval decision, and
                            any related findings and analysis, made under
                            this paragraph.
                ``(7) Eligible entity defined.--In this subsection, the
            term `eligible entity' means a registered entity or group of
            registered entities acting jointly.''.

    SEC. 404. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.

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

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

        ``(a) In General.--
                ``(1) Registration.--
                        ``(A) In general.--A trading facility that offers
                    or seeks to offer a cash or spot market in at least 1
                    digital commodity shall register with the Commission as
                    a digital commodity exchange.
                        ``(B) Application.--A person desiring to register
                    as a digital commodity exchange shall submit to the
                    Commission an application in such form and containing
                    such information as the Commission may require for the
                    purpose of making the determinations required for
                    approval.
                        ``(C) Exemptions.--A trading facility that offers
                    or seeks to offer a cash or spot market in at least 1
                    digital commodity shall not be required to register
                    under this section if the trading facility--
                                ``(i) permits no more than a de minimis
                            amount of trading activity, as the Commission
                            may determine by rule or regulation, in a
                            digital commodity; or
                                ``(ii) serves only customers in a single
                            State, territory, or possession of the United
                            States.
                ``(2) Additional registrations.--
                        ``(A) With the commission.--In order to foster the
                    development of fair and orderly markets, protect
                    customers, and promote responsible innovation, the
                    Commission--
                                ``(i) shall prescribe rules to exempt an
                            entity registered with the Commission under
                            more than 1 section of this Act from
                            duplicative, conflicting, or unduly burdensome
                            provisions of this Act and the rules under this
                            Act;
                                ``(ii) shall prescribe rules to address
                            conflicts of interests and activities of the
                            entity; and
                                ``(iii) may, after an analysis of the risks
                            and benefits, prescribe rules to provide for
                            portfolio margining.
                        ``(B) With a registered futures association.--
                                ``(i) In general.--A registered digital
                            commodity exchange shall become and remain a
                            member of a registered futures association and
                            comply with rules related to such activity, if
                            the registered digital commodity exchange
                            accepts customer funds required to be
                            segregated under subsection (d).
                                ``(ii) Rulemaking required.--The Commission
                            shall require any registered futures
                            association with a digital commodity exchange
                            as a member to provide such rules as may be
                            necessary to further compliance with subsection
                            (d), protect customers, and promote the public
                            interest.
                        ``(C) Registration required.--A person required to
                    be registered as a digital commodity exchange under
                    this section shall register with the Commission as such
                    regardless of whether the person is registered with
                    another State or Federal regulator.
        ``(b) Trading.--
                ``(1) Prohibition on certain trading practices.--
                        ``(A) Section 4b shall apply to any agreement,
                    contract, or transaction in a digital commodity as if
                    the agreement, contract, or transaction were a contract
                    of sale of a commodity for future delivery.
                        ``(B) Section 4c shall apply to any agreement,
                    contract, or transaction in a digital commodity as if
                    the agreement, contract, or transaction were a
                    transaction involving the purchase or sale of a
                    commodity for future delivery.
                        ``(C) Section 4b-1 shall apply to any agreement,
                    contract, or transaction in a digital commodity as if
                    the agreement, contract, or transaction were a contract
                    of sale of a commodity for future delivery.
                ``(2) Prohibition on acting as a counterparty.--
                        ``(A) In general.--A digital commodity exchange or
                    any affiliate of such an exchange shall not trade on or
                    subject to the rules of the digital commodity exchange
                    for its own account.
                        ``(B) Exceptions.--Subject to any conditions,
                    requirements, or limitations imposed by the Commission
                    pursuant to subparagraph (C), a digital commodity
                    exchange may engage in trading on the exchange so long
                    as the trading is not solely for the purpose of the
                    profit of the exchange, including the following:
                                ``(i) Customer direction.--A transaction
                            for, or entered into at the direction of, or
                            for the benefit of, an unaffiliated customer.
                                ``(ii) Risk management.--A transaction to
                            manage the credit, market, and liquidity risks
                            associated with the digital commodity business
                            of the exchange.
                                ``(iii) Operational needs.--A transaction
                            related to the operational needs of the
                            business of the digital commodity exchange or
                            its affiliate.
                                ``(iv) Functional use.--A transaction
                            related to the functional operation of a
                            blockchain system.
                        ``(C) Rulemaking.--The Commission may, by rule,
                    establish conditions, requirements, or other
                    limitations on the activities of a digital commodity
                    exchange and its affiliate permitted pursuant to
                    subparagraph (B) that are necessary for the protection
                    of customers, the promotion of innovation, or the
                    maintenance of fair, orderly, and efficient markets.
                        ``(D) Notice requirement.--In order for a digital
                    commodity exchange or any affiliate of a digital
                    commodity exchange to engage in trading on the
                    affiliated exchange pursuant to subsection (B), notice
                    must be given to the Commission that shall enumerate
                    how any proposed activity is consistent with the
                    exceptions in subsection (B) and the purposes of this
                    Act.
        ``(c) Core Principles for Digital Commodity Exchanges.--
                ``(1) Compliance with core principles.--
                        ``(A) In general.--To be registered, and maintain
                    registration, as a digital commodity exchange, a
                    digital commodity exchange shall comply with--
                                ``(i) the core principles described in this
                            subsection; and
                                ``(ii) any requirement that the Commission
                            may impose by rule or regulation pursuant to
                            section 8a(5).
                        ``(B) Reasonable discretion of a digital commodity
                    exchange.--Unless otherwise determined by the
                    Commission by rule or regulation, a digital commodity
                    exchange described in subparagraph (A) shall have
                    reasonable discretion in establishing the manner in
                    which the digital commodity exchange complies with the
                    core principles described in this subsection.
                ``(2) Compliance with rules.--A digital commodity exchange
            shall--
                        ``(A) establish and enforce compliance with any
                    rule of the digital commodity exchange, including--
                                ``(i) the terms and conditions of the
                            trades traded or processed on or through the
                            digital commodity exchange; and
                                ``(ii) any limitation on access to the
                            digital commodity exchange;
                        ``(B) establish and enforce trading, trade
                    processing, and participation rules that will deter
                    abuses and have the capacity to detect, investigate,
                    and enforce those rules, including means--
                                ``(i) to provide market participants with
                            impartial access to the market; and
                                ``(ii) to capture information that may be
                            used in establishing whether rule violations
                            have occurred; and
                        ``(C) establish rules governing the operation of
                    the exchange, including rules specifying trading
                    procedures to be used in entering and executing orders
                    traded or posted on the facility.
                ``(3) Listing standards for digital commodities.--
                        ``(A) In general.--A digital commodity exchange
                    shall establish policies and procedures to permit
                    trading in a digital commodity only if--
                                ``(i) reports with respect to the digital
                            commodity required under, as applicable,
                            section 4B(b)(3) or 4B(b)(5)(C) of the
                            Securities Act of 1933 (or, with respect to a
                            digital commodity not issued in reliance on
                            section 4(a)(8) of the Securities Act of 1933,
                            a comparable set of reports, where required by
                            the Securities and Exchange Commission) have
                            been filed with the Securities and Exchange
                            Commission;
                                ``(ii) such other similar information as
                            the Commission may, by rule or regulation
                            require, that is related to the ongoing
                            development plan of the blockchain system and
                            is able to be publicly ascertained, has been
                            provided to the public; or
                                ``(iii) the blockchain system to which the
                            digital commodity relates, together with the
                            digital commodity, is certified as a mature
                            blockchain system under section 42 of the
                            Securities Exchange Act of 1934.
                        ``(B) Public information requirements.--
                                ``(i) In general.--A digital commodity
                            exchange shall--
                                        ``(I) permit trading in a digital
                                    commodity only if the digital commodity
                                    exchange reasonably determines that the
                                    information required by clause (ii) is
                                    correct, current, and available to the
                                    public; and
                                        ``(II) establish policies and
                                    procedures to determine that the
                                    information provided pursuant to clause
                                    (ii) is correct, current, and available
                                    to the public.
                                ``(ii) Required information.--With respect
                            to a digital commodity and each blockchain
                            system to which the digital commodity relates
                            for which the digital commodity exchange will
                            make the digital commodity available to the
                            customers of the digital commodity exchange,
                            the following information:
                                        ``(I) Source code.--The source code
                                    for any blockchain system to which the
                                    digital commodity relates.
                                        ``(II) Transaction history.--A
                                    description of the steps necessary to
                                    independently access, search, and
                                    verify the transaction history of any
                                    blockchain system to which the digital
                                    commodity relates, to the extent any
                                    such independent access, search, and
                                    verification activities are technically
                                    feasible with respect to the blockchain
                                    system.
                                        ``(III) Digital commodity
                                    economics.--A narrative description of
                                    the purpose of any blockchain system to
                                    which the digital commodity relates and
                                    the operation of any such blockchain
                                    system, including--
                                                ``(aa) information
                                            explaining the launch and
                                            supply process, including the
                                            number of digital assets to be
                                            issued in an initial
                                            allocation, the total number of
                                            digital commodities to be
                                            created, the release schedule
                                            for the digital commodities,
                                            and the total number of digital
                                            commodities then outstanding;
                                                ``(bb) information
                                            detailing any applicable
                                            consensus mechanism or process
                                            for validating transactions,
                                            method of generating or mining
                                            digital commodities, and any
                                            process for burning or
                                            destroying digital commodities
                                            on the blockchain system;
                                                ``(cc) an explanation of
                                            governance mechanisms for
                                            implementing changes to the
                                            blockchain system or forming
                                            consensus among holders of the
                                            digital commodities; and
                                                ``(dd) sufficient
                                            information for a third party
                                            to create a tool for verifying
                                            the transaction history of the
                                            digital asset.
                                        ``(IV) Trading volume and
                                    volatility.--The trading volume and
                                    volatility of the digital commodity on
                                    the exchange.
                                        ``(V) Additional information.--Such
                                    additional information as the
                                    Commission may determine by rule to be
                                    necessary for a customer to understand
                                    the financial and operational risks of
                                    a digital commodity, and to be
                                    practically feasible to provide.
                                ``(iii) Format.--The Commission shall
                            prescribe rules and regulations for the
                            standardization and simplification of
                            disclosures under clause (ii), including
                            requiring that disclosures--
                                        ``(I) be conspicuous;
                                        ``(II) use plain language
                                    comprehensible to customers;
                                        ``(III) are not drafted in a way
                                    that presumes the customer already has
                                    a base knowledge, familiarity, or
                                    understanding of the basic terminology,
                                    operation, and function of blockchain
                                    systems; and
                                        ``(IV) succinctly explain the
                                    information that is required to be
                                    communicated to the customer.
                                ``(iv) Reliance on previous disclosures.--
                            In complying with this subparagraph, a digital
                            commodity exchange may rely on and make
                            available to the public relevant information
                            publicly disclosed to the Commission, the
                            Securities and Exchange Commission, or an
                            appropriate Federal banking agency.
                        ``(C) Digital commodities held by related and
                    digital commodity affiliated persons.--A digital
                    commodity exchange shall establish policies and
                    procedures designed to permit the trading of a unit of
                    a digital commodity acquired from the issuer and held
                    by a digital commodity affiliated person or a digital
                    commodity related person, only in accordance with the
                    requirements of section 4C of the Securities Act of
                    1933.
                ``(4) Treatment of customer assets.--A digital commodity
            exchange shall establish policies and procedures that are
            designed to protect and ensure the safety of customer money,
            assets, and property.
                ``(5) Monitoring of trading and trade processing.--
                        ``(A) In general.--A digital commodity exchange
                    shall provide a competitive, open, and efficient market
                    and mechanism for executing transactions that protects
                    the price discovery process of trading on the exchange.
                        ``(B) Protection of markets and market
                    participants.--A digital commodity exchange shall
                    establish and enforce rules--
                                ``(i) to protect markets and market
                            participants from abusive practices committed
                            by any party, including abusive practices
                            committed by a party acting as an agent for a
                            participant; and
                                ``(ii) to promote fair and equitable
                            trading on the exchange.
                        ``(C) Trading procedures.--A digital commodity
                    exchange shall--
                                ``(i) establish and enforce rules or terms
                            and conditions defining, or specifications
                            detailing--
                                        ``(I) trading procedures to be used
                                    in entering and executing orders traded
                                    on or through the facilities of the
                                    digital commodity exchange; and
                                        ``(II) procedures for trade
                                    processing of digital commodities on or
                                    through the facilities of the digital
                                    commodity exchange; and
                                ``(ii) monitor trading in digital
                            commodities to prevent manipulation, price
                            distortion, and disruptions, through
                            surveillance, compliance, and disciplinary
                            practices and procedures, including methods for
                            conducting real-time monitoring of trading and
                            comprehensive and accurate trade
                            reconstructions.
                ``(6) Ability to obtain information.--A digital commodity
            exchange shall--
                        ``(A) establish and enforce rules that will allow
                    the facility to obtain any necessary information to
                    perform any of the functions described in this section;
                        ``(B) provide the information to the Commission on
                    request; and
                        ``(C) have the capacity to carry out such
                    international information-sharing agreements as the
                    Commission may require.
                ``(7) Emergency authority.--A digital commodity exchange
            shall adopt rules to provide for the exercise of emergency
            authority, in consultation or cooperation with the Commission
            or a registered entity, as is necessary and appropriate,
            including the authority to facilitate the liquidation or
            transfer of open positions in any digital commodity or to
            suspend or curtail trading in a digital commodity.
                ``(8) Timely publication of trading information.--
                        ``(A) In general.--A digital commodity exchange
                    shall make public timely information on price, trading
                    volume, and other trading data on digital commodities
                    to the extent prescribed by the Commission.
                        ``(B) Capacity of digital commodity exchange.--A
                    digital commodity exchange shall have the capacity to
                    electronically capture and transmit trade information
                    with respect to transactions executed on the exchange.
                ``(9) Recordkeeping and reporting.--
                        ``(A) In general.--A digital commodity exchange
                    shall--
                                ``(i) maintain records relating to the
                            business of the 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 such records of digital
                            commodities which relate to a security open to
                            inspection and examination by the Securities
                            and Exchange Commission.
                        ``(B) Information-sharing.--Subject to section 8,
                    and on request, the Commission shall share information
                    collected under subparagraph (A) with--
                                ``(i) the Board;
                                ``(ii) the Securities and Exchange
                            Commission;
                                ``(iii) each appropriate Federal banking
                            agency;
                                ``(iv) each appropriate State bank
                            supervisor (within the meaning of section 3 of
                            the Federal Deposit Insurance Act);
                                ``(v) the Financial Stability Oversight
                            Council;
                                ``(vi) the Department of Justice; and
                                ``(vii) any other person that the
                            Commission determines to be appropriate,
                            including--
                                        ``(I) foreign financial supervisors
                                    (including foreign futures
                                    authorities);
                                        ``(II) foreign central banks; and
                                        ``(III) foreign ministries.
                        ``(C) Confidentiality agreement.--Before the
                    Commission may share information with any entity
                    described in subparagraph (B), the Commission shall
                    receive a written agreement from the entity stating
                    that the entity shall abide by the confidentiality
                    requirements described in section 8 relating to the
                    information on digital commodities that is provided.
                        ``(D) Providing information.--A digital commodity
                    exchange shall provide to the Commission (including any
                    designee of the Commission) information under
                    subparagraph (A) in such form and at such frequency as
                    is required by the Commission.
                ``(10) Antitrust considerations.--Unless necessary or
            appropriate to achieve the purposes of this Act, a digital
            commodity exchange shall not--
                        ``(A) adopt any rules or take any actions that
                    result in any unreasonable restraint of trade; or
                        ``(B) impose any material anticompetitive burden on
                    trading.
                ``(11) Conflicts of interest.--The digital commodity
            exchange shall establish and enforce rules--
                        ``(A) to minimize conflicts of interest in the
                    decision making processes of the contract market; and
                        ``(B) to establish a process for resolving
                    conflicts of interest referred to in subparagraph (A).
                ``(12) Financial resources.--
                        ``(A) In general.--A digital commodity exchange
                    shall have adequate financial, operational, and
                    managerial resources, as determined by the Commission,
                    to discharge each responsibility of the digital
                    commodity exchange.
                        ``(B) Minimum amount of financial resources.--A
                    digital commodity exchange shall possess financial
                    resources that, at a minimum, exceed the sum of--
                                ``(i) the total amount that would enable
                            the digital commodity exchange to cover the
                            operating costs of the digital commodity
                            exchange for a 1-year period, as calculated on
                            a rolling basis; and
                                ``(ii) the total amount necessary to meet
                            the financial obligations of the digital
                            commodity exchange to all customers of the
                            digital commodity exchange.
                ``(13) Disciplinary procedures.--A digital commodity
            exchange shall establish and enforce disciplinary procedures
            that authorize the digital commodity exchange to discipline,
            suspend, or expel members or market participants that violate
            the rules of the digital commodity exchange, or similar methods
            for performing the same functions, including delegation of the
            functions to third parties.
                ``(14) Governance fitness standards.--
                        ``(A) Governance arrangements.--A digital commodity
                    exchange shall establish governance arrangements that
                    are transparent and designed to permit consideration of
                    the views of market participants.
                        ``(B) Fitness standards.--A digital commodity
                    exchange shall establish and enforce appropriate
                    fitness standards for--
                                ``(i) officers and directors; and
                                ``(ii) any individual or entity with direct
                            access to, or control of, customer assets.
                ``(15) System safeguards.--A digital commodity exchange
            shall--
                        ``(A) establish and maintain a program of risk
                    analysis and oversight to identify and minimize sources
                    of operational and security risks, through the
                    development of appropriate controls and procedures, and
                    automated systems in accordance with industry
                    standards, that--
                                ``(i) are reliable and secure; and
                                ``(ii) have adequate scalable capacity;
                        ``(B) establish and maintain emergency procedures,
                    backup resources, and a plan for disaster recovery that
                    allow for--
                                ``(i) the timely recovery and resumption of
                            operations; and
                                ``(ii) the fulfillment of the
                            responsibilities and obligations of the digital
                            commodity exchange; and
                        ``(C) periodically conduct tests to verify that the
                    backup resources of the digital commodity exchange are
                    sufficient to ensure continued--
                                ``(i) order processing and trade matching;
                                ``(ii) price reporting;
                                ``(iii) market surveillance; and
                                ``(iv) maintenance of a comprehensive and
                            accurate audit trail.
        ``(d) Holding of Customer Assets.--
                ``(1) In general.--A digital commodity exchange shall hold
            customer money, assets, and property in a manner to minimize
            the risk of loss to the customer or unreasonable delay in
            customer access to the money, assets, and property of the
            customer.
                ``(2) Segregation of funds.--
                        ``(A) In general.--A digital commodity exchange
                    shall treat and deal with all money, assets, and
                    property that is received by the digital commodity
                    exchange, or accrues to a customer as the result of
                    trading in digital commodities, as belonging to the
                    customer.
                        ``(B) Commingling prohibited.--Money, assets, and
                    property described in subparagraph (A) shall be
                    separately accounted for and shall not be commingled
                    with the funds of the digital commodity exchange or be
                    used to margin, secure, or guarantee any trades or
                    accounts of any customer or person other than the
                    person for whom the same are held.
                        ``(C) Exceptions.--
                                ``(i) Use of funds.--
                                        ``(I) In general.--Notwithstanding
                                    subparagraph (A), money, assets, and
                                    property described in subparagraph (A)
                                    may, for convenience, be commingled and
                                    deposited in the same account or
                                    accounts with any bank, trust company,
                                    derivatives clearing organization, or
                                    qualified digital asset custodian.
                                        ``(II) Withdrawal.--Notwithstanding
                                    subparagraph (A), such share of the
                                    money, assets, and property described
                                    in subparagraph (A) as in the normal
                                    course of business shall be necessary
                                    to margin, guarantee, secure, transfer,
                                    adjust, or settle a contract of sale of
                                    a digital commodity with a registered
                                    entity may be withdrawn and applied to
                                    such purposes, including the payment of
                                    commissions, brokerage, interest,
                                    taxes, storage, and other charges,
                                    lawfully accruing in connection with
                                    the contract.
                                ``(ii) Commission action.--Notwithstanding
                            subparagraph (A), in accordance with such terms
                            and conditions as the Commission may prescribe
                            by rule, regulation, or order, any money,
                            assets, or property of the customers of a
                            digital commodity exchange may be commingled
                            and deposited in customer accounts with any
                            other money, assets, or property received by
                            the digital commodity exchange and required by
                            the Commission to be separately accounted for
                            and treated and dealt with as belonging to the
                            customer of the digital commodity exchange.
                ``(3) Permitted investments.--Money described in paragraph
            (2) may be invested in obligations of the United States, in
            general obligations of any State or of any political
            subdivision of a State, and in obligations fully guaranteed as
            to principal and interest by the United States, or in any other
            investment that the Commission may by rule or regulation
            prescribe, and such investments shall be made in accordance
            with such rules and regulations and subject to such conditions
            as the Commission may prescribe.
                ``(4) Customer protection during bankruptcy.--
                        ``(A) Customer property.--All assets held on behalf
                    of a customer by a digital commodity exchange, and all
                    money, assets, and property of any customer received by
                    a digital commodity exchange for trading or custody, or
                    to facilitate, margin, guarantee, or secure contracts
                    of sale of a digital commodity (including money,
                    assets, or property accruing to the customer as the
                    result of the transactions), shall be considered
                    customer property for purposes of section 761 of title
                    11, United States Code.
                        ``(B) Transactions.--A transaction involving the
                    sale of a unit of a digital commodity occurring on or
                    subject to the rules of a digital commodity exchange
                    shall be considered a contract for the purchase or sale
                    of a commodity for future delivery, on or subject to
                    the rules of, a contract market or board of trade for
                    purposes of the definition of `commodity contract' in
                    section 761 of title 11, United States Code.
                        ``(C) Exchanges.--A digital commodity exchange
                    shall be considered a futures commission merchant for
                    purposes of section 761 of title 11, United States
                    Code.
                        ``(D) Assets removed from segregation.--Assets
                    removed from segregation due to a customer election
                    under paragraph (6) shall not be considered customer
                    property for purposes of section 761 of title 11,
                    United States Code.
                ``(5) Misuse of customer property.--
                        ``(A) In general.--It shall be unlawful--
                                ``(i) for any digital commodity exchange
                            that has received any customer money, assets,
                            or property for custody to dispose of, or use
                            any such money, assets, or property as
                            belonging to the digital commodity exchange or
                            any person other than a customer of the digital
                            commodity exchange; or
                                ``(ii) for any other person, including any
                            depository, other digital commodity exchange,
                            or digital asset custodian that has received
                            any customer money, assets, or property for
                            deposit, to hold, dispose of, or use any such
                            money, assets, or property, or property, as
                            belonging to the depositing digital commodity
                            exchange or any person other than the customers
                            of the digital commodity exchange.
                        ``(B) Use further defined.--For purposes of this
                    section, `use' of a digital commodity includes
                    utilizing any unit of a digital asset to participate in
                    a blockchain service defined in paragraph (6) or a
                    decentralized governance system associated with the
                    digital commodity or the blockchain system to which the
                    digital commodity relates in any manner other than that
                    expressly directed by the customer from whom the unit
                    of a digital commodity was received.
                ``(6) Participation in blockchain services.--
                        ``(A) In general.--A customer shall have the right
                    to waive the restrictions in paragraph (2) for any unit
                    of a digital commodity to be used under subparagraph
                    (B) of this paragraph, by affirmatively electing, in
                    writing to the digital commodity exchange, to waive the
                    restrictions.
                        ``(B) Use of funds.--Customer digital commodities
                    removed from segregation under subparagraph (A) may be
                    pooled and used by the digital commodity exchange or
                    its designee to provide a blockchain service for a
                    blockchain system to which the unit of the digital
                    asset removed from segregation in subparagraph (A)
                    relates.
                        ``(C) Limitations.--
                                ``(i) In general.--The Commission shall, by
                            rule, establish notice and disclosure
                            requirements, and may, by rule, establish any
                            other limitations and rules related to the
                            waiving of any restrictions under this
                            paragraph that are reasonably necessary to
                            protect customers, including eligible contract
                            participants, non-eligible contract
                            participants, or any other class of customers.
                                ``(ii) Customer choice.--A digital
                            commodity exchange may not require a waiver
                            from a customer described in subparagraph (A)
                            as a condition of doing business on the
                            exchange.
                        ``(D) Blockchain service defined.--In this
                    paragraph, the term `blockchain service' means any
                    activity relating to validating transactions on a
                    blockchain system, providing security for a blockchain
                    system, or other similar activity required for the
                    ongoing operation of a blockchain system.
        ``(e) Market Access Requirements.--The Commission may, by rule,
    impose any additional requirements related to the operations and
    activities of the digital commodity exchange and an affiliated digital
    commodity broker necessary to protect market participants, promote fair
    and equitable trading on the digital commodity exchange, and promote
    responsible innovation.
        ``(f) Designation of Chief Compliance Officer.--
                ``(1) In general.--A digital commodity exchange shall
            designate an individual to serve as a chief compliance officer.
                ``(2) Duties.--The chief compliance officer shall--
                        ``(A) report directly to the board or to the senior
                    officer of the exchange;
                        ``(B) review compliance with the core principles in
                    this subsection;
                        ``(C) in consultation with the board of the
                    exchange, a body performing a function similar to that
                    of a board, or the senior officer of the exchange,
                    resolve any conflicts of interest that may arise;
                        ``(D) establish and administer the policies and
                    procedures required to be established pursuant to this
                    section;
                        ``(E) ensure compliance with this Act and the rules
                    and regulations issued under this Act, including rules
                    prescribed by the Commission pursuant to this section;
                    and
                        ``(F) establish procedures for the remediation of
                    noncompliance issues found during compliance office
                    reviews, look backs, internal or external audit
                    findings, self-reported errors, or through validated
                    complaints.
                ``(3) Requirements for procedures.--In establishing
            procedures under paragraph (2)(F), the chief compliance officer
            shall design the procedures to establish the handling,
            management response, remediation, retesting, and closing of
            noncompliance issues.
                ``(4) Annual reports.--
                        ``(A) In general.--In accordance with rules
                    prescribed by the Commission, the chief compliance
                    officer shall annually prepare and sign a report that
                    contains a description of--
                                ``(i) the compliance of the digital
                            commodity exchange with this Act; and
                                ``(ii) the policies and procedures,
                            including the code of ethics and conflicts of
                            interest policies, of the digital commodity
                            exchange.
                        ``(B) Requirements.--The chief compliance officer
                    shall--
                                ``(i) submit each report described in
                            subparagraph (A) with the appropriate financial
                            report of the digital commodity exchange that
                            is required to be submitted to the Commission
                            pursuant to this section; and
                                ``(ii) include in the report a
                            certification that, under penalty of law, the
                            report is accurate and complete.
        ``(g) Appointment of Trustee.--
                ``(1) In general.--If a proceeding under section 5e results
            in the suspension or revocation of the registration of a
            digital commodity exchange, or if a digital commodity exchange
            withdraws from registration, the Commission, on notice to the
            digital commodity exchange, may apply to the appropriate United
            States district court where the digital commodity exchange is
            located for the appointment of a trustee.
                ``(2) Assumption of jurisdiction.--If the Commission
            applies for appointment of a trustee under paragraph (1)--
                        ``(A) the court may take exclusive jurisdiction
                    over the digital commodity exchange and the records and
                    assets of the digital commodity exchange, wherever
                    located; and
                        ``(B) if the court takes jurisdiction under
                    subparagraph (A), the court shall appoint the
                    Commission, or a person designated by the Commission,
                    as trustee with power to take possession and continue
                    to operate or terminate the operations of the digital
                    commodity exchange in an orderly manner for the
                    protection of customers subject to such terms and
                    conditions as the court may prescribe.
        ``(h) Qualified Digital Asset Custodian.--A digital commodity
    exchange shall hold in a qualified digital asset custodian each unit of
    a digital asset that is--
                ``(1) the property of a customer of the digital commodity
            exchange;
                ``(2) required to be held by the digital commodity exchange
            under subsection (c)(12) of this section; or
                ``(3) otherwise so required by the Commission to reasonably
            protect customers.
        ``(i) Exemptions.--
                ``(1) In general.--In order to promote responsible
            innovation and fair competition, or protect customers, the
            Commission may (on its own initiative or on application of the
            registered digital commodity exchange) exempt, either
            unconditionally or on stated terms or conditions or for stated
            periods and either retroactively or prospectively, or both, a
            registered digital commodity exchange from the requirements of
            this section, if the Commission determines that--
                        ``(A) the exemption would be consistent with the
                    public interest and the purposes of this Act; and
                        ``(B) the exemption will not have a material
                    adverse effect on the ability of the Commission or the
                    digital commodity exchange to discharge regulatory or
                    self-regulatory duties under this Act.
                ``(2) Foreign exchanges.--The Commission may exempt,
            conditionally or unconditionally, a digital commodity exchange
            from registration under this section if the Commission finds
            that the digital commodity exchange is subject to comparable,
            comprehensive supervision and regulation on a consolidated
            basis by the appropriate governmental authorities in the home
            country of the facility.
        ``(j) Customer Defined.--In this section, the term `customer' means
    any person that maintains an account for the trading of digital
    commodities directly with a digital commodity exchange (other than a
    person that is owned or controlled, directly or indirectly, by the
    digital commodity exchange) for its own behalf or on behalf of any
    other person.
        ``(k) Federal Preemption.--Notwithstanding any other provision of
    law, the Commission shall have exclusive jurisdiction over any digital
    commodity exchange registered under this section with respect to
    activities and transactions subject to this Act.''.

    SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.

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

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

        ``(a) In General.--A person is a qualified digital asset custodian
    for purposes of this Act if the person--
                ``(1) holds digital assets on behalf of a person registered
            under this Act or a customer of a person registered under this
            Act; and
                ``(2) is in compliance with subsections (b) and (c).
        ``(b) Supervision Requirement.--A person is in compliance with this
    subsection if the person is subject to--
                ``(1) supervision and examination for custody and
            safekeeping of digital assets by an appropriate Federal banking
            agency, the National Credit Union Administration, the
            Commission, or the Securities and Exchange Commission; or
                ``(2) adequate supervision and appropriate regulation for
            custody and safekeeping of digital assets by--
                        ``(A) a State bank supervisor (within the meaning
                    of section 3 of the Federal Deposit Insurance Act);
                        ``(B) a State credit union supervisor, as defined
                    under section 6003 of the Anti-Money Laundering Act of
                    2020; or
                        ``(C) an appropriate foreign governmental authority
                    in the home country of the digital commodity custodian.
        ``(c) Other Requirements.--A person shall be in compliance with
    this subsection if:
                ``(1) Not otherwise prohibited.--The person has not been
            prohibited by its supervisor from engaging in an activity with
            respect to the custody and safekeeping of digital assets.
                ``(2) Information sharing.--
                        ``(A) In general.--The person shares information
                    with the Commission on request and complies with such
                    requirements for periodic sharing of information
                    regarding customer accounts that the person holds on
                    behalf of an entity registered with the Commission as
                    the Commission determines by rule are reasonably
                    necessary to effectuate any of the provisions, or to
                    accomplish any of the purposes, of this Act.
                        ``(B) Provision of information.--If the person is
                    subject to regulation and examination by an appropriate
                    Federal banking agency, the person may satisfy any
                    information request described in subparagraph (A) by
                    providing the Commission with a detailed listing, in
                    writing, of the digital assets of a customer in the
                    custody of, or use by, the person.
                        ``(C) Rulemaking for cftc entities.--
                                ``(i) In general.--The Commission shall
                            prescribe rules to permit a person registered
                            with the Commission to be a qualified digital
                            asset custodian in compliance with this
                            section.
                                ``(ii) Content.--In prescribing the rules
                            under subparagraph (A), the Commission shall
                            require a person registered with the Commission
                            to--
                                        ``(I) implement requirement
                                    consistent with the requirements in
                                    subsection (d)(1);
                                        ``(II) establish sufficient system
                                    safeguards;
                                        ``(III) prevent or mitigate
                                    conflicts of interest, as appropriate;
                                    and
                                        ``(IV) establish separate
                                    governance arrangements for the
                                    custodial function of the entity.
        ``(d) Adequate Supervision and Appropriate Regulation.--
                ``(1) In general.--For purposes of subsection (b), the
            terms `adequate supervision' and `appropriate regulation' mean
            such minimum standards for supervision and regulation as are
            reasonably necessary to protect the digital assets held by a
            person registered under this Act, including standards relating
            to the licensing, examination, and supervisory processes that
            require the person to, at a minimum--
                        ``(A) receive a review and evaluation of ownership,
                    character and fitness, conflicts of interest, business
                    model, financial statements, funding resources, and
                    policies and procedures of the person;
                        ``(B) hold capital sufficient for the financial
                    integrity of the person;
                        ``(C) protect customer assets;
                        ``(D) establish and maintain books and records
                    regarding the business of the person;
                        ``(E) submit financial statements and audited
                    financial statements to the applicable supervisor
                    described in subsection (b);
                        ``(F) provide disclosures to the applicable
                    supervisor described in subsection (b) regarding
                    actions, proceedings, and other items as determined by
                    the supervisor;
                        ``(G) maintain and enforce policies and procedures
                    for compliance with applicable State and Federal laws,
                    including those related to anti-money laundering and
                    cybersecurity;
                        ``(H) establish a business continuity plan to
                    ensure functionality in cases of disruption; and
                        ``(I) establish policies and procedures to resolve
                    complaints.
                ``(2) Rulemaking with respect to definitions.--
                        ``(A) In general.--For purposes of this section,
                    the Commission may, by rule, further define the terms
                    `adequate supervision' and `appropriate regulation' as
                    necessary and appropriate for the protection of
                    customers, and consistent with the purposes of this
                    Act.
                        ``(B) Conditional treatment of certain custodians
                    before rulemaking.--Before the effective date of a
                    rulemaking under subparagraph (A), a trust company is
                    deemed subject to adequate supervision and appropriate
                    regulation if--
                                ``(i) the trust company is expressly
                            permitted by a State bank supervisor to engage
                            in the custody and safekeeping of digital
                            assets;
                                ``(ii) the State bank supervisor has
                            established licensing, examination, and
                            supervisory processes that require the trust
                            company to, at a minimum, meet the conditions
                            described in subparagraphs (A) through (I) of
                            paragraph (1); and
                                ``(iii) the trust company is in good
                            standing with its State bank supervisor.
                        ``(C) Transition period for certain custodians.--In
                    implementing the rulemaking under subparagraph (A), the
                    Commission shall provide a transition period of not
                    less than 2 years for any trust company that is deemed
                    subject to adequate supervision and appropriate
                    regulation under subparagraph (B) on the effective date
                    of the rulemaking.
        ``(e) Authority To Temporarily Suspend Standards.--The Commission
    may, by rule or order, temporarily suspend, in whole or in part, any
    requirement imposed under, or any standard referred to in, this
    section, or any requirement to utilize a qualified digital asset
    custodian, if the Commission determines that the suspension would be
    consistent with the public interest and the purposes of this Act.''.

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

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

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

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

    SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.

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

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

        (a) In General.--Section 4m(3) of the Commodity Exchange Act (7
    U.S.C. 6m(3)) is amended--
                (1) in subparagraph (A)--
                        (A) by striking ``any commodity trading advisor''
                    and inserting ``a commodity pool operator or commodity
                    trading advisor''; and
                        (B) by striking ``acting as a commodity trading
                    advisor'' and inserting ``acting as a commodity pool
                    operator or commodity trading advisor''; and
                (2) in subparagraph (C), by inserting ``digital
            commodities,'' after ``physical commodities,''.
        (b) Exemptive Authority.--Section 4m of such Act (7 U.S.C. 6m) is
    amended by adding at the end the following:
        ``(4) Exemptive Authority.--The Commission shall promulgate rules
    to provide appropriate exemptions for commodity pool operators and
    commodity trading advisors, to provide relief from duplicative,
    conflicting, or unduly burdensome requirements or to promote
    responsible innovation, to the extent the exemptions foster the
    development of fair and orderly cash or spot digital commodity markets,
    are necessary or appropriate in the public interest, and are consistent
    with the protection of customers.''.

    SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.

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

    ``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.

        ``(a) In General.--Notwithstanding any other provision of this Act,
    a person shall not be subject to this Act and the regulations
    promulgated under this Act based on the person directly or indirectly
    engaging in any of the following activities, whether singly or in
    combination, in relation to the operation of a blockchain system or in
    relation to decentralized finance trading protocol:
                ``(1) Compiling network transactions or relaying,
            searching, sequencing, validating, or acting in a similar
            capacity.
                ``(2) Providing computational work, operating a node or
            oracle service, or procuring, offering, or utilizing network
            bandwidth, or other similar incidental services.
                ``(3) Providing a user-interface that enables a user to
            read, and access data about a blockchain system.
                ``(4) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a blockchain system
            other than a decentralized finance trading protocol.
                ``(5) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a decentralized finance
            messaging system or decentralized finance trading protocol, or
            operating or participating in a liquidity pool with respect
            thereto, for the purpose of executing a spot contract for the
            purchase or sale of a digital commodity.
                ``(6) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing software or systems that
            create or deploy hardware or software, including wallets or
            other systems, facilitating an individual user's own personal
            ability to keep, safeguard, or custody the user's digital
            assets or related private keys.
        ``(b) Exceptions.--Subsection (a) shall not be interpreted to apply
    to the anti-fraud, anti-manipulation, or false reporting enforcement
    authorities of the Commission.''.

    SEC. 410. RESOURCES FOR IMPLEMENTATION AND ENFORCEMENT.

        (a) Collection of Fees.--
                (1) In general.--The Commodity Futures Trading Commission
            (in this section referred to as the ``Commission'') shall
            charge and collect a fee from each person in provisional status
            registered with the Commission pursuant to section 106, on--
                        (A) the filing of the initial application for
                    registration; and
                        (B) an annual basis thereafter for maintaining
                    provisional status.
                (2) Amount.--The fees authorized under paragraph (1) may be
            collected and available for obligation only in the amounts
            provided in advance in an appropriation Act.
                (3) Authority to adjust fees.--Notwithstanding the
            preceding provisions of this subsection, to promote fair
            competition or innovation, the Commission, in its sole
            discretion, may reduce or eliminate any fee otherwise required
            to be paid by a small or medium filer under this subsection.
        (b) Fee Schedule.--
                (1) In general.--The Commission shall publish in the
            Federal Register a schedule of the fees to be charged and
            collected under this section.
                (2) Content.--The fee schedule for a fiscal year shall
            include a written analysis of the estimate of the Commission of
            the total costs of carrying out the functions of the Commission
            under this Act during the fiscal year.
                (3) Submission to congress.--Before publishing the fee
            schedule for a fiscal year, the Commission shall submit a copy
            of the fee schedule to the Committees on Agriculture and on
            Appropriations of the House of Representatives and the
            Committees on Agriculture, Nutrition, and Forestry and on
            Appropriations of the Senate.
                (4) Timing.--
                        (A) 1st fiscal year.--The Commission shall publish
                    the fee schedule for the fiscal year in which this Act
                    is enacted, within 30 days after the date of the
                    enactment of this Act.
                        (B) Subsequent fiscal years.--The Commission shall
                    publish the fee schedule for each subsequent fiscal
                    year, not less than 90 days before the due date
                    prescribed by the Commission for payment of the annual
                    fee for the fiscal year.
        (c) Late Payment Penalty.--
                (1) In general.--The Commission may impose a penalty
            against a person that fails to pay an annual fee charged under
            this section, within 30 days after the due date prescribed by
            the Commission for payment of the fee.
                (2) Amount.--The amount of the penalty shall be--
                        (A) 5 percent of the amount of the fee due,
                    multiplied by
                        (B) the whole number of consecutive 30-day periods
                    that have elapsed since the due date.
        (d) Reimbursement of Excess Fees.--To the extent that the total
    amount of fees collected under this section during a fiscal year that
    begins after the date of the enactment of this Act exceeds the amount
    provided under subsection (a)(2) with respect to the fiscal year, the
    Commission shall reimburse the excess amount to the persons who have
    timely paid their annual fees, on a pro-rata basis that excludes
    penalties, and shall do so within 60 days after the end of the fiscal
    year.
        (e) Deposit of Fees Into the Treasury.--All amounts collected under
    this section shall be credited to the currently applicable
    appropriation, account, or fund of the Commission as discretionary
    offsetting collections, and shall be available for the purposes
    authorized in subsection (f) only to the extent and in the amounts
    provided in advance in appropriations Acts.
        (f) Authorization of Appropriations.--In addition to amounts
    otherwise authorized to be appropriated to the Commission, there is
    authorized to be appropriated to the Commission amounts collected under
    this section to cover the costs of carrying out the functions of the
    Commission under this Act.
        (g) Expedited Hiring Authority.--
                (1) Appointment authority.--The Chairman, pursuant to
            section 6(a), may appoint individuals to a position described
            in paragraph (2) of this subsection--
                        (A) in accordance with the statutes, rules, and
                    regulations governing appointments to positions in the
                    excepted service (as defined in section 2103 of title
                    5, United States Code); and
                        (B) without regard to any statute, rule, or
                    regulation governing appointments to positions in the
                    competitive service (as defined in section 2102 of such
                    title).
                (2) Position described.--A position referred to in
            subparagraph (1) is a position at the Commission that--
                        (A) is in the competitive service (as defined in
                    section 2102 of such title); and
                        (B) requires specialized knowledge of digital
                    commodities markets, financial and capital market
                    formation or regulation, financial market structures or
                    surveillance, data collection or analysis, or
                    information technology, cybersecurity, or system
                    safeguards.
                (3) Rule of construction.--The appointment of a candidate
            to a position under this subsection shall not be considered to
            cause the position to be converted from the competitive service
            to the excepted service.
        (h) Sunset.--The authorities provided by this section shall expire
    at the end of the 4th fiscal year that begins after the date of the
    enactment of this Act.

    SEC. 411. DIGITAL COMMODITY ACTIVITIES BY SEC-REGISTERED ENTITIES.

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

    ``SEC. 5K. EXEMPTION FOR CERTAIN REGISTERED ENTITIES ENGAGED IN DIGITAL
                  COMMODITY ACTIVITIES.

        ``(a) By Alternative Trading Systems.--
                ``(1) In general.--On receipt by the Commission from an
            alternative trading system of a written or electronic notice
            that contains such information as the Commission, by rule, may
            prescribe as necessary or appropriate in the public interest or
            for the protection of investors, the alternative trading system
            shall be exempt from registration as a digital commodity
            exchange pursuant to section 5i if--
                        ``(A) the alternative trading system does not list
                    any retail commodity transactions pursuant to section
                    2(c)(2)(D);
                        ``(B) the provider, or an affiliated person of the
                    provider, of the alternative trading system is not
                    otherwise registered under this Act;
                        ``(C) the alternative trading system lists or
                    trades no other contracts of sale of commodities,
                    except for digital commodities, currencies, and
                    securities; and
                        ``(D) the registration of the alternative trading
                    system is not suspended pursuant to an order by the
                    Securities and Exchange Commission.
                ``(2) Further requirements.--An alternative trading system
            that provides notice to the Commission pursuant to paragraph
            (1) of this subsection shall be exempt from the requirements of
            section 5i to the extent that the alternative trading system--
                        ``(A) is in compliance with requirements consistent
                    with the requirements of section 5i and imposed on the
                    alternative trading system by the Securities and
                    Exchange Commission;
                        ``(B) annually files with the Commission, in a form
                    and manner acceptable to the Commission, a notice that
                    demonstrates compliance with this paragraph and
                    contains any other information the Commission
                    determines to be necessary or appropriate to perform
                    the duties of the Commission under this Act; and
                        ``(C) has total trading volume in digital
                    commodities during any calendar quarter in either of
                    its 2 most recently completed fiscal years that does
                    not exceed the lesser of--
                                ``(i) 25 percent of the total trading
                            volume for all transactions over the same
                            period; or
                                ``(ii) $50,000,000,000.
                ``(3) Enforcement.--This subsection shall not be construed
            to limit any jurisdiction that the Commission may otherwise
            have under any other provision of this Act with respect to a
            contract of sale of a digital commodity or persons effecting
            contracts of sale of digital commodities.
        ``(b) By Registered Intermediaries.--
                ``(1) In general.--On receipt by the Commission, from a
            broker or dealer that is registered with the Securities and
            Exchange Commission, of a written or electronic notice that
            contains such information as the Commission, by rule, may
            prescribe as necessary or appropriate in the public interest or
            for the protection of investors, the broker or dealer shall be
            exempt from registration as a digital commodity broker or
            digital commodity dealer pursuant to section 4u of this Act
            if--
                        ``(A) the broker or dealer does not offer or engage
                    in any retail commodity transactions pursuant to
                    section 2(c)(2)(D) of this Act;
                        ``(B) the broker or dealer, or an affiliated person
                    of the broker or dealer, is not otherwise registered
                    under this Act;
                        ``(C) the broker or dealer does not offer or engage
                    in any other contracts of sale of commodities, except
                    for digital commodities, currencies, and securities;
                        ``(D) the broker or dealer is not subject to a
                    statutory disqualification, as defined under section
                    3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
                    78c(a)); and
                        ``(E) the broker or dealer is a member of a
                    national securities association registered pursuant to
                    section 15A of the Securities Exchange Act of 1934.
                ``(2) Further requirements.--A broker or dealer that
            provides notice to the Commission pursuant to paragraph (1)
            shall be exempt from the requirements of section 4u to the
            extent that the broker or dealer--
                        ``(A) is in compliance with requirements consistent
                    with the requirements of section 4u and imposed on the
                    broker or dealer by the Securities and Exchange
                    Commission;
                        ``(B) annually files with the Commission, in a form
                    and manner acceptable to the Commission, a notice that
                    demonstrates compliance with this subsection and
                    contains any other information the Commission
                    determines to be necessary or appropriate to perform
                    the duties of the Commission under this Act; and
                        ``(C) has consolidated annual gross financial
                    revenues in either of its 2 most recently completed
                    fiscal years from sales, commissions or other
                    activities in digital commodities that do not exceed
                    the lesser of--
                                ``(i) 10 percent of the total annual gross
                            revenues during the same period; or
                                ``(ii) $100,000,000.
                ``(3) Enforcement.--This subsection shall not be construed
            to limit any jurisdiction that the Commission may otherwise
            have under any other provision of this Act with respect to a
            contract of sale of a digital commodity and persons effecting
            contracts of sale of digital commodities.''.

    SEC. 412. REQUIREMENTS RELATED TO CONTROL PERSONS.

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

    ``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL PERSONS.

        ``(a) Limitation.--It shall be unlawful for a blockchain control
    person with respect to a blockchain system certified as a mature
    blockchain system in accordance with section 42 of the Securities
    Exchange Act of 1934 to sell a unit of a digital commodity related to
    the blockchain system unless the person files notice with the
    Commission, in a form and manner determined by the Commission, that the
    person has or intends to obtain an authority described in subsection
    (b)(1) with respect to the blockchain system, and complies with rules
    adopted by the Commission that require--
                ``(1) disclosure of information to the Commission and the
            public about the material activities, as determined by the
            Commission, of the blockchain control person; and
                ``(2)(A) the use of a digital commodity broker to effect
            the sale; or
                ``(B) such other sales restrictions applicable to the
            blockchain control person, or any affiliated blockchain control
            person, to prevent manipulation and distortion of the value of
            the digital commodity and promote further maturity of the
            blockchain system to which the digital commodity relates.
        ``(b) Definitions.--In this section:
                ``(1) Blockchain control person.--The term `blockchain
            control person' means, with respect to a blockchain system, any
            person or group of persons under common control, other than a
            decentralized governance system, who--
                        ``(A) has the unilateral authority, directly or
                    indirectly, through any contract, arrangement,
                    understanding, relationship, or otherwise, to control
                    or materially alter the functionality, operation, or
                    rules of consensus or agreement of the blockchain
                    system or its related digital commodity; or
                        ``(B) has the unilateral authority to direct the
                    voting, in the aggregate, of 20 percent or more of the
                    outstanding voting power of the blockchain system by
                    means of a related digital commodity, nodes or
                    validators, a decentralized governance system, or
                    otherwise, in a blockchain system which can be altered
                    by a voting system.
                ``(2) Affiliated blockchain control person.--The term
            `affiliated blockchain control person' means any person
            directly or indirectly controlling, controlled by, or under
            common control with a blockchain control person, as the
            Commission by rule or regulation, may determine will effectuate
            the purposes of this section.''.

    SEC. 413. OTHER TRADABLE ASSETS.

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

    ``SEC. 4X. TRADING REQUIREMENTS FOR OTHER TRADABLE ASSETS.

        ``(a) Limitation.--A tradable asset shall not be offered,
    solicited, traded, facilitated, executed, cleared, reported, or
    otherwise dealt in, on or subject to the rules of a registered entity,
    or by any other entity registered with the Commission, except in
    accordance with subsection (b).
        ``(b) Requirements.--
                ``(1) Treatment of tradable assets.--A tradable asset that
            is offered, solicited, traded, facilitated, executed, cleared,
            reported, or otherwise dealt in on or subject to the rules of a
            registered entity, or by any other entity registered with the
            Commission, shall be treated as a digital commodity for
            purposes of this Act.
                ``(2) Additional rulemaking authority.--In addition to the
            other requirements of this Act, the Commission may, by rule or
            regulation, impose additional obligations on any person
            registered under this Act offering, soliciting, trading,
            facilitating, executing, clearing, reporting, or otherwise
            dealing in a tradable asset, or class thereof, pursuant to
            paragraph (1) as are necessary for the protection of customers,
            the promotion of innovation, and the maintenance of fair,
            orderly, and efficient markets, including additional
            obligations related to--
                        ``(A) disclosure;
                        ``(B) recordkeeping;
                        ``(C) capital;
                        ``(D) reporting;
                        ``(E) business conduct;
                        ``(F) documentation;
                        ``(G) supervision of employees; and
                        ``(H) segregation.
                ``(3) Prohibition on trading.--A tradable asset, the
            primary purpose of which is to be used to commit fraud or
            market manipulation, or engage in any other conduct that would
            result in abusive practices or be disruptive to market
            integrity, shall not be offered, solicited, traded,
            facilitated, executed, cleared, reported, or otherwise dealt in
            on or subject to the rules of a registered entity, or by any
            other entity registered with the Commission.
        ``(c) Tradable Asset Defined.--In this section, the term `tradable
    asset' means a digital asset other than--
                ``(1) a digital commodity that is treated as such other
            than by reason of subsection (b)(1) of this section; or
                ``(2) a digital asset excluded from the definition of
            digital commodity pursuant to subclause (I) through (VII) of
            section 1a(16)(F)(iii).
        ``(d) Guidance on Fraudulent, Manipulative, or Disruptive Tradable
    Assets.--The Commission may, after public notice and comment, issue
    guidance establishing criteria for determining if the primary purpose
    of a tradable asset is to be used to commit fraud or market
    manipulation, or engage in any other conduct that would result in
    abusive practices or be disruptive to market integrity.''.

    SEC. 414. EFFECTIVE DATE.

        Unless otherwise provided in this title, this title and the
    amendments made by this title shall take effect 270 days after the date
    of the enactment of this Act.

    SEC. 415. SENSE OF CONGRESS.

        It is the sense of Congress that nothing in this Act or any
    amendment made by this Act should be interpreted to authorize any
    entity to regulate any commodity, other than a digital commodity, on
    any spot market.

                TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

    SEC. 501. FINDINGS; SENSE OF CONGRESS.

        (a) Findings.--Congress finds the following:
                (1) Entrepreneurs and innovators are building and deploying
            this next generation of the internet.
                (2) Digital commodity networks represent a new way for
            people to join together and cooperate with one another to
            undertake certain activities.
                (3) Digital commodities have the potential to be the
            foundational building blocks of these systems, aligning the
            economic incentive for individuals to cooperate with one
            another to achieve a common purpose.
                (4) The digital commodity ecosystem has the potential to
            grow our economy and improve everyday lives of Americans by
            facilitating collaboration through the use of technology to
            manage activities, allocate resources, and facilitate decision
            making.
                (5) Blockchain systems and the digital commodities they
            empower provide control, enhance transparency, reduce
            transaction costs, and increase efficiency if proper
            protections are put in place for investors, consumers, our
            financial system, and our national security.
                (6) Blockchain technology facilitates new types of network
            participation which businesses in the United States may utilize
            in innovative ways.
                (7) Other digital commodity companies are setting up their
            operations outside of the United States, where countries are
            establishing frameworks to embrace the potential of blockchain
            technology and digital commodities and provide safeguards for
            consumers.
                (8) Digital commodities, despite the purported anonymity,
            provide law enforcement with an exceptional tracing tool to
            identify illicit activity and bring criminals to justice.
                (9) The Financial Services Committee of the House of
            Representatives has held multiple hearings highlighting various
            risks that digital commodities can pose to the financial
            markets, consumers, and investors that must be addressed as we
            seek to harness the benefits of these innovations.
        (b) Sense of Congress.--It is the sense of Congress that--
                (1) the United States should seek to prioritize
            understanding the potential opportunities of the next
            generation of the internet;
                (2) the United States should seek to foster advances in
            technology that have robust evidence indicating they can
            improve our financial system and create more fair and equitable
            access to financial services for everyday Americans while
            protecting our financial system, investors, and consumers;
                (3) the United States must support the responsible
            development of digital commodities and the underlying
            technology in the United States or risk the shifting of the
            development of such assets and technology outside of the United
            States, to less regulated countries;
                (4) Congress should consult with public and private sector
            stakeholders to understand how to enact a functional framework
            tailored to the specific risks and unique benefits of different
            digital commodity-related activities, distributed ledger
            technology, distributed networks, and mature blockchain
            systems;
                (5) Congress should enact a functional framework tailored
            to the specific risks of different digital commodity-related
            activities and unique benefits of distributed ledger
            technology, distributed networks, and mature blockchain
            systems; and
                (6) consumers and market participants will benefit from a
            framework for digital commodities consistent with longstanding
            investor protections in securities and commodities markets, yet
            tailored to the unique benefits and risks of the digital
            commodity ecosystem.

    SEC. 502. MODERNIZATION OF THE SECURITIES AND EXCHANGE COMMISSION
                  MISSION.

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

    SEC. 503. STRATEGIC HUB FOR INNOVATION AND FINANCIAL TECHNOLOGY.

        Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
    amended by adding at the end the following:
        ``(k) Strategic Hub for Innovation and Financial Technology.--
                ``(1) Establishment.--Not later than 180 days after the
            date of the enactment of this subsection, the Securities and
            Exchange Commission shall establish a committee to be known as
            the Strategic Hub for Innovation and Financial Technology
            (referred to in this subsection as the `FinHub') to support
            engagement on emerging technologies in the financial sector.
                ``(2) Members.--The composition of FinHub shall be
            determined by the Commission, drawing from relevant divisions
            as appropriate, including the Division of Trading and Markets,
            Division of Corporate Finance, and Division of Investment
            Management.
                ``(3) Responsibilities.--FinHub shall--
                        ``(A) serve as a resource for the Commission on
                    emerging financial technology advancements;
                        ``(B) engage with market participants working on
                    emerging financial technologies; and
                        ``(C) facilitate communication between the
                    Commission and businesses working in emerging financial
                    technology fields with information on the Commission,
                    its rules, and regulations.
                ``(4) Report to the commission.--
                        ``(A) In general.--Not later than October 31 of
                    each year after 2025, FinHub shall provide an annual
                    summary of its engagement activities to the Commission,
                    which shall be included in the Commission's annual
                    report to Congress.
                        ``(B) Confidentiality.--Each report submitted under
                    this paragraph shall not contain confidential
                    information.''.

    SEC. 504. CODIFICATION OF LABCFTC.

        (a) In General.--Section 18 of the Commodity Exchange Act (7 U.S.C.
    22) is amended by adding at the end the following:
        ``(c) LabCFTC.--
                ``(1) Establishment.--There is established in the
            Commission LabCFTC.
                ``(2) Purpose.--The purposes of LabCFTC are to--
                        ``(A) promote responsible financial technology
                    innovation and fair competition for the benefit of the
                    American public;
                        ``(B) serve as an information platform to inform
                    the Commission about new financial technology
                    innovation; and
                        ``(C) provide outreach to financial technology
                    innovators to discuss their innovations and the
                    regulatory framework established by this Act and the
                    regulations promulgated thereunder.
                ``(3) Director.--LabCFTC shall have a Director, who shall
            be appointed by the Commission and serve at the pleasure of the
            Commission. Notwithstanding section 2(a)(6)(A), the Director
            shall report directly to the Commission and perform such
            functions and duties as the Commission may prescribe.
                ``(4) Duties.--LabCFTC shall--
                        ``(A) advise the Commission with respect to
                    rulemakings or other agency or staff action regarding
                    financial technology;
                        ``(B) provide internal education and training to
                    the Commission regarding financial technology;
                        ``(C) advise the Commission regarding financial
                    technology that would bolster the Commission's
                    oversight functions;
                        ``(D) engage with academia, students, and
                    professionals on financial technology issues, ideas,
                    and technology relevant to activities under this Act;
                        ``(E) provide persons working in emerging
                    technology fields with information on the Commission,
                    its rules and regulations, and the role of a registered
                    futures association; and
                        ``(F) encourage persons working in emerging
                    technology fields to engage with the Commission and
                    obtain feedback from the Commission on potential
                    regulatory issues.
                ``(5) Report to congress.--
                        ``(A) In general.--Not later than October 31 of
                    each year after 2025, LabCFTC shall submit to the
                    Committee on Agriculture of the House of
                    Representatives and the Committee on Agriculture,
                    Nutrition, and Forestry of the Senate a report on its
                    activities.
                        ``(B) Contents.--Each report required under
                    paragraph (1) shall include--
                                ``(i) the total number of persons that met
                            with LabCFTC;
                                ``(ii) a summary of general issues
                            discussed during meetings with the person;
                                ``(iii) information on steps LabCFTC has
                            taken to improve Commission services, including
                            responsiveness to the concerns of persons;
                                ``(iv) recommendations made to the
                            Commission with respect to the regulations,
                            guidance, and orders of the Commission and such
                            legislative actions as may be appropriate; and
                                ``(v) any other information determined
                            appropriate by the Director of LabCFTC.
                        ``(C) Confidentiality.--A report under paragraph
                    (A) shall abide by the confidentiality requirements in
                    section 8.
                ``(6) Records and engagement.--The Commission shall--
                        ``(A) maintain systems of records to track
                    engagements with the public through LabCFTC;
                        ``(B) store communications and materials received
                    in connection with any such engagement in accordance
                    with Commission policies and procedures on data
                    retention and confidentiality; and
                        ``(C) take reasonable steps to protect any
                    confidential or proprietary information received
                    through LabCFTC engagement.''.
        (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act (7
    U.S.C. 2(a)(6)(A)) is amended--
                (1) by striking ``paragraph and in'' and inserting
            ``paragraph,''; and
                (2) by inserting ``and section 18(c)(3),'' before ``the
            executive''.
        (c) Effective Date.--The Commodity Futures Trading Commission shall
    implement the amendments made by this section (including complying with
    section 18(c)(7) of the Commodity Exchange Act) within 180 days after
    the date of the enactment of this Act.

    SEC. 505. STUDY ON DECENTRALIZED FINANCE.

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

    SEC. 506. STUDY ON NON-FUNGIBLE TOKENS.

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

    SEC. 507. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST DIGITAL
                  COMMODITY HOLDERS.

        (a) In General.--The Commodity Futures Trading Commission with the
    Securities and Exchange Commission shall jointly conduct a study to
    identify--
                (1) the existing level of financial literacy among retail
            digital commodity holders, including subgroups of investors
            identified by the Commodity Futures Trading Commission with the
            Securities and Exchange Commission;
                (2) methods to improve the timing, content, and format of
            financial literacy materials regarding digital commodities
            provided by the Commodity Futures Trading Commission and the
            Securities and Exchange Commission;
                (3) methods to improve coordination between the Securities
            and Exchange Commission and the Commodity Futures Trading
            Commission with other agencies, including the Financial
            Literacy and Education Commission as well as nonprofit
            organizations and State and local jurisdictions, to better
            disseminate financial literacy materials;
                (4) the efficacy of current financial literacy efforts with
            a focus on rural communities and communities with majority
            minority populations;
                (5) the most useful and understandable relevant
            information, including clear disclosures, that retail digital
            commodity holders need to make informed financial decisions
            before engaging with or purchasing a digital commodity or
            service that is typically sold to retail investors of digital
            commodities;
                (6) the most effective public-private partnerships in
            providing financial literacy regarding digital commodities to
            consumers;
                (7) the most relevant metrics to measure successful
            improvement of the financial literacy of an individual after
            engaging with financial literacy efforts; and
                (8) in consultation with the Financial Literacy and
            Education Commission, a strategy (including to the extent
            practicable, measurable goals and objectives) to increase
            financial literacy of investors regarding digital commodities.
        (b) Report.--Not later than 1 year after the date of the enactment
    of this Act, the Commodity Futures Trading Commission and the
    Securities and Exchange Commission shall jointly submit a written
    report on the study required by subsection (a) to the Committees on
    Financial Services and on Agriculture of the House of Representatives
    and the Committees on Banking, Housing, and Urban Affairs and on
    Agriculture, Nutrition, and Forestry of the Senate.

    SEC. 508. STUDY ON FINANCIAL MARKET INFRASTRUCTURE IMPROVEMENTS.

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

    SEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.

        (a) In General.--One year after the date of the enactment of this
    Act, the Securities and Exchange Commission and the Commodity Futures
    Trading Commission, in conjunction with the Secretary of the Treasury,
    shall conduct a comprehensive review of how Foreign Terrorist
    Organizations and Transnational Criminal Syndicates utilize digital
    assets in connection with illicit activities.
        (b) Scope.--This review shall include an analysis of whether the
    Securities and Exchange Commission and the Commodity Futures Trading
    Commission have the necessary tools and resources to effectively
    detect, disrupt, and deter illicit financial activity.
        (c) Report.--The two Commissions shall jointly issue a report to
    the Committees on Agriculture and on Financial Services of the House of
    Representatives and the Committees on Agriculture, Nutrition, and
    Forestry and on Banking, Housing, and Urban Affairs of the Senate on
    the findings of the Commissions.

    SEC. 510. CONFLICT OF INTEREST RULEMAKING.

        No later than 360 days after the date of the enactment of this Act,
    the Commodity Futures Trading Commission shall issue rules establishing
    requirements for the identification, mitigation, and resolution of
    conflicts of interest among and across registered entities (within the
    meaning of the Commodity Exchange Act) and persons required to be
    registered with the Commission, including conflicts of interest related
    to vertically integrated market structures and their varying
    responsibilities.

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

        (a) Short Title.--This Act may be cited as the ``Digital Asset
    Market Clarity Act of 2025'' or the ``CLARITY Act of 2025''.
        (b) Table of Contents.--The table of contents for this Act is as
    follows:

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

    Sec. 101. Definitions under the Securities Act of 1933.
    Sec. 102. Definitions under the Securities Exchange Act of 1934.
    Sec. 103. Definitions under the Commodity Exchange Act.
    Sec. 104. Definitions under this Act.
    Sec. 105. Rulemakings.
    Sec. 106. Provisional registration for digital commodity exchanges,
                                brokers, and dealers.
    Sec. 107. Commodity Exchange Act and securities laws savings
                                provisions.
    Sec. 108. Administrative requirements.
    Sec. 109. International cooperation.
    Sec. 110. Treatment of certain non-controlling blockchain developers.
    Sec. 111. Application of the Bank Secrecy Act.
    Sec. 112. Implementation.
               TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES

    Sec. 201. Treatment of investment contract assets.
    Sec. 202. Exempted primary transactions in digital commodities.
    Sec. 203. Treatment of secondary transactions in digital commodities
                                that originally involved investment
                                contracts.
    Sec. 204. Requirements for offers and sales of digital commodities by
                                digital commodity related persons and
                                digital commodity affiliated persons.
    Sec. 205. Mature blockchain system requirements.
    Sec. 206. Effective date.
       TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
                              EXCHANGE COMMISSION

    Sec. 301. Treatment of digital commodities and permitted payment
                                stablecoins.
    Sec. 302. Anti-fraud authority over permitted payment stablecoins and
                                certain digital commodity transactions.
    Sec. 303. Eligibility of alternative trading systems.
    Sec. 304. Operation of alternative trading systems.
    Sec. 305. Modernization of recordkeeping requirements.
    Sec. 306. Exemptive authority.
    Sec. 307. Additional registrations with the Commodity Futures Trading
                                Commission.
    Sec. 308. Exempting digital commodities from State securities laws.
    Sec. 309. Exclusion for decentralized finance activities.
    Sec. 310. Treatment of custody activities by banking institutions.
    Sec. 311. Broker and dealer disclosures regarding the treatment of
                                assets.
    Sec. 312. Digital commodity activities that are financial in nature.
    Sec. 313. Effective date; administration.
    Sec. 314. Studies on foreign adversary participation.
      TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
                      COMMODITY FUTURES TRADING COMMISSION

    Sec. 401. Commission jurisdiction over digital commodity transactions.
    Sec. 402. Requiring futures commission merchants to use qualified
                                digital asset custodians.
    Sec. 403. Trading certification and approval for digital commodities.
    Sec. 404. Registration of digital commodity exchanges.
    Sec. 405. Qualified digital asset custodians.
    Sec. 406. Registration and regulation of digital commodity brokers and
                                dealers.
    Sec. 407. Registration of associated persons.
    Sec. 408. Registration of commodity pool operators and commodity
                                trading advisors.
    Sec. 409. Exclusion for decentralized finance activities.
    Sec. 410. Resources for implementation and enforcement.
    Sec. 411. Digital commodity activities by SEC-registered entities.
    Sec. 412. Requirements related to control persons.
    Sec. 413. Effective date.
    Sec. 414. Sense of Congress.
                TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

    Sec. 501. Findings; sense of Congress.
    Sec. 502. Modernization of the Securities and Exchange Commission
                                mission.
    Sec. 503. Strategic Hub for Innovation and Financial Technology.
    Sec. 504. Codification of LabCFTC.
    Sec. 505. Study on decentralized finance.
    Sec. 506. Study on non-fungible tokens.
    Sec. 507. Study on expanding financial literacy amongst digital
                                commodity holders.
    Sec. 508. Study on financial market infrastructure improvements.
    Sec. 509. Study on blockchain in payments.

           TITLE I--DEFINITIONS; RULEMAKING; PROVISIONAL REGISTRATION

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

        Section 2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)) is
    amended by adding at the end the following:
                ``(20) Blockchain.--The term `blockchain' means--
                        ``(A) any technology--
                                ``(i) where data is--
                                        ``(I) shared across a network to
                                    create a distributed ledger of
                                    independently verifiable transactions
                                    or information among network
                                    participants;
                                        ``(II) linked using cryptography to
                                    maintain the integrity of the
                                    distributed ledger and to execute other
                                    functions; and
                                        ``(III) propagated among network
                                    participants to reach consensus on the
                                    state of the distributed ledger and any
                                    other functions; and
                                ``(ii) composed of source code that is
                            publicly available; and
                        ``(B) any similar technology to the technology
                    described in subparagraph (A).
                ``(21) Blockchain application.--The term `blockchain
            application' means any executable software that is deployed to
            a blockchain and composed of source code that is publicly
            available, including a smart contract or any network of smart
            contracts, or other similar technology.
                ``(22) Blockchain protocol.--The term `blockchain protocol'
            means publicly available source code of a blockchain that is
            executed by the network participants of a blockchain to
            facilitate its functioning, or other similar technology.
                ``(23) Blockchain system.--The term `blockchain system'
            means any blockchain, together with its blockchain protocol or
            any blockchain application or network of blockchain
            applications.
                ``(24) Decentralized governance system.--
                        ``(A) In general.--The term `decentralized
                    governance system' means, with respect to a blockchain
                    system, any transparent, rules-based system permitting
                    persons to form consensus or reach agreement in the
                    development, provision, publication, maintenance, or
                    administration of such blockchain system, where
                    participation is not limited to, or under the effective
                    control of, any person or group of persons under common
                    control.
                        ``(B) Relationship of persons to decentralized
                    governance systems.--With respect to a decentralized
                    governance system, the decentralized governance system
                    and any persons participating in the decentralized
                    governance system shall be treated as separate persons
                    unless such persons are under common control or acting
                    pursuant to an agreement to act in concert.
                        ``(C) Legal entities for decentralized governance
                    systems.--The term `decentralized governance system'
                    shall include a legal entity used to implement the
                    rules-based system described in subparagraph (A),
                    provided that the legal entity does not operate
                    pursuant to centralized management. For the purposes of
                    this subparagraph, the delegation of ministerial or
                    administrative authority at the direction of the
                    participants in a decentralized governance system shall
                    not be construed to be centralized management.
                ``(25) Digital asset.--The term `digital asset' means any
            digital representation of value which is recorded on a
            cryptographically-secured distributed ledger or other similar
            technology.
                ``(26) Digital commodity.--The term `digital commodity' has
            the meaning given that term under section 1a of the Commodity
            Exchange Act (7 U.S.C. 1a).
                ``(27) Digital commodity affiliated person.--The term
            `digital commodity affiliated person' means a person (including
            a digital commodity related person) that, with respect to any
            digital commodity--
                        ``(A) acquires or has any right to acquire 5
                    percent or more of the total outstanding units of such
                    digital commodity from a digital commodity issuer or an
                    agent or underwriter thereof (other than a
                    decentralized governance system);
                        ``(B) is a founder of the digital commodity issuer;
                    or
                        ``(C) is an executive officer, director, trustee,
                    general partner, or person serving in a similar
                    capacity of the digital commodity issuer or held such
                    role at any point in the previous 12-month period.
                ``(28) Digital commodity issuer.--
                        ``(A) In general.--With respect to a digital
                    commodity, the term `digital commodity issuer' means
                    any person that--
                                ``(i) issues or causes to be issued, or
                            proposes to issue or cause to be issued, a unit
                            of such digital commodity to a person; or
                                ``(ii) offers or sells a right to a future
                            issuance of a unit of such digital commodity to
                            a person.
                        ``(B) Prohibition on evasion.--It shall be unlawful
                    for any person to knowingly evade classification as a
                    `digital commodity issuer' and facilitate an
                    arrangement for the primary purpose of effecting an
                    offer, sale, distribution, or other issuance of a
                    digital commodity, including via any arrangement
                    involving the transfer of intellectual property
                    associated with the blockchain system to which the
                    digital commodity relates.
                ``(29) Digital commodity related person.--
                        ``(A) In general.--With respect to a digital
                    commodity issuer, the term `digital commodity related
                    person' means a person--
                                ``(i) that is or was in the previous 6-
                            month period a promoter, senior employee,
                            advisory board member, consultant, advisor, or
                            person serving in a similar capacity; or
                                ``(ii) that acquires or has any right to
                            acquire 1 percent or more of the total
                            outstanding units of such digital commodity
                            from a digital commodity issuer or an agent or
                            underwriter thereof (other than a decentralized
                            governance system).
                        ``(B) Senior employee defined.--In this paragraph
                    and with respect to a digital commodity issuer, the
                    term `senior employee' means any employee materially
                    involved in the management of the digital commodity
                    issuer, including management of the development of the
                    blockchain system to which the digital commodity
                    relates.
                ``(30) End user distribution.--The term `end user
            distribution' means a distribution of a unit of a digital
            commodity that--
                        ``(A) does not involve an exchange of more than a
                    nominal value of cash, property, or other assets; and
                        ``(B) is distributed in a broad and equitable
                    manner based on conditions capable of being satisfied
                    by any participant in the blockchain system, including,
                    as incentive-based rewards--
                                ``(i) to users of the digital commodity or
                            any blockchain system to which the digital
                            commodity relates;
                                ``(ii) for activities directly related to
                            the operation of the blockchain system, such as
                            mining, validating, staking, or other activity
                            directly tied to the operation of the
                            blockchain system; or
                                ``(iii) to the existing holders of another
                            digital commodity, in proportion to the total
                            units of such other digital commodity as are
                            held by each person.
                ``(31) Mature blockchain system.--The term `mature
            blockchain system' means a blockchain system, together with its
            related digital commodity, that is not controlled by any person
            or group of persons under common control.
                ``(32) Permitted payment stablecoin.--
                        ``(A) In general.--The term `permitted payment
                    stablecoin' means a digital asset--
                                ``(i) that is or is designed to be used as
                            a means of payment or settlement;
                                ``(ii) that is denominated in a national
                            currency;
                                ``(iii) the issuer of which is subject to
                            the regulatory and supervisory authority of a
                            State or Federal agency;
                                ``(iv) the issuer of which--
                                        ``(I) is obligated to convert,
                                    redeem, or repurchase for a fixed
                                    amount of monetary value; or
                                        ``(II) represents that the digital
                                    asset will maintain or creates the
                                    reasonable expectation that the digital
                                    asset will maintain a stable value
                                    relative to the value of a fixed amount
                                    of monetary value; and
                                ``(v) that is not--
                                        ``(I) a national currency;
                                        ``(II) a security issued by--
                                                ``(aa) an investment
                                            company registered under
                                            section 8(a) of the Investment
                                            Company Act of 1940 (15 U.S.C.
                                            80a-8(a)); or
                                                ``(bb) a person that would
                                            be an investment company under
                                            the Investment Company Act of
                                            1940 but for paragraphs (1) and
                                            (7) of section 3(c) of that Act
                                            (15 U.S.C. 80a-3(c));
                                        ``(III) a deposit (as defined under
                                    section 3 of the Federal Deposit
                                    Insurance Act (12 U.S.C. 1813)),
                                    regardless of the technology used to
                                    record such deposit; or
                                        ``(IV) an account (as defined in
                                    section 101 of the Federal Credit Union
                                    Act (12 U.S.C. 1752)), regardless of
                                    the technology used to record such
                                    account.
                        ``(B) Monetary value defined.--The term `monetary
                    value'--
                                ``(i) means--
                                        ``(I) a national currency;
                                        ``(II) a deposit (as defined in
                                    section 3 of the Federal Deposit
                                    Insurance Act (12 U.S.C. 1813)) that is
                                    denominated in a national currency; or
                                        ``(III) an account (as defined in
                                    section 101 of the Federal Credit Union
                                    Act (12 U.S.C. 1752)); and
                                ``(ii) does not include any agricultural or
                            other physical commodity (as defined in section
                            1a of the Commodity Exchange Act (7 U.S.C.
                            1a)).
                ``(33) Securities laws.--The term `securities laws' has the
            meaning given that term under section 3(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78c(a)).''.

    SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.

        Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
    78c(a)) is amended--
                (1) by redesignating the second paragraph (80) (relating to
            funding portals) as paragraph (81); and
                (2) by adding at the end the following:
                ``(82) Bank secrecy act.--The term `Bank Secrecy Act'
            means--
                        ``(A) section 21 of the Federal Deposit Insurance
                    Act (12 U.S.C. 1829b);
                        ``(B) chapter 2 of title I of Public Law 91-508 (12
                    U.S.C. 1951 et seq.); and
                        ``(C) subchapter II of chapter 53 of title 31,
                    United States Code.
                ``(83) Additional digital commodity-related terms.--
                        ``(A) Securities act of 1933.--The terms
                    `blockchain system', `decentralized governance system',
                    `digital asset', `digital commodity affiliated person',
                    `digital commodity issuer', `digital commodity related
                    person', `end user distribution', `mature blockchain
                    system', and `permitted payment stablecoin' have the
                    meaning given those terms, respectively, under section
                    2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).
                        ``(B) Commodity exchange act.--The terms `digital
                    commodity', `digital commodity broker', `digital
                    commodity dealer', `digital commodity exchange',
                    `decentralized finance messaging system', and
                    `decentralized finance trading protocol' have the
                    meaning given those terms, respectively, under section
                    1a of the Commodity Exchange Act (7 U.S.C. 1a).''.

    SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.

        (a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
    1a) is amended--
                (1) in paragraph (10)--
                        (A) in subparagraph (A)--
                                (i) by redesignating clauses (iii) and (iv)
                            as clauses (iv) and (v), respectively; and
                                (ii) by inserting after clause (ii) the
                            following:
                                ``(iii) digital commodity;''; and
                        (B) by redesignating subparagraph (B) as
                    subparagraph (C) and inserting after subparagraph (A)
                    the following:
                        ``(B) Exclusion.--For purposes of this paragraph,
                    the term `trading in commodity interests' shall not
                    include transacting in digital commodities for the
                    purpose of--
                                ``(i) acting as a digital commodity
                            custodian;
                                ``(ii) establishing, maintaining, or
                            managing inventory or payment instruments for
                            commercial purposes; or
                                ``(iii) maintaining or supporting the
                            operation of, or validating transactions on, a
                            blockchain system.'';
                (2) in paragraph (11)--
                        (A) in subparagraph (A)(i)--
                                (i) by redesignating subclauses (III) and
                            (IV) as subclauses (IV) and (V), respectively;
                            and
                                (ii) by inserting after subclause (II) the
                            following:
                                        ``(III) digital commodity;''; and
                        (B) by redesignating subparagraph (B) as
                    subparagraph (C) and inserting after subparagraph (A)
                    the following:
                        ``(B) Exclusion.--For purposes of this paragraph,
                    the term `trading in commodity interests' shall not
                    include transacting in digital commodities for the
                    purpose of--
                                ``(i) acting as a digital commodity
                            custodian;
                                ``(ii) establishing, maintaining, or
                            managing inventory or payment instruments for
                            commercial purposes; or
                                ``(iii) maintaining or supporting the
                            operation of, or validating transactions on, a
                            blockchain system.'';
                (3) in paragraph (12)(A)(i)--
                        (A) in subclause (II), by adding at the end a
                    semicolon;
                        (B) by redesignating subclauses (III) and (IV) as
                    subclauses (IV) and (V), respectively; and
                        (C) by inserting after subclause (II) the
                    following:
                                        ``(III) a digital commodity;'';
                (4) by redesignating paragraphs (16) through (51) as
            paragraphs (17) through (52), respectively, and inserting after
            paragraph (15) the following:
                ``(16) Terms related to digital commodities.--
                        ``(A) Associated person of a digital commodity
                    broker.--
                                ``(i) In general.--Except as provided in
                            clause (ii), the term `associated person of a
                            digital commodity broker' means a person who is
                            associated with a digital commodity broker as a
                            partner, officer, employee, or agent (or any
                            person occupying a similar status or performing
                            similar functions) in any capacity that
                            involves--
                                        ``(I) the solicitation or
                                    acceptance of an order for the purchase
                                    or sale of a digital commodity; or
                                        ``(II) the supervision of any
                                    person engaged in the solicitation or
                                    acceptance of an order for the purchase
                                    or sale of a digital commodity.
                                ``(ii) Exclusion.--The term `associated
                            person of a digital commodity broker' does not
                            include any person associated with a digital
                            commodity broker the functions of which are
                            solely clerical or ministerial.
                        ``(B) Associated person of a digital commodity
                    dealer.--
                                ``(i) In general.--Except as provided in
                            clause (ii), the term `associated person of a
                            digital commodity dealer' means a person who is
                            associated with a digital commodity dealer as a
                            partner, officer, employee, or agent (or any
                            person occupying a similar status or performing
                            similar functions) in any capacity that
                            involves--
                                        ``(I) the solicitation or
                                    acceptance of a contract for the
                                    purchase or sale of a digital
                                    commodity; or
                                        ``(II) the supervision of any
                                    person engaged in the solicitation or
                                    acceptance of a contract for the
                                    purchase or sale of a digital
                                    commodity.
                                ``(ii) Exclusion.--The term `associated
                            person of a digital commodity dealer' does not
                            include any person associated with a digital
                            commodity dealer the functions of which are
                            solely clerical or ministerial.
                        ``(C) Bank secrecy act.--The term `Bank Secrecy
                    Act' means--
                                ``(i) section 21 of the Federal Deposit
                            Insurance Act (12 U.S.C. 1829b);
                                ``(ii) chapter 2 of title I of Public Law
                            91-508 (12 U.S.C. 1951 et seq.); and
                                ``(iii) subchapter II of chapter 53 of
                            title 31, United States Code.
                        ``(D) Decentralized finance messaging system.--
                                ``(i) In general.--The term `decentralized
                            finance messaging system' means a software
                            application that provides a user with the
                            ability to create or submit an instruction,
                            communication, or message to a decentralized
                            finance trading protocol for the purpose of
                            executing a transaction by the user.
                                ``(ii) Additional requirements.--The term
                            `decentralized finance messaging system' does
                            not include any system that provides any person
                            other than the user with control over--
                                        ``(I) the funds of the user; or
                                        ``(II) the execution of the
                                    transaction of the user.
                        ``(E) Decentralized finance trading protocol.--
                                ``(i) In general.--The term `decentralized
                            finance trading protocol' means a blockchain
                            system through which multiple participants can
                            execute a financial transaction--
                                        ``(I) in accordance with an
                                    automated rule or algorithm that is
                                    predetermined and non-discretionary;
                                    and
                                        ``(II) without reliance on any
                                    other person to maintain control of the
                                    digital assets of the user during any
                                    part of the financial transaction.
                                ``(ii) Exclusions.--
                                        ``(I) In general.--The term
                                    `decentralized finance trading
                                    protocol' does not include a blockchain
                                    system if--
                                                ``(aa) a person or group of
                                            persons under common control
                                            has the unilateral authority,
                                            directly or indirectly, through
                                            any contract, arrangement,
                                            understanding, relationship, or
                                            otherwise, to control or
                                            materially alter the
                                            functionality, operation, or
                                            rules of consensus or agreement
                                            of the blockchain system; or
                                                ``(bb) the blockchain
                                            system does not operate,
                                            execute and enforce its
                                            operations and transactions
                                            based solely on pre-
                                            established, transparent rules
                                            encoded directly within the
                                            source code of the blockchain
                                            system.
                                        ``(II) Special rule.--For purposes
                                    of subclause (I), a decentralized
                                    governance system shall not be
                                    considered to be a person or a group of
                                    persons under common control.
                        ``(F) Digital commodity.--
                                ``(i) In general.--The term `digital
                            commodity' means a digital asset that is
                            intrinsically linked to a blockchain system,
                            and the value of which is derived from or is
                            reasonably expected to be derived from the use
                            of the blockchain system.
                                ``(ii) Relationship to a blockchain
                            system.--For purposes of this subparagraph, a
                            digital asset is intrinsically linked to a
                            blockchain system if the digital asset is
                            directly related to the functionality or
                            operation of the blockchain system or to the
                            activities or services for which the blockchain
                            system is created or utilized, including where
                            the digital asset is--
                                        ``(I) issued or generated by the
                                    programmatic functioning of the
                                    blockchain system;
                                        ``(II) used to transfer value
                                    between participants in the blockchain
                                    system;
                                        ``(III) used to access the
                                    activities or services of the
                                    blockchain system;
                                        ``(IV) used to participate in the
                                    decentralized governance system of the
                                    blockchain system;
                                        ``(V) used or removed from
                                    circulation in whole or in part to pay
                                    fees or otherwise verify or validate
                                    transactions on the blockchain system;
                                        ``(VI) used as payment or incentive
                                    to participants in the blockchain
                                    system to engage in the activities of
                                    the blockchain system, provide services
                                    to other participants in the blockchain
                                    system, or otherwise participate in the
                                    functionality of the blockchain system;
                                    or
                                        ``(VII) used as payment or
                                    incentive to participants in the
                                    blockchain system to validate
                                    transactions, secure the blockchain
                                    system, provide computational services,
                                    maintain or distribute information, or
                                    otherwise participate in the operations
                                    of the blockchain system.
                                ``(iii) Exclusion.--The term `digital
                            commodity' does not include any of the
                            following:
                                        ``(I) Security.--
                                                ``(aa) Any security, other
                                            than a note, an investment
                                            contract, or a certificate of
                                            interest or participation in
                                            any profit-sharing agreement.
                                                ``(bb) A note, an
                                            investment contract, or a
                                            certificate of interest or
                                            participation in any profit-
                                            sharing agreement that
                                            represents or gives the holder
                                            an ownership interest or other
                                            interest in the revenues,
                                            profits, obligations, debts,
                                            assets, or assets or debts to
                                            be acquired of the issuer of
                                            the digital asset or another
                                            person (other than a
                                            decentralized governance
                                            system).
                                        ``(II) Security derivative.--A
                                    digital asset that, based on its terms
                                    and other characteristics, is,
                                    represents, or is functionally
                                    equivalent to an agreement, contract,
                                    or transaction that is--
                                                ``(aa) a security future,
                                            as defined in section 2a of the
                                            Securities Act of 1933;
                                                ``(bb) a security-based
                                            swap, as defined in section 2a
                                            of the Securities Act of 1933;
                                                ``(cc) a put, call,
                                            straddle, option, or privilege
                                            on any security, certificate of
                                            deposit, or group or index of
                                            securities (including any
                                            interest therein or based on
                                            the value thereof), as defined
                                            in section 2a of the Securities
                                            Act of 1933; or
                                                ``(dd) a put, call,
                                            straddle, option, or privilege
                                            on any security, as defined in
                                            section 2a of the Securities
                                            Act of 1933.
                                        ``(III) Permitted payment
                                    stablecoin.--A digital asset that is a
                                    permitted payment stablecoin.
                                        ``(IV) Banking deposit.--
                                                ``(aa) A deposit (as
                                            defined under section 3 of the
                                            Federal Deposit Insurance Act
                                            (12 U.S.C. 1813)), regardless
                                            of the technology used to
                                            record the deposit.
                                                ``(bb) An account (as
                                            defined in section 101 of the
                                            Federal Credit Union Act (12
                                            U.S.C. 1752)), regardless of
                                            the technology used to record
                                            the account.
                                        ``(V) Commodity.--A digital asset
                                    that references, represents an interest
                                    in, or is functionally equivalent to--
                                                ``(aa) an agricultural
                                            commodity;
                                                ``(bb) an excluded
                                            commodity, other than a
                                            security; or
                                                ``(cc) an exempt commodity,
                                            other than the digital
                                            commodity itself, as shall be
                                            further defined by the
                                            Commission.
                                        ``(VI) Commodity derivative.--A
                                    digital asset that, based on its terms
                                    and other characteristics, is,
                                    represents, or is functionally
                                    equivalent to an agreement, contract,
                                    or transaction that is--
                                                ``(aa) a contract of sale
                                            of a commodity for future
                                            delivery or an option thereon;
                                                ``(bb) a security futures
                                            product;
                                                ``(cc) a swap;
                                                ``(dd) an agreement,
                                            contract, or transaction
                                            described in section
                                            2(c)(2)(C)(i) or 2(c)(2)(D)(i);
                                                ``(ee) a commodity option
                                            authorized under section 4c; or
                                                ``(ff) a leverage
                                            transaction authorized under
                                            section 19.
                                        ``(VII) Pooled investment
                                    vehicle.--
                                                ``(aa) In general.--A
                                            digital asset that, based on
                                            its terms and other
                                            characteristics, is,
                                            represents, or is functionally
                                            equivalent to--

                                                        ``(AA) a commodity
                                                    pool, as defined in
                                                    this Act; or

                                                        ``(BB) a pooled
                                                    investment vehicle.

                                                ``(bb) Pooled investment
                                            vehicle defined.--In this
                                            subclause, the term `pooled
                                            investment vehicle' means any
                                            investment company as defined
                                            in section 3(a) of the
                                            Investment Company Act of 1940
                                            (15 U.S.C. 80a-3(a)) or any
                                            company that would be an
                                            investment company under
                                            section 3(a) of such Act but
                                            for the exclusion provided from
                                            that definition by paragraph
                                            (1), (7), or (9) of section
                                            3(c) of such Act (15 U.S.C.
                                            80a-3(c)(1), (7), or (9)).
                                        ``(VIII) Good, collectible, and
                                    other non-commodity asset.--A digital
                                    asset that has inherent value, utility,
                                    or significance beyond its mere
                                    existence as a digital asset, including
                                    the digital equivalent of a tangible or
                                    intangible good, such as--
                                                ``(aa) a work of art, a
                                            musical composition, a literary
                                            work, or other intellectual
                                            property;
                                                ``(bb) collectibles,
                                            merchandise, virtual land, and
                                            video game assets;
                                                ``(cc) affinity, rewards,
                                            or loyalty points, including
                                            airline miles or credit card
                                            points, that are not primarily
                                            speculative in nature; or
                                                ``(dd) rights, licenses,
                                            and tickets.
                                ``(iv) Rule of construction.--No
                            presumption shall exist that a digital asset is
                            a security, nor shall a digital asset be
                            excluded from being a digital commodity
                            pursuant to clause (iii)(I), solely due to--
                                        ``(I) the digital asset providing
                                    voting or economic rights with respect
                                    to the blockchain system to which the
                                    digital asset relates or the
                                    decentralized governance system of the
                                    blockchain system;
                                        ``(II) the value of the digital
                                    asset having the potential to
                                    appreciate or depreciate in response to
                                    the efforts, operations, or financial
                                    performance of the decentralized
                                    governance system of the blockchain
                                    system to which the digital asset
                                    relates; or
                                        ``(III) the value of the digital
                                    asset appreciating or depreciating due
                                    to the adoption and use of the
                                    blockchain system to which the digital
                                    asset relates or the decentralized
                                    governance system of the blockchain
                                    system.
                        ``(G) Digital commodity broker.--
                                ``(i) In general.--The term `digital
                            commodity broker' means any person who, as a
                            regular business--
                                        ``(I) is engaged in--
                                                ``(aa) soliciting or
                                            accepting an order from a
                                            customer for--

                                                        ``(AA) the purchase
                                                    or sale of a digital
                                                    commodity; or

                                                        ``(BB) an
                                                    agreement, contract, or
                                                    transaction described
                                                    in section
                                                    2(c)(2)(D)(iv); and

                                                ``(bb) in conjunction with
                                            the activities in item (aa),
                                            accepts or maintains control
                                            over--

                                                        ``(AA) the funds of
                                                    any customer; or

                                                        ``(BB) the
                                                    execution of any
                                                    transaction of a
                                                    customer;

                                        ``(II) is engaged in soliciting or
                                    accepting orders from a customer for
                                    the purchase or sale of a unit of a
                                    digital commodity on or subject to the
                                    rules of a registered entity; or
                                        ``(III) is registered with the
                                    Commission as a digital commodity
                                    broker.
                                ``(ii) Exceptions.--The term `digital
                            commodity broker' does not include a person
                            solely because the person--
                                        ``(I) solicits or accepts an order
                                    described in clause (i)(I)(aa)(AA) from
                                    a customer who is an eligible contract
                                    participant;
                                        ``(II) enters into a digital
                                    commodity transaction the primary
                                    purpose of which is to make, send,
                                    receive, or facilitate payments,
                                    whether involving a payment service
                                    provider or on a peer-to-peer basis; or
                                        ``(III) is a bank (as defined under
                                    section 3(a) of the Securities Exchange
                                    Act of 1934) engaging in certain
                                    banking activities with respect to a
                                    digital commodity in the same or a
                                    similar manner as a bank is excluded
                                    from the definition of a broker under
                                    such section, as determined by the
                                    Commission.
                                ``(iii) Further definition.--The
                            Commission, by rule or regulation, may exclude
                            from the term `digital commodity broker' any
                            person or class of persons if the Commission
                            determines that the rule or regulation will
                            effectuate the purposes of this Act.
                        ``(H) Digital commodity dealer.--
                                ``(i) In general.--The term `digital
                            commodity dealer' means any person who, as a
                            regular business--
                                        ``(I) is, or offers to be a
                                    counterparty to a person for the
                                    purchase or sale of a digital commodity
                                    as a regular business, and in
                                    conjunction with the activities,
                                    accepts or maintains control over the
                                    funds of any counterparty; or
                                        ``(II) is registered with the
                                    Commission as a digital commodity
                                    dealer.
                                ``(ii) Exception.--The term `digital
                            commodity dealer' does not include a person
                            solely because the person--
                                        ``(I) is or offers to be a
                                    counterparty to a person who is an
                                    eligible contract participant;
                                        ``(II) enters into a digital
                                    commodity transaction with an eligible
                                    contract participant;
                                        ``(III) enters into a digital
                                    commodity transaction on or through a
                                    registered digital commodity exchange,
                                    with a registered digital commodity
                                    broker, or through a decentralized
                                    finance trading protocol;
                                        ``(IV) enters into a digital
                                    commodity transaction for the person's
                                    own account, either individually or in
                                    a fiduciary capacity, but not as a part
                                    of a regular business;
                                        ``(V) enters into a digital
                                    commodity transaction the primary
                                    purpose of which is to make, send,
                                    receive, or facilitate payments,
                                    whether involving a payment service
                                    provider or on a peer-to-peer basis; or
                                        ``(VI) is a bank (as defined under
                                    section 3(a) of the Securities Exchange
                                    Act of 1934) engaging in certain
                                    banking activities with respect to a
                                    digital commodity in the same or a
                                    similar manner as a bank is excluded
                                    from the definition of a dealer under
                                    section 3(a)(5) of such Act, as
                                    determined by the Commission.
                                ``(iii) Further definition.--The
                            Commission, by rule or regulation, may exclude
                            from the term `digital commodity dealer' any
                            person or class of persons if the Commission
                            determines that the rule or regulation will
                            effectuate the purposes of this Act.
                        ``(I) Digital commodity exchange.--The term
                    `digital commodity exchange' means a trading facility
                    that offers or seeks to offer a cash or spot market in
                    at least 1 digital commodity.
                        ``(J) Mixed digital asset transaction.--The term
                    `mixed digital asset transaction' means a transaction
                    in which a digital commodity is traded for a security.
                        ``(K) Terms defined under the securities act of
                    1933.--The terms `blockchain system', `decentralized
                    governance system', `digital asset', `digital commodity
                    issuer', `digital commodity affiliated person',
                    `digital commodity related person', `end user
                    distribution', `mature blockchain system', and
                    `permitted payment stablecoin' have the meaning given
                    those terms, respectively, under section 2(a) of the
                    Securities Act of 1933 (15 U.S.C. 77b(a)).''; and
                (5) in paragraph (41) (as so redesignated by paragraph (4)
            of this subsection)--
                        (A) by striking ``and'' at the end of subparagraph
                    (E);
                        (B) by striking the period at the end of
                    subparagraph (F) and inserting ``; and''; and
                        (C) by adding at the end the following:
                        ``(G) a digital commodity exchange registered under
                    section 5i.''.
        (b) Conforming Amendments.--
                (1) Each of the following provisions of law is amended by
            striking ``1a(18)'' and inserting ``1a(19)'':
                        (A) Section 4s(h)(5)(A)(i) of the Commodity
                    Exchange Act (7 U.S.C. 6s(h)(5)(A)(i)).
                        (B) Section 5(e) of the Securities Act of 1933 (15
                    U.S.C. 77e(e)).
                        (C) Section 6(g)(5)(B) of the Securities Exchange
                    Act of 1934 (15 U.S.C. 78f(g)(5)(B)).
                        (D) Section 15F(h)(5)(A)(i) of the Securities
                    Exchange Act of 1934 (15 U.S.C. 78o-10(h)(5)(A)(i)).
                (2) Section 752 of the Wall Street Transparency and
            Accountability Act of 2010 (15 U.S.C. 8325) is amended by
            striking ``1a(39)'' and inserting ``1a(40)''.
                (3) Section 4s(f)(1)(D) of the Commodity Exchange Act (7
            U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)'' and
            inserting ``1a(48)(A)''.
                (4) Each of the following provisions of the Commodity
            Exchange Act is amended by striking ``1a(47)(A)(v)'' and
            inserting ``1a(48)(A)(v)'':
                        (A) Section 4t(b)(1)(C) (7 U.S.C. 6t(b)(1)(C)).
                        (B) Section 5(d)(23) (7 U.S.C. 7(d)(23)).
                        (C) Section 5b(k)(3) (7 U.S.C. 7a-1(k)(3)).
                        (D) Section 5h(f)(10)(A)(iii) (7 U.S.C. 7b-
                    3(f)(10)(A)(iii)).
                (5) Section 21(f)(4)(C) of the Commodity Exchange Act (7
            U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and
            inserting ``1a(49)''.
                (6) Section 403 of the Legal Certainty for Bank Products
            Act of 2000 (7 U.S.C. 27a) is amended--
                        (A) in subsection (a)(2), by striking
                    ``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)''; and
                        (B) in each of subsections (b)(1) and (c)(2), by
                    striking ``1a(47)'' and inserting ``1a(48)''.
                (7) Section 712 of the Wall Street Transparency and
            Accountability Act of 2010 (15 U.S.C. 8302) is amended--
                        (A) in subsection (a)(8), by striking ``1a(47)(D)''
                    each place it appears and inserting ``1a(48)(D)''; and
                        (B) in subsection (d)(1), by striking
                    ``1a(47)(A)(v)'' each place it appears and inserting
                    ``1a(48)(A)(v)''.

    SEC. 104. DEFINITIONS UNDER THIS ACT.

        In this Act:
                (1) Definitions under the commodity exchange act.--The
            terms ``decentralized finance messaging system'',
            ``decentralized finance trading protocol'', ``digital
            commodity'', ``digital commodity broker'', ``digital commodity
            dealer'', ``digital commodity exchange'', and ``mixed digital
            asset transaction'' have the meaning given those terms,
            respectively, under section 1a of the Commodity Exchange Act (7
            U.S.C. 1a).
                (2) Definitions under the securities act of 1933.--The
            terms ``blockchain'', ``blockchain system'', ``blockchain
            protocol'', ``decentralized governance system'', ``digital
            asset'', ``digital commodity issuer'', ``end user
            distribution'', ``mature blockchain system'', ``permitted
            payment stablecoin'', and ``securities laws'' have the meaning
            given those terms, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)).
                (3) Definitions under the securities exchange act of
            1934.--The terms ``Bank Secrecy Act'', ``securities laws'', and
            ``self-regulatory organization'' have the meaning given those
            terms, respectively, under section 3(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78c(a)).

    SEC. 105. RULEMAKINGS.

        (a) Definitions.--The Commodity Futures Trading Commission and the
    Securities and Exchange Commission shall jointly issue rules to further
    define the following terms:
                (1) The terms--
                        (A) ``blockchain'', ``blockchain application'',
                    ``blockchain system'', ``blockchain protocol'',
                    ``decentralized governance system'', ``digital
                    commodity affiliated person'', ``digital commodity
                    issuer'', ``digital commodity related person'', ``end
                    user distribution'', and ``mature blockchain system'',
                    as defined under section 2(a) of the Securities Act of
                    1933;
                        (B) ``unilateral authority'', as such term is used
                    in section 42 of the Securities Exchange Act of 1934
                    and section 1a of the Commodity Exchange Act; and
                        (C) ``programmatic functioning'', as such term is
                    used in sections 4C of the Securities Act of 1933,
                    section 42 of the Securities Exchange Act of 1934, and
                    section 1a of the Commodity Exchange Act.
                (2) The terms ``digital commodity'', ``decentralized
            finance messaging system'', and ``decentralized finance trading
            protocol'', as defined under section 1a of the Commodity
            Exchange Act.
        (b) Joint Rulemaking for Mixed Digital Asset Transactions.--The
    Securities and Exchange Commission and the Commodity Futures Trading
    Commission shall jointly issue rules applicable to mixed digital asset
    transactions under this Act and the amendments made by this Act,
    including by further defining such term.
        (c) Protection of Self-Custody.--
                (1) In general.--A United States individual shall retain
            the right to--
                        (A) maintain a hardware wallet or software wallet
                    for the purpose of facilitating the individual's own
                    lawful custody of digital assets; and
                        (B) engage in direct, peer-to-peer transactions in
                    digital assets with another individual or entity for
                    the individual's own lawful purposes using a hardware
                    wallet or software wallet, if--
                                (i) such other individual or entity is not
                            a financial institution (as defined in section
                            5312 of title 31, United States Code); and
                                (ii) the transactions do not involve any
                            property or interests in property that are
                            blocked pursuant to, or are otherwise
                            prohibited by, United States sanctions.
                (2) Application.--This subsection--
                        (A) applies solely to personal use by individuals;
                    and
                        (B) does not apply to individuals acting in a
                    custodial or fiduciary capacity for others.
                (3) Rule of construction.--Nothing in this subsection shall
            be construed to limit the authority of the Secretary of the
            Treasury, the Securities and Exchange Commission, the Commodity
            Futures Trading Commission, the Board of Governors of the
            Federal Reserve System, the Comptroller of the Currency, the
            Federal Deposit Insurance Corporation, or the National Credit
            Union Administration to carry out any enforcement action or
            special measure authorized under applicable law, including--
                        (A) the Bank Secrecy Act, section 9714 of the
                    Combating Russian Money Laundering Act (31 U.S.C. 5318A
                    note), and section 7213A of the Fentanyl Sanctions Act
                    (21 U.S.C. 2313a); or
                        (B) any other law relating to illicit finance,
                    money laundering, terrorism financing, or United States
                    sanctions.
        (d) Joint Rulemaking, Procedures, or Guidance for Delisting.--Not
    later than 180 days after the date of the enactment of this Act, the
    Commodity Futures Trading Commission and the Securities and Exchange
    Commission shall jointly issue rules, procedures, or guidance (as
    determined appropriate by the Commissions) regarding the process to
    delist an asset for trading under section 106 of this Act if the
    Commissions determine that the listing is inconsistent with the
    Commodity Exchange Act, the securities laws (including regulations
    under those laws), or this Act.
        (e) Joint Rules for Portfolio Margining Determinations.--
                (1) In general.--Not later than 360 days after the date of
            the enactment of this Act, the Commodity Futures Trading
            Commission and the Securities and Exchange Commission shall
            jointly issue rules describing the process for persons
            registered with either such Commission to seek a joint order or
            determination with respect to margin, customer protection,
            segregation, or other requirements as necessary to facilitate
            portfolio margining of securities (including related extensions
            of credit), security-based swaps, contracts for future
            delivery, options on a contract for future delivery, swaps, and
            digital commodities, or any subset thereof, in--
                        (A) a securities account carried by a registered
                    broker or dealer or a security-based swap account
                    carried by a registered security-based swap dealer;
                        (B) a futures or cleared swap account carried by a
                    registered futures commission merchant;
                        (C) a swap account carried by a swap dealer; or
                        (D) a digital commodity account carried by a
                    registered digital commodity broker or digital
                    commodity dealer that is also registered in such other
                    capacity as is necessary to also carry the other
                    customer or counterparty positions being held in the
                    account.
                (2) Process.--With respect to a joint order or
            determination described in paragraph (1), the rules required to
            be issued pursuant to paragraph (1) shall require--
                        (A) the joint order or determination to be issued
                    only if the order or determination is in the public
                    interest and provides for the appropriate protection of
                    customers;
                        (B) applicants to file a standard application, in a
                    form and manner determined by the Securities and
                    Exchange Commission and the Commodity Futures Trading
                    Commission, which shall include the information
                    necessary to make the joint order or determination;
                        (C) the Securities and Exchange Commission and the
                    Commodity Futures Trading Commission to make a final
                    determination not later than 270 days after the filing
                    of a completed application;
                        (D) the Securities and Exchange Commission and the
                    Commodity Futures Trading Commission to consider the
                    public interest of the joint order or determination
                    through the solicitation of public comments; and
                        (E) the Securities and Exchange Commission and the
                    Commodity Futures Trading Commission to consult with
                    other relevant foreign or domestic regulators,
                    including the Board of Governors of the Federal Reserve
                    System, the Federal Deposit Insurance Corporation, and
                    the Office of the Comptroller of the Currency, as
                    appropriate.
        (f) Capital Requirements to Address Netting Agreements.--No later
    than 360 days following the date of enactment of this Act, the Board of
    Governors of the Federal Reserve System, the Comptroller of the
    Currency, and the Federal Deposit Insurance Corporation shall develop
    risk-based and leverage capital requirements for insured depository
    institutions, depository institution holding companies, and nonbank
    financial companies supervised by the Board of Governors that address
    netting agreements that provide for termination and close-out netting
    across multiple types of financial transactions, consistent with
    subsection (e), in the event of a counterparty's default.

    SEC. 106. PROVISIONAL REGISTRATION FOR DIGITAL COMMODITY EXCHANGES,
                  BROKERS, AND DEALERS.

        (a) In General.--
                (1) Provisional registration.--Within 180 days after the
            date of the enactment of this Act, a person acting as a digital
            commodity exchange, digital commodity broker, or digital
            commodity dealer shall file a statement of provisional
            registration with the Commodity Futures Trading Commission (in
            this subsection referred to as the ``Commission''), unless
            exempted from registration under section 5k of the Commodity
            Exchange Act, as a--
                        (A) digital commodity exchange, for a person acting
                    as a digital commodity exchange;
                        (B) digital commodity broker, for a person acting
                    as a digital commodity broker; or
                        (C) digital commodity dealer, for a person acting
                    as a digital commodity dealer.
                (2) Conditions.--
                        (A) Non-registered entities.--A person, other than
                    a registered entity, who files a statement of
                    provisional registration under paragraph (1) shall be
                    considered to be in compliance with this section if the
                    person--
                                (i) is a member of a futures association
                            registered under section 17 of the Commodity
                            Exchange Act, and complies with the rules of
                            the association, including the rules of the
                            association pertaining to customer disclosures
                            and protection of customer assets;
                                (ii) submits to the Commission, in the form
                            and manner determined by the Commission, and
                            continues to materially update, as necessary or
                            required by the Commission, a statement of the
                            nature of the digital commodity-related
                            activities the person is pursuing or intends to
                            pursue;
                                (iii) submits to the Commission and
                            continues to materially update the information
                            required by this subsection;
                                (iv) complies with subsection (c) of this
                            section; and
                                (v) pays all fees and penalties imposed on
                            the person under section 410 of this Act.
                        (B) Registered entity.--
                                (i) In general.--A registered entity who
                            files a statement of provisional registration
                            under paragraph (1) shall be considered to be
                            in compliance with this section if the person--
                                        (I) submits to the Commission and
                                    continues to materially update, a
                                    statement of the nature of the digital
                                    commodity-related activities the person
                                    is pursuing or intends to pursue;
                                        (II) submits, and continues to
                                    materially update, the information
                                    required by this subsection and
                                    subsection (b);
                                        (III) complies with subsection (c);
                                    and
                                        (IV) pays all fees and penalties
                                    imposed on the person under section
                                    410.
                                (ii) Definition.--In this paragraph, the
                            term ``registered entity'' means a person who
                            is designated by the Commodity Futures Trading
                            Commission as a contract market or registered
                            with the Commodity Futures Trading Commission
                            as a swap execution facility.
        (b) Disclosure of General Information.--A person who files a
    statement of provisional registration under subsection (a) shall
    disclose to the Commission, unless already known to the Commission, the
    following:
                (1) Management.--Information concerning the management of
            the person, including information describing--
                        (A) the ownership and management of the person;
                        (B) the financial condition of the person;
                        (C) affiliated entities;
                        (D) potential conflicts of interest;
                        (E) the address of the person, including--
                                (i) the place of incorporation;
                                (ii) principal place of business; and
                                (iii) an address for service of process;
                            and
                        (F) a list of the States in which the person has
                    operations.
                (2) Digital commodity operations.--Information concerning
            the digital commodity operations of the person, including--
                        (A) a general description of the person's business
                    and the terms of service for United States customers;
                        (B) a description of the person's account approval
                    process;
                        (C) any rulebook or other customer order
                    fulfillment rules or procedures;
                        (D) risk management procedures;
                        (E) a description of the product listing process;
                    and
                        (F) policies and procedures for compliance with the
                    Bank Secrecy Act.
        (c) Requirements.--A person who files a statement of provisional
    registration under subsection (a) shall comply with the following
    requirements:
                (1) Statutory disqualifications.--Except to the extent
            otherwise specifically provided by the Commission or any
            registered futures association rule, regulation, or order, the
            person shall not permit an individual who is subject to a
            statutory disqualification under paragraph (2) or (3) of
            section 8a of the Commodity Exchange Act or subject to a
            statutory disqualification as defined in section 3(a) of the
            Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) to effect or
            be involved in effecting transactions on behalf of the person,
            if the person knew, or in the exercise of reasonable care
            should have known, of the statutory disqualification.
                (2) Books and records.--The person shall keep their books
            and records open to inspection and examination by the
            Commission and by any registered futures association or
            national securities association of which the person is a
            member.
                (3) Customer disclosures.--The person shall disclose to
            customers--
                        (A) information about the material risks and
                    characteristics of the assets listed for trading on the
                    person;
                        (B) information about the legal entity that
                    custodies customer assets and the general manner in
                    which the digital assets of the customer will be and
                    are custodied;
                        (C) information concerning the policies and
                    procedures of the person that are related to the
                    protection of customers of the person, including
                    information regarding any conflicts of interest or
                    material affiliates; and
                        (D) in their disclosure documents, offering
                    documents, and promotional material--
                                (i) in a prominent manner, that they are
                            not registered with or regulated by the
                            Commission; and
                                (ii) the contact information for the
                            whistleblower, complaint, and reparation
                            programs of the Commission.
        (d) Authority.--
                (1) In general.--
                        (A) Deemed registration.--A person who remains in
                    compliance with the requirements of this section is
                    deemed to be--
                                (i) a registered digital commodity
                            exchange, pursuant to section 5i, if the person
                            filed a statement of provisional registration
                            as a digital commodity exchange; or
                                (ii) a registered digital commodity broker
                            or dealer, pursuant to section 4u, if the
                            person filed a statement of provisional
                            registration as a digital commodity broker or
                            dealer, as the case may be.
                        (B) Sunset.--The applicability of subparagraph (A)
                    shall expire--
                                (i) in the case of a digital commodity
                            exchange deemed registered pursuant to
                            subparagraph (A)(i), 180 days after the final
                            effective date of the rulemakings required
                            under 5i; or
                                (ii) in the case of a digital commodity
                            broker or dealer deemed registered pursuant to
                            subparagraph (A)(ii), 180 days after the final
                            effective date of the rulemakings required
                            under 4u.
                (2) Superiority of commission-adopted requirements.--The
            requirements of the preceding provisions of this section shall
            not supersede any requirements applicable to registered persons
            adopted by the Commission under the Commodity Exchange Act.
        (e) Delisting.--This section shall not be construed to limit the
    authority of the Commission and the Securities and Exchange Commission
    to jointly require a person to delist an asset for trading if the
    Commission and the Securities and Exchange Commission determine, in
    accordance with rules, procedures or guidance jointly issued by the
    Commission and the Securities and Exchange Commission to delist an
    asset for trading, that the listing is inconsistent with the Commodity
    Exchange Act, the securities laws (including regulations under those
    laws), or this Act.
        (f) Registration.--A person may not file a statement of provisional
    registration with the Commission after the Commission has finalized its
    rules for the registration of digital commodity exchanges, digital
    commodity brokers, or digital commodity dealers, as appropriate.
        (g) Rulemaking.--
                (1) In general.--Within 180 days after the date of the
            enactment of this Act, a registered futures association shall
            adopt and enforce rules applicable to persons required by
            subsection (a)(2) to be members of the association.
                (2) Fees.--The rules adopted under subparagraph (A) of this
            paragraph may provide for dues in accordance with section
            17(b)(6) of the Commodity Exchange Act.
                (3) Effect.--A registered futures association shall submit
            to the Commission any rule adopted under subparagraph (A) of
            this paragraph, which shall take effect pursuant to the
            requirements of section 17(j) of the Commodity Exchange Act.
        (h) Liability of the Filer.--It shall be unlawful for any person to
    provide false information in support of a filing under this section if
    the person knew or reasonably should have known that the information
    was false.
        (i) Whistleblower Enforcement.--For purposes of section 23 of the
    Commodity Exchange Act, the term ``this Act'' includes this section.
        (j) Federal Preemption.--
                (1) This section shall supersede any State or local law
            (other than antifraud provisions of general applicability) that
            regulates the offer or sale of digital assets in the case of a
            transaction conducted in compliance with this section and
            conducted on or through a person who files a statement of
            provisional registration under subsection (a) and complies with
            the requirements of this section.
                (2) Notwithstanding any other provision of law, the
            Commission shall have exclusive jurisdiction over the digital
            asset activities of a person who--
                        (A) files a statement of provisional registration
                    under subsection (a); and
                        (B) complies with the requirements of this section.

    SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
                  PROVISIONS.

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

    SEC. 108. ADMINISTRATIVE REQUIREMENTS.

        Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
    amended--
                (1) in paragraph (3)--
                        (A) in subparagraph (B), by striking ``or'' at the
                    end;
                        (B) in subparagraph (C), by striking the period and
                    inserting ``; or''; and
                        (C) by adding at the end the following:
                        ``(D) a contract of sale of a digital commodity.'';
                (2) in paragraph (4)--
                        (A) in subparagraph (A)--
                                (i) in clause (ii), by striking ``or'' at
                            the end;
                                (ii) in clause (iii), by striking the
                            period and inserting ``; or''; and
                                (iii) by adding at the end the following:
                                ``(iv) a contract of sale of a digital
                            commodity.'';
                        (B) in subparagraph (B)--
                                (i) in clause (ii), by striking ``or'' at
                            the end;
                                (ii) in clause (iii), by striking the
                            period and inserting ``; or''; and
                                (iii) by adding at the end the following:
                                ``(iv) a contract of sale of a digital
                            commodity.''; and
                        (C) in subparagraph (C)--
                                (i) in clause (ii), by striking ``or'' at
                            the end;
                                (ii) by striking ``(iii) a swap, provided
                            however,'' and inserting the following:
                                ``(iii) a swap; or
                                ``(iv) a contract of sale of a digital
                            commodity,
                    provided, however,''; and
                                (iii) by striking ``clauses (i), (ii), or
                            (iii)'' and insert ``any of clauses (i) through
                            (iv)''.

    SEC. 109. INTERNATIONAL COOPERATION.

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

    SEC. 110. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN DEVELOPERS.

        (a) In General.--Notwithstanding applicable law, a non-controlling
    blockchain developer or provider of a blockchain service shall not be
    treated as a money transmitter or as engaged in ``money transmitting''
    or, following the date of enactment of this Act, be otherwise subject
    to any new registration requirement that is substantially similar to
    the requirement that currently applies to money transmitters, solely on
    the basis of--
                (1) creating or publishing software to facilitate the
            creation of, or provision of maintenance services to, a
            blockchain or blockchain service;
                (2) providing hardware or software to facilitate a
            customer's own custody or safekeeping of the customer's digital
            assets; or
                (3) providing infrastructure support to maintain a
            blockchain service.
        (b) Rule of Construction.--Nothing in this section shall be
    construed to affect whether a blockchain developer or provider of a
    blockchain service is otherwise subject to classification or treatment
    as a money transmitter, or as engaged in ``money transmitting'', under
    applicable State or Federal law, including laws relating to anti-money
    laundering or countering the financing of terrorism, based on conduct
    outside the scope of subsection (a). Nothing in this section shall be
    construed to affect whether a blockchain developer or provider of a
    blockchain service is otherwise subject to classification or treatment
    as a financial institution under the Bank Secrecy Act, this Act, or any
    Act enacted after the date of enactment of this Act.
        (c) Effect on Other Laws.--
                (1) Intellectual property law.--Nothing in this section
            shall be construed to limit or expand any law pertaining to
            intellectual property.
                (2) State law.--Nothing in this section shall be construed
            to prevent any State from enforcing any State law that is
            consistent with this section. No cause of action may be brought
            and no liability may be imposed under any State or local law
            that is inconsistent with this section.
        (d) Definitions.--In this section:
                (1) Blockchain developer.--The term ``blockchain
            developer'' means any person or business that creates or
            publishes software to facilitate the creation of, or provide
            maintenance to, a blockchain or a blockchain service.
                (2) Blockchain service.--The term ``blockchain service''
            means any information, transaction, or computing service or
            system that provides or enables access to a blockchain network
            by multiple users, including specifically a service or system
            that enables users to send, receive, exchange, or store digital
            assets described by blockchain networks.
                (3) Non-controlling blockchain developer or provider of a
            blockchain service.--The term ``non-controlling blockchain
            developer or provider of a blockchain service'' means a
            blockchain developer or provider of a blockchain service that
            in the regular course of operations, does not have the legal
            right or the unilateral and independent ability to control,
            initiate upon demand, or effectuate transactions involving
            digital assets that users are entitled to, without the
            approval, consent, or direction of any other third party.

    SEC. 111. APPLICATION OF THE BANK SECRECY ACT.

        (a) In General.--Section 5312(c)(1)(A) of title 31, United States
    Code, is amended--
                (1) by inserting ``digital commodity broker, digital
            commodity dealer,'' after ``futures commission merchant,''; and
                (2) by inserting before the period the following: ``and any
            digital commodity exchange registered, or required to register,
            under the Commodity Exchange Act which permits direct customer
            access''.
        (b) GAO Study.--
                (1) In general.--The Comptroller General of the United
            States, in consultation with the Secretary of the Treasury,
            shall conduct a study to--
                        (A) assess the risks posed by centralized
                    intermediaries that are primarily located in foreign
                    jurisdictions that provide services to U.S. persons
                    without regulatory requirements that are substantially
                    similar to the requirements of the Bank Secrecy Act;
                    and
                        (B) provide any regulatory or legislative
                    recommendations to address these risks under
                    subparagraph (A).
                (2) Report.--Not later than 1 year after the date of
            enactment of this Act, the Comptroller General shall issue a
            report to Congress containing all findings and determinations
            made in carrying out the study required under paragraph (1).

    SEC. 112. IMPLEMENTATION.

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

               TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES

    SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.

        (a) Securities Act of 1933.--Section 2(a) of the Securities Act of
    1933 (15 U.S.C. 77b(a)), as amended by section 101, is further
    amended--
                (1) in paragraph (1), by adding at the end the following:
            ``The term `investment contract' does not include an investment
            contract asset.''; and
                (2) by adding at the end the following:
                ``(34) The term `investment contract asset' means a digital
            commodity--
                        ``(A) that can be exclusively possessed and
                    transferred, person to person, without necessary
                    reliance on an intermediary, and is recorded on a
                    blockchain; and
                        ``(B) sold or otherwise transferred, or intended to
                    be sold or otherwise transferred, pursuant to an
                    investment contract.''.
        (b) Investment Advisers Act of 1940.--Section 202(a)(18) of the
    Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18)) is amended by
    adding at the end the following: ``The term `investment contract' does
    not include an investment contract asset (as such term is defined under
    section 2(a) of the Securities Act of 1933).''.
        (c) Investment Company Act of 1940.--Section 2(a)(36) of the
    Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36)) is amended by
    adding at the end the following: ``The term `investment contract' does
    not include an investment contract asset (as such term is defined under
    section 2(a) of the Securities Act of 1933).''.
        (d) Securities Exchange Act of 1934.--Section 3(a)(10) of the
    Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is amended by
    adding at the end the following: ``The term `investment contract' does
    not include an investment contract asset (as such term is defined under
    section 2(a) of the Securities Act of 1933).''.
        (e) Securities Investor Protection Act of 1970.--Section 16(14) of
    the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll(14)) is
    amended by adding at the end the following: ``The term `investment
    contract' does not include an investment contract asset (as such term
    is defined under section 2(a) of the Securities Act of 1933).''.

    SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL COMMODITIES.

        (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
    is amended--
                (1) in section 4(a), by adding at the end the following:
                ``(8) the offer or sale of an investment contract involving
            units of a digital commodity by its digital commodity issuer
            (including all entities controlled by or under common control
            with the issuer), if--
                        ``(A) the blockchain system to which the digital
                    commodity relates, together with the digital commodity,
                    is certified as a mature blockchain system under
                    section 42 of the Securities Exchange Act of 1934 or
                    the issuer intends for the blockchain system to which
                    the digital commodity relates to be a mature blockchain
                    system by the later of--
                                ``(i) the date that is four years after the
                            first sale of the investment contract involving
                            a unit of such digital commodity in reliance on
                            the exemption provided under this paragraph,
                            subject to any extensions as may be granted by
                            the Commission; or
                                ``(ii) the date that is four years after
                            the effective date of this paragraph;
                        ``(B) the sum of all cash and other consideration
                    to be received by the digital commodity issuer in
                    reliance on the exemption provided under this
                    paragraph, during the 12-month period preceding the
                    date of such offering, including the amount received in
                    such offering, is not more than $75,000,000 (as such
                    amount is annually adjusted by the Commission to
                    reflect the change in the Consumer Price Index for All
                    Urban Consumers published by the Bureau of Labor
                    Statistics of the Department of Labor);
                        ``(C) after the completion of the transaction, a
                    purchaser does not own more than 10 percent of the
                    total amount of the outstanding units of the digital
                    commodity;
                        ``(D) the transaction does not involve the offer or
                    sale of an investment contract involving units of a
                    digital commodity by its digital commodity issuer
                    that--
                                ``(i) is not organized under the laws of a
                            State, a territory of the United States, or the
                            District of Columbia;
                                ``(ii) is a development stage company that
                            either--
                                        ``(I) has no specific business plan
                                    or purpose; or
                                        ``(II) has indicated that the
                                    business plan of the company is to
                                    merge with or acquire an unidentified
                                    company;
                                ``(iii) is an investment company, as
                            defined in section 3 of the Investment Company
                            Act of 1940 (15 U.S.C. 80a-3), or is excluded
                            from the definition of investment company by
                            section 3(b) or section 3(c) of that Act (15
                            U.S.C. 80a-3(b) or 80a-3(c));
                                ``(iv) is issuing fractional undivided
                            interests in oil or gas rights, or a similar
                            interest in other mineral rights;
                                ``(v) is, or has been, subject to any order
                            of the Commission entered pursuant to section
                            12(j) of the Securities Exchange Act of 1934
                            during the 5-year period before the filing of
                            the offering statement; or
                                ``(vi) is disqualified pursuant to section
                            230.262 of title 17, Code of Federal
                            Regulations; and
                        ``(E) the issuer meets the requirements of section
                    4B(b).''; and
                (2) by inserting after section 4A the following:

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

        ``(a) Commission Jurisdiction.--For the purposes of this section:
                ``(1) The Commission shall have jurisdiction and
            enforcement authority with respect to disclosures described in
            this section.
                ``(2) Section 17 shall apply to a statement made in an
            offering statement, disclosure, or report filed under this
            section to the same extent as such section 17 applies to a
            statement made in any other offering statement, disclosure, or
            report filed under this Act.
        ``(b) Requirements for Digital Commodity Issuers.--
                ``(1) Terms and conditions.--A digital commodity issuer
            offering or selling an investment contract involving units of a
            digital commodity in reliance on section 4(a)(8) shall file
            with the Commission an offering statement and any related
            documents, in such form and with such content as prescribed by
            the Commission, including financial information, a description
            of the issuer and the operations of the issuer, the financial
            condition of the issuer, a description of the plan of
            distribution of any unit of a digital commodity that is to be
            offered as well as the intended use of the offering proceeds,
            and a description of the development plan for the blockchain
            system, and the related digital commodity, to become a mature
            blockchain system, if such blockchain system is not already
            certified as a mature blockchain system pursuant to section 42
            of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
                ``(2) Information required for purchasers.--A digital
            commodity issuer that has filed a statement under paragraph (1)
            to offer and sell an investment contract involving a unit of a
            digital commodity in reliance on section 4(a)(8) shall include
            in such statement the following information:
                        ``(A) Maturity status.--Whether the blockchain
                    system to which the digital commodity relates has been
                    certified as a mature blockchain system pursuant to
                    section 42 of the Securities Exchange Act of 1934 (15
                    U.S.C. 78a et seq.) and, where such blockchain system
                    is not so certified, a statement of the digital
                    commodity issuer's intent for the blockchain system to
                    which the digital commodity relates to be a mature
                    blockchain system within the time period described in
                    section 4(a)(8)(A).
                        ``(B) Source code.--The source code, or a publicly
                    accessible webpage displaying such source code, for any
                    blockchain system to which the digital commodity
                    relates, and whether the source code was sourced from
                    an external third party, whether there are any existing
                    external dependencies, and whether the code underwent a
                    third-party security audit, along with material results
                    of any such audit.
                        ``(C) Transaction history.--A description of the
                    steps necessary to independently access, search, and
                    verify the transaction history of any blockchain system
                    to which the digital commodity relates, to the extent
                    any such independent access, search, and verification
                    activities are technically feasible with respect to
                    such blockchain system.
                        ``(D) Digital commodity economics.--A description
                    of the purpose of any blockchain system to which the
                    digital commodity relates and the operation of any such
                    blockchain system, including--
                                ``(i) information explaining the launch and
                            supply process, including the number of units
                            of the digital commodity to be issued in an
                            initial allocation, the total number of units
                            of the digital commodity to be created, the
                            release schedule for the units of the digital
                            commodity, and the total number of units of the
                            digital commodity outstanding;
                                ``(ii) information explaining the technical
                            requirements for holding, accessing, and
                            transferring the digital commodity;
                                ``(iii) information on any applicable
                            consensus mechanism or process for validating
                            transactions, method of generating or mining
                            digital commodities, and any process for
                            burning or destroying units of the digital
                            commodity on the blockchain system;
                                ``(iv) an explanation of any mechanism for
                            driving value to the digital commodity of such
                            blockchain system; and
                                ``(v) an explanation of governance
                            mechanisms for implementing changes to the
                            blockchain system or forming consensus among
                            holders of units of such digital commodity.
                        ``(E) Plan of development.--The current state and
                    timeline for the development of any blockchain system
                    to which the digital commodity relates, detailing how
                    and when the blockchain system is intended to be a
                    mature blockchain system, if the blockchain system is
                    not yet certified as a mature blockchain system, and
                    the various roles that exist or are intended to exist
                    in connection with the blockchain system, such as
                    users, service providers, developers, transaction
                    validators, and governance participants, including a
                    discussion of any mechanisms by which control or
                    authority are exerted with respect to the blockchain
                    system or its related digital commodity, and any
                    critical operational dependencies of the blockchain
                    system or its related digital commodity.
                        ``(F) Ownership disclosures.--
                                ``(i) In general.--A list of all persons
                            who are digital commodity related persons or
                            digital commodity affiliated persons who have
                            been issued a unit of the digital commodity by
                            the digital commodity issuer or have a right to
                            a unit of the digital commodity from the
                            digital commodity issuer.
                                ``(ii) Confidentiality.--The Commission
                            shall keep each list described under clause (i)
                            confidential, consistent with what is necessary
                            or appropriate in the public interest or for
                            the protection of investors.
                        ``(G) Risk factor disclosures.--A description of
                    the material risks surrounding ownership of a unit of a
                    digital commodity.
                ``(3) Ongoing disclosure requirements for maturing
            blockchain systems.--Subject to paragraph (5), the issuer of a
            digital commodity related to a blockchain system that is not
            yet certified as a mature blockchain system under section 42 of
            the Securities Exchange Act of 1934 that has filed a statement
            under paragraph (1) to offer and sell an investment contract
            involving a unit of a digital commodity in reliance on section
            4(a)(8) shall file the following with the Commission:
                        ``(A) Semiannual reports.--Every 6 months, a report
                    containing--
                                ``(i) an updated description of the current
                            state and timeline for the development of the
                            blockchain system to which the digital
                            commodity relates, showing how and when the
                            blockchain is intended to be a mature
                            blockchain system;
                                ``(ii) a description of the efforts of the
                            issuer and digital commodity related persons in
                            developing the blockchain system to which the
                            digital commodity relates;
                                ``(iii) the amount of money raised by the
                            digital commodity issuer in reliance on section
                            4(a)(8), how much of that money has been spent,
                            and the general categories of activities for
                            which that money has been spent and amounts
                            spent per category; and
                                ``(iv) financial statements, where
                            applicable.
                        ``(B) Current reports.--A current report reflecting
                    any material changes relevant to the information
                    previously reported to the Commission by the digital
                    commodity issuer, which shall be filed as soon as
                    practicable after the material change occurred, in
                    accordance with such rules as the Commission may
                    prescribe as necessary or appropriate in the public
                    interest or for the protection of investors.
                ``(4) Rulemaking.--Not later than 360 days after the date
            of the enactment of this section, the Commission shall
            prescribe rules on requirements applicable to issuers of
            digital commodities in reliance on section 4(a)(8).
                ``(5) Termination of certain reporting requirements; post-
            maturity reporting requirements.--
                        ``(A) In general.--The ongoing reporting
                    requirements under paragraph (3) shall not apply to a
                    digital commodity issuer 180 days after the end of the
                    covered fiscal year, if the information with respect to
                    the digital commodity and the blockchain system to
                    which it relates described in subparagraphs (A) through
                    (C) of paragraph (2) is made publicly available and the
                    disclosure requirements under subparagraph (C) of this
                    paragraph are satisfied.
                        ``(B) Covered fiscal year defined.--In this
                    paragraph, the term `covered fiscal year' means, with
                    respect to a digital commodity, the first fiscal year
                    of a digital commodity issuer in which the blockchain
                    system to which such digital commodity relates is
                    certified as a mature blockchain system under section
                    42 of the Securities Exchange Act of 1934.
                        ``(C) Post-maturity reporting requirements.--After
                    the blockchain system to which a digital commodity
                    relates is certified as a mature blockchain system
                    under section 42 of the Securities Exchange Act of
                    1934, any digital commodity issuer that has filed a
                    statement under paragraph (1) to offer and sell an
                    investment contract involving a unit of a digital
                    commodity in reliance on section 4(a)(8) and is engaged
                    in material ongoing efforts related to the mature
                    blockchain system shall disclose, in a manner
                    reasonably calculated to inform the public, and at such
                    frequency as the Commission may prescribe, by rule, a
                    description of such efforts, including--
                                ``(i) any participation in a decentralized
                            governance system of such blockchain system;
                                ``(ii) any participation in alterations or
                            proposed alterations to the functionality or
                            operation of such blockchain system;
                                ``(iii) the use or planned use of any funds
                            raised in reliance on section 4(a)(8) or any
                            rulemaking pursuant to section 202(c) of the
                            CLARITY Act of 2025 in such efforts;
                                ``(iv) the amount of units of the digital
                            commodity, or rights thereto, owned and
                            controlled by such issuer and any use, sale,
                            trading, or other disposition thereof; and
                                ``(v) any affiliations of such issuer
                            material to the efforts of such issuer.
                        ``(D) Termination of and exemption from post-
                    maturity reporting requirements.--Not later than 270
                    days after the date of the enactment of this section,
                    the Commission shall issue rules--
                                ``(i) for terminating the disclosure
                            requirements described in subparagraph (C)
                            during the first fiscal year in which the
                            digital commodity issuer does not engage in
                            material ongoing efforts related to the mature
                            blockchain system; and
                                ``(ii) to, as is necessary or appropriate
                            in the public interest or for the protection of
                            investors, exempt a digital commodity issuer
                            from the requirements described in subparagraph
                            (C) where only a de minimis amount of market
                            activity involving the digital commodity of
                            such digital commodity issuer is taking place.
                        ``(E) Rule of construction.--Nothing in
                    subparagraph (C) may be construed to make any digital
                    commodity described in such subparagraph a security.
        ``(c) Requirements for Intermediaries.--A person acting as an
    intermediary in connection with the offer or sale of an investment
    contract involving units of a digital commodity in reliance on section
    4(a)(8) shall--
                ``(1) register with the Commission as a broker or dealer;
            and
                ``(2) be a member of a national securities association
            registered under section 15A of the Securities Exchange Act of
            1934 (15 U.S.C. 78o-3).
        ``(d) Disqualification Provisions.--The Commission shall issue
    rules to apply the disqualification provisions under section 230.262 of
    title 17, Code of Federal Regulations, to the exemption provided under
    section 4(a)(8).
        ``(e) Failure To Mature.--
                ``(1) In general.--Not later than 270 days after the date
            of the enactment of this section, the Commission shall issue
            rules applying such additional obligations and disclosures for
            the digital commodity issuers, digital commodity related
            persons, and digital commodity affiliated persons of a
            blockchain system described under subsection (b)(1) that does
            not become a mature blockchain system within the time period
            described in section 4(a)(8)(A) as are necessary or appropriate
            in the public interest or for the protection of investors. Such
            obligations and disclosures shall include the following:
                        ``(A) Disclosures.--Disclosures regarding the
                    following:
                                ``(i) Failure to mature.--A detailed
                            explanation of the reason that the blockchain
                            system has not become a mature blockchain
                            system within the time period described in
                            section 4(a)(8)(A).
                                ``(ii) Development plans.--The future plans
                            of development of the blockchain system,
                            including information required under subsection
                            (b)(3).
                                ``(iii) Risk factor disclosures.--The
                            material risks surrounding ownership of a unit
                            of a digital commodity that relates to a
                            blockchain system described under subsection
                            (b)(1) that has not become a mature blockchain
                            system within the time period described in
                            section 4(a)(8)(A).
                        ``(B) Obligations.--Transaction reporting and
                    beneficial ownership disclosure obligations applicable
                    to digital commodity related persons and digital
                    commodity affiliated persons of such blockchain system.
                ``(2) Qualification required.--The Commission may not
            permit any additional reliance on an exempt offering for the
            offer or sale of an investment contract involving a unit of a
            digital commodity by the issuer of the digital commodity
            related to a blockchain system described under subsection
            (a)(1) that has not become a mature blockchain system within
            the time period described in section 4(a)(8)(A) unless the
            Commission has qualified any offering statement related to such
            exempt offering.''.
        (b) Additional Exemptions.--
                (1) Certain registration requirements.--Section 12(g)(6) of
            the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is
            amended by striking ``under section 4(6)'' and inserting
            ``under section 4(a)(6) or 4(a)(8)''.
                (2) Exemption from state regulation.--Section 18(b)(4) of
            the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
                        (A) in subparagraph (B), by striking ``section
                    4(4)'' and inserting ``section 4(a)(4)'';
                        (B) in subparagraph (C), by striking ``section
                    4(6)'' and inserting ``section 4(a)(6)'';
                        (C) in subparagraph (F)--
                                (i) by striking ``section 4(2)'' each place
                            such term appears and inserting ``section
                            4(a)(2)''; and
                                (ii) by striking ``or'' at the end;
                        (D) in subparagraph (G), by striking the period and
                    inserting ``; or''; and
                        (E) by adding at the end the following:
                        ``(H) section 4(a)(8).''.
        (c) Use of Other Exemptions.--
                (1) Rule of construction.--Except as provided in this
            subsection, nothing in this section or the amendments made by
            this section may be construed as prohibiting the offer or sale
            of an investment contract involving units of a digital
            commodity in reliance on an exemption provided under section 3,
            4(a), or 19 of the Securities Act of 1933 other than that
            provided under section 4(a)(8) of the Securities Act of 1933.
                (2) Rulemakings.--
                        (A) The Securities and Exchange Commission may
                    issue rules--
                                (i) to permit the issuer of a digital
                            commodity related to a blockchain system
                            described under section 4B(b)(1) of the
                            Securities Act of 1933 that has not become a
                            mature blockchain system within the time period
                            described in section 4(a)(8)(A) of such Act, or
                            the issuer of a digital commodity described in
                            subparagraph (B)(iii), to utilize an exempt
                            offering to offer or sell an investment
                            contract involving the digital commodity, if
                            the Commission qualifies any offering statement
                            related to such exempt offering; and
                                (ii) for the offer and sale of investment
                            contracts involving units of a digital
                            commodity by issuers that are not organized
                            under the laws of a State, a territory of the
                            United States, or the District of Columbia.
                        (B) Not later than 270 days after the date of the
                    enactment of this section, the Securities and Exchange
                    Commission shall issue the following rules:
                                (i) A rule requiring a digital commodity
                            issuer that last offered or sold an investment
                            contract involving units of a digital commodity
                            in reliance on an exemption provided under
                            section 3, 4(a), or 19 of the Securities Act of
                            1933 prior to the date of enactment of this
                            Act, to file a comparable set of disclosures to
                            those described under section 4B of the
                            Securities Act of 1933 as the Commission
                            determines appropriate based on the exemption,
                            the maturity of the blockchain system to which
                            such digital commodity relates, and any
                            material ongoing efforts of such digital
                            commodity issuer (provided that for blockchains
                            certified as a mature blockchain system under
                            section 42 of the Securities Exchange Act of
                            1934, such disclosures shall be comparable to
                            those under section 4B(b)(5)(C)), not later
                            than the later of--
                                        (I) one year after the effective
                                    date of this section; or
                                        (II) the date of any secondary
                                    market sale of such digital commodity
                                    made in reliance on section 203.
                                (ii) A rule requiring a digital commodity
                            issuer that offers or sells an investment
                            contract involving units of a digital commodity
                            in reliance on an exemption provided under
                            section 3, 4(a), or 19 of the Securities Act of
                            1933, other than that provided under section
                            4(a)(8) of the Securities Act of 1933, on or
                            after the date of enactment of this Act, to
                            file a comparable set of disclosures to those
                            described under section 4B of the Securities
                            Act of 1933 as the Commission determines
                            appropriate based on the exemption, the
                            maturity of the blockchain system to which such
                            digital commodity relates, and any material
                            ongoing efforts of such digital commodity
                            issuer, prior to the date of any secondary
                            market sale of such digital commodity made in
                            reliance on section 203.
                                (iii) With respect to a digital commodity
                            where the digital commodity issuer is required
                            to file disclosures under clause (i) or (ii)
                            and where the blockchain system to which the
                            digital commodity relates is not certified as a
                            mature blockchain system pursuant to section 42
                            of the Securities Exchange Act of 1934 after
                            the 4-year period beginning on the date that
                            the first such disclosure is filed--
                                        (I) a rule prohibiting the offer or
                                    sale of an investment contract
                                    involving units of the digital
                                    commodity unless the Commission has
                                    qualified any offering statement
                                    related to such offer or sale, where
                                    such offer or sale is permitted
                                    pursuant to subparagraph (A)(i); and
                                        (II) a rule requiring the digital
                                    commodity issuer to make disclosures
                                    comparable to those described in
                                    4B(e)(1)(A) of the Securities Act of
                                    1933.

    SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL COMMODITIES
                  THAT ORIGINALLY INVOLVED INVESTMENT CONTRACTS.

        (a) Secondary Market Treatment.--Notwithstanding any other
    provision of law, the offer or sale of a digital commodity that
    originally involved an investment contract by a person other than the
    issuer of such digital commodity, or an agent or underwriter thereof,
    shall be deemed not to be an offer or sale of such investment contract
    between the issuer of the investment contract involving the digital
    commodity, or an agent or underwriter thereof, and the purchaser of
    such digital commodity under--
                (1) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
                (2) the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
            seq.);
                (3) the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
            seq.);
                (4) the Securities Exchange Act of 1934 (15 U.S.C. 78a et
            seq.);
                (5) the Securities Investor Protection Act of 1970 (15
            U.S.C. 78aaa et seq.); and
                (6) any applicable provisions of State law.
        (b) End User Distributions Not an Offer or Sale of a Security.--An
    end user distribution does not involve the offer or sale of a security.
        (c) Agent Defined.--In this section and with respect to a digital
    commodity issuer, the term ``agent'' means any person directly or
    indirectly controlled by the issuer or under direct or indirect common
    control with the issuer.

    SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
                  DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
                  AFFILIATED PERSONS.

        The Securities Act of 1933 (15 U.S.C. 77a et seq.), as amended by
    section 202, is further amended by inserting after section 4B the
    following:

    ``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL COMMODITIES BY
                  DIGITAL COMMODITY RELATED PERSONS AND DIGITAL COMMODITY
                  AFFILIATED PERSONS.

        ``(a) In General.--It shall be a violation of this Act for a
    digital commodity affiliated person or a digital commodity related
    person to offer or sell a digital commodity acquired directly from its
    issuer, or an agent or underwriter thereof, pursuant to an investment
    contract in reliance on section 4(a)(8) or another exemption under this
    Act, other than as provided in this section.
        ``(b) Commission Jurisdiction.--
                ``(1) Where a digital commodity affiliated person or a
            digital commodity related person offers or sells a digital
            commodity acquired directly from its issuer, or an agent or
            underwriter thereof, pursuant to an investment contract in
            reliance on section 4(a)(8), or another exemption under this
            Act, other than as provided in this section, such digital
            commodity affiliated person or digital commodity related person
            shall be considered an issuer of such investment contract.
                ``(2) For the purposes of this section, the Commission
            shall have jurisdiction and enforcement authority with respect
            to an offer or sale of a digital commodity described in
            subsection (a).
        ``(c) Restrictions on Digital Commodity Related Persons and Digital
    Commodity Affiliated Persons.--
                ``(1) Prior to being a mature blockchain system.--Prior to
            the blockchain system to which a digital commodity relates
            being certified as a mature blockchain system under section 42
            of the Securities Exchange Act of 1934, units of the digital
            commodity acquired by a digital commodity related person or
            digital commodity affiliated person directly from its issuer
            (or an agent or underwriter thereof) pursuant to an investment
            contract in reliance on section 4(a)(8), or another exemption
            under this Act, may be offered or sold by such digital
            commodity related person or digital commodity affiliated person
            if--
                        ``(A) reports with respect to such digital
                    commodity, where required under section 4B(b)(3) (or,
                    with respect to a digital commodity not issued in
                    reliance on section 4(a)(8), a comparable set of
                    reports where required by the Commission) have been
                    filed with the Commission;
                        ``(B) the digital commodity related person or
                    digital commodity affiliated person has held the units
                    for not less than 12 months; and
                        ``(C) the aggregate amount of the units of the
                    digital commodity offered or sold by the digital
                    commodity related person or digital commodity
                    affiliated person is--
                                ``(i) in any 12-month period, or shorter
                            period as the Commission may prescribe, not
                            less than 5 percent or greater than 20 percent
                            of the total units of the digital commodity
                            acquired directly from its issuer (or an agent
                            or underwriter thereof) by the digital
                            commodity related person or digital commodity
                            affiliated person, as determined by the
                            Commission pursuant to paragraph (3); and
                                ``(ii) an amount, as determined by the
                            Commission pursuant to paragraph (3), not less
                            than 30 percent or greater than 50 percent of
                            the total units of the digital commodity
                            acquired directly from its issuer (or an agent
                            or underwriter thereof) by the digital
                            commodity related person or digital commodity
                            affiliated person.
                ``(2) After becoming a mature blockchain system.--After the
            blockchain system to which a digital commodity relates is
            certified as a mature blockchain system under section 42 of the
            Securities Exchange Act of 1934, units of the digital commodity
            acquired by a digital commodity related person or digital
            commodity affiliated person directly from its issuer (or an
            agent or underwriter thereof) pursuant to an investment
            contract in reliance on section 4(a)(8) or another exemption
            under this Act, may be--
                        ``(A) offered or sold by a digital commodity
                    related person; or
                        ``(B) offered or sold by a digital commodity
                    affiliated person if--
                                ``(i) information described in section
                            4B(b)(5)(C), where required (or, with respect
                            to a digital commodity not issued in reliance
                            on section 4(a)(8), a comparable set of
                            information, where required) is publicly
                            available;
                                ``(ii) the digital commodity affiliated
                            person has held the units for not less than the
                            earlier of--
                                        ``(I) 12 months; or
                                        ``(II) 3 months following the date
                                    on which the blockchain system is
                                    certified as a mature blockchain system
                                    under section 42 of the Securities
                                    Exchange Act of 1934; and
                                ``(iii) the aggregate amount of the units
                            of the digital commodity offered or sold by the
                            digital commodity affiliated person in any 12-
                            month period is an amount, as determined by the
                            Commission pursuant to paragraph (3), not less
                            than 5 percent or greater than 10 percent of
                            the total outstanding amount of the digital
                            commodity.
                ``(3) Rulemakings required.--Not later than 270 days after
            the date of the enactment of this section, consistent with
            protecting investors, fostering the development of mature
            blockchain systems, facilitating capital formation, and
            maintaining fair and orderly markets the Commission, by rule,
            after notice and comment--
                        ``(A) shall set the percentage amounts described in
                    paragraphs (1)(C)(i), (1)(C)(ii), and (2)(B)(iii); and
                        ``(B) may provide an exemption from the limitation
                    described in paragraph (1)(C)(ii), if the Commission
                    requires any offer or sale pursuant to such exemption
                    of a digital commodity related to a blockchain system
                    that has failed to become a mature blockchain system
                    under this Act or any rule promulgated hereunder to be
                    accompanied by the disclosures required under, as
                    applicable, section 4B(e)(1)(A) or section
                    202(c)(2)(B)(iii)(II) of the CLARITY Act of 2025.
        ``(d) Use of a Digital Commodity in the Programmatic Functioning of
    the Blockchain System.--For purposes of this section, the use of a
    digital commodity in the programmatic functioning of the blockchain
    system to which it relates is not an offer or sale of a digital
    commodity.
        ``(e) Manipulative and Deceptive Devices; Reporting.--
                ``(1) In general.--It shall be unlawful for any digital
            commodity issuer, digital commodity related person, or digital
            commodity affiliated person, directly or indirectly, by the use
            of any means or instrumentality of interstate commerce or of
            the mails, to use or employ, in connection with the purchase or
            sale of any digital commodity, any manipulative or deceptive
            device or contrivance in contravention of such rules and
            regulations as the Commission may prescribe as necessary or
            appropriate in the public interest or for the protection of
            investors.
                ``(2) Affirmative defense.--Not later than 270 days after
            the date of the enactment of this section, the Commission shall
            issue rules to implement paragraph (1), including by providing
            any affirmative defenses to an enforcement action thereunder as
            the Commission may prescribe as necessary or appropriate in the
            public interest or for the protection of investors.
                ``(3) Reporting.--Not later than 270 days after the date of
            the enactment of this section, the Commission shall issue rules
            to prescribe such transaction reporting and beneficial
            ownership disclosure obligations applicable to digital
            commodity related persons and digital commodity affiliated
            persons, as necessary or appropriate in the public interest or
            for the protection of investors.
                ``(4) Differentiation between persons.--In issuing rules
            required under paragraphs (2) and (3), the Commission shall
            differentiate between digital commodity related persons and
            digital commodity affiliated persons, as necessary or
            appropriate in the public interest or for the protection of
            investors.
        ``(f) Certain Units Received Prior to Enactment.--A unit of a
    digital commodity received from the digital commodity issuer prior to
    the date of the enactment of this section through an offer or sale of
    an investment contract involving units of a digital commodity in
    reliance on an exemption provided under section 3, 4(a), or 19, may be
    offered or sold by a digital commodity related person or digital
    commodity affiliated person, if--
                ``(1) the digital commodity issuer is no longer engaged in
            material ongoing efforts related to the blockchain system to
            which the digital commodity relates and the blockchain system
            to which the digital commodity relates is certified as a mature
            blockchain system under section 42 of the Securities Exchange
            Act of 1934;
                ``(2) the digital commodity issuer is engaged in material
            ongoing efforts related to the blockchain system to which the
            digital commodity relates and the blockchain system to which
            the digital commodity relates is certified as a mature
            blockchain system under section 42 of the Securities Exchange
            Act of 1934, and the appropriate disclosures required under
            section 202(c)(2)(B) of the CLARITY Act of 2025 have been made
            with the Commission; or
                ``(3) the digital commodity issuer is engaged in material
            ongoing efforts related to the blockchain system to which the
            digital commodity relates and the blockchain system to which
            the digital commodity relates is not certified as a mature
            blockchain system under section 42 of the Securities Exchange
            Act of 1934, and the appropriate disclosures required under
            section 202(c)(2)(B) of the CLARITY Act of 2025 have been made
            with the Commission.
        ``(g) Rulemaking on Further Usage of Digital Commodities.--The
    Commission, consistent with protecting investors, fostering the
    development of mature blockchain systems, facilitating capital
    formation, and maintaining fair and orderly markets, may, by rule,
    exempt unconditionally or on stated terms or conditions, a digital
    commodity related person or a digital commodity affiliated person, or
    any class thereof, from the requirements of this section for the offer
    or sale of a digital commodity.''.

    SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.

        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. MATURE BLOCKCHAIN SYSTEMS.

        ``(a) Certification of Blockchain Systems.--
                ``(1) Certification.--For purposes of sections 4(a)(8), 4B,
            and 4C of the Securities Act of 1933, any digital commodity
            issuer, digital commodity related person, digital commodity
            affiliated person, or decentralized governance system of the
            blockchain system may certify to the Securities and Exchange
            Commission that the blockchain system to which a digital
            commodity relates is a mature blockchain system.
                ``(2) Filing requirements.--A certification described under
            paragraph (1) shall be filed with the Commission, and include
            such information that is reasonably necessary to establish that
            the blockchain system is not controlled by any person or group
            of persons under common control, which may include information
            regarding--
                        ``(A) the operation of the blockchain system;
                        ``(B) the functionality of the related digital
                    commodity;
                        ``(C) how the market value of the digital commodity
                    is substantially derived from the programmatic
                    functioning of such blockchain system;
                        ``(D) any decentralized governance system which
                    relates to the blockchain system; and
                        ``(E) the current roles, if any, of the digital
                    commodity issuer, digital commodity affiliated persons,
                    and digital commodity related persons where such roles
                    are material to the development or operation of such
                    blockchain system or the decentralized governance
                    system of such blockchain system.
                ``(3) Rebuttable presumption.--The Commission may rebut a
            certification described under paragraph (1) with respect to a
            blockchain system if the Commission, within 60 days of
            receiving such certification, determines that the blockchain
            system is not a mature blockchain system.
                ``(4) Certification review.--
                        ``(A) In general.--Any blockchain system that
                    relates to a digital commodity for which a
                    certification has been made under paragraph (1) shall
                    be considered a mature blockchain system 60 days after
                    the date on which the Commission receives a
                    certification under paragraph (1), unless the
                    Commission notifies the person who made the
                    certification within such time that the Commission is
                    staying the certification due to--
                                ``(i) an inadequate explanation by the
                            person making the certification; or
                                ``(ii) any novel or complex issues which
                            require additional time to consider.
                        ``(B) Public notice.--The Commission shall make the
                    following available to the public and provide a copy to
                    the Commodity Futures Trading Commission:
                                ``(i) Each certification received under
                            paragraph (1).
                                ``(ii) Each stay of the Commission under
                            this subsection, and the reasons therefor.
                                ``(iii) Any response from a person making a
                            certification under paragraph (1) to a stay of
                            the certification by the Commission.
                        ``(C) Consolidation.--The Commission may
                    consolidate and treat as one submission multiple
                    certifications made under paragraph (1) for the same
                    blockchain system which relates to a digital commodity
                    which are received during the review period provided
                    under this paragraph.
                ``(5) Stay of certification.--
                        ``(A) In general.--A notification by the Commission
                    pursuant to paragraph (4)(A) shall stay the
                    certification once for up to an additional 120 days
                    from the date of the notification.
                        ``(B) Public comment period.--Before the end of the
                    60-day period described under paragraph (4)(A), the
                    Commission may begin a public comment period of at
                    least 30 days in conjunction with a stay under this
                    subsection.
                ``(6) Disposition of certification.--A certification made
            under paragraph (1) shall--
                        ``(A) become effective--
                                ``(i) upon the publication of a
                            notification from the Commission to the person
                            who made the certification that the Commission
                            does not object to the certification; or
                                ``(ii) at the expiration of the
                            certification review period; and
                        ``(B) not become effective upon the publication of
                    a notification from the Commission to the person who
                    made the certification that the Commission has rebutted
                    the certification.
                ``(7) Recertification.--With respect to a blockchain system
            for which a certification has been rebutted under this
            subsection, no person may make a certification under paragraph
            (1) with respect to such blockchain system during the 90-day
            period beginning on the date of such rebuttal.
                ``(8) Appeal of rebuttal.--
                        ``(A) In general.--If a certification is rebutted
                    under this section, the person making such
                    certification may appeal the decision to the United
                    States Court of Appeals for the District of Columbia,
                    not later than 60 days after the notice of rebuttal is
                    made.
                        ``(B) Review.--In an appeal under subparagraph (A),
                    the court shall have de novo review of the
                    determination to rebut the certification.
        ``(b) Maturity Criteria.--
                ``(1) Sense of congress.--It is the sense of the Congress
            that protecting investors, maintaining fair, orderly, and
            efficient markets, and facilitating capital formation
            necessitates establishing clear criteria for blockchain systems
            to be deemed mature, as well as enabling the Commission to
            develop, without prejudice to any such criteria codified in
            statute, alternative criteria by which blockchain systems may
            be considered not to be controlled by any person or group of
            persons under common control in order to accommodate changes in
            markets and technology.
                ``(2) In general.--The Commission may issue rules
            identifying conditions by which a blockchain system, together
            with its related digital commodity, shall be considered a
            mature blockchain system, consistent with the protection of
            investors, maintenance of fair, orderly, and efficient markets,
            and the facilitation of capital formation.
                ``(3) Rules of construction.--
                        ``(A) Nothing in this subsection may be construed
                    to permit the Commission to impose additional criteria
                    to the criteria in subsection (c) for certifying that a
                    blockchain system is a mature blockchain system
                    pursuant to subsection (c).
                        ``(B) Nothing in this subsection or subsection (c)
                    may be construed to limit the Commission's ability to
                    identify alternative conditions and criteria by which a
                    blockchain system may be considered a mature blockchain
                    system.
        ``(c) Deemed Mature.--
                ``(1) In general.--Notwithstanding subsection (b), for the
            purposes of subsection (a), a digital commodity issuer, digital
            commodity related person, digital commodity affiliated person,
            or decentralized governance system of the blockchain system may
            establish that a blockchain system, together with its related
            digital commodity, is not controlled by any person or group of
            persons under common control, if the blockchain system,
            together with its related digital asset, meets the requirements
            described in paragraph (2) or (3).
                ``(2) Criteria for any blockchain system.--The requirements
            described in this paragraph are the following:
                        ``(A) System value.--
                                ``(i) Market value.--The digital commodity
                            has a value that is substantially derived from
                            the use and functioning of the blockchain
                            system.
                                ``(ii) Development of value mechanism
                            substantially completed.--Where the digital
                            commodity issuer has made public a development
                            plan describing how the digital commodity's
                            value is reasonably expected to be derived from
                            the programmatic functioning of the blockchain
                            system, the development of such mechanisms has
                            been substantially completed.
                        ``(B) Functional system.--The blockchain system
                    allows network participants to engage in the activities
                    the blockchain system is intended to provide,
                    including--
                                ``(i) using, transmitting, or storing
                            value, or otherwise executing transactions, on
                            the blockchain system;
                                ``(ii) deploying, executing, or accessing
                            software or services, or otherwise offering or
                            participating in services, deployed on or
                            integrated with the blockchain system;
                                ``(iii) participating in the consensus
                            mechanism, transaction validation process, or
                            decentralized governance system of the
                            blockchain system; or
                                ``(iv) operating any client, node,
                            validator, or other form of computational
                            infrastructure with respect to the blockchain
                            system.
                        ``(C) Open and interoperable system.--The
                    blockchain system--
                                ``(i) is composed of source code that is
                            open source; and
                                ``(ii) does not restrict or prohibit based
                            on the exercise of unilateral authority any
                            person, other than a digital commodity issuer,
                            digital commodity related person, or digital
                            commodity affiliated person from engaging in
                            the activities the blockchain system is
                            intended to provide, including the activities
                            described in subparagraph (B).
                        ``(D) Programmatic system.--The blockchain system
                    operates, executes, and enforces its operations and
                    transactions based solely on pre-established,
                    transparent rules encoded directly within the source
                    code of the blockchain system.
                        ``(E) System governance.--No person or group of
                    persons under common control--
                                ``(i) has the unilateral authority,
                            directly or indirectly, through any contract,
                            arrangement, understanding, relationship, or
                            otherwise, to control or materially alter the
                            functionality, operation, or rules of consensus
                            or agreement of the blockchain system or its
                            related digital commodity; or
                                ``(ii) has the unilateral authority to
                            direct the voting, in the aggregate, of 20
                            percent or more of the outstanding voting power
                            of such blockchain system by means of a related
                            digital commodity, nodes or validators, a
                            decentralized governance system, or otherwise,
                            in a blockchain system which can be altered by
                            a voting system.
                        ``(F) Impartial system.--No person or group of
                    persons under common control possesses a unique
                    permission or privilege to alter the functionality,
                    operation, or rules of consensus or agreement of the
                    blockchain system or its related digital commodity,
                    unless such alteration--
                                ``(i) addresses errors, regular
                            maintenance, or cybersecurity risks of the
                            blockchain system that affect the programmatic
                            functioning of the blockchain system; and
                                ``(ii) is adopted through the consensus or
                            agreement of a decentralized governance system.
                        ``(G) Distributed ownership.--No digital commodity
                    issuer, digital commodity related person, or digital
                    commodity affiliated person beneficially owns, in the
                    aggregate, 20 percent or more of the total amount of
                    units of the digital commodity.
                ``(3) Optional criteria for preexisting blockchain
            systems.--The requirements described in this paragraph are that
            the blockchain system--
                        ``(A) was created prior to the date of enactment of
                    this section;
                        ``(B) met the requirements of subparagraphs (A)
                    through (F) of paragraph (2) prior to January 1, 2020;
                    and
                        ``(C) at least 50 percent of the units of the
                    digital commodity related to the blockchain system are
                    held by persons other than the digital commodity
                    issuer, a digital commodity related person, or a
                    digital commodity affiliated person.
        ``(d) Decentralized Governance System.--
                ``(1) For the purposes of this section, a decentralized
            governance system is not a `person' or a `group of persons
            under common control'.
                ``(2) A blockchain system, together with its digital
            commodity, shall not be precluded from being considered a
            mature blockchain system solely based on a functional,
            administrative, clerical, or ministerial action of a
            decentralized governance system, including any such action
            taken by a person acting on behalf of and at the direction of
            the decentralized governance system, as determined by the
            Commission and consistent with the protection of investors,
            maintenance of fair, orderly, and efficient markets, and the
            facilitation of capital formation.
        ``(e) Rulemaking.--Not more than 270 days after the date of
    enactment of this section, the Commission shall issue rules to carry
    out this section.''.

    SEC. 206. EFFECTIVE DATE.

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

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

    SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED PAYMENT
                  STABLECOINS.

        (a) Securities Act of 1933.--Section 2(a)(1) of the Securities Act
    of 1933 (15 U.S.C. 77b(a)(1)), as amended by section 201(a)(1), is
    further amended by adding at the end the following: ``The term does not
    include a digital commodity or permitted payment stablecoin.''.
        (b) Securities Exchange Act of 1934.--Section 3(a)(10) of the
    Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as amended by
    section 201(d) is further is amended by adding at the end the
    following: ``The term does not include a digital commodity or permitted
    payment stablecoin.''.
        (c) Investment Advisers Act of 1940.--Section 202(a) of the
    Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended--
                (1) in paragraph (18)), as amended by section 201(b), by
            adding at the end the following: ``The term does not include a
            digital commodity or permitted payment stablecoin.'';
                (2) by redesignating the second paragraph (29) (relating to
            commodity pools) as paragraph (31); and
                (3) by adding at the end, the following:
                ``(32) Digital commodity-related terms.--The terms `digital
            commodity' and `permitted payment stablecoin' have the meaning
            given those terms, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)).''.
        (d) Investment Company Act of 1940.--Section 2(a) of the Investment
    Company Act of 1940 (15 U.S.C. 80a-2) is amended--
                (1) in paragraph (36), as amended by section 201(c), by
            adding at the end the following: ``The term does not include a
            digital commodity or permitted payment stablecoin.''; and
                (2) by adding at the end, the following:
                ``(55) Digital commodity-related terms.--The terms `digital
            commodity' and `permitted payment stablecoin' have the meaning
            given those terms, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a)).''.
        (e) Securities Investor Protection Act of 1970.--Section 16 of the
    Securities Investor Protection Act of 1970 (15 U.S.C. 78lll) is
    amended--
                (1) in paragraph (14), as amended by section 201(e), by
            adding at the end the following: ``The term does not include a
            digital commodity or permitted payment stablecoin, as such
            terms are defined, respectively, under section 2(a) of the
            Securities Act of 1933 (15 U.S.C. 77b(a))''; and
                (2) by adding at the end the following:
                ``(15) Treatment of permitted payment stablecoins.--A
            permitted payment stablecoin, as defined in section 2(a) of the
            Securities Act of 1933, shall not qualify as `cash' and a claim
            for a permitted payment stablecoin shall not qualify as a
            `claim for cash'.''.

    SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT STABLECOINS AND
                  CERTAIN DIGITAL COMMODITY TRANSACTIONS.

        (a) In General.--Section 10 of the Securities Exchange Act of 1934
    (15 U.S.C. 78j) is amended--
                (1) by moving subsection (c) so as to appear after
            subsection (b);
                (2) by inserting after subsection (c) the following:
                ``(d) To use or employ, in connection with the purchase or
            sale of any permitted payment stablecoin or digital commodity,
            including, as applicable, by or through a broker or dealer or
            an alternative trading system, any manipulative or deceptive
            device or contrivance in contravention of such rules and
            regulations as the Commission may prescribe as necessary or
            appropriate in the public interest or for the protection of
            investors.''; and
                (3) by adding at the end the following: ``Rules promulgated
            under subsection (b) that prohibit fraud, manipulation, or
            insider trading (but not rules imposing or specifying reporting
            or recordkeeping requirements, procedures, or standards as
            prophylactic measures against fraud, manipulation, or insider
            trading), and judicial precedents decided under subsection (b)
            and rules promulgated thereunder that prohibit fraud,
            manipulation, or insider trading, shall apply with respect to
            permitted payment stablecoin and digital commodity transactions
            engaged in by a broker or dealer or through an alternative
            trading system or, as applicable, a national securities
            exchange to the same extent as they apply to securities
            transactions. Judicial precedents decided under section 17(a)
            of the Securities Act of 1933 and sections 9, 15, 16, 20, and
            21A of this title, and judicial precedents decided under
            applicable rules promulgated under such sections, shall apply
            to permitted payment stablecoins and digital commodities with
            respect to those circumstances in which the permitted payment
            stablecoins and digital commodities are brokered, traded, or
            custodied by a broker or dealer or through an alternative
            trading system or, as applicable, a national securities
            exchange to the same extent as they apply to securities.''.''.
        (b) Treatment of Permitted Payment Stablecoins.--Title I of the
    Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
    inserting after section 6 the following:

    ``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT STABLECOINS.

        ``(a) Authority To Broker, Trade, and Custody Permitted Payment
    Stablecoins.--Permitted payment stablecoins may be brokered, traded, or
    custodied by a broker or dealer or through an alternative trading
    system or national securities exchange.
        ``(b) Commission Jurisdiction.--The Commission shall only have
    jurisdiction over a transaction in a permitted payment stablecoin with
    respect to those circumstances in which a permitted payment stablecoin
    is brokered, traded, or custodied--
                ``(1) by a broker or dealer;
                ``(2) through a national securities exchange; or
                ``(3) through an alternative trading system.
        ``(c) Limitation.--Subsection (b) shall only apply to a transaction
    described in subsection (b) for the purposes of regulating the offer,
    execution, solicitation, or acceptance of a permitted payment
    stablecoin in those circumstances in which the permitted payment
    stablecoin is brokered, traded, or custodied--
                ``(1) by a broker or dealer;
                ``(2) through a national securities exchange; or
                ``(3) through an alternative trading system.''.

    SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING SYSTEMS.

        (a) In General.--Section 5 of the Securities Exchange Act of 1934
    (15 U.S.C. 78e) is amended--
                (1) by striking ``It'' and inserting the following:
        ``(a) In General.--It''; and
                (2) by adding at the end the following:
        ``(b) Digital Commodity Protections.--
                ``(1) In general.--The Commission may not preclude a
            trading platform from operating pursuant to a covered exemption
            on the basis that the assets traded or to be traded on such
            platform include--
                        ``(A) digital commodities or permitted payment
                    stablecoins; and
                        ``(B) securities.
                ``(2) Covered exemption.--In this subsection, the term
            `covered exemption' means an exemption--
                        ``(A) described in subsection (a)(2); or
                        ``(B) with respect to any other rule of the
                    Commission relating to the definition of `exchange'.''.
        (b) Securities Exchange Act of 1934.--Section 3(a)(2) of the
    Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is amended by
    adding at the end the following: ``An alternative trading system
    primarily facilitating the trading of digital commodities, permitted
    payment stablecoins, or both, is not a `facility' of an exchange.''.
        (c) Rule of Construction.--Nothing in this section, the amendments
    made by this section, or section 304 may be construed to--
                (1) prohibit a national securities exchange from owning or
            operating any other type of alternative trading system; or
                (2) create a presumption that any other type of alternative
            trading system owned or operated by a national securities
            exchange is a facility of that exchange.

    SEC. 304. OPERATION OF ALTERNATIVE TRADING SYSTEMS.

        (a) Commission Authority.--The Securities and Exchange Commission
    shall have jurisdiction over digital commodity activities and
    transactions engaged in by--
                (1) a registered broker or registered dealer exempt from
            registration with the Commodity Futures Trading Commission
            pursuant to section 5k of the Commodity Exchange Act; and
                (2) an alternative trading system exempt from registration
            with the Commodity Futures Trading Commission pursuant to
            section 5k of the Commodity Exchange Act, including where such
            alternative trading system is operated by a national securities
            exchange or affiliate thereof.
        (b) Rulemaking Authority.--The Securities and Exchange Commission
    shall have authority to issue rules governing any digital commodity
    activities and transactions engaged in by a registered broker or
    registered dealer, or an alternative trading system, including where
    such alternative trading system is operated by a national securities
    exchange or affiliate thereof, that is exempt from registration with
    the Commodity Futures Trading Commission pursuant to section 5k of the
    Commodity Exchange Act, consistent with this section and what is
    necessary or appropriate in the public interest or for the protection
    of investors.
        (c) National Securities Exchanges.--Not later than 270 days after
    the date of the enactment of this Act, the Securities and Exchange
    Commission shall revise the covered regulations to permit a national
    securities exchange or affiliate thereof to operate an alternative
    trading system that permits the trading of digital commodities,
    permitted payment stablecoins, or both by registered brokers or
    registered dealers that are exempt from registration with the Commodity
    Futures Trading Commission pursuant section 5k of the Commodity
    Exchange Act, consistent with this section and what is necessary or
    appropriate in the public interest or for the protection of investors.
        (d) Registered Brokers and Registered Dealers.--Not later than 270
    days after the date of the enactment of this Act, the Securities and
    Exchange Commission shall revise the covered regulations to permit a
    registered broker or registered dealer that is exempt from registration
    with the Commodity Futures Trading Commission pursuant to section 5k of
    the Commodity Exchange Act to operate an alternative trading system
    that permits the trading of digital commodities, permitted payment
    stablecoins, or both, consistent with this section and what is
    necessary or appropriate in the public interest or for the protection
    of investors.
        (e) Permitted Trading.--
                (1) In general.--An alternative trading system operated
            pursuant to this section and the regulations promulgated
            hereunder shall be permitted to trade upon notice to the
            Securities and Exchange Commission in a manner prescribed by
            the Securities and Exchange Commission any digital commodity
            that has been listed by a digital commodity exchange in
            compliance with section 5i(c)(3) of the Commodity Exchange Act.
                (2) Commission authority.--Digital commodity transactions
            offered on an alternative trading system operating pursuant to
            this section shall be subject to the jurisdiction of the
            Securities and Exchange Commission. The Securities and Exchange
            Commission shall have authority to promulgate rules governing
            such digital commodity transactions of alternative trading
            systems, consistent with this section and what is necessary or
            appropriate in the public interest or for the protection of
            investors.
                (3) Suspension of trading.--The Securities and Exchange
            Commission may suspend the trading of a digital commodity by an
            alternative trading system operating pursuant to this section
            as is necessary or appropriate in the public interest and is
            consistent with the protection of investors.
        (f) Order Display and Execution.--Not later than 270 days after the
    date of the enactment of this Act, the Securities and Exchange
    Commission shall issue and revise rules, as necessary or appropriate in
    the public interest or for the protection of investors, regarding
    whether alternative trading systems operating pursuant to subsections
    (c) and (d) have an obligation to provide the prices and sizes of
    orders displayed to more than one person in such alternative trading
    system of digital commodities to self-regulatory organizations with
    members who trade in digital commodities or permitted payment
    stablecoins.
        (g) Principles of Trade.--Not later than 270 days after the date of
    the enactment of this Act, the Securities and Exchange Commission shall
    issue and revise rules, as necessary or appropriate in the public
    interest or for the protection of investors, to--
                (1) apply the rules and standards promulgated pursuant to
            paragraph (2) to the appropriate market participants,
            including--
                        (A) national securities exchanges operating an
                    alternative trading system described in subsection (c);
                    and
                        (B) registered brokers and registered dealers
                    operating or subscribing to an alternative trading
                    system described in subsection (d); and
                (2) apply, as appropriate to the market participants
            described in paragraph (1) and customers thereof, rules and
            standards to--
                        (A) prevent fraudulent and manipulative acts and
                    practices;
                        (B) foster cooperation and coordination with
                    persons engaged in regulating, settling, processing
                    information with respect to, and facilitating
                    transactions in digital commodities or permitted
                    payment stablecoins traded, as applicable, on or by any
                    alternative trading system operating pursuant to
                    subsection (c) or (d), or any registered broker or
                    registered dealer;
                        (C) remove impediments to and perfect the mechanism
                    of a free and open market in digital commodities or
                    permitted payment stablecoins traded, as applicable, on
                    or by any alternative trading system operating pursuant
                    to subsection (c) or (d), or any registered broker or
                    registered dealer;
                        (D) in general, protect investors and the public
                    interest; and
                        (E) prohibit any unfair discrimination between--
                                (i) customers;
                                (ii) any market participants described in
                            subparagraphs (A) and (B) of paragraph (1); or
                                (iii) issuers of digital commodities.
        (h) Implementing Organizations.--The Securities and Exchange
    Commission shall require any registered national securities association
    that has as a member a registered broker or registered dealer that
    operates an alternative trading system pursuant to subsection (d) or
    otherwise transacts in digital commodities or permitted payment
    stablecoins to adopt such rules as may be necessary to further
    compliance with this section, including subsection (g)(2), protect
    investors, maintain fair, orderly, and efficient markets, and
    facilitate capital formation.
        (i) Rule of Construction.--The enumeration of any category of rules
    or regulations in this section shall not be construed to limit the
    authority of the Securities and Exchange Commission to promulgate such
    rules as may be necessary or appropriate to implement this section and
    the purposes of this Act, including over--
                (1) system capacity, integrity, and security;
                (2) examinations, inspections, and investigations;
                (3) trade reporting; or
                (4) written procedures for the confidential treatment of
            trading information.
        (j) Memorandum of Understanding.--Consistent with section 5k of the
    Commodity Exchange Act and to carry out this Act, the Securities and
    Exchange Commission shall enter into a memorandum of understanding with
    the Commodity Futures Trading Commission to ensure--
                (1) requirements imposed on registered brokers or
            registered dealers operating an alternative trading system
            pursuant to subsection (c) or otherwise transacting in digital
            commodities or permitted payment stablecoins are consistent
            with the substantive requirements under section 4u of the
            Commodity Exchange Act;
                (2) requirements imposed on alternative trading systems
            operating pursuant to subsection (c) or (d) are not
            inconsistent with core principles of and are consistent with
            the other substantive requirements under section 5i of the
            Commodity Exchange Act; and
                (3) non-duplicative supervision and enforcement with
            respect to registrants of the Securities and Exchange
            Commission notice registered with the Commodity Futures Trading
            Commission.
        (k) Covered Regulations Defined.--In this section, the term
    ``covered regulations'' means sections 242.300, 242.301, 242.302,
    242.303, 242.304, and 242.1000 through 242.1007 of title 17, Code of
    Federal Regulations.
        (l) Rule of Construction.--Nothing in this section shall be
    construed to limit the anti-fraud, anti-manipulation, or false
    reporting enforcement authorities of the Commodity Futures Trading
    Commission with respect to a contract of sale of a commodity and
    persons effecting such contracts.

    SEC. 305. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.

        (a) In General.--For purposes of books and records requirements for
    brokers, dealers, transfer agents, national securities exchanges under
    the Securities and Exchange Act of 1934 (15 U.S.C. 78a et seq.),
    investment advisers under the Investment Advisers Act of 1940 (15
    U.S.C. 80b-1 et seq.), and investment companies under the Investment
    Company Act of 1940 (15 U.S.C. 80a-1 et seq.), a person may consider
    records from a blockchain system.
        (b) Revision of Rules.--Not later than 180 days after the date of
    enactment of this Act, the Securities and Exchange Commission shall
    issue and revise such rules as may be necessary to implement this
    section.

    SEC. 306. EXEMPTIVE AUTHORITY.

        Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3) is
    amended by striking ``by rule or regulation'' and inserting ``by rule,
    regulation, or order''.

    SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES TRADING
                  COMMISSION.

        Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
    is amended by adding at the end the following:
        ``(p) Additional Registrations With the Commodity Futures Trading
    Commission.--A registered broker or registered dealer shall be
    permitted to maintain a registration with the Commodity Futures Trading
    Commission as a digital commodity broker or digital commodity dealer,
    to list or trade contracts of sale for digital commodities.''.

    SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES LAWS.

        Section 18(b) of the Securities Act of 1933 (15 U.S.C. 77r(b)) is
    amended by adding at the end the following:
                ``(5) Exemption in connection with digital commodities.--A
            digital commodity shall be treated as a covered security.''.

    SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.

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

    ``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.

        ``(a) In General.--Notwithstanding any other provision of this Act,
    a person shall not be subject to this Act and the regulations
    promulgated under this Act based on the person directly or indirectly
    engaging in any of the following activities, whether singly or in
    combination, in relation to the operation of a blockchain system or in
    relation to a decentralized finance trading protocol:
                ``(1) Compiling network transactions or relaying,
            searching, sequencing, validating, or acting in a similar
            capacity.
                ``(2) Providing computational work, operating a node or
            oracle service, or procuring, offering, or utilizing network
            bandwidth, or providing other similar incidental services.
                ``(3) Providing a user-interface that enables a user to
            read and access data about a blockchain system.
                ``(4) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a blockchain system or a
            decentralized finance trading protocol.
                ``(5) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a decentralized finance
            messaging system, or operating or participating in a liquidity
            pool, for the purpose of executing a spot contract for the
            purchase or sale of a digital commodity in relation to a
            decentralized finance trading protocol.
                ``(6) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing software or systems that
            create or deploy hardware or software, including wallets or
            other systems, facilitating an individual user's own personal
            ability to keep, safeguard, or custody the user's digital
            assets or related private keys.
        ``(b) Exceptions.--Subsection (a) shall not apply to the anti-fraud
    and anti-manipulation authorities of the Commission.''.

    SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING INSTITUTIONS.

        (a) Treatment of Custody Activities.--The appropriate Federal
    banking agency, the National Credit Union Administration (in the case
    of a credit union), and the Securities and Exchange Commission may not
    require a depository institution, national bank, Federal credit union,
    State credit union, trust company, broker, or dealer, or any affiliate
    thereof (the ``entity'')--
                (1) to include assets held in custody that are not owned by
            the entity as a liability on the financial statement or balance
            sheet of the entity, including digital commodity or permitted
            payment stablecoin custody or safekeeping services;
                (2) to hold regulatory capital against assets, including
            reserves backing such assets, in custody or safekeeping, except
            as necessary to mitigate against operational risks inherent
            with the custody or safekeeping services, as determined by--
                        (A) the appropriate Federal banking agency;
                        (B) the National Credit Union Administration (in
                    the case of a credit union);
                        (C) a State bank supervisor;
                        (D) a State credit union supervisor (as defined in
                    section 6003 of the Anti-Money Laundering Act of 2020
                    (31 U.S.C. 5311 note)); or
                        (E) the Securities and Exchange Commission (in the
                    case of a broker or dealer); and
                (3) to recognize a liability for any obligations related to
            activities or services performed with respect to digital
            commodities that the entity does not own if that liability
            would exceed the expense recognized in the income statement as
            a result of the corresponding obligation.
        (b) Definitions.--In this section:
                (1) Banking terms.--The terms ``appropriate Federal banking
            agency'', ``depository institution'', ``national bank'', and
            ``State bank supervisor'' have the meaning given those terms,
            respectively, under section 3 of the Federal Deposit Insurance
            Act (12 U.S.C. 1813).
                (2) Credit union terms.--The terms ``Federal credit union''
            and ``State credit union'' have the meaning given those terms,
            respectively, under section 101 of the Federal Credit Union Act
            (12 U.S.C. 1752).

    SEC. 311. BROKER AND DEALER DISCLOSURES REGARDING THE TREATMENT OF
                  ASSETS.

        (a) In General.--Not later than 270 days after the date of the
    enactment of this Act, the Securities and Exchange Commission shall
    issue rules requiring written disclosures regarding the treatment of
    customer assets in the event of an insolvency, resolution, or
    liquidation proceeding to be provided by a registered broker or dealer
    to an investor before a digital commodity, a permitted payment
    stablecoin, or an investment contract involving a unit of a digital
    commodity is received, acquired, or held by the broker or dealer for
    the account of the investor, which shall include, as necessary or
    appropriate for the protection of investors--
                (1) a description of the manner in which any digital
            commodity, permitted payment stablecoin, or investment contact
            involving a unit of a digital commodity received, acquired, or
            held by the broker or dealer for the account of such investor
            would be treated in an insolvency, resolution, or liquidation
            proceeding with respect to the broker or dealer under--
                        (A) title II of the Dodd-Frank Wall Street Reform
                    and Consumer Protection Act (12 U.S.C. 5381 et seq.);
                        (B) the Securities Investor Protection Act of 1970
                    (15 U.S.C. 78aaa et seq.); or
                        (C) as applicable, chapter 7 or chapter 11 of title
                    11, United States Code; and
                (2) how the treatment described in paragraph (1) differs
            from the treatment of securities and cash received, acquired,
            or held by the broker or dealer for the account of such
            investor in the event of an insolvency, resolution, or
            liquidation proceeding with respect to the broker or dealer
            under each law described under subparagraph (A) through (C) of
            paragraph (1).

    SEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN NATURE.

        (a) Digital Commodity Activities That Are Financial in Nature.--
    Section 4(k)(4) of the Bank Holding Company Act of 1956 (12 U.S.C.
    1843(k)(4)) is amended--
                (1) in subparagraph (A), by striking ``or securities'' and
            inserting ``, securities, or digital commodities''; and
                (2) in subparagraph (E), by inserting ``or digital
            commodities'' before the period at the end.
        (b) National Bank Activity.--
                (1) In general.--A national bank may use a digital asset or
            blockchain system to perform, provide, or deliver any activity,
            function, product, or service that the national bank is
            otherwise authorized by law to perform, provide, or deliver.
                (2) Rule of construction.--Nothing in this subsection may
            be construed to exempt a national bank's performance,
            provision, or delivery of an activity, function, product, or
            service from a requirement that would apply if the activity
            were not performed, provided, or delivered using a digital
            asset or blockchain system.
        (c) Insured State Banks and Subsidiaries of Insured State Banks.--
    For purposes of sections 24(a) and 24(d) of the Federal Deposit
    Insurance Act (12 U.S.C. 1831a(a) and (d)), all of the activities
    authorized for a national bank under subsection (b) that are principal
    activities shall be permissible for an insured State bank and
    subsidiary of an insured State bank.

    SEC. 313. EFFECTIVE DATE; ADMINISTRATION.

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

    SEC. 314. STUDIES ON FOREIGN ADVERSARY PARTICIPATION.

        (a) In General.--The Secretary of the Treasury, in consultation
    with the Commodity Futures Trading Commission and the Securities and
    Exchange Commission, shall, not later than 1 year after date of the
    enactment of this section, conduct a study and submit a report to the
    relevant congressional committees that--
                (1) identifies any digital commodity registrants which are
            owned by governments of foreign adversaries;
                (2) determines whether any governments of foreign
            adversaries are collecting personal data or trading data about
            United States persons in the digital commodity markets; and
                (3) evaluates whether any proprietary intellectual property
            of digital commodity registrants is being misused or stolen by
            any governments of foreign adversaries.
        (b) GAO Study and Report.--
                (1) In general.--The Comptroller General shall, not later
            than 1 year after date of the enactment of this section,
            conduct a study and submit a report to the relevant
            congressional committees that--
                        (A) identifies any digital commodity registrants
                    which are owned by governments of foreign adversaries;
                        (B) determines whether any governments of foreign
                    adversaries are collecting personal data or trading
                    data about United States persons in the digital
                    commodity markets; and
                        (C) evaluates whether any proprietary intellectual
                    property of digital commodity registrants is being
                    misused or stolen by any governments of foreign
                    adversaries.
        (c) Definitions.--In this section:
                (1) Digital commodity registrant.--The term ``digital
            commodity registrant'' means any person required to register as
            a digital commodity exchange, digital commodity broker, or
            digital commodity dealer under the Commodity Exchange Act.
                (2) Foreign adversaries.--The term ``foreign adversaries''
            means the foreign governments and foreign non-government
            persons determined by the Secretary of Commerce to be foreign
            adversaries under section 7.4(a) of title 15, Code of Federal
            Regulations.
                (3) Relevant congressional committees.--The term ``relevant
            congressional committees'' means--
                        (A) the Committees on Financial Services and
                    Agriculture of the House of Representatives; and
                        (B) the Committees on Banking, Housing, and Urban
                    Affairs and Agriculture, Nutrition, and Forestry of the
                    Senate.

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

    SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY TRANSACTIONS.

        (a) Savings Clause.--Section 2(a)(1) of the Commodity Exchange Act
    (7 U.S.C. 2(a)(1)) is amended by adding at the end the following:
                        ``(J) Except as expressly provided in this Act,
                    nothing in the CLARITY Act of 2025 shall affect or
                    apply to, or be interpreted to affect or apply to--
                                ``(i) any agreement, contract, or
                            transaction that is subject to this Act as--
                                        ``(I) a contract of sale of a
                                    commodity for future delivery or an
                                    option on such a contract;
                                        ``(II) a swap;
                                        ``(III) a security futures product;
                                        ``(IV) an option authorized under
                                    section 4c of this Act;
                                        ``(V) an agreement, contract, or
                                    transaction described in subparagraph
                                    (C)(i) or (D)(i) of subsection (c)(2)
                                    of this section; or
                                        ``(VI) a leverage transaction
                                    authorized under section 19; or
                                ``(ii) the activities of any person with
                            respect to any such an agreement, contract, or
                            transaction.''.
        (b) Limitation on Authority Over Permitted Payment Stablecoins.--
    Section 2(c)(1) of the Commodity Exchange Act (7 U.S.C. 2(c)(1)) is
    amended--
                (1) in subparagraph (F), by striking ``or'' at the end;
                (2) in subparagraph (G), by striking the period and
            inserting ``; or''; and
                (3) by adding at the end the following:
                        ``(H) permitted payment stablecoins.''.
        (c) Commission Jurisdiction Over Financing Agreements.--Section
    2(c)(2) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended--
                (1) in subparagraph (D), by redesignating clause (iv) as
            clause (v) and inserting after clause (iii) the following:
                                ``(iv) Notwithstanding clause (iii), a
                            digital commodity broker may, subject to the
                            requirements of section 4u(c)(3), offer to or
                            enter into an agreement for margin financing
                            with a customer for the purchase or sale of a
                            digital commodity.''; and
                (2) by adding at the end the following:
        ``(F) Commission Jurisdiction With Respect to Digital Commodity
    Transactions.--
                ``(i) In general.--Subject to sections 6d and 12(e), the
            Commission shall have exclusive jurisdiction with respect to
            any account, agreement, contract, or transaction involving a
            contract of sale of a digital commodity in interstate commerce,
            including in a digital commodity cash or spot market, that is
            offered, solicited, traded, facilitated, executed, cleared,
            reported, or otherwise dealt in--
                        ``(I) on or subject to the rules of a registered
                    entity or an entity that is required to be registered
                    as a registered entity; or
                        ``(II) by any other entity registered, or required
                    to be registered, with the Commission.
                ``(ii) Limitations.--Clause (i) shall not apply with
            respect to--
                        ``(I) custodial or depository activities for a
                    digital commodity of an entity regulated by an
                    appropriate Federal banking agency or a State bank
                    supervisor (within the meaning of section 3 of the
                    Federal Deposit Insurance Act); or
                        ``(II) an offer or sale of an investment contract
                    involving a digital commodity or of a securities offer
                    or sale involving a digital commodity.
                ``(iii) Mixed digital asset transactions.--
                        ``(I) In general.--Clause (i) shall not apply to a
                    mixed digital asset transaction.
                        ``(II) Reports on mixed digital asset
                    transactions.--A digital commodity issuer, digital
                    commodity related person, digital commodity affiliated
                    person, or other person registered with the Securities
                    and Exchange Commission that engages in a mixed digital
                    asset transaction, shall, on request of the Commission,
                    open to inspection and examination by the Commission
                    all books and records relating to the mixed digital
                    asset transaction, subject to the confidentiality and
                    disclosure requirements of section 8.
        ``(G) Agreements, Contracts, and Transactions in Stablecoins.--
                ``(i) Treatment of permitted payment stablecoins on
            commission-registered entities.--Subject to clauses (ii) and
            (iii), the Commission shall have jurisdiction over a cash or
            spot agreement, contract, or transaction in a permitted payment
            stablecoin that is offered, offered to enter into, entered
            into, executed, confirmed the execution of, solicited, or
            accepted--
                        ``(I) on or subject to the rules of a registered
                    entity; or
                        ``(II) by any other entity registered with the
                    Commission.
                ``(ii) Permitted payment stablecoin transaction rules.--
            This Act shall apply to a transaction described in clause (i)
            only for the purpose of regulating the offer, execution,
            solicitation, or acceptance of a cash or spot permitted payment
            stablecoin transaction on a registered entity or by any other
            entity registered with the Commission, as if the permitted
            payment stablecoin were a digital commodity.
                ``(iii) No authority over permitted payment stablecoins.--
            Notwithstanding clauses (i) and (ii), the Commission shall not
            make a rule or regulation, impose a requirement or obligation
            on a registered entity or other entity registered with the
            Commission, or impose a requirement or obligation on a
            permitted payment stablecoin issuer, regarding the operation of
            a permitted payment stablecoin issuer or a permitted payment
            stablecoin.''.
        (d) Conforming Amendment.--Section 2(a)(1)(A) of such Act (7 U.S.C.
    2(a)(1)(A)) is amended in the 1st sentence by inserting ``subparagraphs
    (F) and (G) of subsection (c)(2) of this section or'' before ``section
    19''.

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

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

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

        Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
    amended--
                (1) in subsection (a), by striking ``5(d) and 5b(c)(2)''
            and inserting ``5(d), 5b(c)(2), and 5i(c)'';
                (2) in subsection (b)--
                        (A) in each of paragraphs (1) and (2), by inserting
                    ``digital commodity exchange,'' before ``derivatives'';
                    and
                        (B) in paragraph (3), by inserting ``digital
                    commodity exchange,'' before ``derivatives'' each place
                    it appears;
                (3) in subsection (c)--
                        (A) in paragraph (2), by inserting ``or
                    participants'' before ``(in'';
                        (B) in paragraph (4)(B), by striking ``1a(10)'' and
                    inserting ``1a(9)''; and
                        (C) in paragraph (5), by adding at the end the
                    following:
                        ``(D) Special rules for digital commodity
                    contracts.--In certifying any new rule or rule
                    amendment, or listing any new contract or instrument,
                    in connection with a contract of sale of a commodity
                    for future delivery, option, swap, or other agreement,
                    contract, or transaction, that is based on or
                    references a digital commodity, a registered entity
                    shall make or rely on a certification under subsection
                    (d) for the digital commodity.''; and
                (4) by inserting after subsection (c) the following:
        ``(d) Certifications for Digital Commodity Trading.--
                ``(1) In general.--Notwithstanding subsection (c), for the
            purposes of listing or offering a digital commodity for trading
            in a digital commodity cash or spot market, an eligible entity
            shall submit a written certification to the Commission that the
            digital commodity meets the requirements of this Act (including
            the regulations prescribed under this Act).
                ``(2) Contents of the certification.--
                        ``(A) In general.--In making a written
                    certification under this paragraph, the eligible entity
                    shall furnish to the Commission an analysis of how the
                    digital commodity meets the requirements of section
                    5i(c)(3).
                        ``(B) Reliance on prior disclosures.--In making a
                    certification under this subsection, an eligible entity
                    may rely on the records and disclosures of any relevant
                    person registered with the Securities and Exchange
                    Commission or other State or Federal agency.
                ``(3) Modifications.--
                        ``(A) In general.--An eligible entity shall modify
                    a certification made under paragraph (1) to--
                                ``(i) account for significant changes in
                            any information provided to the Commission
                            under paragraph (2)(A)(ii); or
                                ``(ii) permit or restrict trading in units
                            of a digital commodity held by a digital
                            commodity related person or a digital commodity
                            affiliated person.
                        ``(B) Recertification.--Modifications required by
                    this subsection shall be subject to the same
                    disapproval and review process as a new certification
                    under paragraphs (4) and (5).
                ``(4) Disapproval.--
                        ``(A) In general.--The written certification
                    described in paragraph (1) shall become effective
                    unless the Commission finds that the listing of the
                    digital commodity is inconsistent with the requirements
                    of this Act or the rules and regulations prescribed
                    under this Act.
                        ``(B) Analysis required.--The Commission shall
                    include, with any findings referred to in subparagraph
                    (A), a detailed analysis of the factors on which the
                    decision was based.
                        ``(C) Public findings.--The Commission shall make
                    public any disapproval decision, and any related
                    findings and analysis, made under this paragraph.
                ``(5) Review.--
                        ``(A) In general.--Unless the Commission makes a
                    disapproval decision under paragraph (4), the written
                    certification described in paragraph (1) shall become
                    effective, pursuant to the certification by the
                    eligible entity and notice of the certification to the
                    public (in a manner determined by the Commission) on
                    the date that is--
                                ``(i) 20 business days after the date the
                            Commission receives the certification (or such
                            shorter period as determined by the Commission
                            by rule or regulation), in the case of a
                            digital commodity that has not been certified
                            under this section or for which a certification
                            is being modified under paragraph (3); or
                                ``(ii) 1 business day after the date the
                            Commission receives the certification (or such
                            shorter period as determined by the Commission
                            by rule or regulation) for any digital
                            commodity that has been certified under this
                            section.
                        ``(B) Extensions.--The time for consideration under
                    subparagraph (A) may be extended through notice to the
                    eligible entity that there are novel or complex issues
                    that require additional time to analyze, that the
                    explanation by the submitting eligible entity is
                    inadequate, or of a potential inconsistency with this
                    Act--
                                ``(i) once, for 30 business days, through
                            written notice to the eligible entity by the
                            Commission; and
                                ``(ii) once, for an additional 30 business
                            days, through written notice to the eligible
                            entity from the Commission that includes a
                            description of any deficiencies with the
                            certification, including any--
                                        ``(I) novel or complex issues which
                                    require additional time to analyze;
                                        ``(II) missing information or
                                    inadequate explanations; or
                                        ``(III) potential inconsistencies
                                    with this Act.
                ``(6) Prior approval before registration.--
                        ``(A) In general.--A person applying for
                    registration with the Commission for the purposes of
                    listing or offering a digital commodity for trading in
                    a digital commodity cash or spot market may request
                    that the Commission grant prior approval for the person
                    to list or offer the digital commodity on being
                    registered with the Commission.
                        ``(B) Request for prior approval.--A person seeking
                    prior approval under subparagraph (A) shall furnish the
                    Commission with a written certification that the
                    digital commodity meets the requirements of this Act
                    (including the regulations prescribed under this Act)
                    and the information described in paragraph (2).
                        ``(C) Deadline.--The Commission shall take final
                    action on a request for prior approval not later than
                    90 business days after submission of the request,
                    unless the person submitting the request agrees to an
                    extension of the time limitation established under this
                    subparagraph.
                        ``(D) Disapproval.--
                                ``(i) In general.--The Commission shall
                            approve the listing of the digital commodity
                            unless the Commission finds that the listing is
                            inconsistent with this Act (including any
                            regulation prescribed under this Act).
                                ``(ii) Analysis required.--The Commission
                            shall include, with any findings made under
                            clause (i), a detailed analysis of the factors
                            on which the decision is based.
                                ``(iii) Public findings.--The Commission
                            shall make public any disapproval decision, and
                            any related findings and analysis, made under
                            this paragraph.
                ``(7) Eligible entity defined.--In this subsection, the
            term `eligible entity' means a registered entity or group of
            registered entities acting jointly.''.

    SEC. 404. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.

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

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

        ``(a) In General.--
                ``(1) Registration.--
                        ``(A) In general.--A trading facility that offers
                    or seeks to offer a cash or spot market in at least 1
                    digital commodity shall register with the Commission as
                    a digital commodity exchange.
                        ``(B) Application.--A person desiring to register
                    as a digital commodity exchange shall submit to the
                    Commission an application in such form and containing
                    such information as the Commission may require for the
                    purpose of making the determinations required for
                    approval.
                        ``(C) Exemptions.--A trading facility that offers
                    or seeks to offer a cash or spot market in at least 1
                    digital commodity shall not be required to register
                    under this section if the trading facility--
                                ``(i) permits no more than a de minimis
                            amount of trading activity, as the Commission
                            may determine by rule or regulation, in a
                            digital commodity; or
                                ``(ii) serves only customers in a single
                            State, territory, or possession of the United
                            States.
                ``(2) Additional registrations.--
                        ``(A) With the commission.--In order to foster the
                    development of fair and orderly markets, protect
                    customers, and promote responsible innovation, the
                    Commission--
                                ``(i) shall prescribe rules to exempt an
                            entity registered with the Commission under
                            more than 1 section of this Act from
                            duplicative, conflicting, or unduly burdensome
                            provisions of this Act and the rules under this
                            Act;
                                ``(ii) shall prescribe rules to address
                            conflicts of interests and activities of the
                            entity; and
                                ``(iii) may, after an analysis of the risks
                            and benefits, prescribe rules to provide for
                            portfolio margining.
                        ``(B) With a registered futures association.--
                                ``(i) In general.--A registered digital
                            commodity exchange shall also be a member of a
                            registered futures association and comply with
                            rules related to such activity, if the
                            registered digital commodity exchange accepts
                            customer funds required to be segregated under
                            subsection (d).
                                ``(ii) Rulemaking required.--The Commission
                            shall require any registered futures
                            association with a digital commodity exchange
                            as a member to provide such rules as may be
                            necessary to further compliance with subsection
                            (d), protect customers, and promote the public
                            interest.
                        ``(C) Registration required.--A person required to
                    be registered as a digital commodity exchange under
                    this section shall register with the Commission as such
                    regardless of whether the person is registered with
                    another State or Federal regulator.
        ``(b) Trading.--
                ``(1) Prohibition on certain trading practices.--
                        ``(A) Section 4b shall apply to any agreement,
                    contract, or transaction in a digital commodity as if
                    the agreement, contract, or transaction were a contract
                    of sale of a commodity for future delivery.
                        ``(B) Section 4c shall apply to any agreement,
                    contract, or transaction in a digital commodity as if
                    the agreement, contract, or transaction were a
                    transaction involving the purchase or sale of a
                    commodity for future delivery.
                        ``(C) Section 4b-1 shall apply to any agreement,
                    contract, or transaction in a digital commodity as if
                    the agreement, contract, or transaction were a contract
                    of sale of a commodity for future delivery.
                ``(2) Prohibition on acting as a counterparty.--
                        ``(A) In general.--A digital commodity exchange or
                    any affiliate of such an exchange shall not trade on or
                    subject to the rules of the digital commodity exchange
                    for its own account.
                        ``(B) Exceptions.--The Commission shall, by rule,
                    permit a digital commodity exchange or any affiliate of
                    a digital commodity exchange to engage in trading on
                    the exchange so long as the trading is not solely for
                    the purpose of the profit of the exchange, including
                    the following:
                                ``(i) Customer direction.--A transaction
                            for, or entered into at the direction of, or
                            for the benefit of, an unaffiliated customer.
                                ``(ii) Risk management.--A transaction to
                            manage the credit, market, and liquidity risks
                            associated with the digital commodity business
                            of the exchange.
                                ``(iii) Operational needs.--A transaction
                            related to the operational needs of the
                            business of the digital commodity exchange or
                            its affiliate.
                                ``(iv) Functional use.--A transaction
                            related to the functional operation of a
                            blockchain system.
                        ``(C) Notice requirement.--In order for a digital
                    commodity exchange or any affiliate of a digital
                    commodity exchange to engage in trading on the
                    affiliated exchange pursuant to subsection (B), notice
                    must be given to the Commission that shall enumerate
                    how any proposed activity is consistent with the
                    exceptions in subsection (B) and the purposes of this
                    Act.
        ``(c) Core Principles for Digital Commodity Exchanges.--
                ``(1) Compliance with core principles.--
                        ``(A) In general.--To be registered, and maintain
                    registration, as a digital commodity exchange, a
                    digital commodity exchange shall comply with--
                                ``(i) the core principles described in this
                            subsection; and
                                ``(ii) any requirement that the Commission
                            may impose by rule or regulation pursuant to
                            section 8a(5).
                        ``(B) Reasonable discretion of a digital commodity
                    exchange.--Unless otherwise determined by the
                    Commission by rule or regulation, a digital commodity
                    exchange described in subparagraph (A) shall have
                    reasonable discretion in establishing the manner in
                    which the digital commodity exchange complies with the
                    core principles described in this subsection.
                ``(2) Compliance with rules.--A digital commodity exchange
            shall--
                        ``(A) establish and enforce compliance with any
                    rule of the digital commodity exchange, including--
                                ``(i) the terms and conditions of the
                            trades traded or processed on or through the
                            digital commodity exchange; and
                                ``(ii) any limitation on access to the
                            digital commodity exchange;
                        ``(B) establish and enforce trading, trade
                    processing, and participation rules that will deter
                    abuses and have the capacity to detect, investigate,
                    and enforce those rules, including means--
                                ``(i) to provide market participants with
                            impartial access to the market; and
                                ``(ii) to capture information that may be
                            used in establishing whether rule violations
                            have occurred; and
                        ``(C) establish rules governing the operation of
                    the exchange, including rules specifying trading
                    procedures to be used in entering and executing orders
                    traded or posted on the facility.
                ``(3) Listing standards for digital commodities.--
                        ``(A) In general.--A digital commodity exchange
                    shall not permit trading in a digital commodity
                    unless--
                                ``(i) reports with respect to the digital
                            commodity required under section 4B(b)(3) of
                            the Securities Act of 1933 (or, with respect to
                            a digital commodity not issued in reliance on
                            section 4(a)(8) of the Securities Act of 1933,
                            a comparable set of reports, where required by
                            the Securities and Exchange Commission) have
                            been filed with the Securities and Exchange
                            Commission; or
                                ``(ii) the blockchain system to which the
                            digital commodity relates, together with the
                            digital commodity, is certified as a mature
                            blockchain system under section 42 of the
                            Securities Exchange Act of 1934.
                        ``(B) Public information requirements.--
                                ``(i) In general.--A digital commodity
                            exchange shall permit trading only in a digital
                            commodity if the information required in clause
                            (ii) is correct, current, and available to the
                            public.
                                ``(ii) Required information.--With respect
                            to a digital commodity and each blockchain
                            system to which the digital commodity relates
                            for which the digital commodity exchange will
                            make the digital commodity available to the
                            customers of the digital commodity exchange,
                            the information required in this clause is as
                            follows:
                                        ``(I) Source code.--The source code
                                    for any blockchain system to which the
                                    digital commodity relates.
                                        ``(II) Transaction history.--A
                                    description of the steps necessary to
                                    independently access, search, and
                                    verify the transaction history of any
                                    blockchain system to which the digital
                                    commodity relates, to the extent any
                                    such independent access, search, and
                                    verification activities are technically
                                    feasible with respect to the blockchain
                                    system.
                                        ``(III) Digital commodity
                                    economics.--A narrative description of
                                    the purpose of any blockchain system to
                                    which the digital commodity relates and
                                    the operation of any such blockchain
                                    system, including--
                                                ``(aa) information
                                            explaining the launch and
                                            supply process, including the
                                            number of digital assets to be
                                            issued in an initial
                                            allocation, the total number of
                                            digital commodities to be
                                            created, the release schedule
                                            for the digital commodities,
                                            and the total number of digital
                                            commodities then outstanding;
                                                ``(bb) information
                                            detailing any applicable
                                            consensus mechanism or process
                                            for validating transactions,
                                            method of generating or mining
                                            digital commodities, and any
                                            process for burning or
                                            destroying digital commodities
                                            on the blockchain system;
                                                ``(cc) an explanation of
                                            governance mechanisms for
                                            implementing changes to the
                                            blockchain system or forming
                                            consensus among holders of the
                                            digital commodities; and
                                                ``(dd) sufficient
                                            information for a third party
                                            to create a tool for verifying
                                            the transaction history of the
                                            digital asset.
                                        ``(IV) Trading volume and
                                    volatility.--The trading volume and
                                    volatility of the digital commodity on
                                    the exchange.
                                        ``(V) Additional information.--Such
                                    additional information as the
                                    Commission may determine by rule to be
                                    necessary for a customer to understand
                                    the financial and operational risks of
                                    a digital commodity, and to be
                                    practically feasible to provide.
                                ``(iii) Format.--The Commission shall
                            prescribe rules and regulations for the
                            standardization and simplification of
                            disclosures under clause (ii), including
                            requiring that disclosures--
                                        ``(I) be conspicuous;
                                        ``(II) use plain language
                                    comprehensible to customers; and
                                        ``(III) succinctly explain the
                                    information that is required to be
                                    communicated to the customer.
                                ``(iv) Reliance on previous disclosures.--
                            In complying with this subparagraph, a digital
                            commodity exchange may rely on and make
                            available to the public relevant information
                            publicly disclosed to the Commission, the
                            Securities and Exchange Commission, or an
                            appropriate Federal banking agency.
                        ``(C) Digital commodities held by related and
                    digital commodity affiliated persons.--A digital
                    commodity exchange shall permit the trading of a unit
                    of a digital commodity held by a digital commodity
                    affiliated person or a digital commodity related
                    person, only pursuant to section 4C of the Securities
                    Act of 1933.
                ``(4) Treatment of customer assets.--A digital commodity
            exchange shall establish policies and procedures that are
            designed to protect and ensure the safety of customer money,
            assets, and property.
                ``(5) Monitoring of trading and trade processing.--
                        ``(A) In general.--A digital commodity exchange
                    shall provide a competitive, open, and efficient market
                    and mechanism for executing transactions that protects
                    the price discovery process of trading on the exchange.
                        ``(B) Protection of markets and market
                    participants.--A digital commodity exchange shall
                    establish and enforce rules--
                                ``(i) to protect markets and market
                            participants from abusive practices committed
                            by any party, including abusive practices
                            committed by a party acting as an agent for a
                            participant; and
                                ``(ii) to promote fair and equitable
                            trading on the exchange.
                        ``(C) Trading procedures.--A digital commodity
                    exchange shall--
                                ``(i) establish and enforce rules or terms
                            and conditions defining, or specifications
                            detailing--
                                        ``(I) trading procedures to be used
                                    in entering and executing orders traded
                                    on or through the facilities of the
                                    digital commodity exchange; and
                                        ``(II) procedures for trade
                                    processing of digital commodities on or
                                    through the facilities of the digital
                                    commodity exchange; and
                                ``(ii) monitor trading in digital
                            commodities to prevent manipulation, price
                            distortion, and disruptions, through
                            surveillance, compliance, and disciplinary
                            practices and procedures, including methods for
                            conducting real-time monitoring of trading and
                            comprehensive and accurate trade
                            reconstructions.
                ``(6) Ability to obtain information.--A digital commodity
            exchange shall--
                        ``(A) establish and enforce rules that will allow
                    the facility to obtain any necessary information to
                    perform any of the functions described in this section;
                        ``(B) provide the information to the Commission on
                    request; and
                        ``(C) have the capacity to carry out such
                    international information-sharing agreements as the
                    Commission may require.
                ``(7) Emergency authority.--A digital commodity exchange
            shall adopt rules to provide for the exercise of emergency
            authority, in consultation or cooperation with the Commission
            or a registered entity, as is necessary and appropriate,
            including the authority to facilitate the liquidation or
            transfer of open positions in any digital commodity or to
            suspend or curtail trading in a digital commodity.
                ``(8) Timely publication of trading information.--
                        ``(A) In general.--A digital commodity exchange
                    shall make public timely information on price, trading
                    volume, and other trading data on digital commodities
                    to the extent prescribed by the Commission.
                        ``(B) Capacity of digital commodity exchange.--A
                    digital commodity exchange shall have the capacity to
                    electronically capture and transmit trade information
                    with respect to transactions executed on the exchange.
                ``(9) Recordkeeping and reporting.--
                        ``(A) In general.--A digital commodity exchange
                    shall--
                                ``(i) maintain records relating to the
                            operation of the 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 such records of digital
                            commodities which relate to a security open to
                            inspection and examination by the Securities
                            and Exchange Commission.
                        ``(B) Information-sharing.--Subject to section 8,
                    and on request, the Commission shall share information
                    collected under subparagraph (A) with--
                                ``(i) the Board;
                                ``(ii) the Securities and Exchange
                            Commission;
                                ``(iii) each appropriate Federal banking
                            agency;
                                ``(iv) each appropriate State bank
                            supervisor (within the meaning of section 3 of
                            the Federal Deposit Insurance Act);
                                ``(v) the Financial Stability Oversight
                            Council;
                                ``(vi) the Department of Justice; and
                                ``(vii) any other person that the
                            Commission determines to be appropriate,
                            including--
                                        ``(I) foreign financial supervisors
                                    (including foreign futures
                                    authorities);
                                        ``(II) foreign central banks; and
                                        ``(III) foreign ministries.
                        ``(C) Confidentiality agreement.--Before the
                    Commission may share information with any entity
                    described in subparagraph (B), the Commission shall
                    receive a written agreement from the entity stating
                    that the entity shall abide by the confidentiality
                    requirements described in section 8 relating to the
                    information on digital commodities that is provided.
                        ``(D) Providing information.--A digital commodity
                    exchange shall provide to the Commission (including any
                    designee of the Commission) information under
                    subparagraph (A) in such form and at such frequency as
                    is required by the Commission.
                ``(10) Antitrust considerations.--Unless necessary or
            appropriate to achieve the purposes of this Act, a digital
            commodity exchange shall not--
                        ``(A) adopt any rules or take any actions that
                    result in any unreasonable restraint of trade; or
                        ``(B) impose any material anticompetitive burden on
                    trading.
                ``(11) Conflicts of interest.--The digital commodity
            exchange shall establish and enforce rules--
                        ``(A) to minimize conflicts of interest in the
                    decision making processes of the contract market; and
                        ``(B) to establish a process for resolving
                    conflicts of interest referred to in subparagraph (A).
                ``(12) Financial resources.--
                        ``(A) In general.--A digital commodity exchange
                    shall have adequate financial, operational, and
                    managerial resources, as determined by the Commission,
                    to discharge each responsibility of the digital
                    commodity exchange.
                        ``(B) Minimum amount of financial resources.--A
                    digital commodity exchange shall possess financial
                    resources that, at a minimum, exceed--
                                ``(i) the total amount that would enable
                            the digital commodity exchange to cover the
                            operating costs of the digital commodity
                            exchange for a 1-year period, as calculated on
                            a rolling basis; and
                                ``(ii) the total amount necessary to meet
                            the financial obligations of the digital
                            commodity exchange to all customers of the
                            digital commodity exchange.
                ``(13) Disciplinary procedures.--A digital commodity
            exchange shall establish and enforce disciplinary procedures
            that authorize the digital commodity exchange to discipline,
            suspend, or expel members or market participants that violate
            the rules of the digital commodity exchange, or similar methods
            for performing the same functions, including delegation of the
            functions to third parties.
                ``(14) Governance fitness standards.--
                        ``(A) Governance arrangements.--A digital commodity
                    exchange shall establish governance arrangements that
                    are transparent and designed to permit consideration of
                    the views of market participants.
                        ``(B) Fitness standards.--A digital commodity
                    exchange shall establish and enforce appropriate
                    fitness standards for--
                                ``(i) officers and directors; and
                                ``(ii) any individual or entity with direct
                            access to, or control of, customer assets.
                ``(15) System safeguards.--A digital commodity exchange
            shall--
                        ``(A) establish and maintain a program of risk
                    analysis and oversight to identify and minimize sources
                    of operational and security risks, through the
                    development of appropriate controls and procedures, and
                    automated systems in accordance with industry
                    standards, that--
                                ``(i) are reliable and secure; and
                                ``(ii) have adequate scalable capacity;
                        ``(B) establish and maintain emergency procedures,
                    backup resources, and a plan for disaster recovery that
                    allow for--
                                ``(i) the timely recovery and resumption of
                            operations; and
                                ``(ii) the fulfillment of the
                            responsibilities and obligations of the digital
                            commodity exchange; and
                        ``(C) periodically conduct tests to verify that the
                    backup resources of the digital commodity exchange are
                    sufficient to ensure continued--
                                ``(i) order processing and trade matching;
                                ``(ii) price reporting;
                                ``(iii) market surveillance; and
                                ``(iv) maintenance of a comprehensive and
                            accurate audit trail.
        ``(d) Holding of Customer Assets.--
                ``(1) In general.--A digital commodity exchange shall hold
            customer money, assets, and property in a manner to minimize
            the risk of loss to the customer or unreasonable delay in
            customer access to the money, assets, and property of the
            customer.
                        ``(A) Segregation of funds.--
                                ``(i) In general.--A digital commodity
                            exchange shall treat and deal with all money,
                            assets, and property that is received by the
                            digital commodity exchange, or accrues to a
                            customer as the result of trading in digital
                            commodities, as belonging to the customer.
                                ``(ii) Commingling prohibited.--Money,
                            assets, and property of a customer described in
                            clause (i) shall be separately accounted for
                            and shall not be commingled with the funds of
                            the digital commodity exchange or be used to
                            margin, secure, or guarantee any trades or
                            accounts of any customer or person other than
                            the person for whom the same are held.
                        ``(B) Exceptions.--
                                ``(i) Use of funds.--
                                        ``(I) In general.--Notwithstanding
                                    subparagraph (A), money, assets, and
                                    property of customers of a digital
                                    commodity exchange described in
                                    subparagraph (A) may, for convenience,
                                    be commingled and deposited in the same
                                    account or accounts with any bank,
                                    trust company, derivatives clearing
                                    organization, or qualified digital
                                    asset custodian.
                                        ``(II) Withdrawal.--Notwithstanding
                                    subparagraph (A), such share of the
                                    money, assets, and property described
                                    in subclause (I) of this clause as in
                                    the normal course of business shall be
                                    necessary to margin, guarantee, secure,
                                    transfer, adjust, or settle a contract
                                    of sale of a digital commodity with a
                                    registered entity may be withdrawn and
                                    applied to such purposes, including the
                                    payment of commissions, brokerage,
                                    interest, taxes, storage, and other
                                    charges, lawfully accruing in
                                    connection with the contract of sale of
                                    a digital commodity.
                                ``(ii) Commission action.--Notwithstanding
                            subparagraph (A), in accordance with such terms
                            and conditions as the Commission may prescribe
                            by rule, regulation, or order, any money,
                            assets, or property of the customers of a
                            digital commodity exchange described in
                            subparagraph (A) may be commingled and
                            deposited in customer accounts with any other
                            money, assets, or property received by the
                            digital commodity exchange and required by the
                            Commission to be separately accounted for and
                            treated and dealt with as belonging to the
                            customer of the digital commodity exchange.
                ``(2) Permitted investments.--Money described in
            subparagraph (A) may be invested in obligations of the United
            States, in general obligations of any State or of any political
            subdivision of a State, and in obligations fully guaranteed as
            to principal and interest by the United States, or in any other
            investment that the Commission may by rule or regulation
            prescribe, and such investments shall be made in accordance
            with such rules and regulations and subject to such conditions
            as the Commission may prescribe.
                ``(3) Customer protection during bankruptcy.--
                        ``(A) Customer property.--All assets held on behalf
                    of a customer by a digital commodity exchange, and all
                    money, assets, and property of any customer received by
                    a digital commodity exchange for trading or custody, or
                    to facilitate, margin, guarantee, or secure contracts
                    of sale of a digital commodity (including money,
                    assets, or property accruing to the customer as the
                    result of the transactions), shall be considered
                    customer property for purposes of section 761 of title
                    11, United States Code.
                        ``(B) Transactions.--A transaction involving the
                    sale of a unit of a digital commodity occurring on or
                    subject to the rules of a digital commodity exchange
                    shall be considered a contract for the purchase or sale
                    of a commodity for future delivery, on or subject to
                    the rules of, a contract market or board of trade for
                    purposes of the definition of `commodity contract' in
                    section 761 of title 11, United States Code.
                        ``(C) Exchanges.--A digital commodity exchange
                    shall be considered a futures commission merchant for
                    purposes of section 761 of title 11, United States
                    Code.
                        ``(D) Assets removed from segregation.--Assets
                    removed from segregation due to a customer election
                    under paragraph (5) shall not be considered customer
                    property for purposes of section 761 of title 11,
                    United States Code.
                ``(4) Misuse of customer property.--
                        ``(A) In general.--It shall be unlawful--
                                ``(i) for any digital commodity exchange
                            that has received any customer money, assets,
                            or property for custody to dispose of, or use
                            any such money, assets, or property as
                            belonging to the digital commodity exchange or
                            any person other than a customer of the digital
                            commodity exchange; or
                                ``(ii) for any other person, including any
                            depository, other digital commodity exchange,
                            or digital asset custodian that has received
                            any customer money, assets, or property for
                            deposit, to hold, dispose of, or use any such
                            money, assets, or property, or property, as
                            belonging to the depositing digital commodity
                            exchange or any person other than the customers
                            of the digital commodity exchange.
                        ``(B) Use further defined.--For purposes of this
                    section, `use' of a digital commodity includes
                    utilizing any unit of a digital asset to participate in
                    a blockchain service defined in paragraph (5) or a
                    decentralized governance system associated with the
                    digital commodity or the blockchain system to which the
                    digital commodity relates in any manner other than that
                    expressly directed by the customer from whom the unit
                    of a digital commodity was received.
                ``(5) Participation in blockchain services.--
                        ``(A) In general.--A customer shall have the right
                    to waive the restrictions in paragraph (1) for any unit
                    of a digital commodity to be used under subparagraph
                    (B), by affirmatively electing, in writing to the
                    digital commodity exchange, to waive the restrictions.
                        ``(B) Use of funds.--Customer digital commodities
                    removed from segregation under subparagraph (A) may be
                    pooled and used by the digital commodity exchange or
                    its designee to provide a blockchain service for a
                    blockchain system to which the unit of the digital
                    asset removed from segregation in subparagraph (A)
                    relates.
                        ``(C) Limitations.--
                                ``(i) In general.--The Commission shall, by
                            rule, establish notice and disclosure
                            requirements, and may, by rule, establish any
                            other limitations and rules related to the
                            waiving of any restrictions under this
                            paragraph that are reasonably necessary to
                            protect customers, including eligible contract
                            participants, non-eligible contract
                            participants, or any other class of customers.
                                ``(ii) Customer choice.--A digital
                            commodity exchange may not require a waiver
                            from a customer described in subparagraph (A)
                            as a condition of doing business on the
                            exchange.
                        ``(D) Blockchain service defined.--In this
                    subparagraph, the term `blockchain service' means any
                    activity relating to validating transactions on a
                    blockchain system, providing security for a blockchain
                    system, or other similar activity required for the
                    ongoing operation of a blockchain system.
        ``(e) Market Access Requirements.--The Commission may, by rule,
    impose any additional requirements related to the operations and
    activities of the digital commodity exchange and an affiliated digital
    commodity broker necessary to protect market participants, promote fair
    and equitable trading on the digital commodity exchange, and promote
    responsible innovation.
        ``(f) Designation of Chief Compliance Officer.--
                ``(1) In general.--A digital commodity exchange shall
            designate an individual to serve as a chief compliance officer.
                ``(2) Duties.--The chief compliance officer shall--
                        ``(A) report directly to the board or to the senior
                    officer of the exchange;
                        ``(B) review compliance with the core principles in
                    this subsection;
                        ``(C) in consultation with the board of the
                    exchange, a body performing a function similar to that
                    of a board, or the senior officer of the exchange,
                    resolve any conflicts of interest that may arise;
                        ``(D) establish and administer the policies and
                    procedures required to be established pursuant to this
                    section;
                        ``(E) ensure compliance with this Act and the rules
                    and regulations issued under this Act, including rules
                    prescribed by the Commission pursuant to this section;
                    and
                        ``(F) establish procedures for the remediation of
                    noncompliance issues found during compliance office
                    reviews, look backs, internal or external audit
                    findings, self-reported errors, or through validated
                    complaints.
                ``(3) Requirements for procedures.--In establishing
            procedures under paragraph (2)(F), the chief compliance officer
            shall design the procedures to establish the handling,
            management response, remediation, retesting, and closing of
            noncompliance issues.
                ``(4) Annual reports.--
                        ``(A) In general.--In accordance with rules
                    prescribed by the Commission, the chief compliance
                    officer shall annually prepare and sign a report that
                    contains a description of--
                                ``(i) the compliance of the digital
                            commodity exchange with this Act; and
                                ``(ii) the policies and procedures,
                            including the code of ethics and conflicts of
                            interest policies, of the digital commodity
                            exchange.
                        ``(B) Requirements.--The chief compliance officer
                    shall--
                                ``(i) submit each report described in
                            subparagraph (A) with the appropriate financial
                            report of the digital commodity exchange that
                            is required to be submitted to the Commission
                            pursuant to this section; and
                                ``(ii) include in the report a
                            certification that, under penalty of law, the
                            report is accurate and complete.
        ``(g) Appointment of Trustee.--
                ``(1) In general.--If a proceeding under section 5e results
            in the suspension or revocation of the registration of a
            digital commodity exchange, or if a digital commodity exchange
            withdraws from registration, the Commission, on notice to the
            digital commodity exchange, may apply to the appropriate United
            States district court where the digital commodity exchange is
            located for the appointment of a trustee.
                ``(2) Assumption of jurisdiction.--If the Commission
            applies for appointment of a trustee under paragraph (1)--
                        ``(A) the court may take exclusive jurisdiction
                    over the digital commodity exchange and the records and
                    assets of the digital commodity exchange, wherever
                    located; and
                        ``(B) if the court takes jurisdiction under
                    subparagraph (A), the court shall appoint the
                    Commission, or a person designated by the Commission,
                    as trustee with power to take possession and continue
                    to operate or terminate the operations of the digital
                    commodity exchange in an orderly manner for the
                    protection of customers subject to such terms and
                    conditions as the court may prescribe.
        ``(h) Qualified Digital Asset Custodian.--A digital commodity
    exchange shall hold in a qualified digital asset custodian each unit of
    a digital asset that is--
                ``(1) the property of a customer of the digital commodity
            exchange;
                ``(2) required to be held by the digital commodity exchange
            under subsection (c)(12) of this section; or
                ``(3) otherwise so required by the Commission to reasonably
            protect customers.
        ``(i) Exemptions.--
                ``(1) In order to promote responsible innovation and fair
            competition, or protect customers, the Commission may (on its
            own initiative or on application of the registered digital
            commodity exchange) exempt, either unconditionally or on stated
            terms or conditions or for stated periods and either
            retroactively or prospectively, or both, a registered digital
            commodity exchange from the requirements of this section, if
            the Commission determines that--
                        ``(A) the exemption would be consistent with the
                    public interest and the purposes of this Act; and
                        ``(B) the exemption will not have a material
                    adverse effect on the ability of the Commission or the
                    digital commodity exchange to discharge regulatory or
                    self-regulatory duties under this Act.
                ``(2) The Commission may exempt, conditionally or
            unconditionally, a digital commodity exchange from registration
            under this section if the Commission finds that the digital
            commodity exchange is subject to comparable, comprehensive
            supervision and regulation on a consolidated basis by the
            appropriate governmental authorities in the home country of the
            facility.
        ``(j) Customer Defined.--In this section, the term `customer' means
    any person that maintains an account for the trading of digital
    commodities directly with a digital commodity exchange (other than a
    person that is owned or controlled, directly or indirectly, by the
    digital commodity exchange) for its own behalf or on behalf of any
    other person.
        ``(k) Federal Preemption.--Notwithstanding any other provision of
    law, the Commission shall have exclusive jurisdiction over any digital
    commodity exchange registered under this section with respect to
    activities and transactions subject to this Act.''.

    SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.

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

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

        ``(a) In General.--A person is a qualified digital asset custodian
    for purposes of this Act if the person--
                ``(1) holds digital assets on behalf of a person registered
            under this Act or a customer of a person registered under this
            Act; and
                ``(2) is in compliance with subsections (b) and (c).
        ``(b) Supervision Requirement.--A person is in compliance with this
    subsection if the person is subject to--
                ``(1) supervision and examination for custody and
            safekeeping of digital assets by an appropriate Federal banking
            agency, the National Credit Union Administration, the
            Commission, or the Securities and Exchange Commission; or
                ``(2) adequate supervision and appropriate regulation for
            custody and safekeeping of digital assets by--
                        ``(A) a State bank supervisor (within the meaning
                    of section 3 of the Federal Deposit Insurance Act);
                        ``(B) a State credit union supervisor, as defined
                    under section 6003 of the Anti-Money Laundering Act of
                    2020; or
                        ``(C) an appropriate foreign governmental authority
                    in the home country of the digital commodity custodian.
        ``(c) Other Requirements.--A person shall be in compliance with
    this subsection if:
                ``(1) Not otherwise prohibited.--The person has not been
            prohibited by its supervisor from engaging in an activity with
            respect to the custody and safekeeping of digital assets.
                ``(2) Information sharing.--
                        ``(A) In general.--The person shares information
                    with the Commission on request and complies with such
                    requirements for periodic sharing of information
                    regarding customer accounts that the person holds on
                    behalf of an entity registered with the Commission as
                    the Commission determines by rule are reasonably
                    necessary to effectuate any of the provisions, or to
                    accomplish any of the purposes, of this Act.
                        ``(B) Provision of information.--If the person is
                    subject to regulation and examination by an appropriate
                    Federal banking agency, the person may satisfy any
                    information request described in subparagraph (A) by
                    providing the Commission with a detailed listing, in
                    writing, of the digital assets of a customer in the
                    custody of, or use by, the person.
                        ``(C) Rulemaking for cftc entities.--
                                ``(i) In general.--The Commission shall
                            prescribe rules to permit a person registered
                            with the Commission to be a qualified digital
                            asset custodian in compliance with this
                            section.
                                ``(ii) Content.--In prescribing the rules
                            under subparagraph (A), the Commission shall
                            require a person registered with the Commission
                            to--
                                        ``(I) implement requirement
                                    consistent with the requirements in
                                    subsection (d)(1);
                                        ``(II) establish sufficient system
                                    safeguards;
                                        ``(III) prevent or mitigate
                                    conflicts of interest, as appropriate;
                                    and
                                        ``(IV) establish separate
                                    governance arrangements for the
                                    custodial function of the entity.
        ``(d) Adequate Supervision and Appropriate Regulation.--
                ``(1) In general.--For purposes of subsection (b), the
            terms `adequate supervision' and `appropriate regulation' mean
            such minimum standards for supervision and regulation as are
            reasonably necessary to protect the digital assets held by a
            person registered under this Act, including standards relating
            to the licensing, examination, and supervisory processes that
            require the person to, at a minimum--
                        ``(A) receive a review and evaluation of ownership,
                    character and fitness, conflicts of interest, business
                    model, financial statements, funding resources, and
                    policies and procedures of the person;
                        ``(B) hold capital sufficient for the financial
                    integrity of the person;
                        ``(C) protect customer assets;
                        ``(D) establish and maintain books and records
                    regarding the business of the person;
                        ``(E) submit financial statements and audited
                    financial statements to the applicable supervisor
                    described in subsection (b);
                        ``(F) provide disclosures to the applicable
                    supervisor described in subsection (b) regarding
                    actions, proceedings, and other items as determined by
                    the supervisor;
                        ``(G) maintain and enforce policies and procedures
                    for compliance with applicable State and Federal laws,
                    including those related to anti-money laundering and
                    cybersecurity;
                        ``(H) establish a business continuity plan to
                    ensure functionality in cases of disruption; and
                        ``(I) establish policies and procedures to resolve
                    complaints.
                ``(2) Rulemaking with respect to definitions.--
                        ``(A) In general.--For purposes of this section,
                    the Commission may, by rule, further define the terms
                    `adequate supervision' and `appropriate regulation' as
                    necessary and appropriate for the protection of
                    customers, and consistent with the purposes of this
                    Act.
                        ``(B) Conditional treatment of certain custodians
                    before rulemaking.--Before the effective date of a
                    rulemaking under subparagraph (A), a trust company is
                    deemed subject to adequate supervision and appropriate
                    regulation if--
                                ``(i) the trust company is expressly
                            permitted by a State bank supervisor to engage
                            in the custody and safekeeping of digital
                            assets;
                                ``(ii) the State bank supervisor has
                            established licensing, examination, and
                            supervisory processes that require the trust
                            company to, at a minimum, meet the conditions
                            described in subparagraphs (A) through (I) of
                            paragraph (1); and
                                ``(iii) the trust company is in good
                            standing with its State bank supervisor.
                        ``(C) Transition period for certain custodians.--In
                    implementing the rulemaking under subparagraph (A), the
                    Commission shall provide a transition period of not
                    less than 2 years for any trust company that is deemed
                    subject to adequate supervision and appropriate
                    regulation under subparagraph (B) on the effective date
                    of the rulemaking.
        ``(e) Authority To Temporarily Suspend Standards.--The Commission
    may, by rule or order, temporarily suspend, in whole or in part, any
    requirement imposed under, or any standard referred to in, this section
    if the Commission determines that the suspension would be consistent
    with the public interest and the purposes of this Act.''.

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

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

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

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

    SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.

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

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

        (a) In General.--Section 4m(3) of the Commodity Exchange Act (7
    U.S.C. 6m(3)) is amended--
                (1) in subparagraph (A)--
                        (A) by striking ``any commodity trading advisor''
                    and inserting ``a commodity pool operator or commodity
                    trading advisor''; and
                        (B) by striking ``acting as a commodity trading
                    advisor'' and inserting ``acting as a commodity pool
                    operator or commodity trading advisor''; and
                (2) in subparagraph (C), by inserting ``digital
            commodities,'' after ``physical commodities,''.
        (b) Exemptive Authority.--Section 4m of such Act (7 U.S.C. 6m) is
    amended by adding at the end the following:
        ``(4) Exemptive Authority.--The Commission shall promulgate rules
    to provide appropriate exemptions for commodity pool operators and
    commodity trading advisors, to provide relief from duplicative,
    conflicting, or unduly burdensome requirements or to promote
    responsible innovation, to the extent the exemptions foster the
    development of fair and orderly cash or spot digital commodity markets,
    are necessary or appropriate in the public interest, and are consistent
    with the protection of customers.''.

    SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.

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

    ``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO THIS ACT.

        ``(a) In General.--Notwithstanding any other provision of this Act,
    a person shall not be subject to this Act and the regulations
    promulgated under this Act based on the person directly or indirectly
    engaging in any of the following activities, whether singly or in
    combination, in relation to the operation of a blockchain system or in
    relation to decentralized finance trading protocol:
                ``(1) Compiling network transactions or relaying,
            searching, sequencing, validating, or acting in a similar
            capacity.
                ``(2) Providing computational work, operating a node or
            oracle service, or procuring, offering, or utilizing network
            bandwidth, or other similar incidental services.
                ``(3) Providing a user-interface that enables a user to
            read, and access data about a blockchain system.
                ``(4) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a blockchain system or a
            decentralized finance trading protocol.
                ``(5) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing a decentralized finance
            messaging system or operating or participating in a liquidity
            pool for the purpose of executing a contract of sale of a
            digital commodity.
                ``(6) Developing, publishing, constituting, administering,
            maintaining, or otherwise distributing software or systems that
            create or deploy hardware or software, including wallets or
            other systems, facilitating an individual user's own personal
            ability to keep, safeguard, or custody the user's digital
            assets or related private keys.
        ``(b) Exceptions.--Subsection (a) shall not be interpreted to apply
    to the anti-fraud, anti-manipulation, or false reporting enforcement
    authorities of the Commission.''.

    SEC. 410. RESOURCES FOR IMPLEMENTATION AND ENFORCEMENT.

        (a) Collection of Fees.--
                (1) In general.--The Commodity Futures Trading Commission
            (in this section referred to as the ``Commission'') shall
            charge and collect a filing fee from each person who files with
            the Commission a statement of provisional registration as a
            digital commodity exchange, digital commodity broker, or
            digital commodity dealer pursuant to section 106.
                (2) Amount.--The fees authorized under paragraph (1) may be
            collected and available for obligation only in the amounts
            provided in advance in an appropriation Act.
                (3) Authority to adjust fees.--Notwithstanding the
            preceding provisions of this subsection, to promote fair
            competition or innovation, the Commission, in its sole
            discretion, may reduce or eliminate any fee otherwise required
            to be paid by a small or medium filer under this subsection.
        (b) Fee Schedule.--
                (1) In general.--The Commission shall publish in the
            Federal Register a schedule of the fees to be charged and
            collected under this section.
                (2) Content.--The fee schedule for a fiscal year shall
            include a written analysis of the estimate of the Commission of
            the total costs of carrying out the functions of the Commission
            under this Act during the fiscal year.
                (3) Submission to congress.--Before publishing the fee
            schedule for a fiscal year, the Commission shall submit a copy
            of the fee schedule to the Committees on Agriculture and on
            Appropriations of the House of Representatives and the
            Committees on Agriculture, Nutrition, and Forestry and on
            Appropriations of the Senate.
                (4) Timing.--
                        (A) 1st fiscal year.--The Commission shall publish
                    the fee schedule for the fiscal year in which this Act
                    is enacted, within 30 days after the date of the
                    enactment of this Act.
                        (B) Subsequent fiscal years.--The Commission shall
                    publish the fee schedule for each subsequent fiscal
                    year, not less than 90 days before the due date
                    prescribed by the Commission for payment of the annual
                    fee for the fiscal year.
        (c) Late Payment Penalty.--
                (1) In general.--The Commission may impose a penalty
            against a person that fails to pay an annual fee charged under
            this section, within 30 days after the due date prescribed by
            the Commission for payment of the fee.
                (2) Amount.--The amount of the penalty shall be--
                        (A) 5 percent of the amount of the fee due,
                    multiplied by
                        (B) the whole number of consecutive 30-day periods
                    that have elapsed since the due date.
        (d) Reimbursement of Excess Fees.--To the extent that the total
    amount of fees collected under this section during a fiscal year that
    begins after the date of the enactment of this Act exceeds the amount
    provided under subsection (a)(2) with respect to the fiscal year, the
    Commission shall reimburse the excess amount to the persons who have
    timely paid their annual fees, on a pro-rata basis that excludes
    penalties, and shall do so within 60 days after the end of the fiscal
    year.
        (e) Deposit of Fees Into the Treasury.--All amounts collected under
    this section shall be credited to the currently applicable
    appropriation, account, or fund of the Commission as discretionary
    offsetting collections, and shall be available for the purposes
    authorized in subsection (f) only to the extent and in the amounts
    provided in advance in appropriations Acts.
        (f) Authorization of Appropriations.--In addition to amounts
    otherwise authorized to be appropriated to the Commission, there is
    authorized to be appropriated to the Commission amounts collected under
    this section to cover the costs the costs of carrying out the functions
    of the Commission under this Act.
        (g) Expedited Hiring Authority.--
                (1) Appointment authority.--The Chairman, pursuant to
            section 6(a), may appoint individuals to a position described
            in paragraph (2) of this subsection--
                        (A) in accordance with the statutes, rules, and
                    regulations governing appointments to positions in the
                    excepted service (as defined in section 2103 of title
                    5, United States Code); and
                        (B) without regard to any statute, rule, or
                    regulation governing appointments to positions in the
                    competitive service (as defined in section 2102 of such
                    title).
                (2) Position described.--A position referred to in
            subparagraph (1) is a position at the Commission that--
                        (A) is in the competitive service (as defined in
                    section 2102 of such title); and
                        (B) requires specialized knowledge of digital
                    commodities markets, financial and capital market
                    formation or regulation, financial market structures or
                    surveillance, data collection or analysis, or
                    information technology, cybersecurity, or system
                    safeguards.
                (3) Rule of construction.--The appointment of a candidate
            to a position under this subsection shall not be considered to
            cause the position to be converted from the competitive service
            to the excepted service.
        (h) Sunset.--The authorities provided by this section shall expire
    at the end of the 4th fiscal year that begins after the date of the
    enactment of this Act.

    SEC. 411. DIGITAL COMMODITY ACTIVITIES BY SEC-REGISTERED ENTITIES.

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

    ``SEC. 5K. EXEMPTION FOR CERTAIN REGISTERED ENTITIES ENGAGED IN DIGITAL
                  COMMODITY ACTIVITIES.

        ``(a) By Alternative Trading Systems.--
                ``(1) In general.--On receipt by the Commission from an
            alternative trading system of a written or electronic notice
            that contains such information as the Commission, by rule, may
            prescribe as necessary or appropriate in the public interest or
            for the protection of investors, the alternative trading system
            shall be exempt from registration as a digital commodity
            exchange pursuant to section 5i if--
                        ``(A) the alternative trading system does not list
                    any retail commodity transactions pursuant to section
                    2(c)(2)(D);
                        ``(B) the provider, or an affiliate person of the
                    provider, of the alternative trading system is not
                    otherwise registered under this Act;
                        ``(C) the alternative trading system lists or
                    trades no other contracts of sale of commodities,
                    except for digital commodities, currencies, and
                    securities; and
                        ``(D) the registration of the alternative trading
                    system is not suspended pursuant to an order by the
                    Securities and Exchange Commission.
                ``(2) Further requirements.--An alternative trading system
            that provides notice to the Commission pursuant to paragraph
            (1) of this subsection shall be exempt from the requirements of
            section 5i to the extent that the alternative trading system--
                        ``(A) is in compliance with requirements consistent
                    with the requirements of section 5i and imposed on the
                    alternative trading system by the Securities and
                    Exchange Commission;
                        ``(B) annually files with the Commission, in a form
                    and manner acceptable to the Commission, a notice that
                    demonstrates compliance with this paragraph and
                    contains any other information the Commission
                    determines to be necessary or appropriate to perform
                    the duties of the Commission under this Act; and
                        ``(C) has total trading volume in digital
                    commodities during any calendar quarter in either of
                    its 2 most recently completed fiscal years that does
                    not exceed the lesser of--
                                ``(i) 25 percent of the total trading
                            volume for all transactions over the same
                            period; or
                                ``(ii) $50,000,000,000.
                ``(3) Enforcement.--This subsection shall not be construed
            to limit any jurisdiction that the Commission may otherwise
            have under any other provision of this Act with respect to a
            contract of sale of a digital commodity or persons effecting
            contracts of sale of digital commodities.
        ``(b) By Registered Intermediaries.--
                ``(1) In general.--On receipt by the Commission, from a
            broker or dealer that is registered with the Securities and
            Exchange Commission, of a written or electronic notice that
            contains such information as the Commission, by rule, may
            prescribe as necessary or appropriate in the public interest or
            for the protection of investors, the broker or dealer shall be
            exempt from registration as a digital commodity broker or
            digital commodity dealer pursuant to section 4u of this Act
            if--
                        ``(A) the broker or dealer does not offer or engage
                    in any retail commodity transactions pursuant to
                    section 2(c)(2)(D) of this Act or other contracts of
                    sale of commodities, except for digital commodities,
                    currencies, and securities;
                        ``(B) the broker or dealer is not otherwise
                    registered under this Act;
                        ``(C) the broker or dealer is not subject to a
                    statutory disqualification, as defined under section
                    3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
                    78c(a)); and
                        ``(D) the broker or dealer is a member of a
                    national securities association registered pursuant to
                    section 15A of the Securities Exchange Act of 1934.
                ``(2) Further requirements.--A broker or dealer that
            provides notice to the Commission pursuant to paragraph (1)
            shall be exempt from the requirements of section 4u to the
            extent that the broker or dealer--
                        ``(A) is in compliance with requirements consistent
                    with the requirements of section 4u and imposed on the
                    broker or dealer by the Securities and Exchange
                    Commission;
                        ``(B) annually files with the Commission, in a form
                    and manner acceptable to the Commission, a notice that
                    demonstrates compliance with this subsection and
                    contains any other information the Commission
                    determines to be necessary or appropriate to perform
                    the duties of the Commission under this Act; and
                        ``(C) has consolidated annual gross financial
                    revenues in either of its 2 most recently completed
                    fiscal years from sales, commissions or other
                    activities in digital commodities that do not exceed
                    the lesser of--
                                ``(i) 10 percent of the total annual gross
                            revenues during the same period; or
                                ``(ii) $100,000,000.
                ``(3) Enforcement.--This subsection shall not be construed
            to limit any jurisdiction that the Commission may otherwise
            have under any other provision of this Act with respect to a
            contract of sale of a digital commodity and persons effecting
            contracts of sale of digital commodities.''.

    SEC. 412. REQUIREMENTS RELATED TO CONTROL PERSONS.

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

    ``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL PERSONS.

        ``(a) Limitation.--It shall be unlawful for a blockchain control
    person with respect to a blockchain system certified as a mature
    blockchain system in accordance with section 42 of the Securities
    Exchange Act of 1934 to sell a unit of a digital commodity related to
    the blockchain system unless the person files notice with the
    Commission, in a form and manner determined by the Commission, that the
    person has or intends to obtain an authority described in subsection
    (b)(1) with respect to the blockchain system, and complies with rules
    adopted by the Commission that require--
                ``(1) disclosure of information to the Commission and the
            public about the material activities, as determined by the
            Commission, of the blockchain control person; and
                ``(2)(A) the use of a digital commodity broker to effect
            the sale; or
                ``(B) such other sales restrictions applicable to
            blockchain control person, or any of its digital commodity
            affiliated persons, to prevent manipulation and distortion of
            the value of the digital commodity and promote further maturity
            of the blockchain system to which the digital commodity
            relates.
        ``(b) Definitions.--In this section:
                ``(1) Blockchain control person.--The term `blockchain
            control person' means, with respect to a blockchain system, any
            person or group of persons under common control who--
                        ``(A) has the unilateral authority, directly or
                    indirectly, through any contract, arrangement,
                    understanding, relationship, or otherwise, to control
                    or materially alter the functionality, operation, or
                    rules of consensus or agreement of the blockchain
                    system or its related digital commodity; or
                        ``(B) has the unilateral authority to direct the
                    voting, in the aggregate, of 20 percent or more of the
                    outstanding voting power of the blockchain system by
                    means of a related digital commodity, nodes or
                    validators, a decentralized governance system, or
                    otherwise, in a blockchain system which can be altered
                    by a voting system.
                ``(2) Digital commodity affiliated person.--The term
            `digital commodity affiliated person' means any person directly
            or indirectly controlling, controlled by, or under common
            control with a blockchain control person, as the Commission by
            rule or regulation, may determine will effectuate the purposes
            of this section.''.

    SEC. 413. EFFECTIVE DATE.

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

    SEC. 414. SENSE OF CONGRESS.

        It is the sense of Congress that nothing in this Act or any
    amendment made by this Act should be interpreted to authorize any
    entity to regulate any commodity, other than a digital commodity, on
    any spot market.

                TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS

    SEC. 501. FINDINGS; SENSE OF CONGRESS.

        (a) Findings.--Congress finds the following:
                (1) Entrepreneurs and innovators are building and deploying
            this next generation of the internet.
                (2) Digital commodity networks represent a new way for
            people to join together and cooperate with one another to
            undertake certain activities.
                (3) Digital commodities have the potential to be the
            foundational building blocks of these systems, aligning the
            economic incentive for individuals to cooperate with one
            another to achieve a common purpose.
                (4) The digital commodity ecosystem has the potential to
            grow our economy and improve everyday lives of Americans by
            facilitating collaboration through the use of technology to
            manage activities, allocate resources, and facilitate decision
            making.
                (5) Blockchain systems and the digital commodities they
            empower provide control, enhance transparency, reduce
            transaction costs, and increase efficiency if proper
            protections are put in place for investors, consumers, our
            financial system, and our national security.
                (6) Blockchain technology facilitates new types of network
            participation which businesses in the United States may utilize
            in innovative ways.
                (7) Other digital commodity companies are setting up their
            operations outside of the United States, where countries are
            establishing frameworks to embrace the potential of blockchain
            technology and digital commodities and provide safeguards for
            consumers.
                (8) Digital commodities, despite the purported anonymity,
            provide law enforcement with an exceptional tracing tool to
            identify illicit activity and bring criminals to justice.
                (9) The Financial Services Committee of the House of
            Representatives has held multiple hearings highlighting various
            risks that digital commodities can pose to the financial
            markets, consumers, and investors that must be addressed as we
            seek to harness the benefits of these innovations.
        (b) Sense of Congress.--It is the sense of Congress that--
                (1) the United States should seek to prioritize
            understanding the potential opportunities of the next
            generation of the internet;
                (2) the United States should seek to foster advances in
            technology that have robust evidence indicating they can
            improve our financial system and create more fair and equitable
            access to financial services for everyday Americans while
            protecting our financial system, investors, and consumers;
                (3) the United States must support the responsible
            development of digital commodities and the underlying
            technology in the United States or risk the shifting of the
            development of such assets and technology outside of the United
            States, to less regulated countries;
                (4) Congress should consult with public and private sector
            stakeholders to understand how to enact a functional framework
            tailored to the specific risks and unique benefits of different
            digital commodity-related activities, distributed ledger
            technology, distributed networks, and mature blockchain
            systems;
                (5) Congress should enact a functional framework tailored
            to the specific risks of different digital commodity-related
            activities and unique benefits of distributed ledger
            technology, distributed networks, and mature blockchain
            systems; and
                (6) consumers and market participants will benefit from a
            framework for digital commodities consistent with longstanding
            investor protections in securities and commodities markets, yet
            tailored to the unique benefits and risks of the digital
            commodity ecosystem.

    SEC. 502. MODERNIZATION OF THE SECURITIES AND EXCHANGE COMMISSION
                  MISSION.

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

    SEC. 503. STRATEGIC HUB FOR INNOVATION AND FINANCIAL TECHNOLOGY.

        Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
    amended by adding at the end the following:
        ``(l) Strategic Hub for Innovation and Financial Technology.--
                ``(1) Establishment.--Not later than 180 days after the
            date of the enactment of this subsection, the Securities and
            Exchange Commission shall establish a committee to be known as
            the Strategic Hub for Innovation and Financial Technology
            (referred to in this subsection as the `FinHub') to support
            engagement on emerging technologies in the financial sector.
                ``(2) Members.--The composition of FinHub shall be
            determined by the Commission, drawing from relevant divisions
            as appropriate, including the Division of Trading and Markets,
            Division of Corporate Finance, and Division of Investment
            Management.
                ``(3) Responsibilities.--FinHub shall--
                        ``(A) serve as a resource for the Commission on
                    emerging financial technology advancements;
                        ``(B) engage with market participants working on
                    emerging financial technologies; and
                        ``(C) facilitate communication between the
                    Commission and businesses working in emerging financial
                    technology fields with information on the Commission,
                    its rules, and regulations.
                ``(4) Report to the commission.--
                        ``(A) In general.--Not later than October 31 of
                    each year after 2025, FinHub shall provide an annual
                    summary of its engagement activities to the Commission,
                    which shall be included in the Commission's annual
                    report to Congress.
                        ``(B) Confidentiality.--Each report submitted under
                    this paragraph shall not contain confidential
                    information.''.

    SEC. 504. CODIFICATION OF LABCFTC.

        (a) In General.--Section 18 of the Commodity Exchange Act (7 U.S.C.
    22) is amended by adding at the end the following:
        ``(c) LabCFTC.--
                ``(1) Establishment.--There is established in the
            Commission LabCFTC.
                ``(2) Purpose.--The purposes of LabCFTC are to--
                        ``(A) promote responsible financial technology
                    innovation and fair competition for the benefit of the
                    American public;
                        ``(B) serve as an information platform to inform
                    the Commission about new financial technology
                    innovation; and
                        ``(C) provide outreach to financial technology
                    innovators to discuss their innovations and the
                    regulatory framework established by this Act and the
                    regulations promulgated thereunder.
                ``(3) Director.--LabCFTC shall have a Director, who shall
            be appointed by the Commission and serve at the pleasure of the
            Commission. Notwithstanding section 2(a)(6)(A), the Director
            shall report directly to the Commission and perform such
            functions and duties as the Commission may prescribe.
                ``(4) Duties.--LabCFTC shall--
                        ``(A) advise the Commission with respect to
                    rulemakings or other agency or staff action regarding
                    financial technology;
                        ``(B) provide internal education and training to
                    the Commission regarding financial technology;
                        ``(C) advise the Commission regarding financial
                    technology that would bolster the Commission's
                    oversight functions;
                        ``(D) engage with academia, students, and
                    professionals on financial technology issues, ideas,
                    and technology relevant to activities under this Act;
                        ``(E) provide persons working in emerging
                    technology fields with information on the Commission,
                    its rules and regulations, and the role of a registered
                    futures association; and
                        ``(F) encourage persons working in emerging
                    technology fields to engage with the Commission and
                    obtain feedback from the Commission on potential
                    regulatory issues.
                ``(5) Report to congress.--
                        ``(A) In general.--Not later than October 31 of
                    each year after 2025, LabCFTC shall submit to the
                    Committee on Agriculture of the House of
                    Representatives and the Committee on Agriculture,
                    Nutrition, and Forestry of the Senate a report on its
                    activities.
                        ``(B) Contents.--Each report required under
                    paragraph (1) shall include--
                                ``(i) the total number of persons that met
                            with LabCFTC;
                                ``(ii) a summary of general issues
                            discussed during meetings with the person;
                                ``(iii) information on steps LabCFTC has
                            taken to improve Commission services, including
                            responsiveness to the concerns of persons;
                                ``(iv) recommendations made to the
                            Commission with respect to the regulations,
                            guidance, and orders of the Commission and such
                            legislative actions as may be appropriate; and
                                ``(v) any other information determined
                            appropriate by the Director of LabCFTC.
                        ``(C) Confidentiality.--A report under paragraph
                    (A) shall abide by the confidentiality requirements in
                    section 8.
                ``(6) Records and engagement.--The Commission shall--
                        ``(A) maintain systems of records to track
                    engagements with the public through LabCFTC;
                        ``(B) store communications and materials received
                    in connection with any such engagement in accordance
                    with Commission policies and procedures on data
                    retention and confidentiality; and
                        ``(C) take reasonable steps to protect any
                    confidential or proprietary information received
                    through LabCFTC engagement.''.
        (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act (7
    U.S.C. 2(a)(6)(A)) is amended--
                (1) by striking ``paragraph and in'' and inserting
            ``paragraph,''; and
                (2) by inserting ``and section 18(c)(3),'' before ``the
            executive''.
        (c) Effective Date.--The Commodity Futures Trading Commission shall
    implement the amendments made by this section (including complying with
    section 18(c)(7) of the Commodity Exchange Act) within 180 days after
    the date of the enactment of this Act.

    SEC. 505. STUDY ON DECENTRALIZED FINANCE.

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

    SEC. 506. STUDY ON NON-FUNGIBLE TOKENS.

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

    SEC. 507. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST DIGITAL
                  COMMODITY HOLDERS.

        (a) In General.--The Commodity Futures Trading Commission with the
    Securities and Exchange Commission shall jointly conduct a study to
    identify--
                (1) the existing level of financial literacy among retail
            digital commodity holders, including subgroups of investors
            identified by the Commodity Futures Trading Commission with the
            Securities and Exchange Commission;
                (2) methods to improve the timing, content, and format of
            financial literacy materials regarding digital commodities
            provided by the Commodity Futures Trading Commission and the
            Securities and Exchange Commission;
                (3) methods to improve coordination between the Securities
            and Exchange Commission and the Commodity Futures Trading
            Commission with other agencies, including the Financial
            Literacy and Education Commission as well as nonprofit
            organizations and State and local jurisdictions, to better
            disseminate financial literacy materials;
                (4) the efficacy of current financial literacy efforts with
            a focus on rural communities and communities with majority
            minority populations;
                (5) the most useful and understandable relevant
            information, including clear disclosures, that retail digital
            commodity holders need to make informed financial decisions
            before engaging with or purchasing a digital commodity or
            service that is typically sold to retail investors of digital
            commodities;
                (6) the most effective public-private partnerships in
            providing financial literacy regarding digital commodities to
            consumers;
                (7) the most relevant metrics to measure successful
            improvement of the financial literacy of an individual after
            engaging with financial literacy efforts; and
                (8) in consultation with the Financial Literacy and
            Education Commission, a strategy (including to the extent
            practicable, measurable goals and objectives) to increase
            financial literacy of investors regarding digital commodities.
        (b) Report.--Not later than 1 year after the date of the enactment
    of this Act, the Commodity Futures Trading Commission and the
    Securities and Exchange Commission shall jointly submit a written
    report on the study required by subsection (a) to the Committees on
    Financial Services and on Agriculture of the House of Representatives
    and the Committees on Banking, Housing, and Urban Affairs and on
    Agriculture, Nutrition, and Forestry of the Senate.

    SEC. 508. STUDY ON FINANCIAL MARKET INFRASTRUCTURE IMPROVEMENTS.

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

    SEC. 509. STUDY ON BLOCKCHAIN IN PAYMENTS.

        (a) Study Required.--The Secretary of the Treasury shall conduct a
    study on the potential use of blockchain technology by the domestic
    private sector to address--
                (1) fraud in payments;
                (2) transaction costs and transaction times;
                (3) automated payments; and
                (4) efficiency in commercial transactions.
        (b) Report to Congress.--Not later than one year after the date of
    enactment of this Act, the Secretary shall submit a report to the
    Committee on Financial Services of the House of Representatives and the
    Committee on Banking, Housing, and Urban Affairs of the Senate that
    summarizes the findings of the study required under subsection (a).
        (c) Rule of Construction.--Nothing in this section shall be
    construed to mandate the use of blockchain technology by any public or
    private entity.
                                                     Union Calendar No. 134

    119th CONGRESS

      1st Session

                                   H. R. 3633

                      [Report No. 119-168, Parts I and II]

    _______________________________________________________________________

                                     A BILL

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

    _______________________________________________________________________

                                 June 23, 2025

          Reported from the Committee on Agriculture with an amendment

                                 June 23, 2025

     Reported from the Committee on Financial Services with an amendment;
    committed to the Committee of the Whole House on the State of the Union
                           and ordered to be printed