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

    <DOC>

                                                           Calendar No. 423
    119th CONGRESS
      2d Session
                                    H. R. 3633

    _______________________________________________________________________

                       IN THE SENATE OF THE UNITED STATES

               September 18 (legislative day, September 16), 2025

         Received; read twice and referred to the Committee on Banking,
                           Housing, and Urban Affairs

                                  June 1, 2026

           Reported by Mr. Scott of South Carolina, with an amendment
     [Strike out all after the enacting clause and insert the part printed
                                   in italic]

    _______________________________________________________________________

                                     AN ACT

    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, to amend the Federal Reserve Act to
     prohibit the Federal reserve banks from offering certain products or
    services directly to an individual, to prohibit the use of central bank
         digital currency for monetary policy, and for other purposes.

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

    <DELETED>SECTION 1. SHORT TITLES; TABLE OF CONTENTS.</DELETED>

    <DELETED>    (a) Short Titles.--This Act may be cited as the ``Digital
    Asset Market Clarity Act of 2025'' or the ``CLARITY Act of 2025'' and
    the ``Anti-CBDC Surveillance State Act''.</DELETED>
    <DELETED>    (b) Table of Contents.--The table of contents for this Act
    is as follows:</DELETED>

    <DELETED>Sec. 1. Short titles; table of contents.
       <DELETED>TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION

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

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

    <DELETED>Sec. 301. Treatment of digital commodities and permitted
                                payment stablecoins.
    <DELETED>Sec. 302. Anti-fraud authority over permitted payment
                                stablecoins and certain digital commodity
                                transactions.
    <DELETED>Sec. 303. Eligibility of alternative trading systems.
    <DELETED>Sec. 304. Rulemaking for dual-registered entities.
    <DELETED>Sec. 305. Modernization of recordkeeping requirements.
    <DELETED>Sec. 306. Exemptive authority.
    <DELETED>Sec. 307. Additional registrations with the Commodity Futures
                                Trading Commission.
    <DELETED>Sec. 308. Exempting digital commodities from State securities
                                laws.
    <DELETED>Sec. 309. Exclusion for decentralized finance activities.
    <DELETED>Sec. 310. Treatment of custody activities by banking
                                institutions.
    <DELETED>Sec. 311. Broker and dealer disclosures regarding the
                                treatment of assets.
    <DELETED>Sec. 312. Digital commodity activities that are financial in
                                nature.
    <DELETED>Sec. 313. Effective date; administration.
    <DELETED>Sec. 314. Educational material requirements.
    <DELETED>Sec. 315. Discretionary Surplus Fund.
    <DELETED>TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT
                    THE COMMODITY FUTURES TRADING COMMISSION

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

    <DELETED>Sec. 501. Findings; sense of Congress.
    <DELETED>Sec. 502. Strategic Hub for Innovation and Financial
                                Technology.
    <DELETED>Sec. 503. Codification of LabCFTC.
    <DELETED>Sec. 504. Study on decentralized finance.
    <DELETED>Sec. 505. Study on non-fungible tokens.
    <DELETED>Sec. 506. Study on expanding financial literacy amongst
                                digital commodity holders.
    <DELETED>Sec. 507. Study on financial market infrastructure
                                improvements.
    <DELETED>Sec. 508. Study on blockchain in payments.
    <DELETED>Sec. 509. Study on illicit use of digital assets.
    <DELETED>Sec. 510. GAO study on certain centralized intermediaries that
                                are primarily located in foreign
                                jurisdictions.
    <DELETED>Sec. 511. Studies on foreign adversary participation.
    <DELETED>Sec. 512. Conforming amendments.
              <DELETED>TITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT

    <DELETED>Sec. 601. Short title.
    <DELETED>Sec. 602. Prohibition on Federal reserve banks relating to
                                certain products or services for
                                individuals and prohibition on directly
                                issuing a central bank digital currency.
    <DELETED>Sec. 603. Prohibition on Federal reserve banks indirectly
                                issuing a central bank digital currency.
    <DELETED>Sec. 604. Prohibition with respect to central bank digital
                                currency.
    <DELETED>Sec. 605. Sense of Congress.

             <DELETED>TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED
                             REGISTRATION</DELETED>

    <DELETED>SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF
                  1933.</DELETED>

    <DELETED>    Section 2(a) of the Securities Act of 1933 (15 U.S.C.
    77b(a)) is amended by adding at the end the following:</DELETED>
            <DELETED>    ``(20) Blockchain.--The term `blockchain' means--
            </DELETED>
                    <DELETED>    ``(A) any technology--</DELETED>
                            <DELETED>    ``(i) where data is--</DELETED>
                                    <DELETED>    ``(I) shared across a
                                    network to create a distributed ledger
                                    of independently verifiable
                                    transactions or information among
                                    network participants;</DELETED>
                                    <DELETED>    ``(II) linked using
                                    cryptography to maintain the integrity
                                    of the distributed ledger and to
                                    execute other functions; and</DELETED>
                                    <DELETED>    ``(III) propagated among
                                    network participants to reach consensus
                                    on the state of the distributed ledger
                                    and any other functions; and</DELETED>
                            <DELETED>    ``(ii) composed of source code
                            that is publicly available; and</DELETED>
                    <DELETED>    ``(B) any similar technology to the
                    technology described in subparagraph (A).</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(23) Blockchain system.--The term `blockchain
            system' means any blockchain, together with its blockchain
            protocol or any blockchain application or network of blockchain
            applications.</DELETED>
            <DELETED>    ``(24) Decentralized governance system.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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).</DELETED>
            <DELETED>    ``(27) Digital commodity affiliated person.--The
            term `digital commodity affiliated person'--</DELETED>
                    <DELETED>    ``(A) means a person (including a digital
                    commodity related person) that, with respect to any
                    digital commodity--</DELETED>
                            <DELETED>    ``(i) 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;</DELETED>
                            <DELETED>    ``(ii) is a founder of the digital
                            commodity issuer; or</DELETED>
                            <DELETED>    ``(iii) 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; and</DELETED>
                    <DELETED>    ``(B) does not include a decentralized
                    governance system.</DELETED>
            <DELETED>    ``(28) Digital commodity issuer.--</DELETED>
                    <DELETED>    ``(A) In general.--With respect to a
                    digital commodity, the term `digital commodity issuer'
                    means any person that--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) offers or sells a right to
                            a future issuance of a unit of such digital
                            commodity to a person.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(29) Digital commodity related person.--
            </DELETED>
                    <DELETED>    ``(A) In general.--With respect to a
                    digital commodity issuer, the term `digital commodity
                    related person'--</DELETED>
                            <DELETED>    ``(i) means a person--</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(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; and</DELETED>
                            <DELETED>    ``(ii) does not include a
                            decentralized governance system.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(30) End user distribution.--</DELETED>
                    <DELETED>    ``(A) In general.--The term `end user
                    distribution' means a distribution of a unit of a
                    digital commodity that--</DELETED>
                            <DELETED>    ``(i) does not involve an exchange
                            of more than a nominal value of cash, property,
                            or other assets; and</DELETED>
                            <DELETED>    ``(ii) 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--</DELETED>
                                    <DELETED>    ``(I) to users of the
                                    digital commodity or any blockchain
                                    system to which the digital commodity
                                    relates;</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Protocol consensus participation.--
                    The term `end user distribution' includes the
                    following:</DELETED>
                            <DELETED>    ``(i) Self staking.--The
                            distribution of a unit of a digital commodity
                            as a programmatic result of validating or
                            staking activity for a blockchain system's
                            consensus mechanism, including the staking of a
                            digital commodity and the operation of a node
                            or validator for such activity where the owner
                            of the staked digital commodity and operator of
                            the node or validator are the same person or
                            entity.</DELETED>
                            <DELETED>    ``(ii) Self-custodial staking with
                            a third party.--The distribution of a unit of a
                            digital commodity as a programmatic result of
                            validating or staking activity for a blockchain
                            system's consensus mechanism, including the
                            staking of a digital commodity and the
                            operation of a node or validator for such
                            activity where--</DELETED>
                                    <DELETED>    ``(I) the owner of the
                                    staked digital commodity and operator
                                    of the node or validator for such
                                    activity are different persons or
                                    entities; and</DELETED>
                                    <DELETED>    ``(II) the operator of the
                                    node or validator does not maintain
                                    custody or control of the staked
                                    digital commodity.</DELETED>
                            <DELETED>    ``(iii) Custodial and ancillary
                            staking services.--Subject to the rules issued
                            pursuant to subparagraph (C), the provision of
                            custodial or ancillary staking services
                            enabling the owner of a digital commodity to
                            participate in validating or staking activity
                            for a blockchain system's consensus mechanism
                            that results in the programmatic distribution
                            of a unit of a digital commodity, provided that
                            such custodial or ancillary services are
                            exclusively administrative or ministerial in
                            nature.</DELETED>
                    <DELETED>    ``(C) Rulemaking to define the custodial
                    and ancillary staking services.--Not later than 270
                    days after the date of the enactment of this paragraph,
                    the Commission shall issue rules defining the custodial
                    and ancillary staking services described in
                    subparagraph (B)(iii) that are exclusively
                    administrative or ministerial in nature, consistent
                    with what is necessary or appropriate for the public
                    interest or for the protection of investors.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(32) Permitted payment stablecoin.--The term
            `permitted payment stablecoin' means a payment stablecoin (as
            defined in section 2 of the GENIUS Act) issued by a permitted
            payment stablecoin issuer.</DELETED>
            <DELETED>    ``(33) Permitted payment stablecoin issuer.--The
            term `permitted payment stablecoin issuer' has the meaning
            given that term in section 2 of the GENIUS Act.''.</DELETED>

    <DELETED>SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF
                  1934.</DELETED>

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

    SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.

    <DELETED>    (a) In General.--Section 1a of the Commodity Exchange Act
    (7 U.S.C. 1a) is amended--</DELETED>
            <DELETED>    (1) in paragraph (10)--</DELETED>
                    <DELETED>    (A) in subparagraph (A)--</DELETED>
                            <DELETED>    (i) by redesignating clauses (iii)
                            and (iv) as clauses (iv) and (v), respectively;
                            and</DELETED>
                            <DELETED>    (ii) by inserting after clause
                            (ii) the following:</DELETED>
                            <DELETED>    ``(iii) digital commodity;'';
                            and</DELETED>
                    <DELETED>    (B) by redesignating subparagraph (B) as
                    subparagraph (C) and inserting after subparagraph (A)
                    the following:</DELETED>
                    <DELETED>    ``(B) Exclusion.--For purposes of this
                    paragraph, the term `trading in commodity interests'
                    shall not include transacting in digital commodities
                    for the purpose of--</DELETED>
                            <DELETED>    ``(i) acting as a digital
                            commodity custodian;</DELETED>
                            <DELETED>    ``(ii) establishing, maintaining,
                            or managing inventory or payment instruments
                            for commercial purposes; or</DELETED>
                            <DELETED>    ``(iii) maintaining or supporting
                            the operation of, or validating transactions
                            on, a blockchain system.'';</DELETED>
            <DELETED>    (2) in paragraph (11)--</DELETED>
                    <DELETED>    (A) in subparagraph (A)(i)--</DELETED>
                            <DELETED>    (i) by redesignating subclauses
                            (III) and (IV) as subclauses (IV) and (V),
                            respectively; and</DELETED>
                            <DELETED>    (ii) by inserting after subclause
                            (II) the following:</DELETED>
                                    <DELETED>    ``(III) digital
                                    commodity;''; and</DELETED>
                    <DELETED>    (B) by redesignating subparagraph (B) as
                    subparagraph (C) and inserting after subparagraph (A)
                    the following:</DELETED>
                    <DELETED>    ``(B) Exclusion.--For purposes of this
                    paragraph, the term `trading in commodity interests'
                    shall not include transacting in digital commodities
                    for the purpose of--</DELETED>
                            <DELETED>    ``(i) acting as a digital
                            commodity custodian;</DELETED>
                            <DELETED>    ``(ii) establishing, maintaining,
                            or managing inventory or payment instruments
                            for commercial purposes; or</DELETED>
                            <DELETED>    ``(iii) maintaining or supporting
                            the operation of, or validating transactions
                            on, a blockchain system.'';</DELETED>
            <DELETED>    (3) in paragraph (12)(A)(i)--</DELETED>
                    <DELETED>    (A) in subclause (II), by adding at the
                    end a semicolon;</DELETED>
                    <DELETED>    (B) by redesignating subclauses (III) and
                    (IV) as subclauses (IV) and (V), respectively;
                    and</DELETED>
                    <DELETED>    (C) by inserting after subclause (II) the
                    following:</DELETED>
                                    <DELETED>    ``(III) a digital
                                    commodity;'';</DELETED>
            <DELETED>    (4) by redesignating paragraphs (16) through (51)
            as paragraphs (17) through (52), respectively, and inserting
            after paragraph (15) the following:</DELETED>
            <DELETED>    ``(16) Terms related to digital commodities.--
            </DELETED>
                    <DELETED>    ``(A) Associated person of a digital
                    commodity broker.--</DELETED>
                            <DELETED>    ``(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--</DELETED>
                                    <DELETED>    ``(I) the solicitation or
                                    acceptance of an order for the purchase
                                    or sale of a digital commodity;
                                    or</DELETED>
                                    <DELETED>    ``(II) the supervision of
                                    any person engaged in the solicitation
                                    or acceptance of an order for the
                                    purchase or sale of a digital
                                    commodity.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Associated person of a digital
                    commodity dealer.--</DELETED>
                            <DELETED>    ``(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--</DELETED>
                                    <DELETED>    ``(I) the solicitation or
                                    acceptance of a contract for the
                                    purchase or sale of a digital
                                    commodity; or</DELETED>
                                    <DELETED>    ``(II) the supervision of
                                    any person engaged in the solicitation
                                    or acceptance of a contract for the
                                    purchase or sale of a digital
                                    commodity.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(C) Bank secrecy act.--The term `Bank
                    Secrecy Act' means--</DELETED>
                            <DELETED>    ``(i) section 21 of the Federal
                            Deposit Insurance Act (12 U.S.C.
                            1829b);</DELETED>
                            <DELETED>    ``(ii) chapter 2 of title I of
                            Public Law 91-508 (12 U.S.C. 1951 et seq.);
                            and</DELETED>
                            <DELETED>    ``(iii) subchapter II of chapter
                            53 of title 31, United States Code.</DELETED>
                    <DELETED>    ``(D) Decentralized finance messaging
                    system.--</DELETED>
                            <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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--</DELETED>
                                    <DELETED>    ``(I) the funds of the
                                    user; or</DELETED>
                                    <DELETED>    ``(II) the execution of
                                    the transaction of the user.</DELETED>
                    <DELETED>    ``(E) Decentralized finance trading
                    protocol.--</DELETED>
                            <DELETED>    ``(i) In general.--The term
                            `decentralized finance trading protocol' means
                            a blockchain system through which multiple
                            participants can execute a financial
                            transaction--</DELETED>
                                    <DELETED>    ``(I) in accordance with
                                    an automated rule or algorithm that is
                                    predetermined and non-discretionary;
                                    and</DELETED>
                                    <DELETED>    ``(II) without reliance on
                                    any other person to maintain control of
                                    the digital assets of the user during
                                    any part of the financial
                                    transaction.</DELETED>
                            <DELETED>    ``(ii) Exclusions.--</DELETED>
                                    <DELETED>    ``(I) In general.--The
                                    term `decentralized finance trading
                                    protocol' does not include a blockchain
                                    system if--</DELETED>
                                            <DELETED>    ``(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</DELETED>
                                            <DELETED>    ``(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.</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(F) Digital commodity.--</DELETED>
                            <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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--</DELETED>
                                    <DELETED>    ``(I) issued or generated
                                    by the programmatic functioning of the
                                    blockchain system;</DELETED>
                                    <DELETED>    ``(II) used to transfer
                                    value between participants in the
                                    blockchain system;</DELETED>
                                    <DELETED>    ``(III) used to access the
                                    activities or services of the
                                    blockchain system;</DELETED>
                                    <DELETED>    ``(IV) used to participate
                                    in the decentralized governance system
                                    of the blockchain system;</DELETED>
                                    <DELETED>    ``(V) used or removed from
                                    circulation in whole or in part to pay
                                    fees or otherwise verify or validate
                                    transactions on the blockchain
                                    system;</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(iii) Exclusion.--The term
                            `digital commodity' does not include any of the
                            following:</DELETED>
                                    <DELETED>    ``(I) Security.--
                                    </DELETED>
                                            <DELETED>    ``(aa) Any
                                            security, other than a note, an
                                            investment contract, or a
                                            certificate of interest or
                                            participation in any profit-
                                            sharing agreement.</DELETED>
                                            <DELETED>    ``(bb) A note, an
                                            investment contract, or a
                                            certificate of interest or
                                            participation in any profit-
                                            sharing agreement that--
                                            </DELETED>

                                                    <DELETED>    ``(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);</DELETED>

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

                                                    <DELETED>    ``(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.</DELETED>

                                    <DELETED>    ``(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--</DELETED>
                                            <DELETED>    ``(aa) a security
                                            future, as defined in section
                                            2a of the Securities Act of
                                            1933;</DELETED>
                                            <DELETED>    ``(bb) a security-
                                            based swap, as defined in
                                            section 2a of the Securities
                                            Act of 1933;</DELETED>
                                            <DELETED>    ``(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</DELETED>
                                            <DELETED>    ``(dd) a put,
                                            call, straddle, option, or
                                            privilege on any security, as
                                            defined in section 2a of the
                                            Securities Act of
                                            1933.</DELETED>
                                    <DELETED>    ``(III) Permitted payment
                                    stablecoin.--A digital asset that is a
                                    permitted payment stablecoin.</DELETED>
                                    <DELETED>    ``(IV) Banking deposit.--
                                    </DELETED>
                                            <DELETED>    ``(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.</DELETED>
                                            <DELETED>    ``(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.</DELETED>
                                    <DELETED>    ``(V) Commodity.--A
                                    digital asset that references,
                                    represents an interest in, or is
                                    functionally equivalent to--</DELETED>
                                            <DELETED>    ``(aa) an
                                            agricultural
                                            commodity;</DELETED>
                                            <DELETED>    ``(bb) an excluded
                                            commodity, other than a
                                            security; or</DELETED>
                                            <DELETED>    ``(cc) an exempt
                                            commodity, other than the
                                            digital commodity itself, as
                                            shall be further defined by the
                                            Commission.</DELETED>
                                    <DELETED>    ``(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--</DELETED>
                                            <DELETED>    ``(aa) a contract
                                            of sale of a commodity for
                                            future delivery or an option
                                            thereon;</DELETED>
                                            <DELETED>    ``(bb) a security
                                            futures product;</DELETED>
                                            <DELETED>    ``(cc) a
                                            swap;</DELETED>
                                            <DELETED>    ``(dd) an
                                            agreement, contract, or
                                            transaction described in
                                            section 2(c)(2)(C)(i) or
                                            section
                                            2(c)(2)(D)(i);</DELETED>
                                            <DELETED>    ``(ee) a commodity
                                            option authorized under section
                                            4c; or</DELETED>
                                            <DELETED>    ``(ff) a leverage
                                            transaction authorized under
                                            section 19.</DELETED>
                                    <DELETED>    ``(VII) Pooled investment
                                    vehicle.--</DELETED>
                                            <DELETED>    ``(aa) In
                                            general.--A digital asset not
                                            described by subclause (I)
                                            that, based on its terms and
                                            other characteristics, is,
                                            represents, or is functionally
                                            equivalent to an interest in--
                                            </DELETED>

                                                    <DELETED>    ``(AA) a
                                                    commodity pool, as
                                                    defined in this Act;
                                                    or</DELETED>

                                                    <DELETED>    ``(BB) a
                                                    pooled investment
                                                    vehicle.</DELETED>

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

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

                                                    <DELETED>    ``(BB) any
                                                    company (as defined in
                                                    section 2 of such Act
                                                    (15 U.S.C. 80a-2)) that
                                                    would be an investment
                                                    company under section
                                                    3(a) of such Act but
                                                    for the exclusions
                                                    provided from that
                                                    definition by section
                                                    3(c) of such Act, if
                                                    for purposes of this
                                                    subclause the company
                                                    were assumed to be an
                                                    issuer (as defined in
                                                    section 2 of such Act);
                                                    or</DELETED>

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

                                    <DELETED>    ``(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--
                                    </DELETED>
                                            <DELETED>    ``(aa) a work of
                                            art, a musical composition, a
                                            literary work, or other
                                            intellectual
                                            property;</DELETED>
                                            <DELETED>    ``(bb)
                                            collectibles, merchandise,
                                            virtual land, and video game
                                            assets;</DELETED>
                                            <DELETED>    ``(cc) affinity,
                                            rewards, or loyalty points,
                                            including airline miles or
                                            credit card points, that are
                                            not primarily speculative in
                                            nature; or</DELETED>
                                            <DELETED>    ``(dd) rights,
                                            licenses, and
                                            tickets.</DELETED>
                            <DELETED>    ``(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--
                            </DELETED>
                                    <DELETED>    ``(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;</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(G) Digital commodity broker.--
                    </DELETED>
                            <DELETED>    ``(i) In general.--The term
                            `digital commodity broker' means any person
                            who, as a regular business--</DELETED>
                                    <DELETED>    ``(I) is engaged in--
                                    </DELETED>
                                            <DELETED>    ``(aa) soliciting
                                            or accepting an order from a
                                            customer for--</DELETED>

                                                    <DELETED>    ``(AA) the
                                                    purchase or sale of a
                                                    digital commodity;
                                                    or</DELETED>

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

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

                                                    <DELETED>    ``(AA) the
                                                    funds of any customer;
                                                    or</DELETED>

                                                    <DELETED>    ``(BB) the
                                                    execution of any
                                                    transaction of a
                                                    customer;</DELETED>

                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(III) is registered with
                                    the Commission as a digital commodity
                                    broker.</DELETED>
                            <DELETED>    ``(ii) Exceptions.--The term
                            `digital commodity broker' does not include a
                            person solely because the person--</DELETED>
                                    <DELETED>    ``(I) solicits or accepts
                                    an order described in clause
                                    (i)(I)(aa)(AA) from a customer who is
                                    an eligible contract
                                    participant;</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(H) Digital commodity dealer.--
                    </DELETED>
                            <DELETED>    ``(i) In general.--The term
                            `digital commodity dealer' means any person
                            who, as a regular business--</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(II) is registered with
                                    the Commission as a digital commodity
                                    dealer.</DELETED>
                            <DELETED>    ``(ii) Exception.--The term
                            `digital commodity dealer' does not include a
                            person solely because the person--</DELETED>
                                    <DELETED>    ``(I) is or offers to be a
                                    counterparty to a person who is an
                                    eligible contract
                                    participant;</DELETED>
                                    <DELETED>    ``(II) enters into a
                                    digital commodity transaction with an
                                    eligible contract
                                    participant;</DELETED>
                                    <DELETED>    ``(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;</DELETED>
                                    <DELETED>    ``(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;</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(J) Mixed digital asset transaction.--
                    The term `mixed digital asset transaction' means a
                    transaction in which a digital commodity is traded for
                    a security.</DELETED>
                    <DELETED>    ``(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',
                    `permitted payment stablecoin', and `permitted payment
                    stablecoin issuer' have the meaning given those terms,
                    respectively, under section 2(a) of the Securities Act
                    of 1933 (15 U.S.C. 77b(a)).''; and</DELETED>
            <DELETED>    (5) in paragraph (41) (as so redesignated by
            paragraph (4) of this subsection)--</DELETED>
                    <DELETED>    (A) by striking ``and'' at the end of
                    subparagraph (E);</DELETED>
                    <DELETED>    (B) by striking the period at the end of
                    subparagraph (F) and inserting ``; and''; and</DELETED>
                    <DELETED>    (C) by adding at the end the
                    following:</DELETED>
                    <DELETED>    ``(G) a digital commodity exchange
                    registered under section 5i.''.</DELETED>
    <DELETED>    (b) Conforming Amendments.--</DELETED>
            <DELETED>    (1) Each of the following provisions of law is
            amended by striking ``1a(18)'' and inserting
            ``1a(19)'':</DELETED>
                    <DELETED>    (A) Section 4s(h)(5)(A)(i) of the
                    Commodity Exchange Act (7 U.S.C.
                    6s(h)(5)(A)(i)).</DELETED>
                    <DELETED>    (B) Section 5(e) of the Securities Act of
                    1933 (15 U.S.C. 77e(e)).</DELETED>
                    <DELETED>    (C) Section 6(g)(5)(B) of the Securities
                    Exchange Act of 1934 (15 U.S.C.
                    78f(g)(5)(B)).</DELETED>
                    <DELETED>    (D) Section 15F(h)(5)(A)(i) of the
                    Securities Exchange Act of 1934 (15 U.S.C. 78o-
                    10(h)(5)(A)(i)).</DELETED>
            <DELETED>    (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)''.</DELETED>
            <DELETED>    (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)''.</DELETED>
            <DELETED>    (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)'':</DELETED>
                    <DELETED>    (A) Section 4t(b)(1)(C) (7 U.S.C.
                    6t(b)(1)(C)).</DELETED>
                    <DELETED>    (B) Section 5(d)(23) (7 U.S.C.
                    7(d)(23)).</DELETED>
                    <DELETED>    (C) Section 5b(k)(3) (7 U.S.C. 7a-
                    1(k)(3)).</DELETED>
                    <DELETED>    (D) Section 5h(f)(10)(A)(iii) (7 U.S.C.
                    7b-3(f)(10)(A)(iii)).</DELETED>
            <DELETED>    (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)''.</DELETED>
            <DELETED>    (6) Section 403 of the Legal Certainty for Bank
            Products Act of 2000 (7 U.S.C. 27a) is amended--</DELETED>
                    <DELETED>    (A) in subsection (a)(2), by striking
                    ``1a(47)(A)(v)'' and inserting ``1a(48)(A)(v)'';
                    and</DELETED>
                    <DELETED>    (B) in each of subsections (b)(1) and
                    (c)(2), by striking ``1a(47)'' and inserting
                    ``1a(48)''.</DELETED>
            <DELETED>    (7) Section 712 of the Wall Street Transparency
            and Accountability Act of 2010 (15 U.S.C. 8302) is amended--
            </DELETED>
                    <DELETED>    (A) in subsection (a)(8), by striking
                    ``1a(47)(D)'' each place it appears and inserting
                    ``1a(48)(D)''; and</DELETED>
                    <DELETED>    (B) in subsection (d)(1), by striking
                    ``1a(47)(A)(v)'' each place it appears and inserting
                    ``1a(48)(A)(v)''.</DELETED>

    <DELETED>SEC. 104. DEFINITIONS UNDER THIS ACT.</DELETED>

    <DELETED>    In this Act:</DELETED>
            <DELETED>    (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).</DELETED>
            <DELETED>    (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 ``permitted payment stablecoin
            issuer'' have the meaning given those terms, respectively,
            under section 2(a) of the Securities Act of 1933 (15 U.S.C.
            77b(a)).</DELETED>
            <DELETED>    (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)).</DELETED>

    <DELETED>SEC. 105. RULEMAKINGS.</DELETED>

    <DELETED>    (a) Definitions.--The Commodity Futures Trading Commission
    and the Securities and Exchange Commission shall jointly issue rules to
    further define the following terms:</DELETED>
            <DELETED>    (1) The terms--</DELETED>
                    <DELETED>    (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;</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (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.</DELETED>
            <DELETED>    (2) The terms ``digital commodity'',
            ``decentralized finance messaging system'', and ``decentralized
            finance trading protocol'', as defined under section 1a of the
            Commodity Exchange Act.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (c) Protection of Self-Custody.--</DELETED>
            <DELETED>    (1) In general.--A United States individual shall
            retain the right to--</DELETED>
                    <DELETED>    (A) maintain a hardware wallet or software
                    wallet for the purpose of facilitating the individual's
                    own lawful custody of digital assets; and</DELETED>
                    <DELETED>    (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--
                    </DELETED>
                            <DELETED>    (i) such other individual or
                            entity is not a financial institution (as
                            defined in section 5312 of title 31, United
                            States Code); and</DELETED>
                            <DELETED>    (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.</DELETED>
            <DELETED>    (2) Application.--This subsection--</DELETED>
                    <DELETED>    (A) applies solely to personal use by
                    individuals; and</DELETED>
                    <DELETED>    (B) does not apply to individuals acting
                    in a custodial or fiduciary capacity for
                    others.</DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (B) any other law relating to illicit
                    finance, money laundering, terrorism financing, or
                    United States sanctions.</DELETED>
    <DELETED>    (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 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.</DELETED>
    <DELETED>    (e) Joint Rules for Portfolio Margining Determinations.--
    </DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (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;</DELETED>
                    <DELETED>    (B) a futures or cleared swap account
                    carried by a registered futures commission
                    merchant;</DELETED>
                    <DELETED>    (C) a swap account carried by a swap
                    dealer; or</DELETED>
                    <DELETED>    (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.</DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (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;</DELETED>
                    <DELETED>    (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;</DELETED>
                    <DELETED>    (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;</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>

    <DELETED>SEC. 106. EXPEDITED REGISTRATION FOR DIGITAL COMMODITY
                  EXCHANGES, BROKERS, AND DEALERS; PROVISIONAL
                  STATUS.</DELETED>

    <DELETED>    (a) Registration.--</DELETED>
            <DELETED>    (1) In general.--Unless exempted from
            registration, a person shall not act as a digital commodity
            broker, digital commodity dealer, or digital commodity exchange
            after the end of the 90-day period beginning on the date the
            process described in paragraph (2) is adopted by the Commodity
            Futures Trading Commission, unless, as the case may be, the
            person is registered as a--</DELETED>
                    <DELETED>    (A) digital commodity broker pursuant to
                    section 4u of the Commodity Exchange Act;</DELETED>
                    <DELETED>    (B) digital commodity dealer pursuant to
                    section 4u of the Commodity Exchange Act; or</DELETED>
                    <DELETED>    (C) digital commodity exchange pursuant to
                    section 5i of the Commodity Exchange Act.</DELETED>
            <DELETED>    (2) Expedited process.--Within 180 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 required to be
            registered pursuant to paragraph (1).</DELETED>
    <DELETED>    (b) Provisional Status.--</DELETED>
            <DELETED>    (1) In general.--A person who is registered in
            accordance with subsection (a) of this section shall be in
            provisional status until--</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (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.</DELETED>
            <DELETED>    (2) Payment of fees.--A person in provisional
            status shall pay all fees and penalties required under section
            410.</DELETED>
    <DELETED>    (c) Operations Prior to Regulations.--</DELETED>
            <DELETED>    (1) Requirements.--A person in provisional status
            shall be subject to the requirements of this section and the
            Commodity Exchange Act and any rules or regulations promulgated
            under this section or the Commodity Exchange Act, as
            applicable.</DELETED>
            <DELETED>    (2) Listings.--</DELETED>
                    <DELETED>    (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.</DELETED>
                    <DELETED>    (B) Delisting.--Before the effective date
                    of the joint rulemaking on definitions under section
                    105(a), 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).</DELETED>
            <DELETED>    (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 section or the Commodity
            Exchange Act or any rules or regulations promulgated under this
            section or the Commodity Exchange Act, as applicable.</DELETED>
    <DELETED>    (d) Customer Disclosure Before Registration.--</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (2) Expiration.--Paragraph (1) of this subsection
            shall not apply to any person who registers pursuant to
            subsection (a).</DELETED>

    <DELETED>SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
                  PROVISIONS.</DELETED>

    <DELETED>    (a) In General.--Nothing in this Act shall affect or apply
    to, or be interpreted to affect or apply to--</DELETED>
            <DELETED>    (1) any agreement, contract, or transaction that
            is subject to the Commodity Exchange Act as--</DELETED>
                    <DELETED>    (A) a contract of sale of a commodity for
                    future delivery or an option on such a
                    contract;</DELETED>
                    <DELETED>    (B) a swap;</DELETED>
                    <DELETED>    (C) a security futures product;</DELETED>
                    <DELETED>    (D) an option authorized under section 4c
                    of such Act;</DELETED>
                    <DELETED>    (E) an agreement, contract, or transaction
                    described in section 2(c)(2)(C)(i) of such Act;
                    or</DELETED>
                    <DELETED>    (F) a leverage transaction authorized
                    under section 19 of such Act;</DELETED>
            <DELETED>    (2) any agreement, contract, or transaction that
            is subject to the securities laws as--</DELETED>
                    <DELETED>    (A) a security-based swap;</DELETED>
                    <DELETED>    (B) a security futures product;
                    or</DELETED>
                    <DELETED>    (C) an option on or based on the value of
                    a security; or</DELETED>
            <DELETED>    (3) the activities of any person with respect to
            any such agreement, contract, or transaction.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (c) Definitions.--In this section, each term shall have
    the meaning provided in the Commodity Exchange Act or the regulations
    prescribed under such Act.</DELETED>

    <DELETED>SEC. 108. ADMINISTRATIVE REQUIREMENTS.</DELETED>

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

    <DELETED>SEC. 109. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN
                  DEVELOPERS.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) creating or publishing software to facilitate
            the creation of, or provision of maintenance services to, a
            blockchain or blockchain service;</DELETED>
            <DELETED>    (2) providing hardware or software to facilitate a
            customer's own custody or safekeeping of the customer's digital
            assets; or</DELETED>
            <DELETED>    (3) providing infrastructure support to maintain a
            blockchain service.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (c) Effect on Other Laws.--</DELETED>
            <DELETED>    (1) Intellectual property law.--Nothing in this
            section shall be construed to limit or expand any law
            pertaining to intellectual property.</DELETED>
            <DELETED>    (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.</DELETED>
    <DELETED>    (d) Definitions.--In this section:</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>

    <DELETED>SEC. 110. APPLICATION OF THE BANK SECRECY ACT.</DELETED>

    <DELETED>    (a) In General.--Section 5312(c)(1)(A) of title 31, United
    States Code, is amended--</DELETED>
            <DELETED>    (1) by inserting ``digital commodity broker,
            digital commodity dealer,'' after ``futures commission
            merchant,''; and</DELETED>
            <DELETED>    (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''.</DELETED>
    <DELETED>    (b) Bank Secrecy Act Requirements.--</DELETED>
            <DELETED>    (1) Regulations.--The Secretary of the Treasury,
            acting through the Director of the Financial Crimes Enforcement
            Network, and in consultation with Commodity Futures Trading
            Commission, shall issue requirements consistent with the
            requirements of futures commission merchants to apply the Bank
            Secrecy Act to digital commodity brokers, digital commodity
            dealers, and digital commodity exchanges that are tailored to
            the size and complexity of such entities, including by
            requiring each such entity to--</DELETED>
                    <DELETED>    (A) establish and maintain an anti-money
                    laundering and countering the financing of terrorism
                    program, which shall include--</DELETED>
                            <DELETED>    (i) an appropriate risk
                            assessment;</DELETED>
                            <DELETED>    (ii) the development of internal
                            policies, procedures, and controls;</DELETED>
                            <DELETED>    (iii) the designation of a
                            compliance officer;</DELETED>
                            <DELETED>    (iv) an ongoing employee training
                            program; and</DELETED>
                            <DELETED>    (v) an independent audit function
                            to test such program;</DELETED>
                    <DELETED>    (B) retain appropriate records of
                    transactions;</DELETED>
                    <DELETED>    (C) monitor and report suspicious
                    activity, which may include use of appropriate
                    distributed ledger analytics; and</DELETED>
                    <DELETED>    (D) maintain an effective customer
                    identification program to identify and verify account
                    holders and carry out appropriate customer due
                    diligence.</DELETED>
            <DELETED>    (2) Compliance with sanctions.--A digital
            commodity broker, digital commodity dealer, or digital
            commodity exchange shall comply with all laws and regulations
            related to United States sanctions administered by the Office
            of Foreign Assets Control.</DELETED>

    <DELETED>SEC. 111. RULE OF CONSTRUCTION.</DELETED>

    <DELETED>    Nothing in this Act, or the amendments made by this Act,
    shall be construed to limit or prevent the continued application of
    applicable ethics statutes and regulations administered by the Office
    of Government Ethics, or the ethics rules of the Senate and the House
    of Representatives, including section 208 of title 18, United States
    Code, and sections 2635.702 and 2635.802 of title 5, Code of Federal
    Regulations. For the avoidance of doubt, existing Office of Government
    Ethics laws and the ethics rules of the Senate and the House of
    Representatives prohibit any member of Congress or senior executive
    branch official from issuing a digital commodity during their time in
    public service. For the purposes of this section, an employee described
    in section 202 of title 18, United States Code, shall be deemed an
    executive branch employee for purposes of complying with section 208 of
    that title.</DELETED>

    <DELETED>SEC. 112. IMPLEMENTATION.</DELETED>

    <DELETED>    (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.</DELETED>
    <DELETED>    (b) Rules and Registration Before Final Effective Dates.--
    </DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (A) promulgate rules, regulations, or
                    orders permitted or required by this Act;</DELETED>
                    <DELETED>    (B) conduct studies and prepare reports
                    and recommendations required by this Act;</DELETED>
                    <DELETED>    (C) register persons under this Act;
                    and</DELETED>
                    <DELETED>    (D) exempt persons, agreements, contracts,
                    or transactions from provisions of this Act, under the
                    terms contained in this Act.</DELETED>
            <DELETED>    (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.</DELETED>

      <DELETED>TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES</DELETED>

    <DELETED>SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) in paragraph (1), by adding at the end the
            following: ``The term `investment contract' does not include an
            investment contract asset.''; and</DELETED>
            <DELETED>    (2) by adding at the end the following:</DELETED>
            <DELETED>    ``(36) The term `investment contract asset' means
            a digital commodity--</DELETED>
                    <DELETED>    ``(A) that can be exclusively possessed
                    and transferred, person to person, without necessary
                    reliance on an intermediary, and is recorded on a
                    blockchain; and</DELETED>
                    <DELETED>    ``(B) sold or otherwise transferred, or
                    intended to be sold or otherwise transferred, pursuant
                    to an investment contract.''.</DELETED>
    <DELETED>    (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).''.</DELETED>
    <DELETED>    (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).''.</DELETED>
    <DELETED>    (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).''.</DELETED>
    <DELETED>    (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).''.</DELETED>

    <DELETED>SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL
                  COMMODITIES.</DELETED>

    <DELETED>    (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a
    et seq.) is amended--</DELETED>
            <DELETED>    (1) in section 4(a), by adding at the end the
            following:</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) the date that is four years
                            after the effective date of this
                            paragraph;</DELETED>
                    <DELETED>    ``(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 $50,000,000 (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);</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) is not organized under the
                            laws of a State, a territory of the United
                            States, or the District of Columbia;</DELETED>
                            <DELETED>    ``(ii) is a development stage
                            company that either--</DELETED>
                                    <DELETED>    ``(I) has no specific
                                    business plan or purpose; or</DELETED>
                                    <DELETED>    ``(II) has indicated that
                                    the business plan of the company is to
                                    merge with or acquire an unidentified
                                    company;</DELETED>
                            <DELETED>    ``(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(c) of that Act (15 U.S.C.
                            80a-3(b) or 80a-3(c));</DELETED>
                            <DELETED>    ``(iv) is issuing fractional
                            undivided interests in oil or gas rights, or a
                            similar interest in other mineral
                            rights;</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(vi) is disqualified pursuant to
                            section 230.262 of title 17, Code of Federal
                            Regulations; and</DELETED>
                    <DELETED>    ``(E) the issuer meets the requirements of
                    section 4B(b).''; and</DELETED>
            <DELETED>    (2) by inserting after section 4A the
            following:</DELETED>

    <DELETED>``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL
                  COMMODITY TRANSACTIONS.</DELETED>

    <DELETED>    ``(a) Commission Jurisdiction.--For the purposes of this
    section:</DELETED>
            <DELETED>    ``(1) The Commission shall have jurisdiction and
            enforcement authority with respect to disclosures described in
            this section.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Requirements for Digital Commodity Issuers.--
    </DELETED>
            <DELETED>    ``(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.).</DELETED>
            <DELETED>    ``(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:</DELETED>
                    <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(ii) information explaining the
                            technical requirements for holding, accessing,
                            and transferring the digital
                            commodity;</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(iv) an explanation of any
                            mechanism for driving value to the digital
                            commodity of such blockchain system;
                            and</DELETED>
                            <DELETED>    ``(v) an explanation of governance
                            mechanisms for implementing changes to the
                            blockchain system or forming consensus among
                            holders of units of such digital
                            commodity.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(F) Ownership disclosures.--</DELETED>
                            <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(G) Risk factor disclosures.--A
                    description of the material risks surrounding ownership
                    of a unit of a digital commodity.</DELETED>
            <DELETED>    ``(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:</DELETED>
                    <DELETED>    ``(A) Semiannual reports.--Every 6 months,
                    a report containing--</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(iv) financial statements, where
                            applicable.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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).</DELETED>
            <DELETED>    ``(5) Termination of certain reporting
            requirements; post-maturity reporting requirements.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) any participation in a
                            decentralized governance system of such
                            blockchain system;</DELETED>
                            <DELETED>    ``(ii) any participation in
                            alterations or proposed alterations to the
                            functionality or operation of such blockchain
                            system;</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(v) any affiliations of such
                            issuer material to the efforts of such
                            issuer.</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(E) Rule of construction.--Nothing in
                    subparagraph (C) may be construed to make any digital
                    commodity described in such subparagraph a
                    security.</DELETED>
    <DELETED>    ``(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--</DELETED>
            <DELETED>    ``(1) register with the Commission as a broker or
            dealer; and</DELETED>
            <DELETED>    ``(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).</DELETED>
    <DELETED>    ``(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).</DELETED>
    <DELETED>    ``(e) Failure To Mature.--</DELETED>
            <DELETED>    ``(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:</DELETED>
                    <DELETED>    ``(A) Disclosures.--Disclosures regarding
                    the following:</DELETED>
                            <DELETED>    ``(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).</DELETED>
                            <DELETED>    ``(ii) Development plans.--The
                            future plans of development of the blockchain
                            system, including information required under
                            subsection (b)(3).</DELETED>
                            <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(B) Obligations.--Transaction reporting
                    and beneficial ownership disclosure obligations
                    applicable to digital commodity related persons and
                    digital commodity affiliated persons of such blockchain
                    system.</DELETED>
            <DELETED>    ``(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.''.</DELETED>
    <DELETED>    (b) Additional Exemptions.--</DELETED>
            <DELETED>    (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)''.</DELETED>
            <DELETED>    (2) Exemption from state regulation.--Section
            18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is
            amended--</DELETED>
                    <DELETED>    (A) in subparagraph (B), by striking
                    ``section 4(4)'' and inserting ``section
                    4(a)(4)'';</DELETED>
                    <DELETED>    (B) in subparagraph (C), by striking
                    ``section 4(6)'' and inserting ``section
                    4(a)(6)'';</DELETED>
                    <DELETED>    (C) in subparagraph (F)--</DELETED>
                            <DELETED>    (i) by striking ``section 4(2)''
                            each place such term appears and inserting
                            ``section 4(a)(2)''; and</DELETED>
                            <DELETED>    (ii) by striking ``or'' at the
                            end;</DELETED>
                    <DELETED>    (D) in subparagraph (G), by striking the
                    period and inserting ``; or''; and</DELETED>
                    <DELETED>    (E) by adding at the end the
                    following:</DELETED>
                    <DELETED>    ``(H) section 4(a)(8).''.</DELETED>
    <DELETED>    (c) Use of Other Exemptions.--</DELETED>
            <DELETED>    (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 from registration under
            the Securities Act of 1933, including as 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.</DELETED>
            <DELETED>    (2) Rulemakings.--</DELETED>
                    <DELETED>    (A) The Securities and Exchange Commission
                    may issue rules--</DELETED>
                            <DELETED>    (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</DELETED>
                            <DELETED>    (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.</DELETED>
                    <DELETED>    (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:</DELETED>
                            <DELETED>    (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
                            from registration under the Securities Act of
                            1933, including as 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--</DELETED>
                                    <DELETED>    (I) one year after the
                                    effective date of this section;
                                    or</DELETED>
                                    <DELETED>    (II) the date of any
                                    secondary market sale of such digital
                                    commodity made in reliance on section
                                    203.</DELETED>
                            <DELETED>    (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
                            from registration under the Securities Act of
                            1933, including as 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.</DELETED>
                            <DELETED>    (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--</DELETED>
                                    <DELETED>    (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</DELETED>
                                    <DELETED>    (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.</DELETED>
                            <DELETED>    (iv) A rule permitting a successor
                            to a digital commodity issuer, or such other
                            appropriate person as designated by the
                            Commission, to make the disclosures required
                            under clause (i), where such issuer does not
                            make the required disclosures.</DELETED>

    <DELETED>SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL
                  COMMODITIES THAT ORIGINALLY INVOLVED INVESTMENT
                  CONTRACTS.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) the Securities Act of 1933 (15 U.S.C. 77a et
            seq.);</DELETED>
            <DELETED>    (2) the Investment Advisers Act of 1940 (15 U.S.C.
            80b-1 et seq.);</DELETED>
            <DELETED>    (3) the Investment Company Act of 1940 (15 U.S.C.
            80a-1 et seq.);</DELETED>
            <DELETED>    (4) the Securities Exchange Act of 1934 (15 U.S.C.
            78a et seq.);</DELETED>
            <DELETED>    (5) the Securities Investor Protection Act of 1970
            (15 U.S.C. 78aaa et seq.); and</DELETED>
            <DELETED>    (6) any applicable provisions of State
            law.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>

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

    <DELETED>    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:</DELETED>

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

    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Commission Jurisdiction.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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).</DELETED>
    <DELETED>    ``(c) Restrictions on Digital Commodity Related Persons
    and Digital Commodity Affiliated Persons.--</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(B) the digital commodity related person
                    or digital commodity affiliated person has held the
                    units for not less than 12 months; and</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(A) offered or sold by a digital
                    commodity related person; or</DELETED>
                    <DELETED>    ``(B) offered or sold by a digital
                    commodity affiliated person if--</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(ii) the digital commodity
                            affiliated person has held the units for not
                            less than the earlier of--</DELETED>
                                    <DELETED>    ``(I) 12 months;
                                    or</DELETED>
                                    <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Rulemakings required.--Not later than 270
            days after the date of the enactment of this section,
            consistent with protecting investors, maintaining fair,
            orderly, and efficient markets, and facilitating capital
            formation, and to foster the development of mature blockchain
            systems, the Commission, by rule, after notice and comment--
            </DELETED>
                    <DELETED>    ``(A) shall set the percentage amounts
                    described in paragraphs (1)(C)(i), (1)(C)(ii), and
                    (2)(B)(iii); and</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(d) Rules of Construction.--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.</DELETED>
    <DELETED>    ``(e) Manipulative and Deceptive Devices; Reporting.--
    </DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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 from registration under this Act, including as
    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--</DELETED>
            <DELETED>    ``(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; or</DELETED>
            <DELETED>    ``(2) the appropriate disclosures required under
            section 202(c)(2)(B) of the CLARITY Act of 2025 have been made
            with the Commission.</DELETED>
    <DELETED>    ``(g) Rulemaking on Further Usage of Digital
    Commodities.-- The Commission, consistent with protecting investors,
    maintaining fair, orderly, and efficient markets, and facilitating
    capital formation, as well as fostering the development of mature
    blockchain systems, 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, including for the purposes of promoting market
    liquidity.''.</DELETED>

    <DELETED>SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.</DELETED>

    <DELETED>    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:</DELETED>

    <DELETED>``SEC. 42. MATURE BLOCKCHAIN SYSTEMS.</DELETED>

    <DELETED>    ``(a) Certification of Blockchain Systems.--</DELETED>
            <DELETED>    ``(1) Certification.--A digital commodity issuer,
            digital commodity related person, digital commodity affiliated
            person, decentralized governance system of the blockchain
            system, or a registered digital commodity exchange, or any
            other appropriate person as designated by the Commission, may
            certify to the Commission that the blockchain system to which a
            digital commodity relates is a mature blockchain
            system.</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(A) the operation of the blockchain
                    system;</DELETED>
                    <DELETED>    ``(B) the functionality of the related
                    digital commodity;</DELETED>
                    <DELETED>    ``(C) how the market value of the digital
                    commodity is substantially derived from the
                    programmatic functioning of such blockchain
                    system;</DELETED>
                    <DELETED>    ``(D) any decentralized governance system
                    which relates to the blockchain system; and</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(4) Certification review.--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) an inadequate explanation by
                            the person making the certification;
                            or</DELETED>
                            <DELETED>    ``(ii) any novel or complex issues
                            which require additional time to
                            consider.</DELETED>
                    <DELETED>    ``(B) Public notice.--The Commission shall
                    make the following available to the public and provide
                    a copy to the Commodity Futures Trading
                    Commission:</DELETED>
                            <DELETED>    ``(i) Each certification received
                            under paragraph (1).</DELETED>
                            <DELETED>    ``(ii) Each stay of the Commission
                            under this subsection, and the reasons
                            therefor.</DELETED>
                            <DELETED>    ``(iii) Any response from a person
                            making a certification under paragraph (1) to a
                            stay of the certification by the
                            Commission.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(5) Stay of certification.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(6) Disposition of certification.--A
            certification made under paragraph (1) shall--</DELETED>
                    <DELETED>    ``(A) become effective--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) at the expiration of the
                            certification review period; and</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(8) Appeal of rebuttal.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Review.--In an appeal under
                    subparagraph (A), the court shall have de novo review
                    of the determination to rebut the
                    certification.</DELETED>
    <DELETED>    ``(b) Maturity Criteria.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Rules of construction.--</DELETED>
                    <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(c) Deemed Mature.--</DELETED>
            <DELETED>    ``(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).</DELETED>
            <DELETED>    ``(2) Criteria for any blockchain system.--The
            requirements described in this paragraph are the
            following:</DELETED>
                    <DELETED>    ``(A) System value.--</DELETED>
                            <DELETED>    ``(i) Market value.--The digital
                            commodity has a value that is substantially
                            derived from the use and functioning of the
                            blockchain system.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Functional system.--The blockchain
                    system allows network participants to engage in the
                    activities the blockchain system is intended to
                    provide, including--</DELETED>
                            <DELETED>    ``(i) using, transmitting, or
                            storing value, or otherwise executing
                            transactions, on the blockchain
                            system;</DELETED>
                            <DELETED>    ``(ii) deploying, executing, or
                            accessing software or services, or otherwise
                            offering or participating in services, deployed
                            on or integrated with the blockchain
                            system;</DELETED>
                            <DELETED>    ``(iii) participating in the
                            consensus mechanism, transaction validation
                            process, or decentralized governance system of
                            the blockchain system; or</DELETED>
                            <DELETED>    ``(iv) operating any client, node,
                            validator, or other form of computational
                            infrastructure with respect to the blockchain
                            system.</DELETED>
                    <DELETED>    ``(C) Open and interoperable system.--The
                    blockchain system--</DELETED>
                            <DELETED>    ``(i) is composed of source code
                            that is open source; and</DELETED>
                            <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(E) System governance.--No person or
                    group of persons under common control--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(F) Impartial system.--No person or
                    group of persons under common control possesses a
                    unique permission or privilege with respect to
                    functionality, operation, or rules of consensus or
                    agreement of the blockchain system or its related
                    digital commodity, unless such alteration--</DELETED>
                            <DELETED>    ``(i) addresses errors, regular
                            maintenance, or cybersecurity risks of the
                            blockchain system that affect the programmatic
                            functioning of the blockchain system;
                            and</DELETED>
                            <DELETED>    ``(ii) is adopted through the
                            consensus or agreement of a decentralized
                            governance system.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Optional criteria for preexisting blockchain
            systems.--The requirements described in this paragraph are that
            the blockchain system--</DELETED>
                    <DELETED>    ``(A) was created prior to the date of
                    enactment of this section;</DELETED>
                    <DELETED>    ``(B) met the requirements of
                    subparagraphs (A) through (F) of paragraph (2) prior to
                    the date of enactment of this section; and</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(d) Decentralized Governance System.--</DELETED>
            <DELETED>    ``(1) For the purposes of this section, a
            decentralized governance system is not a `person' or a `group
            of persons under common control'.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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.''.</DELETED>

    <DELETED>SEC. 206. EFFECTIVE DATE.</DELETED>

    <DELETED>    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--</DELETED>
            <DELETED>    (1) 360 days after the date of enactment of this
            Act; or</DELETED>
            <DELETED>    (2) 60 days after the publication in the Federal
            Register of the final rule implementing the
            provision.</DELETED>

     <DELETED>TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES
                       AND EXCHANGE COMMISSION</DELETED>

    <DELETED>SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED
                  PAYMENT STABLECOINS.</DELETED>

    <DELETED>    (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 the GENIUS
    Act, is amended by striking the final sentence and inserting the
    following: ``The term does not include a digital commodity or permitted
    payment stablecoin.''.</DELETED>
    <DELETED>    (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
    the GENIUS Act, is amended by striking the final sentence and inserting
    the following: ``The term does not include a digital commodity or
    permitted payment stablecoin.''.</DELETED>
    <DELETED>    (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--
    </DELETED>
            <DELETED>    (1) in paragraph (18), as amended by the GENIUS
            Act, by striking the final sentence and inserting the
            following: ``The term does not include a digital commodity or
            permitted payment stablecoin.'';</DELETED>
            <DELETED>    (2) by redesignating the second paragraph (29)
            (relating to commodity pools) as paragraph (31); and</DELETED>
            <DELETED>    (3) by adding at the end, the following:</DELETED>
            <DELETED>    ``(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)).''.</DELETED>
    <DELETED>    (d) Investment Company Act of 1940.--Section 2(a) of the
    Investment Company Act of 1940 (15 U.S.C. 80a-2) is amended--</DELETED>
            <DELETED>    (1) in paragraph (36), as amended by the GENIUS
            Act, by striking the final sentence and inserting the
            following: ``The term does not include a digital commodity or
            permitted payment stablecoin.''; and</DELETED>
            <DELETED>    (2) by adding at the end, the following:</DELETED>
            <DELETED>    ``(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)).''.</DELETED>
    <DELETED>    (e) Securities Investor Protection Act of 1970.--Section
    16 of the Securities Investor Protection Act of 1970 (15 U.S.C. 78lll)
    is amended--</DELETED>
            <DELETED>    (1) in paragraph (14), as amended by the GENIUS
            Act, by striking the final sentence and inserting 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</DELETED>
            <DELETED>    (2) by adding at the end the following:</DELETED>
            <DELETED>    ``(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'.''.</DELETED>

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

    <DELETED>    (a) In General.--Section 10 of the Securities Exchange Act
    of 1934 (15 U.S.C. 78j) is amended--</DELETED>
            <DELETED>    (1) by moving subsection (c) so as to appear after
            subsection (b);</DELETED>
            <DELETED>    (2) by inserting after subsection (c) the
            following:</DELETED>
    <DELETED>    ``(d) To use or employ, in connection with the purchase or
    sale of any permitted payment stablecoin or digital commodity, by or
    through, as applicable, a broker, dealer, national securities exchange,
    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</DELETED>
            <DELETED>    (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 or through 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, as applicable, brokered, traded, or custodied by or
            through a broker or dealer or through an alternative trading
            system or a national securities exchange to the same extent as
            they apply to securities.''.</DELETED>
    <DELETED>    (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:</DELETED>

    <DELETED>``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT
                  STABLECOINS.</DELETED>

    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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--</DELETED>
            <DELETED>    ``(1) by a broker or dealer;</DELETED>
            <DELETED>    ``(2) through a national securities exchange;
            or</DELETED>
            <DELETED>    ``(3) through an alternative trading
            system.</DELETED>
    <DELETED>    ``(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--</DELETED>
            <DELETED>    ``(1) by a broker or dealer;</DELETED>
            <DELETED>    ``(2) through a national securities exchange;
            or</DELETED>
            <DELETED>    ``(3) through an alternative trading
            system.''.</DELETED>

    <DELETED>SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING
                  SYSTEMS.</DELETED>

    <DELETED>    (a) In General.--Section 5 of the Securities Exchange Act
    of 1934 (15 U.S.C. 78e) is amended--</DELETED>
            <DELETED>    (1) by striking ``It'' and inserting the
            following:</DELETED>
    <DELETED>    ``(a) In General.--It''; and</DELETED>
            <DELETED>    (2) by adding at the end the following:</DELETED>
    <DELETED>    ``(b) Digital Commodity Protections.--</DELETED>
            <DELETED>    ``(1) In general.--The Commission may not preclude
            a trading platform from operating pursuant to a covered
            exemption to exchange registration under section 6 of this
            title on the basis that the assets traded or to be traded on
            such platform include--</DELETED>
                    <DELETED>    ``(A) digital commodities or permitted
                    payment stablecoins; and</DELETED>
                    <DELETED>    ``(B) securities.</DELETED>
            <DELETED>    ``(2) Covered exemption.--In this subsection, the
            term `covered exemption' means an exemption--</DELETED>
                    <DELETED>    ``(A) described in subsection (a)(2);
                    or</DELETED>
                    <DELETED>    ``(B) with respect to any other rule of
                    the Commission relating to the definition of
                    `exchange'.''.</DELETED>
    <DELETED>    (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: ``Neither an alternative trading
    system predominantly facilitating the trading of digital commodities,
    permitted payment stablecoins, or both, relative to its securities
    traded, nor a digital commodity exchange, is a `facility' of an
    exchange.''.</DELETED>
    <DELETED>    (c) Rule of Construction.--Nothing in this section, the
    amendments made by this section, or section 304 may be construed to--
    </DELETED>
            <DELETED>    (1) prohibit a national securities exchange from
            owning or operating any other type of alternative trading
            system; or</DELETED>
            <DELETED>    (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.</DELETED>

    <DELETED>SEC. 304. RULEMAKING FOR DUAL-REGISTERED ENTITIES.</DELETED>

    <DELETED>    (a) Conflict of Interest Policies and Procedures.--Each
    person or entity dual-registered with the Commodity Futures Trading
    Commission as permitted under section 15(p) of the Securities Exchange
    Act of 1934 shall establish, maintain, and, as applicable, enforce and
    comply with written policies and procedures reasonably designed to
    mitigate any conflicts of interest, including with respect to
    transactions or arrangements with affiliates registered with the
    Securities and Exchange Commission, taking into consideration the
    nature of the business of such person or entity.</DELETED>
    <DELETED>    (b) Exemption From Duplicative, Conflicting, or Unduly
    Burdensome Provisions.--The Securities and Exchange Commission shall
    prescribe rules for a person or entity with multiple registrations,
    where at least one such registration includes any dual registration
    permitted under section 15(p) of the Securities Exchange Act of 1934,
    to exempt the person or entity from duplicative, conflicting, or unduly
    burdensome provisions of the Securities Exchange Act of 1934 and rules
    thereunder, to the extent such an exemption would protect investors,
    maintain fair, orderly, and efficient markets, and facilitate capital
    formation.</DELETED>
    <DELETED>    (c) 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 is registered with the Commodity Futures Trading Commission
    as a digital commodity broker or digital commodity dealer as permitted
    under section 15(p)(1) of the Securities Exchange Act of 1934 or
    otherwise transacts in permitted payment stablecoins to revise such
    rules as may be necessary to further the purposes of and compliance
    with this section.</DELETED>
    <DELETED>    (d) Memorandum of Understanding.--The Securities and
    Exchange Commission shall enter into a memorandum of understanding with
    the Commodity Futures Trading Commission to ensure--</DELETED>
            <DELETED>    (1) non-duplicative supervision and enforcement
            with respect to registrants of the Securities and Exchange
            Commission dual-registered with the Commodity Futures Trading
            Commission as permitted under section 15(p) of the Securities
            Exchange Act of 1934; and</DELETED>
            <DELETED>    (2) appropriate information sharing between the
            Commissions to further the purposes of and compliance with this
            section, the Securities Exchange Act of 1934, and the Commodity
            Exchange Act.</DELETED>
    <DELETED>    (e) 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.</DELETED>

    <DELETED>SEC. 305. MODERNIZATION OF RECORDKEEPING
                  REQUIREMENTS.</DELETED>

    <DELETED>    (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,
    consistent with any rules promulgated under subsection (b), utilize
    records from a blockchain system.</DELETED>
    <DELETED>    (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.</DELETED>

    <DELETED>SEC. 306. EXEMPTIVE AUTHORITY.</DELETED>

    <DELETED>    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''.</DELETED>

    <DELETED>SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES
                  TRADING COMMISSION.</DELETED>

    <DELETED>    Section 15 of the Securities Exchange Act of 1934 (15
    U.S.C. 78o) is amended by adding at the end the following:</DELETED>
    <DELETED>    ``(p) Additional Registrations With the Commodity Futures
    Trading Commission.--</DELETED>
            <DELETED>    ``(1) Registered brokers and dealers.--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.</DELETED>
            <DELETED>    ``(2) National securities exchanges.--A national
            securities exchange or affiliate thereof shall be permitted to
            maintain a registration with the Commodity Futures Trading
            Commission as a digital commodity exchange.</DELETED>
            <DELETED>    ``(3) Alternative trading systems.--An alternative
            trading system, and the operator thereof, shall be permitted to
            maintain a registration with the Commodity Futures Trading
            Commission as a digital commodity exchange.</DELETED>
            <DELETED>    ``(4) Notice of application.--Any person or entity
            described in paragraph (1) through (3) shall provide to the
            Securities and Exchange Commission, at such time and in such
            form and manner as the Securities and Exchange Commission shall
            prescribe, notice of any application to register with the
            Commodity Futures Trading Commission as a digital commodity
            broker, digital commodity dealer, or digital commodity
            exchange.''.</DELETED>

    <DELETED>SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES
                  LAWS.</DELETED>

    <DELETED>    (a) Covered Security.--Section 18(b) of the Securities Act
    of 1933 (15 U.S.C. 77r(b)) is amended by adding at the end the
    following:</DELETED>
            <DELETED>    ``(5) Exemption in connection with digital
            commodities.--A digital commodity shall be treated as a covered
            security.''.</DELETED>
    <DELETED>    (b) Rule of Construction.--Nothing in this section,
    section 202, or the amendments made by such sections may be construed
    to limit the existing authority described in section 18(c)(1) of the
    Securities Act of 1933 (15 U.S.C. 77r(c)(1)) of a securities commission
    (or any agency or office performing like functions) of any State with
    respect to a covered security or any security.</DELETED>

    <DELETED>SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE
                  ACTIVITIES.</DELETED>

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

    <DELETED>``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO
                  THIS ACT.</DELETED>

    <DELETED>    ``(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:</DELETED>
            <DELETED>    ``(1) Compiling network transactions or relaying,
            searching, sequencing, validating, or acting in a similar
            capacity.</DELETED>
            <DELETED>    ``(2) Providing computational work, operating a
            node or oracle service, or procuring, offering, or utilizing
            network bandwidth, or providing other similar incidental
            services.</DELETED>
            <DELETED>    ``(3) Providing a user-interface that enables a
            user to read and access data about a blockchain
            system.</DELETED>
            <DELETED>    ``(4) Developing, publishing, constituting,
            administering, maintaining, or otherwise distributing a
            blockchain system or a decentralized finance trading
            protocol.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Exceptions.--Subsection (a) shall not apply to the
    anti-fraud and anti-manipulation authorities of the
    Commission.''.</DELETED>

    <DELETED>SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING
                  INSTITUTIONS.</DELETED>

    <DELETED>    (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'')--</DELETED>
            <DELETED>    (1) to include assets held in custody that are not
            accounted for as assets of 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; and</DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (A) the appropriate Federal banking
                    agency;</DELETED>
                    <DELETED>    (B) the National Credit Union
                    Administration (in the case of a credit
                    union);</DELETED>
                    <DELETED>    (C) a State bank supervisor;</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (E) the Securities and Exchange Commission
                    (in the case of a broker or dealer).</DELETED>
    <DELETED>    (b) Definitions.--In this section:</DELETED>
            <DELETED>    (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).</DELETED>
            <DELETED>    (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).</DELETED>

    <DELETED>SEC. 311. BROKER AND DEALER DISCLOSURES REGARDING THE
                  TREATMENT OF ASSETS.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (A) title II of the Dodd-Frank Wall Street
                    Reform and Consumer Protection Act (12 U.S.C. 5381 et
                    seq.);</DELETED>
                    <DELETED>    (B) the Securities Investor Protection Act
                    of 1970 (15 U.S.C. 78aaa et seq.); or</DELETED>
                    <DELETED>    (C) as applicable, chapter 7 or chapter 11
                    of title 11, United States Code; and</DELETED>
            <DELETED>    (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).</DELETED>

    <DELETED>SEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN
                  NATURE.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) in subparagraph (A), by striking ``or
            securities'' and inserting ``, securities, or digital
            commodities''; and</DELETED>
            <DELETED>    (2) in subparagraph (E), by inserting ``or digital
            commodities'' before the period at the end.</DELETED>
    <DELETED>    (b) National Bank Activity.--</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>

    <DELETED>SEC. 313. EFFECTIVE DATE; ADMINISTRATION.</DELETED>

    <DELETED>    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--</DELETED>
            <DELETED>    (1) 360 days after the date of enactment of this
            Act; or</DELETED>
            <DELETED>    (2) 60 days after the publication in the Federal
            Register of the final rule implementing the
            provision.</DELETED>

    <DELETED>SEC. 314. EDUCATIONAL MATERIAL REQUIREMENTS.</DELETED>

    <DELETED>    The Securities and Exchange Commission, in consultation
    with the Commodity Futures Trading Commission, shall require any
    registered entity that facilitates the trading of digital commodities
    or investment contracts involving units of a digital commodity to
    provide clear and accessible educational materials to the public,
    including--</DELETED>
            <DELETED>    (1) an overview of how blockchain technology
            functions;</DELETED>
            <DELETED>    (2) a description of common risks associated with
            digital commodities;</DELETED>
            <DELETED>    (3) a description of the differences between
            digital commodity markets and traditional financial
            markets;</DELETED>
            <DELETED>    (4) information on reporting requirements related
            to digital commodity transactions or investment contracts
            involving units of a digital commodity; and</DELETED>
            <DELETED>    (5) guidance on recognizing fraudulent schemes and
            instructions for reporting suspected fraud.</DELETED>

    <DELETED>SEC. 315. DISCRETIONARY SURPLUS FUND.</DELETED>

    <DELETED>    (a) In General.--The dollar amount specified under section
    7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is
    reduced by $15,000,000.</DELETED>
    <DELETED>    (b) Effective Date.--The amendment made by subsection (a)
    shall take effect on September 30, 2035.</DELETED>

    <DELETED>TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT
               THE COMMODITY FUTURES TRADING COMMISSION</DELETED>

    <DELETED>SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY
                  TRANSACTIONS.</DELETED>

    <DELETED>    (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:</DELETED>
                    <DELETED>    ``(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--
                    </DELETED>
                            <DELETED>    ``(i) any agreement, contract, or
                            transaction that is subject to this Act as--
                            </DELETED>
                                    <DELETED>    ``(I) a contract of sale
                                    of a commodity for future delivery or
                                    an option on such a contract;</DELETED>
                                    <DELETED>    ``(II) a swap;</DELETED>
                                    <DELETED>    ``(III) a security futures
                                    product;</DELETED>
                                    <DELETED>    ``(IV) an option
                                    authorized under section 4c of this
                                    Act;</DELETED>
                                    <DELETED>    ``(V) an agreement,
                                    contract, or transaction described in
                                    subparagraph (C)(i) or (D)(i) of
                                    subsection (c)(2) of this section;
                                    or</DELETED>
                                    <DELETED>    ``(VI) a leverage
                                    transaction authorized under section
                                    19; or</DELETED>
                            <DELETED>    ``(ii) the activities of any
                            person with respect to any such an agreement,
                            contract, or transaction.''.</DELETED>
    <DELETED>    (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--</DELETED>
            <DELETED>    (1) in subparagraph (F), by striking ``or'' at the
            end;</DELETED>
            <DELETED>    (2) in subparagraph (G), by striking the period
            and inserting ``; or''; and</DELETED>
            <DELETED>    (3) by adding at the end the following:</DELETED>
                    <DELETED>    ``(H) permitted payment
                    stablecoins.''.</DELETED>
    <DELETED>    (c) Commission Jurisdiction Over Financing Agreements.--
    Section 2(c)(2)(D) of the Commodity Exchange Act (7 U.S.C. 2(c)(2)(D))
    is amended--</DELETED>
            <DELETED>    (1) in clause (ii)(I), by inserting after
            ``paragraph (1)'' the following: ``(other than an agreement,
            contract, or transaction in a permitted payment stablecoin)'';
            and</DELETED>
            <DELETED>    (2) by redesignating clause (iv) as clause (v) and
            inserting after clause (iii) the following:</DELETED>
                            <DELETED>    ``(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 by the digital commodity broker, as
                            determined by the Commission by rule or
                            regulation, based on commercial spot market
                            practices.''.</DELETED>
    <DELETED>    (d) Commission Authority Over Certain Digital Commodity
    and Stablecoin Spot Transactions.--Section 2(c)(2) of the Commodity
    Exchange Act (7 U.S.C. 2(c)(2)) is amended by adding at the end the
    following:</DELETED>
                    <DELETED>    ``(F) Commission jurisdiction with respect
                    to digital commodity transactions.--</DELETED>
                            <DELETED>    ``(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 or tradable asset (as defined in
                            section 4x) in interstate commerce, including
                            in a digital commodity or tradable asset (as so
                            defined) cash or spot market, that is offered,
                            solicited, traded, facilitated, executed,
                            cleared, reported, or otherwise dealt in--
                            </DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(II) by any other entity
                                    registered, or required to be
                                    registered, with the
                                    Commission.</DELETED>
                            <DELETED>    ``(ii) Limitations.--Clause (i)
                            shall not apply with respect to--</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(II) an offer or sale of
                                    an investment contract involving a
                                    digital commodity or of a securities
                                    offer or sale involving a digital
                                    commodity.</DELETED>
                            <DELETED>    ``(iii) Mixed digital asset
                            transactions.--</DELETED>
                                    <DELETED>    ``(I) In general.--Clause
                                    (i) shall not apply to a mixed digital
                                    asset transaction.</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(G) Agreements, contracts, and
                    transactions in stablecoins.--</DELETED>
                            <DELETED>    ``(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, solicited, or accepted, or for
                            which the execution of is confirmed--</DELETED>
                                    <DELETED>    ``(I) on or subject to the
                                    rules of a registered entity;
                                    or</DELETED>
                                    <DELETED>    ``(II) by any other entity
                                    registered with the
                                    Commission.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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.''.</DELETED>
    <DELETED>    (e) Conforming Amendments.--The Commodity Exchange Act is
    amended--</DELETED>
            <DELETED>    (1) in section 1a(9) (7 U.S.C. 1a(9)), as amended
            by the GENIUS Act, by striking the second sentence;
            and</DELETED>
            <DELETED>    (2) in section 2(a)(1)(A) (7 U.S.C. 2(a)(1)(A)),
            in the 1st sentence, by inserting ``subparagraphs (F) and (G)
            of subsection (c)(2) of this section or'' before ``section
            19''.</DELETED>

    <DELETED>SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE
                  QUALIFIED DIGITAL ASSET CUSTODIANS.</DELETED>

    <DELETED>    Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is
    amended--</DELETED>
            <DELETED>    (1) in subsection (a)(2)--</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (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</DELETED>
            <DELETED>    (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''.</DELETED>

    <DELETED>SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL
                  COMMODITIES.</DELETED>

    <DELETED>    Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2)
    is amended--</DELETED>
            <DELETED>    (1) in subsection (a), by striking ``5(d) and
            5b(c)(2)'' and inserting ``5(d), 5b(c)(2), and
            5i(c)'';</DELETED>
            <DELETED>    (2) in subsection (b)--</DELETED>
                    <DELETED>    (A) in each of paragraphs (1) and (2), by
                    inserting ``digital commodity exchange,'' before
                    ``derivatives''; and</DELETED>
                    <DELETED>    (B) in paragraph (3), by inserting
                    ``digital commodity exchange,'' before ``derivatives''
                    each place it appears;</DELETED>
            <DELETED>    (3) in subsection (c)--</DELETED>
                    <DELETED>    (A) in paragraph (2), by inserting ``or
                    participants'' before ``(in a'';</DELETED>
                    <DELETED>    (B) in paragraph (4)(B), by striking
                    ``1a(10)'' and inserting ``1a(9)''; and</DELETED>
                    <DELETED>    (C) in paragraph (5), by adding at the end
                    the following:</DELETED>
                    <DELETED>    ``(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</DELETED>
            <DELETED>    (4) by inserting after subsection (c) the
            following:</DELETED>
    <DELETED>    ``(d) Certifications for Digital Commodity Trading.--
    </DELETED>
            <DELETED>    ``(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).</DELETED>
            <DELETED>    ``(2) Contents of the certification.--</DELETED>
                    <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Modifications.--</DELETED>
                    <DELETED>    ``(A) In general.--An eligible entity
                    shall modify a certification made under paragraph (1)
                    to--</DELETED>
                            <DELETED>    ``(i) account for significant
                            changes in any information provided to the
                            Commission under paragraph (2)(A)(ii);
                            or</DELETED>
                            <DELETED>    ``(ii) permit or restrict trading
                            in units of a digital commodity held by a
                            digital commodity related person or a digital
                            commodity affiliated person.</DELETED>
                    <DELETED>    ``(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).</DELETED>
            <DELETED>    ``(4) Disapproval.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(C) Public findings.--The Commission
                    shall make public any disapproval decision, and any
                    related findings and analysis, made under this
                    paragraph.</DELETED>
            <DELETED>    ``(5) Review.--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) once, for 30 business days,
                            through written notice to the eligible entity
                            by the Commission; and</DELETED>
                            <DELETED>    ``(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--</DELETED>
                                    <DELETED>    ``(I) novel or complex
                                    issues which require additional time to
                                    analyze;</DELETED>
                                    <DELETED>    ``(II) missing information
                                    or inadequate explanations;
                                    or</DELETED>
                                    <DELETED>    ``(III) potential
                                    inconsistencies with this
                                    Act.</DELETED>
            <DELETED>    ``(6) Prior approval before registration.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(D) Disapproval.--</DELETED>
                            <DELETED>    ``(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).</DELETED>
                            <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(iii) Public findings.--The
                            Commission shall make public any disapproval
                            decision, and any related findings and
                            analysis, made under this paragraph.</DELETED>
            <DELETED>    ``(7) Eligible entity defined.--In this
            subsection, the term `eligible entity' means a registered
            entity or group of registered entities acting
            jointly.''.</DELETED>

    <DELETED>SEC. 404. REGISTRATION OF DIGITAL COMMODITY
                  EXCHANGES.</DELETED>

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

    <DELETED>``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY
                  EXCHANGES.</DELETED>

    <DELETED>    ``(a) In General.--</DELETED>
            <DELETED>    ``(1) Registration.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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--
                    </DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) serves only customers in a
                            single State, territory, or possession of the
                            United States.</DELETED>
            <DELETED>    ``(2) Additional registrations.--</DELETED>
                    <DELETED>    ``(A) With the commission.--In order to
                    foster the development of fair and orderly markets,
                    protect customers, and promote responsible innovation,
                    the Commission--</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(ii) shall prescribe rules to
                            address conflicts of interests and activities
                            of the entity; and</DELETED>
                            <DELETED>    ``(iii) may, after an analysis of
                            the risks and benefits, prescribe rules to
                            provide for portfolio margining.</DELETED>
                    <DELETED>    ``(B) With a registered futures
                    association.--</DELETED>
                            <DELETED>    ``(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).</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Trading.--</DELETED>
            <DELETED>    ``(1) Prohibition on certain trading practices.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Prohibition on acting as a counterparty.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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:</DELETED>
                            <DELETED>    ``(i) Customer direction.--A
                            transaction for, or entered into at the
                            direction of, or for the benefit of, an
                            unaffiliated customer.</DELETED>
                            <DELETED>    ``(ii) Risk management.--A
                            transaction to manage the credit, market, and
                            liquidity risks associated with the digital
                            commodity business of the exchange.</DELETED>
                            <DELETED>    ``(iii) Operational needs.--A
                            transaction related to the operational needs of
                            the business of the digital commodity exchange
                            or its affiliate.</DELETED>
                            <DELETED>    ``(iv) Functional use.--A
                            transaction related to the functional operation
                            of a blockchain system.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(c) Core Principles for Digital Commodity Exchanges.--
    </DELETED>
            <DELETED>    ``(1) Compliance with core principles.--</DELETED>
                    <DELETED>    ``(A) In general.--To be registered, and
                    maintain registration, as a digital commodity exchange,
                    a digital commodity exchange shall comply with--
                    </DELETED>
                            <DELETED>    ``(i) the core principles
                            described in this subsection; and</DELETED>
                            <DELETED>    ``(ii) any requirement that the
                            Commission may impose by rule or regulation
                            pursuant to section 8a(5).</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Compliance with rules.--A digital commodity
            exchange shall--</DELETED>
                    <DELETED>    ``(A) establish and enforce compliance
                    with any rule of the digital commodity exchange,
                    including--</DELETED>
                            <DELETED>    ``(i) the terms and conditions of
                            the trades traded or processed on or through
                            the digital commodity exchange; and</DELETED>
                            <DELETED>    ``(ii) any limitation on access to
                            the digital commodity exchange;</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) to provide market
                            participants with impartial access to the
                            market; and</DELETED>
                            <DELETED>    ``(ii) to capture information that
                            may be used in establishing whether rule
                            violations have occurred; and</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Listing standards for digital commodities.--
            </DELETED>
                    <DELETED>    ``(A) In general.--A digital commodity
                    exchange shall establish policies and procedures to
                    permit trading in a digital commodity only if--
                    </DELETED>
                            <DELETED>    ``(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; or</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Public information requirements.--
                    </DELETED>
                            <DELETED>    ``(i) In general.--A digital
                            commodity exchange shall--</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(II) establish policies
                                    and procedures to determine that the
                                    information provided pursuant to clause
                                    (ii) is correct, current, and available
                                    to the public.</DELETED>
                            <DELETED>    ``(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:</DELETED>
                                    <DELETED>    ``(I) Source code.--The
                                    source code for any blockchain system
                                    to which the digital commodity
                                    relates.</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                                    <DELETED>    ``(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--</DELETED>
                                            <DELETED>    ``(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;</DELETED>
                                            <DELETED>    ``(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;</DELETED>
                                            <DELETED>    ``(cc) an
                                            explanation of governance
                                            mechanisms for implementing
                                            changes to the blockchain
                                            system or forming consensus
                                            among holders of the digital
                                            commodities; and</DELETED>
                                            <DELETED>    ``(dd) sufficient
                                            information for a third party
                                            to create a tool for verifying
                                            the transaction history of the
                                            digital asset.</DELETED>
                                    <DELETED>    ``(IV) Trading volume and
                                    volatility.--The trading volume and
                                    volatility of the digital commodity on
                                    the exchange.</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(iii) Format.--The Commission
                            shall prescribe rules and regulations for the
                            standardization and simplification of
                            disclosures under clause (ii), including
                            requiring that disclosures--</DELETED>
                                    <DELETED>    ``(I) be
                                    conspicuous;</DELETED>
                                    <DELETED>    ``(II) use plain language
                                    comprehensible to customers;</DELETED>
                                    <DELETED>    ``(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</DELETED>
                                    <DELETED>    ``(IV) succinctly explain
                                    the information that is required to be
                                    communicated to the customer.</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(5) Monitoring of trading and trade
            processing.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Protection of markets and market
                    participants.--A digital commodity exchange shall
                    establish and enforce rules--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) to promote fair and
                            equitable trading on the exchange.</DELETED>
                    <DELETED>    ``(C) Trading procedures.--A digital
                    commodity exchange shall--</DELETED>
                            <DELETED>    ``(i) establish and enforce rules
                            or terms and conditions defining, or
                            specifications detailing--</DELETED>
                                    <DELETED>    ``(I) trading procedures
                                    to be used in entering and executing
                                    orders traded on or through the
                                    facilities of the digital commodity
                                    exchange; and</DELETED>
                                    <DELETED>    ``(II) procedures for
                                    trade processing of digital commodities
                                    on or through the facilities of the
                                    digital commodity exchange;
                                    and</DELETED>
                            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(6) Ability to obtain information.--A digital
            commodity exchange shall--</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(B) provide the information to the
                    Commission on request; and</DELETED>
                    <DELETED>    ``(C) have the capacity to carry out such
                    international information-sharing agreements as the
                    Commission may require.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(8) Timely publication of trading information.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(9) Recordkeeping and reporting.--</DELETED>
                    <DELETED>    ``(A) In general.--A digital commodity
                    exchange shall--</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(iii) keep any such records of
                            digital commodities which relate to a security
                            open to inspection and examination by the
                            Securities and Exchange Commission.</DELETED>
                    <DELETED>    ``(B) Information-sharing.--Subject to
                    section 8, and on request, the Commission shall share
                    information collected under subparagraph (A) with--
                    </DELETED>
                            <DELETED>    ``(i) the Board;</DELETED>
                            <DELETED>    ``(ii) the Securities and Exchange
                            Commission;</DELETED>
                            <DELETED>    ``(iii) each appropriate Federal
                            banking agency;</DELETED>
                            <DELETED>    ``(iv) each appropriate State bank
                            supervisor (within the meaning of section 3 of
                            the Federal Deposit Insurance Act);</DELETED>
                            <DELETED>    ``(v) the Financial Stability
                            Oversight Council;</DELETED>
                            <DELETED>    ``(vi) the Department of Justice;
                            and</DELETED>
                            <DELETED>    ``(vii) any other person that the
                            Commission determines to be appropriate,
                            including--</DELETED>
                                    <DELETED>    ``(I) foreign financial
                                    supervisors (including foreign futures
                                    authorities);</DELETED>
                                    <DELETED>    ``(II) foreign central
                                    banks; and</DELETED>
                                    <DELETED>    ``(III) foreign
                                    ministries.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(10) Antitrust considerations.--Unless necessary
            or appropriate to achieve the purposes of this Act, a digital
            commodity exchange shall not--</DELETED>
                    <DELETED>    ``(A) adopt any rules or take any actions
                    that result in any unreasonable restraint of trade;
                    or</DELETED>
                    <DELETED>    ``(B) impose any material anticompetitive
                    burden on trading.</DELETED>
            <DELETED>    ``(11) Conflicts of interest.--The digital
            commodity exchange shall establish and enforce rules--
            </DELETED>
                    <DELETED>    ``(A) to minimize conflicts of interest in
                    the decision making processes of the contract market;
                    and</DELETED>
                    <DELETED>    ``(B) to establish a process for resolving
                    conflicts of interest referred to in subparagraph
                    (A).</DELETED>
            <DELETED>    ``(12) Financial resources.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Minimum amount of financial
                    resources.--A digital commodity exchange shall possess
                    financial resources that, at a minimum, exceed the sum
                    of--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) the total amount necessary
                            to meet the financial obligations of the
                            digital commodity exchange to all customers of
                            the digital commodity exchange.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(14) Governance fitness standards.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Fitness standards.--A digital
                    commodity exchange shall establish and enforce
                    appropriate fitness standards for--</DELETED>
                            <DELETED>    ``(i) officers and directors;
                            and</DELETED>
                            <DELETED>    ``(ii) any individual or entity
                            with direct access to, or control of, customer
                            assets.</DELETED>
            <DELETED>    ``(15) System safeguards.--A digital commodity
            exchange shall--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) are reliable and secure;
                            and</DELETED>
                            <DELETED>    ``(ii) have adequate scalable
                            capacity;</DELETED>
                    <DELETED>    ``(B) establish and maintain emergency
                    procedures, backup resources, and a plan for disaster
                    recovery that allow for--</DELETED>
                            <DELETED>    ``(i) the timely recovery and
                            resumption of operations; and</DELETED>
                            <DELETED>    ``(ii) the fulfillment of the
                            responsibilities and obligations of the digital
                            commodity exchange; and</DELETED>
                    <DELETED>    ``(C) periodically conduct tests to verify
                    that the backup resources of the digital commodity
                    exchange are sufficient to ensure continued--</DELETED>
                            <DELETED>    ``(i) order processing and trade
                            matching;</DELETED>
                            <DELETED>    ``(ii) price reporting;</DELETED>
                            <DELETED>    ``(iii) market surveillance;
                            and</DELETED>
                            <DELETED>    ``(iv) maintenance of a
                            comprehensive and accurate audit
                            trail.</DELETED>
    <DELETED>    ``(d) Holding of Customer Assets.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Segregation of funds.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(C) Exceptions.--</DELETED>
                            <DELETED>    ``(i) Use of funds.--</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                                    <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(4) Customer protection during bankruptcy.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(C) Exchanges.--A digital commodity
                    exchange shall be considered a futures commission
                    merchant for purposes of section 761 of title 11,
                    United States Code.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(5) Misuse of customer property.--</DELETED>
                    <DELETED>    ``(A) In general.--It shall be unlawful--
                    </DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(6) Participation in blockchain services.--
            </DELETED>
                    <DELETED>    ``(A) Use of funds.--A digital commodity
                    exchange (or a designee of a digital commodity
                    exchange) may use a unit of a digital commodity
                    belonging to a customer to provide a blockchain service
                    for a blockchain system to which the unit of the
                    digital commodity relates if--</DELETED>
                            <DELETED>    ``(i) the customer expressly
                            permits the use, in writing to the digital
                            commodity exchange; and</DELETED>
                            <DELETED>    ``(ii) the digital commodity
                            exchange complies with subparagraph
                            (B).</DELETED>
                    <DELETED>    ``(B) Limitations.--</DELETED>
                            <DELETED>    ``(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 a
                            permission provided under subparagraph (A) that
                            are reasonably necessary to protect customers,
                            including eligible contract participants, non-
                            eligible contract participants, or any other
                            class of customers.</DELETED>
                            <DELETED>    ``(ii) Customer choice.--A digital
                            commodity exchange may not require a customer
                            to provide the permission referred to in
                            subparagraph (A) as a condition of doing
                            business on the exchange.</DELETED>
                    <DELETED>    ``(C) Requirements.--The Commission may,
                    by rule, waive or modify the requirements of paragraph
                    (2) or subsection (h), to facilitate the use of a unit
                    of a digital commodity belonging to a customer to
                    provide a blockchain service.</DELETED>
                    <DELETED>    ``(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, including protocol
                    consensus participation activities described in section
                    2(a)(30)(B) of the Securities Act of 1933, required for
                    the ongoing operation of a blockchain system.</DELETED>
    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(f) Designation of Chief Compliance Officer.--</DELETED>
            <DELETED>    ``(1) In general.--A digital commodity exchange
            shall designate an individual to serve as a chief compliance
            officer.</DELETED>
            <DELETED>    ``(2) Duties.--The chief compliance officer
            shall--</DELETED>
                    <DELETED>    ``(A) report directly to the board or to
                    the senior officer of the exchange;</DELETED>
                    <DELETED>    ``(B) review compliance with the core
                    principles in this subsection;</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(D) establish and administer the
                    policies and procedures required to be established
                    pursuant to this section;</DELETED>
                    <DELETED>    ``(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</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(4) Annual reports.--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) the compliance of the
                            digital commodity exchange with this Act;
                            and</DELETED>
                            <DELETED>    ``(ii) the policies and
                            procedures, including the code of ethics and
                            conflicts of interest policies, of the digital
                            commodity exchange.</DELETED>
                    <DELETED>    ``(B) Requirements.--The chief compliance
                    officer shall--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) include in the report a
                            certification that, under penalty of law, the
                            report is accurate and complete.</DELETED>
    <DELETED>    ``(g) Appointment of Trustee.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Assumption of jurisdiction.--If the
            Commission applies for appointment of a trustee under paragraph
            (1)--</DELETED>
                    <DELETED>    ``(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</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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--</DELETED>
            <DELETED>    ``(1) the property of a customer of the digital
            commodity exchange;</DELETED>
            <DELETED>    ``(2) required to be held by the digital commodity
            exchange under subsection (c)(12) of this section; or</DELETED>
            <DELETED>    ``(3) otherwise so required by the Commission to
            reasonably protect customers.</DELETED>
    <DELETED>    ``(i) Exemptions.--</DELETED>
            <DELETED>    ``(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
            digital commodity exchange) exempt, either unconditionally or
            on stated terms or conditions or for stated periods and either
            retroactively or prospectively, or both, a digital commodity
            exchange from the requirements of this Act, if the Commission
            determines that--</DELETED>
                    <DELETED>    ``(A) the exemption would be consistent
                    with the public interest and the purposes of this Act;
                    and</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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.''.</DELETED>

    <DELETED>SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.</DELETED>

    <DELETED>    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:</DELETED>

    <DELETED>``SEC. 5J. QUALIFIED DIGITAL ASSET CUSTODIANS.</DELETED>

    <DELETED>    ``(a) In General.--A person is a qualified digital asset
    custodian for purposes of this Act if the person--</DELETED>
            <DELETED>    ``(1) holds digital assets on behalf of a person
            registered under this Act or a customer of a person registered
            under this Act; and</DELETED>
            <DELETED>    ``(2) is in compliance with subsections (b) and
            (c).</DELETED>
    <DELETED>    ``(b) Supervision Requirement.--A person is in compliance
    with this subsection if the person is subject to--</DELETED>
            <DELETED>    ``(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</DELETED>
            <DELETED>    ``(2) adequate supervision and appropriate
            regulation for custody and safekeeping of digital assets by--
            </DELETED>
                    <DELETED>    ``(A) a State bank supervisor (within the
                    meaning of section 3 of the Federal Deposit Insurance
                    Act);</DELETED>
                    <DELETED>    ``(B) a State officer, agency, or other
                    entity which has primary regulatory authority over
                    nondepository State trust companies;</DELETED>
                    <DELETED>    ``(C) a State credit union supervisor, as
                    defined under section 6003 of the Anti-Money Laundering
                    Act of 2020; or</DELETED>
                    <DELETED>    ``(D) an appropriate foreign governmental
                    authority in the home country of such person.</DELETED>
    <DELETED>    ``(c) Other Requirements.--A person shall be in compliance
    with this subsection if:</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Information sharing.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Rulemaking for cftc entities.--</DELETED>
                    <DELETED>    ``(A) 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.</DELETED>
                    <DELETED>    ``(B) Content.--In prescribing the rules
                    under subparagraph (A), the Commission shall require a
                    person registered with the Commission to--</DELETED>
                            <DELETED>    ``(i) implement requirement
                            consistent with the requirements in subsection
                            (d)(1);</DELETED>
                            <DELETED>    ``(ii) establish sufficient system
                            safeguards;</DELETED>
                            <DELETED>    ``(iii) prevent or mitigate
                            conflicts of interest, as appropriate;
                            and</DELETED>
                            <DELETED>    ``(iv) establish separate
                            governance arrangements for the custodial
                            function of the entity.</DELETED>
    <DELETED>    ``(d) Adequate Supervision and Appropriate Regulation.--
    </DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(B) hold capital sufficient for the
                    financial integrity of the person;</DELETED>
                    <DELETED>    ``(C) protect customer assets;</DELETED>
                    <DELETED>    ``(D) establish and maintain books and
                    records regarding the business of the person;</DELETED>
                    <DELETED>    ``(E) submit financial statements and
                    audited financial statements to the applicable
                    supervisor described in subsection (b);</DELETED>
                    <DELETED>    ``(F) provide disclosures to the
                    applicable supervisor described in subsection (b)
                    regarding actions, proceedings, and other items as
                    determined by the supervisor;</DELETED>
                    <DELETED>    ``(G) maintain and enforce policies and
                    procedures for compliance with applicable State and
                    Federal laws, including those related to anti-money
                    laundering and cybersecurity;</DELETED>
                    <DELETED>    ``(H) establish a business continuity plan
                    to ensure functionality in cases of disruption;
                    and</DELETED>
                    <DELETED>    ``(I) establish policies and procedures to
                    resolve complaints.</DELETED>
            <DELETED>    ``(2) Rulemaking with respect to definitions.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Existing digital asset custodians.--
                    A trust company operating as a digital asset custodian
                    before the effective date of a rulemaking under
                    subparagraph (A) is deemed subject to adequate
                    supervision and appropriate regulation if--</DELETED>
                            <DELETED>    ``(i) the trust company is
                            expressly permitted by a State bank supervisor
                            to engage in the custody and safekeeping of
                            digital assets;</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(iii) the trust company is in
                            good standing with its State bank
                            supervisor.</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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.''.</DELETED>

    <DELETED>SEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY
                  BROKERS AND DEALERS.</DELETED>

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

    <DELETED>``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY
                  BROKERS AND DEALERS.</DELETED>

    <DELETED>    ``(a) Registration.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Additional registration.--</DELETED>
                    <DELETED>    ``(A) Rules.--In order to foster the
                    development of fair and orderly markets, protect
                    customers, and promote responsible innovation, the
                    Commission--</DELETED>
                            <DELETED>    ``(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;</DELETED>
                            <DELETED>    ``(ii) shall prescribe rules to
                            address conflicts of interests and the
                            activities of the entity; and</DELETED>
                            <DELETED>    ``(iii) may after an analysis of
                            the risks and benefits, prescribe rules to
                            provide for portfolio margining.</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Requirements.--</DELETED>
            <DELETED>    ``(1) In general.--A person shall register as a
            digital commodity broker or digital commodity dealer by filing
            a registration application with the Commission.</DELETED>
            <DELETED>    ``(2) Contents.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(c) Rulemaking.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Financing agreements.--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) an agreement described in
                            section 2(c)(2)(D)(iv); or</DELETED>
                            <DELETED>    ``(ii) any other margined,
                            leveraged, or financing arrangement for the
                            purchase or sale of a digital commodity with an
                            eligible contract participant.</DELETED>
                    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(d) Capital Requirements.--</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(A) meet, and continue to meet the
                    obligations of such a registrant; and</DELETED>
                    <DELETED>    ``(B) fulfill obligations to customers or
                    counterparties for any margined, leveraged, or financed
                    transactions.</DELETED>
            <DELETED>    ``(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.).</DELETED>
    <DELETED>    ``(e) Reporting and Recordkeeping.--Each digital commodity
    broker and digital commodity dealer--</DELETED>
            <DELETED>    ``(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;</DELETED>
            <DELETED>    ``(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</DELETED>
            <DELETED>    ``(3) shall keep the books and records open to
            inspection and examination by any representative of the
            Commission.</DELETED>
    <DELETED>    ``(f) Daily Trading Records.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Information requirements.--The daily trading
            records shall include such information as the Commission shall
            require by rule or regulation.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(4) Audit trail.--Each digital commodity broker
            and digital commodity dealer shall maintain a complete audit
            trail for conducting comprehensive and accurate trade
            reconstructions.</DELETED>
    <DELETED>    ``(g) Business Conduct Standards.--</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(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);</DELETED>
                    <DELETED>    ``(B) diligent supervision of the business
                    of the registered digital commodity broker or digital
                    commodity dealer, respectively; and</DELETED>
                    <DELETED>    ``(C) such other matters as the Commission
                    deems appropriate.</DELETED>
            <DELETED>    ``(2) Business conduct requirements.--The
            Commission shall, by rule, prescribe business conduct
            requirements which--</DELETED>
                    <DELETED>    ``(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--
                    </DELETED>
                            <DELETED>    ``(i) information about the
                            material risks and characteristics of the
                            digital commodity; and</DELETED>
                            <DELETED>    ``(ii) information about the
                            material risks and characteristics of the
                            transaction;</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(C) establish standards governing
                    digital commodity broker and digital commodity dealer
                    marketing and advertising, including testimonials and
                    endorsements; and</DELETED>
                    <DELETED>    ``(D) establish such other standards and
                    requirements as the Commission may determine are
                    appropriate for the protection of customers.</DELETED>
            <DELETED>    ``(3) Prohibition on fraudulent practices.--It
            shall be unlawful for a digital commodity broker or digital
            commodity dealer to--</DELETED>
                    <DELETED>    ``(A) employ any device, scheme, or
                    artifice to defraud any customer or
                    counterparty;</DELETED>
                    <DELETED>    ``(B) engage in any transaction, practice,
                    or course of business that operates as a fraud or
                    deceit on any customer or counterparty; or</DELETED>
                    <DELETED>    ``(C) engage in any act, practice, or
                    course of business that is fraudulent, deceptive, or
                    manipulative.</DELETED>
    <DELETED>    ``(h) Duties.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(2) Disclosure of general information.--Each
            digital commodity broker and digital commodity dealer shall
            disclose to the Commission information concerning--</DELETED>
                    <DELETED>    ``(A) the terms and conditions of the
                    transactions of the digital commodity broker or digital
                    commodity dealer, respectively;</DELETED>
                    <DELETED>    ``(B) the trading operations, mechanisms,
                    and practices of the digital commodity broker or
                    digital commodity dealer, respectively;</DELETED>
                    <DELETED>    ``(C) financial integrity protections
                    relating to the activities of the digital commodity
                    broker or digital commodity dealer, respectively;
                    and</DELETED>
                    <DELETED>    ``(D) other information relevant to
                    trading in digital commodities by the digital commodity
                    broker or digital commodity dealer,
                    respectively.</DELETED>
            <DELETED>    ``(3) Ability to obtain information.--Each digital
            commodity broker and digital commodity dealer shall--</DELETED>
                    <DELETED>    ``(A) establish and enforce internal
                    systems and procedures to obtain any necessary
                    information to perform any of the functions described
                    in this section; and</DELETED>
                    <DELETED>    ``(B) provide the information to the
                    Commission, on request.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(5) Antitrust considerations.--Unless necessary
            or appropriate to achieve the purposes of this Act, a digital
            commodity broker or digital commodity dealer shall not--
            </DELETED>
                    <DELETED>    ``(A) adopt any process or take any action
                    that results in any unreasonable restraint of trade;
                    or</DELETED>
                    <DELETED>    ``(B) impose any material anticompetitive
                    burden on trading or clearing.</DELETED>
    <DELETED>    ``(i) Designation of Chief Compliance Officer.--</DELETED>
            <DELETED>    ``(1) In general.--Each digital commodity broker
            and digital commodity dealer shall designate an individual to
            serve as a chief compliance officer.</DELETED>
            <DELETED>    ``(2) Duties.--The chief compliance officer
            shall--</DELETED>
                    <DELETED>    ``(A) report directly to the board or to
                    the senior officer of the registered digital commodity
                    broker or registered digital commodity
                    dealer;</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(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;</DELETED>
                    <DELETED>    ``(D) be responsible for administering
                    each policy and procedure that is required to be
                    established pursuant to this section;</DELETED>
                    <DELETED>    ``(E) ensure compliance with this Act
                    (including regulations), including each rule prescribed
                    by the Commission under this section;</DELETED>
                    <DELETED>    ``(F) establish procedures for the
                    remediation of noncompliance issues identified by the
                    chief compliance officer through any--</DELETED>
                            <DELETED>    ``(i) compliance office
                            review;</DELETED>
                            <DELETED>    ``(ii) look-back;</DELETED>
                            <DELETED>    ``(iii) internal or external audit
                            finding;</DELETED>
                            <DELETED>    ``(iv) self-reported error;
                            or</DELETED>
                            <DELETED>    ``(v) validated complaint;
                            and</DELETED>
                    <DELETED>    ``(G) establish and follow appropriate
                    procedures for the handling, management response,
                    remediation, retesting, and closing of noncompliance
                    issues.</DELETED>
            <DELETED>    ``(3) Annual reports.--</DELETED>
                    <DELETED>    ``(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--</DELETED>
                            <DELETED>    ``(i) the compliance of the
                            registered digital commodity broker or
                            registered digital commodity dealer with this
                            Act (including regulations); and</DELETED>
                            <DELETED>    ``(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).</DELETED>
                    <DELETED>    ``(B) Requirements.--The chief compliance
                    officer shall ensure that a compliance report under
                    subparagraph (A)--</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(ii) includes a certification
                            that, under penalty of law, the compliance
                            report is accurate and complete.</DELETED>
    <DELETED>    ``(j) Segregation of Digital Commodities.--</DELETED>
            <DELETED>    ``(1) Holding of customer assets.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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--
                    </DELETED>
                            <DELETED>    ``(i) the property of a customer
                            or counterparty of the digital commodity broker
                            or digital commodity dealer,
                            respectively;</DELETED>
                            <DELETED>    ``(ii) required to be held by the
                            digital commodity broker or digital commodity
                            dealer under subsection (e); or</DELETED>
                            <DELETED>    ``(iii) otherwise so required by
                            the Commission to reasonably protect customers
                            or promote the public interest.</DELETED>
            <DELETED>    ``(2) Segregation of funds.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Commingling prohibited.--</DELETED>
                            <DELETED>    ``(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.</DELETED>
                            <DELETED>    ``(ii) Exceptions.--</DELETED>
                                    <DELETED>    ``(I) Use of funds.--
                                    </DELETED>
                                            <DELETED>    ``(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.</DELETED>
                                            <DELETED>    ``(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.</DELETED>
                                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(4) Customer protection during bankruptcy.--
            </DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(5) Misuse of customer property.--</DELETED>
                    <DELETED>    ``(A) In general.--It shall be unlawful--
                    </DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(6) Participation in blockchain services.--
            </DELETED>
                    <DELETED>    ``(A) Use of funds.--A digital commodity
                    broker or digital commodity dealer (or a designee of a
                    digital commodity broker or a digital commodity dealer)
                    may use a unit of a digital commodity belonging to a
                    customer to provide a blockchain service for a
                    blockchain system to which the unit of the digital
                    commodity relates if--</DELETED>
                            <DELETED>    ``(i) the customer expressly
                            permits the use, in writing to the digital
                            commodity broker or digital commodity dealer,
                            as the case may be; and</DELETED>
                            <DELETED>    ``(ii) the digital commodity
                            broker or the digital commodity dealer, as the
                            case may be, complies with subparagraph
                            (B).</DELETED>
                    <DELETED>    ``(B) Limitations.--</DELETED>
                            <DELETED>    ``(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 a
                            permission provided under subparagraph (A) that
                            are reasonably necessary to protect customers,
                            including eligible contract participants, non-
                            eligible contract participants, or any other
                            class of customers.</DELETED>
                            <DELETED>    ``(ii) Customer choice.--A digital
                            commodity broker or digital commodity dealer
                            may not require a customer to provide the
                            permission referred to in subparagraph (A) as a
                            condition of doing business with the broker or
                            dealer.</DELETED>
                    <DELETED>    ``(C) Requirements.--The Commission may,
                    by rule, waive or modify the requirements of paragraph
                    (2) or subsection (h), to facilitate the use of a unit
                    of a digital commodity belonging to a customer to
                    provide a blockchain service.</DELETED>
                    <DELETED>    ``(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, including protocol
                    consensus participation activities described in section
                    2(a)(30)(B) of the Securities Act of 1933, required for
                    the ongoing operation of a blockchain system.</DELETED>
    <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(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 digital commodity
    broker or digital commodity dealer) exempt, unconditionally or on
    stated terms or conditions, or for stated periods, and retroactively or
    prospectively, or both, a digital commodity broker or digital commodity
    dealer from the requirements of this Act, if the Commission determines
    that--</DELETED>
            <DELETED>    ``(1)(A) the exemption would be consistent with
            the public interest and the purposes of this Act; and</DELETED>
            <DELETED>    ``(B) the exemption will not have a material
            adverse effect on the ability of the Commission to discharge
            regulatory duties under this Act; or</DELETED>
            <DELETED>    ``(2) the digital commodity broker or digital
            commodity dealer is subject to comparable, comprehensive
            supervision and regulation by the appropriate government
            authorities in the home country of the digital commodity broker
            or digital commodity dealer, respectively.''.</DELETED>

    <DELETED>SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.</DELETED>

    <DELETED>    (a) In General.--Section 4k of the Commodity Exchange Act
    (7 U.S.C. 6k) is amended--</DELETED>
            <DELETED>    (1) by redesignating subsections (4) through (6)
            as subsections (5) through (7), respectively;</DELETED>
            <DELETED>    (2) by inserting after subsection (3) the
            following:</DELETED>
    <DELETED>    ``(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</DELETED>
            <DELETED>    (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''.</DELETED>
    <DELETED>    (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)''.</DELETED>

    <DELETED>SEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND
                  COMMODITY TRADING ADVISORS.</DELETED>

    <DELETED>    (a) In General.--Section 4m(3) of the Commodity Exchange
    Act (7 U.S.C. 6m(3)) is amended--</DELETED>
            <DELETED>    (1) in subparagraph (A)--</DELETED>
                    <DELETED>    (A) by striking ``any commodity trading
                    advisor'' and inserting ``a commodity pool operator or
                    commodity trading advisor''; and</DELETED>
                    <DELETED>    (B) by striking ``acting as a commodity
                    trading advisor'' and inserting ``acting as a commodity
                    pool operator or commodity trading advisor'';
                    and</DELETED>
            <DELETED>    (2) in subparagraph (C), by inserting ``digital
            commodities,'' after ``physical commodities,''.</DELETED>
    <DELETED>    (b) Exemptive Authority.--Section 4m of such Act (7 U.S.C.
    6m) is amended by adding at the end the following:</DELETED>
    <DELETED>    ``(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.''.</DELETED>

    <DELETED>SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE
                  ACTIVITIES.</DELETED>

    <DELETED>    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:</DELETED>

    <DELETED>``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO
                  THIS ACT.</DELETED>

    <DELETED>    ``(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:</DELETED>
            <DELETED>    ``(1) Compiling network transactions or relaying,
            searching, sequencing, validating, or acting in a similar
            capacity.</DELETED>
            <DELETED>    ``(2) Providing computational work, operating a
            node or oracle service, or procuring, offering, or utilizing
            network bandwidth, or other similar incidental
            services.</DELETED>
            <DELETED>    ``(3) Providing a user-interface that enables a
            user to read, and access data about a blockchain
            system.</DELETED>
            <DELETED>    ``(4) Developing, publishing, or otherwise
            distributing a blockchain system or a decentralized finance
            messaging system.</DELETED>
            <DELETED>    ``(5) Constituting, administering, or maintaining
            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 transaction for the purchase or sale of a
            digital commodity.</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Exceptions.--Subsection (a) shall not be interpreted
    to apply to the anti-fraud, anti-manipulation, or false reporting
    enforcement authorities of the Commission.''.</DELETED>

    <DELETED>SEC. 410. RESOURCES FOR IMPLEMENTATION AND
                  ENFORCEMENT.</DELETED>

    <DELETED>    (a) Collection of Fees.--</DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (A) the filing of the initial application
                    for registration; and</DELETED>
                    <DELETED>    (B) an annual basis thereafter for
                    maintaining provisional status.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
    <DELETED>    (b) Fee Schedule.--</DELETED>
            <DELETED>    (1) In general.--The Commission shall publish in
            the Federal Register a schedule of the fees to be charged and
            collected under this section.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (4) Timing.--</DELETED>
                    <DELETED>    (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.</DELETED>
                    <DELETED>    (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.</DELETED>
    <DELETED>    (c) Late Payment Penalty.--</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (2) Amount.--The amount of the penalty shall be--
            </DELETED>
                    <DELETED>    (A) 5 percent of the amount of the fee
                    due, multiplied by</DELETED>
                    <DELETED>    (B) the whole number of consecutive 30-day
                    periods that have elapsed since the due date.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>
    <DELETED>    (g) Expedited Hiring Authority.--</DELETED>
            <DELETED>    (1) Appointment authority.--The Chairman, pursuant
            to section 6(a), may appoint individuals to a position
            described in paragraph (2) of this subsection--</DELETED>
                    <DELETED>    (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</DELETED>
                    <DELETED>    (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).</DELETED>
            <DELETED>    (2) Position described.--A position referred to in
            subparagraph (1) is a position at the Commission that--
            </DELETED>
                    <DELETED>    (A) is in the competitive service (as
                    defined in section 2102 of such title); and</DELETED>
                    <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>

    <DELETED>SEC. 411. REQUIREMENTS RELATED TO CONTROL PERSONS.</DELETED>

    <DELETED>    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:</DELETED>

    <DELETED>``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL
                  PERSONS.</DELETED>

    <DELETED>    ``(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--</DELETED>
            <DELETED>    ``(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</DELETED>
            <DELETED>    ``(2)(A) the use of a digital commodity broker to
            effect the sale; or</DELETED>
            <DELETED>    ``(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.</DELETED>
    <DELETED>    ``(b) Definitions.--In this section:</DELETED>
            <DELETED>    ``(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--</DELETED>
                    <DELETED>    ``(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</DELETED>
                    <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.''.</DELETED>

    <DELETED>SEC. 412. OTHER TRADABLE ASSETS.</DELETED>

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

    <DELETED>``SEC. 4X. TRADING REQUIREMENTS FOR OTHER TRADABLE
                  ASSETS.</DELETED>

    <DELETED>    ``(a) Limitation.--A contract of sale of 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).</DELETED>
    <DELETED>    ``(b) Requirements.--</DELETED>
            <DELETED>    ``(1) Treatment of tradable assets.--A contract of
            sale of 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.</DELETED>
            <DELETED>    ``(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 contract of sale of 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--</DELETED>
                    <DELETED>    ``(A) disclosure;</DELETED>
                    <DELETED>    ``(B) recordkeeping;</DELETED>
                    <DELETED>    ``(C) capital;</DELETED>
                    <DELETED>    ``(D) reporting;</DELETED>
                    <DELETED>    ``(E) business conduct;</DELETED>
                    <DELETED>    ``(F) documentation;</DELETED>
                    <DELETED>    ``(G) supervision of employees;
                    and</DELETED>
                    <DELETED>    ``(H) segregation.</DELETED>
    <DELETED>    ``(c) Tradable Asset Defined.--In this section, the term
    `tradable asset' means a digital asset other than--</DELETED>
            <DELETED>    ``(1) a digital commodity that is treated as such
            other than by reason of subsection (b)(1) of this section;
            or</DELETED>
            <DELETED>    ``(2) a digital asset excluded from the definition
            of digital commodity pursuant to subclause (I) through (VII) of
            section 1a(16)(F)(iii).''; and</DELETED>
            <DELETED>    (2) by inserting after section 6d the
            following:</DELETED>

    <DELETED>``SEC. 6E. PROHIBITION ON TRADING CERTAIN DIGITAL
                  ASSETS.</DELETED>

    <DELETED>    ``(a) In General.--A contract of sale of a digital
    commodity or tradable asset (as defined in section 4x) 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, if the
    primary purpose of the digital commodity or tradable asset is to be
    used to--</DELETED>
            <DELETED>    ``(1) commit fraud or market
            manipulation;</DELETED>
            <DELETED>    ``(2) further a scheme found in a final action by
            a court of competent jurisdiction to be in violation of
            campaign finance or government ethics laws; or</DELETED>
            <DELETED>    ``(3) engage in any other conduct that would
            result in abusive practices or be disruptive to market
            integrity.</DELETED>
    <DELETED>    ``(b) 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 digital commodity or tradable asset (as so defined) 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.''.</DELETED>

    <DELETED>SEC. 413. CONFLICT OF INTEREST RULEMAKING.</DELETED>

    <DELETED>     Not 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.</DELETED>

    <DELETED>SEC. 414. EFFECTIVE DATE.</DELETED>

    <DELETED>    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.</DELETED>

    <DELETED>SEC. 415. SENSE OF CONGRESS.</DELETED>

    <DELETED>    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.</DELETED>

       <DELETED>TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS</DELETED>

    <DELETED>SEC. 501. FINDINGS; SENSE OF CONGRESS.</DELETED>

    <DELETED>    (a) Findings.--Congress finds the following:</DELETED>
            <DELETED>    (1) Entrepreneurs and innovators are building and
            deploying this next generation of the internet.</DELETED>
            <DELETED>    (2) Digital commodity networks represent a new way
            for people to join together and cooperate with one another to
            undertake certain activities.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (6) Blockchain technology facilitates new types of
            network participation which businesses in the United States may
            utilize in innovative ways.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (8) Digital commodities, despite the purported
            anonymity, provide law enforcement with an exceptional tracing
            tool to identify illicit activity and bring criminals to
            justice.</DELETED>
            <DELETED>    (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.</DELETED>
    <DELETED>    (b) Sense of Congress.--It is the sense of Congress that--
    </DELETED>
            <DELETED>    (1) the United States should seek to prioritize
            understanding the potential opportunities of the next
            generation of the internet;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (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</DELETED>
            <DELETED>    (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.</DELETED>

    <DELETED>SEC. 502. STRATEGIC HUB FOR INNOVATION AND FINANCIAL
                  TECHNOLOGY.</DELETED>

    <DELETED>    Section 4 of the Securities Exchange Act of 1934 (15
    U.S.C. 78d) is amended by adding at the end the following:</DELETED>
    <DELETED>    ``(k) Strategic Hub for Innovation and Financial
    Technology.--</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(3) Responsibilities.--FinHub shall--</DELETED>
                    <DELETED>    ``(A) serve as a resource for the
                    Commission on emerging financial technology
                    advancements;</DELETED>
                    <DELETED>    ``(B) engage with market participants
                    working on emerging financial technologies;
                    and</DELETED>
                    <DELETED>    ``(C) facilitate communication between the
                    Commission and businesses working in emerging financial
                    technology fields with information on the Commission,
                    its rules, and regulations.</DELETED>
            <DELETED>    ``(4) Report to the commission.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Confidentiality.--Each report
                    submitted under this paragraph shall not contain
                    confidential information.''.</DELETED>

    <DELETED>SEC. 503. CODIFICATION OF LABCFTC.</DELETED>

    <DELETED>    (a) In General.--Section 18 of the Commodity Exchange Act
    (7 U.S.C. 22) is amended by adding at the end the following:</DELETED>
    <DELETED>    ``(c) LabCFTC.--</DELETED>
            <DELETED>    ``(1) Establishment.--There is established in the
            Commission LabCFTC.</DELETED>
            <DELETED>    ``(2) Purpose.--The purposes of LabCFTC are to--
            </DELETED>
                    <DELETED>    ``(A) promote responsible financial
                    technology innovation and fair competition for the
                    benefit of the American public;</DELETED>
                    <DELETED>    ``(B) serve as an information platform to
                    inform the Commission about new financial technology
                    innovation; and</DELETED>
                    <DELETED>    ``(C) provide outreach to financial
                    technology innovators to discuss their innovations and
                    the regulatory framework established by this Act and
                    the regulations promulgated thereunder.</DELETED>
            <DELETED>    ``(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.</DELETED>
            <DELETED>    ``(4) Duties.--LabCFTC shall--</DELETED>
                    <DELETED>    ``(A) advise the Commission with respect
                    to rulemakings or other agency or staff action
                    regarding financial technology;</DELETED>
                    <DELETED>    ``(B) provide internal education and
                    training to the Commission regarding financial
                    technology;</DELETED>
                    <DELETED>    ``(C) advise the Commission regarding
                    financial technology that would bolster the
                    Commission's oversight functions;</DELETED>
                    <DELETED>    ``(D) engage with academia, students, and
                    professionals on financial technology issues, ideas,
                    and technology relevant to activities under this
                    Act;</DELETED>
                    <DELETED>    ``(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</DELETED>
                    <DELETED>    ``(F) encourage persons working in
                    emerging technology fields to engage with the
                    Commission and obtain feedback from the Commission on
                    potential regulatory issues.</DELETED>
            <DELETED>    ``(5) Report to congress.--</DELETED>
                    <DELETED>    ``(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.</DELETED>
                    <DELETED>    ``(B) Contents.--Each report required
                    under paragraph (1) shall include--</DELETED>
                            <DELETED>    ``(i) the total number of persons
                            that met with LabCFTC;</DELETED>
                            <DELETED>    ``(ii) a summary of general issues
                            discussed during meetings with the
                            person;</DELETED>
                            <DELETED>    ``(iii) information on steps
                            LabCFTC has taken to improve Commission
                            services, including responsiveness to the
                            concerns of persons;</DELETED>
                            <DELETED>    ``(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</DELETED>
                            <DELETED>    ``(v) any other information
                            determined appropriate by the Director of
                            LabCFTC.</DELETED>
                    <DELETED>    ``(C) Confidentiality.--A report under
                    paragraph (A) shall abide by the confidentiality
                    requirements in section 8.</DELETED>
            <DELETED>    ``(6) Records and engagement.--The Commission
            shall--</DELETED>
                    <DELETED>    ``(A) maintain systems of records to track
                    engagements with the public through LabCFTC;</DELETED>
                    <DELETED>    ``(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</DELETED>
                    <DELETED>    ``(C) take reasonable steps to protect any
                    confidential or proprietary information received
                    through LabCFTC engagement.''.</DELETED>
    <DELETED>    (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act
    (7 U.S.C. 2(a)(6)(A)) is amended--</DELETED>
            <DELETED>    (1) by striking ``paragraph and in'' and inserting
            ``paragraph,''; and</DELETED>
            <DELETED>    (2) by inserting ``and section 18(c)(3),'' before
            ``the executive''.</DELETED>
    <DELETED>    (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.</DELETED>

    <DELETED>SEC. 504. STUDY ON DECENTRALIZED FINANCE.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) the nature, size, role, and use of
            decentralized finance blockchain applications;</DELETED>
            <DELETED>    (2) the operation of blockchain applications that
            comprise decentralized finance;</DELETED>
            <DELETED>    (3) the interoperability of blockchain
            applications and other blockchain systems;</DELETED>
            <DELETED>    (4) the interoperability of blockchain
            applications and software-based systems, including websites and
            wallets;</DELETED>
            <DELETED>    (5) the decentralized governance systems through
            which blockchain applications may be developed, published,
            constituted, administered, maintained, or otherwise
            distributed, including--</DELETED>
                    <DELETED>    (A) whether the systems enhance or detract
                    from--</DELETED>
                            <DELETED>    (i) the decentralization of the
                            decentralized finance; and</DELETED>
                            <DELETED>    (ii) the inherent benefits and
                            risks of the decentralized governance system;
                            and</DELETED>
                    <DELETED>    (B) any procedures, requirements, or best
                    practices that would mitigate the risks identified in
                    subparagraph (A)(ii);</DELETED>
            <DELETED>    (6) the benefits of decentralized finance,
            including--</DELETED>
                    <DELETED>    (A) operational resilience and
                    availability of blockchain systems;</DELETED>
                    <DELETED>    (B) interoperability of blockchain
                    systems;</DELETED>
                    <DELETED>    (C) market competition and
                    innovation;</DELETED>
                    <DELETED>    (D) transaction efficiency;</DELETED>
                    <DELETED>    (E) transparency and traceability of
                    transactions; and</DELETED>
                    <DELETED>    (F) disintermediation;</DELETED>
            <DELETED>    (7) the risks of decentralized finance,
            including--</DELETED>
                    <DELETED>    (A) pseudonymity of users and
                    transactions;</DELETED>
                    <DELETED>    (B) disintermediation; and</DELETED>
                    <DELETED>    (C) cybersecurity
                    vulnerabilities;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (9) how the levels of illicit activity in
            decentralized finance compare with the levels of illicit
            activity in traditional financial markets;</DELETED>
            <DELETED>    (10) methods for addressing illicit activity in
            decentralized finance and traditional markets that are tailored
            to the unique attributes of each;</DELETED>
            <DELETED>    (11) how decentralized finance may increase the
            accessibility of cross-border transactions; and</DELETED>
            <DELETED>    (12) the feasibility of embedding self-executing
            compliance and risk controls into decentralized
            finance.</DELETED>
    <DELETED>    (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).</DELETED>
    <DELETED>    (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).</DELETED>
    <DELETED>    (d) GAO Study.--The Comptroller General of the United
    States shall--</DELETED>
            <DELETED>    (1) carry out a study on decentralized finance
            that analyzes the information described under paragraphs (1)
            through (12) of subsection (a); and</DELETED>
            <DELETED>    (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).</DELETED>
    <DELETED>    (e) Definitions.--In this section:</DELETED>
            <DELETED>    (1) Decentralized finance.--</DELETED>
                    <DELETED>    (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.</DELETED>
                    <DELETED>    (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.</DELETED>
            <DELETED>    (2) Relevant congressional committees.--The term
            ``relevant congressional committees'' means--</DELETED>
                    <DELETED>    (A) the Committees on Financial Services
                    and Agriculture of the House of Representatives;
                    and</DELETED>
                    <DELETED>    (B) the Committees on Banking, Housing,
                    and Urban Affairs and Agriculture, Nutrition, and
                    Forestry of the Senate.</DELETED>

    <DELETED>SEC. 505. STUDY ON NON-FUNGIBLE TOKENS.</DELETED>

    <DELETED>    (a) In General.--The Comptroller General of the United
    States shall carry out a study of non-fungible tokens that analyzes--
    </DELETED>
            <DELETED>    (1) the nature, size, role, purpose, and use of
            non-fungible tokens;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (3) how non-fungible tokens are minted by issuers
            and subsequently administered to purchasers;</DELETED>
            <DELETED>    (4) how non-fungible tokens are stored after being
            purchased by a consumer;</DELETED>
            <DELETED>    (5) the interoperability of non-fungible tokens
            between different blockchain systems;</DELETED>
            <DELETED>    (6) the scalability of different non-fungible
            tokens marketplaces;</DELETED>
            <DELETED>    (7) the benefits of non-fungible tokens, including
            verifiable digital ownership;</DELETED>
            <DELETED>    (8) the risks of non-fungible tokens, including--
            </DELETED>
                    <DELETED>    (A) intellectual property
                    rights;</DELETED>
                    <DELETED>    (B) cybersecurity risks; and</DELETED>
                    <DELETED>    (C) market risks;</DELETED>
            <DELETED>    (9) whether and how non-fungible tokens have
            integrated with traditional marketplaces, including those for
            music, real estate, gaming, events, and travel;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (11) any potential risks to traditional markets
            from such integration; and</DELETED>
            <DELETED>    (12) the levels and types of illicit activity in
            non-fungible tokens markets.</DELETED>
    <DELETED>    (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).</DELETED>

    <DELETED>SEC. 506. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST
                  DIGITAL COMMODITY HOLDERS.</DELETED>

    <DELETED>    (a) In General.--The Commodity Futures Trading Commission
    with the Securities and Exchange Commission shall jointly conduct a
    study to identify--</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (4) the efficacy of current financial literacy
            efforts with a focus on rural communities and communities with
            majority minority populations;</DELETED>
            <DELETED>    (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;</DELETED>
            <DELETED>    (6) the most effective public-private partnerships
            in providing financial literacy regarding digital commodities
            to consumers;</DELETED>
            <DELETED>    (7) the most relevant metrics to measure
            successful improvement of the financial literacy of an
            individual after engaging with financial literacy efforts;
            and</DELETED>
            <DELETED>    (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.</DELETED>
    <DELETED>    (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.</DELETED>

    <DELETED>SEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE
                  IMPROVEMENTS.</DELETED>

    <DELETED>    (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.</DELETED>
    <DELETED>    (b) Report.--</DELETED>
            <DELETED>    (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).</DELETED>
            <DELETED>    (2) Relevant congressional committees defined.--In
            this section, the term ``relevant congressional committees''
            means--</DELETED>
                    <DELETED>    (A) the Committees on Financial Services
                    and on Agriculture of the House of Representatives;
                    and</DELETED>
                    <DELETED>    (B) the Committees on Banking, Housing,
                    and Urban Affairs and on Agriculture, Nutrition, and
                    Forestry of the Senate.</DELETED>

    <DELETED>SEC. 508. STUDY ON BLOCKCHAIN IN PAYMENTS.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) fraud in payments;</DELETED>
            <DELETED>    (2) transaction costs and transaction
            times;</DELETED>
            <DELETED>    (3) automated payments; and</DELETED>
            <DELETED>    (4) efficiency in commercial
            transactions.</DELETED>
    <DELETED>    (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).</DELETED>
    <DELETED>    (c) Rule of Construction.--Nothing in this section shall
    be construed to mandate the use of blockchain technology by any public
    or private entity.</DELETED>

    <DELETED>SEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.</DELETED>

    <DELETED>    (a) In General.--One year after the date of the enactment
    of this Act, the Secretary of the Treasury, in consultation with the
    Securities and Exchange Commission and the Commodity Futures Trading
    Commission, shall conduct a comprehensive review of how Foreign
    Terrorist Organizations and Transnational Criminal Syndicates utilize
    digital assets in connection with illicit activities.</DELETED>
    <DELETED>    (b) Report.--Not later than 180 days after completing the
    review under subsection (a), the Secretary of the Treasury shall 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 Secretary, including--</DELETED>
            <DELETED>    (1) an assessment of how Foreign Terrorist
            Organizations and Transnational Criminal Syndicates utilize
            digital assets in connection with illicit activities;
            and</DELETED>
            <DELETED>    (2) recommendations to assist the Securities and
            Exchange Commission and the Commodity Futures Trading
            Commission in strengthening compliance and enforcement of
            digital assets-related entities registered with their
            respective agencies.</DELETED>

    <DELETED>SEC. 510. GAO STUDY ON CERTAIN CENTRALIZED INTERMEDIARIES THAT
                  ARE PRIMARILY LOCATED IN FOREIGN JURISDICTIONS.</DELETED>

    <DELETED>    (a) In General.--The Comptroller General of the United
    States, in consultation with the Secretary of the Treasury, shall
    conduct a study to--</DELETED>
            <DELETED>    (1) 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</DELETED>
            <DELETED>    (2) provide any regulatory or legislative
            recommendations to address these risks under paragraph
            (1).</DELETED>
    <DELETED>    (b) 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 subsection (a).</DELETED>

    <DELETED>SEC. 511. STUDIES ON FOREIGN ADVERSARY
                  PARTICIPATION.</DELETED>

    <DELETED>    (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--</DELETED>
            <DELETED>    (1) identifies any digital commodity registrants
            which are owned by governments of foreign
            adversaries;</DELETED>
            <DELETED>    (2) determines whether any governments of foreign
            adversaries are collecting trading data about United States
            persons in the digital commodity markets; and</DELETED>
            <DELETED>    (3) evaluates whether any proprietary intellectual
            property of digital commodity registrants is being misused or
            stolen by any governments of foreign adversaries.</DELETED>
    <DELETED>    (b) GAO Study and Report.--</DELETED>
            <DELETED>    (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--</DELETED>
                    <DELETED>    (A) identifies any digital commodity
                    registrants which are owned by governments of foreign
                    adversaries;</DELETED>
                    <DELETED>    (B) determines whether any governments of
                    foreign adversaries are collecting trading data about
                    United States persons in the digital commodity markets;
                    and</DELETED>
                    <DELETED>    (C) evaluates whether any proprietary
                    intellectual property of digital commodity registrants
                    is being misused or stolen by any governments of
                    foreign adversaries.</DELETED>
    <DELETED>    (c) Definitions.--In this section:</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (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.</DELETED>
            <DELETED>    (3) Relevant congressional committees.--The term
            ``relevant congressional committees'' means--</DELETED>
                    <DELETED>    (A) the Committees on Financial Services
                    and Agriculture of the House of Representatives;
                    and</DELETED>
                    <DELETED>    (B) the Committees on Banking, Housing,
                    and Urban Affairs and Agriculture, Nutrition, and
                    Forestry of the Senate.</DELETED>

    <DELETED>SEC. 512. CONFORMING AMENDMENTS.</DELETED>

    <DELETED>    The GENIUS Act is amended--</DELETED>
            <DELETED>    (1) in section 2, by amending paragraph (7) to
            read as follows:</DELETED>
            <DELETED>    ``(7) Digital asset service provider.--The term
            `digital asset service provider' means any entity registered or
            required to be registered with the Securities and Exchange
            Commission or the Commodity Futures Trading
            Commission.'';</DELETED>
            <DELETED>    (2) in section 4(a)--</DELETED>
                    <DELETED>    (A) by amending paragraph (3) to read as
                    follows:</DELETED>
            <DELETED>    ``(3) Monthly certification; examination of
            reports by registered public accounting firm.--</DELETED>
                    <DELETED>    ``(A) In general.--A permitted payment
                    stablecoin issuer shall, each month, have the
                    information disclosed in the previous month-end report
                    required under paragraph (1)(C) examined by a
                    registered public accounting firm and such examination
                    shall be performed in accordance with standards for
                    attestation engagements issued or adopted by the
                    primary Federal payment stablecoin regulator or, in the
                    case of a State qualified payment stablecoin issuer,
                    the State payment stablecoin regulator.</DELETED>
                    <DELETED>    ``(B) Certification.--Each month, the
                    Chief Executive Officer and Chief Financial Officer of
                    a permitted payment stablecoin issuer shall submit to,
                    as applicable, the primary Federal payment stablecoin
                    regulator or, in the case of a State qualified payment
                    stablecoin issuer, the State payment stablecoin
                    regulator, a certification that, based on such
                    officers' knowledge, the previous monthly report
                    required under paragraph (1)(C)--</DELETED>
                            <DELETED>    ``(i) does not contain any untrue
                            statement of material fact or omit to state a
                            material fact necessary in order to make the
                            statements made, in light of the circumstances
                            under which such statements were made, not
                            misleading; and</DELETED>
                            <DELETED>    ``(ii) fairly presented in all
                            material respects the information required
                            under paragraph (1)(C) for the period presented
                            in such report.</DELETED>
                    <DELETED>    ``(C) Criminal penalty.--Any person who
                    submits a certification required under subparagraph (B)
                    knowing that such certification is false shall be
                    subject to the same criminal penalties as those set
                    forth under section 1350(c) of title 18, United States
                    Code.</DELETED>
                    <DELETED>    ``(D) Internal controls over permitted
                    payment stablecoin issuer's requirements.--</DELETED>
                            <DELETED>    ``(i) In general.--Management of a
                            permitted payment stablecoin issuer shall
                            establish and maintain an adequate internal
                            control structure and procedures for the
                            requirements under this paragraph and
                            paragraphs (1) and (2) in accordance with a
                            framework determined acceptable by the primary
                            Federal payment stablecoin regulator or, in the
                            case of a State qualified payment stablecoin
                            issuer, the State payment stablecoin
                            regulator.</DELETED>
                            <DELETED>    ``(ii) Attestation report.--A
                            permitted payment stablecoin issuer shall
                            obtain an annual attestation report by an
                            independent registered public accounting firm
                            attesting to management's assertions concerning
                            the effectiveness of the internal control
                            structure and procedures for compliance with
                            the requirements described in this paragraph
                            and paragraphs (1) and (2). Such attestation
                            shall be made in accordance with standards for
                            attestation engagements issued or adopted by
                            the primary Federal payment stablecoin
                            regulator or, in the case of a State qualified
                            payment stablecoin issuer, the State payment
                            stablecoin regulator.''; and</DELETED>
                    <DELETED>    (B) by amending paragraph (12) to read as
                    follows:</DELETED>
            <DELETED>    ``(12) Non-financial companies.--</DELETED>
                    <DELETED>    ``(A) Prohibition on non-financial company
                    ownership.--It shall be unlawful for a company that
                    derives a majority of its revenues from activities that
                    are not financial activities to retain or acquire
                    control of a nonbank entity that is--</DELETED>
                            <DELETED>    ``(i) a Federal qualified payment
                            stablecoin issuer; or</DELETED>
                            <DELETED>    ``(ii) a State qualified payment
                            stablecoin issuer.</DELETED>
                    <DELETED>    ``(B) Financial activities defined.--
                    </DELETED>
                            <DELETED>    ``(i) In general.--In this
                            paragraph, the term `financial activities'
                            means--</DELETED>
                                    <DELETED>    ``(I) a financial
                                    activity, within the meaning of section
                                    4(k) of the Bank Holding Company Act of
                                    1956 (12 U.S.C. 1843(k));</DELETED>
                                    <DELETED>    ``(II) issuing, redeeming,
                                    providing custodial or safekeeping
                                    services for, buying, selling, making a
                                    market in, or managing a reserve for
                                    payment stablecoins;</DELETED>
                                    <DELETED>    ``(III) providing
                                    electronic wallet services for payment
                                    stablecoins; or</DELETED>
                                    <DELETED>    ``(IV) an activity
                                    determined by the Board to be a
                                    financial activity pursuant to clause
                                    (ii).</DELETED>
                            <DELETED>    ``(ii) Establishing additional
                            financial activities.--Not later than 180 days
                            after the date of enactment of the CLARITY Act
                            of 2025, the Board, in consultation with the
                            Secretary of the Treasury and the Comptroller,
                            shall issue rules, consistent with the purposes
                            of this Act, to establish--</DELETED>
                                    <DELETED>    ``(I) a list of additional
                                    activities that are financial
                                    activities for purposes of clause (i),
                                    including applicable digital asset
                                    activities that are financial
                                    activities; and</DELETED>
                                    <DELETED>    ``(II) a streamlined
                                    procedure for a nonbank entity to
                                    submit an activity to the Board for
                                    purposes of the Board determining
                                    whether such activity should be added
                                    to the list of additional activities
                                    that are financial activities for
                                    purposes of clause (i).'';
                                    and</DELETED>
            <DELETED>    (3) by adding at the end the following:</DELETED>

    <DELETED>``SEC. 21. COMMODITY-BACKED PAYMENT STABLECOINS.</DELETED>

    <DELETED>    ``(a) Rule of Construction.--Nothing in this Act shall be
    construed to prohibit or limit a commodity-backed payment stablecoin
    issuer from issuing a commodity-backed payment stablecoin in accordance
    with regulations established by a State commodity-backed payment
    stablecoin regulator.</DELETED>
    <DELETED>    ``(b) Preservation of Federal Authority.--Nothing in this
    section shall be construed to alter or limit the jurisdiction of the
    Commodity Futures Trading Commission over any matter within the
    Commission's authority under applicable law.</DELETED>
    <DELETED>    ``(c) Definitions.--For purposes of this
    section:</DELETED>
            <DELETED>    ``(1) Commodity-backed payment stablecoin.--The
            term `commodity-backed payment stablecoin' means a digital
            asset--</DELETED>
                    <DELETED>    ``(A) that is, or is designed to be, used
                    as a means of payment or settlement;</DELETED>
                    <DELETED>    ``(B) that is denominated in a highly
                    liquid, publicly traded physical commodity, such as
                    gold;</DELETED>
                    <DELETED>    ``(C) the issuer of which is obligated
                    to--</DELETED>
                            <DELETED>    ``(i) convert, redeem, or
                            repurchase for a fixed amount of the
                            denominated highly liquid, publicly traded
                            physical commodity; and</DELETED>
                            <DELETED>    ``(ii) custody or cause to be
                            custodied, for the benefit of the holders of
                            the payment stablecoin, an amount of the
                            physical commodity equal to or greater than the
                            total amount of outstanding payment
                            stablecoins, for the purpose of converting,
                            redeeming, or repurchasing the digital asset;
                            and</DELETED>
                    <DELETED>    ``(D) that is not--</DELETED>
                            <DELETED>    ``(i) a security issued by--
                            </DELETED>
                                    <DELETED>    ``(I) an investment
                                    company registered under section 8(a)
                                    of the Investment Company Act of 1940
                                    (15 U.S.C. 80a-8(a)); or</DELETED>
                                    <DELETED>    ``(II) 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));</DELETED>
                            <DELETED>    ``(ii) 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;</DELETED>
                            <DELETED>    ``(iii) 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; or</DELETED>
                            <DELETED>    ``(iv) an interest or
                            participation in a commodity pool (as defined
                            in section 1a(10) of the Commodity Exchange Act
                            (7 U.S.C. 1a)).</DELETED>
            <DELETED>    ``(2) Commodity-backed payment stablecoin
            issuer.--The term `commodity-backed payment stablecoin issuer'
            means--</DELETED>
                    <DELETED>    ``(A) an entity that issues a commodity-
                    backed payment stablecoin; and</DELETED>
                    <DELETED>    ``(B) an entity that is approved to issue
                    such commodity-backed payment stablecoins by a State
                    commodity-backed payment stablecoin
                    regulator.</DELETED>
            <DELETED>    ``(3) Physical commodity.--The term `physical
            commodity' means any exempt commodity (as defined in section
            1a(21) of the Commodity Exchange Act (7 U.S.C. 1a)) which can
            be physically delivered.</DELETED>
            <DELETED>    ``(4) State commodity-backed payment stablecoin
            regulator.--The term `State commodity-backed payment stablecoin
            regulator' means a State agency that has primary regulatory and
            supervisory authority over entities that issue commodity-backed
            payment stablecoins in such State.</DELETED>

    <DELETED>``SEC. 22. PROTECTION OF SELF-CUSTODY.</DELETED>

    <DELETED>    ``(a) In General.--A United States individual shall retain
    the right to--</DELETED>
            <DELETED>    ``(1) maintain a hardware wallet or software
            wallet for the purpose of facilitating the individual's own
            lawful custody of digital assets; and</DELETED>
            <DELETED>    ``(2) 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--</DELETED>
                    <DELETED>    ``(A) such other individual or entity is
                    not a financial institution (as defined in section 5312
                    of title 31, United States Code); and</DELETED>
                    <DELETED>    ``(B) the transactions do not involve any
                    property or interests in property that are blocked
                    pursuant to, or are otherwise prohibited by, United
                    States sanctions.</DELETED>
    <DELETED>    ``(b) Application.--This section--</DELETED>
            <DELETED>    ``(1) applies solely to personal use by
            individuals; and</DELETED>
            <DELETED>    ``(2) does not apply to individuals acting in a
            custodial or fiduciary capacity for others.</DELETED>
    <DELETED>    ``(c) Rule of Construction.--Nothing in this section shall
    be construed to limit the authority of the Secretary of the Treasury,
    the Securities and Exchange Commission, the Commodity Futures Trading
    Commission, or the primary Federal payment stablecoin regulators to
    carry out any enforcement action or special measure authorized under
    applicable law, including--</DELETED>
            <DELETED>    ``(1) 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</DELETED>
            <DELETED>    ``(2) any other law relating to illicit finance,
            money laundering, terrorism financing, or United States
            sanctions.''.</DELETED>

         <DELETED>TITLE VI--ANTI-CBDC SURVEILLANCE STATE ACT</DELETED>

    <DELETED>SEC. 601. SHORT TITLE.</DELETED>

    <DELETED>    This title may be cited as the ``Anti-CBDC Surveillance
    State Act''.</DELETED>

    <DELETED>SEC. 602. PROHIBITION ON FEDERAL RESERVE BANKS RELATING TO
                  CERTAIN PRODUCTS OR SERVICES FOR INDIVIDUALS AND
                  PROHIBITION ON DIRECTLY ISSUING A CENTRAL BANK DIGITAL
                  CURRENCY.</DELETED>

    <DELETED>    Section 16 of the Federal Reserve Act (12 U.S.C. 411 et
    seq.) is amended by adding at the end the following new
    paragraph:</DELETED>
    <DELETED>    ``(18)(A) A Federal reserve bank may not--</DELETED>
    <DELETED>    ``(i) offer financial products or services directly to an
    individual;</DELETED>
    <DELETED>    ``(ii) maintain an account on behalf of an individual;
    or</DELETED>
    <DELETED>    ``(iii) issue a central bank digital currency, or any
    digital asset that is substantially similar under any other name or
    label.</DELETED>
    <DELETED>    ``(B) In this paragraph, the term `central bank digital
    currency' has the meaning given that term under section
    10(11)(D).''.</DELETED>

    <DELETED>SEC. 603. PROHIBITION ON FEDERAL RESERVE BANKS INDIRECTLY
                  ISSUING A CENTRAL BANK DIGITAL CURRENCY.</DELETED>

    <DELETED>    Section 16 of the Federal Reserve Act (12 U.S.C. 411 et
    seq.), as amended by section 2, is further amended by adding at the end
    the following paragraph:</DELETED>
    <DELETED>    ``(19)(A) A Federal reserve bank may not offer a central
    bank digital currency, or any digital asset that is substantially
    similar under any other name or label, indirectly to an individual
    through a financial institution or other intermediary.</DELETED>
    <DELETED>    ``(B) In this paragraph, the term `central bank digital
    currency' has the meaning given that term under section
    10(11)(D).''.</DELETED>

    <DELETED>SEC. 604. PROHIBITION WITH RESPECT TO CENTRAL BANK DIGITAL
                  CURRENCY.</DELETED>

    <DELETED>    Section 10 of the Federal Reserve Act (12 U.S.C. 241 et
    seq.) is amended by inserting before paragraph (12) the
    following:</DELETED>
            <DELETED>    ``(11) Prohibition with respect to central bank
            digital currency.--</DELETED>
                    <DELETED>    ``(A) In general.--The Board of Governors
                    of the Federal Reserve System may not test, study,
                    develop, create, or implement a central bank digital
                    currency, or any digital asset that is substantially
                    similar under any other name or label.</DELETED>
                    <DELETED>    ``(B) Monetary policy.--The Board of
                    Governors of the Federal Reserve System and the Federal
                    Open Market Committee may not use a central bank
                    digital currency to implement monetary policy, or any
                    digital asset that is substantially similar under any
                    other name or label.</DELETED>
                    <DELETED>    ``(C) Exception.--Subparagraph (A) and
                    sections 16(18)(A)(iii) and 16(19)(A) may not be
                    construed to prohibit any dollar-denominated currency
                    that is open, permissionless, and private, and fully
                    preserves the privacy protections of United States
                    coins and physical currency.</DELETED>
                    <DELETED>    ``(D) Central bank digital currency
                    defined.--In this paragraph, the term `central bank
                    digital currency' means a form of digital money or
                    monetary value that is--</DELETED>
                            <DELETED>    ``(i) denominated in the national
                            unit of account;</DELETED>
                            <DELETED>    ``(ii) a direct liability of the
                            Federal Reserve System; and</DELETED>
                            <DELETED>    ``(iii) widely available to the
                            general public.''.</DELETED>

    <DELETED>SEC. 605. SENSE OF CONGRESS.</DELETED>

    <DELETED>    It is the sense of Congress that the Board of Governors of
    the Federal Reserve System currently does not have the authority to
    issue a central bank digital currency, or any digital asset that is
    substantially similar under any other name or label, and will not have
    such authority unless Congress grants it under Congress's Article 1
    Section 8 powers.</DELETED>

    SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

    Sec. 1. Short title; table of contents.
    Sec. 2. Definitions.

                   TITLE I--RESPONSIBLE SECURITIES INNOVATION

    Sec. 101. Short title.
    Sec. 102. Disclosure requirements for certain transactions involving
                                ancillary assets.
    Sec. 103. Exemption and rulemaking for certain transactions involving
                                ancillary assets.
    Sec. 104. Special disposition restrictions by related persons.
    Sec. 105. Characteristics of network tokens.
    Sec. 106. Exemptive authority.
    Sec. 107. Modernization of recordkeeping requirements.
    Sec. 108. Modernization of securities regulations for digital asset
                                activities.
    Sec. 109. Insider trading with respect to ancillary asset transactions.
    Sec. 110. Securities Investor Protection Corporation applicability.
    Sec. 111. Investor and consumer protection enforcement.

                  TITLE II--PROTECTING AGAINST ILLICIT FINANCE

    Sec. 201. Treatment under the Bank Secrecy Act and sanctions laws.
    Sec. 202. Digital asset examination standards.
    Sec. 203. Preventing Illicit Finance Through Partnership Act.
    Sec. 204. Financial Technology Protection Act.
    Sec. 205. Digital asset kiosks.
    Sec. 206. Study on illicit use of digital assets.

           TITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE

    Sec. 301. Rulemaking on application of existing securities intermediary
                                requirements and existing Bank Secrecy Act
                                requirements to non-decentralized finance
                                trading protocols.
    Sec. 302. Illicit finance obligations for distributed ledger messaging
                                systems.
    Sec. 303. Special measure relating to certain transmittals of funds.
    Sec. 304. Offshore stablecoin report.
    Sec. 305. Temporary hold for certain digital asset transactions.
    Sec. 306. Voluntary cybersecurity program for decentralized finance
                                trading protocols.
    Sec. 307. Amendments to monetary instrument definition.
    Sec. 308. Risk management standards for digital asset intermediaries.
    Sec. 309. Study on digital asset mixers and tumblers.
    Sec. 310. GAO study on intermediaries in foreign jurisdictions.
    Sec. 311. Studies on foreign adversary activities.
    Sec. 312. Treasury study on cybersecurity standards.
    Sec. 313. Studies on financial stability risks of decentralized finance
                                trading and credit in digital commodity
                                markets.

                    TITLE IV--RESPONSIBLE BANKING INNOVATION

    Sec. 401. Permissibility of digital asset activities.
    Sec. 402. Joint rules for portfolio margining determinations.
    Sec. 403. Capital requirements to address netting agreements.
    Sec. 404. Prohibiting interest and yield on payment stablecoins.
    Sec. 405. Expanded securities portfolio margin accounts under the
                                Securities Investor Protection Act of 1970.

                   TITLE V--RESPONSIBLE REGULATORY INNOVATION

    Sec. 501. CFTC-SEC Micro-Innovation Sandbox.
    Sec. 502. International cooperation.
    Sec. 503. Automated regulatory compliance study.
    Sec. 504. Report on legislative recommendations.
    Sec. 505. Tokenization of securities.
    Sec. 506. Voluntary adoption of National Institute of Standards and
                                Technology post-quantum cryptography
                                standards.
    Sec. 507. International coordination to combat digital asset illicit
                                finance.
    Sec. 508. Annual report on foreign digital asset trading volume,
                                compliance with United States standards and
                                remediation actions.
    Sec. 509. AI innovation labs.

        TITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION

    Sec. 601. Protecting software developers.
    Sec. 602. Safe harbor for nonfungible tokens.
    Sec. 603. Study on nonfungible tokens.
    Sec. 604. Blockchain Regulatory Certainty Act.
    Sec. 605. Keep Your Coins Act.

                    TITLE VII--PROTECTING CUSTOMER PROPERTY

    Sec. 701. Customer property protections for ancillary assets and
                                digital commodities in bankruptcy.
    Sec. 702. Insolvency safe harbor.

                        TITLE VIII--CUSTOMER PROTECTION

    Sec. 801. Educational materials.
    Sec. 802. Savings clauses.
    Sec. 803. Study on expanding financial literacy.
    Sec. 804. Consultation with SIPC regarding mandatory broker-dealer
                                disclosures to investors concerning the
                                status of payment stablecoins and digital
                                commodities.

                            TITLE IX--OTHER MATTERS

    Sec. 901. Joint Advisory Committee on Digital Assets.
    Sec. 902. Memorandum of understanding.
    Sec. 903. FinCEN appropriations.
    Sec. 904. Build Now Act.
    Sec. 905. Rulemakings.
    Sec. 906. Effective date.

    SEC. 2. DEFINITIONS.

        In this Act:
                (1) Ancillary asset; ancillary asset originator; network
            token.--The terms ``ancillary asset'', ``ancillary asset
            originator'', and ``network token'' have the meanings given
            those terms in section 4B(a) of the Securities Act of 1933, as
            added by this Act.
                (2) 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.
                (3) Commission.--Except where otherwise expressly provided,
            the term ``Commission'' means the Securities and Exchange
            Commission.
                (4) Coordinated control.--With respect to any distributed
            ledger system and a related ancillary asset, the term
            ``coordinated control'' has the meaning given the term by the
            Commission pursuant to rules adopted under section 104(b).
                (5) Decentralized governance system.--
                        (A) In general.--The term ``decentralized
                    governance system'' means, with respect to a
                    distributed ledger system, any transparent, rules-based
                    system permitting persons to form consensus or reach
                    agreement in the development, provision, publication,
                    maintenance, or administration of the distributed
                    ledger system, in which participation is not limited
                    to, or under the 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 those 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, including a decentralized
                    unincorporated nonprofit association or other entity
                    created pursuant to State law, 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.
                        (D) Rule of construction.--For purposes of this
                    Act, and the amendments made by this Act, a
                    decentralized governance system shall not be deemed to
                    be a person or a group of persons acting under common
                    control.
                (6) Digital asset; digital asset service provider.--The
            terms ``digital asset'' and ``digital asset service provider''
            have the meanings given those terms in section 2 of the GENIUS
            Act (12 U.S.C. 5901).
                (7) Digital asset intermediary.--The term ``digital asset
            intermediary'' means a person that is engaged in digital asset
            activities and required by law to register with the Commodity
            Futures Trading Commission or with the Commission under the
            Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
                (8) Digital commodity.--The term ``digital commodity'' has
            the meaning given the term in section 1a of the Commodity
            Exchange Act (7 U.S.C. 1a), as added by this Act.
                (9) Distributed ledger.--The term ``distributed ledger''
            means technology--
                        (A) through which data is shared across a network
                    that creates a public digital ledger of verified
                    transactions or information among network participants;
                    and
                        (B) in which cryptography is used to link the data
                    described in subparagraph (A) to--
                                (i) maintain the integrity of the digital
                            ledger described in that subparagraph; and
                                (ii) execute other functions.
                (10) Distributed ledger application.--The term
            ``distributed ledger application'' means executable software
            that is deployed to and maintained on a distributed ledger and
            composed of source code that is publicly available, including a
            smart contract or any network of smart contracts, or other
            similar technology.
                (11) Distributed ledger protocol.--The term ``distributed
            ledger protocol'' means publicly available source code of a
            distributed ledger that is executed by the network participants
            of a distributed ledger to facilitate its functioning, or other
            similar technology.
                (12) Distributed ledger system.--The term ``distributed
            ledger system'' means a distributed ledger (together with its
            distributed ledger protocol), a distributed ledger application,
            or a network of distributed ledger applications.
                (13) Related person.--The term ``related person'', with
            respect to an ancillary asset originator or an ancillary
            asset--
                        (A) means--
                                (i) any person that is, or within the
                            preceding 36-month period was--
                                        (I) a founder or person serving in
                                    a similar capacity with respect to the
                                    ancillary asset originator; and
                                        (II) a beneficial owner of not less
                                    than 4 percent of the total amount of
                                    outstanding units of an ancillary asset
                                    associated with the ancillary asset
                                    originator;
                                (ii) any person that is, or in the
                            preceding 12-month period was, an executive
                            officer, director, trustee, general partner,
                            owner of more than 10 percent of any class of
                            equity shares of the ancillary asset
                            originator, or person serving in a similar
                            capacity with respect to the ancillary asset
                            originator;
                                (iii) any person, or group of persons under
                            common control, that beneficially owns, or in
                            the preceding 6-month period owned, 10 percent
                            or more of the total amount of outstanding
                            units of the ancillary asset; and
                                (iv) any person, or group of persons under
                            common control, that beneficially owns, or in
                            the preceding 6-month period owned, covered
                            tokens (as that term is defined in section
                            104(a)) that equal not less than 2 percent of
                            the total amount of outstanding units of the
                            ancillary asset; and
                        (B) does not include a decentralized governance
                    system.
                (14) Securities laws.--The term ``securities laws'' has the
            meaning given the term in section 3(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78c(a)).
                (15) Smart contract.--The term ``smart contract'' means a
            self-executing contract or program that--
                        (A) is stored on a distributed ledger system; and
                        (B) automatically executes or enforces digital
                    asset transactions upon the occurrence of explicit,
                    pre-determined conditions encoded in the contract or
                    program, without intervention, other than to provide
                    data, by any entity or natural person.

                   TITLE I--RESPONSIBLE SECURITIES INNOVATION

    SEC. 101. SHORT TITLE.

        This title may be cited as the ``Lummis-Gillibrand Responsible
    Financial Innovation Act of 2026''.

    SEC. 102. DISCLOSURE REQUIREMENTS FOR CERTAIN TRANSACTIONS INVOLVING
                  ANCILLARY ASSETS.

        (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
    is amended by inserting after section 4A (15 U.S.C. 77d-1) the
    following:

    ``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS INVOLVING
                  ANCILLARY ASSETS.

        ``(a) Definitions.--In this section:
                ``(1) Ancillary asset.--The term `ancillary asset' means a
            network token, the value of which is dependent upon the
            entrepreneurial or managerial efforts of an ancillary asset
            originator or a related person, as those concepts are further
            specified by the Commission by regulation.
                ``(2) Ancillary asset originator.--
                        ``(A) In general.--The term `ancillary asset
                    originator' means, with respect to a particular
                    ancillary asset, a person that (whether directly or
                    through 1 or more subsidiary or controlled entities)--
                                ``(i) initially offers, sells, or
                            distributes the ancillary asset; or
                                ``(ii) during the 12-month period beginning
                            on the date on which the ancillary asset is
                            initially offered, sold, or distributed,
                            controls or causes the initial offer, sale, or
                            distribution of that ancillary asset.
                        ``(B) Joint and several liability.--For the
                    purposes of this paragraph, if the person that
                    initially offered, sold, or distributed an ancillary
                    asset (or otherwise sold, distributed, controlled, or
                    caused the initial offer, sale, or distribution of the
                    ancillary asset) did not receive the largest amount of
                    those ancillary assets distributed in the 12-month
                    period following the commencement of that offer, sale,
                    or distribution, then that person, solely for purposes
                    of subsection (c), shall be jointly and severally
                    considered to be an ancillary asset originator with
                    respect to that ancillary asset (with the person that
                    controlled such offer, sale, or distribution) along
                    with the person (including a person under direct or
                    indirect control of that person) that received the
                    largest amount of those ancillary assets in that
                    period, other than ancillary assets received--
                                ``(i) in an intermediary capacity;
                                ``(ii) solely through a gratuitous
                            distribution;
                                ``(iii) through an offer, sale, or
                            distribution of a security to the public
                            registered under section 5; or
                                ``(iv) otherwise in a broad and public
                            manner that the Commission determines, pursuant
                            to regulation, should not subject the person to
                            disclosure requirements under subsection (d).
                        ``(C) Rulemaking.--Not later than 360 days after
                    the date of enactment of this section, the Commission
                    shall, after providing notice and the opportunity for
                    comment, issue rules regarding the circumstances under
                    which persons that are jointly and severally considered
                    an ancillary asset originator pursuant to subparagraph
                    (B) are responsible for furnishing the disclosures
                    required under subsection (d) on behalf of the
                    ancillary asset originator.
                ``(3) Certification covered party.--The term `certification
            covered party' means--
                        ``(A) an ancillary asset originator;
                        ``(B) a subsidiary of the ancillary asset
                    originator;
                        ``(C) a related person of the ancillary asset
                    originator; or
                        ``(D) any entity that directly or indirectly
                    controls or is controlled by a common entity with the
                    ancillary asset originator.
                ``(4) Decentralized governance system; digital asset;
            digital asset intermediary; related person; securities laws.--
            The terms `decentralized governance system', `digital asset',
            `digital asset intermediary', `related person', and `securities
            laws' have the meanings given those terms in section 2 of the
            Digital Asset Market Clarity Act.
                ``(5) Gratuitous distribution.--
                        ``(A) In general.--The term `gratuitous
                    distribution'--
                                ``(i) means a distribution of a network
                            token, including a distribution effected by an
                            agent or other service provider engaged solely
                            in an administrative or ministerial capacity,
                            in exchange for not more than a nominal value
                            of cash, property, services, or other assets in
                            a broad, equitable, and non-discretionary
                            manner; and
                                ``(ii) includes, without limitation, the
                            mechanisms and methods of distribution
                            described in subparagraph (B).
                        ``(B) Mechanisms and methods of distribution.--The
                    mechanisms and methods of distribution described in
                    this subparagraph are the following:
                                ``(i) Self staking.--The distribution of a
                            unit of a network token, as a programmatic
                            result of validating or staking activity for a
                            distributed ledger system's consensus
                            mechanism, including the staking of a network
                            token, and the operation of a node, validator,
                            or substantially similar software for such
                            activity where the owner of the staked network
                            token and the operator of the node, validator,
                            or substantially similar software are the same
                            person or entity.
                                ``(ii) Self-custodial staking with a third
                            party.--The distribution of a unit of a network
                            token, as a programmatic result of validating
                            or staking activity for a distributed ledger
                            system's consensus mechanism, including the
                            staking of a network token, and the operation
                            of a node, validator, or substantially similar
                            software for such activity in which--
                                        ``(I) the owner of the staked
                                    network token, and operator of the
                                    node, validator, or substantially
                                    similar software for such activity are
                                    different persons or entities; and
                                        ``(II) the operator of the node,
                                    validator, or substantially similar
                                    software does not maintain custody or
                                    control of the staked network token.
                                ``(iii) Liquid staking.--The distribution
                            of network tokens, as the issuance, transfer,
                            or redemption of liquid staking tokens
                            representing a pro rata interest in staked
                            network tokens, and their associated rewards,
                            provided that such tokens are issued as
                            administrative or ministerial receipts and are
                            not providing discretionary management
                            authority.
                                ``(iv) Custodial and ancillary staking
                            services.--
                                        ``(I) In general.--Subject to the
                                    rules issued pursuant to subclause
                                    (II), the provision of custodial or
                                    ancillary staking services enabling the
                                    owner of a network token to participate
                                    in validating or staking activity for a
                                    distributed ledger system's consensus
                                    mechanism that results in the
                                    programmatic distribution of a unit of
                                    a network token, provided that such
                                    custodial or ancillary services are
                                    exclusively administrative or
                                    ministerial in nature.
                                        ``(II) Rulemaking to define the
                                    custodial and ancillary staking
                                    services.--The Commission shall issue
                                    rules defining the custodial and
                                    ancillary staking services described in
                                    subclause (I) that are exclusively
                                    administrative or ministerial in
                                    nature, consistent with what is
                                    necessary or appropriate for the public
                                    interest or for the protection of
                                    investors.
                                ``(v) Programmatic and automated
                            distributions.--The automated, programmatic,
                            protocol-defined, or rules-based distribution
                            of network tokens achieved through the
                            transparent functioning of a distributed ledger
                            system, a distributed ledger, or distributed
                            ledger applications, in which--
                                        ``(I) distributions occur pursuant
                                    to public, transparent, rules-based
                                    parameters that are publicly available
                                    and are accessible on a permissionless
                                    basis, without individualized or real-
                                    time negotiation with recipients;
                                        ``(II) recipients receive network
                                    tokens as a direct, programmatic result
                                    of objective, verifiable network
                                    participation, consumption, or
                                    contribution, including consensus
                                    participation, data availability,
                                    bandwidth, governance, or use and
                                    interaction with the protocol or
                                    application;
                                        ``(III) the number of network
                                    tokens received is proportionate to the
                                    verifiable service, usage, or
                                    contribution;
                                        ``(IV) any expected utility or
                                    value of the network tokens arises
                                    primarily from decentralized network
                                    participation and market forces, rather
                                    than the discretionary actions of any
                                    single person or affiliated group; and
                                        ``(V) no person or group has
                                    unilateral authority to alter,
                                    restrict, or direct the issuance
                                    parameters or distribution mechanisms
                                    of the distributed ledger system, and
                                    any modification occurs only through a
                                    decentralized governance system.
                                ``(vi) Technology-neutral clause.--The
                            distribution employing a mechanism, protocol,
                            or technology not specifically described in
                            clauses (i) through (v), without regard to
                            whether such mechanism, protocol, or technology
                            is in existence at the time of enactment of
                            this section, and without regard to terminology
                            or underlying technical framework, provided
                            such distribution meets the requirements
                            described in subparagraph (A)(i).
                ``(6) Investment company.--The term `investment company'
            has the meaning given the term in section 3(a) of the
            Investment Company Act of 1940 (15 U.S.C. 80a-3(a)).
                ``(7) Network token.--
                        ``(A) In general.--The term `network token' means a
                    digital commodity that is intrinsically linked to a
                    distributed ledger system and that derives, or is
                    reasonably expected to derive, its value from the use
                    of such distributed ledger system, and, pursuant to the
                    Digital Asset Market Clarity Act and the amendments
                    made by the Digital Asset Market Clarity Act, is
                    treated as a non-security solely for purposes of the
                    securities laws.
                        ``(B) Disqualifying financial rights.--The term
                    `network token' does not include any of the following:
                                ``(i) Any security, consistent with the
                            categories of disqualifying financial rights
                            described in clause (ii).
                                ``(ii) An investment contract or a
                            certificate of interest or participation in any
                            profit-sharing agreement that represents, gives
                            the holder, or is substantially economically or
                            functionally equivalent to, any of the
                            following, as the Commission shall establish by
                            rule:
                                        ``(I) A debt or equity interest, or
                                    an option on a debt or equity interest,
                                    in a person.
                                        ``(II) Liquidation rights with
                                    respect to a person.
                                        ``(III) An entitlement to, or a
                                    reasonable expectation of, an interest,
                                    dividend, or other payment, or direct
                                    or indirect transfer of value, from a
                                    person (other than a decentralized
                                    governance system).
                                        ``(IV) An express or implied
                                    financial interest in (including a
                                    limited partnership interest or
                                    interest in intellectual property of),
                                    or provided by, a person (other than a
                                    decentralized governance system).
                                ``(iii) Any interest that is, represents,
                            or is functionally equivalent to an interest in
                            an investment company or a company (as defined
                            in section 2 of the Investment Company Act of
                            1940 (15 U.S.C. 80a-2)) that would be an
                            investment company under section 3(a) of that
                            Act (15 U.S.C. 80a-3(a)) but for the exclusions
                            provided from that definition by section 3(c)
                            of that Act (15 U.S.C. 80a-3(c)).
                                ``(iv) Any interest that is, represents, or
                            is functionally equivalent to an interest in
                            any entity or person that is not an investment
                            company but holds or will hold assets other
                            than securities.
                        ``(C) Rule of construction.--A digital commodity--
                                ``(i) shall be deemed to be intrinsically
                            linked to a distributed ledger system if the
                            digital commodity is directly related to the
                            functionality or operation of the distributed
                            ledger system or to the activities or services
                            for which the distributed ledger system is
                            created or utilized; and
                                ``(ii) shall not be disqualified from being
                            deemed a network token due to the granting of
                            economic interests or voting capabilities with
                            respect to a distributed ledger system or its
                            decentralized governance system, as further
                            clarified by the Commission through the final
                            rules adopted under section 105 of the Lummis-
                            Gillibrand Responsible Financial Innovation Act
                            of 2026.
        ``(b) Treatment of Network Tokens and Transactions.--
                ``(1) In general.--The offer, sale, or distribution of an
            ancillary asset by, or caused by, an ancillary asset
            originator, including through an underwriter, shall be
            considered to be an offer, sale, or distribution of an
            investment contract involving an ancillary asset, except with
            respect to a gratuitous distribution.
                ``(2) Treatment as non-security.--Except as provided in
            this section, and subject to paragraph (3), a network token
            shall be treated as a non-security, to the extent materially
            consistent with the requirements and conditions of this
            section, for purposes of --
                        ``(A) section 2(a)(1);
                        ``(B) section 3(a) of the Securities Exchange Act
                    of 1934 (15 U.S.C. 78c(a));
                        ``(C) section 2(a) of the Investment Company Act of
                    1940 (15 U.S.C. 80a-2(a));
                        ``(D) section 202(a) of the Investment Advisers Act
                    of 1940 (15 U.S.C. 80b-2(a));
                        ``(E) section 16 of the Securities Investor
                    Protection Act of 1970 (15 U.S.C. 78lll); or
                        ``(F) any applicable requirement of State law that
                    is functionally equivalent to the provisions described
                    in subparagraphs (A) through (E), including any
                    provision of State law that directly or indirectly
                    prohibits, limits, or imposes any conditions on the
                    use, offer, sale, transfer, or disposition of a network
                    token in a manner that is--
                                ``(i) not substantially similar to
                            prohibitions, limitations, or conditions
                            imposed by that State relating to assets that
                            are commodities under the laws of that State;
                            and
                                ``(ii) inconsistent with this section.
                ``(3) Secondary market treatment.--
                        ``(A) In general.--Except as provided in this
                    section (including the limitation under subparagraph
                    (B)), and to the extent materially consistent with the
                    requirements and conditions of this section, the offer,
                    sale, or distribution of a network token by a person
                    shall be treated as not involving the offer, sale, or
                    distribution of a security under--
                                ``(i) section 2(a)(1);
                                ``(ii) the Securities Exchange Act of 1934
                            (15 U.S.C. 78a et seq.);
                                ``(iii) the Investment Company Act of 1940
                            (15 U.S.C. 80a-1 et seq.);
                                ``(iv) the Investment Advisers Act of 1940
                            (15 U.S.C. 80b-1 et seq.);
                                ``(v) the Securities Investor Protection
                            Act of 1970 (15 U.S.C. 78aaa et seq.); and
                                ``(vi) any applicable requirement of State
                            law that is functionally equivalent to the
                            provisions described in clauses (i) through
                            (v), including any provision of State law that
                            directly or indirectly prohibits, limits, or
                            imposes any conditions on the use, offer, sale,
                            transfer, or disposition of a network token in
                            a manner that is--
                                        ``(I) not substantially similar to
                                    prohibitions, limitations, or
                                    conditions imposed by that State
                                    relating to assets that are commodities
                                    under the laws of that State; and
                                        ``(II) inconsistent with this
                                    section.
                        ``(B) Limitation.--Subparagraph (A) shall not apply
                    if the applicable network token is offered, sold, or
                    distributed pursuant to the offer, sale, or
                    distribution of a security by an ancillary asset
                    originator or underwriter.
                ``(4) Treatment of gratuitous distributions.--
                        ``(A) In general.--A gratuitous distribution, by
                    itself, shall be presumed to not constitute an offer,
                    sale, or distribution of a security for the purposes
                    of--
                                ``(i) section 2(a)(1);
                                ``(ii) section 3(a) of the Securities
                            Exchange Act of 1934 (15 U.S.C. 78c(a));
                                ``(iii) section 2(a) of the Investment
                            Company Act of 1940 (15 U.S.C. 80a-2(a));
                                ``(iv) section 202(a) of the Investment
                            Advisers Act of 1940 (15 U.S.C. 80b-2(a));
                                ``(v) section 16 of the Securities Investor
                            Protection Act of 1970 (15 U.S.C. 78lll); or
                                ``(vi) any applicable requirement of State
                            law, or any provision of State law that is
                            functionally equivalent to the provisions
                            described in clauses (i) through (v), including
                            any provision of State law that directly or
                            indirectly prohibits, limits, or imposes any
                            conditions on the use, offer, sale, transfer,
                            or disposition of a network token in a manner
                            that is--
                                        ``(I) not substantially similar to
                                    prohibitions, limitations, or
                                    conditions imposed by that State
                                    relating to assets that are commodities
                                    under the laws of that State; and
                                        ``(II) inconsistent with this
                                    section.
                        ``(B) Savings clause.--Nothing in this paragraph
                    may be construed to limit, impair, or otherwise affect
                    the anti-fraud or anti-manipulation authorities of the
                    Commission, the Commodity Futures Trading Commission,
                    or a State regulator.
                ``(5) Prior certification.--
                        ``(A) Submission and default treatment.--
                                ``(i) In general.--
                                        ``(I) Presumption.--For purposes of
                                    this section, there shall be a
                                    rebuttable presumption that a network
                                    token, including a network token
                                    distributed in the manner described in
                                    paragraph (4), is an ancillary asset
                                    unless the originator of that network
                                    token, or a digital asset intermediary
                                    (as provided under subsection (c)(4)),
                                    submits to the Commission a completed
                                    written certification, supported by
                                    reasonable evidence, as defined by the
                                    Commission, sufficient to demonstrate
                                    that the network token is not an
                                    ancillary asset.
                                        ``(II) Contents.--A certification
                                    submitted under subclause (I) shall
                                    include a statement in accordance with
                                    subsection (d)(3)(B)(i).
                                ``(ii) Notification.--The Commission shall
                            notify the Commodity Futures Trading Commission
                            of each certification made pursuant to clause
                            (i) and of any final agency action with respect
                            to that certification.
                                ``(iii) Reciprocal notice.--The Commission
                            shall receive a copy of any certification and
                            supporting materials submitted to the Commodity
                            Futures Trading Commission under section 203(d)
                            of the Digital Commodity Intermediaries Act.
                        ``(B) Automatic effectiveness.--A certification
                    submitted under subparagraph (A) by an originator or a
                    digital asset intermediary shall become effective upon
                    the earlier of--
                                ``(i) the date on which the Commission
                            notifies the originator or digital asset
                            intermediary in writing that the Commission
                            does not object to the certification; or
                                ``(ii) if the Commission has not issued a
                            rebuttal to the originator or digital asset
                            intermediary in accordance with subparagraph
                            (C), 60 days after the date on which the
                            originator or digital asset intermediary
                            submits the certification.
                        ``(C) Commission denial.--
                                ``(i) Authority to deny.--Subject to
                            clauses (ii) and (iii), the Commission may deny
                            a certification submitted under subparagraph
                            (A) by an originator or digital asset
                            intermediary only during the 60-day period
                            described in subparagraph (B)(ii) or upon
                            determining, based on reasonable evidence, that
                            a material change in circumstances has occurred
                            after the submission of the certification,
                            whether or not the certification has taken
                            effect.
                                ``(ii) Notice of intent to deny.--If the
                            Commission intends to deny a certification
                            submitted under subparagraph (A), the
                            Commission shall--
                                        ``(I) either not later than 20
                                    business days after the date on which
                                    the certification is submitted, or
                                    promptly after determining that a
                                    material change in circumstances has
                                    occurred, provide to the applicable
                                    originator or digital asset
                                    intermediary notice of the intent of
                                    the Commission to deny that
                                    certification; and
                                        ``(II) provide to the applicable
                                    originator or digital asset
                                    intermediary a 10-day period following
                                    the provision of notice under subclause
                                    (I) during which--
                                                ``(aa) interested persons
                                            shall have an opportunity to
                                            submit written data, views, and
                                            arguments relating to that
                                            certification; and
                                                ``(bb) the Commodity
                                            Futures Trading Commission may,
                                            at the discretion of the
                                            Commodity Futures Trading
                                            Commission, submit input
                                            regarding whether the
                                            applicable asset--

                                                        ``(AA) satisfies
                                                    the requirements for
                                                    being considered an
                                                    ancillary asset; or

                                                        ``(BB) includes any
                                                    disqualifying financial
                                                    right described in
                                                    subsection (a)(7)(B).

                                ``(iii) Requirements after notice of
                            intent.--After the 10-day period described in
                            clause (ii)(II), the Commission shall--
                                        ``(I) upon request of the
                                    applicable originator or digital asset
                                    intermediary, provide an opportunity
                                    for the oral presentation of data,
                                    views, and arguments by certification
                                    covered parties;
                                        ``(II) have a vote of the
                                    Commission (which, notwithstanding
                                    section 4A of the Securities Exchange
                                    Act of 1934 (15 U.S.C. 78d-1), may not
                                    be delegated to an employee or employee
                                    board or to any individual
                                    Commissioner) to deny the certification
                                    after a finding that the applicable
                                    asset--
                                                ``(aa) is an ancillary
                                            asset; or
                                                ``(bb) includes any
                                            disqualifying financial right
                                            described in subsection
                                            (a)(7)(B); and
                                        ``(III) notify the Commodity
                                    Futures Trading Commission of each
                                    denial made under subclause (II).
                                ``(iv) Interested person.--For purposes of
                            this subparagraph, the term `interested person'
                            means, with respect to a network token--
                                        ``(I) the ancillary asset
                                    originator with respect to that network
                                    token (referred to in this clause as
                                    `the originator');
                                        ``(II) a subsidiary of the
                                    originator;
                                        ``(III) a related person of the
                                    originator;
                                        ``(IV) any entity that directly or
                                    indirectly controls or is controlled by
                                    a common entity with the originator;
                                        ``(V) any broker or dealer (as
                                    those terms are defined in section 3(a)
                                    of the Securities Exchange Act of 1934
                                    (15 U.S.C. 78c(a))), or an exchange
                                    registered pursuant to section 6 of
                                    that Act (15 U.S.C. 78f), that operates
                                    in connection with digital assets; or
                                        ``(VI) any person registered with
                                    the Commodity Futures Trading
                                    Commission that operates or proposes to
                                    operate in connection with digital
                                    assets.
                        ``(D) Certification filed by digital asset
                    intermediary.--
                                ``(i) In general.--A certification
                            submitted by a digital asset intermediary under
                            this paragraph shall only become effective if--
                                        ``(I) the digital asset
                                    intermediary has--
                                                ``(aa) conducted a
                                            reasonable inquiry of publicly
                                            available information,
                                            appropriate under the
                                            circumstances, regarding
                                            whether the applicable
                                            originator has engaged in
                                            entrepreneurial and managerial
                                            efforts with respect to the
                                            applicable network token during
                                            the most recent 180-day period,
                                            or is likely to engage in those
                                            efforts in the future; and
                                                ``(bb) concluded that the
                                            efforts described in item (aa)
                                            have not occurred or are not
                                            reasonably likely to occur; and
                                        ``(II) subject to clause (ii), the
                                    applicable originator has certified
                                    that there is not (and, during the most
                                    recent 180-day period, there has not
                                    been) material, non-public information
                                    regarding entrepreneurial or managerial
                                    efforts with respect to the applicable
                                    network token in the possession of the
                                    originator or a related party.
                                ``(ii) Limitation.--Clause (i)(II) shall
                            not be required if the applicable digital asset
                            intermediary, after a reasonable inquiry,
                            appropriate under the circumstances, determines
                            that the applicable originator, or any person
                            jointly and severally liable pursuant to
                            subsection (a)(2)(B), is not capable of
                            submitting the applicable certification.
                        ``(E) Final agency action.--Denial under this
                    paragraph constitutes final agency action reviewable
                    under applicable law.
                        ``(F) Tolling.--Any applicable period specified in
                    this paragraph may be tolled, for periods of not longer
                    than 60 days, during the 3-year period following the
                    effective date of the Digital Asset Market Clarity Act,
                    upon a showing in writing that the originator or
                    digital asset intermediary has not substantially
                    responded to a request for information from the
                    Commission within a reasonable time.
                        ``(G) Withdrawal.--An originator or digital asset
                    intermediary may withdraw a certification submitted
                    under subparagraph (A) at any time before approval.
                        ``(H) Designated commission office.--The Commission
                    shall designate an office that shall--
                                ``(i) acknowledge receipt of certifications
                            submitted under subparagraph (A);
                                ``(ii) support those seeking certification
                            under subparagraph (A) by providing guidance
                            regarding the mechanics of preparing and
                            submitting those certifications; and
                                ``(iii) route certifications submitted
                            under subparagraph (A), together with any
                            associated comments or recommendations, to the
                            appropriate division or office of the
                            Commission for review.
                        ``(I) Misstatements or omissions.--Any material
                    misstatement or omission to state a material fact,
                    including with respect to continuing compliance, in a
                    certification that has become effective under this
                    paragraph shall constitute grounds for the Commission,
                    consistent with the securities laws, to issue an order
                    denying, suspending, or revoking the effectiveness of
                    the certification and to pursue any appropriate
                    enforcement action.
        ``(c) Disclosure Requirements for Certain Transactions Involving
    Ancillary Assets.--
                ``(1) Specified initial and periodic disclosure
            requirements.--
                        ``(A) In general.--An ancillary asset originator
                    shall be subject to the initial and periodic disclosure
                    requirements under subsection (d) upon the occurrence
                    of the earlier of the following:
                                ``(i) Any offer, sale, or distribution of
                            an ancillary asset after the effective date of
                            the Digital Asset Market Clarity Act by, or
                            that is caused by, that ancillary asset
                            originator pursuant to--
                                        ``(I) Regulation Crypto, as adopted
                                    pursuant to section 103 of the Lummis-
                                    Gillibrand Responsible Financial
                                    Innovation Act of 2026;
                                        ``(II) the filing of an effective
                                    registration statement under this Act;
                                        ``(III) the filing of an offering
                                    statement described in section 3(b)(2);
                                    or
                                        ``(IV) an offering conducted
                                    pursuant to section 4(a)(6).
                                ``(ii)(I) The first secondary market offer,
                            sale, or distribution of an ancillary asset in
                            the United States after the effective date of
                            the Digital Asset Market Clarity Act that
                            constitutes a public offering, whether by the
                            ancillary asset originator or any other person.
                                ``(II) For the purposes of subclause (I),
                            the term `public offering' shall be interpreted
                            consistent with the meaning of that term under
                            section 4(a)(2).
                        ``(B) Exclusion.--Subparagraph (A) shall not apply
                    if--
                                ``(i) the aggregate gross proceeds from the
                            offer, sale, or distribution of the applicable
                            ancillary asset (together with any related
                            assets sold in those offers, sales, or
                            distributions) were $5,000,000 or less
                            (adjusted for inflation) during the 12-month
                            period immediately following the date of the
                            first such offer, sale, or distribution; or
                                ``(ii) the average daily aggregate value of
                            trading in the applicable ancillary asset in
                            all spot markets open to the public in the
                            United States for which trading volume is
                            generally available is $5,000,000 or less
                            (adjusted for inflation) during the 12-month
                            period (or such shorter period as the
                            Commission may determine) immediately following
                            the commencement of compliance with the
                            disclosure requirements under subsection (d)
                            (as determined pursuant to paragraph (2) of
                            this subsection), based on the knowledge of the
                            ancillary asset originator after due inquiry
                            (or, if the ancillary asset has not yet traded
                            on spot markets open to the public in the
                            United States, the trading volume is reasonably
                            expected to be $5,000,000 or less (adjusted for
                            inflation) during the 12-month period
                            immediately following the reporting date
                            specified by paragraph (2)).
                        ``(C) Calculation.--For the purposes of this
                    paragraph, the calculation of daily aggregate value
                    shall be based on a reasonable calculation of public
                    data.
                ``(2) Commencement of compliance with specified initial and
            periodic disclosure requirements.--
                        ``(A) In general.--An ancillary asset originator
                    subject to the requirements of paragraph (1) shall
                    comply with the disclosure requirements under
                    subsection (d)--
                                ``(i) before--
                                        ``(I) any initial offer, sale, or
                                    distribution described in paragraph
                                    (1)(A)(i); or
                                        ``(II) a secondary market offer,
                                    sale, or distribution described in
                                    paragraph (1)(A)(ii); and
                                ``(ii) semiannually thereafter.
                        ``(B) Exclusion.--The requirements of this
                    paragraph shall not apply to an offer, sale, or
                    distribution of an ancillary asset that occurs after
                    the effective date of the Digital Asset Market Clarity
                    Act if an ancillary asset originator has submitted a
                    certification under subsection (d)(3)(B) and the
                    Commission has not denied that certification within a
                    60-day period after the completion of the process under
                    that subsection.
                ``(3) Transition rule.--
                        ``(A) In general.--An ancillary asset originator
                    that initially offered, sold, or distributed (or
                    otherwise controlled or caused the offer, sale, or
                    distribution of) a security involving an ancillary
                    asset before the effective date of the Digital Asset
                    Market Clarity Act shall comply with the periodic
                    disclosure requirements under subsection (d), if
                    applicable, beginning on the date that is 1 year after
                    that effective date.
                        ``(B) Effect on certification.--An ancillary asset
                    originator, or any other certification covered party,
                    subject to this paragraph that meets the requirements
                    of subsection (d)(3) may furnish a certification as
                    provided in that subsection without complying with the
                    periodic disclosure requirements under subsection (d),
                    if the Commission has not denied that certification
                    within a 60-day period after the completion of the
                    process under that subsection.
                        ``(C) Period of disclosures.--The disclosures
                    required under subparagraph (A) shall apply with
                    respect to the 3-year period preceding the effective
                    date described in that subparagraph.
                ``(4) Digital asset intermediaries.--
                        ``(A) In general.--Other than as provided under
                    subparagraph (B), with respect to an ancillary asset
                    that is listed for trading on a digital asset
                    intermediary, that digital asset intermediary may, in
                    lieu of the applicable ancillary asset originator,
                    satisfy the requirements of subsection (d) in
                    accordance with such rules as the Commission shall
                    jointly adopt with the Commodity Futures Trading
                    Commission.
                        ``(B) Allocation of disclosure responsibility.--
                                ``(i) Originator filings.--A digital asset
                            intermediary may not satisfy the requirements
                            of subsection (d) in lieu of the applicable
                            ancillary asset originator, if--
                                        ``(I) the ancillary asset
                                    originator is incorporated, organized,
                                    or otherwise registered under the laws
                                    of the United States or of any State;
                                    and
                                        ``(II) the applicable ancillary
                                    asset is--
                                                ``(aa) offered, sold, or
                                            distributed after the effective
                                            date of the Digital Asset
                                            Market Clarity Act pursuant
                                            to--

                                                        ``(AA) an
                                                    investment contract
                                                    that is offered, sold,
                                                    or distributed pursuant
                                                    to Regulation Crypto,
                                                    as adopted pursuant to
                                                    section 103 of the
                                                    Lummis-Gillibrand
                                                    Responsible Financial
                                                    Innovation Act of 2026;

                                                        ``(BB) the filing
                                                    of an effective
                                                    registration statement
                                                    under this Act (other
                                                    than a registration
                                                    statement on the form
                                                    described in section
                                                    239.31 or 239.33 of
                                                    title 17, Code of
                                                    Federal Regulations, or
                                                    the successor to either
                                                    such form);

                                                        ``(CC) the filing
                                                    of an offering
                                                    statement described in
                                                    section 3(b)(2); or

                                                        ``(DD) an offering
                                                    conducted pursuant to
                                                    section 4(a)(6); or

                                                ``(bb) first offered or
                                            sold after the effective date
                                            of the Digital Asset Market
                                            Clarity Act in a transaction
                                            described in paragraph
                                            (1)(A)(ii).
                                ``(ii) Commission determination.--
                                        ``(I) In general.--If, after
                                    notice, comment, and the opportunity
                                    for a hearing, the Commission
                                    determines that it is in the public
                                    interest or necessary for the
                                    protection of investors, including with
                                    respect to an ancillary asset
                                    originator incorporated or organized in
                                    a foreign jurisdiction, the Commission
                                    may require an ancillary asset
                                    originator, after a transition period,
                                    to file the disclosures required under
                                    subsection (d).
                                        ``(II) Extraterritorial effect.--
                                    Subclause (I) shall apply
                                    extraterritorially.
                        ``(C) Standard of liability.--Notwithstanding any
                    other provision of this Act, it shall be unlawful for a
                    digital asset intermediary to file disclosures under
                    subsection (d) pursuant to this paragraph that contain
                    any material misstatement or omission to state a
                    material fact required to be stated therein, or
                    necessary to make the statements therein not
                    misleading, unless that digital asset intermediary did
                    not know (and, in the exercise of reasonable care,
                    could not have known) of that misstatement or omission.
                ``(5) Failure to comply.--Subject to the requirements of
            this section, an ancillary asset shall not be listed for
            trading on a digital asset intermediary if the Commission and
            the Commodity Futures Trading Commission jointly find that the
            ancillary asset originator that initially offered, sold, or
            distributed the ancillary asset after the effective date of the
            Digital Asset Market Clarity Act (or, if a digital asset
            intermediary is satisfying the requirements of this subsection
            in lieu of that ancillary asset originator in accordance with
            paragraph (4), such digital asset intermediary) has materially
            failed to furnish the required disclosures under this
            subsection after a reasonable opportunity to cure, as provided
            by joint rule of the Commission and the Commodity Futures
            Trading Commission in a manner that is consistent with the
            considerations under subsection (d)(5).
        ``(d) Specified Initial and Periodic Disclosure Requirements.--
                ``(1) In general.--
                        ``(A) Furnishing of information.--An ancillary
                    asset originator that is subject to the requirements of
                    paragraph (1) or (3) of subsection (c), or a digital
                    asset intermediary acting in accordance with subsection
                    (c)(4), shall furnish to the Commission, in such form
                    as the Commission may prescribe by rule after providing
                    notice and the opportunity for comment, and until the
                    requirement terminates under paragraph (3) of this
                    subsection, the information described in paragraph (2)
                    of this subsection, to the extent that the information
                    is material and known, or reasonably knowable, to the
                    ancillary asset originator or digital asset
                    intermediary.
                        ``(B) Requirements for rules.--A rule prescribed
                    under subparagraph (A) shall be reasonably tailored,
                    including by adjusting the scope, form, and content of
                    required disclosures, based on--
                                ``(i) the size of the applicable ancillary
                            asset originator in accordance with section
                            108(a) of the Lummis-Gillibrand Responsible
                            Financial Innovation Act of 2026;
                                ``(ii) the aggregate amount of ancillary
                            assets offered, sold, or distributed by the
                            applicable ancillary asset originator to the
                            public in the United States; and
                                ``(iii) whether the applicable ancillary
                            asset and any related distributed ledger system
                            is subject to coordinated control, as defined
                            by the Commission pursuant to rules adopted
                            under section 104(b) of the Lummis-Gillibrand
                            Responsible Financial Innovation Act of 2026.
                ``(2) Categories of information.--The information required
            under paragraph (1) shall include the following with respect to
            the applicable ancillary asset originator and the related
            ancillary asset:
                        ``(A) Basic corporate information regarding the
                    ancillary asset originator and the ancillary asset
                    activities of the ancillary asset originator, which may
                    include the following items, as the Commission shall
                    determine by rule:
                                ``(i) The experience of the ancillary asset
                            originator (or persons controlling the
                            ancillary asset originator) in developing
                            ancillary assets.
                                ``(ii) If the ancillary asset originator
                            (or persons controlling the ancillary asset
                            originator) has previously distributed
                            ancillary assets, information on the subsequent
                            distribution history of those ancillary assets,
                            including price history, if the information is
                            publicly available.
                                ``(iii) The activities that the ancillary
                            asset originator has taken in the relevant
                            disclosure period, and is projecting to take in
                            the 1-year period following the submission of
                            the disclosure, with respect to promoting the
                            use, value, or resale of the ancillary asset
                            (including any activity to facilitate the
                            creation or maintenance of a trading market for
                            the ancillary asset and any distributed ledger
                            system, application, or system that uses the
                            ancillary asset).
                                ``(iv) The anticipated cost of the
                            activities of the ancillary asset originator
                            described in clause (iii), whether the
                            ancillary asset originator has unencumbered,
                            liquid funds equal to that amount, and, if the
                            ancillary asset originator does not have those
                            funds, the anticipated plan of operations of
                            the ancillary asset originator for the portion
                            of time where those liquid funds are less than
                            the anticipated cost of the activities of the
                            ancillary asset originator.
                                ``(v) The experience of the ancillary asset
                            originator with the use of a distributed ledger
                            system or distributed ledger technology.
                                ``(vi) The identities and expertise of the
                            board of directors (or equivalent body) and
                            senior management of the ancillary asset
                            originator, the experience or functions of whom
                            are material to the development or value of the
                            ancillary asset, as well as any personnel
                            changes relating to the ancillary asset
                            originator during the period covered by the
                            disclosure.
                                ``(vii) Financial statements of the
                            ancillary asset originator that are--
                                        ``(I) if the aggregate amount of
                                    such ancillary assets offered, sold, or
                                    distributed to the public does not
                                    exceed $25,000,000 in gross proceeds,
                                    reviewed by a public accountant that is
                                    independent of the ancillary asset
                                    originator; or
                                        ``(II) if the aggregate amount of
                                    such ancillary assets offered, sold, or
                                    distributed to the public exceeds
                                    $25,000,000 in gross proceeds, audited
                                    by a public accountant that is
                                    independent of the ancillary asset
                                    originator.
                                ``(viii) A description of any legal
                            proceedings in which the ancillary asset
                            originator is engaged.
                                ``(ix) Risk factors arising from the
                            activities of the ancillary asset originator
                            with respect to the ancillary asset, and not
                            generally applicable to other kinds of
                            ancillary assets, that may limit the utility or
                            liquidity of the ancillary asset, investor
                            demand with respect to the ancillary asset, or
                            the market price or value of the ancillary
                            asset.
                                ``(x) Information relating to ownership of
                            the ancillary asset by--
                                        ``(I) persons owning not less than
                                    10 percent of any class of equity
                                    security or other ownership interest of
                                    the ancillary asset originator; and
                                        ``(II) the board of directors (or
                                    equivalent body) and senior management
                                    of the ancillary asset originator, if
                                    those individuals, in the aggregate,
                                    own not less than 5 percent of the
                                    ancillary asset.
                                ``(xi) For any material transactions
                            involving the ancillary asset between the
                            ancillary asset originator and any related
                            person, a description, in the aggregate, of the
                            parties, the number of ancillary assets
                            involved, and a summary of any material
                            features of the transactions, including any
                            material terms or ongoing obligations.
                                ``(xii) A summary, in the aggregate by
                            year, of transactions in ancillary assets
                            during the 4-year period preceding the
                            furnishing of the disclosure, by the ancillary
                            asset originator and persons that directly or
                            indirectly control the ancillary asset
                            originator.
                                ``(xiii) Purchases or similar acquisitions
                            of ancillary assets by the ancillary asset
                            originator and affiliates of the ancillary
                            asset originator.
                                ``(xiv) A statement, made in good faith,
                            from the chief financial officer of the
                            ancillary asset originator or equivalent
                            official, stating whether the ancillary asset
                            originator reasonably expects to maintain or
                            have the financial resources to continue
                            business as a going concern for the 12-month
                            period following the furnishing of the
                            disclosure, absent a change in circumstances.
                                ``(xv) The current state and timeline for
                            the development of the distributed ledger
                            system to which the ancillary asset relates,
                            detailing if, how, and when the distributed
                            ledger system and the related ancillary asset
                            are intended to no longer be subject to
                            coordinated control, including by related
                            persons, if the distributed ledger system has
                            not yet received a certification under section
                            104(d) of the Lummis-Gillibrand Responsible
                            Financial Innovation Act of 2026.
                        ``(B) Economic and technical information relating
                    to the ancillary asset, which may include the following
                    items, as the Commission shall determine by rule:
                                ``(i) A general description of the
                            ancillary asset and the distributed ledger
                            system to which that ancillary asset relates,
                            including--
                                        ``(I) a plain-English description
                                    of how the applicable distributed
                                    ledger, distributed ledger system, or
                                    distributed ledger application
                                    functions;
                                        ``(II) the intended or known
                                    functionality and uses of the ancillary
                                    asset and any associated fees for use
                                    or disposition of the ancillary asset;
                                        ``(III) the market for the
                                    ancillary asset;
                                        ``(IV) other assets or services
                                    that may compete with the ancillary
                                    asset;
                                        ``(V) the total supply of the
                                    ancillary asset or the manner and rate
                                    of the ongoing production or creation
                                    of the ancillary asset; and
                                        ``(VI) the governance and consensus
                                    mechanism for the ancillary asset and
                                    that distributed ledger system, if
                                    applicable, including for validating
                                    transactions and implementing changes
                                    to the distributed ledger system, the
                                    method of generating or mining
                                    ancillary assets, and any process for
                                    burning or destroying units of the
                                    ancillary asset on a distributed ledger
                                    system.
                                ``(ii) If the ancillary asset originator
                            has offered, sold, or otherwise provided
                            ancillary assets to affiliates, investors,
                            employees, intermediaries, or resellers, a
                            description of the amount of assets offered,
                            sold, or otherwise provided to such persons and
                            a summary of any material resale restrictions
                            or other material obligations arising from
                            related contracts, agreements, or other
                            arrangements.
                                ``(iii) If ancillary assets were
                            distributed by the ancillary asset originator
                            without charge or upon meeting certain
                            conditions, a description of the distributions,
                            in the aggregate, along with the identity of
                            any recipient that received more than 5 percent
                            of the total amount of ancillary assets
                            (calculated as a percentage of the total supply
                            of such asset at the time of distribution).
                                ``(iv) The amount of ancillary assets owned
                            by the ancillary asset originator.
                                ``(v) For the 12-month period following the
                            furnishing of the disclosure, a description of
                            the current state and anticipated timeline for
                            the development of the distributed ledger
                            system to which that ancillary asset relates,
                            including--
                                        ``(I) plans of the ancillary asset
                                    originator to support (or to cease
                                    supporting) the use or development of
                                    the ancillary asset, including markets
                                    for the ancillary asset and that
                                    distributed ledger system;
                                        ``(II) the various roles that exist
                                    or are intended to exist in connection
                                    with any applicable distributed ledger,
                                    distributed ledger system, or
                                    distributed ledger application, such as
                                    users, service providers, developers,
                                    transaction validators, and governance
                                    participants;
                                        ``(III) a discussion of any
                                    mechanisms by which control or
                                    authority are exerted with respect to
                                    that distributed ledger system, if
                                    applicable, or the related ancillary
                                    asset; and
                                        ``(IV) any critical operational
                                    dependencies of any applicable
                                    distributed ledger, distributed ledger
                                    system, or distributed ledger
                                    application or of the related ancillary
                                    asset.
                                ``(vi) Risk factors that may materially
                            affect the liquidity of the ancillary asset,
                            investor demand with respect to the ancillary
                            asset, or the market price or value of the
                            ancillary asset.
                                ``(vii) To the extent available to the
                            ancillary asset originator, the average daily
                            price for a constant unit of value of the
                            ancillary asset during the relevant reporting
                            period, as well as the 12-month high and low
                            prices for the ancillary asset, as calculated
                            based on the 3 exchanges with the largest
                            trading volume in that ancillary asset.
                                ``(viii) If applicable, and subject to
                            cybersecurity best practices, information
                            relating to any external audit of the code and
                            functionality of the ancillary asset, including
                            the entity performing the audit and the
                            experience of the entity in conducting similar
                            audits.
                                ``(ix) Information relating to custodial
                            services available for the ancillary asset.
                                ``(x) Information on intellectual property
                            rights claimed or disputed relating to the
                            ancillary asset.
                                ``(xi) A description of the technology
                            underlying the initial distribution and trading
                            of the ancillary asset, including the source
                            code for the ancillary asset, if applicable,
                            and technical requirements for holding,
                            accessing, and transferring the ancillary
                            asset.
                                ``(xii) If applicable, a description of the
                            steps necessary to independently access,
                            search, and verify the transaction history of
                            the ancillary asset.
                        ``(C) In addition to the information expressly
                    required to be included under subparagraphs (A) and
                    (B), the ancillary asset originator or digital asset
                    intermediary, as applicable, shall provide such further
                    material information, if any, as may be necessary to
                    ensure that the statements made in the disclosure are
                    not, in light of the circumstances under which the
                    statements are made, materially misleading.
                ``(3) Termination of requirements.--
                        ``(A) Termination.--The obligation of an ancillary
                    asset originator to provide disclosures under paragraph
                    (1) shall terminate on the date that a certification
                    becomes effective under subparagraph (B), including
                    through an approval or deemed approval.
                        ``(B) Certification.--
                                ``(i) In general.--A certification covered
                            party may submit to the Commission a
                            certification, based on the knowledge of the
                            certification covered party after due inquiry
                            and supported by reasonable evidence, that
                            states--
                                        ``(I) that--
                                                ``(aa) during the 180-day
                                            period preceding the date on
                                            which the certification covered
                                            party submits the
                                            certification, and as of the
                                            date of submission, no
                                            certification covered party has
                                            engaged in more than a nominal
                                            level of entrepreneurial or
                                            managerial efforts (as defined
                                            by the Commission by rule),
                                            which shall not, for the
                                            purposes of this clause,
                                            include providing
                                            administrative services alone;
                                                ``(bb) any efforts
                                            described in item (aa) were not
                                            a primary factor in determining
                                            the value of the related
                                            ancillary asset (which may
                                            include that any essential
                                            promises made by the
                                            certification covered party
                                            have been fulfilled); and
                                                ``(cc) a certification is
                                            effective under section 104(d)
                                            of the Lummis-Gillibrand
                                            Responsible Financial
                                            Innovation Act of 2026;
                                        ``(II) in good faith that the
                                    certification covered party does not
                                    reasonably expect there to be any
                                    efforts that would render the
                                    certification covered party unable to
                                    provide a new certification following
                                    the date of the certification; and
                                        ``(III) that substantially all
                                    material information that is reasonably
                                    expected to contribute to the value of
                                    the ancillary assets offered, sold, or
                                    distributed to the public by the
                                    ancillary asset originator is, and is
                                    reasonably expected to remain,
                                    available to the public.
                                ``(ii) Change in circumstances.--
                                        ``(I) Effectiveness of the
                                    certification.--A certification under
                                    clause (i) shall remain effective until
                                    the date on which any certification
                                    covered party engages in
                                    entrepreneurial or managerial efforts
                                    that would render the certification
                                    covered party unable to meet the
                                    standards of the certification.
                                        ``(II) New disclosures required.--
                                    On and after the date described in
                                    subclause (I), the certification
                                    covered party undertaking efforts
                                    described in that subclause shall be
                                    responsible for furnishing to the
                                    Commission the disclosures required
                                    under paragraph (1), including a
                                    description of the change in
                                    circumstances.
                                        ``(III) Periodic disclosures.--The
                                    furnishing of disclosures pursuant to
                                    subclause (II) shall restart the
                                    schedule for periodic disclosures under
                                    paragraph (1).
                                        ``(IV) Prior certifications.--A
                                    certification submitted under clause
                                    (i) before a change in circumstances
                                    shall not be deemed false or misleading
                                    solely by reason of subsequent
                                    reengagement under this clause.
                                ``(iii) Commission denial.--
                                        ``(I) In general.--The Commission
                                    may deny a certification submitted
                                    under clause (i) by a certification
                                    covered party by--
                                                ``(aa) issuing a written
                                            notice of objection to the
                                            certification submitted under
                                            clause (i) or upon determining
                                            that more than a nominal level
                                            of entrepreneurial or
                                            managerial efforts has been
                                            undertaken by any certification
                                            covered party after the
                                            submission of the
                                            certification; and
                                                ``(bb) providing to the
                                            certification covered party 10
                                            days notice of the intent of
                                            the Commission to deny that
                                            certification, during which
                                            period interested persons shall
                                            have an opportunity to submit
                                            written data, views, and
                                            arguments relating to that
                                            certification.
                                        ``(II) Requirements after notice of
                                    intent.--After the 10-day period
                                    described in subclause (I)(bb), the
                                    Commission shall--
                                                ``(aa) upon request of the
                                            certification covered party,
                                            provide an opportunity for the
                                            oral presentation of data,
                                            views, and arguments by any
                                            interested persons; and
                                                ``(bb) have a vote of the
                                            Commission on whether to grant
                                            or deny the certification,
                                            based on a finding as to
                                            whether the applicable
                                            ancillary asset meets the
                                            standard for certification
                                            under clause (i).
                                        ``(III) Final agency action.--
                                    Denial under this clause constitutes
                                    final agency action reviewable under
                                    applicable law.
                                ``(iv) Deemed approval.--If the Commission
                            fails to issue a written notice of objection or
                            non-objection within 90 days after submission
                            of a certification under clause (i), the
                            certification shall be deemed approved by the
                            Commission.
                                ``(v) Withdrawal.--A certification covered
                            party may withdraw a certification submitted
                            under clause (i) at any time before that
                            certification is approved or denied.
                                ``(vi) Designated commission office.--The
                            Commission shall designate an office that
                            shall--
                                        ``(I) acknowledge the receipt of
                                    certifications submitted under clause
                                    (i);
                                        ``(II) support certification
                                    covered parties seeking certification
                                    under clause (i) by providing guidance
                                    regarding the mechanics of preparing
                                    and submitting those certifications;
                                    and
                                        ``(III) route certifications
                                    submitted under clause (i), together
                                    with any associated comments or
                                    recommendations, to the appropriate
                                    division or office of the Commission
                                    for review.
                                ``(vii) Advance review.--
                                        ``(I) In general.--A certification
                                    covered party may submit a
                                    certification under clause (i) before
                                    the offer, sale, or distribution of a
                                    network token.
                                        ``(II) Intended originator.--In
                                    submitting for a certification for
                                    advance review under subclause (I), a
                                    certification covered party shall
                                    identify the person intending to offer,
                                    sell, or distribute the applicable
                                    network token, and that person shall be
                                    treated as the applicable ancillary
                                    asset originator for the purposes of
                                    this subparagraph.
                                ``(viii) Tolling.--Any applicable period
                            specified in this subparagraph may be tolled,
                            for periods of not longer than 60 days, during
                            the 3-year period following the effective date
                            of the Digital Asset Market Clarity Act, upon a
                            showing in writing that the submitting
                            certification covered party has not
                            substantially responded to a request for
                            information from the Commission within a
                            reasonable time.
                                ``(ix) Misstatements or omissions.--Any
                            material misstatement or omission to state a
                            material fact, including with respect to
                            continuing compliance, in a certification that
                            has become effective under this subparagraph
                            shall constitute grounds for the Commission,
                            consistent with the securities laws, to--
                                        ``(I) issue an order denying,
                                    suspending, or revoking the
                                    effectiveness of that certification;
                                    and
                                        ``(II) pursue any appropriate
                                    enforcement action.
                ``(4) Voluntary disclosure.--An ancillary asset originator
            may voluntarily furnish to the Commission the information
            required under this subsection if the ancillary asset
            originator determines that it is reasonably likely that the
            ancillary asset originator will become subject to the
            requirements of paragraph (1) or (3) of subsection (c) in the
            future.
                ``(5) Rulemaking considerations.--In adopting rules under
            this subsection, the Commission shall--
                        ``(A) require only such information as the
                    Commission finds to be necessary or appropriate to
                    protect investors, maintain fair, orderly, and
                    efficient markets, and facilitate capital formation,
                    innovation, and efficiency;
                        ``(B) include in any final versions of those rules
                    a cost-benefit analysis evaluating the effects of any
                    such rule on innovation, efficiency, competition,
                    maintaining fair and orderly markets, and capital
                    formation, including the competitiveness of United
                    States market participants; and
                        ``(C) act jointly with the Commodity Futures
                    Trading Commission to establish a process for
                    implementing the requirements of this subsection,
                    including with respect to listing and disclosures, that
                    is consistent and coordinated with the listing process
                    for digital asset intermediaries.
                ``(6) Limitations.--Rules adopted under this subsection
            shall not require the inclusion of financial statements of an
            ancillary asset originator, except with respect to the
            disclosure of financial information under paragraph (2).
        ``(e) Exemptions.--The Commission may, by order, exempt an
    ancillary asset originator or digital asset intermediary, or any class
    of ancillary asset originators or digital asset intermediaries, from
    specified requirements under subsection (d) if it is in the public
    interest or for the protection of investors, consistent with the
    purposes of this section and subject to such conditions as the
    Commission determines necessary to protect investors and in the public
    interest.
        ``(f) Confidential Treatment of Certain Information.--Subject to
    Commission rules and procedures, an ancillary asset originator required
    to furnish to the Commission disclosures under subsection (d), or a
    digital asset intermediary furnishing those disclosures in lieu of such
    an ancillary asset originator, may submit a request for confidential
    treatment of information included in such disclosures pursuant to
    procedures the Commission shall establish and that are modeled on or
    identical to section 230.406 of title 17, Code of Federal Regulations,
    or any successor regulation.
        ``(g) Effect of Failure to Comply.--The failure of an ancillary
    asset originator or digital asset intermediary to comply with a
    provision of this section shall not, by itself, cause an ancillary
    asset offered, sold, or distributed by that ancillary asset originator
    (or that the ancillary asset originator caused to be offered, sold, or
    distributed) to be a security under any applicable law.
        ``(h) Liability for False or Misleading Statements.--
                ``(1) In general.--It shall be unlawful for an ancillary
            asset originator, in any initial and periodic disclosure,
            certification, or other document furnished under this section,
            to make an untrue statement of a material fact or omit to state
            a material fact required to be stated therein or necessary to
            make the statements therein not misleading.
                ``(2) Rule of construction.--Nothing in this subsection may
            be construed as limiting the application of section 240.10b-5
            of title 17, Code of Federal Regulations, or any successor
            regulation, to false or misleading disclosure statements or
            preventing any private right of action otherwise available
            under the securities laws.
        ``(i) Special Disposition Restrictions by Related Persons.--
                ``(1) In general.--The Commission shall adopt rules,
            consistent with section 104 of the Lummis-Gillibrand
            Responsible Financial Innovation Act of 2026, establishing
            limitations on the disposition of certain ancillary assets with
            specified characteristics by related persons.
                ``(2) Considerations.--In adopting rules under paragraph
            (1), the Commission shall consider what is necessary or
            appropriate to protect investors, promote capital formation,
            and maintain fair and orderly markets, which may include the
            prevention of insider self-dealing or other abuses of a
            privileged position.
        ``(j) Safe Harbor for Forward-Looking Statements.--In any action
    against an ancillary asset originator or digital asset intermediary
    arising under this Act that is based on an untrue statement of a
    material fact or omission of a material fact necessary to make the
    statement not misleading, no liability shall arise with respect to any
    forward-looking statement (including any statement of plans,
    objectives, projections, expectations, or assumptions concerning future
    performance, financial position, development milestones, asset utility,
    system adoption, or market conditions) made in an ancillary asset
    disclosure, statement, or other document furnished pursuant to this
    section, if the statement is--
                ``(1) identified as forward-looking; and
                ``(2) accompanied by meaningful cautionary language that
            identifies important factors that could cause actual results to
            differ materially.
        ``(k) Transactions Before Effective Date.--
                ``(1) Primary transactions.--Notwithstanding any other
            provision of law, neither the Commission nor any private
            plaintiff may initiate, pursue, or maintain any action, or an
            appeal of an action, for a violation of section 5 or 12(a)(1)
            of this Act arising from any offer, sale, or distribution of
            ancillary assets occurring before the effective date of the
            Digital Asset Market Clarity Act, provided that the ancillary
            asset originator or a certification covered party complies with
            any applicable requirements under subsection (c)(3).
                ``(2) Primary transactions related to fraud.--Nothing in
            paragraph (1) shall limit the ability of the Commission to
            bring an action based on the anti-fraud or anti-manipulation
            authorities of the Commission.
                ``(3) Secondary transactions.--Notwithstanding any other
            provision of law, the offer, sale, or distribution of a network
            token by a person occurring before the effective date of the
            Digital Asset Market Clarity Act shall be treated as not
            involving the offer, sale, or distribution of a security
            under--
                        ``(A) section 2(a)(1);
                        ``(B) section 3(a) of the Securities Exchange Act
                    of 1934 (15 U.S.C. 78c(a));
                        ``(C) section 2(a) of the Investment Company Act of
                    1940 (15 U.S.C. 80a-2(a));
                        ``(D) section 202(a) of the Investment Advisers Act
                    of 1940 (15 U.S.C. 80b-2(a));
                        ``(E) section 16 of the Securities Investor
                    Protection Act of 1970 (15 U.S.C. 78lll); or
                        ``(F) any applicable requirement of State law that
                    is functionally equivalent to the provisions described
                    in subparagraphs (A) through (E), including any
                    provision of State law that directly or indirectly
                    prohibits, limits, or imposes any conditions on the
                    use, offer, sale, transfer, or disposition of a network
                    token in a manner that is--
                                ``(i) not substantially similar to
                            prohibitions, limitations, or conditions
                            imposed by that State relating to assets that
                            are commodities under the laws of that State;
                            and
                                ``(ii) inconsistent with this section.
                ``(4) No inference of liability.--Nothing in paragraph (1),
            (2), or (3) may be construed as an admission, acknowledgment,
            or inference of liability for any act, transaction, or conduct
            occurring before the effective date of the Digital Asset Market
            Clarity Act.
                ``(5) Rules of construction.--Nothing in this subsection
            may be construed to--
                        ``(A) impair vested rights or contractual
                    obligations lawfully established before the effective
                    date of the Digital Asset Market Clarity Act; or
                        ``(B) limit the authority of the Commission to
                    bring an action against an ancillary asset originator
                    or a related person for securities fraud or
                    manipulation in connection with a statement, a
                    disclosure, or conduct by that ancillary asset
                    originator or related person, except that the
                    Commission may not exercise that authority to treat a
                    network token as a security or regulate secondary
                    market trading.
        ``(l) Rules of Construction.--Nothing in this section may be
    construed to--
                ``(1) preclude the Commission from bringing an appropriate
            action or entering into a settlement agreement relating to a
            violation or alleged violation of this section;
                ``(2) permit compliance with this section to be used in any
            administrative or judicial proceeding as evidence that an
            ancillary asset is a security;
                ``(3) prohibit the offer, sale, or distribution of a
            digital asset in reliance on an exemption from registration
            under this Act, other than Regulation Crypto (as adopted
            pursuant to section 103 of the Lummis-Gillibrand Responsible
            Financial Innovation Act of 2026); or
                ``(4) require more than 1 person to furnish the disclosures
            required under subsection (d), unless otherwise provided by the
            Commission by rule.
        ``(m) Anti-Evasion.--
                ``(1) Anti-evasion.--The Commission may issue such
            regulations as the Commission considers necessary or
            appropriate in the public interest or for the protection of
            investors to administer and prevent willful evasion of--
                        ``(A) this section;
                        ``(B) sections 103 and 104 of the Lummis-Gillibrand
                    Responsible Financial Innovation Act of 2026; and
                        ``(C) with respect to an ancillary asset originator
                    and related persons, the securities laws amended by the
                    Lummis-Gillibrand Responsible Financial Innovation Act
                    of 2026.
                ``(2) Considerations.--In adopting rules under this
            section--
                        ``(A) the form, label, and written documentation of
                    an agreement, contract, or transaction, or an entity,
                    shall not be dispositive in determining whether the
                    agreement, contract, or transaction, or the entity, has
                    been entered into or structured to willfully evade the
                    requirements of this section;
                        ``(B) the Commission may consider whether, based on
                    the totality of facts and circumstances, the principal
                    purpose of any arrangement, allocation of rights,
                    interposition of entities, or sequencing of steps is to
                    willfully circumvent the requirements of this section
                    or the restrictions set forth in section 104 of the
                    Lummis-Gillibrand Responsible Financial Innovation Act
                    of 2026, by satisfying the literal terms while
                    defeating the purpose and policy of this section;
                        ``(C) for purposes of subparagraph (B), factors
                    that may be considered, without being dispositive, in
                    determining whether a principal purpose to willfully
                    circumvent this section exists may include--
                                ``(i) removal of a disqualifying financial
                            right described in subsection (a)(7)(B) from
                            the instrument coupled with its re-introduction
                            through a substantially equivalent right held
                            by a related person or controlled vehicle,
                            including, by way of example, any nominally
                            independent foundation, decentralized
                            autonomous organization, laboratory, or similar
                            arrangement;
                                ``(ii) circular or non-commercial flows of
                            value among related persons designed to
                            simulate network utility; and
                                ``(iii) timing of steps designed to
                            trigger, accelerate, or delay certification or
                            termination of disclosure obligations without a
                            material change in circumstances relating to
                            the asset; and
                        ``(D) the Commission shall provide that evasion
                    shall not have occurred if an agreement, contract, or
                    transaction is entered into for a legitimate business
                    purpose and is not structured with a principal purpose
                    of willfully circumventing the requirements of this
                    section.
        ``(n) Fiduciary Obligations.--
                ``(1) Fiduciary duties under state law.--Nothing in this
            section, or in any rule issued under this section, may be
            construed to limit, preempt, or otherwise affect any fiduciary
            duty of an ancillary asset originator, or of any director,
            officer, or controlling person of an ancillary asset
            originator, arising under the laws of any State.
                ``(2) Preservation of fiduciary and other duties to
            customers, clients, and shareholders.--Nothing in this section,
            or in any rule issued under this section, may be construed to
            limit, preempt, or otherwise affect any fiduciary duty that any
            person owes to a customer, client, or shareholder under any
            other provision of Federal or State law, including in
            connection with the offer, sale, transfer, distribution, or
            custody of an ancillary asset.
        ``(o) Savings Clause.--Except as provided by the Digital Asset
    Market Clarity Act and the amendments made by that Act, nothing in this
    section may be construed to limit the authority of the Commission under
    the securities laws.''.
        (b) Rulemaking.--Not later than 360 days after the date of
    enactment of this Act, the Commission shall conduct a notice and
    comment rulemaking as necessary or appropriate to carry out section 4B
    of the Securities Act of 1933, as added by subsection (a).

    SEC. 103. EXEMPTION AND RULEMAKING FOR CERTAIN TRANSACTIONS INVOLVING
                  ANCILLARY ASSETS.

        (a) Adoption of Regulation Crypto.--The Commission shall adopt
    rules under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and the
    Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), which shall be
    referred to collectively as ``Regulation Crypto'', to implement
    subsections (b), (c), and (d) of this section.
        (b) Exemption for Certain Transactions Involving Ancillary
    Assets.--
                (1) Exemption.--
                        (A) In general.--Rules adopted by the Commission
                    under this section shall provide that the registration
                    requirements of the Securities Act of 1933 (15 U.S.C.
                    77a et seq.) shall not apply to an offer, sale, or
                    distribution of an investment contract involving an
                    ancillary asset, if the offer, sale, or distribution
                    does not exceed the greater of--
                                (i) $50,000,000 in gross proceeds per
                            calendar year for a period of not longer than 4
                            years; or
                                (ii) 10 percent of the total dollar value
                            of those ancillary assets that are outstanding,
                            as of the date of that offer, sale, or
                            distribution.
                        (B) Continued application of certain provisions.--
                    Sections 12(a)(2) and 17 of the Securities Act of 1933
                    (15 U.S.C. 77l(a)(2), 77q) shall apply with respect to
                    an offer, sale, or distribution of an investment
                    contract involving an ancillary asset that is described
                    in subparagraph (A).
                (2) Limitation.--An ancillary asset originator may not
            raise more than $200,000,000 in total gross proceeds in
            reliance on the rules adopted under subsection (a).
                (3) Review and adjustment for inflation.--
                        (A) In general.--Not later than 2 years after the
                    date of enactment of this Act, and every 2 years
                    thereafter, the Commission shall--
                                (i) review the amounts described in
                            paragraphs (1)(A)(i) and (2);
                                (ii) adjust the amounts described in
                            paragraphs (1)(A)(i) and (2) to account for
                            inflation; and
                                (iii) increase the amounts described in
                            paragraphs (1)(A)(i) and (2) as the Commission
                            determines appropriate, if that action would be
                            in the public interest and consistent with the
                            protection of investors.
                        (B) Report.--If the Commission, after conducting a
                    review under subparagraph (A), determines not to
                    increase the amount described in paragraph (1)(A)(i) or
                    (2) (other than to adjust that amount for inflation, as
                    required under subparagraph (A)(ii) of this paragraph),
                    the Commission shall submit to the Committee on
                    Banking, Housing, and Urban Affairs of the Senate and
                    the Committee on Financial Services of the House of
                    Representatives a report detailing the reasons that the
                    Commission did not increase that amount.
        (c) Conditions for Exemption.--The following conditions shall apply
    to the exemption provided under subsection (b):
                (1) Initial disclosures.--Not later than 30 days before the
            date on which the applicable ancillary asset originator, any
            affiliate of the ancillary asset originator, or any underwriter
            of an investment contract, offers, sells, or distributes an
            ancillary asset in reliance on the rules adopted under
            subsection (a), the ancillary asset originator shall furnish to
            the Commission the disclosures required under section 4B(d) of
            the Securities Act of 1933, as added by this Act, subject to
            the periodic semiannual disclosure requirements of that
            section.
                (2) Coordinated control.--If the applicable ancillary asset
            is reliant on a distributed ledger system that, together with
            that ancillary asset, is subject to coordinated control,
            including by related persons, the restrictions on disposition
            under section 104 shall apply.
                (3) Criteria.--The applicable ancillary asset originator
            may not be--
                        (A) a company that is not organized under, and
                    subject to, the laws of a State or territory of the
                    United States or the District of Columbia;
                        (B) 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;
                        (C) an investment company (as defined in section
                    3(a) of the Investment Company Act of 1940 (15 U.S.C.
                    80a-3(a))) or a company (as defined in section 2 of
                    that Act (15 U.S.C. 80a-2)) that would be an investment
                    company under section 3(a) of that Act (15 U.S.C. 80a-
                    3(a)) but for the exclusions provided from that
                    definition by section 3(c) of that Act (15 U.S.C. 80a-
                    3(c)), provided that, solely for the purposes of
                    evaluating eligibility to rely on the exemption
                    provided under subsection (b), an ancillary asset
                    originator shall not be deemed to be an investment
                    company solely by virtue of investing, reinvesting,
                    owning, holding, or trading ancillary assets, including
                    ancillary assets offered for sale by the ancillary
                    asset originator;
                        (D) a person issuing fractional undivided interests
                    in other commodities;
                        (E) a person that is or has been subject to any
                    order of the Commission entered pursuant to section
                    12(j) of the Securities Exchange Act of 1934 (15 U.S.C.
                    78l(j)) after the date of enactment of this Act and
                    during the 5-year period preceding the offer and sale;
                        (F) a person that is or has been disqualified
                    pursuant to section 230.506(d) of title 17, Code of
                    Federal Regulations, or any successor regulation,
                    unless waived by order of the Commission;
                        (G) a person that is or has been disqualified
                    pursuant to section 230.251 through 230.263 of title
                    17, Code of Federal Regulations (commonly referred to
                    as ``Regulation A''), or any successor regulations,
                    unless waived by order of the Commission; or
                        (H) a person convicted of a felony offense
                    involving insider trading, embezzlement, cybercrime,
                    money laundering, financing of terrorism, or financial
                    fraud, within the last 10 years.
                (4) Furnishing notice of reliance.--The applicable
            ancillary asset originator shall electronically furnish to the
            Commission a notice of reliance on the rules adopted under
            subsection (a) not fewer than 30 days before the date on which
            the ancillary asset originator first offers, sells, or
            distributes an ancillary asset in reliance on those rules,
            which shall contain the following information:
                        (A) The name of the ancillary asset originator.
                        (B) A statement by a person duly authorized by the
                    ancillary asset originator that the conditions of those
                    rules are satisfied.
                        (C) The website where the summary documents of the
                    ancillary asset originator, if any, may be found and
                    made available for public consumption.
                        (D) An email address at which the ancillary asset
                    originator may be contacted.
                (5) Public availability.--The Commission shall require that
            the disclosures furnished to the Commission under section 4B(d)
            of the Securities Act of 1933, as added by this Act, be made
            publicly available in a manner that provides timely and
            continuing access.
                (6) Form and manner.--The disclosures furnished to the
            Commission under section 4B(d) of the Securities Act of 1933,
            as added by this Act, shall be prepared, furnished, and made
            public in the form and manner prescribed by the Commission,
            including through the use of electronic furnishing, web
            posting, machine-readable formats, and plain-English legends,
            as the Commission determines necessary or appropriate in the
            public interest or for the protection of investors.
        (d) Status Under Securities Laws.--
                (1) In general.--A disclosure furnished under section 4B of
            the Securities Act of 1933, as added by this Act, including an
            initial or periodic disclosure furnished under subsection (d)
            of such section 4B, and any other document furnished under the
            rules adopted under subsection (a) of this section, shall be
            deemed to be--
                        (A) a ``prospectus'' solely--
                                (i) for purposes of section 12(a)(2) of the
                            Securities Act of 1933 (15 U.S.C. 77l(a)(2));
                            and
                                (ii) with respect to the person that is the
                            purchasing party in a transaction made in
                            reliance on the rules adopted under subsection
                            (a); and
                        (B) a ``statement'' solely for purposes of--
                                (i) section 17(a) of the Securities Act of
                            1933 (15 U.S.C. 77q(a));
                                (ii) section 10(b) of the Securities
                            Exchange Act of 1934 (15 U.S.C. 78j(b)); and
                                (iii) section 240.10b-5 of title 17, Code
                            of Federal Regulations, or any successor
                            regulation.
                (2) Registration statement.--
                        (A) In general.--A disclosure furnished under
                    section 4B of the Securities Act of 1933, as added by
                    this Act, including an initial or periodic disclosure
                    furnished under subsection (d) of such section 4B, or
                    any other document furnished pursuant to the rules
                    adopted under subsection (a), shall not be deemed to be
                    a ``registration statement'' for purposes of section 11
                    of the Securities Act of 1933 (15 U.S.C. 77k) or to
                    have been filed under the Securities Exchange Act of
                    1934 (15 U.S.C. 78a et seq.).
                        (B) Civil liability.--Liability under section
                    12(a)(2) of the Securities Act of 1933 (15 U.S.C.
                    77l(a)(2)) relating to a disclosure furnished under
                    section 4B of the Securities Act of 1933, as added by
                    this Act, including an initial or periodic disclosure
                    furnished under subsection (d) of such section 4B, or
                    any other document furnished pursuant to the rules
                    adopted under subsection (a), shall only apply to the
                    person making statements in that disclosure or other
                    document, and only a person that purchased an ancillary
                    asset in a transaction involving disclosures provided
                    pursuant to the rules adopted under subsection (a)
                    shall have a claim under such section 12(a)(2).
                (3) Forward-looking statements.--In any action against an
            ancillary asset originator under this title or the amendments
            made by this title that is based on an untrue statement of a
            material fact or omission of a material fact necessary to make
            the statement not misleading, no liability shall arise with
            respect to any forward-looking statement (including a statement
            of plans, objectives, projections, expectations, or assumptions
            concerning future performance, financial position, development
            milestones, digital asset utility, system adoption, or market
            conditions) made in a disclosure, statement, or other document
            furnished pursuant to section 4B of the Securities Act of 1933,
            as added by this Act, including an initial or periodic
            disclosure furnished under subsection (d) of such section 4B,
            or furnished under this section, if the statement is--
                        (A) identified as forward-looking; and
                        (B) accompanied by meaningful cautionary language
                    that identifies important factors that could cause
                    actual results to differ materially.

    SEC. 104. SPECIAL DISPOSITION RESTRICTIONS BY RELATED PERSONS.

        (a) Definitions.--In this section:
                (1) Certification covered party.--The term ``certification
            covered party'' means, with respect to an ancillary asset--
                        (A) the ancillary asset originator;
                        (B) a subsidiary of the ancillary asset originator;
                        (C) a related person of the ancillary asset
                    originator; or
                        (D) any entity that directly or indirectly controls
                    or is controlled by a common entity with an ancillary
                    asset originator.
                (2) Covered token.--The term ``covered token'' means any
            unit of an ancillary asset that was acquired from the ancillary
            asset originator with respect to that ancillary asset or an
            agent or underwriter thereof.
                (3) Distributed ledger control person.--The term
            ``distributed ledger control person'' means, with respect to a
            distributed ledger system, any person or group of persons under
            common control, other than a decentralized governance system,
            that 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
            distributed ledger system or a related ancillary asset.
        (b) Coordinated Control.--
                (1) In general.--The Commission shall adopt rules, based on
            the criteria described in paragraph (2), to define the
            circumstances under which a distributed ledger system, together
            with a related ancillary asset, is considered to be under
            coordinated control.
                (2) Considerations.--In adopting rules under paragraph (1),
            the Commission shall consider the following criteria as indicia
            that a distributed ledger system described in that paragraph,
            together with the related ancillary asset, is considered to be
            under coordinated control:
                        (A) Open digital system.--The extent to which the
                    distributed ledger system is not--
                                (i) a distributed ledger, the protocol of
                            which is freely and publicly available;
                                (ii) a distributed ledger application the
                            source code of which is--
                                        (I) freely and publicly available
                                    via open-source code; and
                                        (II) recorded on a distributed
                                    ledger described in clause (i); or
                                (iii) an analogue to a distributed ledger
                            or distributed ledger application described in
                            clause (i) or (ii), as determined by the
                            Commission by rule or order.
                        (B) Permissionless and credibly neutral digital
                    system.--The extent to which a person or group of
                    persons under common control has--
                                (i) the unilateral authority, via operation
                            of the distributed ledger system, to restrict,
                            censor, or prohibit use of the distributed
                            ledger system, including any applicable system-
                            based user activity; or
                                (ii) private permissions, hard-coded
                            privileges, or similar capabilities granted by
                            the source code of the distributed ledger
                            system that provides preferential treatment
                            compared to other similarly situated persons.
                        (C) Distributed digital network.--The extent to
                    which a person or group of persons under common control
                    has beneficial ownership of, in the aggregate, more
                    than 49 percent of the total amount of outstanding
                    units of the ancillary asset or voting power with
                    respect to any governance system that relates to the
                    distributed ledger system.
                        (D) Autonomous distributed ledger system.--The
                    extent to which--
                                (i) the distributed ledger system has not
                            yet reached an autonomous state; and
                                (ii) a person or group of persons under
                            common control has the unilateral authority,
                            directly or indirectly, to alter or change the
                            functionality, operation, or rules of consensus
                            or agreement of the distributed ledger system.
                        (E) Economic independence.--The extent to which the
                    primary programmatic mechanisms of the distributed
                    ledger system that are intended to facilitate
                    substantial value accrual to the ancillary asset
                    through the functioning of the distributed ledger
                    system are not yet functional.
                (3) Safe harbors.--
                        (A) In general.--The Commission shall establish
                    safe harbors under which a distributed ledger system,
                    together with a related ancillary asset, will not be
                    considered to be under coordinated control for the
                    purposes of section 103(c)(2).
                        (B) Decentralized governance systems.--
                                (i) In general.--For the purposes of this
                            section, a decentralized governance system
                            shall not be considered to be a person or a
                            group of persons under common control.
                                (ii) Distributed ledger systems.--For the
                            purposes of this section, a distributed ledger
                            system, together with any related ancillary
                            asset, shall not be precluded from being
                            considered to not be under coordinated control
                            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 that 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.
                        (C) Emergency measures.--For the purposes of this
                    section, a pre-defined, temporary, rules-based
                    cybersecurity emergency measure that is exercised by an
                    incident response or security council exclusively in
                    response to a specific and documented cybersecurity
                    incident or imminent threat pursuant to publicly
                    disclosed, on-chain authorization mechanisms, that is
                    strictly limited in scope and duration solely to
                    address that cybersecurity incident or imminent threat,
                    and that is exercised without unilateral control by any
                    single person, shall not alone constitute common
                    control or an agreement to work in concert, if those
                    rules and mechanisms, including the procedures and
                    operational limits governing the emergency measure, are
                    disclosed in publicly available written documentation
                    reasonably available to the applicable Federal agency
                    by a decentralized autonomous organization or similar
                    legal entity sufficiently in advance of any exercise of
                    the emergency measure.
                        (D) Nonexclusive.--The safe harbors established
                    under subparagraphs (A), (B), and (C) shall not be
                    exclusive and the Commission shall consider such other
                    circumstances as the Commission finds in the public
                    interest or for the protection of investors.
                (4) Evidence.--The Commission may, in adopting rules under
            this subsection, require such certifications, third party
            verifications, or other evidence as the Commission determines
            necessary or appropriate to determine whether a distributed
            ledger system is under coordinated control for the purposes of
            section 103(c)(2).
                (5) Rule of construction.--For purposes of this
            subsection--
                        (A) the existence or termination of coordinated
                    control shall be determined independently of whether
                    entrepreneurial or managerial efforts described in
                    section 4B of the Securities Act of 1933, as added by
                    this Act, have been completed; and
                        (B) the elimination of coordinated control shall be
                    a prerequisite to the completion of efforts described
                    in subparagraph (A).
        (c) Special Restrictions on Disposition.--The Commission shall
    adopt rules that provide that, with respect to transactions involving
    an ancillary asset for which disclosures are required pursuant to
    section 4B(d) of the Securities Act of 1933, as added by this Act, when
    a sale of that ancillary asset is made by a related person, the
    following restrictions on that sale shall apply:
                (1) Sales prior to certification.--If the covered token was
            acquired after the effective date of this Act and principally
            relies on a distributed ledger system, the covered token may be
            sold by a related person before that distributed ledger system
            is certified as not subject to coordinated control, pursuant to
            subsection (d), if--
                        (A) with respect to that distributed ledger system,
                    the disclosures required pursuant to section 4B(d) of
                    the Securities Act of 1933, as added by this Act, have
                    been furnished;
                        (B) the holder of the covered token has held the
                    units for not less than 12 months; and
                        (C) the amount of covered tokens sold in any 12-
                    month period by the related person is--
                                (i) not greater than an amount to be
                            determined by the Commission pursuant to notice
                            and comment rulemaking not later than 360 days
                            after the date of enactment of this Act, which
                            rulemaking shall consider what is necessary or
                            appropriate in the public interest, including,
                            among other things, the protection of
                            investors, whether the action will promote
                            efficiency, competition, and capital formation,
                            and how to foster the development of
                            distributed ledger systems that are not subject
                            to coordinated control; and
                                (ii) in no case equal to or greater than
                            the amount determined by the Commission
                            pursuant to the rulemaking described in
                            paragraph (2)(C).
                (2) Sales after certification.--If the covered token was
            acquired after the effective date of this Act and principally
            relies on a distributed ledger system that is certified as not
            subject to coordinated control pursuant to subsection (d), the
            covered token may be sold by a related person, if--
                        (A) with respect to that distributed ledger system,
                    the disclosures required pursuant to section 4B(d) of
                    the Securities Act of 1933, as added by this Act, have
                    been furnished;
                        (B) the holder of the covered token has held the
                    units for not less than 6 months; and
                        (C) the amount of covered tokens sold in any 12-
                    month period by the related person is not greater than
                    an amount to be determined by the Commission pursuant
                    to rulemaking that shall not be less than 10 percent of
                    the total amount of outstanding units of such ancillary
                    assets.
                (3) Sales of pre-existing covered tokens.--If the covered
            token was acquired before the effective date of this Act and
            principally relies on a distributed ledger system, the covered
            token may be sold by a related person if--
                        (A) in the case that the distributed ledger system
                    has not been certified as not subject to coordinated
                    control pursuant to subsection (d)--
                                (i) the disclosures required pursuant to
                            section 4B(d) of the Securities Act of 1933, as
                            added by this Act, have been furnished; and
                                (ii) the holder of the covered token has
                            held the units for not less than 12 months; and
                        (B) in the case that the distributed ledger system
                    has been certified as not subject to coordinated
                    control pursuant to subsection (d), the holder of the
                    covered token has held the units for not less than 6
                    months.
                (4) Limitations on transactions by distributed ledger
            control persons.--If the holder of an ancillary asset that
            principally relies on a distributed ledger system that has been
            certified as not subject to coordinated control is a
            distributed ledger control person with respect to that
            distributed ledger system, that control person may resell that
            ancillary asset if--
                        (A) that control person furnishes notice to the
                    Commission, in a form and manner determined by the
                    Commission, that the person has or intends to obtain an
                    authority described in subparagraph (B) with respect to
                    the distributed ledger system;
                        (B) that distributed ledger control person
                    furnishes disclosures to the Commission, in a form and
                    manner determined by the Commission, describing the
                    material activities, as determined by the Commission,
                    of the control person;
                        (C) with respect to that distributed ledger system,
                    disclosures have been furnished pursuant to section
                    4B(d) of the Securities Act of 1933, as added by this
                    Act; and
                        (D) that control person has satisfied such other
                    requirements applicable to that control person that may
                    be established by the Commission to prevent
                    manipulation or distortion of the value of the
                    ancillary asset, including resale restrictions
                    consistent with those applied to related persons that
                    are not control persons.
        (d) Certification of Non-Control by Related Persons.--
                (1) Submission.--With respect to an ancillary asset, a
            certification covered party may furnish to the Commission a
            written certification, in such form and manner as the
            Commission may specify by rule consistent with subsection (b),
            stating that the distributed ledger system is not under
            coordinated control.
                (2) Automatic effectiveness.--A certification furnished
            under paragraph (1) shall become effective, and the distributed
            ledger system shall be deemed not to be under coordinated
            control, on the date that is the earlier of--
                        (A) the date on which the Commission notifies the
                    certification covered party in writing that the
                    Commission does not object to the certification; or
                        (B) if the Commission has not denied the
                    certification under paragraph (3), the date that is 90
                    days after the date on which the certification is
                    furnished, or such shorter period as the Commission may
                    determine by rule.
                (3) Denial.--
                        (A) In general.--The Commission may deny a
                    certification furnished under paragraph (1)--
                                (i) only during the 90-day period beginning
                            on the date on which the certification is
                            furnished, or such shorter period as the
                            Commission may determine by rule, or upon
                            determining, based on reasonable evidence, that
                            a material change in circumstances has occurred
                            after the furnishing of the certification; and
                                (ii) by providing to the certification
                            covered party 10 days notice of the intent of
                            the Commission to deny that certification.
                        (B) Requirements after notice of intent.--After the
                    10-day period described in subparagraph (A)(ii), the
                    Commission shall--
                                (i) conduct a hearing; and
                                (ii) vote to deny the certification if
                            there is a finding that the applicable
                            ancillary asset does not meet the standard for
                            certification that the operations of the
                            distributed ledger system are not under such
                            coordinated control.
                        (C) Final agency action.--Denial under this
                    paragraph constitutes final agency action reviewable
                    under applicable law.
                (4) Verification.--The Commission may, by rule, require
            appropriate third-party verification of a certification
            furnished under paragraph (1).
        (e) Disgorgement.--
                (1) In general.--Any profit realized by a related person
            from the sale of an ancillary asset in violation of the
            restrictions under subsection (c) shall inure to, and be
            recoverable by, the holders of the ancillary asset,
            irrespective of any intention of holding the asset.
                (2) Enforcement.--An action to recover profit described in
            paragraph (1)--
                        (A) may be instituted at law or in equity in any
                    court of competent jurisdiction of the United States
                    by--
                                (i) the applicable ancillary asset
                            originator;
                                (ii) the owner of any units of the
                            applicable ancillary asset; or
                                (iii) the owner of any units of the
                            applicable ancillary asset, in the name and on
                            behalf of the ancillary asset originator, if
                            the ancillary asset originator--
                                        (I) fails or refuses to bring the
                                    action within 60 days after a written
                                    request by any owner of not less than 5
                                    percent of the total amount of
                                    outstanding units of that ancillary
                                    asset; or
                                        (II) fails to diligently prosecute
                                    the action; and
                        (B) shall be brought not later than 2 years after
                    the date that profit was realized.
        (f) Exemption From Disposition Restrictions.--The Commission shall
    adopt rules that provide for the following exemptions from, or waivers
    to, disposition restrictions described in subsection (c):
                (1) Material hardship exemption.--
                        (A) In general.--Subject to subparagraph (B), the
                    Commission shall adopt rules and procedures to exempt
                    parties from related person restrictions with respect
                    to an ancillary asset where those restrictions conflict
                    with an obligation or requirement arising from one of
                    the following material hardships on a related person
                    with respect to the ancillary asset or the ancillary
                    asset originator:
                                (i) The death of the related person.
                                (ii) The bankruptcy or insolvency of the
                            related person.
                                (iii) The dissolution, merger, or
                            acquisition of a corporate person.
                                (iv) Tax liability relating to the receipt
                            of the applicable ancillary asset.
                                (v) Such other material hardships as may be
                            designated by the Commission.
                        (B) Requirements.--The rules and procedures adopted
                    under subparagraph (A) shall be designed to mitigate
                    the risk that parties may seek to structure holdings to
                    evade resale restrictions and exempt or waive the
                    application of resale restrictions only to the extent
                    necessary to address the identified material hardship.
                (2) Liquidity provision exemption.--The Commission shall
            adopt rules to exempt from disposition restrictions parties
            buying or selling an ancillary asset through regular two-sided
            bidding and offering for the purposes of providing market
            liquidity, provided that such activities are not undertaken for
            the purpose of evading the requirements of this section.
                (3) Agency exemption.--The Commission shall adopt rules
            that exempt a party acting as a custodian, trading platform,
            broker, dealer or other agent from being treated as the owner
            of customer or client assets or from being restricted in
            facilitating sales on behalf of a customer or client if the
            agent is otherwise determined to be a related person.
                (4) Exchange-traded product and passive fund exemption.--
            The Commission shall adopt rules to exempt from disposition
            restrictions, as appropriate--
                        (A) exchange-traded products, the shares of which
                    are created and redeemed by authorized participants and
                    registered with the Commission; and
                        (B) passive pooled investment vehicles, whether or
                    not the shares of which are registered with the
                    Commission.
        (g) Related Person Disclosure Requirements.--The Commission shall
    adopt rules that provide for reporting to the Commission certain
    information with respect to ancillary asset holdings or transactions
    relating to ancillary assets by related persons, subject to the
    disposition restrictions provided in subsection (c):
                (1) Disclosure reports.--
                        (A) Disclosure of related person status.--Any
                    person, or group of persons under common control,
                    directly or indirectly, that acquire beneficial
                    ownership of 10 percent or more of the total amount of
                    outstanding units of any such ancillary asset, measured
                    as of the end of any calendar quarter, shall furnish
                    initial and continuing reports as determined by the
                    Commission.
                        (B) Sales of covered tokens by related person prior
                    to certification of non-control.--Quarterly reports
                    relating to the number of ancillary assets sold by a
                    related person in a form as required by the Commission.
                        (C) Sales of covered tokens by related person after
                    certification of non-control.--Quarterly reports
                    relating to the number of ancillary assets sold by a
                    related person that holds, at any point during the
                    applicable calendar quarter, in excess of 5 percent of
                    the total amount of outstanding units of such ancillary
                    asset in a form as required by the Commission.
                        (D) Sales of pre-existing covered tokens by related
                    person.--Quarterly reports relating to the number of
                    ancillary assets sold by a related person that holds in
                    excess of 5 percent of the total amount of outstanding
                    units of such ancillary asset in a form as required by
                    the Commission.
                (2) Confidential treatment.--The Commission may provide for
            confidential treatment of information provided under this
            subsection, or may exempt certain related persons from the
            requirement to furnish a report required under this subsection,
            pursuant to procedures the Commission shall establish and that
            are modeled on or identical to section 230.406 of title 17,
            Code of Federal Regulations, or any successor regulation.
                (3) Good-faith furnishing standard.--
                        (A) In general.--Any obligation to furnish
                    information under this section applies only to the
                    furnisher acting on its own behalf and is limited to
                    information that is material and known, or reasonably
                    knowable after due inquiry, to that furnisher.
                        (B) Reliance.--A furnisher described in
                    subparagraph (A) may reasonably rely on public sources
                    and third-party attestations where appropriate.
                        (C) Liability.--Furnishing in good faith pursuant
                    to this section shall not create liability for
                    information outside the furnisher's possession,
                    custody, or control, or for omissions of information
                    the furnisher could not reasonably obtain without
                    breaching legal privilege, contractual confidentiality,
                    or other applicable law.
                        (D) Other persons.--Any person other than the
                    furnisher may, in good faith and absent knowledge to
                    the contrary, presume that a report required under
                    paragraph (1) has been timely furnished.
                (4) Life cycle event considerations.--The Commission shall
            adopt rules establishing streamlined processes for the
            following life cycle events:
                        (A) Successor disclosures in corporate
                    transactions.--The transfer of disclosure obligations
                    under this section to a successor entity in the event
                    of a merger, acquisition, or sale of substantially all
                    assets relating to the ancillary asset activities,
                    including a notice of succession.
                        (B) Cessation of work.--The cessation or suspension
                    of ongoing disclosure obligations under this section
                    where the ancillary asset originator or related person
                    no longer engages, and does not reasonably expect to
                    engage, in entrepreneurial or managerial efforts with
                    respect to the ancillary asset or its associated
                    distributed ledger system, including a notice of
                    cessation of work.
                        (C) Contractual termination.--The termination of
                    disclosure obligations under this section that attach
                    solely by virtue of a person's status as a related
                    person when a contractual arrangement with the
                    ancillary asset originator or distributed ledger system
                    has concluded, including a notice of cessation of
                    contractual relationship.
        (h) Rule of Construction.--Nothing in this section may be construed
    to--
                (1) limit or impair the anti-fraud or anti-manipulation
            authorities of the Commission; or
                (2) preclude reliance on Regulation Crypto, as adopted
            under section 103, or any other effective registration
            statement or exemption from registration under the Securities
            Act of 1933 (15 U.S.C. 77a et seq.), as amended by this Act.

    SEC. 105. CHARACTERISTICS OF NETWORK TOKENS.

        (a) In General.--Not later than 1 year after the date of enactment
    of this Act, the Commission shall adopt rules that provide that--
                (1) a network token shall not be considered as providing a
            disqualifying financial right under section 4B(a)(7)(B) of the
            Securities Act of 1933, as added by this Act, if the market
            value of the network token is primarily derived, or is
            reasonably expected to be primarily derived, from a distributed
            ledger system or from the broader adoption and use of such a
            system, including where--
                        (A) the mechanisms of the distributed ledger system
                    collect, receive, accrue, or distribute consideration
                    from the functioning of the distributed ledger system;
                        (B) the network token provides governance
                    capabilities with respect to a distributed ledger
                    system or a decentralized governance system;
                        (C) the value of the network token appreciates or
                    depreciates due to the use of, or in response to the
                    efforts, operations, or financial performance of, the
                    distributed ledger system to which the network token
                    relates or its decentralized governance system; or
                        (D) for a network token that meets the definition
                    of an ancillary asset, the value of the network token
                    appreciates or depreciates due to the efforts of the
                    ancillary asset originator or related person; and
                (2) participants in offers or sales of network tokens
            providing financial interests described in paragraph (1) shall
            not be precluded from relying on the exemption from
            registration under section 4B(b) of the Securities Act of 1933,
            as added by this Act.
        (b) Effect of Rulings and Actions Before Date of Enactment.--
                (1) In general.--If, before the date of enactment of this
            Act, a court of the United States, in a non-appealable final
            judgment, found that a digital asset transaction was not an
            offer, sale, or distribution of a security, a digital asset
            transferred pursuant to that offer, sale, or distribution shall
            not be considered to be a security under any provision of law
            described in subsection (b)(2) of section 4B of the Securities
            Act of 1933, as added by this Act.
                (2) Network tokens.--A network token shall not be
            considered to be an ancillary asset, and shall not be
            considered to be a security under any provision of law
            described in subsection (b)(2) of section 4B of the Securities
            Act of 1933, as added by this Act, if, on January 1, 2026, any
            units of that network token were the principal asset of an
            exchange-traded product--
                        (A) not registered under the Investment Company Act
                    of 1940 (15 U.S.C. 80a-1 et seq.); and
                        (B) the shares of which are listed and traded on a
                    national securities exchange registered under section 6
                    of the Securities Exchange Act of 1934 (15 U.S.C. 78f).

    SEC. 106. EXEMPTIVE AUTHORITY.

        (a) Continued Applicability.--Nothing in this Act, or any amendment
    made by this Act, may be construed to amend, limit, impair, or
    otherwise affect the authority of the Commission to grant an exemption
    pursuant to any provision of law that is in effect on the day before
    the date of enactment of this Act, including pursuant to any of the
    following:
                (1) Section 28 of the Securities Act of 1933 (15 U.S.C.
            77z-3).
                (2) Section 36 of the Securities Exchange Act of 1934 (15
            U.S.C. 78mm).
                (3) Section 6(c) of the Investment Company Act of 1940 (15
            U.S.C. 80a-6(c)).
                (4) Section 206A of the Investment Advisers Act of 1940 (15
            U.S.C. 80b-6a).
                (5) Section 304(d) of the Trust Indenture Act of 1939 (15
            U.S.C. 77ddd(d)).
                (6) Section 4(g) of the Securities Investor Protection Act
            of 1970 (15 U.S.C. 78ddd(g)).
        (b) General Exemptive Authority.--Section 28 of the Securities Act
    of 1933 (15 U.S.C. 77z-3) is amended, in the matter preceding the
    matter relating to Schedule A--
                (1) by striking ``by rule or regulation'' and inserting
            ``by rule, regulation, or order''; and
                (2) by adding at the end the following: ``The Commission
            shall, by rule or regulation, determine the procedures under
            which an exemptive order under this section shall be granted
            and may, in the sole discretion of the Commission, decline to
            entertain any application for an order of exemption under this
            section.''.

    SEC. 107. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.

        The Commission shall adopt rules to modernize the recordkeeping
    requirements under the Securities Exchange Act of 1934 (15 U.S.C. 78a
    et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
    seq.), and the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
    seq.), including to facilitate the utilization of distributed ledger
    records.

    SEC. 108. MODERNIZATION OF SECURITIES REGULATIONS FOR DIGITAL ASSET
                  ACTIVITIES.

        (a) Tailoring of Existing Requirements.--The Commission shall--
                (1) amend, rescind, replace, or supplement by rule, order,
            guidance, exemptive relief, or any other appropriate action
            (provided such action is consistent with chapter 5 of title 5,
            United States Code, and other applicable law) each regulation,
            form, interpretive statement, or other requirement within the
            jurisdiction of the Commission that is not otherwise amended by
            this Act (or required to be amended because of a provision of
            this Act or an amendment made by this Act), to the extent that
            such provision applies to any digital asset activity, including
            any activity involving a security that is issued, recorded, or
            transferred using distributed ledger technology, to the extent
            that the provision is outdated, unnecessary, or unduly
            burdensome in light of the unique technological characteristics
            of digital assets or substantially similar technology, which
            may include regulatory provisions governing--
                        (A) customer protection, including custody of
                    digital assets or substantially similar technology;
                        (B) transfer agent rules;
                        (C) books and records, or recordkeeping
                    requirements;
                        (D) clearance and settlement rules;
                        (E) broker-dealer, alternative trading system, and
                    exchange rules;
                        (F) issuer disclosure and ongoing reporting
                    requirements tailored to digital asset securities or
                    substantially similar technology involving securities;
                    and
                        (G) the use of vaults, digital asset receipts, or
                    receipts involving substantially similar technology,
                    vault tokens, or liquidity provider tokens; and
                (2) in imposing future obligations as those obligations
            relate to digital assets or substantially similar technology,
            do so in a manner consistent with the requirements described in
            paragraph (1).
        (b) Rule of Construction.--Nothing in this section may be construed
    to limit the authority of the Commission to pursue fraud, manipulation,
    or deceptive practices involving digital assets or substantially
    similar technology.
        (c) Use of Existing Authority.--When considering, proposing,
    adopting, or engaging in any rule or program or developing new rules or
    programs, including those mandated or authorized under this Act, or any
    amendment made by this Act, the activities of the Commission (which may
    include the solicitation of data and other input from investors,
    regulated entities, and market participants or the representatives of
    any of those persons) shall be considered actions taken under
    subsection (e) of section 19 of the Securities Act of 1933 (15 U.S.C.
    77s) and shall be subject to subsection (f) of that section.
        (d) Continued Applicability of State Consumer Protection Laws.--
    Except as expressly provided by this Act, or an amendment made by this
    Act, nothing in this Act (or in any such amendment) shall preempt any
    State consumer protection law, including common law, or a remedy
    available under any such law.
        (e) Preemption for Exemptions and Digital Asset Activities Under
    the Securities Act.--Section 18 of the Securities Act of 1933 (15
    U.S.C. 77r) is amended--
                (1) in subsection (b)--
                        (A) in paragraph (3)--
                                (i) in the paragraph heading, by inserting
                            ``in qualified transactions or'' after
                            ``sales'';
                                (ii) in the first sentence, by inserting
                            ``in a qualified transaction or'' after ``the
                            security''; and
                                (iii) in the second sentence--
                                        (I) by striking ``term `qualified
                                    purchaser''' and inserting ``terms
                                    `qualified transaction' and `qualified
                                    purchaser''';
                                        (II) by inserting ``and categories
                                    of transactions, including secondary
                                    transactions,'' after ``securities'';
                                    and
                                        (III) by inserting ``and with due
                                    regard to the facilitation of capital
                                    formation and the promotion of
                                    innovation'' before the period at the
                                    end; and
                        (B) in paragraph (4)--
                                (i) in subparagraph (A), by inserting ``or,
                            if the issuer is not required to file such
                            reports, where the Commission otherwise
                            determines, consistent with the public interest
                            and the protection of investors and with due
                            regard to the facilitation of capital formation
                            and the promotion of innovation'' before the
                            semicolon at the end;
                                (ii) in subparagraph (D)(ii), by inserting
                            ``in a qualified transaction or'' after
                            ``offered or sold'';
                                (iii) in subparagraph (F), by striking
                            ``or'' at the end;
                                (iv) in subparagraph (G), by striking the
                            period at the end and inserting ``; or''; and
                                (v) by adding at the end the following:
                        ``(H) Commission rules or regulations issued under
                    section 28, except that this subparagraph does not
                    apply to rules or regulations adopted before the date
                    of enactment of this subparagraph.''.
        (f) Exempting Network Tokens From State Securities Laws.--
                (1) In general.--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 network tokens.--A
            network token, as defined in section 4B(a), shall be treated as
            a covered security.''.
                (2) Rule of construction.--Nothing in this section, section
            4B of the Securities Act of 1933 (as added by this Act), or the
            amendments made by this section may be construed to limit the
            authority (as of the day before the date of enactment of this
            Act) described in section 18(c)(1) of the Securities Act of
            1933 (15 U.S.C. 77r(c)(1)) of a securities commission (or any
            agency or office performing like functions) of any State with
            respect to a covered security or any security.
        (g) Preemption for Ancillary Asset Activities Under the Securities
    Act of 1933.--Section 18(b) of the Securities Act of 1933 (15 U.S.C.
    77r(b)), as amended by subsection (f) is amended by adding at the end
    the following:
                ``(6) Limitations on state law regarding ancillary
            assets.--
                        ``(A) Definitions.--In this paragraph, the term
                    `ancillary asset' has the meaning given the term in
                    section 4B(a).
                        ``(B) Exemption in connection with ancillary
                    assets.--An ancillary asset offered, sold, or
                    distributed in reliance on Regulation Crypto, as
                    adopted under section 103 of the Lummis-Gillibrand
                    Responsible Financial Innovation Act of 2026, shall be
                    treated as a covered security.''.
        (h) Preservation of Regulation Best Interest.--
                (1) In general.--Subject to paragraph (2), nothing in this
            Act, any amendment made by this Act, or any rule issued under
            this Act or pursuant to any such amendment may be construed to
            limit, preempt, or otherwise affect the obligations of a broker
            or dealer registered with the Commission under section 15 of
            the Securities Exchange Act of 1934 (15 U.S.C. 78o) or section
            240.15l-1 of title 17, Code of Federal Regulations (commonly
            known as ``Regulation Best Interest''), or any successor
            regulation.
                (2) Application.--Paragraph (1) shall not apply with
            respect to any person registered with the Commodity Futures
            Trading Commission.
        (i) Preservation of Investment Adviser Fiduciary Duties.--Nothing
    in this Act, any amendment made by this Act, or any rule issued under
    this Act or pursuant to any such amendment may be construed to limit,
    preempt, or otherwise affect the fiduciary duty that an investment
    adviser (as defined in section 202 of the Investment Advisers Act of
    1940 (15 U.S.C. 80b-2)) owes to a client under section 206 of the
    Investment Advisers Act of 1940 (15 U.S.C. 80b-6) or any other
    provision of Federal or State law, including in connection with
    investment advice regarding a digital commodity.

    SEC. 109. INSIDER TRADING WITH RESPECT TO ANCILLARY ASSET TRANSACTIONS.

        (a) Definition.--In this section, the term ``distributed ledger
    control person'' has the meaning given the term in section 104(a).
        (b) Application of Securities Laws.--Any provision of the
    securities laws, or any regulation issued under the securities laws,
    including any duty that arises under the securities laws or under such
    a regulation, that applies with respect to a person that purchases,
    sells, or offers to sell a security, security-based swap, or security-
    based swap agreement while in possession of material nonpublic
    information, or communicates such information in connection with or in
    the transaction, shall apply to any offer, sale, or purchase of a
    security, security-based swap, or security-based swap agreement in
    which an ancillary asset is offered, sold, or purchased, including any
    offer, sale, or purchase conducted pursuant to Regulation Crypto, as
    adopted pursuant to section 103, whether conducted by an ancillary
    asset originator, a related person, or any other person.
        (c) Rulemaking.--
                (1) In general.--The Commission shall adopt rules to
            implement subsection (b), which shall--
                        (A) include rules providing an affirmative defense
                    for an offer, sale, or purchase of an ancillary asset
                    made pursuant to a written plan adopted before the
                    applicable person became aware of material nonpublic
                    information, which shall be consistent with section
                    240.10b5-1 of title 17, Code of Federal Regulations, or
                    any successor regulation; and
                        (B) be interpreted and applied in a manner that is
                    consistent with, and may not be construed to expand or
                    contract, the principles of, and judicial precedent
                    interpreting (by the Supreme Court of the United
                    States), the securities laws and the regulations issued
                    under the securities laws, as those principles and that
                    judicial precedent are in effect, as of the day before
                    the date of enactment of this Act.
                (2) Considerations.--In adopting rules under paragraph (1),
            the Commission shall consider, subject to subsection (e),
            whether, and under what circumstances, an offer, sale,
            purchase, or communication should be addressed by those rules,
            including by--
                        (A) a distributed ledger control person, any person
                    acting on behalf of, or in concert with, an ancillary
                    asset originator, related person, or distributed ledger
                    control person, or a person that obtained material
                    nonpublic information in the course of a relationship
                    of trust and confidence with an ancillary asset
                    originator or related person, where material nonpublic
                    information regarding an ancillary asset originator or
                    an ancillary asset was--
                                (i) obtained pursuant to or in breach of a
                            duty of trust or confidence;
                                (ii) deceptively obtained through theft,
                            bribery, misrepresentation, or espionage or in
                            violation of any Federal law protecting
                            computer data; or
                                (iii) obtained from an ancillary asset
                            originator or related person, the conduct of
                            which is described in subparagraph (B); or
                        (B) an ancillary asset originator or related person
                    that purchases, sells, or otherwise distributes an
                    ancillary asset, or communicates material nonpublic
                    information regarding an ancillary asset originator or
                    ancillary asset, while aware of material nonpublic
                    information that is required to be disclosed in any
                    disclosure furnished, or required to be furnished,
                    under section 4B of the Securities Act of 1933, as
                    added by this Act, or Regulation Crypto, as adopted
                    pursuant to section 103.
        (d) Enforcement.--A violation of subsection (b), or any rule
    adopted under subsection (c), shall be treated as a violation of the
    securities laws and subject to the penalties under sections 21A and 32
    of the Securities Exchange Act of 1934 (15 U.S.C. 78u-1, 78ff) and to
    all other remedies available under the securities laws.
        (e) Rule of Construction.--Consistent with section 4B(b)(3) of the
    Securities Act of 1933, as added by this Act, nothing in this section
    may be construed to apply the securities laws, or any regulation issued
    under the securities laws (including any rule adopted under subsection
    (c)), to any secondary market transaction in an ancillary asset that is
    not otherwise a transaction in a security, security-based swap, or
    security-based swap agreement.

    SEC. 110. SECURITIES INVESTOR PROTECTION CORPORATION APPLICABILITY.

        Section 16(14) of the Securities Investor Protection Act of 1970
    (15 U.S.C. 78lll(14)) is amended by inserting after the second sentence
    the following: ``The term `security' does not include a digital
    commodity.''.

    SEC. 111. INVESTOR AND CONSUMER PROTECTION ENFORCEMENT.

        (a) Preservation of Certain Rights, Authorities, Laws, and
    Obligations.--Subject to subsection (b), nothing in this Act, any
    amendment made by this Act, or any rule, requirement, or regulation
    promulgated pursuant to this Act may be construed to prohibit, limit,
    impair, or otherwise affect--
                (1) any person from bringing a civil action to enforce any
            private right of action for fraud, deceit, manipulation, or
            deceptive practices, to the extent that such private right of
            action is expressly provided for in this Act or an amendment
            made by this Act, or is otherwise available under Federal law,
            including with respect to conduct involving an ancillary asset,
            network token, digital commodity, or any transaction,
            disclosure, certification, notice, report, statement,
            communication, or other document involving any such asset;
                (2) except as expressly provided in this Act or an
            amendment made by this Act, any Federal or State regulator,
            acting within the scope of authority otherwise provided by law,
            from bringing an administrative or civil enforcement action
            under--
                        (A) the Commodity Exchange Act (7 U.S.C. 1 et
                    seq.), including the provisions of that Act that are
                    added by this Act and relate to digital commodities and
                    the jurisdiction of the Commodity Futures Trading
                    Commission;
                        (B) the Securities Act of 1933 (15 U.S.C. 77a et
                    seq.), as amended by this Act, the Securities Exchange
                    Act of 1934 (15 U.S.C. 78a et seq.), as amended by this
                    Act, or the Investment Advisers Act of 1940 (15 U.S.C.
                    80b-1 et seq.);
                        (C) State commodities laws, subject to the
                    provisions of this Act, and the amendments made by this
                    Act, relating to the jurisdiction of the Commodity
                    Futures Trading Commission; or
                        (D) section 18(c)(1) of the Securities Act of 1933
                    (15 U.S.C. 77r(c)(1)), or any functionally equivalent
                    anti-fraud or anti-manipulation provision of State
                    securities law (including any State securities law with
                    respect to a security or a transaction in a security to
                    the extent enforcement of that anti-fraud or anti-
                    manipulation provision of State securities law is not
                    preempted by section 18 of the Securities Act of 1933
                    (15 U.S.C. 77r)), with respect to an investment
                    contract involving an ancillary asset, or other
                    transaction involving any such asset, for which this
                    Act or an amendment made by this Act expressly
                    preserves or provides for the application of anti-fraud
                    or anti-manipulation authority;
                (3) except as expressly provided in this Act or an
            amendment made by this Act, any generally applicable State law,
            including a law relating to fraud, deceit, unfair or deceptive
            acts or practices, consumer protection, banking, payments,
            property, contracts, criminal law, or unlawful conduct or
            practices, or the remedies available under any such law, with
            respect to conduct involving a digital asset, ancillary asset,
            network token, or digital commodity, or any transaction,
            activity, person, or service involving any such asset, provided
            that such law does not impose any licensing, registration,
            qualification, or other requirement that is expressly
            preempted, or otherwise expressly limited, by this Act or an
            amendment made by this Act;
                (4) the fiduciary obligations of an investment adviser, as
            defined in section 202(a) of the Investment Advisers Act of
            1940 (15 U.S.C. 80b-2(a)), under section 206 of that Act (15
            U.S.C. 80b-6), any rule or regulation issued under such section
            206, or any other provision of Federal or State law, including
            in connection with investment advice regarding a digital asset,
            ancillary asset, network token, digital commodity, or
            substantially similar technology; or
                (5) any right or remedy under Federal consumer financial
            law, including under section 1011 of the Consumer Financial
            Protection Act of 2010 (12 U.S.C. 5491) or the Federal Trade
            Commission Act (15 U.S.C. 41 et seq.), or authority under
            Federal consumer financial law with respect to any person,
            subject to the limitations under section 1027 of the Consumer
            Financial Protection Act of 2010 (12 U.S.C. 5517), including
            subsections (i) and (j) of such section 1027.
        (b) Limitations and Rules of Construction.--Nothing in subsection
    (a) may be construed to--
                (1) preserve, create, or authorize any Federal or State
            registration, licensing, qualification, or merit-review
            requirement under State law with respect to an ancillary asset,
            network token, digital commodity, transaction, person, or
            activity, to the extent that such requirement is preempted or
            otherwise limited by this Act or an amendment made by this Act;
                (2) create, preserve, or authorize any private right of
            action under Federal or State law with respect to an ancillary
            asset, network token, digital commodity, or transaction
            involving any such asset;
                (3) permit any claim, action, proceeding, requirement,
            liability, obligation, or remedy to be brought, maintained,
            imposed, or enforced under Federal or State securities or
            commodities law to the extent that such claim, action,
            proceeding, requirement, liability, obligation, or remedy
            depends upon, is predicated on, or would require a
            determination that an ancillary asset, network token, digital
            commodity, or any transaction, activity, person, or service
            involving any such asset has a status or characterization under
            Federal or State securities or commodities law that is contrary
            to an express classification or treatment provided by this Act
            or an amendment made by this Act;
                (4) expand, contract, or otherwise alter the jurisdiction,
            exclusive or otherwise, of the Commission, the Commodity
            Futures Trading Commission, or any State regulator;
                (5) limit, impair, or otherwise affect the treatment of any
            asset, transaction, or interest as a covered security for
            purposes of section 18 of the Securities Act of 1933 (15 U.S.C.
            77r); or
                (6) create any new private right of action under Federal or
            State law, except that nothing in this paragraph may be
            construed to limit, impair, or otherwise affect any private
            right of action preserved under subsection (a)(1), expressly
            provided in this Act or an amendment made by this Act, or
            otherwise available under Federal law.

                  TITLE II--PROTECTING AGAINST ILLICIT FINANCE

    SEC. 201. TREATMENT UNDER THE BANK SECRECY ACT AND SANCTIONS LAWS.

        (a) Amendment.--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 that Act that permits direct customer access''.
        (b) Bank Secrecy Act Requirements.--
                (1) Regulations.--The Secretary of the Treasury, acting
            through the Director of the Financial Crimes Enforcement
            Network, and in consultation with the Commodity Futures Trading
            Commission, shall issue requirements consistent with the
            requirements of futures commission merchants to apply the Bank
            Secrecy Act to digital commodity brokers, digital commodity
            dealers, and digital commodity exchanges that are tailored to
            the size and complexity of such entities, including by
            requiring each such entity to--
                        (A) establish and maintain an anti-money laundering
                    and countering the financing of terrorism program,
                    which shall include--
                                (i) an appropriate risk assessment;
                                (ii) the development of internal policies,
                            procedures, and controls;
                                (iii) the designation of a compliance
                            officer;
                                (iv) an ongoing employee training program;
                            and
                                (v) an independent audit function to test
                            such program;
                        (B) retain appropriate records of transactions;
                        (C) monitor and report suspicious activity, which
                    may include use of appropriate distributed ledger
                    analytics; and
                        (D) maintain an effective customer identification
                    program to identify and verify account holders and
                    carry out appropriate customer due diligence.
                (2) Compliance with sanctions.--A digital commodity broker,
            digital commodity dealer, or digital commodity exchange shall
            comply with all laws and regulations related to United States
            sanctions administered by the Office of Foreign Assets Control.
        (c) Sense of Congress.--It is the sense of Congress that nothing in
    this section shall limit the applicability of any law imposing or
    authorizing the imposition of economic sanctions by the United States.

    SEC. 202. DIGITAL ASSET EXAMINATION STANDARDS.

        (a) Definitions.--In this section:
                (1) Federal functional regulator.--The term ``Federal
            functional regulator'' has the meaning given the term in
            section 509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6809).
                (2) Financial institution.--The term ``financial
            institution'' has the meaning given the term in section
            5312(a)(2) of title 31, United States Code.
        (b) Examination and Review.--The Secretary of the Treasury, in
    consultation with Federal functional regulators, shall establish,
    coordinated to the extent feasible, risk-based examination standards to
    assess financial institutions involved in the digital asset sector for
    compliance with anti-money laundering and countering the financing of
    terrorism requirements under the Bank Secrecy Act.

    SEC. 203. PREVENTING ILLICIT FINANCE THROUGH PARTNERSHIP ACT.

        (a) Short Title.--This section may be cited as the ``Preventing
    Illicit Finance Through Partnership Act''.
        (b) Definitions.--In this section:
                (1) Bank.--The term ``bank'' has the meaning given the term
            in section 1010.100 of title 31, Code of Federal Regulations
            (or any corresponding similar regulation).
                (2) Certified or recognized information-sharing or
            interdiction network.--The term ``certified or recognized
            information-sharing or interdiction network'' means a real-
            time, secure, public-private mechanism that--
                        (A) facilitates the detection, interdiction, and
                    prevention of illicit finance violations through rapid
                    information exchange between government and regulated
                    entities; and
                        (B) is--
                                (i) certified by the Secretary of the
                            Treasury for the purpose of supporting
                            interdiction and investigative actions
                            consistent with law enforcement or regulatory
                            authorities; or
                                (ii) recognized by the Secretary of the
                            Treasury as an existing (as of the day before
                            the date of enactment of this Act), effective
                            public-private partnership network that meets
                            standards for security, accountability, and
                            participation that are equivalent to the
                            standards that would be required by the
                            Secretary of the Treasury for certification
                            under clause (i).
                (3) Covered agency.--The term ``covered agency'' means--
                        (A) the Department of Justice, including the
                    Federal Bureau of Investigation and the Drug
                    Enforcement Administration;
                        (B) the Department of the Treasury, including the
                    Financial Crimes Enforcement Network, the Internal
                    Revenue Service, and the Office of Foreign Assets
                    Control; and
                        (C) the Department of Homeland Security.
                (4) Designated private sector entity.--The term
            ``designated private sector entity'' means a private sector
            entity designated under subsection (d).
                (5) Director.--The term ``Director'' means the Director of
            the Financial Crimes Enforcement Network.
                (6) Illicit finance violation.--The term ``illicit finance
            violation'' means the illicit use of digital assets.
                (7) Illicit use.--The term ``illicit use'' includes fraud,
            money laundering, terrorist financing, the purchase and sale of
            illicit goods, trafficking of fentanyl (including fentanyl
            precursors and trade in other illicit drugs), sanctions
            evasion, theft of funds, funding of illegal activities,
            transactions relating to child sexual abuse material or elder
            fraud abuse, and any other financial transaction involving the
            proceeds of specified unlawful activity, as defined in section
            1956(c) of title 18, United States Code.
                (8) Money services business.--The term ``money services
            business'' has the meaning given the term in section 1010.100
            of title 31, Code of Federal Regulations (or any corresponding
            similar regulation).
        (c) Establishment of Program.--The Secretary of the Treasury shall
    establish a pilot program under which covered agencies and designated
    private sector entities securely share information focused on potential
    illicit finance violations and threats and emerging risks relating to
    illicit finance violations.
        (d) Designation of Private Sector Entities.--
                (1) Required action.--
                        (A) Initial companies.--Not later than 90 days
                    after the date of enactment of this Act, the Director
                    and the Secretary shall designate 10 private sector
                    entities that are money services businesses, 10 private
                    sector entities that are digital commodity brokers,
                    digital commodity dealers, or digital commodity
                    exchanges, and 10 private sector entities that are
                    banks to participate in the pilot program established
                    under subsection (c), if such entities agree and
                    volunteer to participate in the program.
                        (B) Biannual review.--Not less frequently than once
                    every 6 months, the Director shall review and, as
                    appropriate, replace the private sector entities
                    designated under this paragraph.
                        (C) Rule of construction.--Nothing in this section
                    may be construed as--
                                (i) requiring an entity to participate in
                            the pilot program established under this
                            section; or
                                (ii) enabling the Director to select an
                            entity to participate in the pilot program
                            without the consent of such entity.
                (2) Optional designation.--In addition to the 30 private
            sector entities designated under paragraph (1), the Director
            may designate--
                        (A) 1 or more information sharing and analysis
                    centers to participate in the pilot program;
                        (B) 1 or more participants in a certified or
                    recognized information sharing or interdiction network;
                    or
                        (C) 1 or more private sector entities, as
                    appropriate, relating to a particular type of illicit
                    activity.
        (e) Information Sharing With Private Sector Entities.--A covered
    agency that initiates an investigation into a potential illicit finance
    violation, or identifies a threat or emerging risk relating to an
    illicit finance violation, may share with any designated private sector
    entity such information about the investigation, threat, or emerging
    risk as the covered agency determines is appropriate.
        (f) Use of Information by Private Sector Entities.--Information
    received by a designated private sector entity under this section may
    not be used for any purpose other than identifying and reporting on
    activities that may involve illicit finance violations or threats and
    emerging risks relating to illicit finance violations, unless otherwise
    prescribed by regulation or permitted by the covered agency sharing the
    information.
        (g) Means of Sharing Information.--The covered agencies and
    designated private sector entities may share information about
    potential illicit finance violations, or threats and emerging risks
    relating to illicit finance violations, with each other--
                (1) through a portal established by the Secretary of the
            Treasury or a similar mechanism determined appropriate by the
            Secretary of the Treasury;
                (2) through secure email;
                (3) at monthly meetings, which shall be facilitated by the
            Secretary of the Treasury; or
                (4) through a certified or recognized information-sharing
            or interdiction network.
        (h) Limitation on Liability.--A designated private sector entity
    that transmits, receives, or shares information for the purposes of
    identifying and reporting activities that may constitute illicit
    finance violations, or threats and emerging risks relating to illicit
    finance violations, shall not be liable to any person for such
    disclosure or for any failure to provide notice of such disclosure to
    the person who is the subject of such disclosure or any other person
    identified in such disclosure.
        (i) Sunset.--The pilot program established under subsection (c)
    shall terminate on the date that is 5 years after the date of enactment
    of this Act, unless made permanent through notice and comment
    rulemaking by the Department of the Treasury.

    SEC. 204. FINANCIAL TECHNOLOGY PROTECTION ACT.

        (a) Short Title.--This section may be cited as the ``Financial
    Technology Protection Act''.
        (b) Definitions.--In this section:
                (1) Appropriate congressional committees.--The term
            ``appropriate congressional committees'' means--
                        (A) the Committee on Banking, Housing, and Urban
                    Affairs of the Senate;
                        (B) the Committee on Agriculture, Nutrition, and
                    Forestry of the Senate;
                        (C) the Committee on Financial Services of the
                    House of Representatives; and
                        (D) the Committee on Agriculture of the House of
                    Representatives.
                (2) Distributed ledger analytics company.--The term
            ``distributed ledger analytics company'' means any business
            providing software, research, or other services (such as
            tracing tools, geofencing, transaction screening, the
            collection of business data, and sanctions screening) that--
                        (A) support private and public sector
                    investigations and risk management activities; and
                        (B) involve cryptographically secured distributed
                    ledgers or any similar technology or implementation.
                (3) Emerging technologies.--The term ``emerging
            technologies'' means the critical and emerging technology areas
            listed in the Critical and Emerging Technologies List developed
            by the Fast Track Action Subcommittee on Critical and Emerging
            Technologies of the National Science and Technology Council,
            including any updates to such list.
                (4) Foreign terrorist organization.--The term ``foreign
            terrorist organization'' means an organization that is
            designated as a foreign terrorist organization under section
            219 of the Immigration and Nationality Act (8 U.S.C. 1189).
                (5) Illicit use.--The term ``illicit use'' includes fraud,
            money laundering, terrorist financing, the purchase and sale of
            illicit goods, trafficking of fentanyl (including fentanyl
            precursors and trade in other illicit drugs), sanctions
            evasion, theft of funds, funding of illegal activities,
            transactions related to child sexual abuse material or elder
            fraud abuse, and any other financial transaction involving the
            proceeds of specified unlawful activity (as defined in section
            1956(c) of title 18, United States Code).
                (6) State sponsor of terrorism.--The term ``state sponsor
            of terrorism'' means a country determined by the Secretary of
            State to have repeatedly provided support for acts of
            international terrorism under section 40 of the Arms Export
            Control Act (22 U.S.C. 2780) or section 620A of the Foreign
            Assistance Act of 1961 (22 U.S.C. 2371).
                (7) Terrorist.--The term ``terrorist'' includes a person
            carrying out domestic terrorism or international terrorism (as
            such terms are defined, respectively, under section 2331 of
            title 18, United States Code).
                (8) Transnational organized crime.--The term
            ``transnational organized crime'' has the meaning given the
            term in section 284 of title 10, United States Code.
        (c) Independent Financial Technology Working Group to Combat
    Terrorism, Narcotics Trafficking, and Illicit Financing.--
                (1) Establishment.--There is established the Independent
            Financial Technology Working Group to Combat Terrorism,
            Narcotics Trafficking, and Illicit Financing (in this section
            referred to as the ``Working Group'' ), which shall consist of
            the following:
                        (A) The Secretary of the Treasury or their
                    designee, who shall serve as the chair of the Working
                    Group.
                        (B) A senior-level representative from each of the
                    following:
                                (i) The Department of the Treasury.
                                (ii) The Office of Terrorism and Financial
                            Intelligence.
                                (iii) The Internal Revenue Service.
                                (iv) The Department of Justice.
                                (v) The Federal Bureau of Investigation.
                                (vi) The Drug Enforcement Administration.
                                (vii) The Department of Homeland Security.
                                (viii) The United States Secret Service.
                                (ix) The Department of State.
                                (x) The Office of the Director of National
                            Intelligence.
                        (C) At least 5 individuals appointed by the
                    Secretary of the Treasury to represent the following:
                                (i) Digital asset companies.
                                (ii) Distributed ledger analytics
                            companies.
                                (iii) Financial institutions.
                                (iv) Institutions or organizations engaged
                            in research.
                                (v) Institutions or organizations focused
                            on individual privacy and civil liberties.
                        (D) Such additional individuals as the Secretary of
                    the Treasury may appoint as necessary to accomplish the
                    duties described in paragraph (2).
                (2) Duties.--The Working Group shall--
                        (A) conduct research on the illicit use of digital
                    assets and other related emerging technologies,
                    including by terrorists, foreign terrorist
                    organizations, state sponsors of terrorism, and
                    transnational organized crime groups; and
                        (B) develop legislative and regulatory proposals to
                    improve anti-money laundering, counter-terrorist, and
                    other counter-illicit financing efforts in the United
                    States.
                (3) Reports.--
                        (A) In general.--Not later than 1 year after the
                    date of enactment of this Act, and annually for the 3
                    years thereafter, the Working Group shall submit to the
                    Secretary of the Treasury, the heads of each agency
                    represented in the Working Group pursuant to paragraph
                    (1)(B), and the appropriate congressional committees a
                    report containing the findings and determinations made
                    by the Working Group in the previous year and any
                    legislative and regulatory proposals developed by the
                    Working Group.
                        (B) Final report.--Before the date on which the
                    Working Group terminates under paragraph (4)(A), the
                    Working Group shall submit to the appropriate
                    congressional committees a final report detailing the
                    findings, recommendations, and activities of the
                    Working Group, including any final results from the
                    research conducted by the Working Group.
                (4) Sunset.--
                        (A) In general.--The Working Group shall terminate
                    on the later of--
                                (i) the date that is 4 years after the date
                            of enactment of this Act; or
                                (ii) the date on which the Working Group
                            completes any wind-up activities described in
                            subparagraph (B).
                        (B) Authority to wind up activities.--If there are
                    research, proposals, or other related activities of the
                    Working Group ongoing as of the date that is 4 years
                    after the date of enactment of this Act, the Working
                    Group may temporarily continue working in order to wind
                    up such activities.
                        (C) Return of appropriated funds.--On the date on
                    which the Working Group terminates under subparagraph
                    (A), any unobligated funds appropriated to carry out
                    this subsection shall be transferred to the Treasury.

    SEC. 205. DIGITAL ASSET KIOSKS.

        (a) Registration.--Section 5330 of title 31, United States Code, is
    amended--
                (1) in subsection (d)--
                        (A) in paragraph (1)(A), by inserting ``, any
                    person who owns, operates, or manages a digital asset
                    kiosk in the United States or its territories,'' after
                    ``similar instruments''; and
                        (B) by adding at the end the following:
                ``(3) Digital asset; digital asset address; digital asset
            kiosk; digital asset kiosk operator.--The terms `digital
            asset', `digital asset address', `digital asset kiosk', and
            `digital asset kiosk operator' have the meanings given those
            terms, respectively, in section 5337.''; and
                (2) by adding at the end the following:
        ``(f) Registration of Digital Asset Kiosk Locations.--
                ``(1) In general.--Not later than 90 days after the
            effective date of this subsection, and not less than once every
            90 days thereafter, the Secretary of the Treasury shall require
            digital asset kiosk operators to submit an updated list
            containing the physical address of each digital asset kiosk
            owned or operated by the digital asset kiosk operator.
                ``(2) Form and manner of registration.--Each submission by
            a digital asset kiosk operator pursuant to paragraph (1) shall
            include--
                        ``(A) the legal name of the digital asset kiosk
                    operator;
                        ``(B) any fictitious or trade name of the digital
                    asset kiosk operator;
                        ``(C) the physical address of each digital asset
                    kiosk owned, operated, or managed by the digital asset
                    kiosk operator that is located in the United States or
                    the territories of the United States;
                        ``(D) the start date of operation of each digital
                    asset kiosk;
                        ``(E) the end date of operation of each digital
                    asset kiosk, if applicable; and
                        ``(F) each digital asset address used by the
                    digital asset kiosk operator.
                ``(3) False and incomplete information.--The filing of
            false or materially incomplete information in a submission
            required under paragraph (1) shall be deemed a failure to
            comply with the requirements of this subsection.''.
        (b) Preventing Fraudulent Transactions at Digital Asset Kiosks.--
                (1) In general.--Subchapter II of chapter 53 of title 31,
            United States Code, is amended by adding at the end the
            following:
    ``Sec. 5337. Digital asset kiosk fraud prevention
        ``(a) Definitions.--In this section:
                ``(1) Customer.--The term `customer' means any person that
            purchases or sells digital assets through a digital asset
            kiosk.
                ``(2) Distributed ledger analytics.--The term `distributed
            ledger analytics' means the analysis of data from public
            distributed ledgers, and associated transaction information, to
            provide risk-specific information about digital asset
            transactions and digital asset addresses.
                ``(3) Digital asset.--The term `digital asset' has the
            meaning given the term in section 2 of the GENIUS Act (12
            U.S.C. 5901).
                ``(4) Digital asset address.--The term `digital asset
            address' means an alphanumeric identifier associated with a
            digital asset wallet identifying the location to which a
            digital asset purchased through a digital asset kiosk can be
            sent or from which a digital asset sold through a digital asset
            kiosk can be accessed.
                ``(5) Digital asset kiosk.--The term `digital asset kiosk'
            means a stand-alone machine that is capable of accepting or
            dispensing legal tender in exchange for digital assets.
                ``(6) Digital asset kiosk operator.--The term `digital
            asset kiosk operator' means a person who owns, operates, or
            manages a digital asset kiosk located in the United States or
            its territories.
                ``(7) Digital asset kiosk transaction.--The term `digital
            asset kiosk transaction' means the purchase or sale of digital
            assets via a digital asset kiosk.
                ``(8) Digital asset wallet.--The term `digital asset
            wallet' means a software application or other mechanism
            providing a means for holding, storing, and transferring
            digital assets.
                ``(9) FinCEN.--The term `FinCEN' means the Financial Crimes
            Enforcement Network of the Department of the Treasury.
                ``(10) New customer.--The term `new customer,' with respect
            to a digital asset kiosk operator, means a customer during the
            14-day period beginning on the date of the first digital asset
            kiosk transaction of the customer with the digital asset kiosk
            operator.
                ``(11) Transaction hash.--The term `transaction hash' means
            a unique identifier made up of a string of characters that act
            as a record of and provide proof that a transaction was
            verified and added to the distributed ledger.
        ``(b) Disclosures.--
                ``(1) In general.--Before entering into a digital asset
            transaction with a customer, a digital asset kiosk operator
            shall disclose in a clear, conspicuous, and easily readable
            manner--
                        ``(A) all relevant terms and conditions of the
                    digital asset kiosk transaction, including--
                                ``(i) the amount of the digital asset kiosk
                            transaction;
                                ``(ii) the type and nature of the digital
                            asset kiosk transaction;
                                ``(iii) a warning that the digital asset
                            kiosk transaction is final, is not refundable,
                            and may not be reversed; and
                                ``(iv) the type and amount of any fees or
                            other expenses paid by the customer;
                        ``(B) a warning relating to consumer fraud
                    including--
                                ``(i) that consumer fraud often starts with
                            contact from a stranger, and that the customer
                            should never send money to someone the customer
                            does not know;
                                ``(ii) the most common types of fraudulent
                            schemes involving digital asset kiosks, such
                            as--
                                        ``(I) impersonation of a government
                                    official or a bank representative;
                                        ``(II) threats of jail time or
                                    financial penalties;
                                        ``(III) offers of a job or reward
                                    in exchange for payment, or offers of
                                    deals that seem too good to be true;
                                        ``(IV) claims of a frozen bank
                                    account or credit card;
                                        ``(V) requests for donations to
                                    charity or disaster relief; or
                                        ``(VI) payment to an individual the
                                    customer has never met; and
                                ``(iii) a statement that the customer
                            should contact law enforcement if they suspect
                            fraudulent activity, such as scams, including
                            contact information for a relevant law
                            enforcement or government agency.
                ``(2) Additional disclosures.--FinCEN may adopt rules
            relating to additional disclosures required to be made to
            customers prior to engaging in a transaction.
        ``(c) Acknowledgment of Disclosures.--Each time a customer uses a
    digital asset kiosk, the digital asset kiosk operator shall ensure
    acknowledgment of all disclosures required under subsection (b) via
    confirmation of consent of the customer at the digital asset kiosk.
        ``(d) Receipts.--Upon completion of each digital asset kiosk
    transaction, the digital asset kiosk operator shall provide the
    customer with a receipt, which shall include the following information:
                ``(1) The name and contact information of the digital asset
            kiosk operator, including a telephone number for a customer
            service helpline.
                ``(2) The name of the customer.
                ``(3) The type, value, date, and precise time of the
            digital asset kiosk transaction, transaction hash, and each
            applicable digital asset address.
                ``(4) The amount of the digital asset kiosk transaction
            expressed in United States dollars.
                ``(5) All fees charged.
                ``(6) A statement that the customer should contact law
            enforcement if they suspect fraudulent activity, such as scams,
            including contact information for a relevant law enforcement or
            government agency.
                ``(7) The exchange rate applied.
                ``(8) Any additional information the digital asset kiosk
            operator determines appropriate.
        ``(e) Physical Receipts Available.--A physical version of the
    receipt required under subsection (d) shall be issued to the customer
    at the time of the digital asset kiosk transaction, if the customer
    opts for such a physical version of the receipt.
        ``(f) Anti-Fraud Policy.--
                ``(1) In general.--Each digital asset kiosk operator shall
            establish, maintain, and implement a written anti-fraud policy
            if required by, and consistent with, applicable State law in
            those States where the digital asset kiosk operator is
            licensed.
                ``(2) Federal standard.--A digital asset kiosk operator
            operating in any State that does not require an anti-fraud
            policy under paragraph (1) shall establish, maintain, and
            implement an anti-fraud policy that, at a minimum, includes--
                        ``(A) the identification and assessment of fraud-
                    related areas;
                        ``(B) procedures and controls to protect against
                    risks identified under subparagraph (A);
                        ``(C) allocation of responsibility for monitoring
                    the risks identified under subparagraph (A); and
                        ``(D) procedures for the periodic evaluation and
                    revision of the anti fraud procedures, controls, and
                    monitoring mechanisms under subparagraphs (B) and (C).
        ``(g) Appointment of Compliance Officer.--Each digital asset kiosk
    operator shall designate and employ a compliance officer who--
                ``(1) is qualified to coordinate and monitor compliance
            with this section and all other applicable Federal and State
            laws, rules, and regulations;
                ``(2) is employed full-time by the digital asset kiosk
            operator;
                ``(3) is not the chief executive officer of the digital
            asset kiosk operator; and
                ``(4) does not own or control more than 10 percent of any
            interest in the digital asset kiosk operator.
        ``(h) Use of Distributed Ledger Analytics and Wallet Pinning.--
                ``(1) In general.--Each digital asset kiosk operator shall
            use distributed ledger analytics to prevent sending a digital
            asset to a digital asset wallet known to be affiliated with
            fraudulent activity at the time of a digital asset kiosk
            transaction and to detect transaction patterns indicative of
            fraud or other illicit activities.
                ``(2) Wallet pinning.--Each digital asset kiosk operator
            shall maintain restrictions that prevent more than 1 customer
            of the digital asset kiosk operator from using the same digital
            wallet address.
                ``(3) Compliance.--The Director of FinCEN may request
            evidence from any digital asset kiosk operator to confirm
            compliance with this subsection.
        ``(i) Confirmation Required Before New Customer Transactions.--
    Before entering into a digital asset kiosk transaction valued at $500
    or more with a new customer, the digital asset kiosk operator shall
    obtain confirmation from the new customer that--
                ``(1) the new customer wishes to proceed with the digital
            asset kiosk transaction; and
                ``(2) the new customer is not being fraudulently induced
            into engaging in the transaction.
        ``(j) Holding Period.--No digital asset kiosk operator shall
    execute a transaction on behalf of a new customer that sends digital
    assets to a specific wallet address unless at least 72 hours have
    elapsed since the initiation of the transaction by the new customer.
        ``(k) Transaction Limits With Respect to New Customers.--The
    Secretary of the Treasury shall prescribe by regulation the threshold
    amounts for reporting or limiting digital asset kiosk transactions,
    including aggregate or single-day deposit and withdrawal limits, as the
    Secretary determines are reasonably necessary to deter fraud and
    illicit finance. Such regulations shall consider the unique risks and
    functionalities of digital asset kiosks and may provide for exceptions,
    adjustments, or exclusions as deemed appropriate by the Secretary.
        ``(l) Interim Transaction Limits.--Until the effective date of
    regulations prescribed under subsection (k), a digital asset kiosk
    operator shall not permit a new customer to conduct transactions
    exceeding $3,500 in the aggregate within any 24-hour period.
        ``(m) Refunds.--A digital asset kiosk operator shall issue a refund
    for a customer's transaction fees within 30 days if--
                ``(1) the customer was fraudulently induced into engaging
            in the digital asset kiosk transaction; and
                ``(2) the customer files a complaint to the digital asset
            kiosk operator, which includes--
                        ``(A) the name, address, and phone number of the
                    customer;
                        ``(B) the transaction hash of the digital asset
                    kiosk transaction or information sufficient to
                    establish the type, value, date, and time of the
                    digital asset kiosk transaction; and
                        ``(C) a copy of a report to a State or local law
                    enforcement or government agency made not later than 30
                    days after the digital asset kiosk transaction.
        ``(n) Customer Service Helpline.--Each digital asset kiosk operator
    shall provide live customer service during business hours, the phone
    number for which is regularly monitored and displayed in a clear,
    conspicuous, and easily readable manner upon each digital asset kiosk.
    During non-business hours, the digital asset kiosk operator shall
    maintain an alternative customer service system that may include an
    automated chatbot, an online complaint reporting portal, or other
    customer service mechanism.
        ``(o) Communications With Law Enforcement.--Each digital asset
    kiosk operator performing business in the United States shall have a
    dedicated method of contact, such as a phone number, email address, or
    other contact method, for law enforcement and regulatory agencies to
    contact the digital asset kiosk operator. This contact method shall be
    displayed and available on the digital asset kiosk operator's website.
        ``(p) Civil Penalties and State Enforcement.--Any State regulator
    may bring a civil action or other appropriate proceeding to enforce the
    provisions of this section and may assess or collect civil penalties or
    other remedies for violations of this section, as provided under
    applicable State law.
        ``(q) Rule of Construction.--Nothing in this section may be
    construed to prohibit a State from enacting a law, rule, or regulation
    that provides greater protection to customers.''.
                (2) Technical and conforming amendment.--The table of
            sections for subchapter II of chapter 53 of title 31, United
            States Code, is amended by adding at the end the following:

    ``5337. Digital asset kiosk fraud prevention.''.

    SEC. 206. STUDY ON ILLICIT USE OF DIGITAL ASSETS.

        (a) Definitions.--In this section:
                (1) Foreign terrorist organization.--The term ``foreign
            terrorist organization'' means an organization that is
            designated as a foreign terrorist organization under section
            219 of the Immigration and Nationality Act (8 U.S.C. 1189).
                (2) Transnational organized criminal.--The term
            ``transnational organized criminal'' means an individual who
            participates in transnational organized crime, as defined in
            section 284(i) of title 10, United States Code.
        (b) Review.--Not later than 1 year after the date of enactment of
    this Act, the Secretary of the Treasury, in consultation with the
    Attorney General, shall conduct a comprehensive review of how foreign
    terrorist organizations and transnational organized criminals utilize
    digital assets in connection with illicit activities.
        (c) Report.--Not later than 180 days after completing the review
    under subsection (b), the Secretary of the Treasury shall submit to the
    Committee on Agriculture, Nutrition, and Forestry and the Committee on
    Banking, Housing, and Urban Affairs of the Senate and the Committee on
    Agriculture and the Committee on Financial Services of the House of
    Representatives a report on the findings of the Secretary, including--
                (1) an assessment of how foreign terrorist organizations
            and transnational organized criminals utilize digital assets in
            connection with illicit activities; and
                (2) recommendations to assist the Commission and the
            Commodity Futures Trading Commission in strengthening
            compliance and enforcement of digital assets-related entities
            registered with their respective agencies.
        (d) Additional Agencies.--The Secretary of the Treasury may, in the
    sole discretion of the Secretary of the Treasury, solicit input for the
    report required under subsection (c) from any or all of the Federal
    functional regulators, as defined in section 509 of the Gramm-Leach-
    Bliley Act (15 U.S.C. 6809), and the Commodity Futures Trading
    Commission.
        (e) Classified Annex.--The report required under subsection (c) may
    include a classified annex, as appropriate.

           TITLE III--RESPONSIBLE INNOVATION IN DECENTRALIZED FINANCE

    SEC. 301. RULEMAKING ON APPLICATION OF EXISTING SECURITIES INTERMEDIARY
                  REQUIREMENTS AND EXISTING BANK SECRECY ACT REQUIREMENTS
                  TO NON-DECENTRALIZED FINANCE TRADING PROTOCOLS.

        (a) Definitions.--In this section:
                (1) Decentralized finance trading protocol.--The term
            ``decentralized finance trading protocol'' means a distributed
            ledger system through which multiple participants can execute a
            financial transaction--
                        (A) in accordance with an automated rule or
                    algorithm that is predetermined and non-discretionary;
                    and
                        (B) without reliance on a person other than the
                    user to maintain custody or control of any digital
                    assets subject to the financial transaction.
                (2) Non-decentralized finance trading protocol.--
                        (A) In general.--The term ``non-decentralized
                    finance trading protocol'' means a decentralized
                    finance trading protocol that meets 1 or more of the
                    following:
                                (i) A person or group of persons under
                            common control, or acting pursuant to an
                            agreement, arrangement, or understanding 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 decentralized finance trading protocol.
                                (ii) The decentralized finance trading
                            protocol 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
                            distributed ledger system.
                                (iii) A person or group of persons under
                            common control, or acting pursuant to an
                            agreement, arrangement, or understanding to act
                            in concert, has the authority, via operation of
                            the decentralized finance trading protocol, to
                            restrict, censor, or prohibit the use of the
                            decentralized finance trading protocol,
                            including any applicable system-based user
                            activity.
                        (B) Special rule.--For purposes of subparagraph
                    (A), a decentralized governance system, solely by
                    virtue of the operation of the 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, arrangement, or understanding
                    to act in concert.
                        (C) Exclusions.--For purposes of this section,
                    participation in an incident-response or security
                    council, as described in subsection (f), shall not, by
                    itself, be deemed to constitute control of a non-
                    decentralized finance trading protocol.
                        (D) Scoping.--In implementing this section, the
                    Commission and the Department of the Treasury shall
                    construe the term ``non-decentralized finance trading
                    protocol'' in a manner consistent with section 15H of
                    the Securities Exchange Act of 1934, as added by
                    section 601.
        (b) Rules.--
                (1) In general.--The Commission, in consultation with the
            Department of the Treasury, shall adopt tailored, clear, and
            specific rules, after notice and comment, that clarify how a
            person, or group of persons under common control, or acting
            pursuant to an agreement, arrangement, or understanding to act
            in concert, that controls a non-decentralized finance trading
            protocol and is subject to the Securities Exchange Act of 1934
            (15 U.S.C. 78a et seq.), as amended by this Act, shall comply
            with applicable requirements under that Act, including with
            respect to registration, conduct, disclosure, recordkeeping,
            supervision, and other requirements under the securities laws.
                (2) Requirements.--The rulemaking required under paragraph
            (1) shall--
                        (A) ensure that the rules adopted pursuant to that
                    rulemaking are consistent with the purposes of the
                    securities laws, including the public interest, the
                    protection of investors, and the maintenance of fair
                    and orderly markets;
                        (B) protect the rights of software developers,
                    publishers, and users to create, publish, and use code
                    and software in a manner consistent with the First
                    Amendment to the Constitution of the United States;
                        (C) provide legal clarity for the development,
                    publication, and operation of distributed ledger
                    systems and the components therein in a manner
                    consistent with the purposes of this section; and
                        (D) result in, by operation of law, the application
                    and enforcement by the Department of the Treasury,
                    where applicable and pursuant to existing law, as in
                    effect on the day before the date of enactment of this
                    Act, of anti-money laundering and countering the
                    financing of terrorism requirements under the Bank
                    Secrecy Act and other Federal law with respect to any
                    person or group of persons that the Commission
                    determines, through that rulemaking, is required to
                    register, or comply as a registrant, under the
                    Securities Exchange Act of 1934 (15 U.S.C. 78a et
                    seq.).
                (3) Application.--
                        (A) In general.--Any person or group of persons
                    determined under this subsection to be required to
                    register, or comply as a registrant, under the
                    Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
                    (referred to in this paragraph as the ``Exchange Act'')
                    shall be subject to that Act and the Bank Secrecy Act
                    to the extent applicable under existing law, as in
                    effect on the day before the date of enactment of this
                    Act, consistent with the treatment of similarly
                    situated participants under the Exchange Act.
                        (B) Rulemaking.--The Secretary of the Treasury, in
                    consultation with the Commission, shall adopt tailored,
                    clear, and specific rules, after providing notice and
                    the opportunity to comment, that define compliance with
                    obligations under the Bank Secrecy Act and other
                    Federal laws relating to anti-money laundering and
                    countering the financing of terrorism with respect to
                    any person, or group of persons under common control
                    (or acting pursuant to an agreement, arrangement, or
                    understanding to act in concert), that--
                                (i) controls the operation of a non-
                            decentralized finance trading protocol
                            identified in the rulemaking conducted under
                            paragraph (1);
                                (ii) is required to register, or comply as
                            a registrant, under the Exchange Act, as
                            determined in the rulemaking conducted under
                            paragraph (1); and
                                (iii) is caused to be treated as a
                            financial institution under the Bank Secrecy
                            Act pursuant to existing law, as in effect on
                            the day before the date of enactment of this
                            Act, as a result of registration or compliance
                            described in clause (ii).
        (c) Activity-Based Application.--Rules adopted under subsection
    (b)(1) shall require the Commission to determine the applicable
    requirements only with respect to securities-related activities, based
    on the functions performed by the controlling person or group of
    persons, including brokerage, dealing, trading, execution, clearing, or
    custody of securities, without regard to technological form,
    distributed architecture, or purportedly decentralized
    characterization.
        (d) Rules of Construction.--
                (1) Registration not required.--Nothing in this section,
            nor any rule adopted under this section, may be construed to--
                        (A) require a distributed ledger system or any
                    software code to register with the Commission in its
                    own capacity; or
                        (B) prohibit the launch, deployment, or operation
                    of a distributed ledger system.
                (2) No expansion of statutory authority.--Notwithstanding
            any rulemaking required under subsection (b), and
            notwithstanding any action the Commission or the Secretary of
            the Treasury may take under that subsection, nothing in this
            section, including any such rulemaking, may be construed to--
                        (A) expand or contract the statutory authority of
                    the Commission or the Department of the Treasury, as in
                    effect on the day before the date of enactment of this
                    Act, under the Bank Secrecy Act; or
                        (B) limit the use of the authority described in
                    subparagraph (A) to determine, pursuant to that
                    rulemaking, the applicability of existing statutory
                    requirements, as in effect on the day before the date
                    of enactment of this Act, to persons or activities
                    described in this section.
                (3) No presumption of applicability.--Nothing in this
            section may be construed to create a presumption that any
            person or activity described in this section is or is not
            subject to the Securities Exchange Act of 1934 (15 U.S.C. 78a
            et seq.) or the Bank Secrecy Act absent a determination made
            pursuant to a rulemaking required under this section.
        (e) Preservation of Existing Authorities.--Nothing in this section
    may be construed to--
                (1) limit the authority of the Commission under the
            securities laws to investigate violations, bring actions, or
            issue subpoenas with respect to persons determined, pursuant to
            rulemaking, to be subject to the securities laws under this
            section; or
                (2) limit the authority of the Secretary of the Treasury
            under the Bank Secrecy Act, including to investigate violations
            or bring actions with respect to persons determined, pursuant
            to rulemaking, to be subject to the Bank Secrecy Act.
        (f) Non-Decentralized Finance Trading Protocols.--
                (1) In general.--In adopting rules under subsection (b),
            the Commission shall treat a decentralized governance system
            and any person participating in the decentralized governance
            system as separate persons unless such persons are under common
            control or acting pursuant to an agreement, arrangement, or
            understanding to act in concert.
                (2) Emergency measures.--
                        (A) In general.--Pre-defined, temporary rules-based
                    cybersecurity emergency measures exercised by an
                    incident-response or security council exclusively in
                    response to a specific and documented cybersecurity
                    incident or imminent threat and pursuant to publicly
                    disclosed, on-chain authorization mechanisms, strictly
                    limited in scope and duration solely to address such
                    specific and documented cybersecurity incident or
                    imminent threat, and without unilateral control by any
                    single person, shall not, by themselves, constitute
                    common control or an agreement, arrangement, or
                    understanding to act in concert, provided that such
                    rules and authorities, including the procedures and
                    operational limits governing such emergency measures,
                    are disclosed in publicly available written
                    documentation reasonably available to the applicable
                    Federal regulator, by a decentralized governance system
                    or similar legal entity sufficiently in advance of any
                    exercise of such emergency powers.
                        (B) Prohibition.--The emergency measures described
                    in subparagraph (A) may not be used to implement
                    protocol upgrades, governance decisions, or economic
                    changes that are unrelated to the mitigation of the
                    applicable cybersecurity incident or imminent threat,
                    as described in that subparagraph.
                (3) Standards.--The standards criteria for temporary rules-
            based cybersecurity emergency measures under paragraph (2)
            shall be established by rulemaking pursuant to subsection (b).

    SEC. 302. ILLICIT FINANCE OBLIGATIONS FOR DISTRIBUTED LEDGER MESSAGING
                  SYSTEMS.

        (a) Definitions.--In this section:
                (1) Distributed ledger messaging system.--The term
            ``distributed ledger messaging system''--
                        (A) means a web-hosted software application that
                    provides a user with the ability to create or submit an
                    instruction, communication, or message to a distributed
                    ledger application or decentralized finance trading
                    protocol for the purpose of executing a transaction by
                    the user; and
                        (B) does not include--
                                (i) a distributed ledger application;
                                (ii) a distributed ledger protocol;
                                (iii) a distributed ledger system;
                                (iv) a decentralized finance trading
                            protocol;
                                (v) any client, node, validator, or other
                            form of computational infrastructure with
                            respect to a distributed ledger system; or
                                (vi) any software or hardware wallet that
                            facilitates the custody of an individual of
                            their digital assets.
                (2) United States sanction law.--The term ``United States
            sanction law'' means any Federal law imposing, or authorizing
            the imposition of, economic sanctions.
        (b) Guidance.--Not later than 360 days after the date of enactment
    of this Act, the Secretary of the Treasury shall issue guidance with
    respect to the economic sanctions and anti-money laundering and
    countering the financing of terrorism obligations, risk management
    practices, or compliance considerations, applicable to a distributed
    ledger messaging system that is owned or operated by a United States
    person, as defined in any law imposing or authorizing the imposition of
    economic sanctions, which may include--
                (1) the use of commercially reasonable distributed ledger-
            analytics screening measures, through industry-standard
            distributed ledger-analytics tools, to identify wallet
            addresses that are owned by sanctioned persons, involve
            jurisdictions or financial institutions subject to United
            States sanctions, or activity prohibited by United States
            sanctions;
                (2) blocking, rejecting, preventing the routing of, or
            otherwise restricting attempted transactions prohibited by
            United States sanction laws;
                (3) blocking or restricting transactions that exhibit
            indicators of ransomware activity, illicit finance typologies,
            or any other pattern that presents a significant and
            identifiable illicit finance risk based on a commercially
            reasonable distributed ledger-analytics assessment to identify
            transactions that involve ransomware activity and other illicit
            finance activity; and
                (4) implementing and maintaining risk-based measures,
            consistent with applicable law, to identify, mitigate, and
            address anti-money laundering and countering the financing of
            terrorism risks, including--
                        (A) monitoring for risk indicators and limiting
                    exposure to illicit-finance risks, which may include
                    restricting, limiting, or otherwise mitigating exposure
                    to high-risk transactions; and
                        (B) complying, as applicable, with special measures
                    implemented by the Secretary of the Treasury under
                    section 5318A of title 31, United States Code.
        (c) Enforcement and Penalties.--The Secretary of the Treasury and
    any other Federal agency with relevant jurisdiction have the authority,
    as applicable, to enforce this section using their existing
    authorities, as of the day before the date of enactment of this Act,
    under applicable law.
        (d) Rules of Construction.--Nothing in this section may be
    construed to--
                (1) alter or amend any laws imposing or authorizing
            imposition of economic sanctions by the United States,
            including those that apply to United States persons that own or
            operate a distributed ledger messaging system;
                (2) expand or contract the applicability of--
                        (A) economic sanctions, anti-money laundering, or
                    any other illicit finance laws in effect as of the day
                    before the date of enactment of this Act to any person,
                    including any person that owns or operates a
                    distributed ledger messaging system; or
                        (B) the definition of a ``financial institution''
                    under applicable laws, which shall not apply to non-
                    controlling developers or providers as defined in
                    section 604(b)(3); or
                (3) restrict the authority of the Secretary of the Treasury
            to implement, administer, and enforce, including by imposing
            civil money penalties, any law imposing or authorizing the
            imposition of economic sanctions or any law to prevent money
            laundering or illicit finance otherwise provided by Federal law
            to the Secretary of the Treasury.

    SEC. 303. SPECIAL MEASURE RELATING TO CERTAIN TRANSMITTALS OF FUNDS.

        Section 5318A of title 31, United States Code, is amended--
                (1) in subsection (a)(2)(C), by striking ``subsection
            (b)(5)'' and inserting ``paragraph (5) or (6) of subsection
            (b)'' and
                (2) in subsection (b), by adding at the end the following:
                ``(6) Special measure for certain transmittals of funds.--
            If the Secretary of the Treasury finds that a jurisdiction
            outside of the United States, 1 or more financial institutions
            operating outside of the United States, or 1 or more classes of
            transactions within, or involving, a jurisdiction outside of
            the United States is of primary money laundering concern in
            connection with illicit finance through the use of digital
            assets, as defined in section 2 of the GENIUS Act (12 U.S.C.
            5901), the Secretary may, by order, regulation, or otherwise as
            permitted by law, prohibit, or impose conditions upon, certain
            transmittals of funds (to be defined by the Secretary by
            regulation) by any domestic financial institution or domestic
            financial agency, if such transmittal of funds involves any
            such institution, class of transaction, or type of account.''.

    SEC. 304. OFFSHORE STABLECOIN REPORT.

        (a) Definitions.--In this section:
                (1) Material volume of transactions.--The term ``material
            volume of transactions'' means a sustained level of transaction
            activity that is--
                        (A) publicly observable;
                        (B) exceeds de minimis usage over a 12-month
                    period; and
                        (C) is reasonably likely to affect the illicit
                    finance or national security risk exposure of the
                    United States.
                (2) Payment stablecoin.--The term ``payment stablecoin''
            has the meaning given the term in section 2 of the GENIUS Act
            (12 U.S.C. 5901).
                (3) United states-dependent offshore stablecoin.--The term
            ``United States-dependent offshore stablecoin'' means a payment
            stablecoin--
                        (A) that is not issued by a permitted payment
                    stablecoin issuer or any foreign payment stablecoin
                    issuer registered with the Comptroller (as those terms
                    are defined in section 2 of the GENIUS Act (12 U.S.C.
                    5901));
                        (B) that is issued by a person operating outside of
                    the United States; and
                        (C) the value of which is supported or backed by a
                    reserve of assets that has a substantial nexus to the
                    United States, which may include--
                                (i) obligations of the United States,
                            including United States Treasury securities and
                            repurchase agreements backed by United States
                            Treasury securities and funds held as deposits
                            at any bank subject to the jurisdiction of the
                            United States;
                                (ii) deposits maintained at a banking
                            entity or insured depository institution
                            located in the United States, including
                            correspondent or payable-through accounts;
                                (iii) securities issued or guaranteed by
                            the United States or any agency or
                            instrumentality thereof; or
                                (iv) assets custodied, cleared, or settled
                            through payment, clearing, or settlement
                            systems located in the United States.
        (b) Report.--Not later than June 30 of the second calendar year
    that begins after the date of enactment of this Act, and every 4 years
    thereafter for not more than 3 reports, the Secretary of the Treasury
    shall submit to the Committee on Banking, Housing, and Urban Affairs of
    the Senate and the Committee on Financial Services of the House of
    Representatives, and make available on the website of the Department of
    the Treasury, a report assessing whether there is credible,
    articulable, and publicly supportable evidence of significant illicit
    finance threats or vulnerabilities associated with any United States-
    dependent offshore stablecoin employed in a material volume of
    transactions.
        (c) Contents.--Each report required under subsection (b) shall
    include--
                (1) an assessment of the illicit finance risk of each
            United States-dependent offshore stablecoin employed in a
            material volume of transactions;
                (2) an assessment of the controls employed by the issuers
            of United States-dependent offshore stablecoins to address the
            use of such stablecoins in illicit finance, as available;
                (3) data and information regarding the volume of United
            States-dependent offshore stablecoins assessed to be employed
            in connection with illicit finance, as available;
                (4) a general description of the relationships between
            United States-dependent offshore stablecoins and the financial
            system of the United States, including principal channels of
            interaction; and
                (5) such other information or analysis as the Secretary of
            the Treasury deems relevant to assessing the illicit finance
            risks of United States-dependent offshore stablecoins.
        (d) Classified Annex.--Each report required under subsection (b)
    shall be submitted in unclassified form, but may contain a classified
    annex.
        (e) National Strategy.--The reporting requirement under subsection
    (b) may be met as part of the national strategy for combating terrorist
    and other illicit financing required under sections 261 and 262 of the
    Countering America's Adversaries Through Sanctions Act (Public Law 115-
    44; 131 Stat. 934) for the reporting years.
        (f) Rule of Construction.--Nothing in this section may be construed
    to authorize--
                (1) the disclosure of any information that is protected
            from disclosure under Federal law; and
                (2) the collection or use of any information other than
            publicly available data or information lawfully obtained by the
            Department of the Treasury under existing authorities, as of
            the day before the date of enactment of this Act.

    SEC. 305. TEMPORARY HOLD FOR CERTAIN DIGITAL ASSET TRANSACTIONS.

        (a) Definitions.--In this section:
                (1) Covered agency.--The term ``covered agency'' means any
            State or Federal law enforcement agency, including the
            Department of the Treasury.
                (2) Covered person.--The term ``covered person'' means a
            person that is--
                        (A) a permitted payment stablecoin issuer;
                        (B) a foreign payment stablecoin issuer (as defined
                    in section 2 of the GENIUS Act (12 U.S.C. 5901))
                    registered with the Office of the Comptroller of the
                    Currency pursuant to section 18(c) of that Act (12
                    U.S.C. 5916(c)); or
                        (C) a digital asset service provider, as that term
                    is defined in section 2 of the GENIUS Act (12 U.S.C.
                    5901).
                (3) Payment stablecoin; permitted payment stablecoin
            issuer.--The terms ``payment stablecoin'' and ``permitted
            payment stablecoin issuer'' have the meanings given those terms
            in section 2 of the GENIUS Act (12 U.S.C. 5901).
                (4) Qualified written request.--The term ``qualified
            written request'' means a written communication issued by an
            authorized official of a covered agency that--
                        (A) identifies a specific wallet, address, account,
                    or transaction reasonably suspected of being linked to
                    illicit activity;
                        (B) requests a covered person initiate an action
                    with respect to the specified wallet, address, account,
                    or transaction reasonably suspected of being linked to
                    illicit activity, including delaying the execution of a
                    transaction, conversion, or withdrawal involving
                    digital assets; and
                        (C) includes a designated agency contact.
                (5) Temporary hold.--The term ``temporary hold'' means a
            restriction applied by a covered person that delays execution
            of a transaction, conversion, or withdrawal involving digital
            assets for a reasonable period of time, not to exceed 30
            calendar days, which may be extended for an additional 150
            calendar days pursuant to a qualified written request.
        (b) Protection From Private Causes of Action.--
                (1) In general.--Any covered person that, in good faith and
            in compliance with this section, or any person complying with a
            temporary lawful order under subsection (c) that, voluntarily
            implements a temporary hold shall not be held liable pursuant
            to any Federal or State private right of action for
            implementing the temporary hold, provided that--
                        (A) the covered person or other person, as
                    applicable--
                                (i) implements the temporary hold based on
                            a reasonable belief the transaction,
                            conversion, or withdrawal relates to a
                            violation or attempted violation of State or
                            Federal law; or
                                (ii) implements the temporary hold after
                            receiving a qualified written request from a
                            covered agency;
                        (B) the covered person--
                                (i) makes reasonable efforts to notify the
                            affected customer of the temporary hold;
                                (ii) reasonably determines that
                            notification would impede actual or potential
                            law enforcement efforts; or
                                (iii) receives a qualified written request
                            from a covered agency that requests
                            notification not be attempted; and
                        (C) the covered person notifies as soon as
                    reasonably practicable an appropriate State or Federal
                    law enforcement agency or the Federal Trade Commission,
                    provided that such notification is not required when
                    the covered person has received a qualified written
                    request from a covered agency.
                (2) Documentation.--A covered person shall--
                        (A) maintain for the 3-year period following the
                    implementation of a temporary hold documentation of the
                    basis for applying a temporary hold; and
                        (B) make available the documentation described in
                    subparagraph (A) upon the request of a covered agency
                    or the Federal Trade Commission.
        (c) Compliance With Temporary Lawful Orders.--A permitted payment
    stablecoin issuer shall comply with any valid writ, process, order,
    rule, decree, command, or other requirement issued or promulgated under
    Federal law by a court of competent jurisdiction that--
                (1) requires a person to freeze or prevent the transfer of
            payment stablecoins;
                (2) specifies the payment stablecoins or accounts subject
            to blocking with reasonable particularity; and
                (3) is subject to judicial or administrative review or
            appeal, as provided by law.
        (d) Rules of Construction.--Nothing in this section may be
    construed to--
                (1) compel or require any covered person to take action to
            freeze, seize, or block digital assets that is not otherwise
            required under existing Federal or State law, as in effect on
            the day before the date of enactment of this Act;
                (2) limit or alter the authority of any government agency,
            including with respect to authority to pursue enforcement
            actions;
                (3) limit or affect the application of--
                        (A) section 5318(g)(3) of title 31, United States
                    Code, and any regulation requiring any financial
                    institution to report suspicious activity; or
                        (B) any lawful authority to seize or freeze assets
                    pursuant to a lawful order or sanctions designation; or
                (4) limit the ability of a covered person to apply a
            temporary hold to any wallet, address, account, or transaction
            located outside the United States.
        (e) Reporting.--The Attorney General and the Federal Trade
    Commission may issue regulations or guidance relating to any
    notification by covered persons pursuant to this section to the
    Department of Justice and the Federal Trade Commission, respectively.

    SEC. 306. VOLUNTARY CYBERSECURITY PROGRAM FOR DECENTRALIZED FINANCE
                  TRADING PROTOCOLS.

        (a) Definitions.--In this section:
                (1) Covered activities.--The term ``covered activities''
            means the activities described in section 15H(b) of the
            Securities Exchange Act of 1934, as added by section 601.
                (2) Decentralized finance trading protocol.--The term
            ``decentralized finance trading protocol'' has the meaning
            given the term in section 15H(a) of the Securities Exchange Act
            of 1934, as added by section 601.
                (3) Director.--The term ``Director'' means the Director of
            NIST.
                (4) NIST.--The term ``NIST'' means the National Institute
            of Standards and Technology.
        (b) Establishment of Program.--The Director shall, in consultation
    with the Commission and the Commodity Futures Trading Commission,
    establish a voluntary program for the adoption by persons developing
    decentralized finance trading protocols or engaging in covered
    activities of applicable cybersecurity standards published by NIST.
        (c) Development of Program Criteria.--
                (1) Request for information.--The Director shall issue a
            request for information in the Federal Register to gather input
            from experts and industry stakeholders on--
                        (A) cybersecurity threats, vulnerabilities, and
                    risks to decentralized finance trading protocols;
                        (B) auditing and code security standards, including
                    best practices for code audits;
                        (C) consumer protection and code transparency best
                    practices on decentralized finance trading protocols;
                    and
                        (D) existing NIST standards, as of the day before
                    the date of enactment of this Act, and their
                    applicability to decentralized finance trading
                    protocols.
                (2) Report.--The Director shall develop a report on the
            software development of decentralized finance protocols to
            assess technical input from paragraph (1).
                (3) Publication of program criteria.--After evaluating
            input provided under paragraph (1), the Director shall release
            a special publication containing a detailed evaluation of
            cybersecurity best practices and existing applicable standards,
            as of the day before the date of enactment of this Act, for
            decentralized finance trading protocols, to provide program
            criteria to software developers and industry stakeholders under
            the voluntary program, which shall include a summary of public
            comments and responses as to how input was incorporated.
                (4) Requests for revision.--
                        (A) In general.--After the Director publishes the
                    program criteria under paragraph (3), the Director
                    shall issue a request for comment in the Federal
                    Register to gather input on the workability of the
                    program.
                        (B) Petition.--The public may petition the Director
                    to reevaluate certain aspects of the program criteria
                    published under paragraph (3).
                (5) Program updates.--As the technology underpinning
            decentralized finance trading protocols evolves, the Director
            shall update the special publication under paragraph (3) in
            compliance with subsection (d).
        (d) Program.--
                (1) Application.--A person seeking evaluation of a
            decentralized finance trading protocol or a covered activity
            under the program established under subsection (b) shall submit
            to the Director an application at such time and in such manner
            as the Director considers appropriate for purposes of the
            program.
                (2) Review.--In carrying out the program established under
            subsection (b), the Director shall review each application
            submitted by a person under paragraph (1) of this subsection.
                (3) Determination.--In carrying out a review under
            paragraph (2) of an application regarding a decentralized
            finance trading protocol or covered activity, the Director
            shall determine whether the protocol or activity is in
            compliance with existing applicable standards, frameworks, and
            guidelines published by the Director under subsection (c).
                (4) Notice.--For each determination made under paragraph
            (3) pursuant to an application by a person of a decentralized
            finance trading protocol or covered activity, the Director
            shall transmit to the person a notice of the determination.
        (e) Benefits of Program.--
                (1) Display.--A person that receives notice under
            subsection (d)(4) that the Director has determined that a
            decentralized finance trading protocol or a covered activity
            has adopted the applicable cybersecurity standards published by
            NIST, the person may publicly display a designation, seal, or
            other identifier issued by the Director.
                (2) Treatment of adoption.--In adopting a regulation or
            guidance relating to this section, a Federal agency shall
            consider adoption of cybersecurity standards under the program
            required by subsection (b) as evidence of good faith compliance
            with the law.
        (f) Rule of Construction Relating to Preemption.--Nothing in this
    section may be construed to preempt any otherwise applicable provision
    of law of a State.

    SEC. 307. AMENDMENTS TO MONETARY INSTRUMENT DEFINITION.

        (a) Definitions.--In this section:
                (1) Self-hosted wallet.--The term ``self-hosted wallet''
            means a digital interface--
                        (A) that is used to secure and transfer digital
                    assets; and
                        (B) under which the owner of digital assets secured
                    and transferred under subparagraph (A) retains
                    independent control over those digital assets.
                (2) United states sanction law.--The term ``United States
            sanction law'' has the meaning given the term in section
            302(a).
        (b) Monetary Instruments.--Section 5312(a)(3)(D) of title 31,
    United States Code, is amended by inserting ``, including digital
    assets (as defined in section 2 of the GENIUS Act (12 U.S.C. 5901)), as
    may be applicable,'' after ``value''.
        (c) Treasury Risk Assessment.--As part of the national strategy for
    combating terrorist and other illicit financing required under sections
    261 and 262 of the Countering America's Adversaries Through Sanctions
    Act (Public Law 115-44; 131 Stat. 934), the Secretary of the Treasury
    shall consider--
                (1) illicit activity, such as money laundering and
            sanctions evasion, involving self-hosted wallets;
                (2) the effectiveness of and gaps in existing (as of the
            day before the date of enactment of this Act) methods,
            techniques, and strategies used by regulated financial
            institutions in detecting illicit activity, such as money
            laundering, involving self-hosted wallets;
                (3) any illicit actors, including nation state actors, that
            pose a high risk of facilitating illicit activity through the
            use of self-hosted wallets;
                (4) the benefits of the use of self-hosted wallets to--
                        (A) enhance user privacy and civil liberties
                    through direct asset custody; and
                        (B) expand financial inclusion and access for
                    communities underserved by traditional financial
                    institutions;
                (5) end user and counterparty risks associated with self-
            hosted wallets, including consumer fraud, cybersecurity, and
            identity verification;
                (6) the use of hardware self-hosted wallets to smuggle
            digital assets for financing cross-border illicit activity;
                (7) the use of hardware self-hosted wallets for tax evasion
            and asset concealment; and
                (8) other considerations the Secretary may determine
            appropriate.
        (d) Guidance.--The Secretary of the Treasury may issue guidance for
    financial institutions that transact with self-hosted wallets based on
    the results of the research on benefits and risks required under
    subsection (c), which shall not--
                (1) require a regulated entity to collect, with respect to
            any transaction, personally identifiable information about the
            controller of a self-hosted wallet when the controller is not
            both the customer of the regulated entity and a party to such
            transaction, except as required by Federal law, including
            United States sanctions laws and regulations or lawful process;
            or
                (2) be construed to hinder, restrict, or otherwise impair
            the authority of any Federal agency to investigate, detect,
            counteract, or prevent illegal activity.

    SEC. 308. RISK MANAGEMENT STANDARDS FOR DIGITAL ASSET INTERMEDIARIES.

        (a) In General.--Before conducting trading activity (including
    routing orders and executing trades) through a decentralized finance
    trading protocol, a digital asset intermediary shall implement risk
    management standards as described in subsection (b) with respect to
    trading using that decentralized finance trading protocol.
        (b) Requirements.--The risk management standards applicable to a
    digital asset intermediary shall be comprised of the following:
                (1) Conducting an effective risk analysis with respect to
            the decentralized finance trading protocol, including--
                        (A) money laundering and sanctions evasion risks,
                    including whether trading will involve activity
                    relating to a primary money laundering concern;
                        (B) fraud and market manipulation;
                        (C) operational and cybersecurity risk, including
                    settlement; and
                        (D) implementing robust policies and procedures to
                    mitigate the risks identified under this paragraph.
                (2) Disclosing the risks identified under paragraph (1)
            using plain language to customers.
                (3) Maintaining robust, risk-based capability to detect
            market manipulation, fraud, money laundering, and sanctions
            evasion occurring on the decentralized finance trading
            protocol, which may include the use of alternative tools that
            will properly target such risks, including distributed ledger
            analytics tools.
                (4) Implementing an effective risk-based procedure for
            determining whether to execute, reject, or suspend an incoming
            or outgoing transaction relating to the decentralized finance
            trading protocol, as applicable, including a determination
            based on suspected risk of money laundering, sanctions evasion,
            fraud, or market manipulation.
                (5) Consistent with this subsection, implementing other
            reasonable standards which may be required by rule.
        (c) Examinations.--
                (1) Compliance.--The Commission or the Commodity Futures
            Trading Commission, or other appropriate self-regulatory
            organization, shall verify compliance with the requirements of
            this section as part of a regular examination of the digital
            asset intermediary at the frequency and under the conditions
            otherwise provided by law or rule.
                (2) Rule of construction.--Nothing in this section may be
            construed to limit the authority of the Financial Crimes
            Enforcement Network or the Office of Foreign Assets Control
            from conducting examinations, investigations, or enforcement
            actions relating to this section as otherwise provided by law.
        (d) Rulemaking.--Rules shall be adopted to implement this section
    as follows:
                (1) The Department of the Treasury, in consultation with
            the Commission and the Commodity Futures Trading Commission,
            shall adopt rules to implement the money laundering and
            sanctions evasion risk analysis standards of this section.
                (2) The Commission and the Commodity Futures Trading
            Commission shall adopt rules to implement this section other
            than the provisions described in paragraph (1).
                (3) Rules adopted under this paragraph shall be reasonably
            tailored to the size of the applicable digital asset
            intermediary and risks of the digital asset intermediary that
            are reasonably knowable to the digital asset intermediary.

    SEC. 309. STUDY ON DIGITAL ASSET MIXERS AND TUMBLERS.

        (a) Digital Asset Mixer and Tumbler Defined.--In this section, the
    term ``digital asset mixer and tumbler'' means a smart contract, or set
    of smart contracts, that obfuscate or eliminate the source or other
    forms of identification of the holder of a digital asset, including by
    pooling assets from different holders and redistributing those assets
    among holders.
        (b) Report.--Not later than 1 year after the date of enactment of
    this Act, the Secretary of the Treasury shall submit to the Committee
    on Banking, Housing, and Urban Affairs of the Senate and the Committee
    on Financial Services of the House of Representatives a report that
    analyzes the following issues:
                (1) Current (as of the date on which the report is
            submitted) typologies of digital asset mixers and tumblers and
            historical transaction volume.
                (2) Estimates of the percentage of transactions relating to
            digital asset mixers and tumblers that are used by actors
            engaged in illicit finance.
                (3) Estimates of the reliance, and financial exposure, of
            centralized exchanges and traditional financial institutions to
            digital asset mixers and tumblers, and the extent to which
            centralized exchanges and traditional financial institutions
            are adequately implementing anti-money laundering and economic
            sanctions compliance with respect to digital asset mixers and
            tumblers.
                (4) An assessment of potential non-illicit uses of mixers
            and tumblers described in paragraph (1), including privacy
            benefits.
                (5) An analysis of regulatory approaches employed by other
            jurisdictions relating to digital asset mixers and tumblers.
                (6) Recommendations for legislation or regulation relating
            to digital asset mixers and tumblers.

    SEC. 310. GAO STUDY ON INTERMEDIARIES IN FOREIGN JURISDICTIONS.

        (a) In General.--The Comptroller General of the United States, in
    consultation with the Secretary of the Treasury, shall conduct a study
    to--
                (1) assess the risks posed by digital asset intermediaries
            that--
                        (A) are primarily located in foreign jurisdictions
                    that lack regulatory requirements that are
                    substantially similar to the requirements of the Bank
                    Secrecy Act; and
                        (B) provide services to United States persons; and
                (2) provide any regulatory or legislative recommendations
            to address the risks described in paragraph (1).
        (b) Report.--Not later than 1 year after the date of enactment of
    this Act, the Comptroller General of the United States shall submit to
    Congress a report containing all findings and determinations made in
    carrying out the study required under subsection (a).

    SEC. 311. STUDIES ON FOREIGN ADVERSARY ACTIVITIES.

        (a) Definitions.--In this section:
                (1) Foreign adversary.--The term ``foreign adversary''
            means a foreign government or foreign non-government person
            determined by the Secretary of Commerce to be a foreign
            adversary under section 791.4(a) of title 15, Code of Federal
            Regulations, or any successor regulation.
                (2) Relevant congressional committees.--The term ``relevant
            congressional committees'' means--
                        (A) the Committee on Banking, Housing, and Urban
                    Affairs of the Senate;
                        (B) the Committee on Agriculture, Nutrition, and
                    Forestry of the Senate;
                        (C) the Select Committee on Intelligence of the
                    Senate;
                        (D) the Committee on Financial Services of the
                    House of Representatives;
                        (E) the Committee on Agriculture of the House of
                    Representatives; and
                        (F) the Permanent Select Committee on Intelligence
                    of the House of Representatives.
        (b) Treasury Report.--Not later than 1 year after the date of
    enactment of this Act, the Secretary of the Treasury, in consultation
    with the Commodity Futures Trading Commission and the Commission, shall
    conduct a study and submit a report to the relevant congressional
    committees, which may include a classified annex, that--
                (1) identifies any digital asset intermediary that is
            controlled by a government of a foreign adversary, or by
            individuals or entities acting at the direction of a foreign
            adversary;
                (2) determines whether any government of a foreign
            adversary is collecting trading data about United States
            persons in digital asset markets; and
                (3) evaluates whether any proprietary intellectual property
            of digital asset intermediaries is being misused or stolen by
            any government of a foreign adversary.
        (c) GAO Study and Report.--Not later than 1 year after the date of
    enactment of this Act, the Comptroller General shall conduct a study
    and submit a report to the relevant congressional committees, which may
    include a classified annex, that--
                (1) identifies any digital asset intermediary that is owned
            by a government of a foreign adversary, or by individuals or
            entities acting at the direction of a foreign adversary;
                (2) determines whether any government of a foreign
            adversary is collecting trading data about United States
            persons in digital asset markets; and
                (3) evaluates whether any proprietary intellectual property
            of digital asset intermediaries is being misused or stolen by
            any government of a foreign adversary.

    SEC. 312. TREASURY STUDY ON CYBERSECURITY STANDARDS.

        (a) Study.--The Secretary of the Treasury, in consultation with the
    Director of the Cybersecurity and Infrastructure Security Agency, the
    Director of the National Security Agency, and the Director of the
    National Institute of Standards and Technology, shall conduct a study
    on cybersecurity standards applicable to digital asset smart contracts,
    custody, key management, and smart contract deployment.
        (b) Report.--
                (1) In general.--Not later than 365 days after the date of
            enactment of this Act, the Secretary shall submit to the
            Committee on Banking, Housing, and Urban Affairs of the Senate
            and the Committee on Financial Services of the House of
            Representatives a report containing--
                        (A) the findings of the study under subsection (a);
                    and
                        (B) any legislative recommendations.
                (2) Classified annex.--The report under paragraph (1) may
            include a classified annex, as appropriate.

    SEC. 313. STUDIES ON FINANCIAL STABILITY RISKS OF DECENTRALIZED FINANCE
                  TRADING AND CREDIT IN DIGITAL COMMODITY MARKETS.

        Not later than 1 year after the date of enactment of this Act, and
    every 4 years thereafter until 4 consecutive reports have been issued,
    the Secretary of the Treasury, the Board of Governors of the Federal
    Reserve System, the Commission, and the Commodity Futures Trading
    Commission shall--
                (1) conduct a study examining--
                        (A) the role of decentralized finance protocols in
                    the financial system, including--
                                (i) the functions of such protocols;
                                (ii) the use of such protocols to obtain
                            leverage or financing;
                                (iii) the effects of such protocols on the
                            pricing and trading of financial instruments,
                            including descriptions of any linkages between
                            such protocols and traditional financial
                            instrument; and
                                (iv) the types and volumes of financial
                            activity conducted through such protocols;
                        (B) the risks of decentralized finance protocols to
                    financial stability, fair and orderly markets, and
                    otherwise to the financial system of the United States,
                    which shall include a quantification of those risks, to
                    the extent possible;
                        (C) the strategies and guardrails regulators and
                    market participants have used and are using to mitigate
                    risks arising from the use of decentralized finance
                    protocols; and
                        (D) an assessment of whether the regulatory
                    framework adequately controls any risk with respect to
                    decentralized finance protocols;
                (2) conduct a separate study examining the risks to
            financial stability and orderly markets arising from the
            extension and maintenance of credit with respect to digital
            assets by digital asset service providers, including--
                        (A) the effect of gaps in the regulatory framework
                    for credit extended on digital assets, such as risks
                    arising from the extension and maintenance of credit on
                    digital assets; and
                        (B) the interconnections between leverage in the
                    market for digital assets and the financial system; and
                (3) submit to the Committee on Banking, Housing, and Urban
            Affairs of the Senate, the Committee on Agriculture, Nutrition,
            and Forestry of the Senate, the Committee on Financial Services
            of the House of Representatives, and the Committee on
            Agriculture of the House of Representatives a report on the
            studies conducted under paragraphs (1) and (2), which--
                        (A) shall include legislative and regulatory
                    recommendations, as appropriate; and
                        (B) may include a classified annex.

                    TITLE IV--RESPONSIBLE BANKING INNOVATION

    SEC. 401. PERMISSIBILITY OF DIGITAL ASSET ACTIVITIES.

        (a) Definitions.--In this section:
                (1) Appropriate federal banking agency; state bank; state
            bank supervisor; state member bank.--The terms ``appropriate
            Federal banking agency'', ``State bank'', ``State bank
            supervisor'', and ``State member bank'' have the meanings given
            those terms in section 3 of the Federal Deposit Insurance Act
            (12 U.S.C. 1813).
                (2) Customer-driven transaction.--The term ``customer-
            driven transaction''--
                        (A) means a transaction that is entered into for a
                    valid and independent business purpose of a customer;
                    and
                        (B) does not include a transaction, the principal
                    purpose of which is to deliver to a financial holding
                    company, insured State bank, national bank, or Federal
                    credit union assets that the financial holding company,
                    insured State bank, national bank, or Federal credit
                    union, respectively, could not invest in directly.
                (3) Federal branch; state branch.--The terms ``Federal
            branch'' and ``State branch'' have the meanings given those
            terms in section 1(b) of the International Banking Act of 1978
            (12 U.S.C. 3101).
                (4) Federal credit union; insured credit union.--The terms
            ``Federal credit union'' and ``insured credit union'' have the
            meanings given those terms in section 101 of the Federal Credit
            Union Act (12 U.S.C. 1752).
                (5) Financial holding company.--The term ``financial
            holding company'' has the meaning given the term in section 2
            of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).
                (6) Financial subsidiary.--The term ``financial
            subsidiary'' has the meaning given the term in section
            5136A(g)(3) of the Revised Statutes (12 U.S.C. 24a).
                (7) Insured state bank.--The term ``insured State bank''
            means a State bank, the deposits of which are insured by the
            Federal Deposit Insurance Corporation.
                (8) National bank.--The term ``national bank'' means a
            national banking association.
        (b) Authorized Activities for Financial Holding Companies and
    Financial Subsidiaries.--
                (1) In general.--A financial holding company or financial
            subsidiary may use a digital asset or distributed ledger system
            to perform, provide, or deliver any activity, function,
            product, or service that the financial holding company is
            otherwise authorized by law to perform, provide, or deliver.
                (2) Financial in nature.--The activities described in
            subsection (g) are financial in nature, or incidental to a
            financial activity, for purposes of section 4(k) of the Bank
            Holding Company Act of 1956 (12 U.S.C. 1843(k)) and section
            5136A(b) of the Revised Statutes (12 U.S.C. 24a(b)).
                (3) Rule of construction.--Nothing in this subsection may
            be construed to exempt the performance, provision, or delivery
            by a financial holding company or financial subsidiary 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 distributed ledger system.
        (c) Authorized Activities for National Banks.--
                (1) In general.--
                        (A) Authorized activities.--A national bank may use
                    a digital asset or distributed ledger 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.
                        (B) Branches of foreign banks.--
                                (i) Federal branches.--Consistent with
                            section 4(b) of the International Banking Act
                            of 1978 (12 U.S.C. 3102(b)), the activities
                            authorized for a national bank under
                            subparagraph (A) and paragraph (2) shall be
                            permissible for a Federal branch, subject to
                            any limitations that would apply to those
                            activities pursuant to the International
                            Banking Act of 1978 (12 U.S.C. 3101 et seq.) if
                            the activity were not performed, provided, or
                            delivered using a digital asset or distributed
                            ledger system.
                                (ii) Rule of construction for state
                            branches.--For the purposes of activities
                            engaged in by a State branch as principal under
                            section 7(h) of the International Banking Act
                            of 1978 (12 U.S.C. 3105(h)), the activities
                            authorized under clause (i) are permissible
                            activities of a Federal branch.
                (2) Business of banking and other authorized activities.--
            The activities described in subsection (g) are authorized as
            part of the business of banking under the paragraph designated
            as the ``Seventh'' of section 5136 of the Revised Statutes (12
            U.S.C. 24) or under other applicable law.
                (3) Rules of construction.--Nothing in this subsection may
            be construed to--
                        (A) exempt the performance, provision, or delivery
                    by a national bank of an activity, function, product,
                    or service from a prohibition, restriction,
                    registration, limitation, or other requirement that
                    would apply if the activity were not performed,
                    provided, or delivered using a digital asset or
                    distributed ledger system by a national bank; or
                        (B) expand or contract the meaning of ``operations
                    are or have been required by the Comptroller of the
                    Currency to be limited to those of a trust company and
                    activities related thereto'', as that term is used in
                    section 5169(a) of the Revised Statutes (12 U.S.C.
                    27(a)).
        (d) State Banks.--The activities authorized under subsection (c)
    are permissible activities--
                (1) of a national bank for purposes of activities of an
            insured State bank and any subsidiary of an insured State bank
            to engage in as principal under subsections (a) and (d) of
            section 24 of the Federal Deposit Insurance Act (12 U.S.C.
            1831a); and
                (2) of a State member bank, and any subsidiary of a State
            member bank, to engage in as principal.
        (e) Authorized Activities for Federal Credit Unions.--
                (1) In general.--A Federal credit union may use a digital
            asset or distributed ledger system to perform, provide, or
            deliver any activity, function, product, or service that the
            Federal credit union is otherwise authorized by law to perform,
            provide, or deliver.
                (2) Business of credit unions.--The activities described in
            subsection (g) are authorized as part of, or incidental to, the
            authority necessary or requisite to carry on effectively the
            business for which Federal credit unions are incorporated under
            paragraph (17) of section 107 of the Federal Credit Union Act
            (12 U.S.C. 1757(17)).
                (3) Rule of construction.--Nothing in this subsection may
            be construed to exempt the performance, provision, or delivery
            by a Federal credit union 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 distributed ledger system.
        (f) Insured Credit Unions.--The activities authorized for a Federal
    credit union under subsection (e)(1) shall be permissible for an
    insured credit union, subject to authorization by applicable State law.
        (g) Activities Described.--The activities described in this
    subsection are--
                (1) providing custodial, fiduciary, or safekeeping services
            for digital assets;
                (2) providing services related to custodial services for
            digital assets, including staking, facilitating digital asset
            lending, distributed ledger governance services, and advancing
            funds for the purchase of digital assets or in respect of
            distributions on digital assets;
                (3) making loans collateralized by digital assets;
                (4) engaging in payment activities involving digital
            assets, including facilitating customer or principal payments
            in connection with otherwise permissible activities;
                (5) operating a node on a distributed ledger;
                (6) providing self-custodial wallet software;
                (7) engaging in derivatives transactions, including related
            hedging activities, in a manner consistent with section 7.1030
            of title 12, Code of Federal Regulations, as in effect as of
            the date of enactment of this Act;
                (8) providing brokerage services with respect to any
            digital asset, including clearing and execution services,
            whether alone or in combination with other permissible
            activities;
                (9) facilitating transactions in the secondary market for
            all types of digital assets on the order of customers as a
            riskless principal to the extent of engaging in a transaction
            in which a company, after receiving an order to buy or sell a
            digital asset from a customer, purchases or sells the digital
            asset for its own account to offset a contemporaneous sale to
            or purchase from the customer;
                (10) holding as principal digital assets for which the
            banking entity anticipates a reasonably foreseeable need to the
            extent incidental to an otherwise permissible activity, which
            shall include holding digital assets as principal in order to
            pay fees arising from interactions with a distributed ledger
            system or for the purposes of risk management, treasury
            services, liquidity management or trade or margin settlement or
            similar purposes, subject to the otherwise applicable
            limitations on the activities of a banking entity pursuant to
            section 13 of the Bank Holding Company Act of 1956 (12 U.S.C.
            1851) and only to the extent that the terms and prohibitions of
            that section apply to a transaction; and
                (11) underwriting, dealing in, or making a market in
            digital assets in customer-driven transactions, including
            related hedging activities in connection with those customer-
            driven transactions, subject to the otherwise applicable
            limitations on the activities of a banking entity pursuant to
            section 13 of the Bank Holding Company Act of 1956 (12 U.S.C.
            1851) and only to the extent that the terms and prohibitions of
            that section apply to a transaction.
        (h) Other Requirements.--There shall be no other prior notice or
    approval requirements to engage in the activities described in
    subsections (b) through (g) of this section other than those required
    under title LXII of the Revised Statutes, the Act entitled ``An Act to
    place authority over the trust powers of national banks in the
    Comptroller of the Currency'', approved September 28, 1962 (12 U.S.C.
    92a et seq.), the Federal Reserve Act (12 U.S.C. 221 et seq.), or the
    Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) and the
    regulations promulgated under those Acts.
        (i) Rule of Construction.--Nothing in this section may be construed
    to--
                (1) exclude other possible permissible activities that are
            not activities described in subsection (g);
                (2) imply that inclusion of an activity described in
            subsection (g) means that the activity is otherwise
            impermissible;
                (3) limit the authority of an appropriate Federal banking
            agency to determine that activities other than those activities
            described in subsection (g) are permissible for a Federal
            credit union or authorized as part of the business of banking,
            or financial in nature, or incidental or complementary thereto,
            or other applicable law, as applicable, through
            interpretations, guidance, or rulemaking; or
                (4) limit the authority of an appropriate Federal banking
            agency, or a State bank supervisor, to supervise and take
            enforcement action with respect to an insured depository
            institution (or, to the extent applicable, a financial holding
            company) engaging in a digital asset activity authorized by
            this section that the appropriate Federal banking agency or
            State bank supervisor, as applicable, determines, pursuant to
            applicable law, to be an unsafe or unsound practice or a
            violation of a law, rule, or regulation, or any condition
            imposed in writing.
        (j) Application.--The authorities described in this section shall
    not apply to nonfungible assets.

    SEC. 402. JOINT RULES FOR PORTFOLIO MARGINING DETERMINATIONS.

        (a) In General.--The Commodity Futures Trading Commission and the
    Commission shall jointly issue rules to facilitate portfolio margining
    of securities (including related extensions of credit), security-based
    swaps, futures contracts for future delivery, options on futures
    contracts for future delivery, swaps, and digital commodities, or any
    subset thereof, for persons registered with either such Commission,
    in--
                (1) a securities account carried by a registered broker or
            dealer or a security-based swap account carried by a registered
            security-based swap dealer;
                (2) a futures or cleared swap account carried by a
            registered futures commission merchant;
                (3) a swap account carried by a swap dealer; or
                (4) 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.
        (b) Process.--The rules required to be jointly issued under
    subsection (a) shall--
                (1) describe the treatment of any account to which the
            rules relate, and any assets that may be held therein, in a
            proceeding under title 11, United States Code, the Securities
            Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.),
            title II of the Dodd-Frank Wall Street Reform and Consumer
            Protection Act (12 U.S.C. 5381 et seq.), or any other
            applicable insolvency law with respect to the person carrying
            the account;
                (2) be issued only if that issuance is in the public
            interest and provides for the appropriate protection of
            customers, including appropriate disclosures to each current
            and potential customer concerning the treatment of any account
            to which the rules relate, and any assets that may be held
            therein, in a proceeding under title 11, United States Code,
            the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
            et seq.), title II of the Dodd-Frank Wall Street Reform and
            Consumer Protection Act (12 U.S.C. 5381 et seq.), or any other
            applicable insolvency law with respect to the person carrying
            the account;
                (3) require the Commission and the Commodity Futures
            Trading Commission to consider the public interest of, and the
            protection of investors by, those rules through the
            solicitation of public comments; and
                (4) require the Commission and the Commodity Futures
            Trading Commission to--
                        (A) consult with other relevant foreign or domestic
                    regulators, including the Board of Governors of the
                    Federal Reserve System, the Federal Deposit Insurance
                    Corporation, the Office of the Comptroller of the
                    Currency, and State bank supervisors, as appropriate;
                    and
                        (B) if the rules pertain to a securities account
                    carried by a registered broker or dealer that is a
                    member of the Securities Investor Protection
                    Corporation, consult with the Securities Investor
                    Protection Corporation.

    SEC. 403. CAPITAL REQUIREMENTS TO ADDRESS NETTING AGREEMENTS.

        (a) Definitions.--In this section, the terms ``depository
    institution holding company'' and ``insured depository institution''
    have the meanings given those terms in section 3 of the Federal Deposit
    Insurance Act (12 U.S.C. 1813).
        (b) Capital Requirements.--Not later than 360 days after the date
    of enactment of this Act, the Board of Governors of the Federal Reserve
    System, the Comptroller of the Currency, and the Chair of 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 of the Federal Reserve System that
    address netting agreements that provide for termination and close-out
    netting across multiple types of financial transactions, consistent
    with section 402, in the event of the default of a counterparty.

    SEC. 404. PROHIBITING INTEREST AND YIELD ON PAYMENT STABLECOINS.

        (a) Definitions.--In this section:
                (1) Affiliate.--The term ``affiliate'' means any entity
            that controls, is controlled by, or is under common control
            with another entity.
                (2) Commissions.--The term ``Commissions'' means the
            Commission and the Commodity Futures Trading Commission.
                (3) Comptroller; foreign payment stablecoin issuer; payment
            stablecoin; permitted payment stablecoin issuer.--The terms
            ``Comptroller'', ``foreign payment stablecoin issuer'',
            ``payment stablecoin'', and ``permitted payment stablecoin
            issuer'' have the meanings given those terms in section 2 of
            the GENIUS Act (12 U.S.C. 5901).
                (4) Covered party.--The term ``covered party'' means any
            digital asset service provider, together with all of its
            affiliates, but in each case excluding any permitted payment
            stablecoin issuer or foreign payment stablecoin issuer
            registered with the Comptroller.
                (5) Deposit.--The term ``deposit'' has the meaning given
            the term in section 3 of the Federal Deposit Insurance Act (12
            U.S.C. 1813).
                (6) Restricted recipient.--The term ``restricted
            recipient'' means a United States person that is a customer or
            user of a covered party.
                (7) United states person.--The term ``United States
            person'' means a person that is a resident of the United States
            or is organized or incorporated under the laws of the United
            States.
        (b) Sense of Congress.--It is the sense of Congress that--
                (1) depository institutions provide financial services that
            are integral to the strength of the economy of the United
            States and that the payment of consideration by digital asset
            service providers to United States customers or users based on
            their payment stablecoin balances in a manner that is
            economically or functionally equivalent to the payment of
            interest or yield on an interest-bearing bank deposit may
            inhibit the key functions of depository institutions in the
            economy of the United States; and
                (2) payment stablecoins represent a significant innovation
            in financial infrastructure that can strengthen the United
            States payments system and the primacy of the United States
            dollar and that activity-based rewards and incentives tied to
            the use of payment stablecoins and participation in distributed
            ledger systems are critical to enabling innovation,
            competition, and consumer adoption.
        (c) Prohibition on Interest and Yield.--
                (1) In general.--No covered party shall, directly or
            indirectly, pay any form of interest or yield (whether in cash,
            tokens, or other consideration) to a restricted recipient--
                        (A) solely in connection with the holding of the
                    payment stablecoins of that restricted recipient; or
                        (B) on a payment stablecoin balance in a manner
                    that is economically or functionally equivalent to the
                    payment of interest or yield on an interest-bearing
                    bank deposit.
                (2) Activity-based or transaction-based rewards and
            incentives permitted.--
                        (A) In general.--The prohibition under paragraph
                    (1) shall not apply with respect to rewards or
                    incentives based on bona fide activities or bona fide
                    transactions that are not economically or functionally
                    equivalent to the payment of interest or yield on an
                    interest-bearing bank deposit pursuant to the
                    regulations promulgated under paragraph (3).
                        (B) Equivalence to bank deposits.--Except as
                    permitted under subparagraph (A), the prohibition under
                    paragraph (1) shall apply to the payment of interest or
                    yield (whether in cash, tokens, or other consideration)
                    by a covered party to a restricted recipient in
                    connection with a loyalty, promotional, subscription,
                    or incentive program that is economically or
                    functionally equivalent to the payment of interest or
                    yield on an interest-bearing bank deposit.
                (3) Rulemaking.--
                        (A) In general.--Not later than 1 year after the
                    date of enactment of this Act, the Commissions and the
                    Secretary of the Treasury shall jointly promulgate
                    regulations through notice and comment rulemaking to
                    clarify the circumstances under which the prohibition
                    and permissible rewards and incentives in paragraphs
                    (1) and (2) shall apply. Such rulemaking shall include
                    a non-exhaustive list of permissible activity-based or
                    transaction-based rewards or incentives, including
                    payments to restricted recipients in connection with or
                    in compensation for any of the following, provided such
                    payments are not economically or functionally
                    equivalent to the payment of interest or yield on an
                    interest-bearing bank deposit:
                                (i) A transaction, payment, transfer,
                            conversion, remittance, or settlement activity,
                            including a rebate or incentive provided in
                            connection with the acceptance or use of a
                            payment stablecoin.
                                (ii) Providing liquidity for market-marking
                            activity, posting of collateral in connection
                            with trading, or otherwise putting assets at
                            credit or investment risk.
                                (iii) The use of any product or service,
                            including participation in governance,
                            validation, staking, or a loyalty, promotional,
                            subscription, or incentive program.
                        (B) Calculation by reference.--Payments to
                    restricted recipients of consideration, rewards, or
                    benefits that are permissible pursuant to paragraph (2)
                    and subparagraph (A) of this paragraph may be
                    calculated by reference to a balance, duration, tenure,
                    or any combination of the foregoing.
                (4) Evasion.--It shall be unlawful for a covered party to
            violate the prohibition under paragraph (1) or rules
            promulgated pursuant to paragraph (3). A covered party may not
            circumvent or evade such prohibition or rules. The Commissions
            and the Secretary may jointly issue such rules as may be
            necessary or appropriate to prevent circumvention or evasion of
            the prohibition under paragraph (1) or the rules promulgated
            pursuant to paragraph (3).
                (5) Good faith reliance.--A covered party that structures a
            program in good faith reliance on paragraphs (2) and (3) shall
            not be subject to penalties if a subsequent rulemaking or
            adjudication determines the program falls outside paragraphs
            (2) and (3), provided--
                        (A) the covered party comes into compliance within
                    90 days of such determination; and
                        (B) the violation is not substantially similar to a
                    past violation by the covered party.
        (d) Prohibition on Specified Representations.--
                (1) Certain marketing practices.--No covered party shall
            represent that--
                        (A) payment stablecoins are investment products,
                    deposits, backed by the full faith and credit of the
                    United States, guaranteed by the United States
                    Government, subject to deposit insurance by the Federal
                    Deposit Insurance Corporation, or subject to share
                    insurance by the National Credit Union Administration;
                    or
                        (B) any compensation (whether in cash, tokens, or
                    other consideration) paid to a restricted recipient in
                    connection with the holding, use, or retention of the
                    payment stablecoins of that restricted recipient is--
                                (i) paid or generated by the payment
                            stablecoin itself, a permitted payment
                            stablecoin issuer, or a foreign payment
                            stablecoin issuer registered with the
                            Comptroller;
                                (ii) risk-free or comparable to interest
                            paid on a deposit; or
                                (iii) offered, administered, or paid by a
                            person other than the covered party.
                (2) Misleading.--No covered party shall omit material
            information necessary to prevent any marketing, promotion, or
            description described in this subsection from being misleading.
        (e) Disclosures.--
                (1) In general.--Not later than 1 year after the date of
            enactment of this Act, the Commissions and the Secretary of the
            Treasury shall jointly promulgate rules requiring clear and
            conspicuous disclosure, in plain English, of any compensation
            (whether in cash, tokens, or other consideration) paid by a
            covered party in connection with the holding, use, or retention
            of the payment stablecoins of a restricted recipient in a
            manner that is consistent with subsection (d).
                (2) Requirements.--In promulgating rules under paragraph
            (1), the Commissions and the Secretary of the Treasury shall
            require that any required disclosure of compensation described
            in that paragraph, and any related term, representation, or
            description--
                        (A) is presented in a clear, factual,
                    nonpromotional, and non-misleading manner;
                        (B) clearly identifies the circumstances under
                    which such compensation can be paid;
                        (C) clearly identifies the person or persons
                    responsible for offering, administering, and paying
                    such compensation, including whether such persons are
                    affiliated with the issuer of associated payment
                    stablecoins;
                        (D) outlines all material terms with respect to
                    such compensation; and
                        (E) includes a statement that payment stablecoins
                    are not investment products, deposits, backed by the
                    full faith and credit of the United States, guaranteed
                    by the United States Government, subject to deposit
                    insurance by the Federal Deposit Insurance Corporation,
                    or subject to share insurance by the National Credit
                    Union Administration.
                (3) Prohibition.--After the date on which the rules
            promulgated under paragraph (1) become effective, no covered
            party shall market the offering of compensation (whether in
            cash, tokens, or other consideration) paid by such covered
            party in connection with the holding, use, or retention of the
            payment stablecoins of a restricted recipient unless the
            covered party has provided the disclosures required under this
            subsection.
                (4) Satisfaction of requirement.--A covered party that
            provides the disclosures required under this subsection shall
            be deemed not to have made a representation that is prohibited
            under subsection (d), provided that--
                        (A) any marketing, promotion, or description with
                    respect to the applicable compensation does not
                    contradict those disclosures; and
                        (B) those disclosures are presented in plain
                    English and in a clear and conspicuous manner.
        (f) Penalty.--
                (1) Civil monetary penalty.--Whoever knowingly and
            willfully participates in a violation of subsection (c)(1),
            (d)(1), (d)(2), or (e)(3), or rules issued under subsection
            (c)(4), shall be subject to a civil monetary penalty by the
            Department of the Treasury of not more than $5,000,000 for each
            such violation.
                (2) Determination of the number of violations.--For
            purposes of determining the number of violations for this
            subsection, separate acts of noncompliance are a single
            violation when the acts are a result of--
                        (A) a common or substantially overlapping
                    originating cause; or
                        (B) the same statement or publication.
        (g) Referral to Secretary of the Treasury.--If the Commission or
    the Commodity Futures Trading Commission has reason to believe that any
    covered party has knowingly and willfully violated subsection (c)(1),
    (d)(1), (d)(2), or (e)(3), or rules issued under subsection (c)(4), the
    Commission or the Commodity Futures Trading Commission, as applicable,
    shall refer the matter to the Secretary of the Treasury.
        (h) Report to Congress.--Not later than 2 years after the date of
    enactment of this Act, the Board of Governors of the Federal Reserve
    System, the Comptroller of the Currency, the Federal Deposit Insurance
    Corporation, the National Credit Union Administration, and the
    Secretary of the Treasury shall jointly submit to the Committee on
    Banking, Housing, and Urban Affairs of the Senate and the Committee on
    Financial Services of the House of Representatives a report on payment
    stablecoin activity that--
                (1) analyzes and quantifies--
                        (A) the adoption of United States dollar-
                    denominated payment stablecoins and of other payment
                    stablecoins issued by permitted payment stablecoin
                    issuers and foreign payment stablecoin issuers
                    registered with the Comptroller;
                        (B) the effect of United States dollar-denominated
                    payment stablecoins on the average yields of, and
                    demand for, United States Treasury securities of
                    various durations;
                        (C) the effect of United States dollar-denominated
                    payment stablecoins on the use of the dollar in global
                    foreign exchange transactions, global foreign exchange
                    reserves, and global trade;
                        (D) the effect of United States dollar-denominated
                    payment stablecoins on increasing access to financial
                    services for unbanked and underbanked persons, both
                    domestically and globally;
                        (E) the effect of United States dollar-denominated
                    payment stablecoins on payment costs of consumers and
                    merchants; and
                        (F) the adoption of non-United States dollar-
                    denominated stablecoins, including foreign central bank
                    digital currencies, and their effect on the use of the
                    dollar in global foreign exchange transactions, global
                    foreign exchange reserves, and global trade;
                (2) describes how compensation, if any, is paid by covered
            parties to restricted recipients with respect to the payment
            stablecoins of restricted recipients, including through
            rewards, incentives, or similar programs; and
                (3) analyzes and quantifies the effect of any compensation
            described in paragraph (2) and the effect of prohibitions on
            the payment of interest or yield by covered parties under this
            Act and by issuers of payment stablecoins under section
            4(a)(11) of the GENIUS Act (12 U.S.C. 5903(a)(11)) on--
                        (A) the volume, stickiness, composition, and
                    concentration of deposits at depository institutions,
                    including any deposit outflows from depository
                    institutions and the extent to which community banks
                    and credit unions are disproportionately affected
                    thereby;
                        (B) net interest margin accrued to depository
                    institutions;
                        (C) the average rate of interest paid to depositors
                    at depository institutions;
                        (D) consumer and business access to credit;
                        (E) financial arrangements between depository
                    institutions and digital asset service providers and
                    issuers of payment stablecoins; and
                        (F) the items described in paragraph (1).
        (i) No Deeming of Payment of Interest or Yield.--For purposes of
    this section, a covered party shall not be deemed to violate the
    prohibition in subsection (c) solely because an unaffiliated third
    party independently makes a payment with respect to a payment
    stablecoin, unless the covered party directs or maintains significant
    influence over the offering of such consideration and the offering of
    such consideration would otherwise violate the prohibition in
    subsection (c).
        (j) Clarification of Scope and Regulatory Authority.--
                (1) Compensation.--The prohibitions under subsections (c),
            (d), and (e) shall only apply to compensation paid in
            connection with a payment stablecoin or payment stablecoin
            balance.
                (2) Other assets.--Nothing in this section shall be
            construed to authorize the Commissions or the Secretary of the
            Treasury to regulate, restrict, or prohibit the payment of any
            compensation paid in connection with any asset other than a
            payment stablecoin.
        (k) Non-applicability.--Nothing in this section shall--
                (1) modify, alter, or extend prohibitions on the payment of
            yield, interest, or consideration applicable to permitted
            payment stablecoin issuers or foreign payment stablecoin
            issuers, including under section 4(a)(11) of the GENIUS Act (12
            U.S.C. 5903(a)(11)); or
                (2) prohibit the disclosure by covered parties of truthful,
            non-misleading factual information or any information otherwise
            required by Federal law or regulation.

    SEC. 405. EXPANDED SECURITIES PORTFOLIO MARGIN ACCOUNTS UNDER THE
                  SECURITIES INVESTOR PROTECTION ACT OF 1970.

        (a) Amendments.--The Securities Investor Protection Act of 1970 (15
    U.S.C. 78aaa et seq.) is amended--
                (1) in section 9(a) (15 U.S.C. 78fff-3(a))--
                        (A) in paragraph (4), by striking ``and'' at the
                    end;
                        (B) in paragraph (5), by striking the period at the
                    end and inserting ``; and''; and
                        (C) by adding at the end the following:
                ``(6) no advance shall be made by SIPC to the trustee to
            pay or otherwise satisfy any net equity claim of any customer
            with respect to any digital commodities or swaps held in an
            expanded securities portfolio margin account.'';
                (2) in section 10(g) (15 U.S.C. 78fff-4(g)), by striking
            ``16(12)'' and inserting ``16(13)''; and
                (3) in section 16 (15 U.S.C. 78lll)--
                        (A) by redesignating paragraphs (7) through (14) as
                    paragraphs (8) through (15), respectively;
                        (B) by inserting after paragraph (6) the following:
                ``(7) Expanded securities portfolio margin account.--The
            term `expanded securities portfolio margin account' means a
            customer account--
                        ``(A) that is maintained by a broker or dealer
                    registered with the Commission;
                        ``(B) that includes positions in securities,
                    security-based swaps, futures contracts, options on
                    futures contracts, swaps, digital commodities, or other
                    financial instruments, or any combination thereof, as
                    permitted by rule jointly issued by the Commission and
                    the Commodity Futures Trading Commission;
                        ``(C) that is subject to portfolio margining
                    requirements approved pursuant to section 402 of the
                    Digital Asset Market Clarity Act; and
                        ``(D) in which margin requirements are determined
                    on a risk-based, portfolio-wide basis, rather than on
                    an instrument-by-instrument basis.''; and
                        (C) in paragraph (10), as so redesignated, in the
                    matter following subparagraph (L), by striking ``a
                    transaction in the portfolio margining account'' and
                    inserting ``the portfolio margining account or expanded
                    securities portfolio margin account''.
        (b) Rules.--
                (1) Definitions.--In this subsection:
                        (A) Expanded securities portfolio margin account.--
                    The term ``expanded securities portfolio margin
                    account'' has the meaning given the term in section 16
                    of the Securities Investor Protection Act of 1970 (15
                    U.S.C. 78lll), as amended by this section.
                        (B) SIPC.--The term ``SIPC'' means the Securities
                    Investor Protection Corporation.
                (2) Issuance of rules.--Notwithstanding any provision of
            the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
            et seq.), in jointly issuing rules under section 402, the
            Commission and the Commodity Futures Trading Commission, in
            consultation with the SIPC and the Secretary of the Treasury,
            shall issue rules relating to the treatment under that Act of
            securities (including related extensions of credit), security-
            based swaps, contracts of sale of a commodity for future
            delivery, options on contracts of sale of a commodity for
            future delivery, swaps, digital commodities, cash, or other
            property (to the extent that such instruments, cash, or other
            property effectively hedge or collateralize a securities
            position) held in an account offering portfolio margining
            carried as a securities account by a registered broker or
            dealer pursuant to an expanded securities portfolio margin
            account to facilitate portfolio margining in a manner that
            protects customers, including portfolio margin customers, which
            shall include rules relating to--
                        (A) the transfer of accounts;
                        (B) the allocation of customer property among
                    customers;
                        (C) the eligibility of products and positions to be
                    held in an expanded securities portfolio margin
                    account, including any disclosures to and any elections
                    that may need to be performed by customers;
                        (D) the application of customer protection or
                    segregation requirements as between securities
                    customers who are and are not maintaining positions in
                    an expanded securities portfolio margin account;
                        (E) further defining the terms, solely as relating
                    to an expanded securities portfolio margin account,
                    ``customer'', ``customer property'', and ``net
                    equity'', as necessary or appropriate to address non-
                    securities and non-cash positions and assets held in an
                    expanded securities portfolio margin account, and in a
                    manner consistent with subparagraphs (A) through (D);
                    and
                        (F) any interaction between a securities account
                    and an expanded securities portfolio margin account,
                    including any funding of debits in one type of account
                    by credits in the other type of account.
                (3) Process for issuance of rules.--The requirements of
            section 402(b) shall apply with respect to the rules issued
            under this subsection.
        (c) Effect of Rules.--An expanded securities portfolio margin
    account may not be offered, maintained, or utilized until the final
    rules required under subsection (b) are issued.

                   TITLE V--RESPONSIBLE REGULATORY INNOVATION

    SEC. 501. CFTC-SEC MICRO-INNOVATION SANDBOX.

        (a) Definitions.--In this section:
                (1) Commission.--The term ``Commission'' means either of
            the Commissions, as the context requires.
                (2) Commissions.--The term ``Commissions'' means the
            Securities and Exchange Commission and the Commodity Futures
            Trading Commission.
                (3) Eligible firm.--The term ``eligible firm'' means a
            person that is eligible to participate in the Sandbox, in
            accordance with the requirements under this section.
                (4) Innovative.--The term ``innovative'' means new or
            emerging technology, or a novel application of technology,
            including artificial intelligence, that--
                        (A) provides a financial product, service, business
                    model, or delivery mechanism to the public; and
                        (B) lacks--
                                (i) a substantially comparable, widely
                            available analogue in common use in the United
                            States; and
                                (ii) an analogous Federal regulatory
                            regime.
                (5) Person.--The term ``person'' means a person, as defined
            in section 3(a) of the Securities Exchange Act of 1934 (15
            U.S.C. 78c(a)) or section 1a of the Commodity Exchange Act (7
            U.S.C. 1a).
                (6) Sandbox.--The term ``Sandbox'' means the CFTC-SEC
            Micro-Innovation Sandbox established under subsection (b).
                (7) Self-regulatory organization.--The term ``self-
            regulatory organization'' means a self-regulatory organization,
            as defined in--
                        (A) section 3(a) of the Securities Exchange Act of
                    1934 (15 U.S.C. 78c(a)); or
                        (B) section 1.52(a)(2) of title 17, Code of Federal
                    Regulations, or any successor regulation.
        (b) Establishment.--Not later than 360 days after the date of
    enactment of this Act, the Commissions shall, by joint notice and
    comment rulemaking, establish a CFTC-SEC Micro-Innovation Sandbox to
    enable eligible firms to test innovative activities within the United
    States, subject to--
                (1) applicable Federal and State securities and commodities
            laws;
                (2) other State laws that are not specific to the
            regulation of securities or commodities; and
                (3) the limitations of this section.
        (c) Eligible Firm.--
                (1) In general.--A United States-based person shall be an
            eligible firm, and shall be eligible to participate in the
            Sandbox, if the person--
                        (A) submits an application under subsection (e)
                    that is approved under that subsection;
                        (B) seeks to conduct an eligible and lawful
                    innovative activity in the United States;
                        (C) is not subject to--
                                (i) a statutory disqualification, as
                            defined in section 3(a) of the Securities
                            Exchange Act of 1934 (15 U.S.C. 78c(a));
                                (ii) a disqualification under section 8a(2)
                            of the Commodity Exchange Act (7 U.S.C.
                            12a(2)); or
                                (iii) a disqualification under State law;
                        (D) does not have a criminal conviction for fraud;
                        (E) agrees to submit to the jurisdiction and
                    oversight of the Commissions, to the extent that the
                    person is not subject to that jurisdiction or
                    oversight, for purposes of, and while participating in,
                    the Sandbox;
                        (F) designates to the Commissions an individual as
                    a point of contact with respect to activities that the
                    person undertakes as an applicant and participant with
                    respect to the Sandbox;
                        (G) employs not more than 25 employees; and
                        (H) has annual gross revenues of not more than
                    $10,000,000 in any fiscal year.
                (2) Application of requirements.--The requirements under
            paragraph (1) shall be satisfied during the entire period in
            which an eligible firm participates in the Sandbox.
        (d) Eligible Activities and Activity Ceilings.--
                (1) List of eligible activities.--
                        (A) In general.--After providing notice and an
                    opportunity for public comment, the Commissions shall
                    maintain and publish a list of eligible innovative
                    activities, which shall be--
                                (i) updated once every 2 years after
                            providing notice and an opportunity for public
                            comment;
                                (ii) reasonably tailored to include
                            activities that--
                                        (I) further the purposes of this
                                    section; and
                                        (II) are consistent with the
                                    interests of the public and the
                                    protection of investors;
                                (iii) sufficiently flexible to accommodate
                            evolving technological developments, including
                            distributed ledger-based products and services;
                            and
                                (iv) focused exclusively on activities for
                            which specific provisions of the securities
                            laws and commodities laws may create a material
                            impediment to the proposed innovative activity.
                        (B) Identification of requirements.--
                                (i) In general.--For each eligible
                            innovative activity, the Commissions shall,
                            consistent with existing (as of the day before
                            the date of enactment of this Act) statutory
                            and regulatory precedent concerning the
                            respective jurisdiction of each Commission,
                            identify the requirements that each Commission
                            will administer.
                                (ii) Joint jurisdiction.--With respect to
                            an eligible innovative activity that is subject
                            to the jurisdiction of both Commissions, the
                            rulemaking under subsection (b) shall specify
                            which requirements each Commission will
                            administer and any coordinated conditions
                            needed to protect investors and market
                            integrity.
                (2) Activity ceilings.--For each eligible innovative
            activity, the Commissions shall, after public input and
            consultation, establish individual customer and monetary
            ceilings, which shall provide that an eligible firm may not
            raise or commit more than $20,000,000 in aggregate customer,
            investor, or counterparty funds in connection with Sandbox
            activities.
                (3) Annual participation cap.--Each of the Commissions may
            approve not more than 20 projects per year.
        (e) Application.--
                (1) In general.--An eligible firm seeking to participate in
            the Sandbox shall submit to the Commission or Commissions, as
            applicable, an application that--
                        (A) describes the proposed innovative activity and
                    the desired outcomes;
                        (B) subject to approval of the applicable
                    Commission, identifies the provisions of the securities
                    laws, or of the Commodity Exchange Act (7 U.S.C. 1 et
                    seq.), from which the eligible firm proposes to be
                    exempt during the period in which the eligible firm
                    participates in the Sandbox, which--
                                (i) shall not include any Federal or State
                            anti-fraud law or any other law that is not
                            specific to the regulation of securities or
                            commodities; and
                                (ii) shall be subject to the limitations of
                            this section;
                        (C) sets forth how relief from the provisions of
                    law identified under subparagraph (B) is reasonably
                    necessary to engage in the innovative activity;
                        (D) identifies material risks to investors,
                    customers, or market integrity and how the eligible
                    firm will mitigate those risks;
                        (E) certifies that the eligible firm will comply
                    with applicable Federal and State anti-fraud laws;
                        (F) states an exit objective of the eligible firm
                    involving action from the applicable Commission, which
                    may include registration, an exemptive order,
                    interpretive guidance, a no-action letter, or a
                    rulemaking petition, together with milestones and
                    metrics the eligible firm will use to demonstrate
                    readiness for that exit;
                        (G) states the agreement of the eligible firm to
                    submit to the jurisdiction and oversight of the
                    Commissions, to the extent that the eligible firm is
                    not otherwise subject to that jurisdiction and
                    oversight, for purposes of, and while participating in,
                    the Sandbox;
                        (H) designates to the Commissions an individual as
                    a point of contact with respect to activities that the
                    eligible firm undertakes as an applicant and
                    participant with respect to the Sandbox; and
                        (I) states the agreement of the eligible firm to
                    abide by any condition that either of the Commissions
                    may impose for engaging in an eligible innovative
                    activity in the Sandbox.
                (2) Deadline for decision.--Not later than 180 business
            days after the date on which an eligible firm submits an
            application under this subsection, the Commission or
            Commissions, as applicable, shall make a decision with respect
            to the application, after which the eligible firm submitting
            the application may commence eligible innovative activities in
            the Sandbox unless the application is denied.
                (3) Updates and status reports.--Each eligible firm shall
            submit to the Commission or Commissions, as applicable, on a
            semi-annual basis while participating in the Sandbox, an
            updated application that--
                        (A) describes any material changes to the
                    information originally provided under paragraph (1);
                    and
                        (B) reports the progress of the eligible firm
                    toward the stated exit objective described in paragraph
                    (1)(F), including milestones achieved, remaining
                    impediments, and any pending requests for official
                    action before the applicable Commission or the
                    Commissions.
                (4) Unredacted and redacted versions.--
                        (A) In general.--An eligible firm that submits an
                    initial or updated application under this subsection
                    may submit to the applicable Commission or the
                    Commissions an unredacted version, together with a
                    request for confidential treatment, pursuant to
                    procedures the applicable Commission shall establish
                    that are modeled on the rules of that Commission
                    relating to the confidential treatment of information,
                    which shall include--
                                (i) for the Securities and Exchange
                            Commission, sections 200.83, 230.406, and
                            240.24b-2 of title 17, Code of Federal
                            Regulations, or any successor regulations; and
                                (ii) for the Commodity Futures Trading
                            Commission, section 145.9 of title 17, Code of
                            Federal Regulations, or any successor
                            regulations.
                        (B) Omitted information.--An eligible firm may omit
                    information granted confidential treatment under
                    subparagraph (A) from any public posting under
                    subsection (h) in accordance with the procedures
                    established under subparagraph (A).
                        (C) Indication of confidential information.--Any
                    omission in a public posting under subsection (h) shall
                    be clearly indicated by brackets with a prominent
                    legend stating that--
                                (i) confidential information has been
                            omitted; and
                                (ii) an unredacted version has been filed
                            with the applicable Commission or the
                            Commissions.
        (f) Duration of Participation.--
                (1) Duration.--Except as provided in paragraph (2), an
            eligible firm may participate in the Sandbox for a period of
            not more than 2 years, provided that the eligible firm does not
            exceed the ceilings established under subsection (d)(2).
                (2) Extension.--
                        (A) Sole jurisdiction.--If an eligible innovative
                    activity is subject only to the jurisdiction of 1
                    Commission, that Commission may extend participation by
                    an eligible firm in the Sandbox by not more than 1
                    additional year, if that Commission determines that the
                    eligible firm--
                                (i) is actively pursuing the exit objective
                            described in subsection (e)(1)(F) in good
                            faith;
                                (ii) is making demonstrable progress toward
                            achieving such an exit; and
                                (iii) establishes that such an extension is
                            necessary to achieve such an exit.
                        (B) Joint jurisdiction.--Where an eligible
                    innovative activity is subject to the jurisdiction of
                    both Commissions, an extension of participation by an
                    eligible firm in the Sandbox by not more than 1
                    additional year shall be by joint order of the
                    Commissions after making the findings described in
                    clauses (i) through (iii) of subparagraph (A).
        (g) Conditions and Enforcement.--
                (1) Conditions.--An eligible firm shall comply with
            applicable regulatory conditions approved by the applicable
            Commission or the Commissions under subsection (e)(1)(B), which
            shall be consistent with applicable Federal and State anti-
            fraud laws.
                (2) Monitoring.--The Commissions shall monitor Sandbox
            activities and enforce compliance with applicable regulatory
            conditions and Federal anti-fraud laws.
                (3) Coordination.--
                        (A) In general.--The Commissions shall coordinate
                    supervision, information requests, and examinations to
                    avoid duplication while each Commission retains full
                    authority under the provisions of law that such
                    Commission administers.
                        (B) Cooperation with states.--The Commissions may
                    cooperate with any State in enforcing compliance with
                    applicable regulatory conditions and Federal and State
                    anti-fraud laws with respect to the operation of the
                    Sandbox.
                (4) Self-regulatory organizations.--Each self-regulatory
            organization shall recognize and respect Sandbox conditions
            that are applicable to a participant in the Sandbox.
                (5) Cessation of activities.--The Commissions may, at any
            time during the participation of an eligible firm in the
            Sandbox, disqualify the eligible firm from continued
            participation in the Sandbox, order the eligible firm to cease
            engaging in a permitted activity in the Sandbox, revoke a grant
            of exemptive relief, or impose additional or more stringent
            conditions on continuing participation or engagement in a
            permitted activity in the Sandbox, if the Commissions find that
            the eligible firm has failed to comply with--
                        (A) the requirements of this section;
                        (B) the terms or conditions of participation
                    established by the Commissions; or
                        (C) other applicable law.
        (h) Public Disclosure.--
                (1) Initial posting.--Each eligible firm shall post, in a
            prominent location on a public website of the eligible firm,
            the information required under subsection (e)(1), subject to
            confidential treatment under subsection (e)(4), not later than
            the date on which the notice becomes effective under subsection
            (e)(3).
                (2) Updates.--Each eligible firm shall post, in the same
            manner as under paragraph (1), the information required under
            subsection (e)(3), subject to confidential treatment under
            subsection (e)(4), concurrently with submission to the
            applicable Commission or the Commissions.
                (3) Disclosure requirements.--Each post under this
            subsection shall satisfy the disclosure requirements of both
            Commissions where the jurisdictions of both Commissions are
            implicated.
        (i) Use of Data by Commissions.--Each Commission may collect and
    share data from Sandbox activities with the other Commission to inform
    permanent, principles-based regulatory frameworks that advance the
    missions of the Commissions.
        (j) Publication by Commissions.--Not less frequently than annually,
    each Commission shall publish on the public website of the Commission a
    report summarizing the activities conducted under this section,
    including--
                (1) the number and general nature of eligible firms
            participating in the Sandbox;
                (2) the categories of innovative activities tested;
                (3) the impact of Sandbox participation on innovation,
            investor protection, market integrity, and the public interest;
                (4) the disclosures posted by eligible firms under
            subsection (h)(1); and
                (5) exit outcomes, including the types of relief requested
            and actions taken by the Commissions.
        (k) Relationship of Sandbox Participation to State Law.--
                (1) Limited preemption for sandbox participants.--This
            section, including participation in the Sandbox, and any
            exemption or relief granted under this section, shall supersede
            any State securities or commodities law requiring registration,
            qualification, or licensing as a condition of engaging in an
            approved activity or otherwise regulating that activity as a
            security or commodity.
                (2) State enforcement preserved.--Nothing in this section
            may be construed to prohibit or limit any State securities or
            commodities regulator, any State bank regulator, or any State
            law enforcement agency from conducting an investigation or
            bringing an administrative, civil, or criminal enforcement
            action under--
                        (A) a State law prohibiting fraud or deceit, or
                    fraudulent, deceptive, manipulative, unethical,
                    dishonest, or other unlawful conduct or practices, in
                    connection with securities or securities transactions;
                        (B) the anti-fraud provisions of the Commodity
                    Exchange Act (7 U.S.C. 1 et seq.) or State commodities
                    laws; or
                        (C) any State law of general applicability,
                    including such a law relating to banking, consumer
                    protection, contracts, property, or criminal conduct.
                (3) Notice filings.--A State may require notice of any
            document filed with either of the Commissions in connection
            with participation in the Sandbox, together with consent to
            service of process and reasonable fees, consistent with section
            18(c) of the Securities Act of 1933 (15 U.S.C. 77r(c)).

    SEC. 502. INTERNATIONAL COOPERATION.

        (a) Definition.--In this section, the term ``Commissions'' means
    the Commission and the Commodity Futures Trading Commission.
        (b) Cooperation.--In order to promote United States leadership in
    effective, reciprocal, and innovative global regulation of digital
    assets, and to advance the strategic economic and policy interests of
    the United States, the Commissions, as appropriate--
                (1) shall consult and coordinate with foreign regulatory
            authorities or other relevant international organizations on
            the application of consistent international standards with
            respect to the regulation of digital assets;
                (2) may enter into such information sharing arrangements as
            may be determined to be necessary or appropriate in the public
            interest or for the protection of investors, customers, and
            users of digital assets;
                (3) shall pursue reciprocal arrangements with foreign
            regulatory authorities that ensure United States-based digital
            asset firms, exchanges, and infrastructure providers receive
            treatment equivalent to that granted to foreign counterparts
            operating within the United States;
                (4) shall advocate in international fora for the
            development and adoption of technology-neutral, open standards
            that preserve lawful access to public distributed ledger
            infrastructure, support dollar-denominated digital asset usage,
            and safeguard individual rights, including self-custody and
            privacy; and
                (5) may, as appropriate, engage in, at the least,
            cooperative enforcement, supervisory coordination, and joint
            technical assistance, in a manner that promotes responsible
            innovation in digital financial markets.
        (c) Cross-border Sandbox.--The Commissions may leverage the
    activities described in paragraphs (1) through (5) of subsection (b) to
    establish or participate in cross-border regulatory sandboxes that
    build upon the CFTC-SEC Micro-Innovation Sandbox established pursuant
    to section 501.

    SEC. 503. AUTOMATED REGULATORY COMPLIANCE STUDY.

        (a) Definitions.--In this section:
                (1) Automated regulatory compliance.--The term ``automated
            regulatory compliance'' means the use of technology, including
            data standards, automation, and distributed ledger or smart
            contract functionality, to automate, tag, or otherwise
            streamline regulatory reporting, disclosure, supervisory, or
            other compliance obligations.
                (2) Innovative.--The term ``innovative'' has the meaning
            given the term in section 501(a).
        (b) Study Required.--The Comptroller General of the United States
    shall, in consultation with the Department of the Treasury (including
    the Financial Crimes Enforcement Network, the Office of Foreign Assets
    Control, and the Office of Financial Research), the Office of the
    Comptroller of the Currency, the Federal Deposit Insurance Corporation,
    the National Credit Union Administration, the Commission, the Commodity
    Futures Trading Commission, the Bureau of Consumer Financial
    Protection, and the Federal Housing Finance Agency, carry out a study
    of distributed ledger-based compliance tools that--
                (1) to the extent feasible, identifies and evaluates--
                        (A) the landscape of existing (as of the day before
                    the date of enactment of this Act) distributed ledger-
                    based compliance tools for--
                                (i) statutory and regulatory disclosures;
                                (ii) real-time reporting and audit-trail
                            logging; and
                                (iii) anti-money-laundering practices,
                            sanctions screening, and customer-
                            identification checks;
                        (B) the feasibility, benefits, and risks of
                    allowing regulated entities to satisfy applicable
                    regulatory obligations through on-chain, code-based, or
                    other automated mechanisms;
                        (C) the potential for interoperability with
                    automated regulatory compliance mechanisms across and
                    among each of those agencies;
                        (D) the data collection systems of each of those
                    agencies; and
                        (E) standards or taxonomies, or other common data
                    elements, if any, that those agencies could publish or
                    adopt to support the interoperability described in
                    subparagraph (C) in order to ensure consistency and
                    regulatory access;
                (2) recommends pilot programs, guidance, rule changes, or
            amendments to statutes that would be needed to implement
            effective automated regulatory compliance approaches and any
            other related approaches addressed in the study;
                (3) identifies the costs and benefits to issuers of
            different sizes, secondary market intermediaries, regulators,
            investors, and other applicable parties, including differential
            impacts on smaller entities and options to reduce those
            burdens;
                (4) benchmarks international efforts with respect to
            automated regulatory compliance mechanisms and consults with
            any appropriate State, Federal, or foreign regulators; and
                (5) evaluates whether existing (as of the day before the
            date of enactment of this Act) oversight, enforcement, and
            liability frameworks are sufficient to--
                        (A) ensure accountability, transparency, fairness,
                    and consumer protection; and
                        (B) prevent misuse of distributed ledger-based
                    compliance tools.
        (c) Report.--Not later than 1 year after the date of enactment of
    this Act, the Comptroller General of the United States shall make
    publicly available a report that includes the results of the study
    conducted under subsection (b).

    SEC. 504. REPORT ON LEGISLATIVE RECOMMENDATIONS.

        (a) Definitions.--In this section:
                (1) Appropriate committees of congress.--The term
            ``appropriate committees of Congress'' means--
                        (A) the Committee on Banking, Housing, and Urban
                    Affairs of the Senate;
                        (B) the Committee on Agriculture, Nutrition, and
                    Forestry of the Senate;
                        (C) the Committee on Financial Services of the
                    House of Representatives; and
                        (D) the Committee on Agriculture of the House of
                    Representatives.
                (2) Federal financial regulator.--The term ``Federal
            financial regulator'' means--
                        (A) the Board of Governors of the Federal Reserve
                    System;
                        (B) the Commodity Futures Trading Commission;
                        (C) the Department of the Treasury;
                        (D) the Federal Deposit Insurance Corporation;
                        (E) the Federal Housing Finance Agency;
                        (F) the National Credit Union Administration;
                        (G) the Office of the Comptroller of the Currency;
                        (H) the Bureau of Consumer Financial Protection;
                    and
                        (I) the Commission.
        (b) Requirement.--Not later than 1 year after the date of enactment
    of this Act, and every 3 years thereafter for a total of not fewer than
    12 years after the date of enactment of this Act, each Federal
    financial regulator shall submit to the appropriate committees of
    Congress a report that includes--
                (1) a description of the implementation of this Act and the
            amendments made by this Act (including the adoption of rules
            and guidance, and the approval or rejection of applications
            submitted, under this Act and the amendments made by this Act),
            where applicable to the Federal financial regulator; and
                (2) any legislative recommendations for the further
            effective implementation of this Act and the amendments made by
            this Act.

    SEC. 505. TOKENIZATION OF SECURITIES.

        (a) Definitions.--In this section:
                (1) Tokenization.--The term ``tokenization'' means the
            process of creating a digital representation of all rights,
            obligations, or interests in a tangible or intangible asset on
            a distributed ledger or comparable technology.
                (2) Tokenized.--The term ``tokenized'', with respect to an
            asset, means that the asset has undergone tokenization.
        (b) Sense of Congress.--It is the sense of Congress that States
    should promptly consider and adopt commercial law frameworks under the
    Uniform Commercial Code that provide clear and uniform rules for the
    ownership, control, and enforceability of rights relating to digital
    assets.
        (c) Study.--Not later than 360 days after the date of enactment of
    this Act, the Commission shall conduct a comprehensive study of the
    regulatory treatment of tokenized securities, including custody
    standards, interagency coordination, cross-border coordination, and
    consumer protection.
        (d) Parity in Regulatory Treatment.--
                (1) In general.--Subject to paragraph (2), a tokenized
            security shall be treated, for all regulatory purposes, as the
            security that the tokenized security represents, except as
            otherwise provided by--
                        (A) section 106(a); or
                        (B) a rule, regulation, or order issued by the
                    Commission.
                (2) Requirement.--A rule, regulation, or order described in
            paragraph (1)(B) may only be issued by the Commission to adapt
            the manner in which the applicable regulatory requirements are
            satisfied, to the extent necessary or appropriate--
                        (A) in light of the unique technological or other
                    characteristics of digital assets or substantially
                    similar technology; and
                        (B) consistent with--
                                (i) what is necessary or appropriate in the
                            public interest; and
                                (ii) protecting investors, maintaining
                            fair, orderly, and efficient markets, and
                            facilitating capital formation.
        (e) Prohibition on Misrepresentation.--Any statement or omission
    with respect to any material fact that is made by a person in
    connection with the offer, sale, or other representation regarding a
    tokenized security shall be subject to the securities laws, including
    applicable anti-fraud or anti-manipulation provisions under the
    securities laws.
        (f) Agency Action for Tokenized Securities.--
                (1) In general.--The Commission may issue rules governing
            tokenized securities pursuant to the requirements of this
            section.
                (2) Requirements.--Rules issued under this subsection may
            address, consistent with sections 106 and 107, how requirements
            applicable to an underlying security apply to custody, books
            and records, reconciliation with transfer agents or other
            recordkeepers, auditability, settlement finality, treatment of
            chain reorganizations, and other operational risks arising from
            the use of distributed ledger technology or comparable
            technology.
        (g) Rule of Construction Regarding Enforcement.--Nothing in this
    section may be construed to prevent the Commission from enforcing the
    anti-fraud and anti-manipulation provisions of the securities laws, and
    the rules issued under the securities laws, with respect to tokenized
    securities, provided that the elements of those provisions are
    satisfied.
        (h) Savings Clauses.--
                (1) Tokenized security.--Any asset that is a security under
            the securities laws shall not cease to be a security solely
            because the asset is issued, recorded, represented, or
            transferred using distributed ledger technology or comparable
            technology.
                (2) Effect on state law.--Nothing in this section may be
            construed, interpreted, or applied in a manner that preempts,
            supersedes, invalidates, or otherwise affects any State
            property transfer rules, laws, regulations, or common law
            principles relating to the transfer or recording of real
            tangible or intangible assets or interests therein.
                (3) Rulemakings, orders, and other actions.--
            Notwithstanding any other provision of this section, section
            106 shall apply to any rulemaking, order, or other action of
            the Commission under this section.
                (4) No limit of ability to offer or sell.--Nothing in this
            section, or any rule, regulation, or order promulgated under
            this section, may be construed to limit the ability of any
            person to offer or sell any tokenized security, consistent with
            the securities laws.

    SEC. 506. VOLUNTARY ADOPTION OF NATIONAL INSTITUTE OF STANDARDS AND
                  TECHNOLOGY POST-QUANTUM CRYPTOGRAPHY STANDARDS.

        (a) Definitions.--In this section:
                (1) Appropriate congressional committees.--The term
            ``appropriate congressional committees'' means--
                        (A) the Committee on Banking, Housing, and Urban
                    Affairs of the Senate;
                        (B) the Committee on Agriculture, Nutrition, and
                    Forestry of the Senate;
                        (C) the Committee on Commerce, Science, and
                    Transportation of the Senate;
                        (D) the Committee on Financial Services of the
                    House of Representatives;
                        (E) the Committee on Agriculture of the House of
                    Representatives; and
                        (F) the Committee on Energy and Commerce of the
                    House of Representatives.
                (2) Director.--The term ``Director'' means the Under
            Secretary of Commerce for Standards and Technology.
        (b) Findings.--Congress finds the following:
                (1) Technical standards with respect to digital assets
            ensure quality, interoperability, and reliability in products,
            processes, and services and facilitate innovation.
                (2) The digital asset ecosystem should harness standards to
            solve coordination problems and foster innovation, not through
            regulation, but through voluntary, market-driven measures.
                (3) Advances in quantum computing threaten existing (as of
            the day before the date of enactment of this Act) cryptographic
            standards and the security of digital assets.
        (c) Voluntary Adoption.--The Director, in consultation with the
    Secretary of Homeland Security and the heads of sector risk management
    agencies, as appropriate, shall promote the voluntary adoption and
    deployment of post-quantum cryptography standards, including by--
                (1) disseminating and making publicly available guidance
            and resources to help organizations adopt and deploy those
            standards;
                (2) providing technical assistance, as practicable, to
            entities that are at high risk of quantum cryptography analytic
            attacks, such as entities determined to be critical
            infrastructure or digital infrastructure providers; and
                (3) conducting such other activities determined necessary
            by the Director to promote the adoption and deployment of those
            standards across the United States.
        (d) Industry Consultation.--In implementing subsection (c), the
    Director shall, at a minimum--
                (1) solicit regular input from a broad range of industry
            stakeholders regarding the feasibility and practical challenges
            of adopting the standards described in that subsection;
                (2) facilitate ongoing dialogue between the National
            Institute of Standards and Technology and industry participants
            to identify, assess, and address barriers to the adoption of
            the standards described in that subsection;
                (3) not later than 2 years after the date of enactment of
            this Act, and biennially thereafter until 2035, submit to the
            appropriate congressional committees a report on the
            implementation of that subsection, including stakeholder
            engagement with respect to those actions and continued
            challenges in adopting the standards described in that
            subsection; and
                (4) not later than 5 years after the date of enactment of
            this Act, make available to the public a report on stakeholder
            engagement and lessons learned in implementing that subsection.

    SEC. 507. INTERNATIONAL COORDINATION TO COMBAT DIGITAL ASSET ILLICIT
                  FINANCE.

        (a) Definition.--In this section, the term ``Strategy'' means the
    National Strategy to Combat International Digital Asset Illicit Finance
    submitted under subsection (d).
        (b) Interagency Initiative.--The Secretary of the Treasury, in
    coordination with the Secretary of State, the Attorney General, the
    Secretary of Homeland Security, and the heads of such other Federal
    departments and agencies as the President may designate, shall lead an
    interagency initiative to strengthen international cooperation to
    prevent the misuse of digital assets for illicit finance, sanctions
    evasion, terrorist financing, or other national-security threats.
        (c) Objectives.--The initiative established under subsection (b)
    shall--
                (1) engage foreign counterparts, including finance
            ministries, central banks, and financial intelligence units, to
            promote anti-money-laundering, sanctions evasion, and counter-
            terrorist financing standards applicable to digital asset
            activities, consistent with United States standards and the
            framework established under the Strategy;
                (2) encourage the adoption and enforcement of effective
            regulatory and supervisory frameworks for digital asset service
            providers to ensure transparency and prevent illicit use;
                (3) identify and prioritize jurisdictions of concern that
            present significant risk of facilitating illicit digital asset
            activity and develop coordinated diplomatic, economic, and law
            enforcement strategies to address those risks;
                (4) support technical assistance and capacity-building
            programs for partner jurisdictions to enhance anti-money
            laundering, sanctions evasion, and counter-terrorist financing
            supervision, enforcement, and information sharing relating to
            digital assets; and
                (5) report annually to Congress on progress made toward the
            objectives described in paragraphs (1) through (4), including a
            list of cooperative and non-cooperative jurisdictions and any
            recommendations for additional actions or sanctions.
        (d) National Strategy to Combat International Digital Asset Illicit
    Finance.--Not later than 270 days after the date of enactment of this
    Act, the Secretary of the Treasury, in coordination with the Secretary
    of State, the Attorney General, and the Director of National
    Intelligence, shall submit to the Committee on Banking, Housing, and
    Urban Affairs, the Committee on Foreign Relations, and the Committee on
    Homeland Security and Governmental Affairs of the Senate, and the
    Committee on Financial Services, the Committee on Foreign Affairs, and
    the Committee on Homeland Security of the House of Representatives a
    National Strategy to Combat International Digital Asset Illicit
    Finance, which shall--
                (1) assess global vulnerabilities with respect to the
            digital assets framework set out in the Strategy;
                (2) set measurable goals and timelines for multilateral
            engagement with respect to digital assets;
                (3) recommend resource and staffing requirements for
            Treasury attaches, financial intelligence liaisons, and other
            personnel necessary to implement the Strategy; and
                (4) identify standards for combating money laundering,
            sanctions evasion, and terrorist financing with respect to
            digital asset activities applicable to foreign jurisdictions,
            which shall be informed by United States law, regulation, and
            supervisory standards, including standards relating to--
                        (A) anti-money laundering and countering the
                    financing of terrorism laws and regulations that
                    identify, prioritize, and mitigate illicit finance
                    threats, including preventive measures for financial
                    institutions and other entities covered by those laws
                    and regulations, including measures relating to
                    customer due diligence, recordkeeping, internal
                    controls, and the reporting of suspicious transactions;
                        (B) money laundering offenses, asset seizure, and
                    confiscation to recover proceeds of crime;
                        (C) terrorist financing and proliferation-financing
                    offenses and related targeted financial sanctions; and
                        (D) regulation, supervision, and enforcement by
                    competent authorities, including financial
                    intelligence, law enforcement, and sanctions measures.

    SEC. 508. ANNUAL REPORT ON FOREIGN DIGITAL ASSET TRADING VOLUME,
                  COMPLIANCE WITH UNITED STATES STANDARDS AND REMEDIATION
                  ACTIONS.

        (a) In General.--Not later than 1 year after the date of enactment
    of this Act, and annually thereafter for a period of 4 years, the
    Secretary of the Treasury shall submit to the Committee on Banking,
    Housing, and Urban Affairs of the Senate and the Committee on Financial
    Services of the House of Representatives a report that--
                (1) lists the top 20 foreign jurisdictions by volume of
            digital asset trading activity on foreign digital asset service
            providers during the calendar year immediately preceding the
            year of the report;
                (2) assesses the degree to which each foreign jurisdiction
            listed under paragraph (1) has implemented anti-money
            laundering, sanctions evasion, and counter-terrorist financing
            laws, regulations, or standards applicable to digital asset
            activities consistent with the standards and framework
            identified under the National Strategy to Combat International
            Digital Asset Illicit Finance submitted under section 507; and
                (3) identifies foreign jurisdictions with--
                        (A) material deficiencies in the implementation or
                    enforcement of the standards described in paragraph
                    (2); and
                        (B) trading volumes that present systemic illicit
                    finance risk to the United States.
        (b) Form.--Each report required under subsection (a) shall be
    submitted in unclassified form, but may include a classified annex, as
    appropriate.
        (c) Remediation and Engagement Report.--For each foreign
    jurisdiction identified pursuant to subsection (a)(3), the Secretary of
    the Treasury shall include in the applicable report--
                (1) a description of bilateral diplomatic, regulatory, or
            law enforcement engagements undertaken during the calendar year
            immediately preceding the year in which the report is submitted
            to remedy the deficiencies of the foreign jurisdiction;
                (2) a summary of actions taken by the United States
            individually, or in conjunction with any applicable
            international body, to identify high-risk or non-cooperative
            jurisdictions with respect to digital asset illicit finance,
            including public statements identifying those jurisdictions and
            measures to support their remediation;
                (3) any commitments obtained from the foreign jurisdiction
            to address identified deficiencies, including timeliness and
            benchmarks; and
                (4) an assessment of progress made toward full
            implementation of the standards identified under the National
            Strategy to Combat International Digital Asset Illicit Finance
            submitted under section 507.

    SEC. 509. AI INNOVATION LABS.

        (a) Definitions.--
                (1) AI test project.--The term ``AI test project'' means a
            financial product, service, or activity--
                        (A) that makes substantial use of artificial
                    intelligence;
                        (B) that is, or may be, subject to a Federal
                    regulation or Federal statute; and
                        (C) for which a regulated entity submits an
                    application for the waiver or modification of an
                    applicable regulation subject to an alternative
                    compliance strategy.
                (2) Appropriate financial regulatory agency.--The term
            ``appropriate financial regulatory agency'' means--
                        (A) the appropriate Federal banking agency, as
                    defined in section 3 of the Federal Deposit Insurance
                    Act (12 U.S.C. 1813), with respect to an institution
                    described in subsection (q) of that section;
                        (B) the Bureau of Consumer Financial Protection,
                    with respect to a covered person, as defined in section
                    1002 of the Consumer Financial Protection Act of 2010
                    (12 U.S.C. 5481), that does not have an appropriate
                    financial regulatory agency under subparagraph (A),
                    (C), or (D) of this paragraph;
                        (C) the National Credit Union Administration, with
                    respect to an insured credit union, as defined in
                    section 101 of the Federal Credit Union Act (12 U.S.C.
                    1752); and
                        (D) the Federal Housing Finance Agency, with
                    respect to--
                                (i) a Federal Home Loan Bank;
                                (ii) the Federal Home Loan Bank System;
                                (iii) the Federal National Mortgage
                            Association; and
                                (iv) the Federal Home Loan Mortgage
                            Corporation.
                (3) Artificial intelligence; ai.--The terms ``artificial
            intelligence'' and ``AI'' have the meaning given the term
            ``artificial intelligence'' in section 5002 of the National
            Artificial Intelligence Initiative Act of 2020 (15 U.S.C.
            9401).
                (4) Financial product or service.--The term ``financial
            product or service''--
                        (A) has the meaning given the term in section 1002
                    of the Consumer Financial Protection Act of 2010 (12
                    U.S.C. 5481);
                        (B) includes--
                                (i) activities that are financial in
                            nature, as defined in section 4(k)(4) of the
                            Bank Holding Company Act of 1956 (12 U.S.C.
                            1843(k)(4)); and
                                (ii) any financial product or service
                            provided by a person regulated by the
                            Commission, as defined in section 1002 of the
                            Consumer Financial Protection Act of 2010 (12
                            U.S.C. 5481); and
                        (C) does not include the business of insurance.
                (5) Financial regulatory agency.--The term ``financial
            regulatory agency'' means--
                        (A) the Board of Governors of the Federal Reserve
                    System;
                        (B) the Federal Deposit Insurance Corporation;
                        (C) the Office of the Comptroller of the Currency;
                        (D) the Bureau of Consumer Financial Protection;
                        (E) the National Credit Union Administration; and
                        (F) the Federal Housing Finance Agency.
                (6) Regulated entity.--The term ``regulated entity'' means
            an entity regulated by any financial regulatory agency.
        (b) Use of Artificial Intelligence by Regulated Financial
    Entities.--
                (1) AI innovation labs.--
                        (A) Establishment.--Each financial regulatory
                    agency shall establish, or identify an office,
                    division, or department of the agency that shall serve
                    as, an AI Innovation Lab to enable regulated entities
                    to experiment with AI test projects without unnecessary
                    or unduly burdensome regulation or expectation of
                    enforcement actions, pursuant to the approval of an
                    application under subparagraph (B).
                        (B) Applications.--
                                (i) Submission.--
                                        (I) In general.--On and after the
                                    date that is 1 year after the date of
                                    enactment of this Act, a regulated
                                    entity may submit to the appropriate
                                    financial regulatory agency an
                                    application, on a form determined by
                                    the appropriate financial regulatory
                                    agency, to engage in an AI test project
                                    through the AI Innovation Lab
                                    established or identified under
                                    subparagraph (A).
                                        (II) Contents.--An application
                                    submitted under subclause (I) shall
                                    include--
                                                (aa) a description of the
                                            AI test project proposed to be
                                            carried out by the regulated
                                            entity;
                                                (bb) an alternative
                                            compliance strategy that--

                                                        (AA) identifies a
                                                    regulation issued by
                                                    the appropriate
                                                    financial regulatory
                                                    agency that the
                                                    regulated entity
                                                    requests be waived or
                                                    modified; and

                                                        (BB) proposes an
                                                    alternative method for
                                                    the regulated entity to
                                                    comply with the
                                                    regulation, including
                                                    an explanation as to
                                                    why the alternative
                                                    method is essential to
                                                    the operation of the
                                                    entity and how the
                                                    regulated entity would
                                                    effectively manage
                                                    risks associated with
                                                    the AI test project;

                                                (cc) an explanation of how
                                            under the strategy described in
                                            item (aa), the AI test
                                            project--

                                                        (AA) would serve
                                                    the public interest,
                                                    improve consumer or
                                                    investor access to a
                                                    financial product or
                                                    service, or promote
                                                    consumer or investor
                                                    protection;

                                                        (BB) would enhance
                                                    efficiency or
                                                    operations, foster
                                                    innovation or
                                                    competitiveness,
                                                    improve risk management
                                                    and security, or
                                                    enhance regulatory
                                                    compliance;

                                                        (CC) would not
                                                    present a systemic risk
                                                    to the financial system
                                                    of the United States;

                                                        (DD) is consistent
                                                    with the purposes of
                                                    the anti-money
                                                    laundering and
                                                    countering the
                                                    financing of terrorism
                                                    obligations under
                                                    subchapter II of
                                                    chapter 53 of title 31,
                                                    United States Code; and

                                                        (EE) would not
                                                    present a national
                                                    security risk to the
                                                    United States;

                                                (dd) a proposed date on
                                            which the AI test project would
                                            terminate and an explanation as
                                            to why such termination date
                                            would be appropriate;
                                                (ee) proposed limitations
                                            on the size, scope, and growth
                                            of the AI test project;
                                                (ff) a detailed business
                                            plan; and
                                                (gg) an estimate of the
                                            economic impact of the AI test
                                            project if approved.
                                        (III) Joint applications.--Two or
                                    more regulated entities may submit a
                                    joint application to the same financial
                                    regulatory agency under subclause (I).
                                        (IV) Regulations of other
                                    agencies.--
                                                (aa) In general.--A
                                            regulated entity may submit an
                                            application under this
                                            subparagraph that includes an
                                            alternative compliance strategy
                                            for a regulation issued or
                                            enforced by a financial
                                            regulatory agency that is not
                                            the appropriate financial
                                            regulatory agency for the
                                            regulated entity.
                                                (bb) Requirements.--An
                                            application described in item
                                            (aa) shall be subject to the
                                            same requirements as an
                                            application described in
                                            subclause (II), except that--

                                                        (AA) the regulated
                                                    entity shall submit the
                                                    application to the
                                                    appropriate financial
                                                    regulatory agency and
                                                    the financial
                                                    regulatory agency that
                                                    issued or enforces the
                                                    regulation that is the
                                                    subject of the
                                                    alternative compliance
                                                    strategy; and

                                                        (BB) the AI test
                                                    project may not take
                                                    effect unless the
                                                    appropriate financial
                                                    regulatory agency and
                                                    any other financial
                                                    regulatory agency that
                                                    issued or enforces the
                                                    regulation that is the
                                                    subject of the
                                                    alternative compliance
                                                    strategy jointly
                                                    approve the application
                                                    using the process
                                                    described in clause
                                                    (ii).

                                        (V) Notice.--A regulated entity
                                    that is regulated or supervised by more
                                    than 1 financial regulatory agency
                                    shall provide notice of any application
                                    submitted to the appropriate financial
                                    regulatory agency under this section to
                                    each financial regulatory agency by
                                    which it is regulated or supervised not
                                    later than 5 business days after the
                                    entity submits the application to the
                                    appropriate financial regulatory
                                    agency.
                                (ii) Agency review.--
                                        (I) In general.--Except as provided
                                    in subclause (IV), not later than 120
                                    days after the date on which an
                                    application is submitted to the
                                    appropriate financial regulatory agency
                                    under clause (i), the appropriate
                                    financial regulatory agency shall--
                                                (aa) review the
                                            application; and
                                                (bb) submit to the
                                            applicant in writing a
                                            determination of the agency.
                                        (II) Approval.--
                                                (aa) In general.--If the
                                            applicant shows that it is more
                                            likely than not that the
                                            application meets the
                                            requirements for establishing
                                            an alternative compliance
                                            strategy and satisfies the
                                            standards described in items
                                            (bb) and (cc) of clause
                                            (i)(II), the agency shall
                                            approve the application and
                                            notify the applicant in writing
                                            of--

                                                        (AA) the regulation
                                                    that is the subject of
                                                    the alternative
                                                    compliance strategy;

                                                        (BB) the terms of
                                                    the alternative
                                                    compliance strategy for
                                                    the AI test project;

                                                        (CC) the date on
                                                    which the AI test
                                                    project will terminate;

                                                        (DD) any
                                                    limitations on the
                                                    size, scope, or growth
                                                    of the AI test project;
                                                    and

                                                        (EE) any additional
                                                    limitations or
                                                    conditions on the AI
                                                    test project, as
                                                    determined by the
                                                    appropriate financial
                                                    regulatory agency.

                                                (bb) Effect of approval.--
                                            With respect to an AI test
                                            project, except as provided in
                                            item (cc), beginning on the
                                            date on which an application
                                            submitted under clause (i) is
                                            approved and ending on the date
                                            described in item (aa)(CC)--

                                                        (AA) the
                                                    appropriate financial
                                                    regulatory agency may
                                                    enforce a regulation
                                                    described in item
                                                    (aa)(AA) only in the
                                                    manner set out in the
                                                    alternative compliance
                                                    strategy described in
                                                    item (aa)(BB); and

                                                        (BB) except as
                                                    provided in subclause
                                                    (III), a financial
                                                    regulatory agency that
                                                    is not the appropriate
                                                    financial regulatory
                                                    agency may not enforce
                                                    a regulation described
                                                    in item (aa)(AA).

                                                (cc) Enforcement by another
                                            financial regulatory agency.--
                                            With respect to an AI test
                                            project, a financial regulatory
                                            agency other than the
                                            appropriate financial
                                            regulatory agency that approves
                                            an application under clause
                                            (i)(IV) may enforce a
                                            regulation described in item
                                            (aa)(AA) if the alternative
                                            compliance strategy described
                                            in item (aa)(BB) provides for
                                            enforcement by such financial
                                            regulatory agency.
                                                (dd) Rule of
                                            construction.--Nothing in this
                                            clause may be construed to
                                            limit the authority of a
                                            financial regulatory agency to
                                            take an enforcement action
                                            against a regulated entity with
                                            respect to fraud or market
                                            manipulation or for engaging in
                                            an unsafe or unsound practice
                                            relating to an AI test project.
                                        (III) Denial.--
                                                (aa) In general.--If an
                                            agency denies an application
                                            submitted under clause (i), the
                                            agency--

                                                        (AA) shall submit
                                                    to the applicant a
                                                    written notice
                                                    explaining the reason
                                                    for denial; and

                                                        (BB) may not take
                                                    an enforcement action
                                                    related to the proposed
                                                    AI test project against
                                                    the applicant earlier
                                                    than the date that is
                                                    30 days after the date
                                                    on which the agency
                                                    submits the written
                                                    notice described in
                                                    subitem (AA).

                                                (bb) Resubmittals.--Each
                                            time an application submitted
                                            under clause (i) is denied, the
                                            regulated entity--

                                                        (AA) may submit an
                                                    amended application
                                                    after receiving
                                                    feedback from the
                                                    agency making such
                                                    denial; and

                                                        (BB) may not
                                                    resubmit more than 2
                                                    applications that are
                                                    substantially similar
                                                    to the denied
                                                    application.

                                                (cc) Injunctive relief.--
                                            Notwithstanding item (aa)(BB),
                                            a financial regulatory agency,
                                            by and through its own
                                            attorneys, may file a civil
                                            action in an appropriate United
                                            States district court to enjoin
                                            an active AI test project if
                                            the agency determines that the
                                            AI test project presents an
                                            immediate danger to consumers
                                            or investors or presents a
                                            risk--

                                                        (AA) to financial
                                                    markets;

                                                        (BB) in the case of
                                                    an AI test project
                                                    engaged in by an
                                                    insured depository
                                                    institution or an
                                                    insured credit union,
                                                    of loss to a Federal
                                                    deposit or share
                                                    insurance fund;

                                                        (CC) of a violation
                                                    of anti-money
                                                    laundering and
                                                    countering the
                                                    financing of terrorism
                                                    obligations under
                                                    subchapter II of
                                                    chapter 53 of title 31,
                                                    United States Code; or

                                                        (DD) to the
                                                    national security of
                                                    the United States.

                                        (IV) Extension.--If the financial
                                    regulatory agency needs additional
                                    time, the agency may extend the
                                    approval deadline by 120 days. After
                                    the expiration of the 120-day extension
                                    period, if the agency has not made a
                                    determination on the application, the
                                    application will automatically be
                                    deemed approved and effective.
                                        (V) Additional information.--Not
                                    later than the initial or extended
                                    approval deadline, as applicable, a
                                    financial regulatory agency may request
                                    additional information from the
                                    applicant.
                                (iii) Data security.--All data supplied by
                            sponsors of AI test projects to a financial
                            regulatory agency submitted under this section
                            shall be stored and maintained in a secure
                            manner by the financial regulatory agency,
                            consistent with applicable data security
                            standards.
                                (iv) Regulations.--Not later than 180 days
                            after the date of enactment of this Act, each
                            financial regulatory agency shall promulgate
                            regulations that--
                                        (I) shall be published in the
                                    Federal Register and provide a 60-day
                                    period for public notice and comment;
                                        (II) include--
                                                (aa) procedures for
                                            modifying the AI test projects
                                            that are approved by the
                                            agency;
                                                (bb) consequences for
                                            failure to comply with the
                                            terms of an alternative
                                            compliance strategy;
                                                (cc) a requirement that an
                                            AI test project will terminate
                                            not earlier than 1 year after
                                            the AI test project is
                                            approved;
                                                (dd) procedures to extend
                                            the termination date described
                                            in item (cc);
                                                (ee) procedures for
                                            confidentiality; and
                                                (ff) procedures for
                                            coordinating decisions relating
                                            to applications submitted
                                            jointly by multiple regulated
                                            entities or applications
                                            submitted to more than one
                                            financial regulatory agency.
                (2) Report.--Not later than 2 years after the date of
            enactment of this Act, and each year for 7 years thereafter,
            each financial regulatory agency shall submit to the Committee
            on Banking, Housing, and Urban Affairs of the Senate and the
            Committee on Financial Services of the House of Representatives
            an annual report on the outcomes of AI test projects. A report
            under this subsection may not include the names of
            participating entities or any proprietary or confidential
            business information. A report under this subsection shall
            include aggregated findings, trends, and lessons learned from
            the AI test projects.
                (3) Rule of construction.--Nothing in this section may be
            construed to limit the authority of a financial regulatory
            agency to take an enforcement action against a regulated entity
            with respect to fraud or market manipulation relating to an AI
            test project.

        TITLE VI--PROTECTING SOFTWARE DEVELOPERS AND SOFTWARE INNOVATION

    SEC. 601. PROTECTING SOFTWARE DEVELOPERS.

        (a) Amendment to the Securities Act of 1933.--The Securities Act of
    1933 (15 U.S.C. 77a et seq.) is amended by inserting after section 27B
    (15 U.S.C. 77z-2a) the following:

    ``SEC. 27C. APPLICATION TO SOFTWARE DEVELOPERS.

        ``(a) Distributed Ledger System Defined.--In this section, the term
    `distributed ledger system' has the meaning given the term in section 2
    of the Digital Asset Market Clarity Act.
        ``(b) Application to Software Developers.--Notwithstanding any
    other provision of this Act, a person shall not be subject to this Act
    and the regulations promulgated under this Act solely based on the
    person engaging in any of the following activities, whether singly or
    in combination, in relation to the operation of a distributed ledger
    system or any component thereof:
                ``(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.''.
        (b) Amendment to the Securities Exchange Act of 1934.--The
    Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
    inserting after section 15G (15 U.S.C. 78o-11) the following:

    ``SEC. 15H. APPLICATION TO SOFTWARE DEVELOPERS.

        ``(a) Definitions.--In this section:
                ``(1) Constitute.--The term `constitute' means to compile,
            assemble, integrate, or otherwise combine software components
            into a complete software system.
                ``(2) Decentralized finance trading protocol.--
                        ``(A) In general.--The term `decentralized finance
                    trading protocol' means a distributed ledger 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 a person other
                            than the user to maintain custody or control of
                            the digital assets subject to the financial
                            transaction.
                        ``(B) Exclusions.--
                                ``(i) In general.--The term `decentralized
                            finance trading protocol' does not include a
                            distributed ledger system if--
                                        ``(I) 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
                                    distributed ledger system;
                                        ``(II) the distributed ledger
                                    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
                                    distributed ledger system; or
                                        ``(III) a person or group of
                                    persons under common control has the
                                    unilateral authority, via operation of
                                    the distributed ledger system, to
                                    restrict, censor, or prohibit the use
                                    of the distributed ledger system,
                                    including any applicable system-based
                                    user activity.
                                ``(ii) Special rule.--For purposes of
                            clause (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.
                ``(3) Deploy.--The term `deploy' means to bring software or
            hardware onto a distributed ledger system for active use.
                ``(4) Digital asset; distributed ledger application;
            distributed ledger system; distributed ledger protocol;
            decentralized governance system; smart contract.--The terms
            `digital asset', `distributed ledger application', `distributed
            ledger system', `distributed ledger protocol', `decentralized
            governance system', and `smart contract' have the meanings
            given those terms in section 2 of the Digital Asset Market
            Clarity Act.
                ``(5) Decentralized finance messaging system.--
                        ``(A) 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.
                        ``(B) Additional requirements.--The term
                    `decentralized finance messaging system' does not
                    include any system that provides any person other than
                    the user with--
                                ``(i) control over the funds of the user;
                            or
                                ``(ii) the authority to execute any of the
                            transaction of the user.
        ``(b) Application to Software Developers.--Notwithstanding any
    other provision of this Act, a person shall not be subject to this Act
    and the regulations promulgated under this Act solely based on the
    person engaging in any of the following activities, whether singly or
    in combination, in relation to the operation of a distributed ledger
    system or any component thereof:
                ``(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) Developing, publishing, or constituting--
                        ``(A) a distributed ledger system; or
                        ``(B) software or systems that create or utilize
                    hardware or software, including wallets or other
                    systems, that facilitate the ability of a user to keep,
                    safeguard, or have custody of the digital assets or
                    private keys of the user.
        ``(c) Rule of Construction.--Subsection (b)(3) does not extend to
    any activity covered in any of the activities described in
    subparagraphs (A) through (D) of subsection (d)(1), including activity
    taken following deployment of such software or hardware.
        ``(d) Clarification.--
                ``(1) In general.--The Commission shall, pursuant to notice
            and comment rulemaking, clarify the circumstances under which a
            person shall not be subject to this Act by reason of engaging
            solely in 1 or more of the following activities in relation to
            the operation of a decentralized finance trading protocol or
            any component thereof:
                        ``(A) Providing a user interface that enables a
                    user to read and access data.
                        ``(B) Administering, maintaining, or otherwise
                    distributing a decentralized governance system relating
                    to a decentralized finance trading protocol, or a
                    decentralized finance trading protocol.
                        ``(C) Administering, maintaining, or otherwise
                    distributing a decentralized finance messaging system
                    or operating or participating in a smart contract-based
                    liquidity pool in a decentralized finance trading
                    protocol.
                        ``(D) Administering, maintaining, or otherwise
                    distributing software or systems that create or deploy
                    hardware or software, including wallets or other
                    systems, that facilitate the ability of a user to keep,
                    safeguard, or maintain custody of the digital assets or
                    related private keys of the user.
                ``(2) Considerations.--In providing the clarification under
            paragraph (1) the Commission shall--
                        ``(A) ensure that the rules are consistent with the
                    purposes of the securities laws, including the public
                    interest, the protection of investors, and the
                    maintenance of fair and orderly markets;
                        ``(B) provide that section 108(a) of the Lummis-
                    Gillibrand Responsible Financial Innovation Act of 2026
                    shall apply to such rules;
                        ``(C) protect the rights of software developers,
                    publishers, and users to create, publish, and use code
                    and software in a manner consistent with the First
                    Amendment to the Constitution of the United States; and
                        ``(D) provide legal clarity for the development,
                    publication, and operation of distributed ledger
                    systems and the components therein in a manner
                    consistent with the purposes of this section.
                ``(3) Rule of construction.--Nothing in this subsection may
            be construed to grant the Commission authority over persons,
            systems, software, or activities that do not otherwise fall
            within the jurisdiction of the Commission under this Act, or to
            create a presumption that any such activity is subject to this
            Act.
        ``(e) Anti-Fraud, Anti-Manipulation, and False Reporting.--The
    determination that a person is not subject to this Act under
    subsections (b) and (d) shall not apply to the anti-fraud, anti-
    manipulation, or false reporting enforcement authorities of the
    Commission.
        ``(f) Rule of Construction.--Nothing in this Act or the rules and
    regulations promulgated under this Act may be construed to apply any
    requirement of the securities laws to a digital commodity, as defined
    in section 2 of the Digital Asset Market Clarity Act, or expand the
    authority of the Commission beyond that which the Commission had before
    the date of enactment of the Digital Asset Market Clarity Act to
    regulate the activities described in subsection (d)(1).
        ``(g) Federal Preemption.--
                ``(1) In general.--Notwithstanding any other provision of
            law, no securities, commodities, or digital assets law of any
            State (or of any political subdivision of a State) shall apply
            to an activity described in subsection (b).
                ``(2) Rule of construction.--Nothing in paragraph (1) may
            be construed to apply to the anti-money laundering, anti-fraud,
            or anti-manipulation authorities of a State (or of any
            political subdivision of a State).''.
        (c) Applicability.--This section, and the amendments made by this
    section, shall apply to conduct occurring before, on, or after the date
    of enactment of this Act.

    SEC. 602. SAFE HARBOR FOR NONFUNGIBLE TOKENS.

        (a) Definitions.--In this section:
                (1) Nonfungible token.--The term ``nonfungible token''
            means a digital asset recorded on a distributed ledger that--
                        (A) is individually identifiable and
                    distinguishable from any other digital asset;
                        (B) represents ownership of, or rights in, a work
                    of authorship, art, a collectible, a membership, an
                    access credential, a certificate of authenticity, an
                    in-game or in-application item, or another similar
                    specific item or discrete digital or physical good,
                    service, or benefit;
                        (C) is not interchangeable on a 1-to-1 basis with
                    any other token or digital asset; and
                        (D) may be bought, sold, or transferred for
                    consideration.
                (2) Promoter.--The term ``promoter'' means a person or
            group that manages, controls, or operates an enterprise in
            which capital is invested, or any person or group acting on
            behalf of such a person or group with respect to such an
            enterprise, including an affiliate, agent, or coordinated actor
            that contributes to the capital raising efforts of the
            enterprise.
        (b) Safe Harbor.--
                (1) In general.--Except as provided in paragraph (3), the
            offer, sale, resale, transfer, or conveyance of a nonfungible
            token shall not be deemed to constitute an offer, sale, or
            distribution of a security or investment contract under the
            Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities
            Exchange Act of 1934 (15 U.S.C. 78a et seq.), or any equivalent
            State law, unless the transaction, in substance, involves all
            of the elements of an investment contract.
                (2) Rules of construction.--Neither of the following shall
            be considered to be a security under the Securities Act of 1933
            (15 U.S.C. 77a et seq.) or the Securities Exchange Act of 1934
            (15 U.S.C. 78a et seq.):
                        (A) The resale or secondary market transfer of a
                    nonfungible token, where the payment for that resale or
                    transfer does not flow to a promoter or is not used to
                    raise new capital for an enterprise.
                        (B) A nonfungible token that serves as a
                    collectible, membership right, event ticket, access
                    credential, or other non-investment-based use case
                    solely because the nonfungible token may appreciate in
                    value or depend in part on the continued efforts or the
                    reputation of the creator or issuer of the nonfungible
                    token.
                (3) Exceptions.--The safe harbor under paragraph (1) shall
            not apply to--
                        (A) a mass-minted series of items with
                    substantially similar or nearly identical traits that
                    are marketed or sold interchangeably;
                        (B) a fractionalized interest in a nonfungible
                    token; or
                        (C) an interest representing a beneficial or
                    economic claim on a nonfungible token or an asset that
                    a nonfungible token represents.
                (4) Reliance; prospective effect.--
                        (A) Reliance.--A person, other than an originator
                    or related person, that reasonably and in good faith
                    relies on the safe harbor under this subsection shall
                    not be subject to any civil or administrative
                    penalties.
                        (B) Prospective effect.--Any determination by the
                    Commission that the safe harbor under this subsection
                    does not apply to a particular circumstance shall--
                                (i) be prospective only; and
                                (ii) take effect not earlier than 60 days
                            after the date on which the Commission publicly
                            posts that determination.

    SEC. 603. STUDY ON NONFUNGIBLE TOKENS.

        (a) Definition.--In this section, the term ``nonfungible token''
    has the meaning given the term in section 602.
        (b) Study.--The Comptroller General of the United States shall
    carry out a study of nonfungible tokens that analyzes--
                (1) the nature, size, role, purpose, and use of nonfungible
            tokens;
                (2) the similarities and differences between nonfungible
            tokens and other digital commodities, including digital
            commodities and payment stablecoins, and how the markets for
            those digital commodities intersect;
                (3) how nonfungible tokens are minted by issuers and
            subsequently distributed to purchasers;
                (4) how nonfungible tokens are stored after being purchased
            by a consumer;
                (5) the interoperability of nonfungible tokens between
            different distributed ledger systems;
                (6) the scalability of different nonfungible token
            marketplaces;
                (7) the benefits of nonfungible tokens, including
            verifiable digital ownership;
                (8) the risks of nonfungible tokens, including--
                        (A) the infringement of intellectual property
                    rights;
                        (B) cybersecurity risks; and
                        (C) market risks;
                (9) whether and how nonfungible tokens have been, or could
            be, integrated with traditional marketplaces, including
            marketplaces for music, real estate, gaming, events, and
            travel;
                (10) whether and how nonfungible tokens have been, or could
            be, used to facilitate commerce or other activities through the
            representation of documents, identification, contracts,
            licenses, and other commercial, governmental, or personal
            records;
                (11) any risks to traditional markets from the integration
            described in paragraph (9); and
                (12) the levels and types of illicit activity in
            nonfungible token markets.
        (c) Report.--Not later than 1 year after the date of enactment of
    this Act, the Comptroller General of the United States shall make
    publicly available a report that includes the results of the study
    required under subsection (b).

    SEC. 604. BLOCKCHAIN REGULATORY CERTAINTY ACT.

        (a) Short Title.--This section may be cited as the ``Blockchain
    Regulatory Certainty Act''.
        (b) Definitions.--In this section:
                (1) Developer or provider.--The term ``developer or
            provider'' means any person or business that creates or
            publishes software to facilitate the creation of, or provide
            maintenance to, a distributed ledger, or a service associated
            with a distributed ledger.
                (2) Distributed ledger service.--The term ``distributed
            ledger service'' means any information, transaction, or
            computing service or system that provides or enables access to
            a distributed ledger system by multiple users, including a
            service or system that enables users to send, receive,
            exchange, or store digital assets described by distributed
            ledger systems.
                (3) Non-controlling developer or provider.--The term ``non-
            controlling developer or provider'' means a developer or
            provider of a distributed ledger 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 to
            which users are entitled, without the approval, consent, or
            direction of any third party.
        (c) Treatment.--Notwithstanding any other provision of law, a non-
    controlling developer or provider--
                (1) shall not be treated as--
                        (A) a money transmitting business, as defined in
                    section 5330 of title 31, United States Code, and the
                    regulations promulgated under that section; or
                        (B) engaged in money transmitting, as defined in
                    section 1960 of title 18, United States Code; and
                (2) on or after the date of enactment of this Act, shall
            not be otherwise subject to any registration requirement that
            is substantially similar to a requirement (as in effect on the
            day before the date of enactment of this Act) that applies to
            an entity described in subparagraph (A) or (B) of paragraph
            (1), solely on the basis of--
                        (A) creating or publishing software to facilitate
                    the creation of, or providing maintenance services to,
                    a distributed ledger or a service associated with a
                    distributed ledger;
                        (B) providing hardware or software to facilitate a
                    customer's own custody or safekeeping of the digital
                    assets of the customer; or
                        (C) providing infrastructure support to maintain a
                    distributed ledger service.
        (d) Clarification of Treatment.--Subsection (c) shall not modify
    the application of section 1960(b)(1)(C) of title 18, United States
    Code, to any person (referred to in this subsection as the ``initial
    person'') that acts with the specific intent to transfer, on behalf of
    another person, funds that are known by the initial person to be--
                (1) derived from a criminal offense; or
                (2) intended to be used to promote or support unlawful
            activity.
        (e) Rules of Construction.--Nothing in this section may be
    construed--
                (1) to affect whether a developer or provider of a
            distributed ledger service is otherwise subject to
            classification or treatment as a money transmitter, or as
            engaged in money transmitting, under applicable Federal or
            State law, including laws relating to anti-money laundering or
            countering the financing of terrorism, based on conduct outside
            the scope of subsection (c);
                (2) to affect whether a developer or provider is otherwise
            subject to classification or treatment as a financial
            institution under subchapter II of chapter 53 of title 31,
            United States Code, this Act, any amendment made by this Act,
            or any Act enacted after the date of enactment of this Act,
            based on conduct outside the scope of subsection (c);
                (3) to limit or expand any law pertaining to intellectual
            property;
                (4) to prevent any State from enforcing any State law that
            is consistent with this section; or
                (5) to create a cause of action or impose liability under
            any State or local law that is inconsistent with this section.

    SEC. 605. KEEP YOUR COINS ACT.

        (a) Short Title.--This section may be cited as the ``Keep Your
    Coins Act''.
        (b) Definitions.--In this section:
                (1) Covered user.--The term ``covered user'' means a United
            States individual who obtains digital assets to purchase goods
            or services on behalf of that individual, without regard to the
            method in which that individual obtained those digital assets.
                (2) Self-hosted wallet.--The term ``self-hosted wallet''
            means a digital interface--
                        (A) that is used to secure and transfer digital
                    assets; and
                        (B) under which the owner of digital assets secured
                    and transferred under subparagraph (A) retains
                    independent control over those digital assets.
        (c) Self-Custody.--A Federal agency may not prohibit, restrict, or
    otherwise impair the ability of a covered user to self-custody digital
    assets using a self-hosted wallet or other means to conduct
    transactions for any lawful purpose.
        (d) Rule of Construction.--Nothing in this section may be construed
    to limit the authority of the Secretary of the Treasury, the
    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--
                (1) 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
                (2) any other law relating to illicit finance, money
            laundering, terrorism financing, or United States sanctions.

                    TITLE VII--PROTECTING CUSTOMER PROPERTY

    SEC. 701. CUSTOMER PROPERTY PROTECTIONS FOR ANCILLARY ASSETS AND
                  DIGITAL COMMODITIES IN BANKRUPTCY.

        (a) Definitions for Stockbroker Liquidation.--
                (1) In general.--Section 741 of title 11, United States
            Code, is amended--
                        (A) by redesignating paragraphs (5) through (9) as
                    paragraphs (7) through (11), respectively;
                        (B) by redesignating paragraphs (1) through (4) as
                    paragraphs (2) through (5), respectively;
                        (C) by inserting before paragraph (2), as so
                    redesignated, the following:
                ``(1) `ancillary asset' has the meaning given that term in
            section 2 of the Digital Asset Market Clarity Act;'';
                        (D) in paragraph (3), as so redesignated--
                                (i) in subparagraph (A)(vi), by striking
                            ``and'' at the end;
                                (ii) by redesignating subparagraph (B) as
                            subparagraph (C);
                                (iii) by inserting after subparagraph (A)
                            the following:
                        ``(B) entity with whom a person deals as principal
                    or agent and that has a claim against such person on
                    account of a digital commodity or an ancillary asset
                    received, acquired, or held by such person from or for
                    the securities account or accounts of such entity for 1
                    or more of the purposes identified in clauses (i)
                    through (vi) of subparagraph (A) of this paragraph;
                    and''; and
                                (iv) in subparagraph (C), as so
                            redesignated--
                                        (I) in clause (i)--
                                                (aa) by inserting ``,
                                            ancillary asset, or digital
                                            commodity'' after ``security'';
                                            and
                                                (bb) by inserting ``or
                                            (B)'' after ``subparagraph
                                            (A)''; and
                                        (II) in clause (ii), by inserting
                                    ``an ancillary asset, a digital
                                    commodity,'' after ``a security,'';
                        (E) in paragraph (5), as so redesignated, in the
                    matter preceding subparagraph (A), by inserting
                    ``ancillary asset, digital commodity,'' after ``cash,
                    security,'' each place it appears;
                        (F) by inserting after paragraph (5), as so
                    redesignated, the following:
                ``(6) `digital commodity' has the meaning given that term
            in section 2 of the Digital Asset Market Clarity Act;''; and
                        (G) in paragraph (8), as so redesignated, in
                    subparagraph (A)(i), by inserting ``, ancillary asset
                    positions, and digital commodities positions'' after
                    ``securities positions''.
        (b) Extent of Customer Claims.--Section 746(b) of title 11, United
    States Code, is amended, in the matter preceding paragraph (1), by
    striking ``cash or a security'' and inserting ``cash, a security, an
    ancillary asset, or a digital commodity''.
        (c) Technical and Conforming Amendments.--
                (1) Section 546(e) of title 11, United States Code, is
            amended--
                        (A) by striking ``section 741(7)'' and inserting
                    ``section 741''; and
                        (B) by striking ``section 761(4)'' and inserting
                    ``section 761''.
                (2) Section 561(a) of title 11, United States Code, is
            amended--
                        (A) in paragraph (1), by striking ``section
                    741(7)'' and inserting ``section 741''; and
                        (B) in paragraph (2), by striking ``section
                    761(4)'' and inserting ``section 761''.
                (3) Section 752(c) of title 11, United States Code, is
            amended by striking ``section 741(4)(B)'' and inserting
            ``section 741(5)(B)''.
        (d) Clarifications.--For the avoidance of doubt--
                (1) nothing in this section or an amendment made by this
            section may be construed to apply to securities or cash held by
            a broker-dealer and such assets and related claims shall be
            governed exclusively by the Securities Investor Protection Act
            of 1970 (15 U.S.C. 78aaa et seq.);
                (2) nothing in this section or an amendment made by this
            section may be construed to apply to deposits held by a bank or
            commodity contracts, which shall be governed by the relevant
            applicable law; and
                (3) in any liquidation proceeding under subchapter III or
            IV of chapter 7 of title 11, United States Code, those
            provisions shall be construed to treat ancillary assets and
            digital commodities held for customers as customer property
            governed by title 11, United States Code, and required to be
            distributed according to such title.

    SEC. 702. INSOLVENCY SAFE HARBOR.

        (a) Definitions.--In this section:
                (1) Commodity broker; financial institution; financial
            participant; securities clearing agency; stockbroker.--The
            terms ``commodity broker'', ``financial institution'',
            ``financial participant'', ``securities clearing agency'', and
            ``stockbroker'' have the meanings given those terms in section
            101 of title 11, United States Code.
                (2) Commodity contract.--The term ``commodity contract''
            means a commodity contract described in paragraph (4)(A) of
            section 761 of title 11, United States Code.
        (b) Safe Harbor.--A purchase, sale, or loan of, a margin loan or
    other extension of credit on, or a repurchase, reverse repurchase, or
    other transaction involving, a unit of a digital commodity occurring
    with a commodity broker, stockbroker, financial institution, financial
    participant, or securities clearing agency shall be deemed to be--
                (1) a commodity contract for purposes of--
                        (A) sections 362(b)(6), 362(o), 546(e), 553, 556,
                    561, and 562 of title 11, United States Code;
                        (B) section 11 of the Federal Deposit Insurance Act
                    (12 U.S.C. 1821);
                        (C) section 210 of the Dodd-Frank Wall Street
                    Reform and Consumer Protection Act (12 U.S.C. 5390);
                    and
                        (D) section 5(b)(2)(C) of the Securities Investor
                    Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)); and
                (2) a margin payment for purposes of section 548(d)(2)(B)
            of title 11, United States Code.

                        TITLE VIII--CUSTOMER PROTECTION

    SEC. 801. EDUCATIONAL MATERIALS.

        The Commission and the Commodity Futures Trading Commission shall
    require digital asset intermediaries to provide clear and accessible
    educational materials to the public, including--
                (1) an overview of how distributed ledger systems function;
                (2) a description of common risks associated with digital
            assets;
                (3) a description of the differences between digital asset
            markets and traditional financial markets;
                (4) information on reporting and disclosure requirements
            related to digital asset transactions and securities which may
            be accompanied by network tokens or ancillary assets; and
                (5) guidance on recognizing fraudulent schemes and
            instructions for reporting suspected fraud.

    SEC. 802. SAVINGS CLAUSES.

        (a) Definitions.--In this section:
                (1) Digital consumer token.--The term ``digital consumer
            token'' means a digital asset that is primarily acquired for a
            consumptive purpose, including redemption for a specified good
            or service at the time of sale or within a reasonable time
            after sale, as defined by the Federal Trade Commission pursuant
            to rule.
                (2) Nonfungible token.--The term ``nonfungible token''
            means a digital asset recorded on a distributed ledger that--
                        (A) is individually identifiable and
                    distinguishable from any other digital asset;
                        (B) represents ownership of, or rights in, a work
                    of authorship, art, a collectible, a membership, an
                    access credential, a certificate of authenticity, an
                    in-game or in-application item, or another similar
                    specific item or discrete digital or physical good,
                    service, or benefit;
                        (C) is not interchangeable on a 1-to-1 basis with
                    any other token or digital asset; and
                        (D) may be bought, sold, or transferred for
                    consideration.
        (b) Federal Trade Commission.--Nothing in this Act, or any
    amendment made by this Act, may be construed as limiting or abridging
    the jurisdiction of the Federal Trade Commission with respect to--
                (1) investigations or enforcement actions under the Federal
            Trade Commission Act (15 U.S.C. 41 et seq.) relating to unfair
            or deceptive acts or practices by persons relating to commerce
            in nonfungible tokens or digital consumer tokens, including
            deceptive acts with respect to advertising and endorsements
            relating to nonfungible tokens and digital consumer tokens;
                (2) highlighting best practices relating to commerce in
            nonfungible tokens or digital consumer tokens;
                (3) promoting responsible innovation;
                (4) consumer education relating to fraudulent digital asset
            activity; or
                (5) investigating unlawful restraints of trade in the
            digital asset industry.
        (c) Rule of Construction.--Nothing in this Act, or any amendment
    made by this Act, may be construed to expand, contract, or otherwise
    affect the jurisdiction or authority with respect to the Federal
    consumer financial laws under the Consumer Financial Protection Act of
    2010 (12 U.S.C. 5481 et seq.), as in effect on the day before the date
    of enactment of this Act, including with respect to subsection (i) or
    (j) of section 1027 of the Consumer Financial Protection Act of 2010
    (12 U.S.C. 5517).

    SEC. 803. STUDY ON EXPANDING FINANCIAL LITERACY.

        (a) Study.--The Commission and the Commodity Futures Trading
    Commission shall jointly conduct a study to identify--
                (1) the existing (as of the day before the date of
            enactment of this Act) level of financial literacy among retail
            digital asset customers;
                (2) methods to improve the timing, content, and format of
            financial literacy materials regarding digital assets provided
            by the respective commissions;
                (3) methods to improve coordination between the Commission
            and the Commodity Futures Trading Commission with other
            agencies, including the Financial Literacy and Education
            Commission, 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
            asset customers need to make informed financial decisions
            before engaging with or purchasing a digital asset;
                (6) the most effective public-private partnerships in
            providing financial literacy regarding digital assets;
                (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 assets.
        (b) Report.--Not later than 1 year after the date of enactment of
    this Act, the Commission and the Commodity Futures Trading Commission
    shall jointly submit to the Committee on Banking, Housing, and Urban
    Affairs and the Committee on Agriculture, Nutrition, and Forestry of
    the Senate and the Committee on Financial Services and the Committee on
    Agriculture of the House of Representatives a written report on the
    study required under subsection (a).

    SEC. 804. CONSULTATION WITH SIPC REGARDING MANDATORY BROKER-DEALER
                  DISCLOSURES TO INVESTORS CONCERNING THE STATUS OF PAYMENT
                  STABLECOINS AND DIGITAL COMMODITIES.

        (a) Definition.--In this section, the term ``payment stablecoin''
    has the meaning given the term in section 2 of the GENIUS Act (12
    U.S.C. 5901).
        (b) Rules.--Not later than 270 days after the date of enactment of
    this Act, the Commission, after consultation with the Commodity Futures
    Trading Commission and the Securities Investor Protection Corporation,
    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--
                (1) before a digital commodity, a payment stablecoin, or a
            security involving a unit of a digital commodity is received,
            acquired, or held by the broker or dealer for the account of
            the investor; and
                (2) after the provision of the disclosures under paragraph
            (1), at such frequency as the Commission may prescribe.
        (c) Contents.--The rules issued under subsection (b) shall include,
    as necessary or appropriate for the protection of investors--
                (1) a description of the manner in which any digital
            commodity, payment stablecoin, or security involving a unit of
            a digital commodity received, acquired, or held by a broker or
            dealer for the account of an 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 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 the
            applicable investor in the event of an insolvency, resolution,
            or liquidation proceeding with respect to the broker or dealer
            under each provision of law described in subparagraph (A), (B),
            and (C) of paragraph (1).

                            TITLE IX--OTHER MATTERS

    SEC. 901. JOINT ADVISORY COMMITTEE ON DIGITAL ASSETS.

        (a) Establishment.--The Commodity Futures Trading Commission and
    the Commission (referred to collectively in this section as the
    ``Commissions'') shall jointly establish the Joint Advisory Committee
    on Digital Assets (referred to in this section as the ``Committee'').
        (b) Purpose.--
                (1) In general.--The Committee shall--
                        (A) provide the Commissions with official findings
                    and nonbinding recommendations on--
                                (i) the rules, regulations, oversight, and
                            other matters of the Commissions relating to
                            digital assets, including with respect to
                            regulatory harmonization between the
                            Commissions;
                                (ii) how to further the regulatory
                            harmonization of digital asset policy between
                            the Commissions or areas in which that
                            harmonization should occur; and
                                (iii) the implementation by the Commissions
                            of this Act, and the amendments made by this
                            Act, including with respect to regulatory
                            harmonization between the Commissions,
                            memoranda of understanding, and the CFTC-SEC
                            Micro-Innovation Sandbox established pursuant
                            to section 501;
                        (B) develop and share objective methods and best
                    practices for evaluating digital asset networks and
                    activities, including, as appropriate, technical
                    features, economic design, and implications for market
                    integrity, investor protection, and operational
                    resilience; and
                        (C) issue nonbinding recommendations to assist in
                    resolving disputes between the Commissions.
        (c) Review by the Commissions.--Each of the Commissions shall--
                (1) review the findings and nonbinding recommendations
            provided under subsection (b)(1)(A);
                (2) promptly publish a public statement each time the
            Committee submits a finding or nonbinding recommendation to the
            applicable Commission under subsection (b)(1)(A) that--
                        (A) assesses the finding or recommendation; and
                        (B) if applicable, discloses the action or decision
                    not to take action; and
                (3) provide the Committee with a formal written response
            not later than 90 days after the date of submission of a
            finding or nonbinding recommendation under subsection
            (b)(1)(A).
        (d) Membership and Leadership.--
                (1) Non-federal members; size and composition.--
                        (A) In general.--The Commissions shall appoint to
                    the Committee not more than 14 nongovernmental voting
                    members who--
                                (i) represent a broad spectrum of
                            interests, equally divided between the
                            Commissions; and
                                (ii) serve at the pleasure of the
                            appointing Commission.
                        (B) Specific members.--For each of the Commissions,
                    the appointees under subparagraph (A) of this paragraph
                    shall include--
                                (i) 2 individuals described in paragraph
                            (2)(A);
                                (ii) 2 individuals described in paragraph
                            (2)(B);
                                (iii) 1 individual described in paragraph
                            (2)(C);
                                (iv) 2 individuals described in paragraph
                            (2)(D); and
                                (v) 1 individual described in paragraph
                            (2)(E).
                (2) Members described.--A member described in this
            paragraph is--
                        (A) an individual who is employed by, or is a
                    related person with respect to, a digital asset market
                    participant;
                        (B) a person registered with either of the
                    Commissions and that is engaged in activities relating
                    to digital assets;
                        (C) an individual engaged in academic research
                    relating to digital assets;
                        (D) a retail user of digital assets; and
                        (E) a State securities regulator.
                (3) NIST.--The Director of the National Institute of
            Standards and Technology, or the designee of the Director,
            shall serve in an advisory capacity as a nonvoting, ex officio
            member of the Committee, and shall not be excluded from any
            proceedings, meetings, discussions, or deliberations of the
            Committee, except that the chair of the Committee, upon an
            affirmative vote of the Committee, may exclude the Director or
            the designee from any proceedings, meetings, discussions, or
            deliberations of the Committee when necessary to safeguard and
            promote the free exchange of confidential information.
                (4) Co-designated federal officers; commissioner support.--
                        (A) Co-designated federal officers.--
                                (i) In general.--Each Commission shall
                            designate 1 Federal officer to serve as a co-
                            designated Federal officer of the Committee.
                                (ii) Shared duties.--The duties required by
                            section 1009(e) of title 5, United States Code,
                            to be carried out by a designated officer or
                            employee of the Federal Government with respect
                            to the Committee shall be shared by the Federal
                            officers of the Committee who are co-designated
                            under clause (i).
                        (B) Commissioner support.--
                                (i) In general.--Commissioners of the
                            Commissions may be supported by officers or
                            employees of the respective Commission who may
                            prepare or transmit materials, coordinate with
                            agency staff, liaise with Committee leadership,
                            propose agenda items, gather information, and
                            otherwise support the participation of that
                            commissioner in Committee business, in an ex
                            officio, nonvoting capacity.
                                (ii) Rule of construction.--An officer or
                            employee described in clause (i) shall not be
                            considered to be a member of the Committee for
                            purposes of chapter 10 of title 5, United
                            States Code.
                        (C) Information sharing.--The co-designated Federal
                    officers under subparagraph (A) and the officers or
                    employees of the respective Commissions providing
                    support under subparagraph (B) shall share information
                    about digital asset activities under this Act, in
                    accordance with section 902, including with regard to
                    preventing insider trading.
                (5) Committee leadership.--The members of the Committee
            shall elect, from among the membership of the Committee, a
            secretary and an assistant secretary.
                (6) Rotating chair.--The chair and vice chair of the
            Committee shall rotate annually between the Commissions, with
            the Commission designating the chair in even-numbered calendar
            years, the Commodity Futures Trading Commission designating the
            chair in odd-numbered calendar years, the Commission
            designating the vice chair in odd-numbered calendar years, and
            the Commodity Futures Trading Commission designating the vice
            chair in even-numbered calendar years.
                (7) Terms; vacancies; holdover.--
                        (A) In general.--Each non-Federal member of the
                    Committee shall be appointed for a term of 4 years.
                        (B) Service until new appointment.--A member of the
                    Committee may continue to serve after the expiration of
                    the term of the member until a successor is appointed.
                        (C) Vacancies.--A vacancy with respect to
                    membership in the Committee shall be filled only for
                    the remainder of the applicable term.
                        (D) Reappointment.--A member of the Committee may
                    be reappointed.
                (8) Status of members.--A member of the Committee appointed
            under paragraph (1) shall not be deemed to be an employee or
            agent of either of the Commissions solely by reason of
            membership on the Committee.
        (e) No Compensation for Committee Members.--
                (1) Non-federal members.--All Committee members appointed
            under subsection (d)(1) shall--
                        (A) serve without compensation; and
                        (B) while away from the home or regular place of
                    business of the member in the performance of services
                    for the Committee, be allowed travel expenses,
                    including per diem in lieu of subsistence, in the same
                    manner as persons employed intermittently in Government
                    service are allowed expenses under section 5703 of
                    title 5, United States Code.
                (2) No compensation for co-designated federal officers.--
            The Federal officers co-designated under subsection (d)(4)(A)
            shall serve without compensation in addition to that received
            for their services as officers or employees of the United
            States.
        (f) Frequency of Meetings.--The Committee shall meet--
                (1) not less frequently than twice annually; and
                (2) at such other times as either of the Commissions may
            request.
        (g) Procedures; Advisory Nature.--
                (1) In general.--The Committee shall operate pursuant to
            chapter 10 of title 5, United States Code, except as otherwise
            expressly provided by this section.
                (2) Advisory nature of recommendations.--The
            recommendations of the Committee are advisory in nature, shall
            not create any legal rights or obligations, and shall not limit
            or delay the independent authority of either of the
            Commissions.
        (h) Time Limits.--The Commissions shall--
                (1) not later than 90 days after the date of enactment of
            this Act, adopt a joint charter for the Committee;
                (2) not later than 120 days after the date of enactment of
            this Act, make the appointments required under subsection
            (d)(1); and
                (3) not later than 180 days after the date of enactment of
            this Act, hold the initial meeting of the Committee.
        (i) Funding.--Subject to the availability of funds, the Commissions
    shall jointly fund the Committee.
        (j) Duration and Renewal.--
                (1) Initial period.--The Committee shall remain in effect
            for 10 years beginning on the date of enactment of this Act.
                (2) Renewal thereafter.--At the conclusion of the 10-year
            period described in paragraph (1)--
                        (A) the Committee shall be subject to subsections
                    (a) and (b) of section 1013 of title 5, United States
                    Code; and
                        (B) the Commissions may renew the Committee for
                    successive 2-year periods by publishing a notice in the
                    Federal Register, consistent with chapter 10 of title
                    5, United States Code.

    SEC. 902. MEMORANDUM OF UNDERSTANDING.

        (a) Memorandum of Understanding.--The Commission shall enter into a
    memorandum of understanding with the Commodity Futures Trading
    Commission to ensure--
                (1) coordinated supervision and enforcement with respect to
            registrants of the Commission and the Commodity Futures Trading
            Commission, including with regard to--
                        (A) the anti-fraud and anti-manipulation
                    authorities of the Commission, such as with regard to
                    insider trading; and
                        (B) the market integrity authorities of the
                    Commodity Futures Trading Commission; and
                (2) appropriate information sharing between the Commission
            and the Commodity Futures Trading Commission to further the
            purposes of and compliance with this Act, the amendments made
            by this Act, the Securities Act of 1933 (15 U.S.C. 77a et seq.)
            (as amended by this Act), the Securities Exchange Act of 1934
            (15 U.S.C. 78a et seq.) (as amended by this Act), and the
            Commodity Exchange Act (7 U.S.C. 1 et seq.).
        (b) Rule of Construction.--Nothing in this section may 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.
        (c) Rule of Construction.--Nothing in this Act, or any amendment
    made by this Act, may be construed to limit or prevent the continued
    application of applicable law regarding the insider trading of
    securities, including digital asset securities, including section 21A
    of the Securities Exchange Act of 1934 (15 U.S.C. 78u-1).

    SEC. 903. FINCEN APPROPRIATIONS.

        (a) Authorization of Appropriations.--For the purposes of
    developing policy relating to digital assets, acquiring information
    technology resources, funding the operations described in sections 202
    and 203 of this Act, and enforcement of the laws within its
    jurisdiction relating to digital assets, there is authorized to be
    appropriated to the Financial Crimes Enforcement Network of the
    Department of the Treasury the following:
                (1) $30,000,000 for fiscal year 2026, to remain available
            until September 30, 2027.
                (2) $30,000,000 for fiscal year 2027, to remain available
            until September 30, 2028.
                (3) $30,000,000 for fiscal year 2028, to remain available
            until September 30, 2029.
                (4) $30,000,000 for fiscal year 2029, to remain available
            until September 30, 2030.
                (5) $30,000,000 for fiscal year 2030, to remain available
            until September 30, 2031.
        (b) Incentive Premium for Highly Qualified Individuals.--
    Notwithstanding any other provision of law or regulation, the Director
    of the Financial Crimes Enforcement Network of the Department of the
    Treasury may pay an annual incentive premium of not more than 20
    percent of the annual rate of basic pay for a position if necessary to
    attract highly qualified individuals for positions that the Director
    has certified to the Director of the Office of Personnel Management
    reflect the needs of the Financial Crimes Enforcement Network.

    SEC. 904. BUILD NOW ACT.

        (a) Definitions.--In this section:
                (1) Covered recipient.--The term ``covered recipient''
            means a metropolitan city or urban county, as those terms are
            defined in section 102 of the Housing and Community Development
            Act of 1974 (42 U.S.C. 5302), that receives funds under section
            106.
                (2) Current annual growth rate.--The term ``current annual
            growth rate'', with respect to an eligible recipient and a
            fiscal year, means the average annual percentage increase in
            the number of housing units in the jurisdiction of the eligible
            recipient, as calculated by the Secretary, during the period--
                        (A) beginning with the third quarter of the sixth
                    preceding fiscal year; and
                        (B) ending with the third quarter of the preceding
                    fiscal year.
                (3) Eligible recipient.--The term ``eligible recipient''
            means any covered recipient unless--
                        (A)(i) the median Small Area Fair Market Rent in
                    the jurisdiction of the covered recipient is at or
                    below the 60th percentile of median Small Area Fair
                    Market Rents in the jurisdictions of all covered
                    recipients; and
                        (ii) the median home value in the jurisdiction of
                    the covered recipient is below the median home value
                    for the United States;
                        (B) the annual rental vacancy rate in the
                    jurisdiction of the covered recipient is greater than
                    the national annual rental vacancy rate for the most
                    recent year available, as published by the Bureau of
                    the Census;
                        (C) during the 1-year period preceding the date on
                    which the Secretary allocates funds under section 106,
                    the jurisdiction of the covered recipient has been the
                    subject of a major disaster or emergency declaration
                    under section 401 or 501, respectively, of the Robert
                    T. Stafford Disaster Relief and Emergency Assistance
                    Act (42 U.S.C. 5170, 5191); or
                        (D) the covered recipient lacks the legal authority
                    to enact or update zoning and permitting ordinances.
                (4) Extremely high-growth recipient.--The term ``extremely
            high-growth recipient'' means an eligible recipient for which
            the current annual growth rate is at or above 4 percent.
                (5) Housing growth improvement rate.--The term ``housing
            growth improvement rate'', with respect to an eligible
            recipient and a fiscal year, means the quotient of--
                        (A)(i) the current annual growth rate of the
                    eligible recipient, minus
                        (ii) the prior annual growth rate of the eligible
                    recipient; and
                        (B) the sum obtained by adding the absolute values
                    of the current annual growth rate and the prior annual
                    growth rate of the eligible recipient.
                (6) Prior annual growth rate.--The term ``prior annual
            growth rate'', with respect to an eligible recipient and a
            fiscal year, means the average annual percentage increase in
            the number of housing units in the jurisdiction of the eligible
            recipient, as calculated by the Secretary, during the period--
                        (A) beginning with the third quarter of the 11th
                    preceding fiscal year; and
                        (B) ending with the third quarter of the sixth
                    preceding fiscal year.
                (7) Secretary.--The term ``Secretary'' means the Secretary
            of Housing and Urban Development.
                (8) Section 106.--The term ``section 106'' means section
            106 of the Housing and Community Development Act of 1974 (42
            U.S.C. 5306).
        (b) Adjustments to Community Development Block Grant Allocations.--
                (1) In general.--In allocating amounts to an eligible
            recipient under section 106 for a fiscal year, the Secretary
            shall adjust the allocation based on the housing growth
            improvement rate of the eligible recipient, in accordance with
            paragraph (2) of this subsection.
                (2) Adjustments.--
                        (A) Housing growth improvement rate at or above
                    median; extremely high-growth recipients.--
                                (i) In general.--If, with respect to a
                            fiscal year for which the allocation under
                            section 106 is being determined, the housing
                            growth improvement rate for an eligible
                            recipient is at or above the median housing
                            growth improvement rate for all eligible
                            recipients other than extremely high-growth
                            recipients, or if an eligible recipient is an
                            extremely high-growth recipient, the Secretary
                            shall allocate to the eligible recipient for
                            that fiscal year, in addition to the amount
                            that would otherwise be allocated to the
                            eligible recipient under section 106, a bonus
                            amount, as determined under clause (ii) of this
                            subparagraph.
                                (ii) Bonus amount.--For purposes of clause
                            (i), the bonus amount for an eligible recipient
                            for a fiscal year shall be equal to the product
                            of--
                                        (I) the aggregate amount by which
                                    allocations to eligible recipients are
                                    decreased under subparagraph (B) for
                                    that fiscal year; and
                                        (II) the quotient of--
                                                (aa) the number of housing
                                            units, as of the third quarter
                                            of the preceding fiscal year,
                                            in the jurisdiction of the
                                            eligible recipient, as
                                            calculated by the Secretary;
                                            and
                                                (bb) the number of housing
                                            units, as of the third quarter
                                            of the preceding fiscal year,
                                            in the jurisdictions of all
                                            eligible recipients that
                                            receive a bonus amount under
                                            this paragraph, as calculated
                                            by the Secretary.
                        (B) Housing growth improvement rate below median.--
                    If, with respect to a fiscal year for which the
                    allocation under section 106 is being determined, the
                    housing growth improvement rate for an eligible
                    recipient is below the median housing growth
                    improvement rate for all eligible recipients other than
                    extremely high-growth recipients, the Secretary shall
                    decrease the amount that would otherwise be allocated
                    to the eligible recipient under section 106 for that
                    fiscal year by 10 percent.
        (c) Calculation of Housing Units.--
                (1) Housing and urban development requirements.--In
            calculating the number of housing units in the jurisdiction of
            an eligible recipient under any provision of this section, the
            Secretary shall--
                        (A) use the Current Address Count Listing Files and
                    other data products, as needed, of the Bureau of the
                    Census tabulated from the Master Address File; and
                        (B) make calculations at the block level, using
                    boundaries that reflect the most current boundaries.
                (2) Census bureau and postal service requirements.--The
            Bureau of the Census and the United States Postal Service shall
            provide any relevant data to the Secretary upon request to
            assist the Secretary in making a calculation described in
            paragraph (1).
                (3) Adjustment of calculation periods.--The Secretary may
            adjust the calculation periods under subparagraphs (A) and (B)
            of subsection (a)(2), subparagraphs (A) and (B) of subsection
            (a)(6), and items (aa) and (bb) of subsection (b)(2)(A)(ii)(II)
            by not more than 2 months to achieve alignment with the data
            provided by the Bureau of the Census.
        (d) Annual Report on Housing Growth Improvement Rate.--Before
    allocating funds under section 106 for a fiscal year, the Secretary
    shall publish a report that--
                (1) includes the housing growth improvement rate for each
            eligible recipient; and
                (2) lists, for the most recent fiscal year for which
            allocations were made under section 106--
                        (A) the eligible recipients that received a bonus
                    amount under subsection (b)(2)(A) of this section; and
                        (B) the eligible recipients for which the
                    allocation under section 106 was decreased under
                    subsection (b)(2)(B) of this section.
        (e) Notification; Implementation Dates.--
                (1) Notification.--
                        (A) In general.--Not later than 60 days after the
                    date of enactment of this Act, the Secretary shall
                    notify each eligible recipient of the recipient's
                    housing growth improvement rate and whether that
                    housing growth improvement rate is above, at, or below
                    the median housing growth improvement rate for all
                    eligible recipients other than extremely high-growth
                    recipients.
                        (B) Guidance.--As part of the notification under
                    subparagraph (A), the Secretary shall share guidance,
                    including resources developed by the Department of
                    Housing and Urban Development, on best practices and
                    recommendations for policies to reduce regulatory
                    barriers to housing and increase housing supply.
                (2) Implementation dates.--Subsection (b) shall take effect
            beginning with the third full fiscal year after the date of
            enactment of this Act and remain in effect through fiscal year
            2043.
                (3) No effect on previous appropriations.--This section
            shall not apply to amounts appropriated before the date of
            enactment of this Act.

    SEC. 905. RULEMAKINGS.

        Except as otherwise provided, not later than 1 year after the date
    of enactment of this Act, each applicable regulator shall adopt rules
    to carry out this Act, and the amendments made by this Act, through
    appropriate notice and comment rulemaking.

    SEC. 906. EFFECTIVE DATE.

        This Act, and the amendments made by this Act, shall take effect on
    the date that is 360 days after the date of enactment of this Act,
    except that, if a provision of this Act, or an amendment made by this
    Act, requires a rulemaking, that provision shall take effect on the
    later of--
                (1) the date that is 360 days after the date of enactment
            of this Act; or
                (2) the date that is 60 days after the publication in the
            Federal Register of the final rule implementing the provision.
                                                           Calendar No. 423

    119th CONGRESS

      2d Session

                                   H. R. 3633

    _______________________________________________________________________

                                     AN ACT

    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, to amend the Federal Reserve Act to
     prohibit the Federal reserve banks from offering certain products or
    services directly to an individual, to prohibit the use of central bank
         digital currency for monetary policy, and for other purposes.

    _______________________________________________________________________

                                  June 1, 2026

                           Reported with an amendment