115 HR 3633 RS: Digital Asset Market Clarity Act of 2025
U.S. House of Representatives
2026-06-01
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short titles; table of contents(a)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
.(b)The table of contents for this Act is as follows:Sec. 1. Short titles; table of contents.Title I—Definitions; Rulemaking; Expedited RegistrationSec. 101. Definitions under the Securities Act of 1933.Sec. 102. Definitions under the Securities Exchange Act of 1934.Sec. 103. Definitions under the Commodity Exchange Act.Sec. 104. Definitions under this Act.Sec. 105. Rulemakings.Sec. 106. Expedited registration for digital commodity exchanges, brokers, and dealers; provisional status.Sec. 107. Commodity Exchange Act and securities laws savings provisions.Sec. 108. Administrative requirements.Sec. 109. Treatment of certain non-controlling blockchain developers.Sec. 110. Application of the Bank Secrecy Act.Sec. 111. Rule of construction.Sec. 112. Implementation.Title II—Offers and Sales of Digital CommoditiesSec. 201. Treatment of investment contract assets.Sec. 202. Exempted primary transactions in digital commodities.Sec. 203. Treatment of secondary transactions in digital commodities that originally involved investment contracts.Sec. 204. Requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons.Sec. 205. Mature blockchain system requirements.Sec. 206. Effective date.Title III—Registration for Intermediaries at the Securities and Exchange CommissionSec. 301. Treatment of digital commodities and permitted payment stablecoins.Sec. 302. Anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions.Sec. 303. Eligibility of alternative trading systems.Sec. 304. Rulemaking for dual-registered entities.Sec. 305. Modernization of recordkeeping requirements.Sec. 306. Exemptive authority.Sec. 307. Additional registrations with the Commodity Futures Trading Commission.Sec. 308. Exempting digital commodities from State securities laws.Sec. 309. Exclusion for decentralized finance activities.Sec. 310. Treatment of custody activities by banking institutions.Sec. 311. Broker and dealer disclosures regarding the treatment of assets.Sec. 312. Digital commodity activities that are financial in nature.Sec. 313. Effective date; administration.Sec. 314. Educational material requirements.Sec. 315. Discretionary Surplus Fund.Title IV—Registration for Digital Commodity Intermediaries at the Commodity Futures Trading CommissionSec. 401. Commission jurisdiction over digital commodity transactions.Sec. 402. Requiring futures commission merchants to use qualified digital asset custodians.Sec. 403. Trading certification and approval for digital commodities.Sec. 404. Registration of digital commodity exchanges.Sec. 405. Qualified digital asset custodians.Sec. 406. Registration and regulation of digital commodity brokers and dealers.Sec. 407. Registration of associated persons.Sec. 408. Registration of commodity pool operators and commodity trading advisors.Sec. 409. Exclusion for decentralized finance activities.Sec. 410. Resources for implementation and enforcement.Sec. 411. Requirements related to control persons.Sec. 412. Other tradable assets.Sec. 413. Conflict of interest rulemaking.Sec. 414. Effective date.Sec. 415. Sense of Congress.Title V—Innovation and Technology ImprovementsSec. 501. Findings; sense of Congress.Sec. 502. Strategic Hub for Innovation and Financial Technology.Sec. 503. Codification of LabCFTC.Sec. 504. Study on decentralized finance.Sec. 505. Study on non-fungible tokens.Sec. 506. Study on expanding financial literacy amongst digital commodity holders.Sec. 507. Study on financial market infrastructure improvements.Sec. 508. Study on blockchain in payments.Sec. 509. Study on illicit use of digital assets.Sec. 510. GAO study on certain centralized intermediaries that are primarily located in foreign jurisdictions.Sec. 511. Studies on foreign adversary participation.Sec. 512. Conforming amendments.Title VI—Anti-CBDC Surveillance State ActSec. 601. Short title.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.Sec. 603. Prohibition on Federal reserve banks indirectly issuing a central bank digital currency.Sec. 604. Prohibition with respect to central bank digital currency.Sec. 605. Sense of Congress.<enum>I</enum><header>Definitions; Rulemaking; Expedited Registration</header><section id="HD826CE11D821402F9A0016A06D22B6D4"><enum>101.</enum><header>Definitions under the Securities Act of 1933</header><text display-inline="no-display-inline">Section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="H90033E477B4C4413A551848FFE6B6952" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H2791EAEAD93D49EE926E25C7B9906B68"><enum>(20)</enum><header>Blockchain</header><text display-inline="yes-display-inline">The term <term>blockchain</term> means—</text><subparagraph id="HDB8071A05E2D416DAC0CCAB8778B247E"><enum>(A)</enum><text>any technology—</text><clause id="H01A4DF96733A4FCDB9D8221268AC6D83"><enum>(i)</enum><text>where data is—</text><subclause id="H693E2DB341614AB99AF10631BC4502A1"><enum>(I)</enum><text display-inline="yes-display-inline">shared across a network to create a distributed ledger of independently verifiable transactions or information among network participants;</text></subclause><subclause id="HC5B7AE808144402DA3B620408EDB2646"><enum>(II)</enum><text>linked using cryptography to maintain the integrity of the distributed ledger and to execute other functions; and</text></subclause><subclause id="H74BA67FB1BD641F6AD9A15CC90DC43BA" display-inline="no-display-inline"><enum>(III)</enum><text display-inline="yes-display-inline">propagated among network participants to reach consensus on the state of the distributed ledger and any other functions; and</text></subclause></clause><clause id="H981A98A7BC074F25A88BAC03B5E3C42D"><enum>(ii)</enum><text>composed of source code that is publicly available; and</text></clause></subparagraph><subparagraph id="HDDFEBD9F2AE44AF8A5485A0E18F10727"><enum>(B)</enum><text>any similar technology to the technology described in subparagraph (A).</text></subparagraph></paragraph><paragraph id="H5C14AD01B0244AB1A867FFA73A5A3DDD"><enum>(21)</enum><header>Blockchain application</header><text display-inline="yes-display-inline">The term <term>blockchain application</term> 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.</text></paragraph><paragraph id="HA1D9BD70AD274DF7B4DAB4248C8F6A3F"><enum>(22)</enum><header>Blockchain protocol</header><text display-inline="yes-display-inline">The term <quote>blockchain protocol</quote> 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.</text></paragraph><paragraph id="HDCFE69D2CC5549618297A5371E6EBE44"><enum>(23)</enum><header>Blockchain system</header><text display-inline="yes-display-inline">The term <term>blockchain system</term> means any blockchain, together with its blockchain protocol or any blockchain application or network of blockchain applications.</text></paragraph><paragraph id="H1779F93FFA6342DE8A57B3AA68D87589" commented="no"><enum>(24)</enum><header>Decentralized governance system</header><subparagraph id="H620196997C154C68B99F7E0010E36C6E"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>decentralized governance system</term> 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.</text></subparagraph><subparagraph id="HCB7C09EC012A4356936A9C2CD6D655E8"><enum>(B)</enum><header>Relationship of persons to decentralized governance systems</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HE68561C17F6F4F3587140B9AE4713AAA"><enum>(C)</enum><header>Legal entities for decentralized governance systems</header><text display-inline="yes-display-inline">The term <term>decentralized governance system</term> 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.</text></subparagraph></paragraph><paragraph id="HCCB5234BB8864CB7802F86338F74E079"><enum>(25)</enum><header>Digital asset</header><text display-inline="yes-display-inline">The term <term>digital asset</term> means any digital representation of value which is recorded on a cryptographically-secured distributed ledger or other similar technology.</text></paragraph><paragraph id="H0113F5CE498847D5974EEE6DD5EE3978"><enum>(26)</enum><header>Digital commodity</header><text display-inline="yes-display-inline">The term <term>digital commodity</term> has the meaning given that term under section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>).</text></paragraph><paragraph id="H69D8D016D16B481C838C5265BFB18BD4"><enum>(27)</enum><header>Digital commodity affiliated person</header><text display-inline="yes-display-inline">The term <term>digital commodity affiliated person</term>—</text><subparagraph id="H406752A4F36F4406AAD99055E596242E"><enum>(A)</enum><text> means a person (including a digital commodity related person) that, with respect to any digital commodity—</text><clause id="H8966C23A9A4547E4B0E5BD0D120F04AD"><enum>(i)</enum><text display-inline="yes-display-inline">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;</text></clause><clause id="HD5A0180B60264B819ABB2EE02A8E4A0F"><enum>(ii)</enum><text display-inline="yes-display-inline">is a founder of the digital commodity issuer; or</text></clause><clause id="H8C793CFA2DF6496C976C11ED20FBDEC2"><enum>(iii)</enum><text display-inline="yes-display-inline">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</text></clause></subparagraph><subparagraph id="HCC249966A2C94367BD938545240A472F"><enum>(B)</enum><text display-inline="yes-display-inline">does not include a decentralized governance system.</text></subparagraph></paragraph><paragraph id="HB4279DF4282D43A7A85198493A422A54"><enum>(28)</enum><header>Digital commodity issuer</header><subparagraph id="HC287A68D965C441D93E6D0E30914D32F"><enum>(A)</enum><header>In general</header><text>With respect to a digital commodity, the term <term>digital commodity issuer</term> means any person that—</text><clause id="H53AC7E37F88D44A4A19C92D15571363D"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H4FB79C98CF8E4C939FE5845AE0876AC2"><enum>(ii)</enum><text>offers or sells a right to a future issuance of a unit of such digital commodity to a person.</text></clause></subparagraph><subparagraph id="H6E78BA9A33754037A0A114FF5F06299F" commented="no"><enum>(B)</enum><header>Prohibition on evasion</header><text display-inline="yes-display-inline">It shall be unlawful for any person to knowingly evade classification as a <quote>digital commodity issuer</quote> 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.</text></subparagraph></paragraph><paragraph id="HD06CC32D39E1466C80A816C9293A612D"><enum>(29)</enum><header>Digital commodity related person</header><subparagraph id="H93B8A3F2E2674DB48DC404636EF094AC"><enum>(A)</enum><header>In general</header><text>With respect to a digital commodity issuer, the term <term>digital commodity related person</term>—</text><clause id="H70DB26C7F59C42B787703D8A2BF91616"><enum>(i)</enum><text>means a person—</text><subclause id="H2A8D339B2B614486B8F6F8C3A57D8B6A"><enum>(I)</enum><text display-inline="yes-display-inline">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</text></subclause><subclause id="HFF814ED5AEC642CB9B8254A1292BEF2A"><enum>(II)</enum><text display-inline="yes-display-inline">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</text></subclause></clause><clause id="H4356E1A1FF64496093E64FFFCC8E11FA"><enum>(ii)</enum><text display-inline="yes-display-inline">does not include a decentralized governance system.</text></clause></subparagraph><subparagraph id="H49D8EDDECE8147ACA025D4506A6CAF64"><enum>(B)</enum><header>Senior employee defined</header><text display-inline="yes-display-inline">In this paragraph and with respect to a digital commodity issuer, the term <term>senior employee</term> 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.</text></subparagraph></paragraph><paragraph id="H73768B0B19364F00A7EBEF7D11982587"><enum>(30)</enum><header>End user distribution</header><subparagraph id="HF3C9918C00524F04A3CF1D30CCAD35BF"><enum>(A)</enum><header>In general</header><text>The term <term>end user distribution</term> means a distribution of a unit of a digital commodity that—</text><clause id="H54648E8FE33B42BD8BDD15B6A1BEA1DE"><enum>(i)</enum><text display-inline="yes-display-inline">does not involve an exchange of more than a nominal value of cash, property, or other assets; and</text></clause><clause id="H689F0B09EBEA404EA467DE134ABBEC15"><enum>(ii)</enum><text display-inline="yes-display-inline">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—</text><subclause id="HD9E275ABF38D4EAD9B4255BE5EB5D2D2"><enum>(I)</enum><text display-inline="yes-display-inline">to users of the digital commodity or any blockchain system to which the digital commodity relates;</text></subclause><subclause id="H1A5250560AEC44B190A1971B9B4D6FB3"><enum>(II)</enum><text>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</text></subclause><subclause id="HC27C4C1160D64077BC8C2EDC084DE197"><enum>(III)</enum><text display-inline="yes-display-inline">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.</text></subclause></clause></subparagraph><subparagraph id="H1CB10FF0120A4F36AB4A403B60630056" commented="no"><enum>(B)</enum><header>Protocol consensus participation</header><text display-inline="yes-display-inline">The term <term>end user distribution</term> includes the following:</text><clause id="HD9C7D15B67C847368A5D4A4A4591B4F9" commented="no"><enum>(i)</enum><header>Self staking</header><text>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.</text></clause><clause id="H5F9E2212FE944DF4B2105C62F47B8E77" commented="no"><enum>(ii)</enum><header>Self-custodial staking with a third party</header><text>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—</text><subclause id="H4AC345820B1B4008812ACB87AE8A067A" commented="no"><enum>(I)</enum><text>the owner of the staked digital commodity and operator of the node or validator for such activity are different persons or entities; and</text></subclause><subclause id="H87C89F44D4074853B404E1F6652EEABE" commented="no"><enum>(II)</enum><text>the operator of the node or validator does not maintain custody or control of the staked digital commodity.</text></subclause></clause><clause id="H3F5698B1BA6A478A9A3C399FA037C3D4" commented="no"><enum>(iii)</enum><header>Custodial and ancillary staking services</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="HCD6D0E2C38C54683BE45A9C725EF5498" commented="no" display-inline="no-display-inline"><enum>(C)</enum><header>Rulemaking to define the custodial and ancillary staking services</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H9DA3E30698C5484BB789AB2246AB65B2"><enum>(31)</enum><header>Mature blockchain system</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H67D3A992EEBD4EA69F548A04D42DC770" commented="no"><enum>(32)</enum><header>Permitted payment stablecoin</header><text display-inline="yes-display-inline">The term <quote>permitted payment stablecoin</quote> means a payment stablecoin (as defined in section 2 of the GENIUS Act) issued by a permitted payment stablecoin issuer.</text></paragraph><paragraph id="H72B94C1BDD9F4D628C9BAC36C09F86FF"><enum>(33)</enum><header>Permitted payment stablecoin issuer</header><text display-inline="yes-display-inline">The term <quote>permitted payment stablecoin issuer</quote> has the meaning given that term in section 2 of the GENIUS Act.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="HC4DC284A76754EDD9E951F7A1AD049A1"><enum>102.</enum><header>Definitions under the Securities Exchange Act of 1934</header><text display-inline="no-display-inline">Section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>) is amended—</text><paragraph id="H14ED8966630444658B321A2FC7A18634"><enum>(1)</enum><text>by redesignating the second paragraph (80) (relating to funding portals) as paragraph (81); and</text></paragraph><paragraph id="HEE17DB9FC9E640E18C1DD62DBBE05201"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block id="H3CB6A0DD13EC431A82CA158816062851" style="OLC" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H18B74855F5E947159406CF7C124BA54E" display-inline="no-display-inline"><enum>(82)</enum><header>Bank Secrecy Act</header><text>The term <term>Bank Secrecy Act</term> means—</text><subparagraph id="H6767568A5B1E4B0C8C6FA06FB4A2AF40"><enum>(A)</enum><text>section 21 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1829b">12 U.S.C. 1829b</external-xref>);</text></subparagraph><subparagraph id="H3687693C658C4BC0804864A718D1B834"><enum>(B)</enum><text>chapter 2 of title I of <external-xref legal-doc="public-law" parsable-cite="pl/91/508">Public Law 91–508</external-xref> (<external-xref legal-doc="usc" parsable-cite="usc/12/1951">12 U.S.C. 1951 et seq.</external-xref>); and</text></subparagraph><subparagraph id="H24FF6C30145640098269959BB181CF26"><enum>(C)</enum><text>subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> of title 31, United States Code.</text></subparagraph></paragraph><paragraph id="H0A577B7FC1964D408D8F901BF600013F"><enum>(83)</enum><header>Additional digital commodity-related terms</header><subparagraph id="H5A54B092F24540F9B1AAE8128024C8EA"><enum>(A)</enum><header>Securities Act of 1933</header><text display-inline="yes-display-inline">The terms <term>blockchain system</term>, <term>decentralized governance system</term>, <term>digital asset</term>, <term>digital commodity affiliated person</term>, <term>digital commodity issuer</term>, <term>digital commodity related person</term>, <term>end user distribution</term>, <term>mature blockchain system</term>, <term>permitted payment stablecoin</term>, and <term>permitted payment stablecoin issuer</term> have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>).</text></subparagraph><subparagraph id="HB2C56886D7964D8897E7065270623567"><enum>(B)</enum><header>Commodity Exchange Act</header><text display-inline="yes-display-inline">The terms <term>digital commodity</term>, <term>digital commodity broker</term>, <term>digital commodity dealer</term>, <term>digital commodity exchange</term>, <term>decentralized finance messaging system</term>, and <term>decentralized finance trading protocol</term> have the meaning given those terms, respectively, under section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>).</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="H7DD4FEDFE2F04718BF0CA79727DDC602" display-inline="no-display-inline" section-type="subsequent-section"><enum>103.</enum><header>Definitions under the Commodity Exchange Act</header><subsection id="H6DD911BEB6834F2F8F5DCEC3DA0076C9"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>) is amended—</text><paragraph id="H36B93D5AF1C64BDBA72B928C06279767"><enum>(1)</enum><text>in paragraph (10)—</text><subparagraph id="H66225074719F47DE939D188E29C82F0A"><enum>(A)</enum><text>in subparagraph (A)—</text><clause id="H4D948BA0E5E243FD9A3F0501188BBBFF"><enum>(i)</enum><text display-inline="yes-display-inline">by redesignating clauses (iii) and (iv) as clauses (iv) and (v), respectively; and</text></clause><clause id="H51EA3EE163354A32AA5EDFE0FB71110A"><enum>(ii)</enum><text>by inserting after clause (ii) the following:</text><quoted-block style="OLC" id="HAB766A8A4EA142299D6221E7072D5886" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><clause id="H4A17C58CA6304678976FB102A75CFA0D"><enum>(iii)</enum><text display-inline="yes-display-inline">digital commodity;</text></clause><after-quoted-block>; and</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="HB622F4B3973D4B428805580534ACB500"><enum>(B)</enum><text>by redesignating subparagraph (B) as subparagraph (C) and inserting after subparagraph (A) the following:</text><quoted-block style="OLC" id="HE5D27507E6AD40F990E7BD4DE342DA88" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H0EBB9ABD1CA04409BEDEDAB7E773A61A"><enum>(B)</enum><header>Exclusion</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term <term>trading in commodity interests</term> shall not include transacting in digital commodities for the purpose of—</text><clause id="H4E67C9E6FF924DC59A3C85A9C67E85EE"><enum>(i)</enum><text>acting as a digital commodity custodian;</text></clause><clause id="H2EAFFAEA61DD49E19CC8F75161DF09FC"><enum>(ii)</enum><text>establishing, maintaining, or managing inventory or payment instruments for commercial purposes; or</text></clause><clause id="H2B49DE6C2D8F4AF68B737955801CB6F9"><enum>(iii)</enum><text>maintaining or supporting the operation of, or validating transactions on, a blockchain system.</text></clause></subparagraph><after-quoted-block>;</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H0C6EA3ECC05A4F09959DE6137A530C34"><enum>(2)</enum><text>in paragraph (11)—</text><subparagraph id="H4B538FEA1F594CC0A2AE703B9EE8B15D"><enum>(A)</enum><text>in subparagraph (A)(i)—</text><clause id="H57755A92198A4020881C54CB143E326D"><enum>(i)</enum><text display-inline="yes-display-inline">by redesignating subclauses (III) and (IV) as subclauses (IV) and (V), respectively; and</text></clause><clause id="HEE9A47EFDD7A44E484971A72A9DEF9F1"><enum>(ii)</enum><text>by inserting after subclause (II) the following:</text><quoted-block style="OLC" id="HDCD54677609F4FA8BE866FA6E8B94492" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subclause id="H9390DEE25C1747E7BD7D237DF8A80EEF"><enum>(III)</enum><text display-inline="yes-display-inline">digital commodity;</text></subclause><after-quoted-block>; and</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="HF9282910ACF24D289900A230A892FA89"><enum>(B)</enum><text>by redesignating subparagraph (B) as subparagraph (C) and inserting after subparagraph (A) the following:</text><quoted-block style="OLC" id="H7765519ACF754462BA559C3CE039BA5E" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H8E59D67C81004307ACE03EEB8B0DBDE9"><enum>(B)</enum><header>Exclusion</header><text display-inline="yes-display-inline">For purposes of this paragraph, the term <term>trading in commodity interests</term> shall not include transacting in digital commodities for the purpose of—</text><clause id="H27AED17BBD084B79AEC1A65F52FC4F20"><enum>(i)</enum><text>acting as a digital commodity custodian;</text></clause><clause id="HD91B04336C51480B8FD55FD92B94D85E"><enum>(ii)</enum><text>establishing, maintaining, or managing inventory or payment instruments for commercial purposes; or</text></clause><clause id="H37275CAA50354E2EBC4D7DE3DFC672EB"><enum>(iii)</enum><text>maintaining or supporting the operation of, or validating transactions on, a blockchain system.</text></clause></subparagraph><after-quoted-block>;</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="HA486D0F1757646EBA99709CC0A3D54D8"><enum>(3)</enum><text>in paragraph (12)(A)(i)—</text><subparagraph id="HAD1D0F4281E44B74BEFC16CFB467D437"><enum>(A)</enum><text>in subclause (II), by adding at the end a semicolon;</text></subparagraph><subparagraph id="H517EB9BF49994ABF940ED7749B2622D5"><enum>(B)</enum><text display-inline="yes-display-inline">by redesignating subclauses (III) and (IV) as subclauses (IV) and (V), respectively; and</text></subparagraph><subparagraph id="HA8341E7F00DD4A5E90B9B110D28188AB"><enum>(C)</enum><text>by inserting after subclause (II) the following:</text><quoted-block style="OLC" id="HB84E9BBA410843318C854EB8B2F67B1C" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subclause id="H150EBE025CEB4830A094B930EF9ACF0D"><enum>(III)</enum><text display-inline="yes-display-inline">a digital commodity;</text></subclause><after-quoted-block>;</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H75950D159D304CC7B54499EAD4E09FB3"><enum>(4)</enum><text display-inline="yes-display-inline">by redesignating paragraphs (16) through (51) as paragraphs (17) through (52), respectively, and inserting after paragraph (15) the following:</text><quoted-block style="OLC" id="HE3CC9BB4E99A4946B751578964BAAFB2" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HAC36506DF59E4C1AA97A50CB0C5FBCA8"><enum>(16)</enum><header>Terms related to digital commodities</header><subparagraph id="H7B250DFEE1174E3DB1EFDEC574F778FD" commented="no"><enum>(A)</enum><header>Associated person of a digital commodity broker</header><clause id="H4A360FC3C0CB4E39B604B3273174989A" commented="no"><enum>(i)</enum><header>In general</header><text>Except as provided in clause (ii), the term <term>associated person of a digital commodity broker</term> 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—</text><subclause id="H1FABF5073EE44D9FB588A35A8BA9E5C3" commented="no"><enum>(I)</enum><text>the solicitation or acceptance of an order for the purchase or sale of a digital commodity; or</text></subclause><subclause id="HDFAB9A4DF4AB4C63B0E99410FA887DD4" commented="no"><enum>(II)</enum><text>the supervision of any person engaged in the solicitation or acceptance of an order for the purchase or sale of a digital commodity.</text></subclause></clause><clause id="H8857382F8DE5416A84F2AC9D7C662DB7" commented="no"><enum>(ii)</enum><header>Exclusion</header><text>The term <term>associated person of a digital commodity broker</term> does not include any person associated with a digital commodity broker the functions of which are solely clerical or ministerial.</text></clause></subparagraph><subparagraph id="HA32A4F369C0543D2AF57C66B1CA359D8" commented="no"><enum>(B)</enum><header>Associated person of a digital commodity dealer</header><clause id="HC0799D72C84448129EE09A1BC0D8395F" commented="no"><enum>(i)</enum><header>In general</header><text>Except as provided in clause (ii), the term <term>associated person of a digital commodity dealer</term> 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—</text><subclause id="H971E0B5A23E146FBAC3DEEDC489B3A0D" commented="no"><enum>(I)</enum><text>the solicitation or acceptance of a contract for the purchase or sale of a digital commodity; or</text></subclause><subclause id="HF317810A22D7412F812AE2D00C6B3075" commented="no"><enum>(II)</enum><text>the supervision of any person engaged in the solicitation or acceptance of a contract for the purchase or sale of a digital commodity.</text></subclause></clause><clause id="HC20C653AA77A4874B2483AB4BDA874E2" commented="no"><enum>(ii)</enum><header>Exclusion</header><text>The term <term>associated person of a digital commodity dealer</term> does not include any person associated with a digital commodity dealer the functions of which are solely clerical or ministerial.</text></clause></subparagraph><subparagraph id="H340ADB545DA0423BA445D0FD1114E20F" display-inline="no-display-inline"><enum>(C)</enum><header>Bank Secrecy Act</header><text>The term <term>Bank Secrecy Act</term> means—</text><clause id="H4D028BA9F5A14E7D93C146AED4FF5322"><enum>(i)</enum><text>section 21 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1829b">12 U.S.C. 1829b</external-xref>);</text></clause><clause id="H96D91594388B4C7B9011B7CE5475488B"><enum>(ii)</enum><text>chapter 2 of title I of <external-xref legal-doc="public-law" parsable-cite="pl/91/508">Public Law 91–508</external-xref> (<external-xref legal-doc="usc" parsable-cite="usc/12/1951">12 U.S.C. 1951 et seq.</external-xref>); and</text></clause><clause id="HC1C6E019A94346DABA6BCF17B23EB73E"><enum>(iii)</enum><text>subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> of title 31, United States Code.</text></clause></subparagraph><subparagraph id="H913EDA5B8DEA435693BD8FDBCD1414CC"><enum>(D)</enum><header>Decentralized finance messaging system</header><clause id="H9882252F4DF944AFA2A95BEBEA5641B6"><enum>(i)</enum><header>In general</header><text>The term <term>decentralized finance messaging system</term> 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.</text></clause><clause id="H677AC68EC5764E2684706B47B8FA0DE3"><enum>(ii)</enum><header>Additional requirements</header><text>The term <term>decentralized finance messaging system</term> does not include any system that provides any person other than the user with control over—</text><subclause id="H1243FACA75514C38A3B04CB12A010519"><enum>(I)</enum><text>the funds of the user; or</text></subclause><subclause id="HDFA328BAA1CE465E9926606A46567D1D"><enum>(II)</enum><text>the execution of the transaction of the user.</text></subclause></clause></subparagraph><subparagraph id="H42EE780389B84B9B84FD312E4A550DAB"><enum>(E)</enum><header>Decentralized finance trading protocol</header><clause id="H22D45C1BA3D749CC8825D190961E7DE7"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>decentralized finance trading protocol</term> means a blockchain system through which multiple participants can execute a financial transaction—</text><subclause id="H2FA3595EF8FA4AA4A80099DB9E9CFE0D"><enum>(I)</enum><text>in accordance with an automated rule or algorithm that is predetermined and non-discretionary; and</text></subclause><subclause id="H765C4B92A2FF40798E673EC2AED16466"><enum>(II)</enum><text>without reliance on any other person to maintain control of the digital assets of the user during any part of the financial transaction.</text></subclause></clause><clause id="H9295639197324A0DAB5B13149326974C"><enum>(ii)</enum><header>Exclusions</header><subclause id="H72635E1D327741B6A965C52B7011E537"><enum>(I)</enum><header>In general</header><text>The term <term>decentralized finance trading protocol</term> does not include a blockchain system if—</text><item id="HCB412394A2D643C5825FD309AB685909"><enum>(aa)</enum><text display-inline="yes-display-inline">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</text></item><item id="H455EC5C5977248118A94D3BE4A7F7373"><enum>(bb)</enum><text>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.</text></item></subclause><subclause id="HD6733099B3844FAD84371E6209366045"><enum>(II)</enum><header>Special rule</header><text display-inline="yes-display-inline">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.</text></subclause></clause></subparagraph><subparagraph id="H8A048980ABAD4B26969922E847F80254" commented="no"><enum>(F)</enum><header>Digital commodity</header><clause id="H98C323DF2E3C44D389BB6FB2E3DA58DC"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>digital commodity</term> 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.</text></clause><clause id="HDCD4BC3794F84736BB74156C4E2FC77D"><enum>(ii)</enum><header>Relationship to a blockchain system</header><text>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—</text><subclause id="H85D9A9B2E0934190B91801B4FF0734D9"><enum>(I)</enum><text>issued or generated by the programmatic functioning of the blockchain system;</text></subclause><subclause id="HF416132DA8BC4629B8000BC31F8C3448"><enum>(II)</enum><text>used to transfer value between participants in the blockchain system;</text></subclause><subclause id="H104F137AE893487E920BDDA407622BEA"><enum>(III)</enum><text>used to access the activities or services of the blockchain system;</text></subclause><subclause id="H7B4404A6326E4C8CA08CC8E57759F5AA"><enum>(IV)</enum><text>used to participate in the decentralized governance system of the blockchain system;</text></subclause><subclause id="H32D72D74CD684ABDBA562D3A9BDF5952"><enum>(V)</enum><text>used or removed from circulation in whole or in part to pay fees or otherwise verify or validate transactions on the blockchain system;</text></subclause><subclause id="HFB6C4258551543EBA101C53309D3E760"><enum>(VI)</enum><text>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</text></subclause><subclause id="H5F86FC85B78A402BBA2553801443BDF1"><enum>(VII)</enum><text>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.</text></subclause></clause><clause id="HD64D70E723974E6CA518B0B7C2A23680"><enum>(iii)</enum><header>Exclusion</header><text>The term <term>digital commodity</term> does not include any of the following:</text><subclause id="HAA8EC97DD6DA44AB9B5DAFD68C328413" commented="no"><enum>(I)</enum><header>Security</header><item id="H9CEB8713BCF848D48BAA133A00F459B9" commented="no"><enum>(aa)</enum><text display-inline="yes-display-inline">Any security, other than a note, an investment contract, or a certificate of interest or participation in any profit-sharing agreement.</text></item><item id="HF7562FA5641A4E0196A99840C58AD7E8" commented="no"><enum>(bb)</enum><text>A note, an investment contract, or a certificate of interest or participation in any profit-sharing agreement that—</text><subitem id="H986FFA134190429AA3F58BA41433E012"><enum>(AA)</enum><text>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);</text></subitem><subitem id="H2FB2719BB9184BA7AB12805AD21A72AA"><enum>(BB)</enum><text display-inline="yes-display-inline">makes the holder a creditor of the issuer of the digital asset or another person; or</text></subitem><subitem id="HA2597ECC80304C2AA184C7487D66D58E"><enum>(CC)</enum><text>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. </text></subitem></item></subclause><subclause id="HEACF9520659F4AA8A419E40E7F2260EE"><enum>(II)</enum><header>Security derivative</header><text>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—</text><item id="H721353D1AFE5406DAEBC11310A39B655"><enum>(aa)</enum><text>a security future, as defined in section 2a of the Securities Act of 1933;</text></item><item id="H8EDC28324CC64E0CAB93B975B0314C35"><enum>(bb)</enum><text>a security-based swap, as defined in section 2a of the Securities Act of 1933;</text></item><item id="H91988A9A49144603AF6FD4216F171D67"><enum>(cc)</enum><text>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</text></item><item id="H69125C7408DC49F6BE355DCFA6423676"><enum>(dd)</enum><text>a put, call, straddle, option, or privilege on any security, as defined in section 2a of the Securities Act of 1933.</text></item></subclause><subclause id="H07AE03F868EA41CC8AFEB4B4773AF655"><enum>(III)</enum><header>Permitted payment stablecoin</header><text>A digital asset that is a permitted payment stablecoin.</text></subclause><subclause id="H7F4EF8038D2C422E8FA4FEEE916DD894"><enum>(IV)</enum><header>Banking deposit</header><item id="HE8010B5F494248B6BCA9BD80077D9278"><enum>(aa)</enum><text>A deposit (as defined under section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>)), regardless of the technology used to record the deposit.</text></item><item id="HD7E90700F52F4197985286CDCA82AE4B"><enum>(bb)</enum><text display-inline="yes-display-inline">An account (as defined in section 101 of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1752">12 U.S.C. 1752</external-xref>)), regardless of the technology used to record the account.</text></item></subclause><subclause id="HDA3ACCE92BAB44898E7F01BE27F53130"><enum>(V)</enum><header>Commodity</header><text>A digital asset that references, represents an interest in, or is functionally equivalent to—</text><item id="H6CD57B927E6545DB9E6D0024BD3F1196"><enum>(aa)</enum><text>an agricultural commodity;</text></item><item id="H572EA7FAAE824C2F8FC184969D36A21B"><enum>(bb)</enum><text>an excluded commodity, other than a security; or</text></item><item id="H02104607F1884D9790E1AB435ADDF893"><enum>(cc)</enum><text>an exempt commodity, other than the digital commodity itself, as shall be further defined by the Commission.</text></item></subclause><subclause id="HD6D0ED23A79345B0BD973668CF432994"><enum>(VI)</enum><header>Commodity derivative</header><text>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—</text><item id="H4054D6E2D07A4C59A5A4F9049EA2220B"><enum>(aa)</enum><text>a contract of sale of a commodity for future delivery or an option thereon;</text></item><item id="HF79947663B6C40758E7B0B0B935C9B62"><enum>(bb)</enum><text>a security futures product;</text></item><item id="H98BFF8202688431C9114778F15B1019E"><enum>(cc)</enum><text>a swap;</text></item><item id="HB1670B4E86AA4649A0703FCE9709131A"><enum>(dd)</enum><text>an agreement, contract, or transaction described in section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);</text></item><item id="HA599C314DB7C46C89E217A0331D6C805"><enum>(ee)</enum><text>a commodity option authorized under section 4c; or</text></item><item id="H666FB6F39CBF44F9925E4C4FCDA3C905"><enum>(ff)</enum><text>a leverage transaction authorized under section 19.</text></item></subclause><subclause id="H13F304451EA24C0B87AF0BB593C67607"><enum>(VII)</enum><header>Pooled investment vehicle</header><item id="HFE74F5C26E7847D69F094F971865A05A"><enum>(aa)</enum><header>In general</header><text>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—</text><subitem id="H10C8622AFBBF43C6B97DB3D9DAF0D9AD"><enum>(AA)</enum><text>a commodity pool, as defined in this Act; or</text></subitem><subitem id="H0D87F3781D4F40ED9363FAA86A659D20"><enum>(BB)</enum><text>a pooled investment vehicle.</text></subitem></item><item id="HCE14FF916A52448E8F4407B70B1FE94B"><enum>(bb)</enum><header>Pooled investment vehicle defined</header><text display-inline="yes-display-inline">In this subclause, the term <term>pooled investment vehicle</term> means—</text><subitem id="HE3CA324E79AB43349F519BBC4146A532"><enum>(AA)</enum><text>any investment company as defined in section 3(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(a)</external-xref>);</text></subitem><subitem id="H17EB7B5D50364564888D155F63FBC2BD"><enum>(BB)</enum><text display-inline="yes-display-inline">any company (as defined in section 2 of such Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2</external-xref>)) 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</text></subitem><subitem id="H37B4A2EAF77149A5B90A7B2C04DD31A0"><enum>(CC)</enum><text display-inline="yes-display-inline">any entity or person that is not an investment company but holds or will hold assets other than securities.</text></subitem></item></subclause><subclause id="H8CA82D46739F4D4FAE25D0CF80BFFD40"><enum>(VIII)</enum><header>Good, collectible, and other non-commodity asset</header><text display-inline="yes-display-inline">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—</text><item id="H47D446A236544E1F9C3E8AD4A48810EE"><enum>(aa)</enum><text>a work of art, a musical composition, a literary work, or other intellectual property;</text></item><item id="H1479AF7B037446D99F9387093CFD7BF9"><enum>(bb)</enum><text>collectibles, merchandise, virtual land, and video game assets;</text></item><item id="HCEBE7F3D491A4C9EB6BBCB960710567B"><enum>(cc)</enum><text>affinity, rewards, or loyalty points, including airline miles or credit card points, that are not primarily speculative in nature; or</text></item><item id="H086FE193F429429DB0F2883A56FA6793"><enum>(dd)</enum><text>rights, licenses, and tickets.</text></item></subclause></clause><clause id="HC1AF9F133A1343179BE404549451BE2F"><enum>(iv)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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—</text><subclause id="H7E8BFFA99BDB45A98C4C2E88B5AF71DD"><enum>(I)</enum><text display-inline="yes-display-inline">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;</text></subclause><subclause id="H6FAEBE9F72CA48C3AC8B33AF7204D175"><enum>(II)</enum><text display-inline="yes-display-inline">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</text></subclause><subclause id="H6F9AAB0E60EE48598B19B81A6A42D825"><enum>(III)</enum><text display-inline="yes-display-inline">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.</text></subclause></clause></subparagraph><subparagraph id="H9B3C1D88465C48DEB7B6F77C71C9EC1B" commented="no"><enum>(G)</enum><header>Digital commodity broker</header><clause id="HBFB3390DF08143FEBDB6BE56601A6B4A" commented="no"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>digital commodity broker</term> means any person who, as a regular business—</text><subclause id="H2CC44C3D57214097BF13C50C58805E25" commented="no"><enum>(I)</enum><text>is engaged in—</text><item id="H79F297F435AB46A083DEC86282CFB106" commented="no"><enum>(aa)</enum><text>soliciting or accepting an order from a customer for—</text><subitem id="HB316AB5ADDF2418F92B19634508555C2" commented="no"><enum>(AA)</enum><text>the purchase or sale of a digital commodity; or</text></subitem><subitem id="HDFB1D1B15F644E89BC635DAB32E5417B" commented="no"><enum>(BB)</enum><text>an agreement, contract, or transaction described in section 2(c)(2)(D)(iv); and</text></subitem></item><item id="H7C3828D1E11E415F8C83DA49C9F46FB3" commented="no"><enum>(bb)</enum><text>in conjunction with the activities in item (aa), accepts or maintains control over—</text><subitem id="HEDCE8613B9984A978417A29CFC8B8DB3" commented="no"><enum>(AA)</enum><text>the funds of any customer; or</text></subitem><subitem id="H12370FFFF42C4399B640BCA696440ADA" commented="no"><enum>(BB)</enum><text>the execution of any transaction of a customer;</text></subitem></item></subclause><subclause id="H56B17554EA3D4CA9A61923305A1B4E95" commented="no"><enum>(II)</enum><text>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</text></subclause><subclause id="H45D4C63493C5485E9984137040E63A32" commented="no"><enum>(III)</enum><text>is registered with the Commission as a digital commodity broker.</text></subclause></clause><clause id="H625F5862035E4FC9BE679BF803304BD7" commented="no"><enum>(ii)</enum><header>Exceptions</header><text>The term ‘digital commodity broker’ does not include a person solely because the person—</text><subclause id="HAC81D63D8F9C4D7194B8023F31D220F0"><enum>(I)</enum><text display-inline="yes-display-inline">solicits or accepts an order described in clause (i)(I)(aa)(AA) from a customer who is an eligible contract participant;</text></subclause><subclause id="H84FDBE7373F948EE83B217790793B21D" commented="no"><enum>(II)</enum><text display-inline="yes-display-inline">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</text></subclause><subclause id="H4EB0B0A5BF324EF0B0CDAE7FC21E6723" commented="no"><enum>(III)</enum><text>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.</text></subclause></clause><clause id="HE90F2EA275794029991DCB236B354415" commented="no"><enum>(iii)</enum><header>Further definition</header><text>The Commission, by rule or regulation, may exclude from the term <term>digital commodity broker</term> any person or class of persons if the Commission determines that the rule or regulation will effectuate the purposes of this Act.</text></clause></subparagraph><subparagraph id="HF05536D3C0DD4B6B83CDE6494886CE7D" commented="no"><enum>(H)</enum><header>Digital commodity dealer</header><clause id="H89B27579107B43CBB2823F63ED32D2A8" commented="no"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>digital commodity dealer</term> means any person who, as a regular business—</text><subclause id="HF7D95747A15A405090D46079BCA7BC68" commented="no"><enum>(I)</enum><text>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</text></subclause><subclause id="HBDC9008E39AF4BD48F963DD323C8C342" commented="no"><enum>(II)</enum><text>is registered with the Commission as a digital commodity dealer.</text></subclause></clause><clause id="HD80FB9E0B6014649820F5C2D820783DC" commented="no"><enum>(ii)</enum><header>Exception</header><text>The term <term>digital commodity dealer</term> does not include a person solely because the person—</text><subclause id="H2C0E3A2827D24E1FBC6FF344564F493F"><enum>(I)</enum><text display-inline="yes-display-inline">is or offers to be a counterparty to a person who is an eligible contract participant;</text></subclause><subclause id="HD6C38A1086AD4077A044F07E0B8C8E52" commented="no"><enum>(II)</enum><text>enters into a digital commodity transaction with an eligible contract participant;</text></subclause><subclause id="H2695420D49AE451CA2721382FF8FAEDE" commented="no"><enum>(III)</enum><text display-inline="yes-display-inline">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;</text></subclause><subclause id="H7164176C7DA7402B8C2A9A94B7281813" commented="no"><enum>(IV)</enum><text>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;</text></subclause><subclause id="HDFD7D4E0726C42B1B32A489CAFF3B920" commented="no"><enum>(V)</enum><text display-inline="yes-display-inline">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</text></subclause><subclause id="HEB7FCB3C6E62430090052D3B2A7A6B47" commented="no"><enum>(VI)</enum><text>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.</text></subclause></clause><clause id="H66BF3677102344B4A32FBFB6BD92CF37" commented="no"><enum>(iii)</enum><header>Further definition</header><text>The Commission, by rule or regulation, may exclude from the term <term>digital commodity dealer</term> any person or class of persons if the Commission determines that the rule or regulation will effectuate the purposes of this Act.</text></clause></subparagraph><subparagraph id="H31746C70FF154CF9AF4E850596CD7704"><enum>(I)</enum><header>Digital commodity exchange</header><text display-inline="yes-display-inline">The term <term>digital commodity exchange</term> means a trading facility that offers or seeks to offer a cash or spot market in at least 1 digital commodity.</text></subparagraph><subparagraph id="HF97F3089FFE344658892AF5C390D858A"><enum>(J)</enum><header>Mixed digital asset transaction</header><text display-inline="yes-display-inline">The term <term>mixed digital asset transaction</term> means a transaction in which a digital commodity is traded for a security.</text></subparagraph><subparagraph id="H84378BF44EDC46DB9FD14EB961DC8CA4"><enum>(K)</enum><header>Terms defined under the Securities Act of <enum-in-header>1933</enum-in-header></header><text display-inline="yes-display-inline">The terms <term>blockchain system</term>, <term>decentralized governance system</term>, <term>digital asset</term>, <term>digital commodity issuer</term>, <term>digital commodity affiliated person</term>, <term>digital commodity related person</term>, <term>end user distribution</term>, <term>mature blockchain system</term>, <term>permitted payment stablecoin</term>, and <term>permitted payment stablecoin issuer</term> have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>).</text></subparagraph></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="HF476B6A466B548DA98C1CFDBE16DB596"><enum>(5)</enum><text>in paragraph (41) (as so redesignated by paragraph (4) of this subsection)—</text><subparagraph id="H519763377C484A3FA623774DAF263596"><enum>(A)</enum><text>by striking <quote>and</quote> at the end of subparagraph (E);</text></subparagraph><subparagraph id="HA3E0831CAEFA458681D85ADAAE439B18"><enum>(B)</enum><text>by striking the period at the end of subparagraph (F) and inserting <quote>; and</quote>; and</text></subparagraph><subparagraph id="HB7CDB4B1728B43278E5C30E028E49720"><enum>(C)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" id="H62A60083EA054D57B3E90EBBDA4263E4" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H17E39218A6174BEB8D15D15BCF8963DF"><enum>(G)</enum><text display-inline="yes-display-inline">a digital commodity exchange registered under section 5i.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></subsection><subsection id="H92FC660A1E8842E8A93F2C55F6EA0FA1"><enum>(b)</enum><header>Conforming amendments</header><paragraph id="H6110F5F88B654EFAB9728AC4AD6FB8B8"><enum>(1)</enum><text>Each of the following provisions of law is amended by striking <quote>1a(18)</quote> and inserting <quote>1a(19)</quote>:</text><subparagraph id="HE4B7542C8D5C4E0D8392B672592A9D74"><enum>(A)</enum><text>Section 4s(h)(5)(A)(i) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6s">7 U.S.C. 6s(h)(5)(A)(i)</external-xref>).</text></subparagraph><subparagraph id="H9D263CE9C708465F866DD950D1DE8CD9"><enum>(B)</enum><text>Section 5(e) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77e">15 U.S.C. 77e(e)</external-xref>).</text></subparagraph><subparagraph id="H379322E982F7499280ACBCCD175E3E2D"><enum>(C)</enum><text>Section 6(g)(5)(B) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78f">15 U.S.C. 78f(g)(5)(B)</external-xref>).</text></subparagraph><subparagraph id="HD72CD2EBAAB64749BF50D29C8878181C"><enum>(D)</enum><text display-inline="yes-display-inline">Section 15F(h)(5)(A)(i) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78o-10">15 U.S.C. 78o–10(h)(5)(A)(i)</external-xref>).</text></subparagraph></paragraph><paragraph id="H9DF6A563307349389B84A66AB065E602"><enum>(2)</enum><text>Section 752 of the Wall Street Transparency and Accountability Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/15/8325">15 U.S.C. 8325</external-xref>) is amended by striking <quote>1a(39)</quote> and inserting <quote>1a(40)</quote>.</text></paragraph><paragraph id="HFE2CFA44F62742E8BBCFB9145FF2270F"><enum>(3)</enum><text display-inline="yes-display-inline">Section 4s(f)(1)(D) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6s">7 U.S.C. 6s(f)(1)(D)</external-xref>) is amended by striking <quote>1a(47)(A)</quote> and inserting <quote>1a(48)(A)</quote>.</text></paragraph><paragraph id="H294C6C7A92724C4DB411B62C3E7E1ED0"><enum>(4)</enum><text>Each of the following provisions of the Commodity Exchange Act is amended by striking <quote>1a(47)(A)(v)</quote> and inserting <quote>1a(48)(A)(v)</quote>:</text><subparagraph id="H8B7C1075053F427A9B790B588DED9357"><enum>(A)</enum><text>Section 4t(b)(1)(C) (<external-xref legal-doc="usc" parsable-cite="usc/7/6t">7 U.S.C. 6t(b)(1)(C)</external-xref>).</text></subparagraph><subparagraph id="H0C35EA1BAAC046EEA168E44128CFEB2E"><enum>(B)</enum><text>Section 5(d)(23) (<external-xref legal-doc="usc" parsable-cite="usc/7/7">7 U.S.C. 7(d)(23)</external-xref>).</text></subparagraph><subparagraph id="H74551A5207774D14AC566B0C9F926BE6"><enum>(C)</enum><text display-inline="yes-display-inline">Section 5b(k)(3) (<external-xref legal-doc="usc" parsable-cite="usc/7/7a-1">7 U.S.C. 7a–1(k)(3)</external-xref>).</text></subparagraph><subparagraph id="HF1C5E73815A2444483FA95C25A58ADF3"><enum>(D)</enum><text display-inline="yes-display-inline">Section 5h(f)(10)(A)(iii) (<external-xref legal-doc="usc" parsable-cite="usc/7/7b-3">7 U.S.C. 7b–3(f)(10)(A)(iii)</external-xref>).</text></subparagraph></paragraph><paragraph id="H29BBE0060CCF453EB19BA43590D713C3"><enum>(5)</enum><text>Section 21(f)(4)(C) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/24a">7 U.S.C. 24a(f)(4)(C)</external-xref>) is amended by striking <quote>1a(48)</quote> and inserting <quote>1a(49)</quote>.</text></paragraph><paragraph id="H3BCC5843A5114B6A84C1E254AE5826A5"><enum>(6)</enum><text>Section 403 of the Legal Certainty for Bank Products Act of 2000 (<external-xref legal-doc="usc" parsable-cite="usc/7/27a">7 U.S.C. 27a</external-xref>) is amended—</text><subparagraph id="H2F6F2E4CA09C4CD186C411A84F261BC8"><enum>(A)</enum><text>in subsection (a)(2), by striking <quote>1a(47)(A)(v)</quote> and inserting <quote>1a(48)(A)(v)</quote>; and</text></subparagraph><subparagraph id="HD5EAEB0A82CF44B884B764250C48B85B"><enum>(B)</enum><text>in each of subsections (b)(1) and (c)(2), by striking <quote>1a(47)</quote> and inserting <quote>1a(48)</quote>.</text></subparagraph></paragraph><paragraph id="HCF6A41AD71104776BD627D43E2230594"><enum>(7)</enum><text>Section 712 of the Wall Street Transparency and Accountability Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/15/8302">15 U.S.C. 8302</external-xref>) is amended—</text><subparagraph id="HDAB642B5DB134BB1BBD3764651BAE6E3"><enum>(A)</enum><text>in subsection (a)(8), by striking <quote>1a(47)(D)</quote> each place it appears and inserting <quote>1a(48)(D)</quote>; and</text></subparagraph><subparagraph id="H7809B44C85B34951897B3E765F23A5F6"><enum>(B)</enum><text>in subsection (d)(1), by striking <quote>1a(47)(A)(v)</quote> each place it appears and inserting <quote>1a(48)(A)(v)</quote>.</text></subparagraph></paragraph></subsection></section><section id="H00DB23FB39484D138409D9E90227CAE0" commented="no" display-inline="no-display-inline" section-type="subsequent-section"><enum>104.</enum><header>Definitions under this Act</header><text display-inline="no-display-inline">In this Act:</text><paragraph id="HFF874A9906154FAFB12948A82D125240" commented="no"><enum>(1)</enum><header>Definitions under the Commodity Exchange Act</header><text display-inline="yes-display-inline">The terms <term>decentralized finance messaging system</term>, <term>decentralized finance trading protocol</term>, <term>digital commodity</term>, <term>digital commodity broker</term>, <term>digital commodity dealer</term>, <term>digital commodity exchange</term>, and <term>mixed digital asset transaction</term> have the meaning given those terms, respectively, under section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>).</text></paragraph><paragraph id="H40FD8787789741F9928DC95087958BD9" commented="no"><enum>(2)</enum><header>Definitions under the Securities Act of 1933</header><text display-inline="yes-display-inline">The terms <term>blockchain</term>, <term>blockchain system</term>, <term>blockchain protocol</term>, <term>decentralized governance system</term>, <term>digital asset</term>, <term>digital commodity issuer</term>, <term>end user distribution</term>, <term>mature blockchain system</term>, <term>permitted payment stablecoin</term>, and <term>permitted payment stablecoin issuer</term> have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>).</text></paragraph><paragraph id="H4A482DEEFFAB495692E016C1ABB523CB"><enum>(3)</enum><header>Definitions under the Securities Exchange Act of 1934</header><text display-inline="yes-display-inline">The terms <term>Bank Secrecy Act</term>, <term>securities laws</term>, and <term>self-regulatory organization</term> have the meaning given those terms, respectively, under section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>).</text></paragraph></section><section id="HBC9A09DBDEAD4F688101C16E1F64AE73"><enum>105.</enum><header>Rulemakings</header><subsection id="HBA44D040A7924B0CA546CEBBB98BB6B2"><enum>(a)</enum><header>Definitions</header><text display-inline="yes-display-inline">The Commodity Futures Trading Commission and the Securities and Exchange Commission shall jointly issue rules to further define the following terms:</text><paragraph id="H3D0C5C5823C741D0BCEFF8C707BDA6B4"><enum>(1)</enum><text display-inline="yes-display-inline">The terms—</text><subparagraph id="H008B66DF8E324249845A6FAFB6805D2D"><enum>(A)</enum><text><quote>blockchain</quote>, <quote>blockchain application</quote>, <quote>blockchain system</quote>, <quote>blockchain protocol</quote>, <quote>decentralized governance system</quote>, <quote>digital commodity affiliated person</quote>, <quote>digital commodity issuer</quote>, <quote>digital commodity related person</quote>, <quote>end user distribution</quote>, and <quote>mature blockchain system</quote>, as defined under section 2(a) of the Securities Act of 1933;</text></subparagraph><subparagraph id="H03F81433059F40BCBF3C23393C8A1797"><enum>(B)</enum><text display-inline="yes-display-inline"><quote>unilateral authority</quote>, as such term is used in section 42 of the Securities Exchange Act of 1934 and section 1a of the Commodity Exchange Act; and</text></subparagraph><subparagraph id="HD9AC9B45D3CC4599B19A8D90FD28141E"><enum>(C)</enum><text display-inline="yes-display-inline"><quote>programmatic functioning</quote>, 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.</text></subparagraph></paragraph><paragraph id="H7713614001044101BDF740309C6C612D"><enum>(2)</enum><text display-inline="yes-display-inline">The terms <term>digital commodity</term>, <term>decentralized finance messaging system</term>, and <term>decentralized finance trading protocol</term>, as defined under section 1a of the Commodity Exchange Act.</text></paragraph></subsection><subsection id="HC73E5A4020A741608227570B34CDD34C"><enum>(b)</enum><header>Joint rulemaking for mixed digital asset transactions</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="HACDAE329FB3747AE957D76B7AF55B70C"><enum>(c)</enum><header>Protection of self-Custody</header><paragraph id="H9F4FC3C456CC4E2A98C058E7017EEF66"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">A United States individual shall retain the right to—</text><subparagraph id="HC419032D4941493A8D53DCA4E6AD1B4D"><enum>(A)</enum><text>maintain a hardware wallet or software wallet for the purpose of facilitating the individual’s own lawful custody of digital assets; and</text></subparagraph><subparagraph id="H9287718F78FB4A0B96E2A02C25CB33CB"><enum>(B)</enum><text>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—</text><clause id="H1517E04B662B475295DEA4CDD407B34A"><enum>(i)</enum><text display-inline="yes-display-inline">such other individual or entity is not a financial institution (as defined in section 5312 of title 31, United States Code); and</text></clause><clause id="HF85AE3E22FF147ECAB923C7DC6A60ED7"><enum>(ii)</enum><text>the transactions do not involve any property or interests in property that are blocked pursuant to, or are otherwise prohibited by, United States sanctions.</text></clause></subparagraph></paragraph><paragraph id="H6DBC3CC0F06C48C09273416E8D33EB85"><enum>(2)</enum><header>Application</header><text>This subsection—</text><subparagraph id="H90656A21B8C54AAF834D36B84BDED865"><enum>(A)</enum><text>applies solely to personal use by individuals; and</text></subparagraph><subparagraph id="HE53E715367824A039E5501E4BD8D77A5"><enum>(B)</enum><text>does not apply to individuals acting in a custodial or fiduciary capacity for others.</text></subparagraph></paragraph><paragraph id="HF6CC7E10B1F5405A96784E89B1D151FD"><enum>(3)</enum><header>Rule of construction</header><text>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—</text><subparagraph id="HD9FADEC5D1FC4F87A6B20B328BAB4582"><enum>(A)</enum><text display-inline="yes-display-inline">the Bank Secrecy Act, section 9714 of the Combating Russian Money Laundering Act (<external-xref legal-doc="usc" parsable-cite="usc/31/5318A">31 U.S.C. 5318A</external-xref> note), and section 7213A of the Fentanyl Sanctions Act (<external-xref legal-doc="usc" parsable-cite="usc/21/2313a">21 U.S.C. 2313a</external-xref>); or</text></subparagraph><subparagraph id="H921A687A496E4CBC83EB55D0CE917719"><enum>(B)</enum><text>any other law relating to illicit finance, money laundering, terrorism financing, or United States sanctions.</text></subparagraph></paragraph></subsection><subsection id="H89276F6031DA415EAB6941B36E021EB9" display-inline="no-display-inline"><enum>(d)</enum><header>Joint rulemaking, procedures, or guidance for delisting</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H9BB7EBD2ADDB4E9AA8C19976C7F32D84" commented="no"><enum>(e)</enum><header>Joint rules for portfolio margining determinations</header><paragraph id="H0C1B0B5FBF6D4B3CB9430F592347F890" commented="no"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H23046BDF6F1541CF8D60D548FE21AFB3" commented="no"><enum>(A)</enum><text>a securities account carried by a registered broker or dealer or a security-based swap account carried by a registered security-based swap dealer;</text></subparagraph><subparagraph id="H046B56C6803447AC9BA9D684DDFA8240" commented="no"><enum>(B)</enum><text>a futures or cleared swap account carried by a registered futures commission merchant;</text></subparagraph><subparagraph id="H6C15EA14D3F347CFB3F64539DB1A2D4D" commented="no"><enum>(C)</enum><text>a swap account carried by a swap dealer; or</text></subparagraph><subparagraph id="HCFB030E58D3A45B0BBD2E9BC7BD42EA2" commented="no"><enum>(D)</enum><text>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.</text></subparagraph></paragraph><paragraph id="HE88B0B7379EB45EEA6D18B74581BDE1D" commented="no"><enum>(2)</enum><header>Process</header><text display-inline="yes-display-inline">With respect to a joint order or determination described in paragraph (1), the rules required to be issued pursuant to paragraph (1) shall require—</text><subparagraph id="H38A52B648E2D4DE694C87470B6E46805" commented="no"><enum>(A)</enum><text display-inline="yes-display-inline">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;</text></subparagraph><subparagraph id="HA395617677154792B3845A426E0C4057" commented="no"><enum>(B)</enum><text display-inline="yes-display-inline">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;</text></subparagraph><subparagraph id="H9B3A3EFCC0A248B6972ECDA738D69B23" commented="no"><enum>(C)</enum><text display-inline="yes-display-inline">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;</text></subparagraph><subparagraph id="HE5DAA7BDF69E4434A4383AB4993DB7CB" commented="no"><enum>(D)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph id="H413436B76CCF41C487D6247319BE11D7" commented="no"><enum>(E)</enum><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph></subsection><subsection id="HB73665EA4C78468981577EF48C028FD3" commented="no"><enum>(f)</enum><header>Capital requirements to address netting agreements</header><text display-inline="yes-display-inline">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.</text></subsection></section><section id="H251E3123086F48F194147113DD1DFF3C" display-inline="no-display-inline" section-type="subsequent-section"><enum>106.</enum><header>Expedited registration for digital commodity exchanges, brokers, and dealers; provisional status</header><subsection id="HEED3681E98B342C79A975F37B2A9D5D1"><enum>(a)</enum><header>Registration</header><paragraph id="HBEBA92C76C6F4DD5BCF13861C122CC02" commented="no"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H86B86FFD54E04D619B01FF92EE654B25" commented="no"><enum>(A)</enum><text>digital commodity broker pursuant to section 4u of the Commodity Exchange Act;</text></subparagraph><subparagraph id="H2FB5843BC1B84FC5A0AF7C54474B4313" commented="no"><enum>(B)</enum><text display-inline="yes-display-inline">digital commodity dealer pursuant to section 4u of the Commodity Exchange Act; or</text></subparagraph><subparagraph id="HAE8FCE3AE3DA47F18E20E7D6B358A6D1" commented="no"><enum>(C)</enum><text>digital commodity exchange pursuant to section 5i of the Commodity Exchange Act.</text></subparagraph></paragraph><paragraph id="HC642C7CC670E49129A2434F20FE14955"><enum>(2)</enum><header>Expedited process</header><text display-inline="yes-display-inline">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). </text></paragraph></subsection><subsection id="HA18C7CA24D974DE783CF140B0927B0A3" commented="no"><enum>(b)</enum><header>Provisional status</header><paragraph id="H2C584D03DC6F4B84A416215C8A9C6408" commented="no"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">A person who is registered in accordance with subsection (a) of this section shall be in provisional status until—</text><subparagraph id="H9415283D7E8D4789A54471CA53EE1670" commented="no"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="H6AE99D7DF3534C049CA704DD13661A38" commented="no"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="H11A3E03F097B41D58C455D9612481399" commented="no"><enum>(2)</enum><header>Payment of fees</header><text>A person in provisional status shall pay all fees and penalties required under section 410.</text></paragraph></subsection><subsection id="H61F4C49D621C4FC59843C63EC2AC00CB"><enum>(c)</enum><header>Operations prior to regulations</header><paragraph id="H288A1F97A2FD46448354A31D231BB9A7" commented="no"><enum>(1)</enum><header>Requirements</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H76B08636DF2B4F1CA446D35D354CD925"><enum>(2)</enum><header>Listings</header><subparagraph id="H3A122797D6DB4FC39BE4BA039CABBBA3"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H6ECD68C3C9E44A9A8D12BB058C6DBB1D"><enum>(B)</enum><header>Delisting</header><text>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).</text></subparagraph></paragraph><paragraph id="H8347257F09F74559908E8820D0A387FE" commented="no"><enum>(3)</enum><header>Exemptive authority</header><text display-inline="yes-display-inline">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.</text></paragraph></subsection><subsection id="H0917EDB4D90546C2830F81A5107BDC06"><enum>(d)</enum><header>Customer disclosure before registration</header><paragraph id="H3D48328D56754FE8A7F9CB5795A3FB83"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H90FB1E1738AC4D7BA9C75B5DBDEF7DF0"><enum>(2)</enum><header>Expiration</header><text>Paragraph (1) of this subsection shall not apply to any person who registers pursuant to subsection (a).</text></paragraph></subsection></section><section id="H9875FEA11B9A43618C18F319774B25F0" display-inline="no-display-inline" section-type="subsequent-section"><enum>107.</enum><header>Commodity Exchange Act and securities laws savings provisions</header><subsection id="HC3AA4396E39647CF8A2D39DF751904BB"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Nothing in this Act shall affect or apply to, or be interpreted to affect or apply to—</text><paragraph id="H14E46ED901154396B1AB4F44BFF93E92"><enum>(1)</enum><text>any agreement, contract, or transaction that is subject to the Commodity Exchange Act as—</text><subparagraph id="HEE0861CCC8774FA7BB88E2D006FCF96D"><enum>(A)</enum><text>a contract of sale of a commodity for future delivery or an option on such a contract;</text></subparagraph><subparagraph id="H519E9CA90705440CAE08FE4575AA3F2C"><enum>(B)</enum><text>a swap;</text></subparagraph><subparagraph id="H347AF307C3254425A41996FACF3E42B5"><enum>(C)</enum><text>a security futures product;</text></subparagraph><subparagraph id="H88661835FE044C7B82A0B389BC12DFF0"><enum>(D)</enum><text>an option authorized under section 4c of such Act;</text></subparagraph><subparagraph id="H35FB29C09F18470DA4881BFDE54B4F48"><enum>(E)</enum><text>an agreement, contract, or transaction described in section 2(c)(2)(C)(i) of such Act; or</text></subparagraph><subparagraph id="H12BCB1202AAA4E38A00513683311A003"><enum>(F)</enum><text>a leverage transaction authorized under section 19 of such Act;</text></subparagraph></paragraph><paragraph id="HC315627CF4BB4BC7B00973C2EDDE08FC"><enum>(2)</enum><text display-inline="yes-display-inline">any agreement, contract, or transaction that is subject to the securities laws as—</text><subparagraph id="H00563760974544A19D230662A47918C8"><enum>(A)</enum><text>a security-based swap;</text></subparagraph><subparagraph id="HEDBBAAEEA8A14E9396204C0125EC302B"><enum>(B)</enum><text>a security futures product; or</text></subparagraph><subparagraph id="H9D164AD84837481CA06E978B38366C79"><enum>(C)</enum><text>an option on or based on the value of a security; or</text></subparagraph></paragraph><paragraph id="H6E15C607934F4A7AA77E40CA8D3D1D5B"><enum>(3)</enum><text>the activities of any person with respect to any such agreement, contract, or transaction.</text></paragraph></subsection><subsection id="H4A4B087A697B4BC8BA9B4353EB0B325B"><enum>(b)</enum><header>Prohibitions on spot digital commodity entities</header><text>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.</text></subsection><subsection id="HD651874DE5FD40C0941C08DECCFBADAD"><enum>(c)</enum><header>Definitions</header><text>In this section, each term shall have the meaning provided in the Commodity Exchange Act or the regulations prescribed under such Act.</text></subsection></section><section id="H382AF9B7CB97460BA2E7E5B7285ECC82"><enum>108.</enum><header>Administrative requirements</header><text display-inline="no-display-inline">Section 4c(a) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6c">7 U.S.C. 6c(a)</external-xref>) is amended—</text><paragraph id="HB80C1AB1510D495D994626DDF51E0827"><enum>(1)</enum><text>in paragraph (3)—</text><subparagraph id="H128365179F204B5EA1748FFA5F246987"><enum>(A)</enum><text>in subparagraph (B), by striking <quote>or</quote> at the end;</text></subparagraph><subparagraph id="H165D91F4181E4C089284C60637EEE2DC"><enum>(B)</enum><text>in subparagraph (C), by striking the period and inserting <quote>; or</quote>; and</text></subparagraph><subparagraph id="H7811C266A0EF4038B3BFF3F07833F2F3"><enum>(C)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" id="H59C34431DA31498BBE340F4ACDE32449" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="HE28067A317CF461C8F93AF0B70792B44"><enum>(D)</enum><text display-inline="yes-display-inline">a contract of sale of a digital commodity.</text></subparagraph><after-quoted-block>;</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H2BFF409EBE31415995C4286EDAA46944" display-inline="no-display-inline"><enum>(2)</enum><text>in paragraph (4)—</text><subparagraph id="HEB4DF704AA784FF0B8E550997BEC98BD"><enum>(A)</enum><text>in subparagraph (A)—</text><clause id="HF33AEE25B80B4BF5B9F20C5D2526F0C2"><enum>(i)</enum><text>in clause (ii), by striking <quote>or</quote> at the end;</text></clause><clause id="H968794A5520C426EB297C99B0ACBF003"><enum>(ii)</enum><text>in clause (iii), by striking the period and inserting <quote>; or</quote>; and</text></clause><clause id="HBE78047A69FF451A8D1DA73E0C341893"><enum>(iii)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="HE55F8670CED34DB2A63BF4C58CA709C3" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><clause id="HDA1B0878213C4EF298343BC2FC60AF1E"><enum>(iv)</enum><text display-inline="yes-display-inline">a contract of sale of a digital commodity.</text></clause><after-quoted-block>;</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="HB7B23FB31529440F8993D571E2C6D1FD" display-inline="no-display-inline"><enum>(B)</enum><text>in subparagraph (B)—</text><clause id="H89B46F6D2FB24BB69CFC6C0094B8B58F"><enum>(i)</enum><text>in clause (ii), by striking <quote>or</quote> at the end;</text></clause><clause id="HC8CED79A8BA44CBA98AAFE5969A71B1C"><enum>(ii)</enum><text>in clause (iii), by striking the period and inserting <quote>; or</quote>; and</text></clause><clause id="HF7AED0E15C4B47D1AEA32C08153DF49F"><enum>(iii)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="HE28DAEAA943A4AC3A531A541DFD4689F" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><clause id="HA2182C93CA5444AC8C9A26DD88F873EA"><enum>(iv)</enum><text display-inline="yes-display-inline">a contract of sale of a digital commodity.</text></clause><after-quoted-block>; and</after-quoted-block></quoted-block></clause></subparagraph><subparagraph id="H3EF8B4824A4C4BF4AC653BF9657EDC49" display-inline="no-display-inline"><enum>(C)</enum><text>in subparagraph (C)—</text><clause id="H34FE3A7AA57E432481049BF7B9CFCCB2"><enum>(i)</enum><text>in clause (ii), by striking <quote>or</quote> at the end;</text></clause><clause id="H1CCA6419B2C743D4A8398BA379FF1596"><enum>(ii)</enum><text>by striking <quote>(iii) a swap, provided however,</quote> and inserting the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="H9ABE646617D64A058BE84F23975DE492" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><clause id="H87BC4BC131A24A69B28664885AC1D8E8"><enum>(iii)</enum><text>a swap; or</text></clause><clause id="H70FAFBF080864EE6BF4F6B4C5FE352FD"><enum>(iv)</enum><text display-inline="yes-display-inline">a contract of sale of a digital commodity,</text></clause><quoted-block-continuation-text committee-id="SSBK00" reported-display-style="strikethrough" changed="deleted" quoted-block-continuation-text-level="subparagraph">provided, however,</quoted-block-continuation-text><after-quoted-block>; and</after-quoted-block></quoted-block></clause><clause id="HBF991D5861274217AEEE1FE2D6897F9E"><enum>(iii)</enum><text>by striking <quote>clauses (i), (ii), or (iii)</quote> and insert <quote>any of clauses (i) through (iv)</quote>.</text></clause></subparagraph></paragraph></section><section id="H5A6FB06314744BA0B5F5FC1ADFDD6ED3"><enum>109.</enum><header>Treatment of certain non-controlling blockchain developers</header><subsection id="HDAC4A4FC88F74B25990B58714F4164FF"><enum>(a)</enum><header>In general</header><text>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 <quote>money transmitting</quote> 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—</text><paragraph id="HD8F0BA95886A433C9CBE0C4260DA3C2B"><enum>(1)</enum><text>creating or publishing software to facilitate the creation of, or provision of maintenance services to, a blockchain or blockchain service;</text></paragraph><paragraph id="HFC996D55778F47189B0544D56F002B23"><enum>(2)</enum><text>providing hardware or software to facilitate a customer’s own custody or safekeeping of the customer’s digital assets; or</text></paragraph><paragraph id="H1DBA5BB4C41741CA9B23C0D4A2F721DB"><enum>(3)</enum><text>providing infrastructure support to maintain a blockchain service.</text></paragraph></subsection><subsection id="HCE2C7A72A42945C89A5AFFF4FEDD7366"><enum>(b)</enum><header>Rule of Construction</header><text>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 <quote>money transmitting</quote>, 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.</text></subsection><subsection id="H1CB005300FDC4D0C81D5BD21B54B7046"><enum>(c)</enum><header>Effect on other laws</header><paragraph id="H5A6F027549C446BE816D4323CD4D664F"><enum>(1)</enum><header>Intellectual property law</header><text>Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.</text></paragraph><paragraph id="H0954A4528A114DF58475F0A7CC8057E7"><enum>(2)</enum><header>State law</header><text>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.</text></paragraph></subsection><subsection id="HB6C36D32E97A479E8EB36559F45A3F8B"><enum>(d)</enum><header>Definitions</header><text>In this section:</text><paragraph id="H4516EE8C5B0C4EBC8AB6BFB728DBE68C"><enum>(1)</enum><header>Blockchain developer</header><text>The term <quote>blockchain developer</quote> 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.</text></paragraph><paragraph id="H9606951D60D74CE39642D7F19A53FDC1"><enum>(2)</enum><header>Blockchain service</header><text>The term <quote>blockchain service</quote> 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.</text></paragraph><paragraph id="H92437EE14B4F4F82BA74C8622B53AD2D"><enum>(3)</enum><header>Non-controlling blockchain developer or provider of a blockchain service</header><text>The term <quote>non-controlling blockchain developer or provider of a blockchain service</quote> 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.</text></paragraph></subsection></section><section id="HD029C3FA6F8540B2887D1FAE04CAAB4C" section-type="subsequent-section" display-inline="no-display-inline"><enum>110.</enum><header>Application of the Bank Secrecy Act</header><subsection id="H22D9BE3A2BFE4902BEA827AD8D9E18FC"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 5312(c)(1)(A) of title 31, United States Code, is amended—</text><paragraph id="H544720D522C7458FAB43DC3BE3BA3A0A"><enum>(1)</enum><text>by inserting <quote>digital commodity broker, digital commodity dealer,</quote> after <quote>futures commission merchant,</quote>; and</text></paragraph><paragraph id="HEDE432D7404E4A4BA11F180C20FF5B0B"><enum>(2)</enum><text>by inserting before the period the following: <quote>and any digital commodity exchange registered, or required to register, under the Commodity Exchange Act which permits direct customer access</quote>.</text></paragraph></subsection><subsection id="H8626ED19F6A74693BCBEF340694D5C95"><enum>(b)</enum><header>Bank Secrecy Act requirements</header><paragraph id="H939B256FB5EA4C8C92DD2047D504432E"><enum>(1)</enum><header>Regulations</header><text display-inline="yes-display-inline">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—</text><subparagraph id="HB675A109F9264C9DBD98BA7D72A5A17E"><enum>(A)</enum><text>establish and maintain an anti-money laundering and countering the financing of terrorism program, which shall include—</text><clause id="H84D0A2B0A19A4DD2BA0D15C07123CFE3"><enum>(i)</enum><text>an appropriate risk assessment;</text></clause><clause id="H54C7240F442A4EBA86A009B63224E1EB"><enum>(ii)</enum><text>the development of internal policies, procedures, and controls;</text></clause><clause id="HF992078071634E4CAB0B4D68A39D925A"><enum>(iii)</enum><text>the designation of a compliance officer;</text></clause><clause id="H19E140E85FA142FEBB491099EB6B12AE"><enum>(iv)</enum><text>an ongoing employee training program; and</text></clause><clause id="H91C1713CC6294C9BBE59DCDEFA575E6B"><enum>(v)</enum><text>an independent audit function to test such program;</text></clause></subparagraph><subparagraph id="H2E72F8FFADCA4AEBB47473B11BC1C2D1"><enum>(B)</enum><text>retain appropriate records of transactions;</text></subparagraph><subparagraph id="H158A6D2B1D4941A98114E3EFB396A68A"><enum>(C)</enum><text>monitor and report suspicious activity, which may include use of appropriate distributed ledger analytics; and</text></subparagraph><subparagraph id="H1AC1AEAE20ED4BCD9A0F7111DA7C2340"><enum>(D)</enum><text>maintain an effective customer identification program to identify and verify account holders and carry out appropriate customer due diligence.</text></subparagraph></paragraph><paragraph id="H67DD8B2406704648863B216DF202C018"><enum>(2)</enum><header>Compliance with sanctions</header><text>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.</text></paragraph></subsection></section><section id="HF451DAE158FE4236BB94ACF5A165829D" section-type="subsequent-section"><enum>111.</enum><header>Rule of construction</header><text display-inline="no-display-inline">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. </text></section><section id="H265C74DDC1AB4A9CA007859EFCB3FBFD"><enum>112.</enum><header>Implementation</header><subsection id="H974293D163764804AFFD568CE473B87A"><enum>(a)</enum><header>Global rulemaking timeframe</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="HB3B41A987A86427898A27D14D4A12148"><enum>(b)</enum><header>Rules and registration before final effective dates</header><paragraph id="HF46F18B6199A4B2A95BD5E7E2D4F2A85"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H702B2B79BD9D471FAC05B36ED4C9F10C"><enum>(A)</enum><text>promulgate rules, regulations, or orders permitted or required by this Act;</text></subparagraph><subparagraph id="HD70022F91335432AAEEEE5CB3005EB71"><enum>(B)</enum><text>conduct studies and prepare reports and recommendations required by this Act;</text></subparagraph><subparagraph id="H7B37B59AD73D4D279379F338335DF9FB"><enum>(C)</enum><text>register persons under this Act; and</text></subparagraph><subparagraph id="H7E107316B133480DBA22B227C25E2B24"><enum>(D)</enum><text>exempt persons, agreements, contracts, or transactions from provisions of this Act, under the terms contained in this Act.</text></subparagraph></paragraph><paragraph id="H524CB5961E3648BD9ECAFDA0DBCB4C6B"><enum>(2)</enum><header>Limitation on effectiveness</header><text>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.</text></paragraph></subsection></section><enum>II</enum><header>Offers and Sales of Digital Commodities</header><section id="H444B5E57FC44492DAB57E331ED9638DF" commented="no" display-inline="no-display-inline" section-type="subsequent-section"><enum>201.</enum><header>Treatment of investment contract assets</header><subsection id="HF37F977BF46D4E5394A5CED57FF17247" commented="no"><enum>(a)</enum><header>Securities Act of 1933</header><text display-inline="yes-display-inline">Section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>), as amended by section 101, is further amended—</text><paragraph id="HA6D6BD371C8245518328A7F46E1BDD30" commented="no"><enum>(1)</enum><text>in paragraph (1), by adding at the end the following: <quote>The term <term>investment contract</term> does not include an investment contract asset.</quote>; and</text></paragraph><paragraph id="HB916FF3FD7BD4927B8EC5472D782262C" commented="no"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="HAE43B90D195E4148AD4B02B9EAE457AC" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H6E0F4362728949B4895BAFA5CD2C60F2" commented="no"><enum>(36)</enum><text display-inline="yes-display-inline">The term <term>investment contract asset</term> means a digital commodity—</text><subparagraph id="H92CFE689DECB48ADA6316D2158B014C2" commented="no"><enum>(A)</enum><text display-inline="yes-display-inline">that can be exclusively possessed and transferred, person to person, without necessary reliance on an intermediary, and is recorded on a blockchain; and</text></subparagraph><subparagraph id="H0DDB4ACFC6214A4FB8535E4DA1B1273F" commented="no"><enum>(B)</enum><text display-inline="yes-display-inline">sold or otherwise transferred, or intended to be sold or otherwise transferred, pursuant to an investment contract.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H4DA2C2E0C7524E21A10EAB7ABBE9DD73" commented="no"><enum>(b)</enum><header>Investment Advisers Act of 1940</header><text display-inline="yes-display-inline">Section 202(a)(18) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)(18)</external-xref>) is amended by adding at the end the following: <quote>The term <term>investment contract</term> does not include an investment contract asset (as such term is defined under section 2(a) of the Securities Act of 1933).</quote>.</text></subsection><subsection id="H6ED96135D23540A7AB257CD87851EBE5" commented="no"><enum>(c)</enum><header>Investment Company Act of 1940</header><text display-inline="yes-display-inline">Section 2(a)(36) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)(36)</external-xref>) is amended by adding at the end the following: <quote>The term <term>investment contract</term> does not include an investment contract asset (as such term is defined under section 2(a) of the Securities Act of 1933).</quote>.</text></subsection><subsection id="H3CCE8924162A480BAF4E689D407208D4" commented="no"><enum>(d)</enum><header>Securities Exchange Act of 1934</header><text display-inline="yes-display-inline">Section 3(a)(10) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(10)</external-xref>) is amended by adding at the end the following: <quote>The term <term>investment contract</term> does not include an investment contract asset (as such term is defined under section 2(a) of the Securities Act of 1933).</quote>.</text></subsection><subsection id="H9A263863258D4252B0AD45BF57C5FA00" commented="no"><enum>(e)</enum><header>Securities Investor Protection Act of 1970</header><text display-inline="yes-display-inline">Section 16(14) of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll(14)</external-xref>) is amended by adding at the end the following: <quote>The term <term>investment contract</term> does not include an investment contract asset (as such term is defined under section 2(a) of the Securities Act of 1933).</quote>.</text></subsection></section><section id="H52CE3B0DC1984A908ACAC4EFA08B3EC5"><enum>202.</enum><header>Exempted primary transactions in digital commodities</header><subsection id="H2F154C5102D842E893CA26BA45051E41"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) is amended—</text><paragraph id="HC5ED1A83842F4D04A9E5A6F77B9FAA4B"><enum>(1)</enum><text>in section 4(a), by adding at the end the following:</text><quoted-block style="OLC" id="H40BAAF46428C49FE93A49F452AC08DFD" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H144D5CF86A334B9F9462822E67536818"><enum>(8)</enum><text display-inline="yes-display-inline">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—</text><subparagraph id="HFC1A26CF4D0345E3801A052F1705C58F"><enum>(A)</enum><text display-inline="yes-display-inline">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—</text><clause id="H43DAA5A2539F42C2B981ED5287037BB2"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="HAA4F7D541B684E74892BE81ACD827C8F"><enum>(ii)</enum><text>the date that is four years after the effective date of this paragraph;</text></clause></subparagraph><subparagraph id="HBF841712EFAC4C7F8808E18B24384042"><enum>(B)</enum><text display-inline="yes-display-inline">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);</text></subparagraph><subparagraph id="HA3BF9A8E4AE94F259D7B9A2E61D67579"><enum>(C)</enum><text display-inline="yes-display-inline">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;</text></subparagraph><subparagraph id="H5555BA0A923143449BC19E341EC8D7C9"><enum>(D)</enum><text display-inline="yes-display-inline">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—</text><clause id="H069DA63AFD87469DB7A0433F3AF0F6E0"><enum>(i)</enum><text display-inline="yes-display-inline">is not organized under the laws of a State, a territory of the United States, or the District of Columbia;</text></clause><clause id="H41A8A9D565E74410AF64A5A0C2778854"><enum>(ii)</enum><text>is a development stage company that either—</text><subclause id="H18051C1310954197AD5857727FF3E11D"><enum>(I)</enum><text>has no specific business plan or purpose; or</text></subclause><subclause id="H59A744E631E74F9F82F3F4C7725B0CC0"><enum>(II)</enum><text>has indicated that the business plan of the company is to merge with or acquire an unidentified company;</text></subclause></clause><clause id="H4C249C725A934BD6B1AEFFFAF7BD60E7"><enum>(iii)</enum><text>is an investment company, as defined in section 3 of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3</external-xref>), or is excluded from the definition of investment company by section 3(c) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(b)</external-xref> or 80a–3(c));</text></clause><clause id="H9F59CEF0D1664044A8E8408DF7E9B994"><enum>(iv)</enum><text>is issuing fractional undivided interests in oil or gas rights, or a similar interest in other mineral rights;</text></clause><clause id="H9D85D2CD867C44DA9E3688E3940B1438"><enum>(v)</enum><text>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</text></clause><clause id="H24F9E18EEA914F77A4F82D373BB98796"><enum>(vi)</enum><text>is disqualified pursuant to section 230.262 of title 17, Code of Federal Regulations; and</text></clause></subparagraph><subparagraph id="H70E4344E2D7241BDB813F869BFE9DA4A"><enum>(E)</enum><text>the issuer meets the requirements of section 4B(b).</text></subparagraph></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="HAF535A3FBB254EA4BB556D393DC0E91B"><enum>(2)</enum><text>by inserting after section 4A the following:</text><quoted-block style="OLC" id="HA284AC9B33074FE29687BF5A58E54449" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="HCBCB9C1E5EBC46EAB94E2A117782452A"><enum>4B.</enum><header>Requirements with respect to certain digital commodity transactions</header><subsection id="HE01B39DA33CE40348E8BF9D0D6D5EA30"><enum>(a)</enum><header>Commission jurisdiction</header><text display-inline="yes-display-inline">For the purposes of this section:</text><paragraph id="HDAF70709D35F40EFBA8843484E7A66B6"><enum>(1)</enum><text>The Commission shall have jurisdiction and enforcement authority with respect to disclosures described in this section.</text></paragraph><paragraph id="HCB781BD8FC5643BF8763D7388A4AAEA7"><enum>(2)</enum><text display-inline="yes-display-inline">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. </text></paragraph></subsection><subsection id="H70D3C634CC484CB494564EA83AA538E3"><enum>(b)</enum><header>Requirements for digital commodity issuers</header><paragraph id="H35916D168BEB4C52A0AC84C24889B861"><enum>(1)</enum><header>Terms and conditions</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>).</text></paragraph><paragraph id="H34E79F3CF6BF4928ADE9144773F0F774"><enum>(2)</enum><header>Information required for purchasers</header><text display-inline="yes-display-inline">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:</text><subparagraph id="H9D935181FA4E4570B2A12C19004FBF26"><enum>(A)</enum><header>Maturity status</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) 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).</text></subparagraph><subparagraph id="H50BE53758F2F4F8399F016B52EB1ACA3"><enum>(B)</enum><header>Source code</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H3872323C84DC42E1A596EE18694EC818"><enum>(C)</enum><header>Transaction history</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HB9A2C07793D643C9A5603E8DF99839AC"><enum>(D)</enum><header>Digital commodity economics</header><text>A description of the purpose of any blockchain system to which the digital commodity relates and the operation of any such blockchain system, including—</text><clause id="H04831FC3B3A9468B8AC99E96107948CD"><enum>(i)</enum><text>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;</text></clause><clause id="HD606E260F9E44F52B18B6B92D500D8B9"><enum>(ii)</enum><text>information explaining the technical requirements for holding, accessing, and transferring the digital commodity;</text></clause><clause id="HA7327022A158489483D0C327E6248D3A"><enum>(iii)</enum><text>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;</text></clause><clause id="H98B2AAF73DA540DFBFF99020BD40BE0D"><enum>(iv)</enum><text display-inline="yes-display-inline">an explanation of any mechanism for driving value to the digital commodity of such blockchain system; and</text></clause><clause id="H85745264A4F5439DB6D0CAE4B1BAE44A"><enum>(v)</enum><text>an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of units of such digital commodity.</text></clause></subparagraph><subparagraph id="HE5887C46488C43229106572161E49CD8"><enum>(E)</enum><header>Plan of development</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H8DB61A573BD846709525F6CF63B9F51E" display-inline="no-display-inline"><enum>(F)</enum><header>Ownership disclosures</header><clause id="H556B2A60B7B04349A5DD9D8315293576"><enum>(i)</enum><header>In general</header><text>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.</text></clause><clause id="H8CB047F0EA0A4FDB9C08D0FF0EC6C5B3"><enum>(ii)</enum><header>Confidentiality</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="HA04A8A41F4484E5DA41957AE4C283FA7"><enum>(G)</enum><header>Risk factor disclosures</header><text>A description of the material risks surrounding ownership of a unit of a digital commodity.</text></subparagraph></paragraph><paragraph id="H5CB8A8E90B884125AA62C81197D20D47"><enum>(3)</enum><header>Ongoing disclosure requirements for maturing blockchain systems</header><text display-inline="yes-display-inline">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:</text><subparagraph id="H94D4B8B699E14DA8854669B6F3F41410"><enum>(A)</enum><header>Semiannual reports</header><text display-inline="yes-display-inline">Every 6 months, a report containing—</text><clause id="H00124133060E4077A86ED094A0A745A9"><enum>(i)</enum><text display-inline="yes-display-inline">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;</text></clause><clause id="H6B15AC9305234B54AF0C2E7D0DBEC0B9"><enum>(ii)</enum><text display-inline="yes-display-inline">a description of the efforts of the issuer and digital commodity related persons in developing the blockchain system to which the digital commodity relates;</text></clause><clause id="H47FF3D7702CD4E149A960E37E37031C4"><enum>(iii)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="HB107D8A7DFFF4993ACBB538A5DDD3A2D" commented="no"><enum>(iv)</enum><text display-inline="yes-display-inline">financial statements, where applicable.</text></clause></subparagraph><subparagraph id="H6AE43BF192A047F38D364414A30BC9FB" commented="no"><enum>(B)</enum><header>Current reports</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H63C4EAF573B541A38BCE82E50560D953" commented="no"><enum>(4)</enum><header>Rulemaking</header><text display-inline="yes-display-inline">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).</text></paragraph><paragraph id="H4FEB3CEBB3FA460B8D145A16F77078EE" display-inline="no-display-inline"><enum>(5)</enum><header>Termination of certain reporting requirements; post-maturity reporting requirements</header><subparagraph id="H0C8B5E8307EA4B2D8D90C10209115901"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H8DAE07C999D14B19941153E29D7FFAE5"><enum>(B)</enum><header>Covered fiscal year defined</header><text>In this paragraph, the term <quote>covered fiscal year</quote> 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. </text></subparagraph><subparagraph id="HD6A5DDE3D4E04D80820ACAB3F760B7B0"><enum>(C)</enum><header>Post-maturity reporting requirements</header><text display-inline="yes-display-inline">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—</text><clause id="HAA94385D9FFC47E0959FC577B9CD4FA4"><enum>(i)</enum><text>any participation in a decentralized governance system of such blockchain system;</text></clause><clause id="H44A7420406CC4B67B81B74B400A94584"><enum>(ii)</enum><text>any participation in alterations or proposed alterations to the functionality or operation of such blockchain system;</text></clause><clause id="H27835B378FC34D0585A4BA2D7E43058C"><enum>(iii)</enum><text display-inline="yes-display-inline">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;</text></clause><clause id="HD2064AE9B6244FEF8A2EE2F77DA76DA9"><enum>(iv)</enum><text>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</text></clause><clause id="HA02AE34AF5FB47B0B7629734F75FF074"><enum>(v)</enum><text>any affiliations of such issuer material to the efforts of such issuer.</text></clause></subparagraph><subparagraph id="HB8721AB667F04D539A32E7D6A1249183"><enum>(D)</enum><header>Termination of and exemption from post-maturity reporting requirements</header><text display-inline="yes-display-inline">Not later than 270 days after the date of the enactment of this section, the Commission shall issue rules—</text><clause id="HE450ED93C0694FB0AA6A835924AA5C63"><enum>(i)</enum><text>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</text></clause><clause id="HE3823E2BF2B7405DB4AB1CF86D906CAF"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="H10DD4F61D10A4007BFE969893F853A80"><enum>(E)</enum><header>Rule of construction</header><text>Nothing in subparagraph (C) may be construed to make any digital commodity described in such subparagraph a security.</text></subparagraph></paragraph></subsection><subsection id="H4A5AF234172346988A1C95F0FCC4052F"><enum>(c)</enum><header>Requirements for intermediaries</header><text display-inline="yes-display-inline">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—</text><paragraph id="HAC10416F69D840F6A764C22D817AB98A" commented="no" display-inline="no-display-inline"><enum>(1)</enum><text display-inline="yes-display-inline">register with the Commission as a broker or dealer; and</text></paragraph><paragraph id="HA03A9B85858E4DFFB06C3ADAC32BB65B"><enum>(2)</enum><text display-inline="yes-display-inline">be a member of a national securities association registered under section 15A of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78o-3">15 U.S.C. 78o–3</external-xref>).</text></paragraph></subsection><subsection id="HB337AF1476CD43AEAE2FEC5437E90423"><enum>(d)</enum><header>Disqualification provisions</header><text display-inline="yes-display-inline">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).</text></subsection><subsection id="HE73ABE4A31064C5D82D5E3EE28D2D74E"><enum>(e)</enum><header>Failure To mature</header><paragraph id="HC3ECD06A62404D248BBF9943CF60927D"><enum>(1)</enum><header>In general</header><text>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:</text><subparagraph id="H22497534B10B43AC824ECF53237C8BA4"><enum>(A)</enum><header>Disclosures</header><text display-inline="yes-display-inline">Disclosures regarding the following:</text><clause id="HB6750CC1ED3C410B8FFF0894FEEB439B"><enum>(i)</enum><header>Failure to mature</header><text>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).</text></clause><clause id="H6FDCAE77498E4A04BEBA3ED2B97EF0DE"><enum>(ii)</enum><header>Development plans</header><text>The future plans of development of the blockchain system, including information required under subsection (b)(3).</text></clause><clause id="H280CAC7594BE4B6892EEA02B2455F7B1"><enum>(iii)</enum><header>Risk factor disclosures</header><text display-inline="yes-display-inline">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).</text></clause></subparagraph><subparagraph id="H266BEA0D50254B25A70581FFB217A47A"><enum>(B)</enum><header>Obligations</header><text>Transaction reporting and beneficial ownership disclosure obligations applicable to digital commodity related persons and digital commodity affiliated persons of such blockchain system.</text></subparagraph></paragraph><paragraph id="HAF7F05827FDA42CAAFCB2F05A688AADC"><enum>(2)</enum><header>Qualification required</header><text display-inline="yes-display-inline">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.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H7F0243A0D9044E5590173121898B23E2"><enum>(b)</enum><header>Additional exemptions</header><paragraph id="H21FE8EA1323D4473975FF3C853F6D743"><enum>(1)</enum><header>Certain registration requirements</header><text display-inline="yes-display-inline">Section 12(g)(6) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78l">15 U.S.C. 78l(g)(6)</external-xref>) is amended by striking <quote>under section 4(6)</quote> and inserting <quote>under section 4(a)(6) or 4(a)(8)</quote>.</text></paragraph><paragraph id="HAC432E3FECA545F394F701D4C9E7D799" commented="no"><enum>(2)</enum><header>Exemption from State regulation</header><text display-inline="yes-display-inline">Section 18(b)(4) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(b)(4)</external-xref>) is amended—</text><subparagraph id="HD96D9CD6D4F74CEBB39E63A09B20864F" commented="no"><enum>(A)</enum><text display-inline="yes-display-inline">in subparagraph (B), by striking <quote>section 4(4)</quote> and inserting <quote>section 4(a)(4)</quote>;</text></subparagraph><subparagraph id="HF0B78A76299B4F8190083EFF0F33AA52" commented="no"><enum>(B)</enum><text display-inline="yes-display-inline">in subparagraph (C), by striking <quote>section 4(6)</quote> and inserting <quote>section 4(a)(6)</quote>;</text></subparagraph><subparagraph id="H961277327482476796759EB74E2A27B6" commented="no"><enum>(C)</enum><text>in subparagraph (F)—</text><clause id="H5B640ED3FC9D432FA01EB931F9F38E9E" commented="no"><enum>(i)</enum><text>by striking <quote>section 4(2)</quote> each place such term appears and inserting <quote>section 4(a)(2)</quote>; and</text></clause><clause id="H5AC5FC60ED3A4E5987DC1AABE49528A3" commented="no"><enum>(ii)</enum><text>by striking <quote>or</quote> at the end;</text></clause></subparagraph><subparagraph id="H52F36D40DB034EA4BE9F43C34BA36793" commented="no"><enum>(D)</enum><text>in subparagraph (G), by striking the period and inserting <quote>; or</quote>; and</text></subparagraph><subparagraph id="HF40C188EE26248C4A223864624762350" commented="no"><enum>(E)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" id="H65D660D0E3E944D7935846C59463B25E" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H4F1C13F70BFC43CE9D0A69E721088273" commented="no"><enum>(H)</enum><text display-inline="yes-display-inline">section 4(a)(8).</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subparagraph></paragraph></subsection><subsection id="H2D31A084A35C49C0A4118B5369287496"><enum>(c)</enum><header>Use of other exemptions</header><paragraph id="HBD3ECF653F0D45AE921E4065AC62E2E8"><enum>(1)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H6E01EB1C781B40C6B7D69474E07429C3"><enum>(2)</enum><header>Rulemakings</header><subparagraph id="H7C137D5595A6403DABE452C2A608CF2C"><enum>(A)</enum><text>The Securities and Exchange Commission may issue rules—</text><clause id="H55BE5A656E1B4207ACB93031A6ADDE43"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H05E16B51B3D749B9A775EC4819D17BC1"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="H239AE4F3CDD54B7AAC76CEF44F38D3D3" commented="no"><enum>(B)</enum><text display-inline="yes-display-inline">Not later than 270 days after the date of the enactment of this section, the Securities and Exchange Commission shall issue the following rules:</text><clause id="H2172371D66D3453A86BC120B9AE23761" commented="no"><enum>(i)</enum><text display-inline="yes-display-inline">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—</text><subclause id="H3E1F71DC609A4DABA7187D7E3F3DE54C" commented="no"><enum>(I)</enum><text display-inline="yes-display-inline">one year after the effective date of this section; or</text></subclause><subclause id="H5F49B6983C334023A830000359B62DD3" commented="no"><enum>(II)</enum><text>the date of any secondary market sale of such digital commodity made in reliance on section 203.</text></subclause></clause><clause id="HB8EA69CF28ED45938AB22EF39E87844C" commented="no"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text></clause><clause id="HB66D9FF798A14C5DA095B2317F209E7F" commented="no"><enum>(iii)</enum><text display-inline="yes-display-inline">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—</text><subclause id="H40BD4B4D012C4645A2F8457185B902C2" commented="no"><enum>(I)</enum><text>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</text></subclause><subclause id="H939562F88512424AA66ECAB76F322F7F" commented="no"><enum>(II)</enum><text display-inline="yes-display-inline">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.</text></subclause></clause><clause id="H51597EE9529D4731B9628EE2F0C4A453"><enum>(iv)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph></paragraph></subsection></section><section id="H7EB9E15FB8FF4FDDB7AE5ACD2D4616B6"><enum>203.</enum><header>Treatment of secondary transactions in digital commodities that originally involved investment contracts</header><subsection id="HFAA84CF2B447415EA69E553C61CC5015"><enum>(a)</enum><header>Secondary market treatment</header><text display-inline="yes-display-inline">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—</text><paragraph id="H8EB110063CEE44A6913AD877E3C0CD6C"><enum>(1)</enum><text>the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>);</text></paragraph><paragraph id="H518F58B66A674C89997C4DEFA5AF2105"><enum>(2)</enum><text>the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>);</text></paragraph><paragraph id="HA74C06504B1A40E38A2FF3A7F0E8223C"><enum>(3)</enum><text>the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-1">15 U.S.C. 80a–1 et seq.</external-xref>);</text></paragraph><paragraph id="H04F370D2233D4945A87C7781D7051279"><enum>(4)</enum><text>the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>);</text></paragraph><paragraph id="H7ECC55A43C19425DB6EBA9D432E46FF3"><enum>(5)</enum><text>the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>); and</text></paragraph><paragraph id="H5EE034238BBF498F8D606E74564594DB"><enum>(6)</enum><text>any applicable provisions of State law.</text></paragraph></subsection><subsection id="H47C41CC49B424F869A499A2F0D96DE19"><enum>(b)</enum><header>End user distributions not an offer or sale of a security</header><text display-inline="yes-display-inline">An end user distribution does not involve the offer or sale of a security.</text></subsection><subsection id="H60B2E5E6DDAD44F998EDCC18F4422442"><enum>(c)</enum><header>Agent defined</header><text>In this section and with respect to a digital commodity issuer, the term <term>agent</term> means any person directly or indirectly controlled by the issuer or under direct or indirect common control with the issuer.</text></subsection></section><section id="HB8A45EB87E7F422AB7CA5DC2DB31AFDD"><enum>204.</enum><header>Requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons</header><text display-inline="no-display-inline">The Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>), as amended by section 202, is further amended by inserting after section 4B the following:</text><quoted-block style="OLC" id="HC2B6CA380BE04AF1B4538AB5D5A7E178" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H0D4F3D8C95E24C299158DE5EC47DE6A0"><enum>4C.</enum><header>Requirements for offers and sales of digital commodities by digital commodity related persons and digital commodity affiliated persons</header><subsection id="H7F203E2CC6414E658F004337AA3A0EE1"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="HD9E69A6BAD194570B73C28AD9E6ED043"><enum>(b)</enum><header>Commission jurisdiction</header><paragraph id="H74DC6FF23B3F47488B83DC268689F02A"><enum>(1)</enum><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H623F1C17EBD34602B6863DF09CCE8508"><enum>(2)</enum><text display-inline="yes-display-inline">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).</text></paragraph></subsection><subsection id="H86060694283442D59A416582ADAB77CE"><enum>(c)</enum><header>Restrictions on digital commodity related persons and digital commodity affiliated persons</header><paragraph id="H43BAA417071F4F28AF4B7C3DDD1F8D53"><enum>(1)</enum><header>Prior to being a mature blockchain system</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H3F201B40743E4C0FA3B19CF959E3EECE"><enum>(A)</enum><text display-inline="yes-display-inline">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;</text></subparagraph><subparagraph id="H6DBA913E0926409791F6993A6D3FFBAA"><enum>(B)</enum><text>the digital commodity related person or digital commodity affiliated person has held the units for not less than 12 months; and</text></subparagraph><subparagraph id="H68D1AF4EA6474F8E8E3151A1FAA62254" commented="no"><enum>(C)</enum><text display-inline="yes-display-inline">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—</text><clause id="HFDA6F31EEC214321947605A7CBB6791B"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H78F223364C5C4533994D64603352CA5E"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph></paragraph><paragraph id="HA8D996FF540F47079C275817F60ADAC6"><enum>(2)</enum><header>After becoming a mature blockchain system</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H13BACB918E0640D1832E0F4883475C1F"><enum>(A)</enum><text display-inline="yes-display-inline">offered or sold by a digital commodity related person; or</text></subparagraph><subparagraph id="H05DFC3D539604EC5A94CA83A166071E1"><enum>(B)</enum><text>offered or sold by a digital commodity affiliated person if—</text><clause id="HDF4BF89E336B4C40B784C5C2603AAA89"><enum>(i)</enum><text display-inline="yes-display-inline">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;</text></clause><clause id="HC3DC90ECD7B64CF8BD78AAFB3C09C0AD"><enum>(ii)</enum><text display-inline="yes-display-inline">the digital commodity affiliated person has held the units for not less than the earlier of—</text><subclause id="HF5303E839EF740A4BE47D1745E2DD034"><enum>(I)</enum><text display-inline="yes-display-inline">12 months; or</text></subclause><subclause id="H7AC8E3E64911400A9C8EE6C1B5E7C333"><enum>(II)</enum><text display-inline="yes-display-inline">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</text></subclause></clause><clause id="HE351BCD4E3C94C608E79C753D4630925"><enum>(iii)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph></paragraph><paragraph id="H78DE38FFB3914C3BA76A6AECA4E9A893"><enum>(3)</enum><header>Rulemakings required</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H51B7E6D1F9C4481AABC9600A3A7AEB2B"><enum>(A)</enum><text>shall set the percentage amounts described in paragraphs (1)(C)(i), (1)(C)(ii), and (2)(B)(iii); and</text></subparagraph><subparagraph id="H157333959F134B518D806FF733F9E821"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="HC4D27540C003465DBE18ACFE2FBCF2DA"><enum>(d)</enum><header>Rules of construction</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H39BCE852141E43BCAB4A1F3BD87E72CB"><enum>(e)</enum><header>Manipulative and deceptive devices; reporting</header><paragraph id="HD07B1323F4E44D10B6B7DE5DF195D63F"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H8013C4CCB9444EB3A02840F7E3EC6440"><enum>(2)</enum><header>Affirmative defense</header><text>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.</text></paragraph><paragraph id="H6F1D325FBFAF4926A09FB71197484AAD" display-inline="no-display-inline"><enum>(3)</enum><header>Reporting</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HAC80BEBCABC44180826C9D4550C6B7F5"><enum>(4)</enum><header>Differentiation between persons</header><text>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.</text></paragraph></subsection><subsection id="H6ADA1082384C41AB83ADD90CCC13C91C" commented="no"><enum>(f)</enum><header>Certain units received prior to enactment</header><text display-inline="yes-display-inline">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—</text><paragraph id="H5AD18F8B122442A8B93B0B61545319F1" commented="no"><enum>(1)</enum><text display-inline="yes-display-inline">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</text></paragraph><paragraph id="HF23FC34D452B4281889315E21F4E90F5" commented="no"><enum>(2)</enum><text display-inline="yes-display-inline">the appropriate disclosures required under section 202(c)(2)(B) of the CLARITY Act of 2025 have been made with the Commission.</text></paragraph></subsection><subsection id="HA626DE9F19C2459A89C5DFAB8F334279"><enum>(g)</enum><header>Rulemaking on further usage of digital commodities</header><text display-inline="yes-display-inline"> 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.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H9BDF21F255454C47810F98ED022455FE"><enum>205.</enum><header>Mature blockchain system requirements</header><text display-inline="no-display-inline">Title I of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HC14A84AF53184487949F93689B2D0348" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="HA81125CAC50D4B5B949C4EF671C3F46C"><enum>42.</enum><header>Mature blockchain systems</header><subsection id="H7BD33BE6A8DF40EAB42E05952C119ECE"><enum>(a)</enum><header>Certification of blockchain systems</header><paragraph id="HDB33A0773406484893F749B47D7D69C5"><enum>(1)</enum><header>Certification</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H4C60565B204144D0BA3D85C39EE56172"><enum>(2)</enum><header>Filing requirements</header><text>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—</text><subparagraph id="H0B3F63CFF2084C0EAE28C7E8D99815A0"><enum>(A)</enum><text>the operation of the blockchain system;</text></subparagraph><subparagraph id="HCF8FDAE6409442009A4DB9735E76A64C"><enum>(B)</enum><text display-inline="yes-display-inline">the functionality of the related digital commodity;</text></subparagraph><subparagraph id="H9EFAAE7B0D8A4E8D8C7F09FE4F35E979"><enum>(C)</enum><text display-inline="yes-display-inline">how the market value of the digital commodity is substantially derived from the programmatic functioning of such blockchain system;</text></subparagraph><subparagraph id="H37491042A384420189E317EC0286A1CC"><enum>(D)</enum><text>any decentralized governance system which relates to the blockchain system; and</text></subparagraph><subparagraph id="H40C35F94B2784E5A9BA37BC003218046"><enum>(E)</enum><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H6D0E4EAA3F014405B69CB8C98E93FBB5"><enum>(3)</enum><header>Rebuttable presumption</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HB807FA8E009241A088AFDFEB96D0D0D6"><enum>(4)</enum><header>Certification review</header><subparagraph id="H74B53987634D4BDF956013C04FCF0231"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><clause id="H30A6E442F8C84AD2A3D360030975D06F"><enum>(i)</enum><text>an inadequate explanation by the person making the certification; or</text></clause><clause id="HAE2939CE423B43C4AC028BB3A773528D"><enum>(ii)</enum><text>any novel or complex issues which require additional time to consider.</text></clause></subparagraph><subparagraph id="H7AD53F40EE3043FE96E1A1D2535FCEA1"><enum>(B)</enum><header>Public notice</header><text>The Commission shall make the following available to the public and provide a copy to the Commodity Futures Trading Commission:</text><clause id="H6950072E47894278B7D276F50B990A0A"><enum>(i)</enum><text display-inline="yes-display-inline">Each certification received under paragraph (1).</text></clause><clause id="HDE4E274E42EE4BDABA667FB17FFFB020"><enum>(ii)</enum><text>Each stay of the Commission under this subsection, and the reasons therefor.</text></clause><clause id="HA3018F47FDCC4824A8C2BFF6AE1C6368"><enum>(iii)</enum><text display-inline="yes-display-inline">Any response from a person making a certification under paragraph (1) to a stay of the certification by the Commission.</text></clause></subparagraph><subparagraph id="HCA4515F6999F4EDF83CA58BB4936975B"><enum>(C)</enum><header>Consolidation</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H06F9A514FD284AA59CE202A61449FB53"><enum>(5)</enum><header>Stay of certification</header><subparagraph id="H5F398A98541149CAA280D337379A73F2"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HA3ED336A9BB84C308478470E080CD00E"><enum>(B)</enum><header>Public comment period</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="HD734361CB7D04531BBB79A0E219E2C7B"><enum>(6)</enum><header>Disposition of certification</header><text display-inline="yes-display-inline">A certification made under paragraph (1) shall—</text><subparagraph id="HECC76DEFA3FF486CAB66F8AD2C5AC6DD"><enum>(A)</enum><text>become effective—</text><clause id="H5E9DF20FA3474B8FB6B9F34E77334AC1"><enum>(i)</enum><text>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</text></clause><clause id="HA2B36CB64011465C812A3966A40D9A75"><enum>(ii)</enum><text>at the expiration of the certification review period; and</text></clause></subparagraph><subparagraph id="HDA670648997E41DEBAA9DB8AC10B7F80"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="H5E6A91A62686408686358C1E40F5C1F1"><enum>(7)</enum><header>Recertification</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H31948175B6B447438A0937037C25B9F1"><enum>(8)</enum><header>Appeal of rebuttal</header><subparagraph id="HB8B39A4196B34DB08278BEBFB3C5EB31"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HAF9C49FF09A84A4C8EB9590E752A62EA"><enum>(B)</enum><header>Review</header><text display-inline="yes-display-inline">In an appeal under subparagraph (A), the court shall have de novo review of the determination to rebut the certification.</text></subparagraph></paragraph></subsection><subsection id="H377CB0B9B58C43619A8292EF046A1A61"><enum>(b)</enum><header>Maturity criteria</header><paragraph id="H5E6006F045724C0388D4DFA1F95AA8D4"><enum>(1)</enum><header>Sense of Congress</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H8CFABD2C7ADE44F1A831F21504AE6343"><enum>(2)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H50B8755C20AE4A8AA6157A9372CBF6DB"><enum>(3)</enum><header>Rules of construction</header><subparagraph id="H783BD233BB51404DAB60409822A6689C"><enum>(A)</enum><text>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).</text></subparagraph><subparagraph id="HD85F9D311CA247C3B474FB465333A4FD"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph></subsection><subsection id="H224835723F1542BF8CE26E45C2C1F81C"><enum>(c)</enum><header>Deemed mature</header><paragraph id="HE798EDDE5BBD4733AE8A6FE587FCD699"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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).</text></paragraph><paragraph id="H1BDC4165127A409E910DA1883DF43156"><enum>(2)</enum><header>Criteria for any blockchain system</header><text>The requirements described in this paragraph are the following:</text><subparagraph id="HCEB8DBE2F90445D2AFDF9F8EC4BFD676"><enum>(A)</enum><header>System value</header><clause id="H45406FCF9B684DC6895BE0FE2CBF6F7E"><enum>(i)</enum><header>Market value</header><text>The digital commodity has a value that is substantially derived from the use and functioning of the blockchain system.</text></clause><clause id="HB464EC3AD09C47B3AD09C732B3EFC749"><enum>(ii)</enum><header>Development of value mechanism substantially completed</header><text>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.</text></clause></subparagraph><subparagraph id="H98EED3A1553C4FD5BD69615CEB964B2B"><enum>(B)</enum><header>Functional system</header><text>The blockchain system allows network participants to engage in the activities the blockchain system is intended to provide, including—</text><clause id="HEB411B2421D64C1181828B05B42B886A"><enum>(i)</enum><text>using, transmitting, or storing value, or otherwise executing transactions, on the blockchain system;</text></clause><clause id="H01C86DBED2354E66B44B6938D442F464"><enum>(ii)</enum><text>deploying, executing, or accessing software or services, or otherwise offering or participating in services, deployed on or integrated with the blockchain system;</text></clause><clause id="H3F613872E7664DDFBF6E0FE0B0541296"><enum>(iii)</enum><text>participating in the consensus mechanism, transaction validation process, or decentralized governance system of the blockchain system; or</text></clause><clause id="H00BF1258700744ECBE2BF22A185AE00D"><enum>(iv)</enum><text>operating any client, node, validator, or other form of computational infrastructure with respect to the blockchain system.</text></clause></subparagraph><subparagraph id="H3CCA5E9C29524105A6081AD8DA59BE90"><enum>(C)</enum><header>Open and interoperable system</header><text>The blockchain system—</text><clause id="HE9C7563E3B874C0C91068708B7E6D42C"><enum>(i)</enum><text>is composed of source code that is open source; and</text></clause><clause id="H2B4E0C9BB0E54CD1862BE05513BAD8AB"><enum>(ii)</enum><text>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).</text></clause></subparagraph><subparagraph id="HFB4780DF5C3344159EC184A801CB238F"><enum>(D)</enum><header>Programmatic system</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H79C9EA3C9CA041958D5A10C02E55BA7D"><enum>(E)</enum><header>System governance</header><text>No person or group of persons under common control—</text><clause id="H189B0C66B88C4186ABC63794AB93C82C"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="HE3B433D6ED25474DA253E32839D66E7D"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="H49997BFF75364A708280E87D4C8084E0"><enum>(F)</enum><header>Impartial system</header><text display-inline="yes-display-inline">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—</text><clause id="HB82B773D03FE494B8DD1A3EF176A32FA"><enum>(i)</enum><text>addresses errors, regular maintenance, or cybersecurity risks of the blockchain system that affect the programmatic functioning of the blockchain system; and</text></clause><clause id="H762102E6271241799FAD8C1B78E30B92"><enum>(ii)</enum><text>is adopted through the consensus or agreement of a decentralized governance system.</text></clause></subparagraph><subparagraph id="HE2C0758267D24555BDF5316215E207E2"><enum>(G)</enum><header>Distributed ownership</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="HAE73E6C1FF2A4E468B8EC13732ED19BB"><enum>(3)</enum><header>Optional criteria for preexisting blockchain systems</header><text display-inline="yes-display-inline">The requirements described in this paragraph are that the blockchain system—</text><subparagraph id="H50115DEC31E04FF6934F09060FFF928A"><enum>(A)</enum><text display-inline="yes-display-inline">was created prior to the date of enactment of this section;</text></subparagraph><subparagraph id="H2204969509054F79910FB4DC25D09061"><enum>(B)</enum><text>met the requirements of subparagraphs (A) through (F) of paragraph (2) prior to the date of enactment of this section; and</text></subparagraph><subparagraph id="HE3C8DF8B8CE647FEB2C2C4B8E80252BB"><enum>(C)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="H601BF3B9D7444889871C4C7526BFE889"><enum>(d)</enum><header>Decentralized governance system</header><paragraph id="H33FBACECE617491FABA1961736835AFF" display-inline="no-display-inline"><enum>(1)</enum><text display-inline="yes-display-inline">For the purposes of this section, a decentralized governance system is not a <quote>person</quote> or a <quote>group of persons under common control</quote>.</text></paragraph><paragraph id="HA9A852946F204F05BC0AEA005279B9AB"><enum>(2)</enum><text>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.</text></paragraph></subsection><subsection id="HD037C34E61334D9B85FD5CF46B2E2F72"><enum>(e)</enum><header>Rulemaking</header><text>Not more than 270 days after the date of enactment of this section, the Commission shall issue rules to carry out this section.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="HCCD01C50BC47471F9A56FCA1B4F53989"><enum>206.</enum><header>Effective date</header><text display-inline="no-display-inline">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—</text><paragraph id="HD2C18E36AE26409C84621F9877887E5A"><enum>(1)</enum><text>360 days after the date of enactment of this Act; or</text></paragraph><paragraph id="HE11E39D7AA2E4B06A56B5FB7D582487B"><enum>(2)</enum><text>60 days after the publication in the Federal Register of the final rule implementing the provision.</text></paragraph></section><enum>III</enum><header>Registration for Intermediaries at the Securities and Exchange Commission</header><section id="HADEB2230E1D74D6F8F1620E7AF41C13E"><enum>301.</enum><header>Treatment of digital commodities and permitted payment stablecoins</header><subsection id="H29E2B15F4C36416A8B59B54502AC6764"><enum>(a)</enum><header>Securities Act of 1933</header><text display-inline="yes-display-inline">Section 2(a)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)(1)</external-xref>), as amended by the GENIUS Act, is amended by striking the final sentence and inserting the following: <quote>The term does not include a digital commodity or permitted payment stablecoin.</quote>.</text></subsection><subsection id="H1C83222FE90442FFB8F42B4C26DFF801"><enum>(b)</enum><header>Securities Exchange Act of 1934</header><text display-inline="yes-display-inline">Section 3(a)(10) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>), as amended by the GENIUS Act, is amended by striking the final sentence and inserting the following: <quote>The term does not include a digital commodity or permitted payment stablecoin.</quote>.</text></subsection><subsection id="HAE6BDB2F5686475FB8FC47CAB3DFD21D"><enum>(c)</enum><header>Investment Advisers Act of 1940</header><text>Section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>) is amended—</text><paragraph id="HCD2FBA2AF2B042C9844C56B394E81653"><enum>(1)</enum><text display-inline="yes-display-inline">in paragraph (18), as amended by the GENIUS Act, by striking the final sentence and inserting the following: <quote>The term does not include a digital commodity or permitted payment stablecoin.</quote>;</text></paragraph><paragraph id="H3F6E4525C6194DD5BC093BA10F1CFDEB" commented="no"><enum>(2)</enum><text>by redesignating the second paragraph (29) (relating to commodity pools) as paragraph (31); and</text></paragraph><paragraph id="H2B8E04D6F55F489AA0B49F39205BC5F8"><enum>(3)</enum><text>by adding at the end, the following:</text><quoted-block id="HFCF04495F7A342D5B32F27ED0774D603" style="OLC" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HDC15D3FE2F674293A9E828826247C307"><enum>(32)</enum><header>Digital commodity-related terms</header><text display-inline="yes-display-inline">The terms <term>digital commodity</term> and <term>permitted payment stablecoin</term> have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H820AA8C23765456595417B004EFA63D8"><enum>(d)</enum><header>Investment Company Act of 1940</header><text>Section 2(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2</external-xref>) is amended—</text><paragraph id="HBAC8BBAFF1D64444A675E9548A99118C"><enum>(1)</enum><text display-inline="yes-display-inline">in paragraph (36), as amended by the GENIUS Act, by striking the final sentence and inserting the following: <quote>The term does not include a digital commodity or permitted payment stablecoin.</quote>; and</text></paragraph><paragraph id="H88BBC2236C5C45F596FA1D0ABBE7BA27"><enum>(2)</enum><text>by adding at the end, the following:</text><quoted-block id="H496097C520944960A89407001D5400DF" style="OLC" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H993B0FABA7414651A2D68A4BC5F59B94"><enum>(55)</enum><header>Digital commodity-related terms</header><text display-inline="yes-display-inline">The terms <term>digital commodity</term> and <term>permitted payment stablecoin</term> have the meaning given those terms, respectively, under section 2(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>).</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="HE712257837AA46DC885C2893F5972BDE"><enum>(e)</enum><header>Securities Investor Protection Act of 1970</header><text display-inline="yes-display-inline">Section 16 of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll</external-xref>) is amended—</text><paragraph id="H2D7E481D9F3645159E91C9E0149C1940"><enum>(1)</enum><text display-inline="yes-display-inline">in paragraph (14), as amended by the GENIUS Act, by striking the final sentence and inserting the following: <quote>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77b">15 U.S.C. 77b(a)</external-xref>)</quote>; and</text></paragraph><paragraph id="HEB18351DB8B94DF7AC4AE60133FD3578"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" id="H8EE69231D2534FE99C6B53FED11A13D1" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H2472E09D59FC4CEFA3EF20B151C9A59D"><enum>(15)</enum><header>Treatment of permitted payment stablecoins</header><text display-inline="yes-display-inline">A permitted payment stablecoin, as defined in section 2(a) of the Securities Act of 1933, shall not qualify as <quote>cash</quote> and a claim for a permitted payment stablecoin shall not qualify as a <quote>claim for cash</quote>.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection></section><section id="HA7306F16ACCC490ABB0271A20D2C02DD" commented="no"><enum>302.</enum><header>Anti-fraud authority over permitted payment stablecoins and certain digital commodity transactions</header><subsection id="H3FCB91A1D5FD4B399BBB46464DDA382F"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 10 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78j">15 U.S.C. 78j</external-xref>) is amended—</text><paragraph id="H61E1B4F636194C2F842CB929FABC60F7"><enum>(1)</enum><text>by moving subsection (c) so as to appear after subsection (b);</text></paragraph><paragraph id="HA43CEE87BD2A45E8B801C91B4FCF6D83"><enum>(2)</enum><text>by inserting after subsection (c) the following:</text><quoted-block style="OLC" id="HA5DBB8562E71464985C2F7708B7D7D00" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="HFB4DFC77A2C044189F9B0C03A61EC012"><enum>(d)</enum><text display-inline="yes-display-inline">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.</text></subsection><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="H634ADA1B892B4D61BB40B40AED9B7CD9"><enum>(3)</enum><text>by adding at the end the following: <quote>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.</quote>. </text></paragraph></subsection><subsection id="H9921B5D468D8482E8C25DFA51C6AC72E"><enum>(b)</enum><header>Treatment of permitted payment stablecoins</header><text display-inline="yes-display-inline">Title I of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) is amended by inserting after section 6 the following:</text><quoted-block style="OLC" id="H04338CA4759A4B74A12FA9993CA5CDFF" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="HBF6033976D8F4F03854EA6869501CC4C"><enum>6A.</enum><header>Treatment of transactions in permitted payment stablecoins</header><subsection id="H3AD8BE162B5F495FA97D0AC43A2C37C9"><enum>(a)</enum><header>Authority To broker, trade, and custody permitted payment stablecoins</header><text display-inline="yes-display-inline">Permitted payment stablecoins may be brokered, traded, or custodied by a broker or dealer or through an alternative trading system or national securities exchange.</text></subsection><subsection id="H8EEE693F6C2440C5BB9C6601A146CC70"><enum>(b)</enum><header>Commission jurisdiction</header><text display-inline="yes-display-inline">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—</text><paragraph id="H9246217209674C07A5A17E4093C1CC4C"><enum>(1)</enum><text>by a broker or dealer;</text></paragraph><paragraph id="H1D4A759D6D0E4C88BC30C6AC24B5D3D7"><enum>(2)</enum><text display-inline="yes-display-inline">through a national securities exchange; or</text></paragraph><paragraph id="HC986F600850F493FBAF17BF159B4D40D"><enum>(3)</enum><text>through an alternative trading system.</text></paragraph></subsection><subsection id="H77B0FFC482344A078B94F9850AA7F86E"><enum>(c)</enum><header>Limitation</header><text display-inline="yes-display-inline">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—</text><paragraph id="H417B0CAB0BAB4FB2B6C4AF33D76BA4E1"><enum>(1)</enum><text>by a broker or dealer;</text></paragraph><paragraph id="H9C034187C2AA4962B13BBA090F098C05"><enum>(2)</enum><text display-inline="yes-display-inline">through a national securities exchange; or</text></paragraph><paragraph id="HA755CD52A849499680231F2E6CDC3BDC"><enum>(3)</enum><text>through an alternative trading system.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><section id="HD090B5999C54463F9C75DABD84CB7BAD"><enum>303.</enum><header>Eligibility of alternative trading systems</header><subsection id="H874E046C0235422B9EA6C12E77948135"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 5 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78e">15 U.S.C. 78e</external-xref>) is amended—</text><paragraph id="H8E53AEECC3B24729A5C5CBD1CF5D4B77"><enum>(1)</enum><text>by striking <quote>It</quote> and inserting the following:</text><quoted-block style="OLC" id="HC02B1D0638134976BCC08FBA0C9CE1DA" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H5C9C6DEE953E4316B4B514CC40C08AD1"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">It</text></subsection><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="H6823DA05DFC6440E91D05DB7A638F8FD"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" id="H29D82E5A96604BAC8099E282691735FF" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="HAFC5D8D7C1984010BBC5917AE3A9E937"><enum>(b)</enum><header>Digital commodity protections</header><paragraph id="HC29E0AD5CA4543D288D0F6910524BA7B"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subparagraph id="HC71563E5C4744E3DA1E3D7FA89E7E19C"><enum>(A)</enum><text>digital commodities or permitted payment stablecoins; and</text></subparagraph><subparagraph id="H0B299757B7474AD7B3DC5EDC16B022CE"><enum>(B)</enum><text>securities.</text></subparagraph></paragraph><paragraph id="HF5EBB0B8B8C84DFDB65AADEB3C128A0C"><enum>(2)</enum><header>Covered exemption</header><text display-inline="yes-display-inline">In this subsection, the term <term>covered exemption</term> means an exemption—</text><subparagraph id="H0FD1CB4F20BB44688E47A164870655C3"><enum>(A)</enum><text>described in subsection (a)(2); or</text></subparagraph><subparagraph id="H174BC3B80B9C4CDCAF9057256B474D6D"><enum>(B)</enum><text>with respect to any other rule of the Commission relating to the definition of <quote>exchange</quote>.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="HC178AB29E71E4BA0B24C720537626104"><enum>(b)</enum><header>Securities Exchange Act of 1934</header><text display-inline="yes-display-inline">Section 3(a)(2) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(2)</external-xref>) is amended by adding at the end the following: <quote>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 <quote>facility</quote> of an exchange.</quote>.</text></subsection><subsection id="HB4574DA927E249DD8DB61831BCD3831D"><enum>(c)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">Nothing in this section, the amendments made by this section, or section 304 may be construed to—</text><paragraph id="H160BC05EE69A413FB99284344D4D62B7"><enum>(1)</enum><text>prohibit a national securities exchange from owning or operating any other type of alternative trading system; or</text></paragraph><paragraph id="H03D24C89C85F40F4AF4DA7E844722207"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text></paragraph></subsection></section><section id="HB2C3765CF6614F3C9A764B1C649C2701"><enum>304.</enum><header>Rulemaking for dual-registered entities</header><subsection id="HBB6F647259A04B88A3E25260AB67E59D"><enum>(a)</enum><header>Conflict of interest policies and procedures</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="HF91D24188DE94A2FA37238F3173206AD"><enum>(b)</enum><header>Exemption from duplicative, conflicting, or unduly burdensome provisions</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H2A88E0502B884C7EA36D98CF5946AFE7"><enum>(c)</enum><header>Implementing organizations</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H5568E7273EBF4FB4ABCC9E017704706E"><enum>(d)</enum><header>Memorandum of understanding</header><text display-inline="yes-display-inline">The Securities and Exchange Commission shall enter into a memorandum of understanding with the Commodity Futures Trading Commission to ensure—</text><paragraph id="H61B8C7865DBF40AB8E389DFD4409033F"><enum>(1)</enum><text display-inline="yes-display-inline">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</text></paragraph><paragraph id="HB3E64D7ADC3941599B0B7DD2AC29841F"><enum>(2)</enum><text>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.</text></paragraph></subsection><subsection id="H9B6A361DB2364ABFA8F7C7DFD0373C20" commented="no" display-inline="no-display-inline"><enum>(e)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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.</text></subsection></section><section id="H19EBB89FF99543B8ACB1AF95CCB7F228"><enum>305.</enum><header>Modernization of recordkeeping requirements</header><subsection id="H916A8921A6AF4D0998282918250E1660"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">For purposes of books and records requirements for brokers, dealers, transfer agents, national securities exchanges under the Securities and Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), investment advisers under the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>), and investment companies under the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-1">15 U.S.C. 80a–1 et seq.</external-xref>), a person may, consistent with any rules promulgated under subsection (b), utilize records from a blockchain system.</text></subsection><subsection id="HF60CBA0887EB45789CFB5692600079C8"><enum>(b)</enum><header>Revision of rules</header><text>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.</text></subsection></section><section id="H46463C0B63C44A249302C3F837E361E8"><enum>306.</enum><header>Exemptive authority</header><text display-inline="no-display-inline">Section 28 of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77z-3">15 U.S.C. 77z–3</external-xref>) is amended by striking <quote>by rule or regulation</quote> and inserting <quote>by rule, regulation, or order</quote>.</text></section><section id="H1AA0A6FAE0034C528E2C046EBB10123A"><enum>307.</enum><header>Additional registrations with the Commodity Futures Trading Commission</header><text display-inline="no-display-inline">Section 15 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78o">15 U.S.C. 78o</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HBB5BD50593C24AD28564A05C475F8CC2" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H296CD628ACB1478DAF8D28220A289D80"><enum>(p)</enum><header>Additional registrations with the Commodity Futures Trading Commission</header><paragraph id="H26247A6B22E043B29AB169FD48FB0D5A"><enum>(1)</enum><header>Registered brokers and dealers</header><text>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.</text></paragraph><paragraph id="H5A3F71E176A04689A20358B5DF70C38C"><enum>(2)</enum><header>National securities exchanges</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HC512874ED2DC43C6AD2C256964C40B3C"><enum>(3)</enum><header>Alternative trading systems</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H856EA2D6E18C479BA6C1DEE565829306"><enum>(4)</enum><header>Notice of application</header><text display-inline="yes-display-inline">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.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H7998E1F9A6F14A9DB648CB01049C9232"><enum>308.</enum><header>Exempting digital commodities from State securities laws</header><subsection id="HE887A7262F314D629CEDBCC1D97CF37D"><enum>(a)</enum><header>Covered security</header><text display-inline="yes-display-inline">Section 18(b) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(b)</external-xref>) is amended by adding at the end the following:</text><quoted-block id="HF567752808BC40509A8A072D74C02881" style="OLC" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H39D3D5D854F845209B745C85A956D30B"><enum>(5)</enum><header>Exemption in connection with digital commodities</header><text display-inline="yes-display-inline">A digital commodity shall be treated as a covered security.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H75CD6A9D9F4245F992A1CD39FD080961"><enum>(b)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(c)(1)</external-xref>) of a securities commission (or any agency or office performing like functions) of any State with respect to a covered security or any security.</text></subsection></section><section id="H0C7332F0826F420AB08811A081E6E8A9"><enum>309.</enum><header>Exclusion for decentralized finance activities</header><text display-inline="no-display-inline">The Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) is amended by inserting after section 15G the following:</text><quoted-block style="OLC" id="H52DD038B6C434EB99BEDF9B521CF497A" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H9201CE9B46514136AA1878C8999E8B02"><enum>15H.</enum><header>Decentralized finance activities not subject to this Act</header><subsection id="H6B68F293AB11465D8F83355CA3519C50"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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:</text><paragraph id="H05F7051292484C468D1562DF335F1AC7"><enum>(1)</enum><text>Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.</text></paragraph><paragraph id="HB5B7CFF826474B7C8BBA732C9355F55E"><enum>(2)</enum><text>Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.</text></paragraph><paragraph id="H539E33AC630D4A448B54E6157A42D862"><enum>(3)</enum><text>Providing a user-interface that enables a user to read and access data about a blockchain system.</text></paragraph><paragraph id="H3F6A7F7D47EA4803BF83B0143C4B1887"><enum>(4)</enum><text>Developing, publishing, constituting, administering, maintaining, or otherwise distributing a blockchain system or a decentralized finance trading protocol.</text></paragraph><paragraph id="H760932C5DE294511B2D24DECC71A114C"><enum>(5)</enum><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HAAB1C03985C74943AD8A0329E83403B2"><enum>(6)</enum><text>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.</text></paragraph></subsection><subsection id="HFFC1BA93BACD4CC7835F058E7BC4D0CB"><enum>(b)</enum><header>Exceptions</header><text display-inline="yes-display-inline">Subsection (a) shall not apply to the anti-fraud and anti-manipulation authorities of the Commission.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H4C81B119275B4C239F95B3D57721B76D"><enum>310.</enum><header>Treatment of custody activities by banking institutions</header><subsection id="H8B1DFC21F6E94DF1BFEA521B4AC412B7" display-inline="no-display-inline"><enum>(a)</enum><header>Treatment of custody activities</header><text display-inline="yes-display-inline">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 <quote>entity</quote>)—</text><paragraph id="H8B2DC66D4BF847E5B664B7A66591F70E"><enum>(1)</enum><text display-inline="yes-display-inline">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</text></paragraph><paragraph id="HE1C0771CACC04FF3AEF75CE0557E4C93"><enum>(2)</enum><text display-inline="yes-display-inline">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—</text><subparagraph id="H571AD9E1B70A42CCAA73761FCE3D0B9C"><enum>(A)</enum><text>the appropriate Federal banking agency;</text></subparagraph><subparagraph id="H357AAF847AEA47D693D14AD1CABB3F07" commented="no"><enum>(B)</enum><text>the National Credit Union Administration (in the case of a credit union);</text></subparagraph><subparagraph id="H3290FD4F386B465EA8C164CA34BDDAE8" commented="no"><enum>(C)</enum><text display-inline="yes-display-inline">a State bank supervisor;</text></subparagraph><subparagraph id="HDBD635DD8FB94C0E9F6A72D0F20F965F" commented="no"><enum>(D)</enum><text display-inline="yes-display-inline">a State credit union supervisor (as defined in section 6003 of the Anti-Money Laundering Act of 2020 (<external-xref legal-doc="usc" parsable-cite="usc/31/5311">31 U.S.C. 5311</external-xref> note)); or</text></subparagraph><subparagraph id="H668F07A7934445B88C523B911A17396B"><enum>(E)</enum><text>the Securities and Exchange Commission (in the case of a broker or dealer).</text></subparagraph></paragraph></subsection><subsection id="HF8BA708CD35A43CDB8D75DA88384D30C"><enum>(b)</enum><header>Definitions</header><text>In this section:</text><paragraph id="HD4E04261EFC344CDA5A7204DC23A7F1A"><enum>(1)</enum><header>Banking terms</header><text display-inline="yes-display-inline">The terms <term>appropriate Federal banking agency</term>, <term>depository institution</term>, <term>national bank</term>, and <term>State bank supervisor</term> have the meaning given those terms, respectively, under section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>).</text></paragraph><paragraph id="H2D5CFDF05DB34DA9AE2B4D46E1AB7058"><enum>(2)</enum><header>Credit union terms</header><text display-inline="yes-display-inline">The terms <term>Federal credit union</term> and <term>State credit union</term> have the meaning given those terms, respectively, under section 101 of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1752">12 U.S.C. 1752</external-xref>).</text></paragraph></subsection></section><section id="HB6F9D179EE1B41338FAE89ED0EAF3349" commented="no"><enum>311.</enum><header>Broker and dealer disclosures regarding the treatment of assets</header><subsection id="H3BDE5A692B974B40ACE6B7B0FC083E5E" commented="no"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><paragraph id="H06D9FDE9FF164D6EB9F43709500447B8" commented="no"><enum>(1)</enum><text>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—</text><subparagraph id="HCB49E4E6EA124D91960AF6644634BFDB" commented="no"><enum>(A)</enum><text>title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5381">12 U.S.C. 5381 et seq.</external-xref>);</text></subparagraph><subparagraph id="H96804117E80A4275ACD9C6E788FCDE34" commented="no"><enum>(B)</enum><text>the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>); or</text></subparagraph><subparagraph id="H3E0426FE2BF84D538A93268C378B6DCC" commented="no"><enum>(C)</enum><text>as applicable, chapter 7 or <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/11/11">chapter 11</external-xref> of title 11, United States Code; and</text></subparagraph></paragraph><paragraph id="HDACF07AFDBF640959C0085AB2500948E" commented="no"><enum>(2)</enum><text>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).</text></paragraph></subsection></section><section id="H3D1FB9DE89664718B39CA5863BD37A98"><enum>312.</enum><header>Digital commodity activities that are financial in nature</header><subsection id="H333BAEDE6761451DB5D20A4386697D04"><enum>(a)</enum><header>Digital commodity activities that are financial in nature</header><text display-inline="yes-display-inline">Section 4(k)(4) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1843">12 U.S.C. 1843(k)(4)</external-xref>) is amended—</text><paragraph id="HFB949C1464824084B338428BE246B737"><enum>(1)</enum><text>in subparagraph (A), by striking <quote>or securities</quote> and inserting <quote>, securities, or digital commodities</quote>; and</text></paragraph><paragraph id="HB68E00DE7F23405C81F00CCDAFD4CF7F"><enum>(2)</enum><text>in subparagraph (E), by inserting <quote>or digital commodities</quote> before the period at the end.</text></paragraph></subsection><subsection id="HC004B12AF1084C1DA087E7E3D6CEDB7A" commented="no"><enum>(b)</enum><header>National bank activity</header><paragraph id="H1EA6B58ED02B4B35A5F304CDB876A213" commented="no"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="H4EF435FB5CF04A4AA7D6AB9EF687429E" commented="no"><enum>(2)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="H4CF920D3FAD84BD19048919578CC7D3B" commented="no"><enum>(c)</enum><header>Insured State banks and subsidiaries of insured State banks</header><text>For purposes of sections 24(a) and 24(d) of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1831a">12 U.S.C. 1831a(a)</external-xref> 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.</text></subsection></section><section id="H3AF18BDCC31948DD9F24C9C26E0795C5"><enum>313.</enum><header>Effective date; administration</header><text display-inline="no-display-inline">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—</text><paragraph id="H4E4F4B577EAB45B5B0687C8612730C2D"><enum>(1)</enum><text>360 days after the date of enactment of this Act; or</text></paragraph><paragraph id="HA76E862AB48B4D879CD4EB9D9F70A3D7"><enum>(2)</enum><text>60 days after the publication in the Federal Register of the final rule implementing the provision.</text></paragraph></section><section id="H4A475A8716884C8F951CF2D6D642B69F"><enum>314.</enum><header>Educational material requirements</header><text display-inline="no-display-inline">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—</text><paragraph id="H420AE4F6E2F54E419674FF8DCE501ECF"><enum>(1)</enum><text>an overview of how blockchain technology functions;</text></paragraph><paragraph id="H74496D05375E4FF2909A8BC22F9FA2D4"><enum>(2)</enum><text>a description of common risks associated with digital commodities;</text></paragraph><paragraph id="HB7DBA003789D4433AA485C67C0B06A61"><enum>(3)</enum><text display-inline="yes-display-inline">a description of the differences between digital commodity markets and traditional financial markets;</text></paragraph><paragraph id="H95F274D86F734FBF96B3E7B66EBC1BCF"><enum>(4)</enum><text>information on reporting requirements related to digital commodity transactions or investment contracts involving units of a digital commodity; and</text></paragraph><paragraph id="H53755FC9BE6F4A81BE8B36A7E49CC61B"><enum>(5)</enum><text>guidance on recognizing fraudulent schemes and instructions for reporting suspected fraud.</text></paragraph></section><section id="H0E06B40B1E234A07817077B8FC6A869C"><enum>315.</enum><header>Discretionary Surplus Fund</header><subsection id="HB19FBC5AC45343719EDDAF7E4F067C96"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The dollar amount specified under section 7(a)(3)(A) of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/289">12 U.S.C. 289(a)(3)(A)</external-xref>) is reduced by $15,000,000.</text></subsection><subsection id="H8047231003314CC1A29E5B924FFEF5CF"><enum>(b)</enum><header>Effective date</header><text>The amendment made by subsection (a) shall take effect on September 30, 2035.</text></subsection></section><enum>IV</enum><header>Registration for Digital Commodity Intermediaries at the Commodity Futures Trading Commission</header><section id="H5E0DDC3ECE53485CA51AEC8506FBE735"><enum>401.</enum><header>Commission jurisdiction over digital commodity transactions</header><subsection id="H7C862A77AF9A48CD9D59B437D5E79AD4"><enum>(a)</enum><header>Savings clause</header><text>Section 2(a)(1) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(a)(1)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HC7910C10166B479E9AB6274F1E852E06" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H918B1470531747698A0F3E8D84B9E52D"><enum>(J)</enum><text display-inline="yes-display-inline">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—</text><clause id="H12DCC71DAA5C4BFE9EA71EFA40A4ABF9"><enum>(i)</enum><text>any agreement, contract, or transaction that is subject to this Act as—</text><subclause id="HCA3C2065EA074BDC9CF291A0B3B77C54"><enum>(I)</enum><text>a contract of sale of a commodity for future delivery or an option on such a contract;</text></subclause><subclause id="H923657B34D644EF7A1C54CBA28949645"><enum>(II)</enum><text>a swap;</text></subclause><subclause id="H38814352F5B449BD913CAA7A54E995A6"><enum>(III)</enum><text>a security futures product;</text></subclause><subclause id="H32C825E505E54F9CB904678BCC27C970"><enum>(IV)</enum><text>an option authorized under section 4c of this Act;</text></subclause><subclause id="HE386E8077D9A492DAA494BD22E4F35E5"><enum>(V)</enum><text>an agreement, contract, or transaction described in subparagraph (C)(i) or (D)(i) of subsection (c)(2) of this section; or</text></subclause><subclause id="H32A7C63D55204A60861913DC0ECFF643"><enum>(VI)</enum><text>a leverage transaction authorized under section 19; or</text></subclause></clause><clause id="H78148A8D52684190B29427C24CD942AA"><enum>(ii)</enum><text>the activities of any person with respect to any such an agreement, contract, or transaction.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H880DB9CDFC0645FFACB11B46DFAEC4C0" display-inline="no-display-inline"><enum>(b)</enum><header>Limitation on authority over permitted payment stablecoins</header><text>Section 2(c)(1) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(c)(1)</external-xref>) is amended—</text><paragraph id="H02AB250FCBF146DAAB1148E5A5C41CE6"><enum>(1)</enum><text>in subparagraph (F), by striking <quote>or</quote> at the end;</text></paragraph><paragraph id="HAB37AF09DDEE4C14ADE7CF6525914D7E"><enum>(2)</enum><text>in subparagraph (G), by striking the period and inserting <quote>; or</quote>; and</text></paragraph><paragraph id="H27297875463C4587986409D438C20938"><enum>(3)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="H2B5E90A31D324082A90A3B25A1930300" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H82C5C8E1FA2F4256A945BD2D243BD006"><enum>(H)</enum><text display-inline="yes-display-inline">permitted payment stablecoins.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H1B4434C0E5254A6EBD5EDE2A9C6EA419"><enum>(c)</enum><header>Commission jurisdiction over financing agreements</header><text>Section 2(c)(2)(D) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(c)(2)(D)</external-xref>) is amended—</text><paragraph id="HC3DD6E4A5A25442BBE34CBF5BBCA3E82" commented="no" display-inline="no-display-inline"><enum>(1)</enum><text>in clause (ii)(I), by inserting after <quote>paragraph (1)</quote> the following: <quote>(other than an agreement, contract, or transaction in a permitted payment stablecoin)</quote>; and</text></paragraph><paragraph id="H999DFB6A3B614D9B93CE4E7DA11EDE2B"><enum>(2)</enum><text>by redesignating clause (iv) as clause (v) and inserting after clause (iii) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="HFA2556F330EB46D89D6B693557BFFACF" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><clause id="HF6E0EB757C7A45D681FC0B382AED4510"><enum>(iv)</enum><header>Agreements for margin financing</header><text display-inline="yes-display-inline">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.</text></clause><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="H03CAACBDCD524C4686280EE8D619EE6D"><enum>(d)</enum><header>Commission authority over certain digital commodity and stablecoin spot transactions</header><text display-inline="yes-display-inline">Section 2(c)(2) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(c)(2)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="H66BDA096451544D49D95046D565857D0" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="HC0BEBE19A72A463AA09BB26F121EAA6C" commented="no"><enum>(F)</enum><header>Commission jurisdiction with respect to digital commodity transactions</header><clause id="H401E69264C2B4C9788040CBB12B8DE2D" commented="no"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subclause id="HC7FA901170BB479D8B48C36536D35D43" commented="no"><enum>(I)</enum><text display-inline="yes-display-inline">on or subject to the rules of a registered entity or an entity that is required to be registered as a registered entity; or</text></subclause><subclause id="HBAB33A68F2974A1BAA4EFC82BC6DDE39" commented="no"><enum>(II)</enum><text>by any other entity registered, or required to be registered, with the Commission.</text></subclause></clause><clause id="H78A4AF43BB0C4BFE9FAACC5410D37E8C" commented="no"><enum>(ii)</enum><header>Limitations</header><text>Clause (i) shall not apply with respect to—</text><subclause id="HF087D11CDF0C49C994750E715CDB9000"><enum>(I)</enum><text>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</text></subclause><subclause id="H1F3E5F7635F94291887023CE2237226B"><enum>(II)</enum><text display-inline="yes-display-inline">an offer or sale of an investment contract involving a digital commodity or of a securities offer or sale involving a digital commodity.</text></subclause></clause><clause id="H95526DF626D64C97BBD4DDC64D2DB907"><enum>(iii)</enum><header>Mixed digital asset transactions</header><subclause id="H04BDF2C8C22E4AE982DAE0AB01713258"><enum>(I)</enum><header>In general</header><text display-inline="yes-display-inline">Clause (i) shall not apply to a mixed digital asset transaction.</text></subclause><subclause id="H871CB46CFE0C494CB0BD60D75999DB56"><enum>(II)</enum><header>Reports on mixed digital asset transactions</header><text>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.</text></subclause></clause></subparagraph><subparagraph id="HF7A8BFBC65424005875DE1BB120C60E6"><enum>(G)</enum><header>Agreements, contracts, and transactions in stablecoins</header><clause id="HC98EC78A4DEC4EA7A790B084F3663DDE"><enum>(i)</enum><header>Treatment of permitted payment stablecoins on commission-registered entities</header><text display-inline="yes-display-inline">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—</text><subclause id="HB5A2B46E332F43B89632655000FB79F5"><enum>(I)</enum><text>on or subject to the rules of a registered entity; or</text></subclause><subclause id="HAE649DC493C946959C7582BD0F7B11F3"><enum>(II)</enum><text>by any other entity registered with the Commission.</text></subclause></clause><clause id="H979F73E2EA6948068CABEAB3795406A0"><enum>(ii)</enum><header>Permitted payment stablecoin transaction rules</header><text>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.</text></clause><clause id="HF6A0BEB57CBF41CE8E3969B3EB08D09A"><enum>(iii)</enum><header>No authority over permitted payment stablecoins</header><text>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.</text></clause></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HCB2056F7B9B84D668BB40B5112EBCB73"><enum>(e)</enum><header>Conforming amendments</header><text display-inline="yes-display-inline">The Commodity Exchange Act is amended—</text><paragraph id="H882B0696A9AA4114835C306CF6133B7A"><enum>(1)</enum><text display-inline="yes-display-inline">in section 1a(9) (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a(9)</external-xref>), as amended by the GENIUS Act, by striking the second sentence; and </text></paragraph><paragraph id="H81E8DD69C9A440BD9D179ADA410356C1"><enum>(2)</enum><text display-inline="yes-display-inline">in section 2(a)(1)(A) (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(a)(1)(A)</external-xref>), in the 1st sentence, by inserting <quote>subparagraphs (F) and (G) of subsection (c)(2) of this section or</quote> before <quote>section 19</quote>.</text></paragraph></subsection></section><section id="H806CC847CD2F4CEF8DB2996E3C081EEB"><enum>402.</enum><header>Requiring futures commission merchants to use qualified digital asset custodians</header><text display-inline="no-display-inline">Section 4d of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6d">7 U.S.C. 6d</external-xref>) is amended—</text><paragraph id="H2CDF74691A534F879B3C1A349D0DA19F"><enum>(1)</enum><text display-inline="yes-display-inline">in subsection (a)(2)—</text><subparagraph id="H7E574AAD5102436FB79D1AE319F770AB"><enum>(A)</enum><text>in the 1st proviso, by striking <quote>any bank or trust company</quote> and inserting <quote>any bank, trust company, or qualified digital asset custodian, as applicable,</quote>; and</text></subparagraph><subparagraph id="H637A2506E52D40988FB022BDC84D7E9D"><enum>(B)</enum><text>by inserting <quote><italic>: Provided further,</italic> That any such property that is a digital asset shall be held in a qualified digital asset custodian</quote> before the period at the end; and</text></subparagraph></paragraph><paragraph id="HCC9729EEB2ED4319A998CFB2D5B356AD"><enum>(2)</enum><text display-inline="yes-display-inline">in subsection (f)(3)(A)(i), by striking <quote>any bank or trust company</quote> and inserting <quote>any bank, trust company, or qualified digital asset custodian</quote>.</text></paragraph></section><section id="HEACCC0CC0A2E4BDE96F056A288F8D04C"><enum>403.</enum><header>Trading certification and approval for digital commodities</header><text display-inline="no-display-inline">Section 5c of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/7a-2">7 U.S.C. 7a–2</external-xref>) is amended—</text><paragraph id="H963AB7B7F3DC487285E22A84F4339862"><enum>(1)</enum><text>in subsection (a), by striking <quote>5(d) and 5b(c)(2)</quote> and inserting <quote>5(d), 5b(c)(2), and 5i(c)</quote>;</text></paragraph><paragraph id="H0A6094EA08444504ABF218BBBA576176"><enum>(2)</enum><text>in subsection (b)—</text><subparagraph id="H4A4DB9A93A1C41D7BBC4B9E61BF016AF"><enum>(A)</enum><text>in each of paragraphs (1) and (2), by inserting <quote>digital commodity exchange,</quote> before <quote>derivatives</quote>; and</text></subparagraph><subparagraph id="H01654C1BC90045E7B94D40CF8202145D"><enum>(B)</enum><text>in paragraph (3), by inserting <quote>digital commodity exchange,</quote> before <quote>derivatives</quote> each place it appears;</text></subparagraph></paragraph><paragraph id="H21DD26EAA02A4EB7B7BF42471BF94059"><enum>(3)</enum><text>in subsection (c)—</text><subparagraph id="H7C0394CBB9374DCA8D2CCDFFE05EFEAA"><enum>(A)</enum><text>in paragraph (2), by inserting <quote>or participants</quote> before <quote>(in a</quote>;</text></subparagraph><subparagraph id="H80DFC63B12BD4FFEB7B27C6D9103C345"><enum>(B)</enum><text>in paragraph (4)(B), by striking <quote>1a(10)</quote> and inserting <quote>1a(9)</quote>; and</text></subparagraph><subparagraph id="H960C28F7FD97445FAA09BC973D1F8986"><enum>(C)</enum><text>in paragraph (5), by adding at the end the following:</text><quoted-block style="OLC" id="H093289E0EE1341608DE2D8891D04BCB6" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subparagraph id="H7937A44A661C40A89D06C9361EF1B0C9" commented="no"><enum>(D)</enum><header>Special rules for digital commodity contracts</header><text display-inline="yes-display-inline">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.</text></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H0DC04492415A4D27AC891C69294CE35C"><enum>(4)</enum><text>by inserting after subsection (c) the following:</text><quoted-block style="OLC" id="H8C673EC3676F48A78A1BB9673473CA23" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H9094DFC8EF274678833F96E89CCFA656"><enum>(d)</enum><header>Certifications for digital commodity trading</header><paragraph id="H241058D5AD744EE9A221F385F5257FAD"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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).</text></paragraph><paragraph id="HFB7ECA7ABC4F40F9950725A92F4B0707"><enum>(2)</enum><header>Contents of the certification</header><subparagraph id="H3589C41899204488AA2F9FE80DAE4058"><enum>(A)</enum><header>In general</header><text>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).</text></subparagraph><subparagraph id="HABE920105EF346FC80A0CD5ACD111BF6"><enum>(B)</enum><header>Reliance on prior disclosures</header><text>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.</text></subparagraph></paragraph><paragraph id="H0F0E11216D6C4B82813C2C62E067054D"><enum>(3)</enum><header>Modifications</header><subparagraph id="HC9B026EDAC4F4A3CBBEB17852D4E77C6"><enum>(A)</enum><header>In general</header><text>An eligible entity shall modify a certification made under paragraph (1) to—</text><clause id="H5F5F99BF02214D9C8D41DCFFFECF0249"><enum>(i)</enum><text display-inline="yes-display-inline">account for significant changes in any information provided to the Commission under paragraph (2)(A)(ii); or</text></clause><clause id="H1F2DBD507EC44B01BCE4A5712935B4FA"><enum>(ii)</enum><text>permit or restrict trading in units of a digital commodity held by a digital commodity related person or a digital commodity affiliated person.</text></clause></subparagraph><subparagraph id="H07568293BD454AC996869F5CF37E657B"><enum>(B)</enum><header>Recertification</header><text display-inline="yes-display-inline">Modifications required by this subsection shall be subject to the same disapproval and review process as a new certification under paragraphs (4) and (5).</text></subparagraph></paragraph><paragraph id="HD3E24EAC0D20401783A83F7457DB4968"><enum>(4)</enum><header>Disapproval</header><subparagraph id="HBC25A2A836284D0A81708EF219A551C1"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="H08F6DFC6FCE4448386DB2AD72C1888A0"><enum>(B)</enum><header>Analysis required</header><text display-inline="yes-display-inline">The Commission shall include, with any findings referred to in subparagraph (A), a detailed analysis of the factors on which the decision was based.</text></subparagraph><subparagraph id="H4F18DED48F9F41748083D4F839861BE4"><enum>(C)</enum><header>Public findings</header><text display-inline="yes-display-inline">The Commission shall make public any disapproval decision, and any related findings and analysis, made under this paragraph.</text></subparagraph></paragraph><paragraph id="H9EF49C6137A94710BAC7755039AADB8E"><enum>(5)</enum><header>Review</header><subparagraph id="H95B12BC868AC481BA2298B44FE526875"><enum>(A)</enum><header>In general</header><text>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—</text><clause id="H706BB6A003B94DFFA2D49FE96BFDCF50"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H15474E22231148C9A0DE50E9FF751AAB"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="H5128048B334B4B8F8AFFA99DA500B1FC" commented="no"><enum>(B)</enum><header>Extensions</header><text display-inline="yes-display-inline">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—</text><clause id="H2054A93553AC464B88138088DC25B76D" commented="no"><enum>(i)</enum><text>once, for 30 business days, through written notice to the eligible entity by the Commission; and</text></clause><clause id="H310B88BABF9547C29181A9180E40438E" commented="no"><enum>(ii)</enum><text>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—</text><subclause id="HED2344AD159C43F98A4F11CF6FDA5C88" commented="no"><enum>(I)</enum><text>novel or complex issues which require additional time to analyze;</text></subclause><subclause id="HEDEE0A70C9564DCF90EC9541261BC991" commented="no"><enum>(II)</enum><text>missing information or inadequate explanations; or</text></subclause><subclause id="H385EDF9B18F44E328A1EFFA15BECDC3F" commented="no"><enum>(III)</enum><text>potential inconsistencies with this Act.</text></subclause></clause></subparagraph></paragraph><paragraph id="H0D8A5B599E474F45A0CB15031D1056A8" display-inline="no-display-inline"><enum>(6)</enum><header>Prior approval before registration</header><subparagraph id="HF4B9F9DDA1274F4A808EE925F7259888"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HDD4FF4453B8E4B2BA0FA4C3220F35F09"><enum>(B)</enum><header>Request for prior approval</header><text display-inline="yes-display-inline">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).</text></subparagraph><subparagraph id="H6115FF54B6AF4780BA5753C3EB676ABF"><enum>(C)</enum><header>Deadline</header><text>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.</text></subparagraph><subparagraph id="H3CB5ECEA61FD43E99DC0A99AB5B4F9D6"><enum>(D)</enum><header>Disapproval</header><clause id="H5F3C7D6E554546CC8BE95FB1AC493CBE"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">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).</text></clause><clause id="H2635F401DBAE457E9DF7BDFAD81AFE6A"><enum>(ii)</enum><header>Analysis required</header><text display-inline="yes-display-inline">The Commission shall include, with any findings made under clause (i), a detailed analysis of the factors on which the decision is based.</text></clause><clause id="H031CE7898BAF4F41AF25F2F149A935C7"><enum>(iii)</enum><header>Public findings</header><text display-inline="yes-display-inline">The Commission shall make public any disapproval decision, and any related findings and analysis, made under this paragraph.</text></clause></subparagraph></paragraph><paragraph id="H7A6ABDE779434DB286645F9CFB694EE2"><enum>(7)</enum><header>Eligible entity defined</header><text>In this subsection, the term <term>eligible entity</term> means a registered entity or group of registered entities acting jointly.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="HC8C95F2C22CA4CB9947B48A38B412963"><enum>404.</enum><header>Registration of digital commodity exchanges</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>) is amended by inserting after section 5h the following:</text><quoted-block style="OLC" id="HD5B2BE0A39B646EB8B2667539A622F74" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H12F956B336594FB38575C8E090EC3E14"><enum>5i.</enum><header>Registration of digital commodity exchanges</header><subsection id="HC662BEEDFB014BFF966E49C31C963F63"><enum>(a)</enum><header>In general</header><paragraph id="HDD3F1C3859FF422AB4AC4835023E5F85"><enum>(1)</enum><header>Registration</header><subparagraph id="HBBE7A4F1638F418194483CB00FA9C88B"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HDF0845F774304D1EB118F27B2836E958"><enum>(B)</enum><header>Application</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H0AC4E71B8B124E20BA7191DEF42A2BCF"><enum>(C)</enum><header>Exemptions</header><text display-inline="yes-display-inline">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—</text><clause id="H67A003ADE74148409F590CD354848C9E"><enum>(i)</enum><text>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</text></clause><clause id="HFEE5A0B1EDCB4D2EA4A2B020AB8CB665"><enum>(ii)</enum><text>serves only customers in a single State, territory, or possession of the United States.</text></clause></subparagraph></paragraph><paragraph id="H4C91D45D57494EF596B5C183F64FB814"><enum>(2)</enum><header>Additional registrations</header><subparagraph id="H5E9665564C8D421F934D6451E695EC3A"><enum>(A)</enum><header>With the Commission</header><text display-inline="yes-display-inline">In order to foster the development of fair and orderly markets, protect customers, and promote responsible innovation, the Commission—</text><clause id="HD3E638F6BD064D06B776553F7D329A94"><enum>(i)</enum><text>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;</text></clause><clause id="HDC43D9B2612C4733BC3BD79232D00A80"><enum>(ii)</enum><text>shall prescribe rules to address conflicts of interests and activities of the entity; and</text></clause><clause id="H528EEBB40D4A4254BB1BA4E6F7F7B7D7"><enum>(iii)</enum><text>may, after an analysis of the risks and benefits, prescribe rules to provide for portfolio margining.</text></clause></subparagraph><subparagraph id="H7400C145370B4996BB9CE3425894C186" commented="no"><enum>(B)</enum><header>With a registered futures association</header><clause id="HF6641D9A11924E59BCE80C72561DAF85" commented="no"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">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).</text></clause><clause id="HCA2446D8C0F84168846B78C1D92F16D6" commented="no"><enum>(ii)</enum><header>Rulemaking required</header><text>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.</text></clause></subparagraph><subparagraph id="H7A24D8A942DE459CBAFB2E19406338ED"><enum>(C)</enum><header>Registration required</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph></subsection><subsection id="HEC270C2AE7484F2E84B77475BF648465"><enum>(b)</enum><header>Trading</header><paragraph id="H46870E2F6072494B8B18C78C6F7CE455"><enum>(1)</enum><header>Prohibition on certain trading practices</header><subparagraph id="H030DD3CB210C4B11B1C05754543EC30F"><enum>(A)</enum><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H37DEB639878043F9857592EFD460BF93"><enum>(B)</enum><text>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.</text></subparagraph><subparagraph id="H1B2DC7AF64B74157B4C2667CF479C272"><enum>(C)</enum><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H7E27903DF77B4964BB6BBBF28A9B1140"><enum>(2)</enum><header>Prohibition on acting as a counterparty</header><subparagraph id="HE1822968088240459593C290578E1F66"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H838A5564DA6C4894B0850B4CFFC83094"><enum>(B)</enum><header>Exceptions</header><text display-inline="yes-display-inline">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:</text><clause id="H34C96B504CD043408A57AA6E0EBBA6AD"><enum>(i)</enum><header>Customer direction</header><text>A transaction for, or entered into at the direction of, or for the benefit of, an unaffiliated customer.</text></clause><clause id="H09589507DC9B4E8AA1F84236D37457A9"><enum>(ii)</enum><header>Risk management</header><text>A transaction to manage the credit, market, and liquidity risks associated with the digital commodity business of the exchange.</text></clause><clause id="HFE0FDD36AE9A4491963F1ED3EA784E0F"><enum>(iii)</enum><header>Operational needs</header><text display-inline="yes-display-inline">A transaction related to the operational needs of the business of the digital commodity exchange or its affiliate.</text></clause><clause id="H29CF8C33E7C24ED7A580CB91EE9EB554"><enum>(iv)</enum><header>Functional use</header><text>A transaction related to the functional operation of a blockchain system.</text></clause></subparagraph><subparagraph id="H4638991E8C74429D9C8EC580AFA9059A"><enum>(C)</enum><header>Rulemaking</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H6BD72F0BFE8B4504B6EBAE450161CA42"><enum>(D)</enum><header>Notice requirement</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="H4B67D21D22D74AD2A6662E3A2B7F706F"><enum>(c)</enum><header>Core principles for digital commodity exchanges</header><paragraph id="H1C50BDD1F5D84E138BE57C20938B43D6"><enum>(1)</enum><header>Compliance with core principles</header><subparagraph id="HC2912B4981954DDFB857AC52AB692635"><enum>(A)</enum><header>In general</header><text>To be registered, and maintain registration, as a digital commodity exchange, a digital commodity exchange shall comply with—</text><clause id="HF0F95D2A6764408AAABE85B1AE3A5018"><enum>(i)</enum><text>the core principles described in this subsection; and</text></clause><clause id="H33B8ECF51D7C4166B7074EFD37CEEECD"><enum>(ii)</enum><text>any requirement that the Commission may impose by rule or regulation pursuant to section 8a(5).</text></clause></subparagraph><subparagraph id="H9123A01F95E5424CBECE5016A85E6940"><enum>(B)</enum><header>Reasonable discretion of a digital commodity exchange</header><text>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.</text></subparagraph></paragraph><paragraph id="H5926E014803244FB895C7DA53EB26FCF"><enum>(2)</enum><header>Compliance with rules</header><text>A digital commodity exchange shall—</text><subparagraph id="H4926E23916F04BCC8E4AF295959767E5"><enum>(A)</enum><text>establish and enforce compliance with any rule of the digital commodity exchange, including—</text><clause id="HF2F5A0A8FF064EB3BF12568B58A36379"><enum>(i)</enum><text>the terms and conditions of the trades traded or processed on or through the digital commodity exchange; and</text></clause><clause id="H42DF4F3CD0B74962867BDDE4773937E0"><enum>(ii)</enum><text>any limitation on access to the digital commodity exchange;</text></clause></subparagraph><subparagraph id="HCB96792B8E6A4211A17B289F490979EF"><enum>(B)</enum><text>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—</text><clause id="H5B027000AF9946F286BA289C79E8F5AB"><enum>(i)</enum><text>to provide market participants with impartial access to the market; and</text></clause><clause id="HD9F5471C01E14A0FA16DD6A16406FAB3"><enum>(ii)</enum><text>to capture information that may be used in establishing whether rule violations have occurred; and</text></clause></subparagraph><subparagraph id="HD38FB63E44B342E7BD7D650E45EEF80B"><enum>(C)</enum><text>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.</text></subparagraph></paragraph><paragraph id="H2FA9687F2049489EA66284292B7D362E"><enum>(3)</enum><header>Listing standards for digital commodities</header><subparagraph id="HCCE5553EB0044F29A6BACF4702DA5E8F"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">A digital commodity exchange shall establish policies and procedures to permit trading in a digital commodity only if—</text><clause id="H03AD0EF1E5704573852C4F6CC7EC4499"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H847944C455174E2DBE73032C71BC54C5"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="HBA5FCB4AD08649FC9E92BC5D21378A2B"><enum>(B)</enum><header>Public information requirements</header><clause id="H695AFF890225427C84A64B95D7D66937"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">A digital commodity exchange shall—</text><subclause id="H2EC86A8BDDA448C1A82FB6E57C9AC5DD"><enum>(I)</enum><text>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</text></subclause><subclause id="H70B0B69A0E224FBD8B63886E76D44DF9"><enum>(II)</enum><text display-inline="yes-display-inline">establish policies and procedures to determine that the information provided pursuant to clause (ii) is correct, current, and available to the public.</text></subclause></clause><clause id="H657925638AA843F8B5D63D988D14B2D6"><enum>(ii)</enum><header>Required information</header><text>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:</text><subclause id="H5C2FE275331B45E985AF78477E6A9ADF"><enum>(I)</enum><header>Source code</header><text>The source code for any blockchain system to which the digital commodity relates.</text></subclause><subclause id="H1BA18A25FEA94B18ACCA9ED3D0148187"><enum>(II)</enum><header>Transaction history</header><text display-inline="yes-display-inline">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.</text></subclause><subclause id="H608D43D2FEED4D16B8651996504732E4"><enum>(III)</enum><header>Digital commodity economics</header><text>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—</text><item id="H44EFD536190047FDA1B4A972F2CBDE95"><enum>(aa)</enum><text>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;</text></item><item id="H45BD8041B82B42CD9F840CFE90AE5249"><enum>(bb)</enum><text>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;</text></item><item id="H1AA7AA5D6B2D4A85A16B17E4660597AE"><enum>(cc)</enum><text>an explanation of governance mechanisms for implementing changes to the blockchain system or forming consensus among holders of the digital commodities; and</text></item><item id="HDC0C1F77814E4E0781610C846CEEA258"><enum>(dd)</enum><text>sufficient information for a third party to create a tool for verifying the transaction history of the digital asset.</text></item></subclause><subclause id="H90D4234C112947EFAC076CC38030CA19" display-inline="no-display-inline"><enum>(IV)</enum><header>Trading volume and volatility</header><text display-inline="yes-display-inline">The trading volume and volatility of the digital commodity on the exchange.</text></subclause><subclause id="HE2CD237E9D0A4432A113C7E3AF144CC8"><enum>(V)</enum><header>Additional information</header><text display-inline="yes-display-inline">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.</text></subclause></clause><clause id="HFFE5A968ABFD470898763E25367F65F4" display-inline="no-display-inline"><enum>(iii)</enum><header>Format</header><text display-inline="yes-display-inline">The Commission shall prescribe rules and regulations for the standardization and simplification of disclosures under clause (ii), including requiring that disclosures—</text><subclause id="HC34C403485824A7CAF0B76E5E503F53A"><enum>(I)</enum><text>be conspicuous;</text></subclause><subclause id="H9F6BA8D71E624623A94E8F5215CE4CD2"><enum>(II)</enum><text>use plain language comprehensible to customers;</text></subclause><subclause id="HDCAE1A2C4B394234BDFC80F6B402C450" display-inline="no-display-inline"><enum>(III)</enum><text display-inline="yes-display-inline">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</text></subclause><subclause id="H818CD2786EBB4BD89AE2D00DAF567625"><enum>(IV)</enum><text>succinctly explain the information that is required to be communicated to the customer.</text></subclause></clause><clause id="H360989B8FE364CC8A4431C21756DF19C"><enum>(iv)</enum><header>Reliance on previous disclosures</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="H5AE54FD6F8DF4F4FBF44C27D26BFA1D6"><enum>(C)</enum><header>Digital commodities held by related and digital commodity affiliated persons</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H8B72C2CDA3604F3FB95A7BD99DCCD69B"><enum>(4)</enum><header>Treatment of customer assets</header><text>A digital commodity exchange shall establish policies and procedures that are designed to protect and ensure the safety of customer money, assets, and property.</text></paragraph><paragraph id="HF3D2B079AB3F44869D66E6B7EDB8653D"><enum>(5)</enum><header>Monitoring of trading and trade processing</header><subparagraph id="H98FB2021DF7741B18BA34E346328ECED"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HF06ADF455BBB4EF98F1825B061F4369B"><enum>(B)</enum><header>Protection of markets and market participants</header><text>A digital commodity exchange shall establish and enforce rules—</text><clause id="H553DA1A9E5DD4F48A7FE9D92541CF2AA"><enum>(i)</enum><text>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</text></clause><clause id="H0FD5CDD24D5943E6A1DD36242B75FB57"><enum>(ii)</enum><text>to promote fair and equitable trading on the exchange.</text></clause></subparagraph><subparagraph id="H04E0765047DB468CB596434876D97E2C"><enum>(C)</enum><header>Trading procedures</header><text>A digital commodity exchange shall—</text><clause id="H6C5C2755A4BC4A7EADD29F1A16DDFED7"><enum>(i)</enum><text>establish and enforce rules or terms and conditions defining, or specifications detailing—</text><subclause id="H919EDF5258A94E0999FE07AC3ED4FCE1"><enum>(I)</enum><text>trading procedures to be used in entering and executing orders traded on or through the facilities of the digital commodity exchange; and</text></subclause><subclause id="HBF075B6B9B034BD3AC3262B852EB690F"><enum>(II)</enum><text>procedures for trade processing of digital commodities on or through the facilities of the digital commodity exchange; and</text></subclause></clause><clause id="H397BF31CD725400E8981E7142341E8C0"><enum>(ii)</enum><text>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.</text></clause></subparagraph></paragraph><paragraph id="HC498666D522C40F2895C37934F82CEFF"><enum>(6)</enum><header>Ability to obtain information</header><text>A digital commodity exchange shall—</text><subparagraph id="HF0FADBB7150F41328123848D5C85FCC7"><enum>(A)</enum><text>establish and enforce rules that will allow the facility to obtain any necessary information to perform any of the functions described in this section;</text></subparagraph><subparagraph id="HB0475C9948A14D23A39B1C949B36991D"><enum>(B)</enum><text>provide the information to the Commission on request; and</text></subparagraph><subparagraph id="H2086770118814570B9397DA3C44089FE"><enum>(C)</enum><text>have the capacity to carry out such international information-sharing agreements as the Commission may require.</text></subparagraph></paragraph><paragraph id="HDD6E581E72814AC08EDD2E9E69A29199"><enum>(7)</enum><header>Emergency authority</header><text>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.</text></paragraph><paragraph id="HEFB4A010B35A4ABEAED4DBB26BAEC5C3"><enum>(8)</enum><header>Timely publication of trading information</header><subparagraph id="HE220A44B971746D4AA2D30D39A9B7118"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HBC45670B1EF3485C928F8B4B34BDC004"><enum>(B)</enum><header>Capacity of digital commodity exchange</header><text>A digital commodity exchange shall have the capacity to electronically capture and transmit trade information with respect to transactions executed on the exchange.</text></subparagraph></paragraph><paragraph id="H18DC9C3925B14A08882137C840C49669"><enum>(9)</enum><header>Recordkeeping and reporting</header><subparagraph id="H969398CA09FE416CB14CC577CC767A4D"><enum>(A)</enum><header>In general</header><text>A digital commodity exchange shall—</text><clause id="H77D3849987244ACC87D07BDC7B409E73"><enum>(i)</enum><text>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;</text></clause><clause id="H1BB7831E46A14431BADA76C95C8AACC5"><enum>(ii)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H15C91D231C684DE3BDC053F9598A1F1C"><enum>(iii)</enum><text display-inline="yes-display-inline">keep any such records of digital commodities which relate to a security open to inspection and examination by the Securities and Exchange Commission.</text></clause></subparagraph><subparagraph id="H59430FED4FED463E8D8C321D68836AE1"><enum>(B)</enum><header>Information-sharing</header><text>Subject to section 8, and on request, the Commission shall share information collected under subparagraph (A) with—</text><clause id="H38134F2A34864059B78DBDAEAE05247B"><enum>(i)</enum><text>the Board;</text></clause><clause id="H502FB03CB39F4827A56089F9A0859ABD"><enum>(ii)</enum><text>the Securities and Exchange Commission;</text></clause><clause id="H54BB1B99540F4DE8AD9E34B928EEA5DA"><enum>(iii)</enum><text>each appropriate Federal banking agency;</text></clause><clause id="HC222874087A44BC881BB174AF99C8B87"><enum>(iv)</enum><text display-inline="yes-display-inline">each appropriate State bank supervisor (within the meaning of section 3 of the Federal Deposit Insurance Act);</text></clause><clause id="H307FDC9FD1AC4D62A2A37BE15EBCB4DA"><enum>(v)</enum><text>the Financial Stability Oversight Council;</text></clause><clause id="HF1B0A7F7BB684F83B29A8715243C6736"><enum>(vi)</enum><text>the Department of Justice; and</text></clause><clause id="H155592AF912F415182168543541DEC5D"><enum>(vii)</enum><text>any other person that the Commission determines to be appropriate, including—</text><subclause id="HD67677955CDC469B9A9305CEB717238B"><enum>(I)</enum><text>foreign financial supervisors (including foreign futures authorities);</text></subclause><subclause id="HD28CBA2CDFD04A378BE7A3FE373CD25C"><enum>(II)</enum><text>foreign central banks; and</text></subclause><subclause id="H67654A33EF854C779EE14ECD573EC558"><enum>(III)</enum><text>foreign ministries.</text></subclause></clause></subparagraph><subparagraph id="H98AE4053A1294C4292B72014DF9E45F2"><enum>(C)</enum><header>Confidentiality agreement</header><text>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.</text></subparagraph><subparagraph id="H6DC62CEF97B8456199B6771D388F0886"><enum>(D)</enum><header>Providing information</header><text>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.</text></subparagraph></paragraph><paragraph id="H34E563C02FF74746A07E0933E3B4AD87"><enum>(10)</enum><header>Antitrust considerations</header><text display-inline="yes-display-inline">Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity exchange shall not—</text><subparagraph id="H3DF3D6380A3A4C58A301098352D605B4"><enum>(A)</enum><text>adopt any rules or take any actions that result in any unreasonable restraint of trade; or</text></subparagraph><subparagraph id="H717844B161F648B2A00E2E935EE8CD3D"><enum>(B)</enum><text>impose any material anticompetitive burden on trading.</text></subparagraph></paragraph><paragraph id="H0356417FEA3C498395C447BB02D10AEB"><enum>(11)</enum><header>Conflicts of interest</header><text display-inline="yes-display-inline">The digital commodity exchange shall establish and enforce rules—</text><subparagraph id="H6326277CCD794064B286F7D9CA5AD788"><enum>(A)</enum><text display-inline="yes-display-inline">to minimize conflicts of interest in the decision making processes of the contract market; and</text></subparagraph><subparagraph id="H0FCE4CEFB4C242D08FB70B490987D47A"><enum>(B)</enum><text>to establish a process for resolving conflicts of interest referred to in subparagraph (A).</text></subparagraph></paragraph><paragraph id="H7C42F6640EAE4225B912751C297FC5B4"><enum>(12)</enum><header>Financial resources</header><subparagraph id="H49F3142218B2440592CE81A896F6D87A"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="H16938C0D797F4ED4B72C58E5CA5F9B76"><enum>(B)</enum><header>Minimum amount of financial resources</header><text>A digital commodity exchange shall possess financial resources that, at a minimum, exceed the sum of—</text><clause id="H8FABF89EE27940AAA94418AAA65A7B20"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H04B2EA96FB564886B65246592641E343"><enum>(ii)</enum><text display-inline="yes-display-inline">the total amount necessary to meet the financial obligations of the digital commodity exchange to all customers of the digital commodity exchange.</text></clause></subparagraph></paragraph><paragraph id="H56CE0069E3B2476B8A9D4B5ADD22B806"><enum>(13)</enum><header>Disciplinary procedures</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HD6D14E34F63041568F318B3462DE8D20"><enum>(14)</enum><header>Governance fitness standards</header><subparagraph id="H2DF9F54226584408B341087A9B662FCB"><enum>(A)</enum><header>Governance arrangements</header><text display-inline="yes-display-inline">A digital commodity exchange shall establish governance arrangements that are transparent and designed to permit consideration of the views of market participants.</text></subparagraph><subparagraph id="H7956571AFF4F48B9921D7E2E729AB699"><enum>(B)</enum><header>Fitness standards</header><text>A digital commodity exchange shall establish and enforce appropriate fitness standards for—</text><clause id="H124A62A5E19246C68E22411BB6975158"><enum>(i)</enum><text>officers and directors; and</text></clause><clause id="H7030EF0F90054BD08F4F5FE07B4C5326"><enum>(ii)</enum><text>any individual or entity with direct access to, or control of, customer assets.</text></clause></subparagraph></paragraph><paragraph id="H983498AE740C4C1D9991CB99301B567E"><enum>(15)</enum><header>System safeguards</header><text>A digital commodity exchange shall—</text><subparagraph id="H80AEE3F277C84A43BAAB4E2AEA9A3B2B"><enum>(A)</enum><text>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—</text><clause id="H36B3CBFFA78641C1A3F898293F4443A2"><enum>(i)</enum><text>are reliable and secure; and</text></clause><clause id="HD069F8BE63924A4C8DC35DAD0895EC53"><enum>(ii)</enum><text>have adequate scalable capacity;</text></clause></subparagraph><subparagraph id="H4DC4D26CD86C49718824E5C63C3029CB"><enum>(B)</enum><text>establish and maintain emergency procedures, backup resources, and a plan for disaster recovery that allow for—</text><clause id="H5AC4B165BBFA41079EBD50B913CF766B"><enum>(i)</enum><text>the timely recovery and resumption of operations; and</text></clause><clause id="H528EC106C68A49A19F397968C7E95482"><enum>(ii)</enum><text>the fulfillment of the responsibilities and obligations of the digital commodity exchange; and</text></clause></subparagraph><subparagraph id="H9D2595FEF713426AA6C445053F37D3F1"><enum>(C)</enum><text>periodically conduct tests to verify that the backup resources of the digital commodity exchange are sufficient to ensure continued—</text><clause id="HBDC374CA1D284B60BB6C46049B785BEF"><enum>(i)</enum><text>order processing and trade matching;</text></clause><clause id="HC64A1863B9874F1298A53DFD9F6940BF"><enum>(ii)</enum><text>price reporting;</text></clause><clause id="H05F2C1B8ECCB4D99B38E9BA8D6AD4CD1"><enum>(iii)</enum><text>market surveillance; and</text></clause><clause id="HE2B7211598D444CCA013BCA245CDF77A"><enum>(iv)</enum><text>maintenance of a comprehensive and accurate audit trail.</text></clause></subparagraph></paragraph></subsection><subsection id="H02AA6E5C1DC14984AA704D6908FACD07"><enum>(d)</enum><header>Holding of customer assets</header><paragraph id="HFAB2BC733D4044309A0D35C25BFC6F38"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H40EDF67008DD4FF08173077FE1A5F964"><enum>(2)</enum><header>Segregation of funds</header><subparagraph id="HCA2C4E94617846F8B130939E2A9A9778"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H8A85692613D948219DB54DCD66DCA891"><enum>(B)</enum><header>Commingling prohibited</header><text>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.</text></subparagraph><subparagraph id="H0502B03988194715986303D93806BEBB"><enum>(C)</enum><header>Exceptions</header><clause id="HDA5935FD29DF49DCA2F5773C1955A990"><enum>(i)</enum><header>Use of funds</header><subclause id="H6E212C928F4543918F25696B30AEB20E"><enum>(I)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subclause><subclause id="H406EB15A27AF41F58116682FE8A180C9"><enum>(II)</enum><header>Withdrawal</header><text>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.</text></subclause></clause><clause id="H90E1C4BFA0D94F18891C0B7BA407636B"><enum>(ii)</enum><header>Commission action</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph></paragraph><paragraph id="H57F62D402EAF41058DB919FA71484E15"><enum>(3)</enum><header>Permitted investments</header><text>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.</text></paragraph><paragraph id="H7892B5DB367F4F31AF73D34CC29898AB"><enum>(4)</enum><header>Customer protection during bankruptcy</header><subparagraph id="H6C929DA88C9944A5873E8FCF5D97826A"><enum>(A)</enum><header>Customer property</header><text>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.</text></subparagraph><subparagraph id="HA2DD0BAF5F4743F79B052303052AEAF0"><enum>(B)</enum><header>Transactions</header><text display-inline="yes-display-inline">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 <quote>commodity contract</quote> in section 761 of title 11, United States Code.</text></subparagraph><subparagraph id="H4B971953DDF544789C85B08FC82FF520"><enum>(C)</enum><header>Exchanges</header><text>A digital commodity exchange shall be considered a futures commission merchant for purposes of section 761 of title 11, United States Code.</text></subparagraph><subparagraph id="H89210A9006A44015B879AAB6A2579CAE"><enum>(D)</enum><header>Assets removed from segregation</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="H9187F74A6E0C4B3782CF1097C3B1EB16"><enum>(5)</enum><header>Misuse of customer property</header><subparagraph id="H594DC324B0FE4B1F9319053400A38C17"><enum>(A)</enum><header>In general</header><text>It shall be unlawful—</text><clause id="H67F7CA3E39A94D96850E4CA0915CEB70"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H2F7877270F214211A84EA57DC93B3DB8"><enum>(ii)</enum><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="HA3532FB1B9EA408DB4AC46F9DB143B36"><enum>(B)</enum><header>Use further defined</header><text display-inline="yes-display-inline">For purposes of this section, <quote>use</quote> 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.</text></subparagraph></paragraph><paragraph id="HA4CE8034475B41D0B6952AA0A2155CC9"><enum>(6)</enum><header>Participation in blockchain services</header><subparagraph id="HF04A92E5479E475AB83E4CA7EC50E0BC"><enum>(A)</enum><header>Use of funds</header><text display-inline="yes-display-inline">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—</text><clause id="H36BE3A38533F41A7AF84A482F32A1D31"><enum>(i)</enum><text>the customer expressly permits the use, in writing to the digital commodity exchange; and</text></clause><clause id="HBB44A8929C2049689C1321ED31EBBD59"><enum>(ii)</enum><text>the digital commodity exchange complies with subparagraph (B).</text></clause></subparagraph><subparagraph id="HF4D69E3CA56D4ECA8A9AE833237F0EBD"><enum>(B)</enum><header>Limitations</header><clause id="H755140620F76486E9645015229482840"><enum>(i)</enum><header>In general</header><text>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.</text></clause><clause id="H54F35EEC9C3C482B869873A79300254E"><enum>(ii)</enum><header>Customer choice</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="H1DF6B901EE7A41258371F8A7AC66DCFF"><enum>(C)</enum><header>Requirements</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H4401426213A94B40989159103BB5746A"><enum>(D)</enum><header>Blockchain service defined</header><text display-inline="yes-display-inline">In this paragraph, the term <term>blockchain service</term> 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.</text></subparagraph></paragraph></subsection><subsection id="HBA4A45A64EFD403BA397146995D64571"><enum>(e)</enum><header>Market access requirements</header><text>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.</text></subsection><subsection id="H52F34BFBE8674D5CBCDADB2B336DC4AE"><enum>(f)</enum><header>Designation of chief compliance officer</header><paragraph id="HCEC60DCE2B8F479E922156BB7B8E1737"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">A digital commodity exchange shall designate an individual to serve as a chief compliance officer.</text></paragraph><paragraph id="H7C9F9F880CF449C0A1E9FC2368DA8BA5"><enum>(2)</enum><header>Duties</header><text>The chief compliance officer shall—</text><subparagraph id="H06E7EC26133E4636B6C5B03B3E1536F4"><enum>(A)</enum><text>report directly to the board or to the senior officer of the exchange;</text></subparagraph><subparagraph id="H6F038D146FF34F56B961F93C6B088065"><enum>(B)</enum><text>review compliance with the core principles in this subsection;</text></subparagraph><subparagraph id="H5244F79C79434D57B497C2D56FC14CE7"><enum>(C)</enum><text>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;</text></subparagraph><subparagraph id="HE5E21C9DF7904C3390ACFF042A987D5B"><enum>(D)</enum><text>establish and administer the policies and procedures required to be established pursuant to this section;</text></subparagraph><subparagraph id="HA8C80D34A77C45CD8C60D3C5DA06A560"><enum>(E)</enum><text>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</text></subparagraph><subparagraph id="HB11825E0048C4A22B05D15CD6E5197C9"><enum>(F)</enum><text>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.</text></subparagraph></paragraph><paragraph id="HB39A2C1CA9A7455CA925BAC11E0778EE"><enum>(3)</enum><header>Requirements for procedures</header><text>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.</text></paragraph><paragraph id="H9865A65B39764E93B017441CB5D59DA9"><enum>(4)</enum><header>Annual reports</header><subparagraph id="H5C703F7C29364A78B0391FCFF1E7B1C6"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of—</text><clause id="HF6A38E657D764BECB858ABD698CB3845"><enum>(i)</enum><text>the compliance of the digital commodity exchange with this Act; and</text></clause><clause id="H479101FE2C034DBB98B60E62B8DB0047"><enum>(ii)</enum><text>the policies and procedures, including the code of ethics and conflicts of interest policies, of the digital commodity exchange.</text></clause></subparagraph><subparagraph id="HBA63ADE002AF4B768071D96B819C6AD4"><enum>(B)</enum><header>Requirements</header><text>The chief compliance officer shall—</text><clause id="HFD52ED24FED34438938D8B3DBF6AC1A7"><enum>(i)</enum><text>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</text></clause><clause id="HD04500878B03442FBFFA33857C92A2C8"><enum>(ii)</enum><text>include in the report a certification that, under penalty of law, the report is accurate and complete.</text></clause></subparagraph></paragraph></subsection><subsection id="HC9A48A9D1B264EC1A68537237CFA161E"><enum>(g)</enum><header>Appointment of trustee</header><paragraph id="HA2B6F688F2214FDBB9088A3BABDD33B8"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="HC22FF4B9F57B45F39362997D24001667"><enum>(2)</enum><header>Assumption of jurisdiction</header><text>If the Commission applies for appointment of a trustee under paragraph (1)—</text><subparagraph id="HF701B9C5F40341428EDFD55A845088EE"><enum>(A)</enum><text>the court may take exclusive jurisdiction over the digital commodity exchange and the records and assets of the digital commodity exchange, wherever located; and</text></subparagraph><subparagraph id="H59F8E4BBFDBC49229194E55513AB6B8A"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="HCE6F4FE31CA1438DA1410EAD30A4BA4B"><enum>(h)</enum><header>Qualified digital asset custodian</header><text>A digital commodity exchange shall hold in a qualified digital asset custodian each unit of a digital asset that is—</text><paragraph id="H5F6DC2C4601C4ECC9E28CCBFBE4A1A4E"><enum>(1)</enum><text>the property of a customer of the digital commodity exchange;</text></paragraph><paragraph id="HBB97EEFBAF7D4C28B83D6C0047CB8B5F"><enum>(2)</enum><text>required to be held by the digital commodity exchange under subsection (c)(12) of this section; or</text></paragraph><paragraph id="H7B46FB5C3B60469D81849234D6167D0D"><enum>(3)</enum><text>otherwise so required by the Commission to reasonably protect customers.</text></paragraph></subsection><subsection id="HF7F82376D19A413F9B47DB0F0A949C31"><enum>(i)</enum><header>Exemptions</header><paragraph id="HB9F715B6E2D4494A856115138CF60F81"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="HB27748156E244858A149DF721EEF9401"><enum>(A)</enum><text>the exemption would be consistent with the public interest and the purposes of this Act; and</text></subparagraph><subparagraph id="HCA40CE68616243518729CC6F959B2F04"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="H019A5B853AA04B779AE79A04B463C4D7"><enum>(2)</enum><header>Foreign exchanges</header><text display-inline="yes-display-inline">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.</text></paragraph></subsection><subsection id="H2E686DD315E746D49AF7A66ACF8B8CBC"><enum>(j)</enum><header>Customer defined</header><text display-inline="yes-display-inline">In this section, the term <term>customer</term> 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.</text></subsection><subsection id="HD103F81B71F349E68802C4CB8913441A"><enum>(k)</enum><header>Federal preemption</header><text display-inline="yes-display-inline">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.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H88D9369D74164EF38C1824FD36A8768A"><enum>405.</enum><header>Qualified digital asset custodians</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), as amended by the preceding provisions of this Act, is amended by inserting after section 5i the following:</text><quoted-block style="OLC" id="H60419A5DB8FB4E9EAF73DB17921B8D51" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H4DFAFA8B8CCB4BD7982D96EA36F87E3B"><enum>5j.</enum><header>Qualified digital asset custodians</header><subsection id="H338E3D5A4D484AEA8C8B81EBD2A6F362"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">A person is a qualified digital asset custodian for purposes of this Act if the person—</text><paragraph id="HA868A23FA9E54E87ADB641B31D1D9C38"><enum>(1)</enum><text display-inline="yes-display-inline">holds digital assets on behalf of a person registered under this Act or a customer of a person registered under this Act; and</text></paragraph><paragraph id="H661C59518F7B4E48B1A8989680B78FB9"><enum>(2)</enum><text>is in compliance with subsections (b) and (c).</text></paragraph></subsection><subsection id="H55B07800F84D4FD6AB746949A832527E" display-inline="no-display-inline"><enum>(b)</enum><header>Supervision requirement</header><text display-inline="yes-display-inline">A person is in compliance with this subsection if the person is subject to—</text><paragraph id="H6E3D3D6EC3214B0A9627F54DDD6D9830"><enum>(1)</enum><text>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</text></paragraph><paragraph id="H7AA7DF40265D4B14B518DBBA2A1CBABC"><enum>(2)</enum><text display-inline="yes-display-inline">adequate supervision and appropriate regulation for custody and safekeeping of digital assets by—</text><subparagraph id="H7706BBD6321648358A440903F12944A4"><enum>(A)</enum><text>a State bank supervisor (within the meaning of section 3 of the Federal Deposit Insurance Act);</text></subparagraph><subparagraph id="H48D6B04C4A124F979F1A6B4148859F33"><enum>(B)</enum><text display-inline="yes-display-inline">a State officer, agency, or other entity which has primary regulatory authority over nondepository State trust companies;</text></subparagraph><subparagraph id="H46F1CB7F126249BFA7F784670703160E"><enum>(C)</enum><text display-inline="yes-display-inline">a State credit union supervisor, as defined under section 6003 of the Anti-Money Laundering Act of 2020; or</text></subparagraph><subparagraph id="H9ECFE82E66654422A339F521F84B0DF0"><enum>(D)</enum><text>an appropriate foreign governmental authority in the home country of such person.</text></subparagraph></paragraph></subsection><subsection id="HDF610D44313941D99FED67A2564E0F84"><enum>(c)</enum><header>Other requirements</header><text display-inline="yes-display-inline">A person shall be in compliance with this subsection if:</text><paragraph id="HE5648931A4C448F3994BA7324000DCC1"><enum>(1)</enum><header>Not otherwise prohibited</header><text display-inline="yes-display-inline">The person has not been prohibited by its supervisor from engaging in an activity with respect to the custody and safekeeping of digital assets.</text></paragraph><paragraph id="H0895F4BD84F7490FBD5A96076D323EA6"><enum>(2)</enum><header>Information sharing</header><subparagraph id="HAB515894D7B240B784F5CB5A6CC933D2"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HEBC592EA212D41E08991E6E3BA5D58CB"><enum>(B)</enum><header>Provision of information</header><text>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.</text></subparagraph></paragraph><paragraph id="H85E825439F244B61A4608EAA2099F1F9"><enum>(3)</enum><header>Rulemaking for CFTC entities</header><subparagraph id="HFD38E584F9434014A8D2C8CDA58D9B70"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HEB0634497BBA46FB89F0A86F434A19D3"><enum>(B)</enum><header>Content</header><text>In prescribing the rules under subparagraph (A), the Commission shall require a person registered with the Commission to—</text><clause id="HF150779463E4434CA782B33839221355"><enum>(i)</enum><text display-inline="yes-display-inline">implement requirement consistent with the requirements in subsection (d)(1);</text></clause><clause id="HF0E8292A7DA74D8C8CAFE80897410AA7"><enum>(ii)</enum><text display-inline="yes-display-inline">establish sufficient system safeguards;</text></clause><clause id="H777D1E6FA18E4939B6B5367D7F79CE7D"><enum>(iii)</enum><text>prevent or mitigate conflicts of interest, as appropriate; and</text></clause><clause id="HBCE851A01AB847CCB8BE49CB3B997081"><enum>(iv)</enum><text>establish separate governance arrangements for the custodial function of the entity.</text></clause></subparagraph></paragraph></subsection><subsection id="HADD7281AAB344F3396E9E41B3601F7BE"><enum>(d)</enum><header>Adequate supervision and appropriate regulation</header><paragraph id="H78703808FA9B42D4A86A01321B7A561B"><enum>(1)</enum><header>In general</header><text>For purposes of subsection (b), the terms <term>adequate supervision</term> and <term>appropriate regulation</term> 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—</text><subparagraph id="H6514DAF0B8DA4F53A97C72A54542AF60"><enum>(A)</enum><text display-inline="yes-display-inline">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;</text></subparagraph><subparagraph id="H737BF331973742DEB62CD28CFE369CC3"><enum>(B)</enum><text>hold capital sufficient for the financial integrity of the person;</text></subparagraph><subparagraph id="H4F284A8147C145E09E9663F1E5BFF5AD"><enum>(C)</enum><text>protect customer assets;</text></subparagraph><subparagraph id="H156F4E0668C04F42A591C2F806C28F8E"><enum>(D)</enum><text>establish and maintain books and records regarding the business of the person;</text></subparagraph><subparagraph id="HE1A86146D69C403AB05329F28188B302"><enum>(E)</enum><text>submit financial statements and audited financial statements to the applicable supervisor described in subsection (b);</text></subparagraph><subparagraph id="HE115C101875E48B19063FFFC859327FB"><enum>(F)</enum><text display-inline="yes-display-inline">provide disclosures to the applicable supervisor described in subsection (b) regarding actions, proceedings, and other items as determined by the supervisor;</text></subparagraph><subparagraph id="HCB51E1EDF56041649FA23DA447BB852B"><enum>(G)</enum><text>maintain and enforce policies and procedures for compliance with applicable State and Federal laws, including those related to anti-money laundering and cybersecurity;</text></subparagraph><subparagraph id="H4F6EA95FEEB1488E9A4E673F81419194"><enum>(H)</enum><text>establish a business continuity plan to ensure functionality in cases of disruption; and</text></subparagraph><subparagraph id="H20020E7DC8774E4593B8D46095E7BCE0"><enum>(I)</enum><text>establish policies and procedures to resolve complaints.</text></subparagraph></paragraph><paragraph id="HBB6BF6E90EDE41F1B224279A754D2305"><enum>(2)</enum><header>Rulemaking with respect to definitions</header><subparagraph id="HC404CE97EFDE4C509990D5F31D460985"><enum>(A)</enum><header>In general</header><text>For purposes of this section, the Commission may, by rule, further define the terms <term>adequate supervision</term> and <term>appropriate regulation</term> as necessary and appropriate for the protection of customers, and consistent with the purposes of this Act.</text></subparagraph><subparagraph id="H30C009101A144AD997DC38058381F647"><enum>(B)</enum><header>Existing digital asset custodians</header><text display-inline="yes-display-inline">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—</text><clause id="HEB57876C76394753AB38CE14BCFC145C"><enum>(i)</enum><text>the trust company is expressly permitted by a State bank supervisor to engage in the custody and safekeeping of digital assets;</text></clause><clause id="HA96A9F3D83BB4A9DA357B37582AEF367"><enum>(ii)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="HE84D311F3F67486884335D0F2CA401F2"><enum>(iii)</enum><text display-inline="yes-display-inline">the trust company is in good standing with its State bank supervisor.</text></clause></subparagraph><subparagraph id="HF8A5D32D3CC445BBB7B038A51C49E867"><enum>(C)</enum><header>Transition period for certain custodians</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph></subsection><subsection id="HDC65E814AFBE4C83989BF0245674B9CE"><enum>(e)</enum><header>Authority to temporarily suspend standards</header><text display-inline="yes-display-inline">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.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H0B9DE8AD9E274586B98DBE516CD99DFC"><enum>406.</enum><header>Registration and regulation of digital commodity brokers and dealers</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>) is amended by inserting after section 4t the following:</text><quoted-block style="OLC" id="H49A953BFE70345018E2DBA92313CB4C4" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="HE6EAFF139BB7438E98F32DDBFCCA6AF9"><enum>4u.</enum><header>Registration and regulation of digital commodity brokers and dealers</header><subsection id="H66CF77AF041E4F099927F519D26AEEA3"><enum>(a)</enum><header>Registration</header><paragraph id="H94830D8F15C24CBDB760EEFB409F008D"><enum>(1)</enum><header>Requirement</header><text>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.</text></paragraph><paragraph id="H5FD05CD8725D4C64BE7C18DF2C09F09D"><enum>(2)</enum><header>Additional registration</header><subparagraph id="HA4FD127A00C6492694B5C293DE47FFED"><enum>(A)</enum><header>Rules</header><text>In order to foster the development of fair and orderly markets, protect customers, and promote responsible innovation, the Commission—</text><clause id="HD075939241DC4B0E87BB46C942EA58CB"><enum>(i)</enum><text>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;</text></clause><clause id="H2B066AAE2B4C4DC7B7FDF8FF3F060F94"><enum>(ii)</enum><text>shall prescribe rules to address conflicts of interests and the activities of the entity; and</text></clause><clause id="HC046C919AA5A4C86A3A5E46935F1BE36"><enum>(iii)</enum><text>may after an analysis of the risks and benefits, prescribe rules to provide for portfolio margining.</text></clause></subparagraph><subparagraph id="H5BD9910E05514193866D5F606D48854A"><enum>(B)</enum><header>With membership in a registered futures association</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="HCB3CB376807647A385C04636F5C784B1"><enum>(b)</enum><header>Requirements</header><paragraph id="HB72F601CEDF7459FB96F96A884DA9431"><enum>(1)</enum><header>In general</header><text>A person shall register as a digital commodity broker or digital commodity dealer by filing a registration application with the Commission.</text></paragraph><paragraph id="HE35B3C7DD0CE411DAECBBCDA76437EC5"><enum>(2)</enum><header>Contents</header><subparagraph id="H6F1ED15DD23D4228BAF568F6B54DC62E"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HC665730F0BE34CAEBC8CED9F971766BE"><enum>(B)</enum><header>Continual reporting</header><text>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.</text></subparagraph></paragraph><paragraph id="HD609445F153848F39811D301B9C912E3"><enum>(3)</enum><header>Statutory disqualification</header><text>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.</text></paragraph></subsection><subsection id="H3948916B2F9648C686F7C307DA37D7E2"><enum>(c)</enum><header>Rulemaking</header><paragraph id="H0ABCB1DD985F405E928C8942BA93EBE4"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H3A26958A50594C8AAEB86EDC6FEC116A"><enum>(2)</enum><header>Financing agreements</header><subparagraph id="H32798B725C0E47D8B2A1A0A82038E7E0"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><clause id="HA21E3E28347E462689A8B8003E06F316"><enum>(i)</enum><text>an agreement described in section 2(c)(2)(D)(iv); or</text></clause><clause id="H60EA2BA5BFA54BCF90E929FAB7B76DAE"><enum>(ii)</enum><text>any other margined, leveraged, or financing arrangement for the purchase or sale of a digital commodity with an eligible contract participant.</text></clause></subparagraph><subparagraph id="H5A8907F717FF4FE1BFA5F147591FE6A7"><enum>(B)</enum><header>Specific authority</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="HDBBD0D935F0341FDA781C6F6CE22FB69"><enum>(d)</enum><header>Capital requirements</header><paragraph id="H2A28AC6520AB4EDD9BDEA6893EEBA9DE"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subparagraph id="H64F13BEE99E548438AEBB6C8948C3D6F"><enum>(A)</enum><text display-inline="yes-display-inline">meet, and continue to meet the obligations of such a registrant; and</text></subparagraph><subparagraph id="HFE511B71D48C4E68BE4A11A9677B25D4"><enum>(B)</enum><text>fulfill obligations to customers or counterparties for any margined, leveraged, or financed transactions.</text></subparagraph></paragraph><paragraph id="H9B67A1A336BE465E91212173A921AFDC" commented="no"><enum>(2)</enum><header>Futures commission merchants and other dealers</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>).</text></paragraph></subsection><subsection id="H72332D8A62F84C03B539259453B29182"><enum>(e)</enum><header>Reporting and recordkeeping</header><text>Each digital commodity broker and digital commodity dealer—</text><paragraph id="HB3735FFBCF0F4859BE3B85309AB1E317"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="HC3C15A19E188440EB17CEFAAA6E6FA36"><enum>(2)</enum><text>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</text></paragraph><paragraph id="H8FFF8252842B42DA94C00532E0AC2286"><enum>(3)</enum><text>shall keep the books and records open to inspection and examination by any representative of the Commission.</text></paragraph></subsection><subsection id="H344F62ED17FB4B3FBF1315456EC09630"><enum>(f)</enum><header>Daily trading records</header><paragraph id="HED6D8F850B6641EB9F2C65AC56C38170"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="H8D8FD90A793E48D69E19110D24967D08"><enum>(2)</enum><header>Information requirements</header><text>The daily trading records shall include such information as the Commission shall require by rule or regulation.</text></paragraph><paragraph id="H83EE17F973E247AB9DC354D008EAB1B5"><enum>(3)</enum><header>Counterparty records</header><text>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.</text></paragraph><paragraph id="H86FED0E53A714A6B80B07AE67CDBBE06"><enum>(4)</enum><header>Audit trail</header><text>Each digital commodity broker and digital commodity dealer shall maintain a complete audit trail for conducting comprehensive and accurate trade reconstructions.</text></paragraph></subsection><subsection id="H61A813F45EFD44DE95BF1A5FCF539EEB"><enum>(g)</enum><header>Business conduct standards</header><paragraph id="H9ABD17CE766A4F73A43D4726CD23CC3A"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="HE36450BD3FA84495A57CA0DD52382406"><enum>(A)</enum><text>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);</text></subparagraph><subparagraph id="HACED7F2267F94C6CA9916DCCDCEAABBA"><enum>(B)</enum><text>diligent supervision of the business of the registered digital commodity broker or digital commodity dealer, respectively; and</text></subparagraph><subparagraph id="H7A1D2EAE5E9C4D4FB38D3280C5E5978B"><enum>(C)</enum><text>such other matters as the Commission deems appropriate.</text></subparagraph></paragraph><paragraph id="HEF2EDDEEFF8B4BD3B43CB71269DD3C9C"><enum>(2)</enum><header>Business conduct requirements</header><text>The Commission shall, by rule, prescribe business conduct requirements which—</text><subparagraph id="HD134336EFA4D4371AB64AE785EB5CE27"><enum>(A)</enum><text>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—</text><clause id="H99F304FBC65E46FB83900F63C630D2E3"><enum>(i)</enum><text>information about the material risks and characteristics of the digital commodity; and</text></clause><clause id="H836A11E099D64C99B481F37FE45456A2"><enum>(ii)</enum><text>information about the material risks and characteristics of the transaction;</text></clause></subparagraph><subparagraph id="HB2A7484691A9446496079416F9C2E8B8"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="HB5E937D100A84908B528822E438EF3FC"><enum>(C)</enum><text display-inline="yes-display-inline">establish standards governing digital commodity broker and digital commodity dealer marketing and advertising, including testimonials and endorsements; and</text></subparagraph><subparagraph id="H9E6789BA04D741AC9F296B355B352552"><enum>(D)</enum><text display-inline="yes-display-inline">establish such other standards and requirements as the Commission may determine are appropriate for the protection of customers.</text></subparagraph></paragraph><paragraph id="HEF339FC586C64407856E5A9C9C40D1E0"><enum>(3)</enum><header>Prohibition on fraudulent practices</header><text>It shall be unlawful for a digital commodity broker or digital commodity dealer to—</text><subparagraph id="H6777DF9C403F453E91EC89424EB2F88E"><enum>(A)</enum><text>employ any device, scheme, or artifice to defraud any customer or counterparty;</text></subparagraph><subparagraph id="HF0E40F856E01402C831A13C80D08288C"><enum>(B)</enum><text>engage in any transaction, practice, or course of business that operates as a fraud or deceit on any customer or counterparty; or</text></subparagraph><subparagraph id="H1D19E2DC58FB4CC885F72076EEC715EE"><enum>(C)</enum><text>engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative.</text></subparagraph></paragraph></subsection><subsection id="H3A0D34F99F904155B507443A55EF9005"><enum>(h)</enum><header>Duties</header><paragraph id="H2F978D89B3504AC9A8812FF832B1195E"><enum>(1)</enum><header>Risk management procedures</header><text>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.</text></paragraph><paragraph id="HD021433775F3426FA91A792175098D91"><enum>(2)</enum><header>Disclosure of general information</header><text>Each digital commodity broker and digital commodity dealer shall disclose to the Commission information concerning—</text><subparagraph id="H5CB05E1AFFCB4E22A7989B93B4B5522E"><enum>(A)</enum><text display-inline="yes-display-inline">the terms and conditions of the transactions of the digital commodity broker or digital commodity dealer, respectively;</text></subparagraph><subparagraph id="H59F9B1CAFDEA461AA620CA8C00BF8A73"><enum>(B)</enum><text display-inline="yes-display-inline">the trading operations, mechanisms, and practices of the digital commodity broker or digital commodity dealer, respectively;</text></subparagraph><subparagraph id="H2D6D703A25E84595A947D932730A4D22"><enum>(C)</enum><text display-inline="yes-display-inline">financial integrity protections relating to the activities of the digital commodity broker or digital commodity dealer, respectively; and</text></subparagraph><subparagraph id="HD17C756522FD4CD8B55EBD8D17ABD848"><enum>(D)</enum><text display-inline="yes-display-inline">other information relevant to trading in digital commodities by the digital commodity broker or digital commodity dealer, respectively.</text></subparagraph></paragraph><paragraph id="H5AAF5200D3A84923B3787FAE60C58CC8"><enum>(3)</enum><header>Ability to obtain information</header><text>Each digital commodity broker and digital commodity dealer shall—</text><subparagraph id="H379B1673445D43DB9037D08D861D2A90"><enum>(A)</enum><text>establish and enforce internal systems and procedures to obtain any necessary information to perform any of the functions described in this section; and</text></subparagraph><subparagraph id="H0A25560E20E74878B753D86DA379612D"><enum>(B)</enum><text>provide the information to the Commission, on request.</text></subparagraph></paragraph><paragraph id="H40B53BF7F615453198C0418A3842D6B6"><enum>(4)</enum><header>Conflicts of interest</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HC8D7DA1FB4F14E3D81F09F9DD37F70CD"><enum>(5)</enum><header>Antitrust considerations</header><text>Unless necessary or appropriate to achieve the purposes of this Act, a digital commodity broker or digital commodity dealer shall not—</text><subparagraph id="HAD0A1254CC29451AA7EFA5C14EA6A9F1"><enum>(A)</enum><text>adopt any process or take any action that results in any unreasonable restraint of trade; or</text></subparagraph><subparagraph id="H16F549C15FF145A49D4C1F45E2FF931C"><enum>(B)</enum><text>impose any material anticompetitive burden on trading or clearing.</text></subparagraph></paragraph></subsection><subsection id="H2837711980D14539ACAE47AD910A9736"><enum>(i)</enum><header>Designation of chief compliance officer</header><paragraph id="H0C28A3EE77C44373B004E007E4363F8D"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">Each digital commodity broker and digital commodity dealer shall designate an individual to serve as a chief compliance officer.</text></paragraph><paragraph id="H746519226FF143FC92134B07F2D63846"><enum>(2)</enum><header>Duties</header><text>The chief compliance officer shall—</text><subparagraph id="HE113343C54CB4173A5263C74601F65BF"><enum>(A)</enum><text>report directly to the board or to the senior officer of the registered digital commodity broker or registered digital commodity dealer;</text></subparagraph><subparagraph id="H3F03854B7F774013B7E2B53C0EFA4EA5"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="HA508617BD707465094E6D4EEB901C1A1"><enum>(C)</enum><text>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;</text></subparagraph><subparagraph id="HC7013CE0D4A94A10905B823FB65CF84F"><enum>(D)</enum><text>be responsible for administering each policy and procedure that is required to be established pursuant to this section;</text></subparagraph><subparagraph id="H7637D31484D842E180D3A2BABC4CD22A"><enum>(E)</enum><text>ensure compliance with this Act (including regulations), including each rule prescribed by the Commission under this section;</text></subparagraph><subparagraph id="H2E47F9FD17B946AFA67BEF58457354E3"><enum>(F)</enum><text>establish procedures for the remediation of noncompliance issues identified by the chief compliance officer through any—</text><clause id="H2135BAB20E68415BA61BF641D65F724A"><enum>(i)</enum><text>compliance office review;</text></clause><clause id="H2FC28051B9DA496AADB651A1D5EC5984"><enum>(ii)</enum><text>look-back;</text></clause><clause id="HC7A4CC07CE934EFC8934B0473EE416BD"><enum>(iii)</enum><text>internal or external audit finding;</text></clause><clause id="HF0D578D0C2B84E20A89427618E36A7BC"><enum>(iv)</enum><text>self-reported error; or</text></clause><clause id="H356DFBF48884471CB1063859DC5607FC"><enum>(v)</enum><text>validated complaint; and</text></clause></subparagraph><subparagraph id="H2FB199B8B6744D5386ABCFCDD2F558B7"><enum>(G)</enum><text>establish and follow appropriate procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues.</text></subparagraph></paragraph><paragraph id="HB210F5F5A3334D5FA6A97BF2FC26058F"><enum>(3)</enum><header>Annual reports</header><subparagraph id="HF35725500A3B450DB67E8E0CC81420E5"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">In accordance with rules prescribed by the Commission, the chief compliance officer shall annually prepare and sign a report that contains a description of—</text><clause id="H6C8F9885974E4EA4B6BEC293D983C818"><enum>(i)</enum><text>the compliance of the registered digital commodity broker or registered digital commodity dealer with this Act (including regulations); and</text></clause><clause id="H75A929C622294B95A0B48550EFB3425F"><enum>(ii)</enum><text>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).</text></clause></subparagraph><subparagraph id="HC357E683AA8049EDAE2BA45F24C8690F"><enum>(B)</enum><header>Requirements</header><text>The chief compliance officer shall ensure that a compliance report under subparagraph (A)—</text><clause id="HD8E1FE9F4AAF4959AD83F696E21FF7E4"><enum>(i)</enum><text>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</text></clause><clause id="H1AF730CFC35745C994AC37C7B4021CFA"><enum>(ii)</enum><text>includes a certification that, under penalty of law, the compliance report is accurate and complete.</text></clause></subparagraph></paragraph></subsection><subsection id="HCD1871A2D2E9444295B1483A174E3BF1"><enum>(j)</enum><header>Segregation of digital commodities</header><paragraph id="HA4ACAADFEB01453CB636DC1D83B5D613"><enum>(1)</enum><header>Holding of customer assets</header><subparagraph id="H3E3186106CFF48189D9EFD3B684D268B"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="HF43561151C2642C1AF56318285D38ABF"><enum>(B)</enum><header>Qualified digital asset custodian</header><text>Each digital commodity broker and digital commodity dealer shall hold in a qualified digital asset custodian each unit of a digital asset that is—</text><clause id="H9F21A003EB524E80AE05A9C5F67C2536"><enum>(i)</enum><text>the property of a customer or counterparty of the digital commodity broker or digital commodity dealer, respectively;</text></clause><clause id="H230CF5B87B134805BB0DC0BA32CCA5E0"><enum>(ii)</enum><text display-inline="yes-display-inline">required to be held by the digital commodity broker or digital commodity dealer under subsection (e); or</text></clause><clause id="HB0E2F2E9978B4BBFAFFC291E5DAA8B0A"><enum>(iii)</enum><text>otherwise so required by the Commission to reasonably protect customers or promote the public interest.</text></clause></subparagraph></paragraph><paragraph id="HB0D148B57DFF4B349A2F1EA243BFF3D6"><enum>(2)</enum><header>Segregation of funds</header><subparagraph id="H30924F0F607647A8AB341FED344287B7"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H3943AD88C7F148F98018209325F4B6EE"><enum>(B)</enum><header>Commingling prohibited</header><clause id="H96A41DB6320E4E868358146D38FB64C1"><enum>(i)</enum><header>In general</header><text>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.</text></clause><clause id="H54300A9A150949B0A8037461CA23FBED"><enum>(ii)</enum><header>Exceptions</header><subclause id="H24F0B4AC23FC4BD6B8EE54A84BBBB5E2"><enum>(I)</enum><header>Use of funds</header><item id="HC27365A59CFF4EC09BA1F49DB5FA02F1"><enum>(aa)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></item><item id="H29E8FCF4110C43A686732F80409DD240"><enum>(bb)</enum><header>Withdrawal</header><text>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.</text></item></subclause><subclause id="HC7B84ACE3A784066B2FE2DC4483710E2"><enum>(II)</enum><header>Commission action</header><text>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.</text></subclause></clause></subparagraph></paragraph><paragraph id="H64FA43E9D6D440DB9EACAB216147B421"><enum>(3)</enum><header>Permitted investments</header><text>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.</text></paragraph><paragraph id="H6CCA3D0C0C4B4073A0DC8FCB515AEE8C" commented="no"><enum>(4)</enum><header>Customer protection during bankruptcy</header><subparagraph id="H6B703C653FCC4242AA39DCD74129FD65" commented="no"><enum>(A)</enum><header>Customer property</header><text>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.</text></subparagraph><subparagraph id="HE49846AF0563476E95348889E2A75A9A" commented="no"><enum>(B)</enum><header>Transactions</header><text display-inline="yes-display-inline">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 <quote>commodity contract</quote> in section 761 of title 11, United States Code.</text></subparagraph><subparagraph id="H1D8BE6E62496429C809D1A85FA9C8BC4" commented="no"><enum>(C)</enum><header>Brokers and dealers</header><text>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.</text></subparagraph><subparagraph id="HC253A2DA545B4D7B83FAB64F49464816" commented="no"><enum>(D)</enum><header>Assets removed from segregation</header><text>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.</text></subparagraph></paragraph><paragraph id="H8F32DC0317144BFCAA12B337B9E9BCC5"><enum>(5)</enum><header>Misuse of customer property</header><subparagraph id="HE0E11498AEC749CAAFF58E1DCDB183FF"><enum>(A)</enum><header>In general</header><text>It shall be unlawful—</text><clause id="HF7B5187034254DB1BC7F8B5ED8627CB1"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause id="H7CCD48169705450183BEEBBCFE3B8585"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="H1812FFD622C8461C96C6986E15646A00"><enum>(B)</enum><header>Use further defined</header><text>For purposes of this section, <quote>use</quote> 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.</text></subparagraph></paragraph><paragraph id="HA00AE2040A04437DAC3BACADFB088830"><enum>(6)</enum><header>Participation in blockchain services</header><subparagraph id="H7D1F2D9B282445A0AABF3F097974DD97" display-inline="no-display-inline"><enum>(A)</enum><header>Use of funds</header><text display-inline="yes-display-inline">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—</text><clause id="HFCD8D982FAF246058255EA0159E5B344"><enum>(i)</enum><text>the customer expressly permits the use, in writing to the digital commodity broker or digital commodity dealer, as the case may be; and</text></clause><clause id="HEAC2066A4612452B954AE52370DFDACA"><enum>(ii)</enum><text>the digital commodity broker or the digital commodity dealer, as the case may be, complies with subparagraph (B).</text></clause></subparagraph><subparagraph id="HBBAA2E3F64B4408B9DFF8FDFDA4CE2A3"><enum>(B)</enum><header>Limitations</header><clause id="HECF62D8DE3644F28930896A3117104DB"><enum>(i)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></clause><clause id="H2DB2F3A619DB45EC8C57831E6968F926"><enum>(ii)</enum><header>Customer choice</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph><subparagraph id="HD321C0AA093848D99ED480DB87C7E148"><enum>(C)</enum><header>Requirements</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HD53DC7015CDA47948B5F3A2E9C714A79"><enum>(D)</enum><header>Blockchain service defined</header><text display-inline="yes-display-inline">In this paragraph, the term <term>blockchain service</term> 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.</text></subparagraph></paragraph></subsection><subsection id="HE9A7D780EA884629830B041885ED40EB"><enum>(k)</enum><header>Federal preemption</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H0C470F5B33ED4868AE4422E5D768DE57"><enum>(l)</enum><header>Exemptions</header><text display-inline="yes-display-inline">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—</text><paragraph id="HDD158E8018F945C597DEFD8B84C538FC"><enum>(1)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HCB3684E67939482990E1A26A0B8BB146"><enum>(A)</enum><text>the exemption would be consistent with the public interest and the purposes of this Act; and</text></subparagraph><subparagraph id="H283A4C9C71204411B6E02465952B9D63" indent="up1"><enum>(B)</enum><text>the exemption will not have a material adverse effect on the ability of the Commission to discharge regulatory duties under this Act; or</text></subparagraph></paragraph><paragraph id="HF74AEBF65FC244218DDE65F22ACBED5A"><enum>(2)</enum><text display-inline="yes-display-inline">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.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H7F65743760044B1C9F1E1494BE58FEDE"><enum>407.</enum><header>Registration of associated persons</header><subsection id="H23D87A2D1A2E42399A1170540968C584"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 4k of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6k">7 U.S.C. 6k</external-xref>) is amended—</text><paragraph id="HDA96460936314174964CAD2C78B99ACE"><enum>(1)</enum><text>by redesignating subsections (4) through (6) as subsections (5) through (7), respectively;</text></paragraph><paragraph id="HCD6373BD0BD24762BBAD17DD81F8AC66"><enum>(2)</enum><text>by inserting after subsection (3) the following:</text><quoted-block style="OLC" id="H388F56C18085400F88FF7ED953E69708" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H6C0430793A9849C6821546139026BE5E"><enum>(4)</enum><text display-inline="yes-display-inline">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.</text></subsection><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="H851D749728C343B08AEBA59C352A049F"><enum>(3)</enum><text>in subsection (5) (as so redesignated), by striking <quote>or of a commodity trading advisor</quote> and inserting <quote>of a commodity trading advisor, of a digital commodity broker, or of a digital commodity dealer</quote>.</text></paragraph></subsection><subsection id="H86367AF1104B4B569CB9E8ABBBFAC5FB"><enum>(b)</enum><header>Conforming amendments</header><text display-inline="yes-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a et seq.</external-xref>) is amended by striking <quote>section 4k(6)</quote> each place it appears and inserting <quote>section 4k(7)</quote>.</text></subsection></section><section id="HC29699F43D7E4BF683A1EC0AE67B2165"><enum>408.</enum><header>Registration of commodity pool operators and commodity trading advisors</header><subsection id="H8318830DBBD149A9B1285793E4A4C4C0"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 4m(3) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6m">7 U.S.C. 6m(3)</external-xref>) is amended—</text><paragraph id="H119BF35F9DD746B7A7B5660FA84F22C4"><enum>(1)</enum><text display-inline="yes-display-inline">in subparagraph (A)—</text><subparagraph id="HEB2A6413B60641C39A7505C03AE609AC"><enum>(A)</enum><text>by striking <quote>any commodity trading advisor</quote> and inserting <quote>a commodity pool operator or commodity trading advisor</quote>; and</text></subparagraph><subparagraph id="HAE187F8FE58146BEA50AC29B1D182B01"><enum>(B)</enum><text>by striking <quote>acting as a commodity trading advisor</quote> and inserting <quote>acting as a commodity pool operator or commodity trading advisor</quote>; and</text></subparagraph></paragraph><paragraph id="H6748915C5ACF43A89CF3004B12C5B2F1"><enum>(2)</enum><text>in subparagraph (C), by inserting <quote>digital commodities,</quote> after <quote>physical commodities,</quote>.</text></paragraph></subsection><subsection id="H204A630DCD7246C6886FD6672ABC3FD4"><enum>(b)</enum><header>Exemptive authority</header><text display-inline="yes-display-inline">Section 4m of such Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6m">7 U.S.C. 6m</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="H9C39843E346C46DC85217A2DEF7EA3F1" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H75554FEA476D46909C6A7086912DAC0D"><enum>(4)</enum><header>Exemptive authority</header><text display-inline="yes-display-inline">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.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section><section id="HF781AC665EB04CA5BCBA675E425C540E"><enum>409.</enum><header>Exclusion for decentralized finance activities</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), as amended by the preceding provisions of this Act, is amended by inserting after section 4u the following:</text><quoted-block style="OLC" id="HE51AE9D9FE5241FFAB5B4A841A9C6740" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H394A035211364A3B9025D1B8D06A01AD"><enum>4v.</enum><header>Decentralized finance activities not subject to this Act</header><subsection id="H742DE37E7A674A239007FBABC34236DE"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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:</text><paragraph id="H473234E6FFFC4EBB91101E3AC3361C19"><enum>(1)</enum><text>Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.</text></paragraph><paragraph id="H65C81D9B52E340C3AB1877DB5970E187"><enum>(2)</enum><text>Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or other similar incidental services.</text></paragraph><paragraph id="H2707A4A5F35B42DAB620304F1FE259C3"><enum>(3)</enum><text>Providing a user-interface that enables a user to read, and access data about a blockchain system.</text></paragraph><paragraph id="HC63D2A4BB079440C8F886840ACA55759"><enum>(4)</enum><text display-inline="yes-display-inline">Developing, publishing, or otherwise distributing a blockchain system or a decentralized finance messaging system.</text></paragraph><paragraph id="H7076250B19024B348CE3B6CE8A03D37C"><enum>(5)</enum><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="HBB089E1FDAE04D928663D015CF66F418"><enum>(6)</enum><text>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.</text></paragraph></subsection><subsection id="H4036A0D13172446688B90056B81963FB"><enum>(b)</enum><header>Exceptions</header><text display-inline="yes-display-inline">Subsection (a) shall not be interpreted to apply to the anti-fraud, anti-manipulation, or false reporting enforcement authorities of the Commission.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="HCB6AB1D05D56425F947BAECAF0D95424"><enum>410.</enum><header>Resources for implementation and enforcement</header><subsection id="H3B67AC33373D4D18B61191E29F9DAF04"><enum>(a)</enum><header>Collection of fees</header><paragraph id="H0E5F8C1DE74B445BB58AC48C1D1EF072"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">The Commodity Futures Trading Commission (in this section referred to as the <quote>Commission</quote>) shall charge and collect a fee from each person in provisional status registered with the Commission pursuant to section 106, on—</text><subparagraph id="H6EE2A433FD754A00A8448860466DE26B"><enum>(A)</enum><text display-inline="yes-display-inline">the filing of the initial application for registration; and</text></subparagraph><subparagraph id="H2129DC75594345509EB6EDC3F22E7D4C"><enum>(B)</enum><text>an annual basis thereafter for maintaining provisional status.</text></subparagraph></paragraph><paragraph id="H884991FF75B34FE6BA7365EE2CDDAF85"><enum>(2)</enum><header>Amount</header><text>The fees authorized under paragraph (1) may be collected and available for obligation only in the amounts provided in advance in an appropriation Act.</text></paragraph><paragraph id="H6ACC6A27DF2B46CE9F6551CAED96B82F"><enum>(3)</enum><header>Authority to adjust fees</header><text>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.</text></paragraph></subsection><subsection id="HA61445436CD243C1BC8CB500525D503C"><enum>(b)</enum><header>Fee schedule</header><paragraph id="H7A4516E9201647B487546F2BF9C923EB"><enum>(1)</enum><header>In general</header><text>The Commission shall publish in the Federal Register a schedule of the fees to be charged and collected under this section.</text></paragraph><paragraph id="HDE7E9138C8CB4FA79BDBD5B39981E7CB"><enum>(2)</enum><header>Content</header><text>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.</text></paragraph><paragraph id="H3C1618254E7E410DAF7CD073493EA480"><enum>(3)</enum><header>Submission to congress</header><text>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.</text></paragraph><paragraph id="H2B4978F6D3A4426DA0C6B1C65C72EC2E"><enum>(4)</enum><header>Timing</header><subparagraph id="HBF04BB988F014F03BB8807FBEAA5BE09"><enum>(A)</enum><header>1st fiscal year</header><text>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.</text></subparagraph><subparagraph id="H7BA4D8C56D4B445D81141C34EE06D805"><enum>(B)</enum><header>Subsequent fiscal years</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="H293660548D0943E9800B708E9664AFD8"><enum>(c)</enum><header>Late payment penalty</header><paragraph id="H8B476FE5A0CD4C62B43D182D3FBDC900"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="H14DEF0C215214C0187114711AFDD631F"><enum>(2)</enum><header>Amount</header><text>The amount of the penalty shall be—</text><subparagraph id="H6C8681077BA74B249B2974B29771214C"><enum>(A)</enum><text>5 percent of the amount of the fee due, multiplied by</text></subparagraph><subparagraph id="H6980094FB3E9452DA071F2E640933726"><enum>(B)</enum><text>the whole number of consecutive 30-day periods that have elapsed since the due date.</text></subparagraph></paragraph></subsection><subsection id="HDA86242804004D828830A574DE47DB6B"><enum>(d)</enum><header>Reimbursement of excess fees</header><text>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.</text></subsection><subsection id="H6D64666FF9494EEB900C3DFE810C86B3"><enum>(e)</enum><header>Deposit of fees into the Treasury</header><text>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.</text></subsection><subsection id="H92433ED5799347BF91820D6B05B708A9"><enum>(f)</enum><header>Authorization of appropriations</header><text>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.</text></subsection><subsection id="HD1F18704E3AA429693F57AA18B6A2842"><enum>(g)</enum><header>Expedited hiring authority</header><paragraph id="H41B6ABF451624BF185EDE1CFCA9A3DE6"><enum>(1)</enum><header>Appointment authority</header><text>The Chairman, pursuant to section 6(a), may appoint individuals to a position described in paragraph (2) of this subsection—</text><subparagraph id="H85F3BCE683A0440AA4ABB68A611E60D6"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="HD6AE2418F8C74AC1A30AA56C389FA5EE"><enum>(B)</enum><text>without regard to any statute, rule, or regulation governing appointments to positions in the competitive service (as defined in section 2102 of such title).</text></subparagraph></paragraph><paragraph id="H9A69D9D7017A437BB532F9E5070C29AD"><enum>(2)</enum><header>Position described</header><text>A position referred to in subparagraph (1) is a position at the Commission that—</text><subparagraph id="H265E4BBAA8D746B7BFEB88FBD7819472"><enum>(A)</enum><text>is in the competitive service (as defined in section 2102 of such title); and</text></subparagraph><subparagraph id="H2E7F10FD10584EA6B8173761C949420D"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="H996EFDF29DE346DCAA6960E2DA01EA13"><enum>(3)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="H8817023055A6445A8C84FB5D81693D91"><enum>(h)</enum><header>Sunset</header><text>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.</text></subsection></section><section id="H2B202FB86E824265A7E1180084268C02"><enum>411.</enum><header>Requirements related to control persons</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), as amended the preceding provisions of this Act, is amended by inserting after section 4v the following:</text><quoted-block style="OLC" id="H885D90B4BA2E45BEA0A673E0C4749CDC" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="HFC193A56D4C4405EA38ADF64E319FB94"><enum>4w.</enum><header>Limitation on transactions by blockchain control persons</header><subsection id="H4FAA730955BE483C84566A72F0F9EB65"><enum>(a)</enum><header>Limitation</header><text display-inline="yes-display-inline">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—</text><paragraph id="H66F9ECDA26A64B6987345580814CF75E"><enum>(1)</enum><text>disclosure of information to the Commission and the public about the material activities, as determined by the Commission, of the blockchain control person; and</text></paragraph><paragraph id="H599734DE447C45A2A677943600A3D2D5"><enum>(2)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H7E156968C5B94AA8BD078ED4C1526218"><enum>(A)</enum><text>the use of a digital commodity broker to effect the sale; or</text></subparagraph><subparagraph id="H6C6A14104A1049489BDB9D18D35B1720" indent="up1"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="H076F9B5012CF43E4857A3D53756298B3"><enum>(b)</enum><header>Definitions</header><text>In this section:</text><paragraph id="HDD6207F0D9094E24BC5380A6E2A04755"><enum>(1)</enum><header>Blockchain control person</header><text>The term <term>blockchain control person</term> means, with respect to a blockchain system, any person or group of persons under common control, other than a decentralized governance system, who—</text><subparagraph id="H16A20501A8454280B705BC2FB3B7B705"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="H151C7D34201A4F3BB0C21144C1811F6B"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="H1BDCB86AD8C54B60B8DA293EE146B42F"><enum>(2)</enum><header>Affiliated blockchain control person</header><text>The term <term>affiliated blockchain control person</term> 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.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H14A6CAE8B1CD455695A26D38340314BE" commented="no"><enum>412.</enum><header>Other tradable assets</header><text display-inline="no-display-inline">The Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), as amended by the preceding provisions of this Act, is amended—</text><paragraph id="HC8F1CC34C11D4F819EB54A63B1CC7416"><enum>(1)</enum><text>by inserting after section 4w the following:</text><quoted-block style="OLC" id="HDC266575594C48EDA482BA865F910913" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H219F6D990DA54AD982E92C9048D075F5" commented="no"><enum>4x.</enum><header>Trading requirements for other tradable assets</header><subsection id="H242000EEAF304447BFE9107962DF3A12" commented="no"><enum>(a)</enum><header>Limitation</header><text display-inline="yes-display-inline">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).</text></subsection><subsection id="HDE5A821E010445A6BC61D1C598AAD480" commented="no"><enum>(b)</enum><header>Requirements</header><paragraph id="H08B65276F8AF46B8A860C5842845127E" commented="no"><enum>(1)</enum><header>Treatment of tradable assets</header><text>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.</text></paragraph><paragraph id="H8D6BC8A9E1174761B5DE006348829DCE" commented="no"><enum>(2)</enum><header>Additional rulemaking authority</header><text>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—</text><subparagraph id="H9312874E4DA34804BBE3C6C2A738CBCD" commented="no"><enum>(A)</enum><text>disclosure;</text></subparagraph><subparagraph id="H133A3E4263B34A6C9F3DB0502BB8B14A" commented="no"><enum>(B)</enum><text>recordkeeping;</text></subparagraph><subparagraph id="H7E0CB56AA9B545B6A5A7ECAB8141FE6A" commented="no"><enum>(C)</enum><text>capital;</text></subparagraph><subparagraph id="H1C69BEF934944A24B83C2FA419BBEE90" commented="no"><enum>(D)</enum><text>reporting;</text></subparagraph><subparagraph id="HFDD50411D0E14167919D28D1A489741B" commented="no"><enum>(E)</enum><text>business conduct;</text></subparagraph><subparagraph id="H15664568C5514A61931FDF25791FCA26" commented="no"><enum>(F)</enum><text>documentation;</text></subparagraph><subparagraph id="HBB8F76A8095F416A9C4E66D72E08B34D" commented="no"><enum>(G)</enum><text>supervision of employees; and</text></subparagraph><subparagraph id="H9E0D444DB63C4D2EA05A84BB5DF393F0" commented="no"><enum>(H)</enum><text>segregation.</text></subparagraph></paragraph></subsection><subsection id="HFAD44D940D934C96A061E30007330CEB" commented="no"><enum>(c)</enum><header>Tradable asset defined</header><text>In this section, the term <quote>tradable asset</quote> means a digital asset other than—</text><paragraph id="H4BC31A3271A545528E71E281C7DB2C24" commented="no"><enum>(1)</enum><text>a digital commodity that is treated as such other than by reason of subsection (b)(1) of this section; or</text></paragraph><paragraph id="H68346B5682C042E29C694F1CA8D56A95" commented="no"><enum>(2)</enum><text>a digital asset excluded from the definition of digital commodity pursuant to subclause (I) through (VII) of section 1a(16)(F)(iii).</text></paragraph></subsection></section><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph><paragraph id="HB30ADAFA527A4B0B9B398DB48C7D9D55"><enum>(2)</enum><text>by inserting after section 6d the following:</text><quoted-block style="OLC" id="HFC551EF15DFA42F4BAE289617D853860" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H70D6FE4F4265420CA0DBF813AFB3AA2B"><enum>6e.</enum><header>Prohibition on trading certain digital assets</header><subsection id="H3B3FECAED49E4FFF99499D3E5C2EC334"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><paragraph id="H95FD5914C11C4680BEED5E6BC4870C16"><enum>(1)</enum><text>commit fraud or market manipulation;</text></paragraph><paragraph id="HCA4DCA2EA8E84E4B848C08FD55C12BC8"><enum>(2)</enum><text>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</text></paragraph><paragraph id="HADA9CFD00A1E471DA1FB0DE75FD65901"><enum>(3)</enum><text>engage in any other conduct that would result in abusive practices or be disruptive to market integrity.</text></paragraph></subsection><subsection id="H8A997C9FD4774CFC8534D45E9934A590"><enum>(b)</enum><header>Guidance on fraudulent, manipulative, or disruptive tradable assets</header><text>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.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="H1484E12D8291426E985A7614F33F7B4D"><enum>413.</enum><header>Conflict of interest rulemaking</header><text display-inline="no-display-inline"> 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.</text></section><section id="HB712782C7F4B4248A397E5F9010A3B48"><enum>414.</enum><header>Effective date</header><text display-inline="no-display-inline">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.</text></section><section id="H821670D5E74B4088820C512BF120B3E4" display-inline="no-display-inline" section-type="subsequent-section"><enum>415.</enum><header>Sense of Congress</header><text display-inline="no-display-inline">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.</text></section><enum>V</enum><header>Innovation and Technology Improvements</header><section id="H3952D618D8C6489D8924F95ABED27F2B"><enum>501.</enum><header>Findings; sense of Congress</header><subsection id="H003BEB336EDE48238D3D8BC014525AC9"><enum>(a)</enum><header>Findings</header><text display-inline="yes-display-inline">Congress finds the following:</text><paragraph id="H4BBA8DB855184E84BFB5FE213C80E1B4"><enum>(1)</enum><text display-inline="yes-display-inline">Entrepreneurs and innovators are building and deploying this next generation of the internet.</text></paragraph><paragraph id="H87443EDEC53549FC8A03D14FC3640CB6"><enum>(2)</enum><text>Digital commodity networks represent a new way for people to join together and cooperate with one another to undertake certain activities.</text></paragraph><paragraph id="H0FBA8D24C70644EEA263D99A65D138DE"><enum>(3)</enum><text>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.</text></paragraph><paragraph id="HC6DC4E9EEBE04DE890F682E7CEF48347"><enum>(4)</enum><text>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.</text></paragraph><paragraph id="H099308218BC64B7DB5149A79F1F1F14E"><enum>(5)</enum><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H29D7FD56F80545059F228338A8D48CA4"><enum>(6)</enum><text>Blockchain technology facilitates new types of network participation which businesses in the United States may utilize in innovative ways.</text></paragraph><paragraph id="H2A3CC3A18FE145528AA9AACEE6EF5145"><enum>(7)</enum><text>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.</text></paragraph><paragraph id="HEDDA3D1D80334F5DBFE19A8366FAC07F"><enum>(8)</enum><text>Digital commodities, despite the purported anonymity, provide law enforcement with an exceptional tracing tool to identify illicit activity and bring criminals to justice.</text></paragraph><paragraph id="H9618F88313A240698500984026450279"><enum>(9)</enum><text display-inline="yes-display-inline">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.</text></paragraph></subsection><subsection id="H81FE623F66624CE6B2287991EC7D31CF"><enum>(b)</enum><header>Sense of Congress</header><text>It is the sense of Congress that—</text><paragraph id="HE4AD465FAE3041ADAFC76869D7B44F71"><enum>(1)</enum><text display-inline="yes-display-inline">the United States should seek to prioritize understanding the potential opportunities of the next generation of the internet;</text></paragraph><paragraph id="H3168F5C9D8D447818A7A672EA9BF300E"><enum>(2)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="H1493475B781C4557A91B1491A581DD34"><enum>(3)</enum><text>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;</text></paragraph><paragraph id="H5BDBF65E32904E3D983D68F78FB20D42"><enum>(4)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="H224153270DFF429E806B897B9BA1B4D1"><enum>(5)</enum><text display-inline="yes-display-inline">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</text></paragraph><paragraph id="HDB68BED96D404400A82C34E403F6A800"><enum>(6)</enum><text>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.</text></paragraph></subsection></section><section id="H1E220AA18A6342C780C368D4AF64047E"><enum>502.</enum><header>Strategic Hub for Innovation and Financial Technology</header><text display-inline="no-display-inline">Section 4 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78d">15 U.S.C. 78d</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="H4FE359B50142438598ADABCD0781AF2A" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H55621743607B4D0B9FEC4F6806343387"><enum>(k)</enum><header>Strategic Hub for Innovation and Financial Technology</header><paragraph id="H8436D0D04BF1485FB1A9A953056C0976"><enum>(1)</enum><header>Establishment</header><text display-inline="yes-display-inline">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 <quote>FinHub</quote>) to support engagement on emerging technologies in the financial sector.</text></paragraph><paragraph id="H69DC7A9B30B74F0B89A83BCCE166084E"><enum>(2)</enum><header>Members</header><text>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.</text></paragraph><paragraph id="H3029A0E4FD5D4A2CA219B8DF88D3CC14"><enum>(3)</enum><header>Responsibilities</header><text>FinHub shall—</text><subparagraph id="H6A3603C2E91B4819BD480F14865F84FF"><enum>(A)</enum><text>serve as a resource for the Commission on emerging financial technology advancements;</text></subparagraph><subparagraph id="H0152E0904F98432891EC11EFDA809DA4"><enum>(B)</enum><text>engage with market participants working on emerging financial technologies; and</text></subparagraph><subparagraph id="HEF168CF103534F9286FD2EB099C0F460"><enum>(C)</enum><text>facilitate communication between the Commission and businesses working in emerging financial technology fields with information on the Commission, its rules, and regulations.</text></subparagraph></paragraph><paragraph id="H175F19AE704F4D89934CF13C4F3B4B3E"><enum>(4)</enum><header>Report to the Commission</header><subparagraph id="HB68F0D03DBB243E1A3AA67ADDFB289D3"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="H820F6289F03F41BBB0A3645C3FCC0D8B"><enum>(B)</enum><header>Confidentiality</header><text>Each report submitted under this paragraph shall not contain confidential information.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H74A709E403754CBCA52D81ACF897490F" display-inline="no-display-inline"><enum>503.</enum><header>Codification of LabCFTC</header><subsection id="HEAD680E1CD4742FD8DF221933A3D48F0"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Section 18 of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/22">7 U.S.C. 22</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HDC2EFC873B1847E9A9353BB137F84E12" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><subsection id="H217F563663604EC3ACEF505C5637D190"><enum>(c)</enum><header>LabCFTC</header><paragraph id="HB39D81FDE95A4F1CA2C6E6B4B92870CD"><enum>(1)</enum><header>Establishment</header><text display-inline="yes-display-inline">There is established in the Commission LabCFTC.</text></paragraph><paragraph id="HB6B1237C41B24E63BD7EECE0198C1972"><enum>(2)</enum><header>Purpose</header><text display-inline="yes-display-inline">The purposes of LabCFTC are to—</text><subparagraph id="HB6F63FDBCCCC49AC95D02D6A5FB015E8"><enum>(A)</enum><text display-inline="yes-display-inline">promote responsible financial technology innovation and fair competition for the benefit of the American public;</text></subparagraph><subparagraph id="HD02254834214437181D669AF49A62343"><enum>(B)</enum><text>serve as an information platform to inform the Commission about new financial technology innovation; and</text></subparagraph><subparagraph id="H51D40A5613F74D70A7C478615E1B991D"><enum>(C)</enum><text>provide outreach to financial technology innovators to discuss their innovations and the regulatory framework established by this Act and the regulations promulgated thereunder.</text></subparagraph></paragraph><paragraph id="HE17FDD71D36E4B6BAD82BE2B0A406069"><enum>(3)</enum><header>Director</header><text display-inline="yes-display-inline">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.</text></paragraph><paragraph id="H74BE00464692478CA2415B70A324C73C"><enum>(4)</enum><header>Duties</header><text>LabCFTC shall—</text><subparagraph id="HD749A73B4CE8436BA274BB5E80DFFB30"><enum>(A)</enum><text>advise the Commission with respect to rulemakings or other agency or staff action regarding financial technology;</text></subparagraph><subparagraph id="H32054480834947F3A20D5E10B5CF4B19"><enum>(B)</enum><text>provide internal education and training to the Commission regarding financial technology;</text></subparagraph><subparagraph id="HD719193CF15D448BA69135115A77C055"><enum>(C)</enum><text>advise the Commission regarding financial technology that would bolster the Commission’s oversight functions;</text></subparagraph><subparagraph id="HB4DDC0A4168648F2A8B01CA1B8D5C3DB"><enum>(D)</enum><text>engage with academia, students, and professionals on financial technology issues, ideas, and technology relevant to activities under this Act;</text></subparagraph><subparagraph id="HD21E44552D0E44089869038F87467056"><enum>(E)</enum><text>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</text></subparagraph><subparagraph id="H93566DA585FA4BC0919F844E20275305"><enum>(F)</enum><text>encourage persons working in emerging technology fields to engage with the Commission and obtain feedback from the Commission on potential regulatory issues.</text></subparagraph></paragraph><paragraph id="HDDC23042257F42BFB64347AB3E7E6D3D"><enum>(5)</enum><header>Report to Congress</header><subparagraph id="H6E206B06822F41F88ECC84FD3563675C"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H9AE546FE4DAE4AB5BD8B2271AF8BCCAE"><enum>(B)</enum><header>Contents</header><text>Each report required under paragraph (1) shall include—</text><clause id="HF7DAC77F4B3D4564AF4E3FC5BA3C73D4"><enum>(i)</enum><text display-inline="yes-display-inline">the total number of persons that met with LabCFTC;</text></clause><clause id="H2BC41A8282794ABF89E3748E1790C8E6"><enum>(ii)</enum><text>a summary of general issues discussed during meetings with the person;</text></clause><clause id="H937C0804C8BC4EE69D699F644E856AEA"><enum>(iii)</enum><text>information on steps LabCFTC has taken to improve Commission services, including responsiveness to the concerns of persons;</text></clause><clause id="HAAA9EC9D2B0142C197019873D144DDEF"><enum>(iv)</enum><text>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</text></clause><clause id="H8A98B922B97F458BA631469ABE9A4768"><enum>(v)</enum><text>any other information determined appropriate by the Director of LabCFTC.</text></clause></subparagraph><subparagraph id="H32D5436E86604170BD654EFBFBB42EC4"><enum>(C)</enum><header>Confidentiality</header><text>A report under paragraph (A) shall abide by the confidentiality requirements in section 8.</text></subparagraph></paragraph><paragraph id="H175607ED9AC84DD1B07D9AE0CFB7C3BA"><enum>(6)</enum><header>Records and engagement</header><text display-inline="yes-display-inline">The Commission shall—</text><subparagraph id="H531303F3C2BE40C5971E630F669BB540"><enum>(A)</enum><text>maintain systems of records to track engagements with the public through LabCFTC;</text></subparagraph><subparagraph id="HECE1BCA239BA4A418680DB28572CB47A"><enum>(B)</enum><text>store communications and materials received in connection with any such engagement in accordance with Commission policies and procedures on data retention and confidentiality; and</text></subparagraph><subparagraph id="H776CFA9726A44C53B58920DB6C5EB8A0"><enum>(C)</enum><text>take reasonable steps to protect any confidential or proprietary information received through LabCFTC engagement.</text></subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HE68020678CC147EF846A6EC4EFAA4014"><enum>(b)</enum><header>Conforming amendments</header><text>Section 2(a)(6)(A) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/7/2">7 U.S.C. 2(a)(6)(A)</external-xref>) is amended—</text><paragraph id="H7D364511742D4635B428E66DC610DC6B"><enum>(1)</enum><text>by striking <quote>paragraph and in</quote> and inserting <quote>paragraph,</quote>; and</text></paragraph><paragraph id="H19A72129A0AE4388ACDE9CF7E73CF95E"><enum>(2)</enum><text>by inserting <quote>and section 18(c)(3),</quote> before <quote>the executive</quote>.</text></paragraph></subsection><subsection id="H2C5D840D23D848A68378D100F44105D5"><enum>(c)</enum><header>Effective date</header><text>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.</text></subsection></section><section id="H6C4DFAAFD05D44FBBA7ED5853A242D24"><enum>504.</enum><header>Study on decentralized finance</header><subsection id="HB95AD719C9764B8CAF32F75D16C23E17"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><paragraph id="H797CC424A8A74C8A8E95B6881583DC1D"><enum>(1)</enum><text>the nature, size, role, and use of decentralized finance blockchain applications;</text></paragraph><paragraph id="HBACC57E1EBD1474A9C58866F2232F09D"><enum>(2)</enum><text>the operation of blockchain applications that comprise decentralized finance;</text></paragraph><paragraph id="H9A15B5B71C4D42F19923AED9012457E7"><enum>(3)</enum><text>the interoperability of blockchain applications and other blockchain systems;</text></paragraph><paragraph id="H655BF8F1E9FF46C9B5360B4E6C09303A"><enum>(4)</enum><text>the interoperability of blockchain applications and software-based systems, including websites and wallets;</text></paragraph><paragraph id="HC80737EADAE04797A1F951ACB537748B"><enum>(5)</enum><text>the decentralized governance systems through which blockchain applications may be developed, published, constituted, administered, maintained, or otherwise distributed, including—</text><subparagraph id="H11D221DBE1FB4F3584E76023266B2597"><enum>(A)</enum><text>whether the systems enhance or detract from—</text><clause id="H2CD18C73D982428FB8DB9779E6BB41B7"><enum>(i)</enum><text>the decentralization of the decentralized finance; and</text></clause><clause id="HDABB4DBE004945449E40F6093E7F7E88"><enum>(ii)</enum><text>the inherent benefits and risks of the decentralized governance system; and</text></clause></subparagraph><subparagraph id="H6E301DAD08204CC89D68372C7774FCED"><enum>(B)</enum><text>any procedures, requirements, or best practices that would mitigate the risks identified in subparagraph (A)(ii);</text></subparagraph></paragraph><paragraph id="H6FC5E38573E048C8997DD0A9EFB13373"><enum>(6)</enum><text>the benefits of decentralized finance, including—</text><subparagraph id="HED9A2E693D864DE9AEDA94303EDA730C"><enum>(A)</enum><text>operational resilience and availability of blockchain systems;</text></subparagraph><subparagraph id="H5FF6C6CB9AD14FDAAC0868384A7F9903"><enum>(B)</enum><text>interoperability of blockchain systems;</text></subparagraph><subparagraph id="H82990A1B14F64602AD33E75D38F38CED"><enum>(C)</enum><text>market competition and innovation;</text></subparagraph><subparagraph id="HEDB82580E7AA40F58B1EAE68FCEEDE10"><enum>(D)</enum><text>transaction efficiency;</text></subparagraph><subparagraph id="HD9AA478960AD45429314D778F36EBA30"><enum>(E)</enum><text>transparency and traceability of transactions; and</text></subparagraph><subparagraph id="HFC3B0815C8EB4CFC8BFAB6663345BD44"><enum>(F)</enum><text>disintermediation;</text></subparagraph></paragraph><paragraph id="HBA929B4030F24F25A60A7DCD18AB5510"><enum>(7)</enum><text>the risks of decentralized finance, including—</text><subparagraph id="HF10955044F89431E8B6C3441EC298301"><enum>(A)</enum><text>pseudonymity of users and transactions;</text></subparagraph><subparagraph id="H0BDA9DF26B9E4FFB99C5D34AEBD9B051"><enum>(B)</enum><text>disintermediation; and</text></subparagraph><subparagraph id="HB9D6A30F59A34008A3684A7364BAA640"><enum>(C)</enum><text>cybersecurity vulnerabilities;</text></subparagraph></paragraph><paragraph id="H5368BBF6A7284B5EB8E89EBA248BA4D1"><enum>(8)</enum><text>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;</text></paragraph><paragraph id="HB7AADD0F48174E7695071C409D8A73A0"><enum>(9)</enum><text>how the levels of illicit activity in decentralized finance compare with the levels of illicit activity in traditional financial markets;</text></paragraph><paragraph id="H850620D609F144939BD7644CBD35D273"><enum>(10)</enum><text display-inline="yes-display-inline">methods for addressing illicit activity in decentralized finance and traditional markets that are tailored to the unique attributes of each;</text></paragraph><paragraph id="H07965B745C414A9C8C780ABAB88B09E4"><enum>(11)</enum><text>how decentralized finance may increase the accessibility of cross-border transactions; and</text></paragraph><paragraph id="H44AC867A20834BFD91E11B270E801A6B"><enum>(12)</enum><text display-inline="yes-display-inline">the feasibility of embedding self-executing compliance and risk controls into decentralized finance.</text></paragraph></subsection><subsection id="HD86CAE206CB14D6992E21DA39B19E499"><enum>(b)</enum><header>Consultation</header><text display-inline="yes-display-inline">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).</text></subsection><subsection id="H23C0D48F44EA4AF18C0636EBC0EBC986"><enum>(c)</enum><header>Report</header><text display-inline="yes-display-inline">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).</text></subsection><subsection id="HF373C94F2CD44B38AA2326F4CA31AE36"><enum>(d)</enum><header>GAO Study</header><text>The Comptroller General of the United States shall—</text><paragraph id="H7C651EA4E0044E41AC2FA852CAA34D65"><enum>(1)</enum><text display-inline="yes-display-inline">carry out a study on decentralized finance that analyzes the information described under paragraphs (1) through (12) of subsection (a); and</text></paragraph><paragraph id="H5C4544503098499C85778717A15DB6CC"><enum>(2)</enum><text display-inline="yes-display-inline">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).</text></paragraph></subsection><subsection id="HA1C7C0A4D37247758DFF3BCDE2BAF0F7"><enum>(e)</enum><header>Definitions</header><text>In this section:</text><paragraph id="H63920D6745044957B6D58569A6DD5A77"><enum>(1)</enum><header>Decentralized finance</header><subparagraph id="H520DF1A5CDC345DDBD84F844DD79C284"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>decentralized finance</term> 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.</text></subparagraph><subparagraph id="HE20CB26BBA9046C588A68851FED926CD"><enum>(B)</enum><header>Relationship to excluded activities</header><text display-inline="yes-display-inline">The term <term>decentralized finance</term> 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.</text></subparagraph></paragraph><paragraph id="HF8CDE9C176194F80B7832DC1966A9BD9"><enum>(2)</enum><header>Relevant congressional committees</header><text>The term <term>relevant congressional committees</term> means—</text><subparagraph id="H6769CB7F4E60494F88EA93626EAA76A6"><enum>(A)</enum><text>the Committees on Financial Services and Agriculture of the House of Representatives; and</text></subparagraph><subparagraph id="H72CCF29D36C84A1D8B3DE696872D30E2"><enum>(B)</enum><text>the Committees on Banking, Housing, and Urban Affairs and Agriculture, Nutrition, and Forestry of the Senate.</text></subparagraph></paragraph></subsection></section><section id="HF9202F253A5447579410FFE7DFC405E9"><enum>505.</enum><header>Study on non-fungible tokens</header><subsection id="HD46E8B2D78A6455ABCE933DCAD3F6B53"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The Comptroller General of the United States shall carry out a study of non-fungible tokens that analyzes—</text><paragraph id="H392299F28D8F4E599103E4FF805579A7"><enum>(1)</enum><text display-inline="yes-display-inline">the nature, size, role, purpose, and use of non-fungible tokens;</text></paragraph><paragraph id="H4A818372865445EB9EB9C1DA82DCC556"><enum>(2)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="HB23A332E74A7425AAFACFC476B9B17F3"><enum>(3)</enum><text display-inline="yes-display-inline">how non-fungible tokens are minted by issuers and subsequently administered to purchasers;</text></paragraph><paragraph id="H5172EF5E83E440989E2E0BE1DEC6227C"><enum>(4)</enum><text display-inline="yes-display-inline">how non-fungible tokens are stored after being purchased by a consumer;</text></paragraph><paragraph id="H647B1BF5E79B43EC89D4CC79F3670F89"><enum>(5)</enum><text display-inline="yes-display-inline">the interoperability of non-fungible tokens between different blockchain systems;</text></paragraph><paragraph id="HB1339395C7F04EBDA8D5EFCD1863A817"><enum>(6)</enum><text>the scalability of different non-fungible tokens marketplaces;</text></paragraph><paragraph id="HD8350082C4DC47D792B1FB3D45BF9FD2"><enum>(7)</enum><text display-inline="yes-display-inline">the benefits of non-fungible tokens, including verifiable digital ownership;</text></paragraph><paragraph id="HC41419EBD075497B9E6AF3952F45BC19"><enum>(8)</enum><text>the risks of non-fungible tokens, including—</text><subparagraph id="H82872447073F45E6A45A5CB33111B423"><enum>(A)</enum><text>intellectual property rights;</text></subparagraph><subparagraph id="H556505FF958041F085DF8562B16C5DC5"><enum>(B)</enum><text>cybersecurity risks; and</text></subparagraph><subparagraph id="HCFF813D02B6D4466810CB66C4D58662B"><enum>(C)</enum><text>market risks;</text></subparagraph></paragraph><paragraph id="H5339FAA7F18C4B4BB8DB1C2A16151F70"><enum>(9)</enum><text display-inline="yes-display-inline">whether and how non-fungible tokens have integrated with traditional marketplaces, including those for music, real estate, gaming, events, and travel;</text></paragraph><paragraph id="H974D10BEA8044A6B9C2BF6CA8D16CF23"><enum>(10)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="HA06CF06D7032435CA48CADF822086D54"><enum>(11)</enum><text>any potential risks to traditional markets from such integration; and</text></paragraph><paragraph id="HFDBF916515DF4A9988F88274975DADF7"><enum>(12)</enum><text>the levels and types of illicit activity in non-fungible tokens markets.</text></paragraph></subsection><subsection id="H49B2B1BE0976481C89B7321DAB488E8D"><enum>(b)</enum><header>Report</header><text display-inline="yes-display-inline">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).</text></subsection></section><section id="H27EEC676C46C4150BFEB50A2CB8C50EC" display-inline="no-display-inline" section-type="subsequent-section"><enum>506.</enum><header>Study on expanding financial literacy amongst digital commodity holders</header><subsection id="HD577EBB7AC91410F963F746BBE133CA4"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The Commodity Futures Trading Commission with the Securities and Exchange Commission shall jointly conduct a study to identify—</text><paragraph id="H2CA3873B26D24D7AA78360485A812430"><enum>(1)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="H1119CF23A2A943CDA5502D91CAFE78BE"><enum>(2)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="HD2E7950E4E36437DB448C4F3D9FD879D"><enum>(3)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="H7463E24DFCB741A6872123E1BBE9A1E8"><enum>(4)</enum><text>the efficacy of current financial literacy efforts with a focus on rural communities and communities with majority minority populations;</text></paragraph><paragraph id="HA7118BCC5B924717A6C14A9E165EE5B5"><enum>(5)</enum><text display-inline="yes-display-inline">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;</text></paragraph><paragraph id="H2B4142CFABE943D6924F27C9C3BCB3A0"><enum>(6)</enum><text display-inline="yes-display-inline">the most effective public-private partnerships in providing financial literacy regarding digital commodities to consumers;</text></paragraph><paragraph id="HE69E61B836EB42EE99988F239CDF660E"><enum>(7)</enum><text>the most relevant metrics to measure successful improvement of the financial literacy of an individual after engaging with financial literacy efforts; and</text></paragraph><paragraph id="H26915A6CCCBA4F17B204BB87049F7D67"><enum>(8)</enum><text display-inline="yes-display-inline">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.</text></paragraph></subsection><subsection id="HC36EE9EDA0D0452D869BC9217D32640B"><enum>(b)</enum><header>Report</header><text>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.</text></subsection></section><section id="HBC8D1A0FABA3456790BFA99DEF95E858"><enum>507.</enum><header>Study on financial market infrastructure improvements</header><subsection id="H7CA1D868D10B43AF85E595041BD2B2BB"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H0C3777010EB649C5899BAF9503B544B9"><enum>(b)</enum><header>Report</header><paragraph id="H44B239BDACFA44DFB683B168779EBFAD"><enum>(1)</enum><header>Time limit</header><text display-inline="yes-display-inline">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).</text></paragraph><paragraph id="H3BFBA0AD2BD3408F896EE467F98203A3"><enum>(2)</enum><header>Relevant congressional committees defined</header><text>In this section, the term <term>relevant congressional committees</term> means—</text><subparagraph id="HE40569E2A27D48D2A9A1481ED490B695"><enum>(A)</enum><text>the Committees on Financial Services and on Agriculture of the House of Representatives; and</text></subparagraph><subparagraph id="H503065145910462C978A1367EFC08D2E"><enum>(B)</enum><text>the Committees on Banking, Housing, and Urban Affairs and on Agriculture, Nutrition, and Forestry of the Senate.</text></subparagraph></paragraph></subsection></section><section id="HC7D15071E0CB43D197F87E2EEF2D5731" commented="no"><enum>508.</enum><header>Study on blockchain in payments</header><subsection id="H76170FE3EE9941E595CD6D275173DCF6" commented="no"><enum>(a)</enum><header>Study required</header><text display-inline="yes-display-inline">The Secretary of the Treasury shall conduct a study on the potential use of blockchain technology by the domestic private sector to address—</text><paragraph id="H1AF2AAABE3E340BBB473D4DC500E3F84" commented="no"><enum>(1)</enum><text>fraud in payments;</text></paragraph><paragraph id="H7A397A209CAC453283DCB69335A4D6F7" commented="no"><enum>(2)</enum><text>transaction costs and transaction times;</text></paragraph><paragraph id="HA2277CF1FE7B4F33BF3138944279667E" commented="no"><enum>(3)</enum><text>automated payments; and</text></paragraph><paragraph id="H400E381E47B0482FBD140CBAB5F7DEB8" commented="no"><enum>(4)</enum><text>efficiency in commercial transactions.</text></paragraph></subsection><subsection id="H6BE4A12ECF7C47E6AB4B56BA289E20CD" commented="no"><enum>(b)</enum><header>Report to Congress</header><text>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).</text></subsection><subsection id="HC62BB0A2E4734F5AACB364AFFB9C1E17" commented="no"><enum>(c)</enum><header>Rule of construction</header><text>Nothing in this section shall be construed to mandate the use of blockchain technology by any public or private entity.</text></subsection></section><section id="H3C1C978D11354094983CCCF87E7470C5" display-inline="no-display-inline" section-type="subsequent-section"><enum>509.</enum><header>Study on illicit use of digital assets</header><subsection id="H53CDAA9AC2B5407B994C7BF11CED463B"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="H95344D6EEBC84B38B5519D7A3D4D21A0"><enum>(b)</enum><header>Report</header><text>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—</text><paragraph id="HC0EC173520D748529E6B138F09660829"><enum>(1)</enum><text display-inline="yes-display-inline">an assessment of how Foreign Terrorist Organizations and Transnational Criminal Syndicates utilize digital assets in connection with illicit activities; and</text></paragraph><paragraph id="HA71891BD0AEB48E1A8B427D955D23F24"><enum>(2)</enum><text>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.</text></paragraph></subsection></section><section id="H04F49AE45AFB4B5680DE7EB9EF448E19"><enum>510.</enum><header>GAO study on certain centralized intermediaries that are primarily located in foreign jurisdictions</header><subsection id="HB0B0A94FB3CE420E8EE64F5D82F766F5"><enum>(a)</enum><header>In general</header><text>The Comptroller General of the United States, in consultation with the Secretary of the Treasury, shall conduct a study to—</text><paragraph id="H3D126EEA2DF24C89AE013B2A54165123"><enum>(1)</enum><text display-inline="yes-display-inline">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</text></paragraph><paragraph id="H5539B4CA5C3F455A9D9A70817D1B4FB7"><enum>(2)</enum><text>provide any regulatory or legislative recommendations to address these risks under paragraph (1).</text></paragraph></subsection><subsection id="HF4967C767D2543FB819D14920805C919"><enum>(b)</enum><header>Report</header><text display-inline="yes-display-inline">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).</text></subsection></section><section id="H280C8D9C93B848DBB1CCF6CF61D32F8A" display-inline="no-display-inline" section-type="subsequent-section" commented="no"><enum>511.</enum><header>Studies on foreign adversary participation</header><subsection id="H331771C8282C4FC6816EBD367B7D3849" commented="no"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><paragraph id="H262EDD3043AD40EE8DD872194022030A" commented="no"><enum>(1)</enum><text>identifies any digital commodity registrants which are owned by governments of foreign adversaries;</text></paragraph><paragraph id="H4531BFC4E8FD4F609750E3011645F40A" commented="no"><enum>(2)</enum><text display-inline="yes-display-inline">determines whether any governments of foreign adversaries are collecting trading data about United States persons in the digital commodity markets; and</text></paragraph><paragraph id="HE0F3A82B09174E6D88D9D41AAC7498BB" commented="no"><enum>(3)</enum><text display-inline="yes-display-inline">evaluates whether any proprietary intellectual property of digital commodity registrants is being misused or stolen by any governments of foreign adversaries.</text></paragraph></subsection><subsection id="H73AB74EF86E1485393C37916E057E0D4" commented="no"><enum>(b)</enum><header>GAO study and report</header><paragraph id="H57DCB2DE5CBD49D694CF0A52DF380722" commented="no"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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—</text><subparagraph id="HE2D444C26F6342FC9099165E655D55BA" display-inline="no-display-inline" commented="no"><enum>(A)</enum><text display-inline="yes-display-inline">identifies any digital commodity registrants which are owned by governments of foreign adversaries;</text></subparagraph><subparagraph id="HC7616F1DF7E0486BB64D3CF7D8B2D834" commented="no"><enum>(B)</enum><text display-inline="yes-display-inline">determines whether any governments of foreign adversaries are collecting trading data about United States persons in the digital commodity markets; and</text></subparagraph><subparagraph id="H609A8977DE144AB99B154F8961525739" commented="no"><enum>(C)</enum><text display-inline="yes-display-inline">evaluates whether any proprietary intellectual property of digital commodity registrants is being misused or stolen by any governments of foreign adversaries.</text></subparagraph></paragraph></subsection><subsection id="H052BBF9A88454E3EBD8396C56A8BD93E" commented="no"><enum>(c)</enum><header>Definitions</header><text display-inline="yes-display-inline">In this section:</text><paragraph id="H2E01D69D91B64687A48D495F98138C8E" commented="no"><enum>(1)</enum><header>Digital commodity registrant</header><text display-inline="yes-display-inline">The term <term>digital commodity registrant</term> means any person required to register as a digital commodity exchange, digital commodity broker, or digital commodity dealer under the Commodity Exchange Act.</text></paragraph><paragraph id="H769AC37DA7CA495DB44CA612A256B166" commented="no"><enum>(2)</enum><header>Foreign adversaries</header><text display-inline="yes-display-inline">The term <term>foreign adversaries</term> 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.</text></paragraph><paragraph id="H48CF5195D5714E3D83FBB7BC70E23B60" commented="no"><enum>(3)</enum><header>Relevant congressional committees</header><text>The term <term>relevant congressional committees</term> means—</text><subparagraph id="H2528677EC91A4D909E66E5AEFA2B95DE" commented="no"><enum>(A)</enum><text>the Committees on Financial Services and Agriculture of the House of Representatives; and</text></subparagraph><subparagraph id="H5F42E53AA5DE42C1A2DED5D2DA909E3D" commented="no"><enum>(B)</enum><text>the Committees on Banking, Housing, and Urban Affairs and Agriculture, Nutrition, and Forestry of the Senate.</text></subparagraph></paragraph></subsection></section><section id="H8B6763505E674D9DA9B8FF4FC6D58C1B" display-inline="no-display-inline" section-type="subsequent-section"><enum>512.</enum><header>Conforming amendments</header><text display-inline="no-display-inline">The GENIUS Act is amended—</text><paragraph id="HC89B89C89BC241D586B2207003D7531B"><enum>(1)</enum><text>in section 2, by amending paragraph (7) to read as follows:</text><quoted-block style="OLC" id="H41544BE732AC4903BDAF59CF81425DBF" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HFB3A0B8A70C94E378E75EFD058C149E8"><enum>(7)</enum><header>Digital asset service provider</header><text display-inline="yes-display-inline">The term <quote>digital asset service provider</quote> means any entity registered or required to be registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission.</text></paragraph><after-quoted-block>;</after-quoted-block></quoted-block></paragraph><paragraph id="HE313E3CE4DC84CEE9112735A0F0ADDEF" commented="no"><enum>(2)</enum><text>in section 4(a)—</text><subparagraph id="H99436EB36F3941D18650BE38C5F2D964"><enum>(A)</enum><text>by amending paragraph (3) to read as follows:</text><quoted-block style="OLC" id="H533A5883CDFC4857886D6B89FF56F936" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="H6294C31A3F2F4317B0897DAB63BA81F3" commented="no"><enum>(3)</enum><header>Monthly certification; examination of reports by registered public accounting firm</header><subparagraph id="H09973219E8D54B728F9510C94C63BA17" commented="no"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H8ADBEE9B874E44298595723D8ECD1EC7" commented="no"><enum>(B)</enum><header>Certification</header><text display-inline="yes-display-inline">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)—</text><clause id="HC3812889A98F4CFFBC5ACC1965F56DCD" commented="no"><enum>(i)</enum><text>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</text></clause><clause id="H702A95E9AF8945C1B9C2ED76A54030F1" commented="no"><enum>(ii)</enum><text>fairly presented in all material respects the information required under paragraph (1)(C) for the period presented in such report.</text></clause></subparagraph><subparagraph id="HA7AFFA4BE8CF4BCE968616B0EE52441A" commented="no"><enum>(C)</enum><header>Criminal penalty</header><text>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.</text></subparagraph><subparagraph id="HAEB89E023014486CBBF33B76F6726BC7" commented="no"><enum>(D)</enum><header>Internal controls over permitted payment stablecoin issuer’s requirements</header><clause id="H76DB11FEA1EC4463B99B00128856E914" commented="no"><enum>(i)</enum><header>In general</header><text>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. </text></clause><clause id="HBB42BCB82CAF4925870F040DD9136A67" commented="no"><enum>(ii)</enum><header>Attestation report</header><text display-inline="yes-display-inline">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.</text></clause></subparagraph></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph><subparagraph id="HC3A7A649183D421586111BBF91C18D5A"><enum>(B)</enum><text>by amending paragraph (12) to read as follows:</text><quoted-block style="OLC" id="HAA7A41B8A2E04B99A656879976D67D20" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HF9DC04B32676474B9585A708DD1C90B1" commented="no"><enum>(12)</enum><header>Non-financial companies</header><subparagraph id="H763B807FEABD4B259C1DED8C582B7354" commented="no"><enum>(A)</enum><header>Prohibition on non-financial company ownership</header><text>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—</text><clause id="H9BB7B402D6CD45E49B90AF61C635E62C" commented="no"><enum>(i)</enum><text>a Federal qualified payment stablecoin issuer; or</text></clause><clause id="H767D853F787E461C84E17FC80864A385" commented="no"><enum>(ii)</enum><text>a State qualified payment stablecoin issuer.</text></clause></subparagraph><subparagraph id="H219C3F95AA6D40A4A03A73DC44D09625" commented="no"><enum>(B)</enum><header>Financial activities defined</header><clause id="HED3C069F13984FFD91505162F2D1C226" commented="no"><enum>(i)</enum><header>In general</header><text>In this paragraph, the term <quote>financial activities</quote> means—</text><subclause id="HF5C748F0D2A3467292388833D8466702" commented="no"><enum>(I)</enum><text display-inline="yes-display-inline">a financial activity, within the meaning of section 4(k) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1843">12 U.S.C. 1843(k)</external-xref>);</text></subclause><subclause id="HCAA7BD58E8644C3583E7C107ED3BCC4B" commented="no"><enum>(II)</enum><text>issuing, redeeming, providing custodial or safekeeping services for, buying, selling, making a market in, or managing a reserve for payment stablecoins;</text></subclause><subclause id="H2F3A294C892A4095A0E202B6AD785AD3" commented="no"><enum>(III)</enum><text>providing electronic wallet services for payment stablecoins; or</text></subclause><subclause id="H9495E1105E2246D9A6946F4DB679E0D6"><enum>(IV)</enum><text display-inline="yes-display-inline">an activity determined by the Board to be a financial activity pursuant to clause (ii).</text></subclause></clause><clause id="H6C806A615E044939AC6B2CEFAD3C0780" commented="no"><enum>(ii)</enum><header>Establishing additional financial activities</header><text display-inline="yes-display-inline">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—</text><subclause id="H1658F732F8454D41B144CDE39DDAFD1D" commented="no"><enum>(I)</enum><text>a list of additional activities that are financial activities for purposes of clause (i), including applicable digital asset activities that are financial activities; and</text></subclause><subclause id="HF2F87F417F5B41E48B546016A10CDC97" commented="no"><enum>(II)</enum><text>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).</text></subclause></clause></subparagraph></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="H8894419B7D474DC29F079AD2BB034996"><enum>(3)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" id="H9668B002072F4B3F92A332E0B81DA17A" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><section id="H2E8034BA972B4563BBEB51C98B5DF564"><enum>21.</enum><header>Commodity-backed payment stablecoins</header><subsection id="H9A8103CDF33348548B8AF5C98E7A7587"><enum>(a)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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.</text></subsection><subsection id="HCA659A896D2E4EFA991DC1307C348B79"><enum>(b)</enum><header>Preservation of Federal authority</header><text>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.</text></subsection><subsection id="HAC2335AF046D43C7A50F55E7F79FB664"><enum>(c)</enum><header>Definitions</header><text>For purposes of this section:</text><paragraph id="H3A6AD8CD85104BFD8B87593815003659"><enum>(1)</enum><header>Commodity-backed payment stablecoin</header><text>The term <quote>commodity-backed payment stablecoin</quote> means a digital asset—</text><subparagraph id="H7B7AAB647D5544A7984B0AAD484ED39B"><enum>(A)</enum><text>that is, or is designed to be, used as a means of payment or settlement;</text></subparagraph><subparagraph id="HA8A2908A1D7A4C3889BFB80E0EF61A79"><enum>(B)</enum><text>that is denominated in a highly liquid, publicly traded physical commodity, such as gold;</text></subparagraph><subparagraph id="H98115A147E36469D9894CAB2D0C10803"><enum>(C)</enum><text>the issuer of which is obligated to—</text><clause id="H5EBD5760F4454179A658453D13E73F94"><enum>(i)</enum><text>convert, redeem, or repurchase for a fixed amount of the denominated highly liquid, publicly traded physical commodity; and</text></clause><clause id="HA428012267224F3ABF44D1C1A418F063"><enum>(ii)</enum><text>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</text></clause></subparagraph><subparagraph id="HE83C44AA5E9B47D8A071D3D458856304"><enum>(D)</enum><text>that is not—</text><clause id="HB754FFDA317D406EBD5E9D1738AF3032"><enum>(i)</enum><text>a security issued by—</text><subclause id="H1C24E39557D547F887547A6726149D01"><enum>(I)</enum><text>an investment company registered under section 8(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-8">15 U.S.C. 80a–8(a)</external-xref>); or</text></subclause><subclause id="H14F51F292CA74006BCAD4BFF426DA2AC"><enum>(II)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a-3(c)</external-xref>);</text></subclause></clause><clause id="H2F5C3154AA07447C97F2D0792E175511"><enum>(ii)</enum><text>a deposit (as defined under section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>)), regardless of the technology used to record such deposit;</text></clause><clause id="HBC1FD650592D45D987C181ABB8ADC131"><enum>(iii)</enum><text>an account (as defined in section 101 of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1752">12 U.S.C. 1752</external-xref>)), regardless of the technology used to record such account; or</text></clause><clause id="H95303CD0827C4A21876FAAFE8D87F7AE"><enum>(iv)</enum><text>an interest or participation in a commodity pool (as defined in section 1a(10) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>)).</text></clause></subparagraph></paragraph><paragraph id="H8DB8DBE75B2F4372B75643C37D05F419"><enum>(2)</enum><header>Commodity-backed payment stablecoin issuer</header><text>The term <quote>commodity-backed payment stablecoin issuer</quote> means—</text><subparagraph id="HE505D40EDE5849839950AFCB14659B04"><enum>(A)</enum><text>an entity that issues a commodity-backed payment stablecoin; and</text></subparagraph><subparagraph id="H539714D4EBEA4835A607E5640D8F77D9"><enum>(B)</enum><text display-inline="yes-display-inline">an entity that is approved to issue such commodity-backed payment stablecoins by a State commodity-backed payment stablecoin regulator.</text></subparagraph></paragraph><paragraph id="HD22BC19EFA8E41F3874AFEC53FD9A90C"><enum>(3)</enum><header>Physical commodity</header><text display-inline="yes-display-inline">The term <quote>physical commodity</quote> means any exempt commodity (as defined in section 1a(21) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>)) which can be physically delivered.</text></paragraph><paragraph id="HF45B2007240744699071E8BD0BD9D12F"><enum>(4)</enum><header>State commodity-backed payment stablecoin regulator</header><text>The term <quote>State commodity-backed payment stablecoin regulator</quote> means a State agency that has primary regulatory and supervisory authority over entities that issue commodity-backed payment stablecoins in such State.</text></paragraph></subsection></section><section id="H360AA9FC9DAC4080BB6F5A80301EBCDB"><enum>22.</enum><header>Protection of self-custody</header><subsection id="H34402C74E28B43F5B9FF7FB86D36519B"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">A United States individual shall retain the right to—</text><paragraph id="HB581923E842D463C805120468E53EA37"><enum>(1)</enum><text>maintain a hardware wallet or software wallet for the purpose of facilitating the individual’s own lawful custody of digital assets; and</text></paragraph><paragraph id="HF249058F11DA46CB97603C60C60C84E3"><enum>(2)</enum><text>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—</text><subparagraph id="H90C2E3E59651472E931DE03F5FED4839"><enum>(A)</enum><text>such other individual or entity is not a financial institution (as defined in section 5312 of title 31, United States Code); and</text></subparagraph><subparagraph id="H9A25DC0B14DC49B0A2DE2F7654D872B7"><enum>(B)</enum><text>the transactions do not involve any property or interests in property that are blocked pursuant to, or are otherwise prohibited by, United States sanctions.</text></subparagraph></paragraph></subsection><subsection id="H6155D9B9656D46819C1410A8FB44F1EC"><enum>(b)</enum><header>Application</header><text>This section—</text><paragraph id="H056744EE320647F3885277B55F221A65"><enum>(1)</enum><text>applies solely to personal use by individuals; and</text></paragraph><paragraph id="HBD9C6AC412664C169A9675926DDD92AE"><enum>(2)</enum><text>does not apply to individuals acting in a custodial or fiduciary capacity for others.</text></paragraph></subsection><subsection id="H08679F3E7E5D41A4BD921172A029D7DE"><enum>(c)</enum><header>Rule of construction</header><text>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—</text><paragraph id="HCEA7EC4E70774376A6BE992E1F7BDDB7"><enum>(1)</enum><text>the Bank Secrecy Act, section 9714 of the Combating Russian Money Laundering Act (<external-xref legal-doc="usc" parsable-cite="usc/31/5318A">31 U.S.C. 5318A</external-xref> note), and section 7213A of the Fentanyl Sanctions Act (<external-xref legal-doc="usc" parsable-cite="usc/21/2313a">21 U.S.C. 2313a</external-xref>); or</text></paragraph><paragraph id="H78406D8F1E714DA4B3C4FC53D5F38E76"><enum>(2)</enum><text>any other law relating to illicit finance, money laundering, terrorism financing, or United States sanctions.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><enum>VI</enum><header>Anti-CBDC Surveillance State Act</header><section id="H9C65BA44095145D593490FBAF5B1006D"><enum>601.</enum><header>Short title</header><text display-inline="no-display-inline">This title may be cited as the <quote>Anti-CBDC Surveillance State Act</quote>.</text></section><section id="HC710E0B4435246EFA588280C007B8157" display-inline="no-display-inline" section-type="subsequent-section"><enum>602.</enum><header>Prohibition on Federal reserve banks relating to certain products or services for individuals and prohibition on directly issuing a central bank digital currency</header><text display-inline="no-display-inline">Section 16 of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/411">12 U.S.C. 411 et seq.</external-xref>) is amended by adding at the end the following new paragraph:</text><quoted-block style="OLC" id="H31D0B287CAF040A7B51E954505B2917D" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HC5EB8599B2B94CB4A318442FD7C6B12B" indent="up1"><enum>(18)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H0304E13B568D40BF82D2E37057598071"><enum>(A)</enum><text>A Federal reserve bank may not—</text><clause id="H8E323E7FE05446DF955116B7CB9099ED" indent="up2"><enum>(i)</enum><text>offer financial products or services directly to an individual;</text></clause><clause id="H671A840D455D4E83B04CB63133AED9FF" indent="up2"><enum>(ii)</enum><text>maintain an account on behalf of an individual; or</text></clause><clause id="H77FB48BE30594364BF12D2093B62D91A" indent="up2"><enum>(iii)</enum><text display-inline="yes-display-inline">issue a central bank digital currency, or any digital asset that is substantially similar under any other name or label.</text></clause></subparagraph><subparagraph id="H63DCA32C4C104CC1962426D4CA75B691" indent="up1"><enum>(B)</enum><text>In this paragraph, the term <quote>central bank digital currency</quote> has the meaning given that term under section 10(11)(D).</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H3B90539FD0E3473CA8994D1268416D7F"><enum>603.</enum><header>Prohibition on Federal reserve banks indirectly issuing a central bank digital currency</header><text display-inline="no-display-inline">Section 16 of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/411">12 U.S.C. 411 et seq.</external-xref>), as amended by section 2, is further amended by adding at the end the following paragraph:</text><quoted-block style="OLC" id="H11A2563064EF4E6C88054FEEC1545BAD" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HB3A45111C75A4C69BC2281D092F64CFA" indent="up1"><enum>(19)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="HF278307BE9DF4A858296C16FB9C8C8A0"><enum>(A)</enum><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H7465E04F7CF44BC1B7880FC5EE2D754E" indent="up1"><enum>(B)</enum><text>In this paragraph, the term <quote>central bank digital currency</quote> has the meaning given that term under section 10(11)(D).</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H227AF355C2264EB5A80E6436DD4A9018"><enum>604.</enum><header>Prohibition with respect to central bank digital currency</header><text display-inline="no-display-inline">Section 10 of the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/241">12 U.S.C. 241 et seq.</external-xref>) is amended by inserting before paragraph (12) the following:</text><quoted-block style="OLC" id="H350A560EC15E464FB98A5F4EF2DF005C" display-inline="no-display-inline" changed="deleted" reported-display-style="strikethrough" committee-id="SSBK00"><paragraph id="HBC70C59E7F9E457C85EAE2442490EE69"><enum>(11)</enum><header>Prohibition with respect to central bank digital currency</header><subparagraph id="HC0FDDA800E0142DA9764F1CC68E06AD2"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H5239E6E9B4354AC6A9B5EE39B7B82DB6"><enum>(B)</enum><header>Monetary policy</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="H72EB5632C3D744D199A460FD5648252F"><enum>(C)</enum><header>Exception</header><text display-inline="yes-display-inline">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.</text></subparagraph><subparagraph id="HBFD32253864D497B91EA639CDA106D16" commented="no" display-inline="no-display-inline"><enum>(D)</enum><header>Central bank digital currency defined</header><text display-inline="yes-display-inline">In this paragraph, the term <quote>central bank digital currency</quote> means a form of digital money or monetary value that is—</text><clause id="HD5F7F7E6F35B4F249C1C557963C9835A" commented="no"><enum>(i)</enum><text>denominated in the national unit of account;</text></clause><clause id="H04BE17E979564C458816A9FC6A361354" commented="no"><enum>(ii)</enum><text>a direct liability of the Federal Reserve System; and</text></clause><clause id="H7A858DBF8A86401C8912D5E59256F6C0" commented="no"><enum>(iii)</enum><text>widely available to the general public.</text></clause></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section><section id="H3760EC753D0F480E9593DFC6C6C658EE"><enum>605.</enum><header>Sense of Congress</header><text display-inline="no-display-inline">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.</text></section>1.Short title; table of contents(a)This Act may be cited as the Digital Asset Market Clarity Act
.(b)The table of contents for this Act is as follows:Sec. 1. Short title; table of contents.Sec. 2. Definitions.TITLE I—Responsible securities innovationSec. 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 financeSec. 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 financeSec. 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 innovationSec. 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 innovationSec. 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 innovationSec. 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 propertySec. 701. Customer property protections for ancillary assets and digital commodities in bankruptcy.Sec. 702. Insolvency safe harbor.TITLE VIII—Customer protectionSec. 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 mattersSec. 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.2.In this Act:(1)Ancillary asset; ancillary asset originator; network tokenThe 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)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)Except where otherwise expressly provided, the term Commission means the Securities and Exchange Commission.(4)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)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 systemsWith 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 systemsThe 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)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 providerThe 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 intermediaryThe 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)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)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 applicationThe 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 protocolThe 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 systemThe 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)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)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)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.<enum>I</enum><header>Responsible securities innovation</header><section id="id63730145e1804cc9a6ffd7a233f3c869"><enum>101.</enum><header>Short title</header><text display-inline="no-display-inline">This title may be cited as the <quote><short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title></quote>.</text></section><section commented="no" display-inline="no-display-inline" section-type="subsequent-section" id="idf89f09c942024d3093abafaa56976778"><enum>102.</enum><header display-inline="yes-display-inline">Disclosure requirements for certain transactions involving ancillary assets</header><subsection id="id9ebd244c28e14080904103e744ab18b7"><enum>(a)</enum><header>In general</header><text>The Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) is amended by inserting after section 4A (<external-xref legal-doc="usc" parsable-cite="usc/15/77d-1">15 U.S.C. 77d–1</external-xref>) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id738e50851db2466a9b78e5b217dc2332" changed="added" reported-display-style="italic" committee-id="SSBK00"><section id="id583cbcba6f2c49b6a2ba7be3dba03171"><enum>4B.</enum><header>Requirements with respect to certain transactions involving ancillary assets</header><subsection id="id09c8c58570d24c28b1489105c5714b08"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id7bdc70527c8c4feab1878f7b3172b89a"><enum>(1)</enum><header>Ancillary asset</header><text>The term <term>ancillary asset</term> 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.</text></paragraph><paragraph id="id3edf8e67194d4f3bb3c254a82d18f8e4"><enum>(2)</enum><header>Ancillary asset originator</header><subparagraph id="idaab6c512402f480f87c5d239746cee03"><enum>(A)</enum><header>In general</header><text>The term <term>ancillary asset originator</term> means, with respect to a particular ancillary asset, a person that (whether directly or through 1 or more subsidiary or controlled entities)—</text><clause id="id9370f905d2954f69aeca8805b9ad30b1"><enum>(i)</enum><text>initially offers, sells, or distributes the ancillary asset; or</text></clause><clause id="ida1903a550f2241b086ab4d184aa54f4e"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="id4a0f66d3ec094530990b3d4b5bbbc933"><enum>(B)</enum><header>Joint and several liability</header><text>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— </text><clause commented="no" display-inline="no-display-inline" id="idb44dc56d8dbd4875ba7aa4b33a41ea79"><enum>(i)</enum><text display-inline="yes-display-inline">in an intermediary capacity; </text></clause><clause commented="no" display-inline="no-display-inline" id="idecf270b1c6694e0a8cff240ec2b58521"><enum>(ii)</enum><text display-inline="yes-display-inline">solely through a gratuitous distribution; </text></clause><clause commented="no" display-inline="no-display-inline" id="id2a623da0a8fc4fdb81738af342c98a92"><enum>(iii)</enum><text display-inline="yes-display-inline">through an offer, sale, or distribution of a security to the public registered under section 5; or </text></clause><clause commented="no" display-inline="no-display-inline" id="id04c04f5f2143402ca0bc179454cbf071"><enum>(iv)</enum><text display-inline="yes-display-inline">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).</text></clause></subparagraph><subparagraph id="id7cc1174b3354410d98465ea5fc67a348"><enum>(C)</enum><header>Rulemaking</header><text>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.</text></subparagraph></paragraph><paragraph id="idba754666d1474aecba3104efc5d198d3"><enum>(3)</enum><header>Certification covered party</header><text>The term <term>certification covered party</term> means—</text><subparagraph id="id018c69938f604043b3f4098098140b08"><enum>(A)</enum><text>an ancillary asset originator;</text></subparagraph><subparagraph id="id77428e5e71964c8b8d6cc896aabc8903"><enum>(B)</enum><text>a subsidiary of the ancillary asset originator;</text></subparagraph><subparagraph id="id493d1043855d48a181057d5dd8e141ed"><enum>(C)</enum><text>a related person of the ancillary asset originator; or</text></subparagraph><subparagraph id="id2c3c619e69474f329fdc74e9e23b6d30"><enum>(D)</enum><text>any entity that directly or indirectly controls or is controlled by a common entity with the ancillary asset originator.</text></subparagraph></paragraph><paragraph id="id24dd54d711534d67b2b4196ec6e4abd7"><enum>(4)</enum><header>Decentralized governance system; digital asset; digital asset intermediary; related person; securities laws</header><text>The terms <term>decentralized governance system</term>, <term>digital asset</term>, <term>digital asset intermediary</term>, <term>related person</term>, and <term>securities laws</term> have the meanings given those terms in section 2 of the <short-title>Digital Asset Market Clarity Act</short-title>.</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ide71d4d4e8d8d480599da85f43623e87b"><enum>(5)</enum><header display-inline="yes-display-inline">Gratuitous distribution</header><subparagraph id="ideee76e5a2488423495c56acbacd44c6e"><enum>(A)</enum><header>In general</header><text>The term <term>gratuitous distribution</term>—</text><clause id="id03af8a96f2d348478c947cf12b1efa7f"><enum>(i)</enum><text>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</text></clause><clause id="id10c8d5e37f75489e8ab2761ae6a0f849"><enum>(ii)</enum><text>includes, without limitation, the mechanisms and methods of distribution described in subparagraph (B).</text></clause></subparagraph><subparagraph id="id12e309ed786d4c8b9088ded6f7d179ec"><enum>(B)</enum><header>Mechanisms and methods of distribution</header><text>The mechanisms and methods of distribution described in this subparagraph are the following:</text><clause id="ide6c4d5ef482248b6a342a66662f7e0d4"><enum>(i)</enum><header>Self staking</header><text>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.</text></clause><clause id="idce47aef76e41474f9308196e9a945033"><enum>(ii)</enum><header>Self-custodial staking with a third party</header><text>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—</text><subclause id="id7f93c15e6c4448fb8f1e716a10018f43"><enum>(I)</enum><text>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</text></subclause><subclause id="id69314d17f93946a4a37c8702c62bd184"><enum>(II)</enum><text>the operator of the node, validator, or substantially similar software does not maintain custody or control of the staked network token.</text></subclause></clause><clause id="idcd3bbc501be747deb75db9179010b823"><enum>(iii)</enum><header>Liquid staking</header><text>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.</text></clause><clause id="ida94409dbe9aa4807a667a48f043c0bec"><enum>(iv)</enum><header>Custodial and ancillary staking services</header><subclause id="idcce656104e974002984a3252eb80399f"><enum>(I)</enum><header>In general</header><text>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.</text></subclause><subclause id="idcb310947b86846fdbb9fa60128348161"><enum>(II)</enum><header>Rulemaking to define the custodial and ancillary staking services</header><text>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.</text></subclause></clause><clause id="id8f8c86c9f0424c278924221ac34207e4"><enum>(v)</enum><header>Programmatic and automated distributions</header><text>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—</text><subclause id="id536fbd08bca54ac0ae8c39ee52065d4b"><enum>(I)</enum><text>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;</text></subclause><subclause id="id8b4cc77a6e58462aa84277312db08624"><enum>(II)</enum><text>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;</text></subclause><subclause id="idf0297f1913c04ba7b191ebe4617f1ba8"><enum>(III)</enum><text>the number of network tokens received is proportionate to the verifiable service, usage, or contribution;</text></subclause><subclause id="id8821a968a7ec4db59cde5de0a72a4b05"><enum>(IV)</enum><text>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</text></subclause><subclause id="id013481a461e84163a716ca53661a3651"><enum>(V)</enum><text>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.</text></subclause></clause><clause id="id74ef0906740b46cfb50608750963d8b0"><enum>(vi)</enum><header>Technology-neutral clause</header><text>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).</text></clause></subparagraph></paragraph><paragraph id="id077ad728c4cf4ade8207e6d4018aa14d"><enum>(6)</enum><header>Investment company</header><text>The term <term>investment company</term> has the meaning given the term in section 3(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(a)</external-xref>).</text></paragraph><paragraph id="id65c7194847ae40a39cfa7f2b9fc09d78"><enum>(7)</enum><header>Network token</header><subparagraph id="idde47bbe2e6ec428997490d9065a0fcb8"><enum>(A)</enum><header>In general</header><text>The term <term>network token</term> 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 <short-title>Digital Asset Market Clarity Act</short-title> and the amendments made by the <short-title>Digital Asset Market Clarity Act</short-title>, is treated as a non-security solely for purposes of the securities laws.</text></subparagraph><subparagraph id="id1cde4554b92040aa816e0b9efc208781"><enum>(B)</enum><header>Disqualifying financial rights</header><text>The term <term>network token</term> does not include any of the following:</text><clause id="id4b4b5ef5747444249c20e339ba13bae0"><enum>(i)</enum><text>Any security, consistent with the categories of disqualifying financial rights described in clause (ii).</text></clause><clause id="id9fc69295a6bc4052818c31cbe3249c9f"><enum>(ii)</enum><text>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:</text><subclause id="idaeadc223eb6a47e1b8a71f5ff27c2458"><enum>(I)</enum><text>A debt or equity interest, or an option on a debt or equity interest, in a person.</text></subclause><subclause id="idda0809930c3f4e958daefa9443b6d479"><enum>(II)</enum><text>Liquidation rights with respect to a person.</text></subclause><subclause id="id68255fe3822b4fe0ae0abc1416428acd"><enum>(III)</enum><text>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).</text></subclause><subclause id="id78a929d3e2ea42169db4b25674b14e92"><enum>(IV)</enum><text>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).</text></subclause></clause><clause id="ide37611a74e7e440dad6b6ff9b98a39a0"><enum>(iii)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2</external-xref>)) that would be an investment company under section 3(a) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(a)</external-xref>) but for the exclusions provided from that definition by section 3(c) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(c)</external-xref>).</text></clause><clause id="idd1340cf8d2cc47068f349f5525740f70"><enum>(iv)</enum><text>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.</text></clause></subparagraph><subparagraph id="id3ce177f59ada45b196fc6e7056fff0f3"><enum>(C)</enum><header>Rule of construction</header><text>A digital commodity—</text><clause id="id264ecbfb20dd42d0b38189e966600d10"><enum>(i)</enum><text>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</text></clause><clause id="iddac4cf6fbfb54861b1363c037d245cca"><enum>(ii)</enum><text>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 <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>.</text></clause></subparagraph></paragraph></subsection><subsection id="idb26ee57eca504b9da757441db28e55cb"><enum>(b)</enum><header>Treatment of network tokens and transactions</header><paragraph id="idd88e49b571024d9abfe9dbf0010788f3"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idd3545c157a9646dbb2b50af46409e5ae"><enum>(2)</enum><header display-inline="yes-display-inline">Treatment as non-security</header><text>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 —</text><subparagraph id="id0fb276da52d54add953db8a37c6dfa7a"><enum>(A)</enum><text>section 2(a)(1);</text></subparagraph><subparagraph id="idd404ef2025b3453baae39bcc6dd54abb"><enum>(B)</enum><text>section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>);</text></subparagraph><subparagraph id="id5203853fe6ba4ab289d75eeb9c45ef60"><enum>(C)</enum><text>section 2(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)</external-xref>);</text></subparagraph><subparagraph id="id66d4f320a1504cde897532f0c9261636"><enum>(D)</enum><text>section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>);</text></subparagraph><subparagraph id="idf8119b49e28c4fe3b92018f51ba76fb6"><enum>(E)</enum><text>section 16 of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll</external-xref>); or</text></subparagraph><subparagraph id="idb9f7f1e942674147b030c74ae21a4a1c"><enum>(F)</enum><text>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—</text><clause id="id01f372754ffb4385ac2e760c79078db7"><enum>(i)</enum><text>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</text></clause><clause id="idc064befdfd784ea880b7ded690125423"><enum>(ii)</enum><text>inconsistent with this section.</text></clause></subparagraph></paragraph><paragraph id="iddb25e9dbf5794f4aad477b1a169ae91a"><enum>(3)</enum><header>Secondary market treatment</header><subparagraph commented="no" display-inline="no-display-inline" id="iddfa1872542ab45c291bdc9eff3954578"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text>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—</text><clause id="id26769731526d4eeab694e1fe1ed8772b"><enum>(i)</enum><text>section 2(a)(1);</text></clause><clause id="idfc0e432c60084517a02328ea2faa96a5"><enum>(ii)</enum><text>the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>);</text></clause><clause id="id8da650f0932d4217ad52bf29170083b8"><enum>(iii)</enum><text>the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-1">15 U.S.C. 80a–1 et seq.</external-xref>);</text></clause><clause id="id11b85787200a4f919652b142e3532ba6"><enum>(iv)</enum><text>the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>);</text></clause><clause id="id729abeef7eac48c09c53307bf742c2c2"><enum>(v)</enum><text>the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>); and</text></clause><clause id="idae3d72e5e5f542f6bb34ae8417d22d55"><enum>(vi)</enum><text>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—</text><subclause id="idd5491cb4c5b948b9ae9f993a721bb17f"><enum>(I)</enum><text>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</text></subclause><subclause id="id35cee1166f5d448db7b25a31299757b6"><enum>(II)</enum><text>inconsistent with this section.</text></subclause></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idfe51897eb3414a9d9b0e62d92d15c86b"><enum>(B)</enum><header>Limitation</header><text>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.</text></subparagraph></paragraph><paragraph id="idb84bccb1a6cc4ba3a74bc8d2073e70c5"><enum>(4)</enum><header>Treatment of gratuitous distributions</header><subparagraph id="idd8e1592e09e141c08867b4af97deedc3"><enum>(A)</enum><header>In general</header><text>A gratuitous distribution, by itself, shall be presumed to not constitute an offer, sale, or distribution of a security for the purposes of—</text><clause id="idba8cb56280b246f58f66a5b7a34138dd"><enum>(i)</enum><text>section 2(a)(1);</text></clause><clause id="idb1f8c539c63c46f1864c0ad2a7f88b8d"><enum>(ii)</enum><text>section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>);</text></clause><clause id="iddcefe28ef5944629a22e7b83a70f542e"><enum>(iii)</enum><text>section 2(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)</external-xref>);</text></clause><clause id="idfad7758d394e4666a71b84d206cfa586"><enum>(iv)</enum><text>section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>);</text></clause><clause id="idc3807e1a205346b6aec03f17e60d8c55"><enum>(v)</enum><text>section 16 of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll</external-xref>); or</text></clause><clause id="idb6b2b7f8fc254e4fa72a4a8717df2e26"><enum>(vi)</enum><text>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—</text><subclause id="idd2e7195b56ba4bbb95c06d654814c2d2"><enum>(I)</enum><text>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</text></subclause><subclause id="idd581cb4ecc7d40aca54dee5a86aca056"><enum>(II)</enum><text>inconsistent with this section.</text></subclause></clause></subparagraph><subparagraph id="id9015f2861c544a56b6ca2beb8c9c4f2d"><enum>(B)</enum><header>Savings clause</header><text>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.</text></subparagraph></paragraph><paragraph id="ide1ac9f04045845f78fec64caf98bae91"><enum>(5)</enum><header>Prior certification</header><subparagraph id="id0454242b9cb44074941a40920cb2e498"><enum>(A)</enum><header>Submission and default treatment</header><clause id="id64283ae5d5094893bfcd70fa3e21e232"><enum>(i)</enum><header>In general</header><subclause commented="no" display-inline="no-display-inline" id="id42abc3dc47fa4c278253b64084fa2ec1"><enum>(I)</enum><header display-inline="yes-display-inline">Presumption</header><text>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. </text></subclause><subclause commented="no" display-inline="no-display-inline" id="id3f80af8e35ed4b3ba9f96af40c124643"><enum>(II)</enum><header>Contents</header><text display-inline="yes-display-inline">A certification submitted under subclause (I) shall include a statement in accordance with subsection (d)(3)(B)(i).</text></subclause></clause><clause commented="no" display-inline="no-display-inline" id="ida24ecddcb9054d308762b96e84eda56b"><enum>(ii)</enum><header>Notification</header><text display-inline="yes-display-inline">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.</text></clause><clause commented="no" display-inline="no-display-inline" id="ide5e2065f314d493cbf8793e9b5b2e323"><enum>(iii)</enum><header>Reciprocal notice</header><text>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.</text></clause></subparagraph><subparagraph id="id9002383f3ec54e198a20ad130a37495e"><enum>(B)</enum><header>Automatic effectiveness</header><text>A certification submitted under subparagraph (A) by an originator or a digital asset intermediary shall become effective upon the earlier of—</text><clause id="id2e50ce7d142a496e8e8587dfe842eb64"><enum>(i)</enum><text>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</text></clause><clause id="id8869a248f0bf44c2bd7cc4604e8509e6"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="idacc0e70c19d9474eb2d56a229fd1ec67"><enum>(C)</enum><header>Commission denial</header><clause id="id58d6864d36714ae99b3a45f69803e039"><enum>(i)</enum><header>Authority to deny</header><text>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.</text></clause><clause commented="no" display-inline="no-display-inline" id="id523821f72ab54067b2206ce7413ec4a0"><enum>(ii)</enum><header>Notice of intent to deny</header><text>If the Commission intends to deny a certification submitted under subparagraph (A), the Commission shall—</text><subclause id="id4d861c64f3014c719f01edaf0143b13c"><enum>(I)</enum><text>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</text></subclause><subclause commented="no" display-inline="no-display-inline" id="idb7e9057ef40f488cba22de6a6773f3b5"><enum>(II)</enum><text display-inline="yes-display-inline">provide to the applicable originator or digital asset intermediary a 10-day period following the provision of notice under subclause (I) during which— </text><item commented="no" display-inline="no-display-inline" id="id64dcab87af12446988e110aff6a600b7"><enum>(aa)</enum><text display-inline="yes-display-inline">interested persons shall have an opportunity to submit written data, views, and arguments relating to that certification; and</text></item><item commented="no" display-inline="no-display-inline" id="id44132ca097df4f9ebbf31e1622a8f8f5"><enum>(bb)</enum><text>the Commodity Futures Trading Commission may, at the discretion of the Commodity Futures Trading Commission, submit input regarding whether the applicable asset—</text><subitem commented="no" display-inline="no-display-inline" id="id89844dd3a20e4b13bbfa67bc123f7858"><enum>(AA)</enum><text display-inline="yes-display-inline">satisfies the requirements for being considered an ancillary asset; or</text></subitem><subitem id="idfbf53f970fe4495596c89109827a9756"><enum>(BB)</enum><text>includes any disqualifying financial right described in subsection (a)(7)(B).</text></subitem></item></subclause></clause><clause id="id3b8f788c4aff4dd6b31496a29909093b"><enum>(iii)</enum><header>Requirements after notice of intent</header><text>After the 10-day period described in clause (ii)(II), the Commission shall—</text><subclause id="id8ef5dc763b6147d0b91070f131636da8"><enum>(I)</enum><text>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; </text></subclause><subclause id="ide7806af81d7f47a4983ae435e206de24"><enum>(II)</enum><text>have a vote of the Commission (which, notwithstanding section 4A of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78d-1">15 U.S.C. 78d–1</external-xref>), 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— </text><item commented="no" display-inline="no-display-inline" id="idefb58e69517f4b5d952da81ea0a17744"><enum>(aa)</enum><text display-inline="yes-display-inline">is an ancillary asset; or</text></item><item commented="no" display-inline="no-display-inline" id="ideedf3627d4974489a548dec79b8c2c8e"><enum>(bb)</enum><text display-inline="yes-display-inline">includes any disqualifying financial right described in subsection (a)(7)(B); and</text></item></subclause><subclause commented="no" display-inline="no-display-inline" id="id73ae4f0e759344c8894d962461ec23be"><enum>(III)</enum><text>notify the Commodity Futures Trading Commission of each denial made under subclause (II).</text></subclause></clause><clause id="id81131f0b2e7645dead128a681cc2d250"><enum>(iv)</enum><header>Interested person</header><text>For purposes of this subparagraph, the term <term>interested person</term> means, with respect to a network token—</text><subclause id="id03c2dce788e44c7481b1491c18e65c04"><enum>(I)</enum><text>the ancillary asset originator with respect to that network token (referred to in this clause as <quote>the originator</quote>);</text></subclause><subclause id="id630682ab6a6b4d8e862e46feecf61014"><enum>(II)</enum><text>a subsidiary of the originator;</text></subclause><subclause id="idad94b30551b5495685f9c12fa6b2d02a"><enum>(III)</enum><text>a related person of the originator;</text></subclause><subclause id="idb13d5546de9c42c3a0e7247e28a96a58"><enum>(IV)</enum><text>any entity that directly or indirectly controls or is controlled by a common entity with the originator;</text></subclause><subclause id="idcd58ed349f7b4c829cebd04f41eb9f5c"><enum>(V)</enum><text>any broker or dealer (as those terms are defined in section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>)), or an exchange registered pursuant to section 6 of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/78f">15 U.S.C. 78f</external-xref>), that operates in connection with digital assets; or</text></subclause><subclause id="id7fc6e12c563d408fb39d6a180bcb9e15"><enum>(VI)</enum><text>any person registered with the Commodity Futures Trading Commission that operates or proposes to operate in connection with digital assets.</text></subclause></clause></subparagraph><subparagraph id="id2bfb9dc135a84bb0a088714d512b8c6c"><enum>(D)</enum><header>Certification filed by digital asset intermediary</header><clause commented="no" display-inline="no-display-inline" id="id4d3eb1801d884b6b86838b2d9c722774"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text>A certification submitted by a digital asset intermediary under this paragraph shall only become effective if— </text><subclause commented="no" display-inline="no-display-inline" id="ideff47edfa0624c2581ca3cbc53dfd7c8"><enum>(I)</enum><text display-inline="yes-display-inline">the digital asset intermediary has— </text><item commented="no" display-inline="no-display-inline" id="id3ae4bf3de5054d56ae694e411abe61a6"><enum>(aa)</enum><text display-inline="yes-display-inline">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</text></item><item commented="no" display-inline="no-display-inline" id="id727117039a3649e99d7c7b4f018442a3"><enum>(bb)</enum><text>concluded that the efforts described in item (aa) have not occurred or are not reasonably likely to occur; and</text></item></subclause><subclause commented="no" display-inline="no-display-inline" id="id2e955c994644465091643058a50d0a5f"><enum>(II)</enum><text>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.</text></subclause></clause><clause commented="no" display-inline="no-display-inline" id="id3db37489a9204e8dad4a37612c7fb55d"><enum>(ii)</enum><header>Limitation</header><text>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. </text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8e1af9a9ff0b48318b0541eee214a630"><enum>(E)</enum><header display-inline="yes-display-inline">Final agency action</header><text>Denial under this paragraph constitutes final agency action reviewable under applicable law.</text></subparagraph><subparagraph id="id704872c0e7fa499b85b28065cece9067"><enum>(F)</enum><header>Tolling</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title>, 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.</text></subparagraph><subparagraph id="idb202fd0984254802a8bd076c8b93ca2b"><enum>(G)</enum><header>Withdrawal</header><text>An originator or digital asset intermediary may withdraw a certification submitted under subparagraph (A) at any time before approval.</text></subparagraph><subparagraph id="idb5dec213e2ee43c4b26728a92dbc797d"><enum>(H)</enum><header>Designated commission office</header><text>The Commission shall designate an office that shall—</text><clause id="id4117163101fe4cad969d402de3e18adb"><enum>(i)</enum><text>acknowledge receipt of certifications submitted under subparagraph (A);</text></clause><clause id="id973f5a4dd4504d5f8fee375cbfc3f68c"><enum>(ii)</enum><text>support those seeking certification under subparagraph (A) by providing guidance regarding the mechanics of preparing and submitting those certifications; and</text></clause><clause id="id72c0abc0093c4f1d969e9fe69a5fee90"><enum>(iii)</enum><text>route certifications submitted under subparagraph (A), together with any associated comments or recommendations, to the appropriate division or office of the Commission for review.</text></clause></subparagraph><subparagraph id="id593f1fb7be2a4c11b5189de37ab8732c"><enum>(I)</enum><header>Misstatements or omissions</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="id4ef04010ec794c159dbf3fb3efa314ee"><enum>(c)</enum><header>Disclosure requirements for certain transactions involving ancillary assets</header><paragraph id="idad5f53d87ed84c4b8b6b5ccae3c45822"><enum>(1)</enum><header>Specified initial and periodic disclosure requirements</header><subparagraph id="id7b176fe9491c45feaa70b4103d71d014"><enum>(A)</enum><header>In general</header><text>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:</text><clause commented="no" display-inline="no-display-inline" id="id97e6e30a2ada4d91915f6788a205812c"><enum>(i)</enum><text display-inline="yes-display-inline">Any offer, sale, or distribution of an ancillary asset after the effective date of the <short-title>Digital Asset Market Clarity Act</short-title> by, or that is caused by, that ancillary asset originator pursuant to— </text><subclause commented="no" display-inline="no-display-inline" id="id69aee16f6ab34b34aaada51516ae0b23"><enum>(I)</enum><text display-inline="yes-display-inline">Regulation Crypto, as adopted pursuant to section 103 of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>;</text></subclause><subclause commented="no" display-inline="no-display-inline" id="idfee0e006d1d14603bfc9c067e054a0fd"><enum>(II)</enum><text>the filing of an effective registration statement under this Act;</text></subclause><subclause commented="no" display-inline="no-display-inline" id="ide30766370a8745be96af7f79b9e4783a"><enum>(III)</enum><text>the filing of an offering statement described in section 3(b)(2); or</text></subclause><subclause commented="no" display-inline="no-display-inline" id="iddfb49d7d2ab44c78bbca2a544a8c1300"><enum>(IV)</enum><text>an offering conducted pursuant to section 4(a)(6).</text></subclause></clause><clause commented="no" display-inline="no-display-inline" id="id92b38da0e96a41598580d3793651eefc"><enum>(ii)</enum><subclause commented="no" display-inline="yes-display-inline" id="idbbe836db8c0d4162a8a46c685f51f99e"><enum>(I)</enum><text>The first secondary market offer, sale, or distribution of an ancillary asset in the United States after the effective date of the <short-title>Digital Asset Market Clarity Act</short-title> that constitutes a public offering, whether by the ancillary asset originator or any other person.</text></subclause><subclause commented="no" display-inline="no-display-inline" indent="up1" id="id10f1b13bac334351b1a2a6575fd54a62"><enum>(II)</enum><text>For the purposes of subclause (I), the term <term>public offering</term> shall be interpreted consistent with the meaning of that term under section 4(a)(2).</text></subclause></clause></subparagraph><subparagraph id="id306bd5f0fb5146da9c6743a2e49bdc85"><enum>(B)</enum><header>Exclusion</header><text>Subparagraph (A) shall not apply if—</text><clause id="id081c93fa28df481dac604cf6097a67f1"><enum>(i)</enum><text>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</text></clause><clause id="id8f836736f93a46edac5a34f3ebfe2928"><enum>(ii)</enum><text>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)).</text></clause></subparagraph><subparagraph id="idbc68e0650f054ab8be3a616b86dac505"><enum>(C)</enum><header>Calculation</header><text>For the purposes of this paragraph, the calculation of daily aggregate value shall be based on a reasonable calculation of public data.</text></subparagraph></paragraph><paragraph id="id8ad1ff62117644c79b569a5bdbd6f5e6"><enum>(2)</enum><header>Commencement of compliance with specified initial and periodic disclosure requirements</header><subparagraph id="id6b736d8dcdcf4f5e912bba414b659b37"><enum>(A)</enum><header>In general</header><text>An ancillary asset originator subject to the requirements of paragraph (1) shall comply with the disclosure requirements under subsection (d)—</text><clause id="id42a08b14828f49e8a70642003fc659ce"><enum>(i)</enum><text>before—</text><subclause id="id40d7199200db4e748497e4640e2dcd42"><enum>(I)</enum><text>any initial offer, sale, or distribution described in paragraph (1)(A)(i); or</text></subclause><subclause id="id81205f93bd644a11becd4df5afc47000"><enum>(II)</enum><text>a secondary market offer, sale, or distribution described in paragraph (1)(A)(ii); and</text></subclause></clause><clause id="id6814e19359364db0824052ea61c218d9"><enum>(ii)</enum><text>semiannually thereafter.</text></clause></subparagraph><subparagraph id="ida5618d16ec804e148f10d4f8259ad012"><enum>(B)</enum><header>Exclusion</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title> 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.</text></subparagraph></paragraph><paragraph id="idac07071e97824cd4923fbd565b91045b"><enum>(3)</enum><header>Transition rule</header><subparagraph id="idfdd0fcc186674d2a810b7db4f04ee7c1"><enum>(A)</enum><header>In general</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title> shall comply with the periodic disclosure requirements under subsection (d), if applicable, beginning on the date that is 1 year after that effective date.</text></subparagraph><subparagraph id="id9bb616b7966f46938c7bd4b677d0d864"><enum>(B)</enum><header>Effect on certification</header><text>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.</text></subparagraph><subparagraph id="id21f11c2fc1b242f6bcf3c7d6173da3be"><enum>(C)</enum><header>Period of disclosures</header><text>The disclosures required under subparagraph (A) shall apply with respect to the 3-year period preceding the effective date described in that subparagraph.</text></subparagraph></paragraph><paragraph id="idcbce187c54c9401fa8dcc4e3f82a45e5"><enum>(4)</enum><header>Digital asset intermediaries</header><subparagraph id="idae175a1878dc488195eec634c27a1d5f"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="id3ca64423fcd44456a6032118fc63d4a1"><enum>(B)</enum><header>Allocation of disclosure responsibility</header><clause commented="no" display-inline="no-display-inline" id="idadad754e52a84c5693ed9411e3a2fde8"><enum>(i)</enum><header display-inline="yes-display-inline">Originator filings</header><text>A digital asset intermediary may not satisfy the requirements of subsection (d) in lieu of the applicable ancillary asset originator, if—</text><subclause commented="no" display-inline="no-display-inline" id="idd85d0fe9d27e44548635bffb7d31d523"><enum>(I)</enum><text display-inline="yes-display-inline">the ancillary asset originator is incorporated, organized, or otherwise registered under the laws of the United States or of any State; and</text></subclause><subclause commented="no" display-inline="no-display-inline" id="id74363507d20948b7be43695e715289ce"><enum>(II)</enum><text>the applicable ancillary asset is—</text><item commented="no" display-inline="no-display-inline" id="idd4f1a814a7ee4ee3aff95ed755f267e5"><enum>(aa)</enum><text display-inline="yes-display-inline">offered, sold, or distributed after the effective date of the <short-title>Digital Asset Market Clarity Act</short-title> pursuant to—</text><subitem commented="no" display-inline="no-display-inline" id="ida0194117577f434ab0d56a824485f4bb"><enum>(AA)</enum><text display-inline="yes-display-inline">an investment contract that is offered, sold, or distributed pursuant to Regulation Crypto, as adopted pursuant to section 103 of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>;</text></subitem><subitem commented="no" display-inline="no-display-inline" id="idb77e7ec68b49439a94fb109aba782f3e"><enum>(BB)</enum><text display-inline="yes-display-inline">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);</text></subitem><subitem commented="no" display-inline="no-display-inline" id="ida0305c70a851470d9a7d6fc4e19fa820"><enum>(CC)</enum><text display-inline="yes-display-inline">the filing of an offering statement described in section 3(b)(2); or</text></subitem><subitem commented="no" display-inline="no-display-inline" id="id4dad9cc156dd4ff1b260bbe03d2fa5ba"><enum>(DD)</enum><text>an offering conducted pursuant to section 4(a)(6); or</text></subitem></item><item commented="no" display-inline="no-display-inline" id="id2afb793bf7a64807b326adf38a63a3bc"><enum>(bb)</enum><text>first offered or sold after the effective date of the <short-title>Digital Asset Market Clarity Act</short-title> in a transaction described in paragraph (1)(A)(ii).</text></item></subclause></clause><clause commented="no" display-inline="no-display-inline" id="id028ba1df3be24100bf5173c0ae598996"><enum>(ii)</enum><header>Commission determination</header><subclause commented="no" display-inline="no-display-inline" id="id25c1f72496c64daf8a10b1cfafc94ab1"><enum>(I)</enum><header display-inline="yes-display-inline">In general</header><text>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).</text></subclause><subclause commented="no" display-inline="no-display-inline" id="id207eb9349b364690aee6dda4a9a559d6"><enum>(II)</enum><header>Extraterritorial effect</header><text>Subclause (I) shall apply extraterritorially.</text></subclause></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id52bfc847f5ac4a6c89821e5d35dded4b"><enum>(C)</enum><header>Standard of liability</header><text>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.</text></subparagraph></paragraph><paragraph id="id29d47a2b2e3842079f5642bb6f929ec0"><enum>(5)</enum><header>Failure to comply</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title> (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).</text></paragraph></subsection><subsection id="id3e9a848b6c5144fc86440fffe21200b0"><enum>(d)</enum><header>Specified initial and periodic disclosure requirements</header><paragraph id="ida2989687851849579768c424d281256a"><enum>(1)</enum><header>In general</header><subparagraph id="id9131197a84284b4da5c6bff751112104"><enum>(A)</enum><header>Furnishing of information</header><text>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.</text></subparagraph><subparagraph id="id97a60946410b4bc7ab2ecabe0d363401"><enum>(B)</enum><header>Requirements for rules</header><text>A rule prescribed under subparagraph (A) shall be reasonably tailored, including by adjusting the scope, form, and content of required disclosures, based on— </text><clause commented="no" display-inline="no-display-inline" id="idbdf747f5bfab414782904fcc65d87de6"><enum>(i)</enum><text display-inline="yes-display-inline">the size of the applicable ancillary asset originator in accordance with section 108(a) of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>;</text></clause><clause commented="no" display-inline="no-display-inline" id="idf9086b7e76df4576ba7608e088f153da"><enum>(ii)</enum><text>the aggregate amount of ancillary assets offered, sold, or distributed by the applicable ancillary asset originator to the public in the United States; and</text></clause><clause commented="no" display-inline="no-display-inline" id="id2543175e333f4e1b8e672bc1ad29fbe7"><enum>(iii)</enum><text>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 <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>.</text></clause></subparagraph></paragraph><paragraph id="id1bc400f1d5114b3292a8d9ee4faaaa78"><enum>(2)</enum><header>Categories of information</header><text>The information required under paragraph (1) shall include the following with respect to the applicable ancillary asset originator and the related ancillary asset:</text><subparagraph id="idc7f553f1d8c943998d0c2dc69773d848"><enum>(A)</enum><text>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:</text><clause id="id45ec62b2c71e4e269e8a94f9d73791ef"><enum>(i)</enum><text>The experience of the ancillary asset originator (or persons controlling the ancillary asset originator) in developing ancillary assets.</text></clause><clause id="id0385bc7248ab4ac2ac4687dbc59ccad7"><enum>(ii)</enum><text>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.</text></clause><clause id="idca52e268cf4e46019dad780892fac224"><enum>(iii)</enum><text>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).</text></clause><clause id="id5dc65e82baf74c0999ebe20c316365d4"><enum>(iv)</enum><text>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.</text></clause><clause id="idcd0f7816f0014c748c5dc9d17da6e9c8"><enum>(v)</enum><text>The experience of the ancillary asset originator with the use of a distributed ledger system or distributed ledger technology.</text></clause><clause id="id7b21e81be2d4481d9ecd04aec7450740"><enum>(vi)</enum><text>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.</text></clause><clause id="ida232be9f9f4b4a9f9fa5e8f9c84a8499"><enum>(vii)</enum><text>Financial statements of the ancillary asset originator that are—</text><subclause id="idc728722893234a208a277532e9a853ca"><enum>(I)</enum><text>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</text></subclause><subclause id="ide99e60b504954076944271f11ec18485"><enum>(II)</enum><text>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.</text></subclause></clause><clause id="id36042413f00e4b29abe259cfae672de4"><enum>(viii)</enum><text>A description of any legal proceedings in which the ancillary asset originator is engaged.</text></clause><clause id="idbfca7b3722394aa7838f1d4fde585477"><enum>(ix)</enum><text>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.</text></clause><clause id="id1eb1855417454fbea6a3c127858f5913"><enum>(x)</enum><text>Information relating to ownership of the ancillary asset by—</text><subclause id="id0153723229614588a6cc145f12dfafc3"><enum>(I)</enum><text>persons owning not less than 10 percent of any class of equity security or other ownership interest of the ancillary asset originator; and</text></subclause><subclause id="id6952a288e2f4477d9f44ff8b284983f4"><enum>(II)</enum><text>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.</text></subclause></clause><clause id="id82ddaebf2e024a718b00e074433d7fa1"><enum>(xi)</enum><text>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.</text></clause><clause id="id736b8d4340f44204ac27c4ac5a84aa40"><enum>(xii)</enum><text>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.</text></clause><clause id="id28c27ee8503944baa290631877783edc"><enum>(xiii)</enum><text>Purchases or similar acquisitions of ancillary assets by the ancillary asset originator and affiliates of the ancillary asset originator.</text></clause><clause id="id325d9fc9c8c94e96ab93080b11a535f8"><enum>(xiv)</enum><text>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.</text></clause><clause id="id2b32b4e736a4440fa5bd8c014bad30cf"><enum>(xv)</enum><text>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 <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>.</text></clause></subparagraph><subparagraph id="idd82b28841c0e46f783fa72741e0e2b10"><enum>(B)</enum><text>Economic and technical information relating to the ancillary asset, which may include the following items, as the Commission shall determine by rule:</text><clause id="ida441fe499eae41a6821d5d7ff9afa558"><enum>(i)</enum><text>A general description of the ancillary asset and the distributed ledger system to which that ancillary asset relates, including—</text><subclause id="idec64c982c61d45cf81bbaf9239947ef0"><enum>(I)</enum><text>a plain-English description of how the applicable distributed ledger, distributed ledger system, or distributed ledger application functions;</text></subclause><subclause id="idf4d3edeff61747d6b9bbe565f63e7c1e"><enum>(II)</enum><text>the intended or known functionality and uses of the ancillary asset and any associated fees for use or disposition of the ancillary asset;</text></subclause><subclause id="id5d0dc9fafc4d4d768b857c8b0b062771"><enum>(III)</enum><text>the market for the ancillary asset;</text></subclause><subclause id="id396e707824e3423190e45ba40a7445d7"><enum>(IV)</enum><text>other assets or services that may compete with the ancillary asset;</text></subclause><subclause id="idd8270685673944ba8b7ce92d50ba80ba"><enum>(V)</enum><text>the total supply of the ancillary asset or the manner and rate of the ongoing production or creation of the ancillary asset; and</text></subclause><subclause id="id1285f82fc3a948f8aff8846fc50b4cd9"><enum>(VI)</enum><text>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.</text></subclause></clause><clause id="idd0a5ac0763b446f89ffd7f7a09517c60"><enum>(ii)</enum><text>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.</text></clause><clause id="id43dd3bd2c1ec42fab30c617975cf5170"><enum>(iii)</enum><text>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).</text></clause><clause id="ide2932b37413e4ceeb00d6e49eb9ebb89"><enum>(iv)</enum><text>The amount of ancillary assets owned by the ancillary asset originator.</text></clause><clause id="ide0232dcedf2f42c1b8abfbc4e8d3de02"><enum>(v)</enum><text>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—</text><subclause id="id0dcab1cd04c144ad9a61a23d664ecb09"><enum>(I)</enum><text>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;</text></subclause><subclause id="id5d1178cf57184e23bd2e96b429a198c5"><enum>(II)</enum><text>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;</text></subclause><subclause id="idca4982c6c35143358299638022884a7f"><enum>(III)</enum><text>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</text></subclause><subclause id="ida368675160444e8284a1ea4e1693b971"><enum>(IV)</enum><text>any critical operational dependencies of any applicable distributed ledger, distributed ledger system, or distributed ledger application or of the related ancillary asset.</text></subclause></clause><clause id="id021d6cfa4cb7441c92bd3af654bd96b1"><enum>(vi)</enum><text>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.</text></clause><clause id="id0f45652473de47b98d5c00b837bdc5dd"><enum>(vii)</enum><text>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.</text></clause><clause id="id79b3473a401f423bbadc195f9466a33e"><enum>(viii)</enum><text>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.</text></clause><clause id="idfe5953a0e45840beb70f9de229a3152b"><enum>(ix)</enum><text>Information relating to custodial services available for the ancillary asset.</text></clause><clause id="id7f3225267b954d35a98b66081a52578e"><enum>(x)</enum><text>Information on intellectual property rights claimed or disputed relating to the ancillary asset.</text></clause><clause id="idedb6e49768e649af9d27a24b76637132"><enum>(xi)</enum><text>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.</text></clause><clause id="id859ffd8a5ee94625854f2d36734a1930"><enum>(xii)</enum><text>If applicable, a description of the steps necessary to independently access, search, and verify the transaction history of the ancillary asset.</text></clause></subparagraph><subparagraph id="id70c3106aeb8c41bdb609aa29765641a8"><enum>(C)</enum><text>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.</text></subparagraph></paragraph><paragraph id="idbb584df903a940f9be842ad473b13586"><enum>(3)</enum><header>Termination of requirements</header><subparagraph id="id47a846188f2041639dc22a7c68488792"><enum>(A)</enum><header>Termination</header><text>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.</text></subparagraph><subparagraph id="id1ae355ac78044fd1a9629f84e6d8de8b"><enum>(B)</enum><header>Certification</header><clause id="ide0eafa7f2f78400fac88dee6f3021432"><enum>(i)</enum><header>In general</header><text>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—</text><subclause id="idff13983f305746d1a9421859ed21a02d"><enum>(I)</enum><text>that— </text><item commented="no" display-inline="no-display-inline" id="id5e9ac6a30fd64ee583dba124801aa48f"><enum>(aa)</enum><text display-inline="yes-display-inline">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; </text></item><item commented="no" display-inline="no-display-inline" id="idaa61114d1e20476fb28b8fadf8181cc1"><enum>(bb)</enum><text display-inline="yes-display-inline">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</text></item><item commented="no" display-inline="no-display-inline" id="id87817b2684964ec4ae7f4254c35609d5"><enum>(cc)</enum><text>a certification is effective under section 104(d) of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>;</text></item></subclause><subclause id="ide5dba330cead414388320ad6d2a73eef"><enum>(II)</enum><text>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</text></subclause><subclause id="id8741fa3c92dc4f2d8b7dafb6b92e5e5e"><enum>(III)</enum><text>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.</text></subclause></clause><clause id="idda11e0fa38cd414a9aa83254c1d50c39"><enum>(ii)</enum><header>Change in circumstances</header><subclause id="ide02a163d42a348d1a48109b02d4bc2ec"><enum>(I)</enum><header>Effectiveness of the certification</header><text>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.</text></subclause><subclause id="idfcf8377a9555497abc80200498763566"><enum>(II)</enum><header>New disclosures required</header><text>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.</text></subclause><subclause id="idfc083fd6f3da4fb39dfaff309cec6ca0"><enum>(III)</enum><header>Periodic disclosures</header><text>The furnishing of disclosures pursuant to subclause (II) shall restart the schedule for periodic disclosures under paragraph (1).</text></subclause><subclause id="id5555d5b79b3d4a8d8a245d25974e8686"><enum>(IV)</enum><header>Prior certifications</header><text>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.</text></subclause></clause><clause id="id6edf0c6b56cc4db3abffebe758792144"><enum>(iii)</enum><header>Commission denial</header><subclause id="id4365b2ee201d4f08be84cf91f98abd60"><enum>(I)</enum><header>In general</header><text>The Commission may deny a certification submitted under clause (i) by a certification covered party by—</text><item id="id7a6ab07fd7ea47998a5f0dca82f4fe81"><enum>(aa)</enum><text>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</text></item><item id="iddd56a7a13fae4bbfa0dcc988a3ec0c4b"><enum>(bb)</enum><text>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.</text></item></subclause><subclause id="id63206d7f2359415ea8696471fc5795a4"><enum>(II)</enum><header>Requirements after notice of intent</header><text>After the 10-day period described in subclause (I)(bb), the Commission shall—</text><item id="id94a175298fc24df5bdf0010a130175b5"><enum>(aa)</enum><text>upon request of the certification covered party, provide an opportunity for the oral presentation of data, views, and arguments by any interested persons; and</text></item><item id="id0d4e94809c3541839d0c2d9c929b7cc2"><enum>(bb)</enum><text>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).</text></item></subclause><subclause commented="no" display-inline="no-display-inline" id="id71812b90e64f4e6487ce9ff0c1f92dfc"><enum>(III)</enum><header>Final agency action</header><text>Denial under this clause constitutes final agency action reviewable under applicable law. </text></subclause></clause><clause id="id43b86261b2234459ac95129abdd951cd"><enum>(iv)</enum><header>Deemed approval</header><text>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.</text></clause><clause commented="no" display-inline="no-display-inline" id="idc545f7e910be45269f9aae4df79cbd7d"><enum>(v)</enum><header>Withdrawal</header><text>A certification covered party may withdraw a certification submitted under clause (i) at any time before that certification is approved or denied.</text></clause><clause commented="no" display-inline="no-display-inline" id="idede6084b493a4552ba20f6619c68b434"><enum>(vi)</enum><header>Designated Commission office</header><text>The Commission shall designate an office that shall—</text><subclause commented="no" display-inline="no-display-inline" id="idf6cd2dd01ed64b369fe8f7bbe7b2cd85"><enum>(I)</enum><text display-inline="yes-display-inline">acknowledge the receipt of certifications submitted under clause (i);</text></subclause><subclause commented="no" display-inline="no-display-inline" id="idce817d8a238a4fc797846cfd060cf9d9"><enum>(II)</enum><text>support certification covered parties seeking certification under clause (i) by providing guidance regarding the mechanics of preparing and submitting those certifications; and</text></subclause><subclause commented="no" display-inline="no-display-inline" id="idaebf215e52384a40aec804a878e2187c"><enum>(III)</enum><text>route certifications submitted under clause (i), together with any associated comments or recommendations, to the appropriate division or office of the Commission for review.</text></subclause></clause><clause commented="no" display-inline="no-display-inline" id="idf5cfd1d969054ef6a4cfc76c193ede81"><enum>(vii)</enum><header>Advance review</header><subclause commented="no" display-inline="no-display-inline" id="id68ce1773a1fc465e8d19898e88b55573"><enum>(I)</enum><header display-inline="yes-display-inline">In general</header><text>A certification covered party may submit a certification under clause (i) before the offer, sale, or distribution of a network token.</text></subclause><subclause commented="no" display-inline="no-display-inline" id="ida88a5d79299d43e2976a021486c3100b"><enum>(II)</enum><header>Intended originator</header><text>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.</text></subclause></clause><clause commented="no" display-inline="no-display-inline" id="id0c37baf682d545b1abc670e04cb2e4ac"><enum>(viii)</enum><header>Tolling</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title>, 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.</text></clause><clause commented="no" display-inline="no-display-inline" id="idbfef0d9a9bf2441086f32cf641310d17"><enum>(ix)</enum><header>Misstatements or omissions</header><text>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— </text><subclause commented="no" display-inline="no-display-inline" id="id5f13af590e354d8b80bac57096c2ca3e"><enum>(I)</enum><text display-inline="yes-display-inline">issue an order denying, suspending, or revoking the effectiveness of that certification; and</text></subclause><subclause commented="no" display-inline="no-display-inline" id="idc11fed373bbc4c3fa741805b0ced62fe"><enum>(II)</enum><text display-inline="yes-display-inline">pursue any appropriate enforcement action.</text></subclause></clause></subparagraph></paragraph><paragraph id="idd4d9b86e12fa4b2dbf61bfcc72e7848f"><enum>(4)</enum><header>Voluntary disclosure</header><text>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.</text></paragraph><paragraph id="idf83e6ecd439b43eabf83bc1ea2904771"><enum>(5)</enum><header>Rulemaking considerations</header><text>In adopting rules under this subsection, the Commission shall—</text><subparagraph id="id803d46e016db4b39b160f18d25a18e90"><enum>(A)</enum><text>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; </text></subparagraph><subparagraph id="id88f596581b214c658fa9cb590d95441d"><enum>(B)</enum><text>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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idfa6ff23e220d4ef8bf19e450232b45f4"><enum>(C)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id1eced55758f94753805baea8d651053e"><enum>(6)</enum><header>Limitations</header><text>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).</text></paragraph></subsection><subsection id="idc8addd2f023a47f1a252fd49f2f7a87f"><enum>(e)</enum><header>Exemptions</header><text>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.</text></subsection><subsection id="idb9f093c7a4c64f1b9a8117820439e5c0"><enum>(f)</enum><header>Confidential treatment of certain information</header><text>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.</text></subsection><subsection id="idf663e07598bb4b729ca7c0268f6d1017"><enum>(g)</enum><header>Effect of failure to comply</header><text>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.</text></subsection><subsection id="id61e835dfa4db4ea3b827b5a7cf06c0cb"><enum>(h)</enum><header>Liability for false or misleading statements</header><paragraph id="idfad394fb3a8a4a4da2a0c9088b3cc94a"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id1bfc8b071a8e4721957c68a0308930b8"><enum>(2)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="idff3d6eb42fd746ef89fa840f30dd1336"><enum>(i)</enum><header>Special disposition restrictions by related persons</header><paragraph commented="no" display-inline="no-display-inline" id="id53ace0c8adb24e2a8302c648f5253477"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text>The Commission shall adopt rules, consistent with section 104 of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>, establishing limitations on the disposition of certain ancillary assets with specified characteristics by related persons. </text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2d0206f787124a72aabe187e7788e3ad"><enum>(2)</enum><header>Considerations</header><text display-inline="yes-display-inline">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.</text></paragraph></subsection><subsection id="id6bdfa6f9aaae43cea92b2cd9953cb195"><enum>(j)</enum><header>Safe harbor for forward-Looking statements</header><text>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—</text><paragraph id="id34b967f7b8b34bac91df90352111cb4b"><enum>(1)</enum><text>identified as forward-looking; and</text></paragraph><paragraph id="idd77e3f084b064742adec6e11cc47210a"><enum>(2)</enum><text>accompanied by meaningful cautionary language that identifies important factors that could cause actual results to differ materially.</text></paragraph></subsection><subsection id="idcc3d1cf3440347b58042719fab5b475b"><enum>(k)</enum><header>Transactions before effective date</header><paragraph id="id6f2e3210a5ab40cc816e1269180de8ed"><enum>(1)</enum><header>Primary transactions</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title>, provided that the ancillary asset originator or a certification covered party complies with any applicable requirements under subsection (c)(3).</text></paragraph><paragraph id="id288c747571964da4a907f7a5384eeb3e"><enum>(2)</enum><header>Primary transactions related to fraud</header><text>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.</text></paragraph><paragraph id="id3fb6047583284f0ab5a8cbd4de4a540a"><enum>(3)</enum><header>Secondary transactions</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title> shall be treated as not involving the offer, sale, or distribution of a security under—</text><subparagraph id="id3e0435b411de497f9f1b3505cf0fd97b"><enum>(A)</enum><text>section 2(a)(1);</text></subparagraph><subparagraph id="idacc4f60233214848b343e3e317e1b1dd"><enum>(B)</enum><text>section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>);</text></subparagraph><subparagraph id="id3103ba81968748a3b7b029241a61baf4"><enum>(C)</enum><text>section 2(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)</external-xref>);</text></subparagraph><subparagraph id="id862fa0bc577a43db8d5acf60f81c9e3b"><enum>(D)</enum><text>section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>);</text></subparagraph><subparagraph id="idee6ac2f7b5724a54b5e7416c4142b381"><enum>(E)</enum><text>section 16 of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll</external-xref>); or</text></subparagraph><subparagraph id="ided0c2459624148a19291c369301fe816"><enum>(F)</enum><text>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—</text><clause id="id60e432693182495da845d612329e93c6"><enum>(i)</enum><text>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</text></clause><clause id="ida207147368c74d128b394c0e15af102d"><enum>(ii)</enum><text>inconsistent with this section.</text></clause></subparagraph></paragraph><paragraph id="id2a5a15d85b0e4fd6aac8206628031c02"><enum>(4)</enum><header>No inference of liability</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title>.</text></paragraph><paragraph id="id99c2527253aa4308bbc98afaa94c50b0"><enum>(5)</enum><header>Rules of construction</header><text>Nothing in this subsection may be construed to— </text><subparagraph commented="no" display-inline="no-display-inline" id="id5a797893f20a43cca34b8e4b4a8f7287"><enum>(A)</enum><text display-inline="yes-display-inline">impair vested rights or contractual obligations lawfully established before the effective date of the <short-title>Digital Asset Market Clarity Act</short-title>; or</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id59dc3229cb0e402cafdadffd37ddd237"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="id442a9e5cb7f84ffabd8c38bb6ca49047"><enum>(l)</enum><header>Rules of construction</header><text>Nothing in this section may be construed to—</text><paragraph id="id8d1b89fedc7c453caa6826ffafc5ff50"><enum>(1)</enum><text>preclude the Commission from bringing an appropriate action or entering into a settlement agreement relating to a violation or alleged violation of this section;</text></paragraph><paragraph id="id45eb590342b04a04a42bb9c8e3aef6fc"><enum>(2)</enum><text>permit compliance with this section to be used in any administrative or judicial proceeding as evidence that an ancillary asset is a security;</text></paragraph><paragraph id="ide0bd2d21aec546f7b970e8d62dd117f8"><enum>(3)</enum><text>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 <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>); or</text></paragraph><paragraph id="id60c560eeacce46108e797966d96c77ec"><enum>(4)</enum><text>require more than 1 person to furnish the disclosures required under subsection (d), unless otherwise provided by the Commission by rule.</text></paragraph></subsection><subsection id="iddc350464a92348cf8b2f6069fa1d6a41"><enum>(m)</enum><header>Anti-Evasion</header><paragraph id="idb83432337ca041d0b9eef90b54f2023a"><enum>(1)</enum><header>Anti-evasion</header><text>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—</text><subparagraph id="id1730207935df43f8b3f044918612caf6"><enum>(A)</enum><text>this section; </text></subparagraph><subparagraph id="idef1e655f09a545f6870b9846fee54553"><enum>(B)</enum><text>sections 103 and 104 of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>; and</text></subparagraph><subparagraph id="id7ff9f803484d401db0fd576b8e672ecc"><enum>(C)</enum><text>with respect to an ancillary asset originator and related persons, the securities laws amended by the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>.</text></subparagraph></paragraph><paragraph id="idb3035d0e2c74490794682af7a6335e87"><enum>(2)</enum><header>Considerations</header><text>In adopting rules under this section—</text><subparagraph id="idb2234c7ee9434685a58eb1d662222b85"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="idca5af648c28f444dad89248ddda0f509"><enum>(B)</enum><text>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 <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>, by satisfying the literal terms while defeating the purpose and policy of this section;</text></subparagraph><subparagraph id="id5200c08da61749aa845ddca3d088d2d1"><enum>(C)</enum><text>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—</text><clause id="id2d4210e191274c44bc693b4b6e091d18"><enum>(i)</enum><text>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;</text></clause><clause id="id6182bb0a6d9d4ee486dfbb999c85e785"><enum>(ii)</enum><text>circular or non-commercial flows of value among related persons designed to simulate network utility; and</text></clause><clause id="id4da3cbe8ee58460093a647dd01959f7e"><enum>(iii)</enum><text>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</text></clause></subparagraph><subparagraph id="idc1c5cf1c8f2a424aa3d87ae5cebd9db6"><enum>(D)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="id838a17c5ec0648319fa69d83135ac554"><enum>(n)</enum><header>Fiduciary obligations</header><paragraph id="id8ed4b320386f498680d8aa6b6aba2d69"><enum>(1)</enum><header>Fiduciary duties under State law</header><text>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.</text></paragraph><paragraph id="id812b86269c23481c91829d946e725221"><enum>(2)</enum><header>Preservation of fiduciary and other duties to customers, clients, and shareholders</header><text>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.</text></paragraph></subsection><subsection id="id31d240bca0854974b251bf166fa4247d"><enum>(o)</enum><header>Savings clause</header><text>Except as provided by the <short-title>Digital Asset Market Clarity Act</short-title> 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.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="idc79337da36f14018ab34be380d79f9c2"><enum>(b)</enum><header>Rulemaking</header><text>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).</text></subsection></section><section commented="no" display-inline="no-display-inline" id="id8a512eb9a83a4c98bf7f3078676469f0"><enum>103.</enum><header>Exemption and rulemaking for certain transactions involving ancillary assets</header><subsection id="idde31188b2e3c4955b79ce6359f7093f8"><enum>(a)</enum><header>Adoption of Regulation Crypto</header><text>The Commission shall adopt rules under the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) and the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), which shall be referred to collectively as <quote>Regulation Crypto</quote>, to implement subsections (b), (c), and (d) of this section.</text></subsection><subsection id="idf0a1b1e644634f309e8e97f12ca7a6a0"><enum>(b)</enum><header>Exemption for certain transactions involving ancillary assets</header><paragraph id="id0e052433adb24f2086966583d273db4a"><enum>(1)</enum><header>Exemption</header><subparagraph commented="no" display-inline="no-display-inline" id="id185751d252f14428ad8e9b8b8a9a66e6"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text>Rules adopted by the Commission under this section shall provide that the registration requirements of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) 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—</text><clause id="idc3901bf8d6dd4f3cb143663e5dd6432f"><enum>(i)</enum><text>$50,000,000 in gross proceeds per calendar year for a period of not longer than 4 years; or</text></clause><clause id="id0304d5f3139b4b84ae3adc1f7205cb55"><enum>(ii)</enum><text>10 percent of the total dollar value of those ancillary assets that are outstanding, as of the date of that offer, sale, or distribution.</text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id63abb0a533184e79a40bfaca9f114198"><enum>(B)</enum><header>Continued application of certain provisions</header><text>Sections 12(a)(2) and 17 of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77l">15 U.S.C. 77l(a)(2)</external-xref>, 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).</text></subparagraph></paragraph><paragraph id="id204f354693ba47759864b4996165e13b"><enum>(2)</enum><header>Limitation</header><text>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).</text></paragraph><paragraph id="id0b3e7e30342f45a9bdd96f6cd5a6cf14"><enum>(3)</enum><header>Review and adjustment for inflation</header><subparagraph id="id5ef2dbaba9964517aaf44bb523e04963"><enum>(A)</enum><header>In general</header><text>Not later than 2 years after the date of enactment of this Act, and every 2 years thereafter, the Commission shall—</text><clause id="idce53af38c0404bf7ab52cf000032a977"><enum>(i)</enum><text>review the amounts described in paragraphs (1)(A)(i) and (2);</text></clause><clause id="ide9d931f3ed31419884a8b1338255f498"><enum>(ii)</enum><text>adjust the amounts described in paragraphs (1)(A)(i) and (2) to account for inflation; and</text></clause><clause id="id52385487ebef4dd9a6170e3afcb097ec"><enum>(iii)</enum><text>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.</text></clause></subparagraph><subparagraph id="idbcfac83604dd4d4e9bb508e0124c5289"><enum>(B)</enum><header>Report</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="id36cd961e2edd41cb84b137d4a42c2473"><enum>(c)</enum><header>Conditions for exemption</header><text>The following conditions shall apply to the exemption provided under subsection (b):</text><paragraph id="idde714ed3aeb248b1aab0fdb9a4cae652"><enum>(1)</enum><header>Initial disclosures</header><text>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.</text></paragraph><paragraph id="id72cfdce0a8c9470c992b912812edce0d"><enum>(2)</enum><header>Coordinated control</header><text>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.</text></paragraph><paragraph id="idc0db1150c81e49e585888b3f3981984e"><enum>(3)</enum><header>Criteria</header><text>The applicable ancillary asset originator may not be—</text><subparagraph id="idf3fbd306062d4bef9e4d26c2a72104a2"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id5435660c36ab454b8a16ae5f36129063"><enum>(B)</enum><text>a development-stage company that either—</text><clause id="id43a21f1f67f146cda651c1b0b3b07f22"><enum>(i)</enum><text>has no specific business plan or purpose; or</text></clause><clause id="idf9085c5c938844f4a9df317c807e0ed7"><enum>(ii)</enum><text>has indicated that the business plan of the company is to merge with or acquire an unidentified company;</text></clause></subparagraph><subparagraph id="idb9f2278f5f224c779b7b9637d9646226"><enum>(C)</enum><text>an investment company (as defined in section 3(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(a)</external-xref>)) or a company (as defined in section 2 of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2</external-xref>)) that would be an investment company under section 3(a) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(a)</external-xref>) but for the exclusions provided from that definition by section 3(c) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(c)</external-xref>), 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;</text></subparagraph><subparagraph id="id7dcd05244a674d99b8ae992289aab79c"><enum>(D)</enum><text>a person issuing fractional undivided interests in other commodities;</text></subparagraph><subparagraph id="ida000f373bb534ece910db01fbfb8e25d"><enum>(E)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78l">15 U.S.C. 78l(j)</external-xref>) after the date of enactment of this Act and during the 5-year period preceding the offer and sale;</text></subparagraph><subparagraph id="idc548c11888cf4afc8b71303cfb2e5b7d"><enum>(F)</enum><text>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;</text></subparagraph><subparagraph id="id8d96eaa3be6b474abd5bae82e13662e2"><enum>(G)</enum><text>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 <quote>Regulation A</quote>), or any successor regulations, unless waived by order of the Commission; or</text></subparagraph><subparagraph id="id9db6bb1e0b2b4aa994a03cc288528487"><enum>(H)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id8d2cafe3adc0473c8aaf7264e6107cb4"><enum>(4)</enum><header>Furnishing notice of reliance</header><text>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:</text><subparagraph id="id5a9046ed02c844e2baaafe2c5ba2da15"><enum>(A)</enum><text>The name of the ancillary asset originator.</text></subparagraph><subparagraph id="ida534d9f9121c4badabbee4171c7d0812"><enum>(B)</enum><text>A statement by a person duly authorized by the ancillary asset originator that the conditions of those rules are satisfied.</text></subparagraph><subparagraph id="id34480e7091d744e1bcb602ac7a9aa493"><enum>(C)</enum><text>The website where the summary documents of the ancillary asset originator, if any, may be found and made available for public consumption.</text></subparagraph><subparagraph id="idcc21f1b85cd84f1b9f6660be95152d9e"><enum>(D)</enum><text>An email address at which the ancillary asset originator may be contacted.</text></subparagraph></paragraph><paragraph id="id3a66080b8eda4efb94aeb153dbc3312f"><enum>(5)</enum><header>Public availability</header><text>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.</text></paragraph><paragraph id="idabdd3ed5e7f540018ecabec6d2ebdec5"><enum>(6)</enum><header>Form and manner</header><text>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.</text></paragraph></subsection><subsection id="id786eebd2bb77455b9c0946f469c4b755"><enum>(d)</enum><header>Status under securities laws</header><paragraph id="id25cb05a3b95f4ed09da64bd387f8aad0"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="id98a32e61290545bd85643fe86e7242c5"><enum>(A)</enum><text>a <quote>prospectus</quote> solely—</text><clause id="id972f75e1a6ac4f9d8de6fba86dadafb1"><enum>(i)</enum><text>for purposes of section 12(a)(2) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77l">15 U.S.C. 77l(a)(2)</external-xref>); and</text></clause><clause id="idf2ac741563464f98bd1d0479f1c16cf2"><enum>(ii)</enum><text>with respect to the person that is the purchasing party in a transaction made in reliance on the rules adopted under subsection (a); and</text></clause></subparagraph><subparagraph id="idb5cc0b678d9d4a90bd9924903d64cbd2"><enum>(B)</enum><text>a <quote>statement</quote> solely for purposes of— </text><clause commented="no" display-inline="no-display-inline" id="id338ca51e8b0342cbba6a10dd293b0fe5"><enum>(i)</enum><text display-inline="yes-display-inline">section 17(a) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77q">15 U.S.C. 77q(a)</external-xref>);</text></clause><clause commented="no" display-inline="no-display-inline" id="id47a4855ab02f491abd9b46ce7c35821b"><enum>(ii)</enum><text display-inline="yes-display-inline">section 10(b) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78j">15 U.S.C. 78j(b)</external-xref>); and </text></clause><clause commented="no" display-inline="no-display-inline" id="id3e59bb9a4a9647d2a0d3d686b92e4b4d"><enum>(iii)</enum><text display-inline="yes-display-inline">section 240.10b–5 of title 17, Code of Federal Regulations, or any successor regulation.</text></clause></subparagraph></paragraph><paragraph id="id54d0597192a940619f196866c78b1db7"><enum>(2)</enum><header>Registration statement</header><subparagraph id="id28f35f5ada9640ab91843b1a7e4940d4"><enum>(A)</enum><header>In general</header><text>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 <quote>registration statement</quote> for purposes of section 11 of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77k">15 U.S.C. 77k</external-xref>) or to have been filed under the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>).</text></subparagraph><subparagraph id="idf372e67a10224df0846a950c5f8aeaac"><enum>(B)</enum><header>Civil liability</header><text>Liability under section 12(a)(2) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77l">15 U.S.C. 77l(a)(2)</external-xref>) 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).</text></subparagraph></paragraph><paragraph id="ida1aab06e971549d1a3a816dc66c0d760"><enum>(3)</enum><header>Forward-looking statements</header><text>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—</text><subparagraph id="ida640232fa1c04981a5fae1b4d183ea0d"><enum>(A)</enum><text>identified as forward-looking; and</text></subparagraph><subparagraph id="id635024319fb242eba506fe148f2fd649"><enum>(B)</enum><text>accompanied by meaningful cautionary language that identifies important factors that could cause actual results to differ materially.</text></subparagraph></paragraph></subsection></section><section id="id3e704b4c298c4fd5a788bc84399bf0da"><enum>104.</enum><header>Special disposition restrictions by related persons</header><subsection id="idb3f49cf715f947a28046572a2d53a6d1"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idd59b039f1f8146fbb5eb637d87572ecf"><enum>(1)</enum><header>Certification covered party</header><text>The term <term>certification covered party</term> means, with respect to an ancillary asset—</text><subparagraph id="ideacb4986543c409a9c41f93b3097d6d9"><enum>(A)</enum><text>the ancillary asset originator;</text></subparagraph><subparagraph id="id3e3c7297cd2e4a529bc7dce49ba4ceb2"><enum>(B)</enum><text>a subsidiary of the ancillary asset originator;</text></subparagraph><subparagraph id="idb1d4d3c594ea4cdfa99ccb60126e5ccc"><enum>(C)</enum><text>a related person of the ancillary asset originator; or</text></subparagraph><subparagraph id="id85c4b559f33840958a26ddbb49b9a849"><enum>(D)</enum><text>any entity that directly or indirectly controls or is controlled by a common entity with an ancillary asset originator.</text></subparagraph></paragraph><paragraph id="id90b8d9050c23416596418d16b314c54b"><enum>(2)</enum><header>Covered token</header><text>The term <term>covered token</term> 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.</text></paragraph><paragraph id="ide86f37a21a184535a6fa4be3a79d4f38"><enum>(3)</enum><header>Distributed ledger control person</header><text>The term <term>distributed ledger control person</term> 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.</text></paragraph></subsection><subsection id="id6e7dd5dce9a5473dafa38ad629c23569"><enum>(b)</enum><header>Coordinated control</header><paragraph id="idfed2ef74dd094a3d9013b0b76934ecba"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id98d46a7a3a2e479aac9f0b88e761d14b"><enum>(2)</enum><header>Considerations</header><text>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:</text><subparagraph id="idde51761090664007bdffa83735ea1723"><enum>(A)</enum><header>Open digital system</header><text>The extent to which the distributed ledger system is not—</text><clause id="idf25e5562d6544aff96d69c46f05252f8"><enum>(i)</enum><text>a distributed ledger, the protocol of which is freely and publicly available;</text></clause><clause id="id908923360bc24032ae2c26683c0d2173"><enum>(ii)</enum><text>a distributed ledger application the source code of which is—</text><subclause id="idecb85cfeeea8461a99b5981b9b321393"><enum>(I)</enum><text>freely and publicly available via open-source code; and</text></subclause><subclause id="id698cfe03dbe8407b869319e5f8f10e92"><enum>(II)</enum><text>recorded on a distributed ledger described in clause (i); or</text></subclause></clause><clause id="idb895b7c079ab41cb9f3c8196fc9fc66d"><enum>(iii)</enum><text>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.</text></clause></subparagraph><subparagraph id="id090c0bd506e947df9a86d9866f30a094"><enum>(B)</enum><header>Permissionless and credibly neutral digital system</header><text>The extent to which a person or group of persons under common control has—</text><clause id="id5fe59770d6904b9f83c55422449f316f"><enum>(i)</enum><text>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</text></clause><clause id="id3fa70c22163346f69c83ee4e47b2d088"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="id2788e58a1cc94e8cbec82561f3baea57"><enum>(C)</enum><header>Distributed digital network</header><text>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.</text></subparagraph><subparagraph id="idf53707db462145e4b8f6e5527aacfdfa"><enum>(D)</enum><header>Autonomous distributed ledger system</header><text>The extent to which—</text><clause id="id719a682a03e64f8f87e024d077028215"><enum>(i)</enum><text>the distributed ledger system has not yet reached an autonomous state; and</text></clause><clause id="iddc1d2cf591924e7a929e5ff821a7898c"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="ide0dec08878924653b6627af6e9dcc2f8"><enum>(E)</enum><header>Economic independence</header><text>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.</text></subparagraph></paragraph><paragraph id="id6c1dd5dc153d48c8bddbeb271fc74724"><enum>(3)</enum><header>Safe harbors</header><subparagraph id="ideb774d13a2dd48d4a754358f5325c4ed"><enum>(A)</enum><header>In general</header><text>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).</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idb4cb71c3c5214095801cd71f0e36e24e"><enum>(B)</enum><header>Decentralized governance systems</header><clause commented="no" display-inline="no-display-inline" id="idda63e7a6326a4e39ba0c3a47f3677781"><enum>(i)</enum><header display-inline="yes-display-inline">In general</header><text>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.</text></clause><clause commented="no" display-inline="no-display-inline" id="id8b1c5a560e894a9da484eae5f3fdc27a"><enum>(ii)</enum><header>Distributed ledger systems</header><text>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.</text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id152d48bc170e4bcb8324aee4ccc1d015"><enum>(C)</enum><header>Emergency measures</header><text>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.</text></subparagraph><subparagraph id="idc9701f7cb8744123a0175763b8c39ff6"><enum>(D)</enum><header>Nonexclusive</header><text>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.</text></subparagraph></paragraph><paragraph id="idc0526f2987434421b90a4926908bf385"><enum>(4)</enum><header>Evidence</header><text>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).</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id99737ee5f4ec4e4797d45beda47e5a6e"><enum>(5)</enum><header>Rule of construction</header><text>For purposes of this subsection— </text><subparagraph commented="no" display-inline="no-display-inline" id="id0751c947767a418885c285a20d387976"><enum>(A)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ide353e196b75840d8bcef0e9907328c6c"><enum>(B)</enum><text>the elimination of coordinated control shall be a prerequisite to the completion of efforts described in subparagraph (A).</text></subparagraph></paragraph></subsection><subsection id="id8531f5ac65e94d3aadfe85f7d5a88d6c"><enum>(c)</enum><header>Special restrictions on disposition</header><text>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:</text><paragraph id="idfbb7d3903eab41acb57a0fde910f9c94"><enum>(1)</enum><header>Sales prior to certification</header><text>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—</text><subparagraph id="ida39a6f10d7bc45009d61fd50163fe0ba"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id35afc3dcdcd14bafaf9282bf0ea4a1c7"><enum>(B)</enum><text>the holder of the covered token has held the units for not less than 12 months; and</text></subparagraph><subparagraph id="idf5b43863540b41a2bcacee68070feb46"><enum>(C)</enum><text>the amount of covered tokens sold in any 12-month period by the related person is— </text><clause commented="no" display-inline="no-display-inline" id="idd53f4d804ade456090b7814678c7c3bb"><enum>(i)</enum><text display-inline="yes-display-inline">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</text></clause><clause commented="no" display-inline="no-display-inline" id="id6238cde951fb4057a68c1bf8e05f8df4"><enum>(ii)</enum><text>in no case equal to or greater than the amount determined by the Commission pursuant to the rulemaking described in paragraph (2)(C).</text></clause></subparagraph></paragraph><paragraph id="idc35c893b736c43ef945b0f54d88d00de"><enum>(2)</enum><header>Sales after certification</header><text>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—</text><subparagraph id="id426231301bed4b09b626bf7292156304"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id401438c1eeeb4958916ef24d4608d3c9"><enum>(B)</enum><text>the holder of the covered token has held the units for not less than 6 months; and</text></subparagraph><subparagraph id="id64c06f3489894bb9a5abc2a64b405d88"><enum>(C)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id5166de19c59c4bada553cf0878fbef0d"><enum>(3)</enum><header>Sales of pre-existing covered tokens</header><text>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—</text><subparagraph id="id5603acbd5fa2491096e5398b398f2b58"><enum>(A)</enum><text>in the case that the distributed ledger system has not been certified as not subject to coordinated control pursuant to subsection (d)—</text><clause id="ida179cc30573045aca8d45acbabc8d00e"><enum>(i)</enum><text>the disclosures required pursuant to section 4B(d) of the Securities Act of 1933, as added by this Act, have been furnished; and</text></clause><clause id="ida362b2ebdf5147eba4f2b6531e2455d6"><enum>(ii)</enum><text>the holder of the covered token has held the units for not less than 12 months; and</text></clause></subparagraph><subparagraph id="ide032506fa0f741cd9bddf3da3af553cd"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="idd7b996e6abe04753926aa06c4971129d"><enum>(4)</enum><header>Limitations on transactions by distributed ledger control persons</header><text>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—</text><subparagraph id="id2c90571a8f4f43adbe3d2d541fea155c"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id05b4500d74464f67b24f0b77bfa75d17"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="idb82a2bda7aa244cc92f725a779dc6ba6"><enum>(C)</enum><text>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</text></subparagraph><subparagraph id="idebc867225cf046eba50e001f9455e622"><enum>(D)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="id191c313c89d949488bccec7bb7463768"><enum>(d)</enum><header>Certification of non-Control by related persons</header><paragraph id="ida9f7e64082cb4e1b830d5969f5353625"><enum>(1)</enum><header>Submission</header><text>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.</text></paragraph><paragraph id="id46c5b69f160e4a1ebd59152448a9da54"><enum>(2)</enum><header>Automatic effectiveness</header><text>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—</text><subparagraph id="id33f65e2126bc443a9f2db3c5b0aaca9e"><enum>(A)</enum><text>the date on which the Commission notifies the certification covered party in writing that the Commission does not object to the certification; or</text></subparagraph><subparagraph id="id44559f7fda04454c8c7d7e49fa2f08f7"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id0e797c745d3b47f1a39adcfe8d61a404"><enum>(3)</enum><header>Denial</header><subparagraph id="idc04bb37bafc94e71a4bd3e85e4a1cca0"><enum>(A)</enum><header>In general</header><text>The Commission may deny a certification furnished under paragraph (1)—</text><clause id="idb4fce3502cf746babf86a8b66a589a6e"><enum>(i)</enum><text>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</text></clause><clause id="id58ec231d4f534a939417a484886508ff"><enum>(ii)</enum><text>by providing to the certification covered party 10 days notice of the intent of the Commission to deny that certification.</text></clause></subparagraph><subparagraph id="idaa5cc33f85fd4f06956c1d85b029f4a6"><enum>(B)</enum><header>Requirements after notice of intent</header><text>After the 10-day period described in subparagraph (A)(ii), the Commission shall—</text><clause id="id85390127e52c478a84377c70e24b0fba"><enum>(i)</enum><text>conduct a hearing; and</text></clause><clause id="id83527611865b43c6ae8826ea53389251"><enum>(ii)</enum><text>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.</text></clause></subparagraph><subparagraph id="id8aaf62702a8a4830b8455891d34b253f"><enum>(C)</enum><header>Final agency action</header><text>Denial under this paragraph constitutes final agency action reviewable under applicable law.</text></subparagraph></paragraph><paragraph id="id7fb8d4958e1548f2a6d6247eae460200"><enum>(4)</enum><header>Verification</header><text>The Commission may, by rule, require appropriate third-party verification of a certification furnished under paragraph (1).</text></paragraph></subsection><subsection id="idd3e6d60653074376933858b494634a95"><enum>(e)</enum><header>Disgorgement</header><paragraph id="id50288e16fca646e7b0500f41219a2917"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id52de97bb4c1e4111bc8788999d25dfff"><enum>(2)</enum><header>Enforcement</header><text>An action to recover profit described in paragraph (1)—</text><subparagraph id="id214469a886944d59baebd8c98e5d1a8b"><enum>(A)</enum><text>may be instituted at law or in equity in any court of competent jurisdiction of the United States by—</text><clause id="id6f140ae3b20449bb9dda43220edae490"><enum>(i)</enum><text>the applicable ancillary asset originator;</text></clause><clause id="idc5447d63162f474685cf83f7a361e18a"><enum>(ii)</enum><text>the owner of any units of the applicable ancillary asset; or</text></clause><clause id="id4b181b20462c40179f5bee2586e37cee"><enum>(iii)</enum><text>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—</text><subclause id="id8f5c0530d014437a938b223edbd4dcdd"><enum>(I)</enum><text>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</text></subclause><subclause id="id797b7a9bdf014fd0a4c37f42661712cd"><enum>(II)</enum><text>fails to diligently prosecute the action; and</text></subclause></clause></subparagraph><subparagraph id="id4096f48c4c9547cf9cc36c18be7ba9c0"><enum>(B)</enum><text>shall be brought not later than 2 years after the date that profit was realized.</text></subparagraph></paragraph></subsection><subsection id="idf7bc7f07398d41f288fcf54bc5c4cd32"><enum>(f)</enum><header>Exemption from disposition restrictions</header><text>The Commission shall adopt rules that provide for the following exemptions from, or waivers to, disposition restrictions described in subsection (c):</text><paragraph id="ided9a8f638bee4a43947e89a16b85c56f"><enum>(1)</enum><header>Material hardship exemption</header><subparagraph commented="no" display-inline="no-display-inline" id="idf954681f96714e409d4478fc9821d200"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text>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:</text><clause commented="no" display-inline="no-display-inline" id="id80478faa2e184b528be1f315e4598608"><enum>(i)</enum><text display-inline="yes-display-inline">The death of the related person.</text></clause><clause commented="no" display-inline="no-display-inline" id="id99fe1940fc00468a8e37a13287ac637f"><enum>(ii)</enum><text display-inline="yes-display-inline">The bankruptcy or insolvency of the related person.</text></clause><clause commented="no" display-inline="no-display-inline" id="id48a556c33c6749c6955f6e95af8994aa"><enum>(iii)</enum><text display-inline="yes-display-inline">The dissolution, merger, or acquisition of a corporate person. </text></clause><clause commented="no" display-inline="no-display-inline" id="id397ba8f88cee401284a4aa47ee02648d"><enum>(iv)</enum><text display-inline="yes-display-inline">Tax liability relating to the receipt of the applicable ancillary asset. </text></clause><clause commented="no" display-inline="no-display-inline" id="id84006d55590f4d20a4d08aa2ae4a1fe6"><enum>(v)</enum><text display-inline="yes-display-inline">Such other material hardships as may be designated by the Commission. </text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idd03cb7a885fc4e059b668104e00c1a72"><enum>(B)</enum><header>Requirements</header><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="idc796b365218a4b8a8da7237c79f9489f"><enum>(2)</enum><header>Liquidity provision exemption</header><text>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.</text></paragraph><paragraph id="idf524fe7650ee4443a14072e4d4137de3"><enum>(3)</enum><header>Agency exemption</header><text>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.</text></paragraph><paragraph id="ide2ea40c35e3a47c1879444cfacaefcda"><enum>(4)</enum><header>Exchange-traded product and passive fund exemption</header><text>The Commission shall adopt rules to exempt from disposition restrictions, as appropriate— </text><subparagraph commented="no" display-inline="no-display-inline" id="id70d540a85fe74c6aa84cf1a4e9bbe2d0"><enum>(A)</enum><text display-inline="yes-display-inline">exchange-traded products, the shares of which are created and redeemed by authorized participants and registered with the Commission; and </text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idc9760394b7184548ba2b37fbb66fc6fb"><enum>(B)</enum><text display-inline="yes-display-inline">passive pooled investment vehicles, whether or not the shares of which are registered with the Commission.</text></subparagraph></paragraph></subsection><subsection id="id6eabfb1ecde748028cb58ba52f4682c7"><enum>(g)</enum><header>Related person disclosure requirements</header><text>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):</text><paragraph id="idb7251d098c2342e398a000684c260cae"><enum>(1)</enum><header>Disclosure reports</header><subparagraph id="idd8e9be80ecf5499da487ee7804a16045"><enum>(A)</enum><header>Disclosure of related person status</header><text>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.</text></subparagraph><subparagraph id="ide572df49b1ce483b938a200d6a883fcb"><enum>(B)</enum><header>Sales of covered tokens by related person prior to certification of non-control</header><text>Quarterly reports relating to the number of ancillary assets sold by a related person in a form as required by the Commission.</text></subparagraph><subparagraph id="id32106a164b244e7e9658759fb6c0284a"><enum>(C)</enum><header>Sales of covered tokens by related person after certification of non-control</header><text>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.</text></subparagraph><subparagraph id="id868560b9099a4d938df98cb00c47fdb3"><enum>(D)</enum><header>Sales of pre-existing covered tokens by related person</header><text>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.</text></subparagraph></paragraph><paragraph id="id0bcc04b4f4aa4769bdda8a1546363048"><enum>(2)</enum><header>Confidential treatment</header><text>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.</text></paragraph><paragraph id="id25bc504fa19a4bcea3fd2bce31abfe94"><enum>(3)</enum><header>Good-faith furnishing standard</header><subparagraph id="id5e96096beeb14a1ba756f2755431ef19"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="id2f1d7f352acb42d4a5b47c6f51698dae"><enum>(B)</enum><header>Reliance</header><text>A furnisher described in subparagraph (A) may reasonably rely on public sources and third-party attestations where appropriate.</text></subparagraph><subparagraph id="id2ba53016b8cd4095b306a6c9212ad0da"><enum>(C)</enum><header>Liability</header><text>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.</text></subparagraph><subparagraph id="id749948fad38e4dcf9cae12408254a00c"><enum>(D)</enum><header>Other persons</header><text>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.</text></subparagraph></paragraph><paragraph id="idfe351ddee2224d679b96983ea00e6fbf"><enum>(4)</enum><header>Life cycle event considerations</header><text>The Commission shall adopt rules establishing streamlined processes for the following life cycle events:</text><subparagraph id="id0234c4e644bb4a09b23c5d694a91b784"><enum>(A)</enum><header>Successor disclosures in corporate transactions</header><text>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.</text></subparagraph><subparagraph id="id9d5358f04b3d435f98f930c5c0dd012b"><enum>(B)</enum><header>Cessation of work</header><text>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.</text></subparagraph><subparagraph id="idb6471a1386ee488e95c6df3caba42482"><enum>(C)</enum><header>Contractual termination</header><text>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.</text></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id65707d199ed74c048b6d5494d5f3ee92"><enum>(h)</enum><header>Rule of construction</header><text>Nothing in this section may be construed to—</text><paragraph id="id35aa90a5c8694445bf0b796aefd32c41"><enum>(1)</enum><text>limit or impair the anti-fraud or anti-manipulation authorities of the Commission; or</text></paragraph><paragraph id="idcf8b7f1e573a4137b95b19aa931e0720"><enum>(2)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>), as amended by this Act.</text></paragraph></subsection></section><section id="id5cf9286205844b01ba25f6881703a60f"><enum>105.</enum><header>Characteristics of network tokens</header><subsection id="id8b556d05cec54bd48a7b37fa35b94f36"><enum>(a)</enum><header>In general</header><text>Not later than 1 year after the date of enactment of this Act, the Commission shall adopt rules that provide that—</text><paragraph id="id1c8a08cf79044780b60f505a5c6af577"><enum>(1)</enum><text>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—</text><subparagraph id="idc6ae2d6cc3264cafa3585ae19469aaef"><enum>(A)</enum><text>the mechanisms of the distributed ledger system collect, receive, accrue, or distribute consideration from the functioning of the distributed ledger system; </text></subparagraph><subparagraph id="id2e62abc1c97a4ec29685f206b52fd64a"><enum>(B)</enum><text>the network token provides governance capabilities with respect to a distributed ledger system or a decentralized governance system; </text></subparagraph><subparagraph id="id2eba798a97c64c568a05dcaa1c215231"><enum>(C)</enum><text>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</text></subparagraph><subparagraph id="id47ea0d9339da4dde927b1eb0f86e5a0c"><enum>(D)</enum><text>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</text></subparagraph></paragraph><paragraph id="id5d04efe5ec6b48e7a95bcc8765fe4403"><enum>(2)</enum><text>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.</text></paragraph></subsection><subsection id="id13db1ae8ff6a4bcfbde9bcec61dab857"><enum>(b)</enum><header>Effect of rulings and actions before date of enactment</header><paragraph id="id342674be4d1b4db293b57efb5aa9fedf"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id59225a055d1341449e282a98ecfd4058"><enum>(2)</enum><header>Network tokens</header><text>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— </text><subparagraph commented="no" display-inline="no-display-inline" id="idad454d11d6c645c2bb35b162af461a9d"><enum>(A)</enum><text display-inline="yes-display-inline">not registered under the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-1">15 U.S.C. 80a–1 et seq.</external-xref>); and</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idb1eb7f5654fc4eaca9661da25c70c8b2"><enum>(B)</enum><text display-inline="yes-display-inline">the shares of which are listed and traded on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78f">15 U.S.C. 78f</external-xref>).</text></subparagraph></paragraph></subsection></section><section id="id05100a8fe5d84d8485b7cfaed5d4cf80"><enum>106.</enum><header>Exemptive authority</header><subsection id="id64f390584fd544debd09f161fb2838f0"><enum>(a)</enum><header>Continued applicability</header><text>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:</text><paragraph id="idf60e5de70b994209a30322dc9703a64a"><enum>(1)</enum><text>Section 28 of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77z-3">15 U.S.C. 77z–3</external-xref>).</text></paragraph><paragraph id="id9b0c730c886c4cbaaf387140ce415f5e"><enum>(2)</enum><text>Section 36 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78mm">15 U.S.C. 78mm</external-xref>).</text></paragraph><paragraph id="id5ef9f221ca4448b99ee1d16f9bd7ac0e"><enum>(3)</enum><text>Section 6(c) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-6">15 U.S.C. 80a–6(c)</external-xref>).</text></paragraph><paragraph id="iddc868bd677024c36a0a776e3cd7602b6"><enum>(4)</enum><text>Section 206A of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-6a">15 U.S.C. 80b–6a</external-xref>).</text></paragraph><paragraph id="id3b37e108f14048a4b355f7e70c41ec0b"><enum>(5)</enum><text>Section 304(d) of the Trust Indenture Act of 1939 (<external-xref legal-doc="usc" parsable-cite="usc/15/77ddd">15 U.S.C. 77ddd(d)</external-xref>).</text></paragraph><paragraph id="id43235e06ce6c4b9888be27650eca4f70"><enum>(6)</enum><text>Section 4(g) of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78ddd">15 U.S.C. 78ddd(g)</external-xref>).</text></paragraph></subsection><subsection id="id50abf2611be84cc58103e1dc74b86c6d"><enum>(b)</enum><header>General exemptive authority</header><text>Section 28 of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77z-3">15 U.S.C. 77z–3</external-xref>) is amended, in the matter preceding the matter relating to Schedule A—</text><paragraph id="id726b496a66724ad68142569eb92e9162"><enum>(1)</enum><text>by striking <quote>by rule or regulation</quote> and inserting <quote>by rule, regulation, or order</quote>; and</text></paragraph><paragraph id="id7299b9671dc5471790fb827dd28d4ff6"><enum>(2)</enum><text>by adding at the end the following: <quote>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.</quote>.</text></paragraph></subsection></section><section id="idab6c28b0d6d148dc80bfddedccba4d12"><enum>107.</enum><header>Modernization of recordkeeping requirements</header><text display-inline="no-display-inline">The Commission shall adopt rules to modernize the recordkeeping requirements under the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>), and the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-1">15 U.S.C. 80a–1 et seq.</external-xref>), including to facilitate the utilization of distributed ledger records.</text></section><section id="id70d320b279604f6b912ac39bcacdaa2c"><enum>108.</enum><header>Modernization of securities regulations for digital asset activities</header><subsection id="id67445b6b8bb042c1bba147e81dc9746e"><enum>(a)</enum><header>Tailoring of existing requirements</header><text>The Commission shall—</text><paragraph id="id782ca4f185a84e73999e0d33fc537e6e"><enum>(1)</enum><text>amend, rescind, replace, or supplement by rule, order, guidance, exemptive relief, or any other appropriate action (provided such action is consistent with <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/5">chapter 5</external-xref> 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—</text><subparagraph id="ida14b1afbb98947e7bf2725ba4f19d6ca"><enum>(A)</enum><text>customer protection, including custody of digital assets or substantially similar technology;</text></subparagraph><subparagraph id="idc12822cd1ac649459b2eef5f073c3177"><enum>(B)</enum><text>transfer agent rules;</text></subparagraph><subparagraph id="id33ba948f8db346dbb4b05402d6bbf160"><enum>(C)</enum><text>books and records, or recordkeeping requirements;</text></subparagraph><subparagraph id="id27b8dc2448374b89b4d900dc917eb0b1"><enum>(D)</enum><text>clearance and settlement rules;</text></subparagraph><subparagraph id="id5c5b851aa5af46fabcc0bb530dad022f"><enum>(E)</enum><text>broker-dealer, alternative trading system, and exchange rules;</text></subparagraph><subparagraph id="idbd4bb7d78a5749bba80bd4f2196ec8b4"><enum>(F)</enum><text>issuer disclosure and ongoing reporting requirements tailored to digital asset securities or substantially similar technology involving securities; and</text></subparagraph><subparagraph id="idb7c26c6d5385402180825c359c16620f"><enum>(G)</enum><text>the use of vaults, digital asset receipts, or receipts involving substantially similar technology, vault tokens, or liquidity provider tokens; and</text></subparagraph></paragraph><paragraph id="id870abe29fe744e59b459c0666853c17a"><enum>(2)</enum><text>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).</text></paragraph></subsection><subsection id="id64961c55100c42fa94dc8b780afce9b9"><enum>(b)</enum><header>Rule of construction</header><text>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.</text></subsection><subsection id="id51b067a8b6a447729d67d49ad2948080"><enum>(c)</enum><header>Use of existing authority</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77s">15 U.S.C. 77s</external-xref>) and shall be subject to subsection (f) of that section.</text></subsection><subsection id="idc5904f6f65a045b5b2281da6020b1c5f"><enum>(d)</enum><header>Continued applicability of State consumer protection laws</header><text>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.</text></subsection><subsection commented="no" display-inline="no-display-inline" id="id7a2137a136d545d587e33fdfacab5ac9"><enum>(e)</enum><header display-inline="yes-display-inline">Preemption for exemptions and digital asset activities under the securities act</header><text>Section 18 of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r</external-xref>) is amended—</text><paragraph id="ide4feb9a0fe3645fd91b5699b0c72d443"><enum>(1)</enum><text>in subsection (b)—</text><subparagraph id="id4bd5685a0e7741e2949899aed9c9cc96"><enum>(A)</enum><text>in paragraph (3)—</text><clause id="id13c0170f875b4365818ff076c4bf82a6"><enum>(i)</enum><text>in the paragraph heading, by inserting <quote><header-in-text level="paragraph" style="OLC">in qualified transactions or</header-in-text></quote> after <quote><header-in-text level="paragraph" style="OLC">sales</header-in-text></quote>;</text></clause><clause id="id17cf40571c27463eaba48a91a1bf2e99"><enum>(ii)</enum><text>in the first sentence, by inserting <quote>in a qualified transaction or</quote> after <quote>the security</quote>; and</text></clause><clause id="idc21ac3e4e7d649aeb2d1503bc49835fa"><enum>(iii)</enum><text>in the second sentence—</text><subclause id="idc3baaeac0b224834b52936c39dbda4ab"><enum>(I)</enum><text>by striking <quote>term <quote>qualified purchaser</quote></quote> and inserting <quote>terms <quote>qualified transaction</quote> and <quote>qualified purchaser</quote></quote>;</text></subclause><subclause id="id4ec63c61d1a14807a3976f68d5fb503b"><enum>(II)</enum><text>by inserting <quote>and categories of transactions, including secondary transactions,</quote> after <quote>securities</quote>; and</text></subclause><subclause id="id49947963797e4265b81b500c8626e9be"><enum>(III)</enum><text>by inserting <quote>and with due regard to the facilitation of capital formation and the promotion of innovation</quote> before the period at the end; and</text></subclause></clause></subparagraph><subparagraph id="id4dcbd53f377144e99183370de2bf102d"><enum>(B)</enum><text>in paragraph (4)—</text><clause id="id8b396aa28216407b9af50852bb735b1f"><enum>(i)</enum><text>in subparagraph (A), by inserting <quote>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</quote> before the semicolon at the end;</text></clause><clause id="idf76bb07eab294cf6946ac75f29293a4b"><enum>(ii)</enum><text>in subparagraph (D)(ii), by inserting <quote>in a qualified transaction or</quote> after <quote>offered or sold</quote>;</text></clause><clause id="id0aee8a68d7524f69881deb1f5ba77841"><enum>(iii)</enum><text>in subparagraph (F), by striking <quote>or</quote> at the end;</text></clause><clause id="id21f848e60b2f4e9c82ce3ea4de53dbf1"><enum>(iv)</enum><text>in subparagraph (G), by striking the period at the end and inserting <quote>; or</quote>; and</text></clause><clause id="idaa815d4d6a2c459f9740a6cb95976cc9"><enum>(v)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="idb0ca6d748e054ab99f5078c296ac1b94" changed="added" reported-display-style="italic" committee-id="SSBK00"><subparagraph id="id90990929ce864e2d85b1c4bc53d065e7"><enum>(H)</enum><text>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.</text></subparagraph><after-quoted-block>.</after-quoted-block></quoted-block></clause></subparagraph></paragraph></subsection><subsection id="id97f734d82d73477693a4a56044290f55"><enum>(f)</enum><header>Exempting network tokens from <enum-in-header>S</enum-in-header>tate securities laws</header><paragraph id="id647ec012a01b4cd99e1ac2f4693db74f"><enum>(1)</enum><header>In general</header><text>Section 18(b) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(b)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id21f9351c82c8481c827ad75995a04a43" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="id82aa19cc567a413292fa6c3c507ed618"><enum>(5)</enum><header>Exemption in connection with network tokens</header><text>A network token, as defined in section 4B(a), shall be treated as a covered security.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph><paragraph id="id08a468183d4f4b7da99c3d677b8819f8"><enum>(2)</enum><header>Rule of construction</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(c)(1)</external-xref>) of a securities commission (or any agency or office performing like functions) of any State with respect to a covered security or any security.</text></paragraph></subsection><subsection id="idd819d203816f48f798e27e33241edc14"><enum>(g)</enum><header>Preemption for ancillary asset activities under the Securities Act of 1933</header><text>Section 18(b) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(b)</external-xref>), as amended by subsection (f) is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id08e4bca4b04448b9875aa520ffa01f49" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="id8b78afdbba7f44319196a40b8be28b13"><enum>(6)</enum><header>Limitations on state law regarding ancillary assets</header><subparagraph id="idf9307303d7144b309ff1ab9f3718c8c6"><enum>(A)</enum><header>Definitions</header><text>In this paragraph, the term <term>ancillary asset</term> has the meaning given the term in section 4B(a).</text></subparagraph><subparagraph id="idfc6df7ec43204de1ae4c307aa575d215"><enum>(B)</enum><header>Exemption in connection with ancillary assets</header><text>An ancillary asset offered, sold, or distributed in reliance on Regulation Crypto, as adopted under section 103 of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title>, shall be treated as a covered security.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection commented="no" display-inline="no-display-inline" id="idc8b438758f6645e8bd9836ba6de24cb1"><enum>(h)</enum><header>Preservation of Regulation Best Interest</header><paragraph commented="no" display-inline="no-display-inline" id="id895e1aec7eba4813ac5cc38294931116"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78o">15 U.S.C. 78o</external-xref>) or section 240.15l–1 of title 17, Code of Federal Regulations (commonly known as <quote>Regulation Best Interest</quote>), or any successor regulation.</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id7e3b78131767428eb43518ee64e7ea13"><enum>(2)</enum><header>Application</header><text>Paragraph (1) shall not apply with respect to any person registered with the Commodity Futures Trading Commission.</text></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="iddeb33ed810234990845fd552b89b7152"><enum>(i)</enum><header>Preservation of investment adviser fiduciary duties</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2</external-xref>)) owes to a client under section 206 of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-6">15 U.S.C. 80b–6</external-xref>) or any other provision of Federal or State law, including in connection with investment advice regarding a digital commodity.</text></subsection></section><section id="idb6e6d3c02a7f4765b90c2f55a23101b4"><enum>109.</enum><header>Insider trading with respect to ancillary asset transactions</header><subsection id="id6bea0d255216428e9fd1529b208023d6"><enum>(a)</enum><header>Definition</header><text>In this section, the term <term>distributed ledger control person</term> has the meaning given the term in section 104(a).</text></subsection><subsection commented="no" display-inline="no-display-inline" id="id8ec276f8e2f946b0b6f42cb985df6625"><enum>(b)</enum><header display-inline="yes-display-inline">Application of securities laws</header><text>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.</text></subsection><subsection id="id5f97e993f03e4080ba825db722e23a1f"><enum>(c)</enum><header>Rulemaking</header><paragraph commented="no" display-inline="no-display-inline" id="id72359f1bba484e328b94f7055224d3e6"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text>The Commission shall adopt rules to implement subsection (b), which shall—</text><subparagraph commented="no" display-inline="no-display-inline" id="id65fa7cec61994012854085e25c799434"><enum>(A)</enum><text>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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id03bd35c580f846d3a1045b51f6180699"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id7658eff0cd034eb196b5f4f326bd12c7"><enum>(2)</enum><header>Considerations</header><text>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—</text><subparagraph commented="no" display-inline="no-display-inline" id="id42f05f2751ea48309d1b78bfe325c5d4"><enum>(A)</enum><text display-inline="yes-display-inline">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—</text><clause commented="no" display-inline="no-display-inline" id="id863f87fd54d14a6abb6098d130af4a36"><enum>(i)</enum><text display-inline="yes-display-inline">obtained pursuant to or in breach of a duty of trust or confidence;</text></clause><clause commented="no" display-inline="no-display-inline" id="ide1afc85c9f2949aa86a9e7e59ff9d325"><enum>(ii)</enum><text>deceptively obtained through theft, bribery, misrepresentation, or espionage or in violation of any Federal law protecting computer data; or</text></clause><clause commented="no" display-inline="no-display-inline" id="idadc0cfa00fc94989aa2c052c1d61706c"><enum>(iii)</enum><text>obtained from an ancillary asset originator or related person, the conduct of which is described in subparagraph (B); or</text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idbf1237b70ed04d788767edc0ee31a197"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="idc788d13dc92e46c6ae40ddd377713ba6"><enum>(d)</enum><header>Enforcement</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78u-1">15 U.S.C. 78u–1</external-xref>, 78ff) and to all other remedies available under the securities laws.</text></subsection><subsection id="id086de67faa794761a8dafb0f1815762b"><enum>(e)</enum><header>Rule of construction</header><text>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.</text></subsection></section><section commented="no" display-inline="no-display-inline" section-type="subsequent-section" id="id29acf07828564ff5ab6c9c8aa05e747f"><enum>110.</enum><header>Securities Investor Protection Corporation applicability</header><text display-inline="no-display-inline">Section 16(14) of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll(14)</external-xref>) is amended by inserting after the second sentence the following: <quote>The term <term>security</term> does not include a digital commodity.</quote>.</text></section><section id="id307fa14de62242ffb8bfbd14967cc975"><enum>111.</enum><header>Investor and consumer protection enforcement</header><subsection id="id47b2f729118d4d02b767a6ec84a56ad2"><enum>(a)</enum><header>Preservation of certain rights, authorities, laws, and obligations</header><text>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—</text><paragraph id="id3599684e26f64a6c8f65365cbeb6eeb3"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id19797afc76e74b3a9e43d8cf860cd953"><enum>(2)</enum><text>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—</text><subparagraph id="idc48d4d8a7130422488e2692c359939bb"><enum>(A)</enum><text>the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), 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;</text></subparagraph><subparagraph id="id10ae42ddd6cf4680ba9be1399df8db87"><enum>(B)</enum><text>the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>), as amended by this Act, the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), as amended by this Act, or the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>);</text></subparagraph><subparagraph id="id686535cee9fa401eba9a5054244252cc"><enum>(C)</enum><text>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</text></subparagraph><subparagraph id="id8a14508dd82849d8b6c7cc2d543ca399"><enum>(D)</enum><text>section 18(c)(1) of the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(c)(1)</external-xref>), 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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r</external-xref>)), 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;</text></subparagraph></paragraph><paragraph id="id227854f23cf549e494c1d2db981fb433"><enum>(3)</enum><text>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;</text></paragraph><paragraph id="idbf34e913c6274441b506045413db0262"><enum>(4)</enum><text>the fiduciary obligations of an investment adviser, as defined in section 202(a) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-2">15 U.S.C. 80b–2(a)</external-xref>), under section 206 of that Act (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-6">15 U.S.C. 80b–6</external-xref>), 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</text></paragraph><paragraph id="id179f1212822e409181a1afe704241d9a"><enum>(5)</enum><text>any right or remedy under Federal consumer financial law, including under section 1011 of the Consumer Financial Protection Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/12/5491">12 U.S.C. 5491</external-xref>) or the Federal Trade Commission Act (<external-xref legal-doc="usc" parsable-cite="usc/15/41">15 U.S.C. 41 et seq.</external-xref>), 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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5517">12 U.S.C. 5517</external-xref>), including subsections (i) and (j) of such section 1027.</text></paragraph></subsection><subsection id="id5edd4a8b402c469da5909fc193c88f6d"><enum>(b)</enum><header>Limitations and rules of construction</header><text>Nothing in subsection (a) may be construed to—</text><paragraph id="id0f8bb41a381544a89985c38a71fe4345"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="iddf02bf47101b44b19254b1306957adb6"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="idffc67643dc3f4ea3977adf31be0a8381"><enum>(3)</enum><text>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;</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id5667d166505e40968886c7ce334d7176"><enum>(4)</enum><text display-inline="yes-display-inline">expand, contract, or otherwise alter the jurisdiction, exclusive or otherwise, of the Commission, the Commodity Futures Trading Commission, or any State regulator;</text></paragraph><paragraph id="ide8ceceacebe84e70b679aa4dece67eb3"><enum>(5)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r</external-xref>); or</text></paragraph><paragraph id="id094c5371f55a4d1395fcb982103470cf" commented="no" display-inline="no-display-inline"><enum>(6)</enum><text>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.</text></paragraph></subsection></section><enum>II</enum><header>Protecting against illicit finance</header><section id="id21f21ed42d804558b9cec679f4314de8"><enum>201.</enum><header>Treatment under the Bank Secrecy Act and sanctions laws</header><subsection id="id37f28523fe23405b9e28d998249de8d1"><enum>(a)</enum><header>Amendment</header><text>Section 5312(c)(1)(A) of title 31, United States Code, is amended—</text><paragraph id="id3fb714afe7604e03bd938e5f0f09ba33"><enum>(1)</enum><text>by inserting <quote>digital commodity broker, digital commodity dealer,</quote> after <quote>futures commission merchant,</quote>; and</text></paragraph><paragraph id="id5511ed226d8047bbaef592a2ab063d77"><enum>(2)</enum><text>by inserting before the period the following: <quote>and any digital commodity exchange registered, or required to register, under that Act that permits direct customer access</quote>.</text></paragraph></subsection><subsection id="id462789aaf7164c8c83587558f4ac5aa0"><enum>(b)</enum><header>Bank secrecy act requirements</header><paragraph id="idae76b0a8ac304602aa2672b1429ff76d"><enum>(1)</enum><header>Regulations</header><text>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—</text><subparagraph id="id6828539242f248da80327392c79df849"><enum>(A)</enum><text>establish and maintain an anti-money laundering and countering the financing of terrorism program, which shall include—</text><clause id="id8930f04ec96c45389c53a324d4545bad"><enum>(i)</enum><text>an appropriate risk assessment;</text></clause><clause id="idfb47756f58344d3caf6212df3b879f12"><enum>(ii)</enum><text>the development of internal policies, procedures, and controls;</text></clause><clause id="ide6e1f9d0f6774f06b076a4a542b26f05"><enum>(iii)</enum><text>the designation of a compliance officer;</text></clause><clause id="id7f7d2adb29444399ac88c3aed4fd5121"><enum>(iv)</enum><text>an ongoing employee training program; and</text></clause><clause id="idbf26346ce2ca4aff9326cb7a706b8a0c"><enum>(v)</enum><text>an independent audit function to test such program;</text></clause></subparagraph><subparagraph id="id9ab26503048e41a3a95cc9fb785f6159"><enum>(B)</enum><text>retain appropriate records of transactions;</text></subparagraph><subparagraph id="id67dd4420af7d4a7ea8455f3d5b660e50"><enum>(C)</enum><text>monitor and report suspicious activity, which may include use of appropriate distributed ledger analytics; and</text></subparagraph><subparagraph id="id62ef574ca469485b8cd9daa0b3876737"><enum>(D)</enum><text>maintain an effective customer identification program to identify and verify account holders and carry out appropriate customer due diligence.</text></subparagraph></paragraph><paragraph id="id18223cbdb39f4714a517d6ec15c25a8a"><enum>(2)</enum><header>Compliance with sanctions</header><text>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.</text></paragraph></subsection><subsection id="idcdc936d553c54c02af095c16739b325a"><enum>(c)</enum><header>Sense of Congress</header><text>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.</text></subsection></section><section id="id8f9bea41c3c94de1b357d1039c94f57a"><enum>202.</enum><header>Digital asset examination standards</header><subsection id="idd964852c18bd4eb98b7f953722a78729"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ided6cb9bbac934e76a8188203ecc8ebb3"><enum>(1)</enum><header>Federal functional regulator</header><text>The term <term>Federal functional regulator</term> has the meaning given the term in section 509 of the Gramm-Leach-Bliley Act (<external-xref legal-doc="usc" parsable-cite="usc/15/6809">15 U.S.C. 6809</external-xref>).</text></paragraph><paragraph id="idfa55277e1d1c4a629f681f09f38708e6"><enum>(2)</enum><header>Financial institution</header><text>The term <term>financial institution</term> has the meaning given the term in section 5312(a)(2) of title 31, United States Code.</text></paragraph></subsection><subsection id="id159b3aa19fc541e6bd02338843bb1dc9"><enum>(b)</enum><header>Examination and review</header><text>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.</text></subsection></section><section id="id0623211147a64325993fa086bc8714ad"><enum>203.</enum><header>Preventing Illicit Finance Through Partnership Act</header><subsection commented="no" display-inline="no-display-inline" id="id2ec02f292fdb402a8c1334b8a2a65bfa"><enum>(a)</enum><header display-inline="yes-display-inline">Short title</header><text>This section may be cited as the <quote>Preventing Illicit Finance Through Partnership Act</quote>.</text></subsection><subsection id="idb8d6a35f4b1348f288f18928680eb4f8"><enum>(b)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id2d0b234b231b400ba6dd8f7770ad32d6"><enum>(1)</enum><header>Bank</header><text>The term <term>bank</term> has the meaning given the term in section 1010.100 of title 31, Code of Federal Regulations (or any corresponding similar regulation).</text></paragraph><paragraph id="id9c638f5540364d709d9dd6c874f287de"><enum>(2)</enum><header>Certified or recognized information-sharing or interdiction network</header><text>The term <term>certified or recognized information-sharing or interdiction network</term> means a real-time, secure, public-private mechanism that—</text><subparagraph id="id5c2444b5d16e444a8674eea3e74474f3"><enum>(A)</enum><text>facilitates the detection, interdiction, and prevention of illicit finance violations through rapid information exchange between government and regulated entities; and</text></subparagraph><subparagraph id="id932ab567db97453cbff0ccc9c448d543"><enum>(B)</enum><text>is—</text><clause id="id5d25ffc1f29b421293d5182131cf50b4"><enum>(i)</enum><text>certified by the Secretary of the Treasury for the purpose of supporting interdiction and investigative actions consistent with law enforcement or regulatory authorities; or</text></clause><clause id="idb5bd0b24abff484cb6f9c0f71cc2d5f3"><enum>(ii)</enum><text>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).</text></clause></subparagraph></paragraph><paragraph id="id9183778b99e64771ada64915389e198f"><enum>(3)</enum><header>Covered agency</header><text>The term <term>covered agency</term> means—</text><subparagraph id="idd9d9cb1fc4fb4b0381e4873180dd58cb"><enum>(A)</enum><text>the Department of Justice, including the Federal Bureau of Investigation and the Drug Enforcement Administration;</text></subparagraph><subparagraph id="id3e7ed5d180f7446baa57b41ac4440a27"><enum>(B)</enum><text>the Department of the Treasury, including the Financial Crimes Enforcement Network, the Internal Revenue Service, and the Office of Foreign Assets Control; and</text></subparagraph><subparagraph id="id0d53e7ebd2964e319e7eb37487996915"><enum>(C)</enum><text>the Department of Homeland Security.</text></subparagraph></paragraph><paragraph id="id8a0510a3f6a447aca4d66d7afa09019e"><enum>(4)</enum><header>Designated private sector entity</header><text>The term <term>designated private sector entity</term> means a private sector entity designated under subsection (d).</text></paragraph><paragraph id="id29ea3372df9d499ba54d7a4fc33440b9"><enum>(5)</enum><header>Director</header><text>The term <term>Director</term> means the Director of the Financial Crimes Enforcement Network.</text></paragraph><paragraph id="id1f07840108fd4218a45f1c91be3cd058"><enum>(6)</enum><header>Illicit finance violation</header><text>The term <term>illicit finance violation</term> means the illicit use of digital assets.</text></paragraph><paragraph id="ide451c390df084794a913b05e13a2ca6e"><enum>(7)</enum><header>Illicit use</header><text>The term <term>illicit use</term> 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.</text></paragraph><paragraph id="id665dbb6e3f574d23af8e7277038c010f"><enum>(8)</enum><header>Money services business</header><text>The term <term>money services business</term> has the meaning given the term in section 1010.100 of title 31, Code of Federal Regulations (or any corresponding similar regulation).</text></paragraph></subsection><subsection id="idf2242a3cb45b418da1c37f3e60ab4b19"><enum>(c)</enum><header>Establishment of program</header><text>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.</text></subsection><subsection id="id8ca49e4fe27249d4aeba440cd1c7d7d1"><enum>(d)</enum><header>Designation of private sector entities</header><paragraph id="ide9c08f30305347b7ad65f8c39a29ea13"><enum>(1)</enum><header>Required action</header><subparagraph id="idd48bc92bc4a84bb484094ac19bf70edf"><enum>(A)</enum><header>Initial companies</header><text>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.</text></subparagraph><subparagraph id="id2ce494a0fc22451cb90aa284c9464129"><enum>(B)</enum><header>Biannual review</header><text>Not less frequently than once every 6 months, the Director shall review and, as appropriate, replace the private sector entities designated under this paragraph.</text></subparagraph><subparagraph id="idcbfa554e4d2c43e7aff534dbe88e8e54"><enum>(C)</enum><header>Rule of construction</header><text>Nothing in this section may be construed as—</text><clause id="idedc3f80a36944b36a555e5acad1604f7"><enum>(i)</enum><text>requiring an entity to participate in the pilot program established under this section; or</text></clause><clause id="id2563642723db4ebc90aa01bf7ecf8148"><enum>(ii)</enum><text>enabling the Director to select an entity to participate in the pilot program without the consent of such entity.</text></clause></subparagraph></paragraph><paragraph id="ide08a8ba34a8843c18fa63a3c3d9092de"><enum>(2)</enum><header>Optional designation</header><text>In addition to the 30 private sector entities designated under paragraph (1), the Director may designate—</text><subparagraph id="id5cfd72fd004141d49bbeadc844b581ff"><enum>(A)</enum><text>1 or more information sharing and analysis centers to participate in the pilot program;</text></subparagraph><subparagraph id="id5c235a3e868e47a5a6bfefd561510692"><enum>(B)</enum><text>1 or more participants in a certified or recognized information sharing or interdiction network; or</text></subparagraph><subparagraph id="idbfce2504a36b45d6b986ef97a69e51df"><enum>(C)</enum><text>1 or more private sector entities, as appropriate, relating to a particular type of illicit activity.</text></subparagraph></paragraph></subsection><subsection id="id549033892f60431996ad8c4911ee281d"><enum>(e)</enum><header>Information sharing with private sector entities</header><text>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.</text></subsection><subsection id="id21db7deca9c644a996372df6c828cc9e"><enum>(f)</enum><header>Use of information by private sector entities</header><text>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.</text></subsection><subsection id="id95b67e33fec044d0b3851da36e0f6b87"><enum>(g)</enum><header>Means of sharing information</header><text>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—</text><paragraph id="id720175d7da1b4276b90b28f537797e3d"><enum>(1)</enum><text>through a portal established by the Secretary of the Treasury or a similar mechanism determined appropriate by the Secretary of the Treasury;</text></paragraph><paragraph id="id0bee8c199d194945899cfe0fe3db9a8a"><enum>(2)</enum><text>through secure email;</text></paragraph><paragraph id="id03de61ead2904f909c251d8b45ce659e"><enum>(3)</enum><text>at monthly meetings, which shall be facilitated by the Secretary of the Treasury; or</text></paragraph><paragraph id="id7bb502b1e4ef4c88b9d6f47cb5f79904"><enum>(4)</enum><text>through a certified or recognized information-sharing or interdiction network.</text></paragraph></subsection><subsection id="id6959d59728584b76bea170b3f53f14f3"><enum>(h)</enum><header>Limitation on liability</header><text>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.</text></subsection><subsection id="idb7ab9514b4734a69868f22ce9bea74de"><enum>(i)</enum><header>Sunset</header><text>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.</text></subsection></section><section id="idf1194aee25b6425280458a5381e23108"><enum>204.</enum><header>Financial Technology Protection Act</header><subsection commented="no" display-inline="no-display-inline" id="id3dab8167ca47477d89cdbabc777206c2"><enum>(a)</enum><header display-inline="yes-display-inline">Short title</header><text>This section may be cited as the <quote>Financial Technology Protection Act</quote>.</text></subsection><subsection id="idf9170fbdcc0041b1a38b510c7eace313"><enum>(b)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id35bd2b53b430471189de0951904c2f21"><enum>(1)</enum><header>Appropriate congressional committees</header><text>The term <term>appropriate congressional committees</term> means—</text><subparagraph id="idd5ae2d12d64b40098da8fda40b12e26a"><enum>(A)</enum><text>the Committee on Banking, Housing, and Urban Affairs of the Senate;</text></subparagraph><subparagraph id="id2265d5b72e3c4d8ca18371d5ead7cf05"><enum>(B)</enum><text>the Committee on Agriculture, Nutrition, and Forestry of the Senate;</text></subparagraph><subparagraph id="id832256fe7ae4410980565f0c6e37ea78"><enum>(C)</enum><text>the Committee on Financial Services of the House of Representatives; and</text></subparagraph><subparagraph id="id0fbe099f0de548289058bacf460079ef"><enum>(D)</enum><text>the Committee on Agriculture of the House of Representatives.</text></subparagraph></paragraph><paragraph id="id68b6bb54c51f4d14bf88fd4313ea9980"><enum>(2)</enum><header>Distributed ledger analytics company</header><text>The term <term>distributed ledger analytics company</term> 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—</text><subparagraph id="id65b5c1298e17409b987610ca371bdc65"><enum>(A)</enum><text>support private and public sector investigations and risk management activities; and</text></subparagraph><subparagraph id="id703ff961c08145238e5bc41e5cc9c54d"><enum>(B)</enum><text>involve cryptographically secured distributed ledgers or any similar technology or implementation.</text></subparagraph></paragraph><paragraph id="idcd43394e05d34e9b8870e347b77a3f15"><enum>(3)</enum><header>Emerging technologies</header><text>The term <term>emerging technologies</term> 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.</text></paragraph><paragraph id="id6fd9ba166c1047b18855d14cc909d763"><enum>(4)</enum><header>Foreign terrorist organization</header><text>The term <term>foreign terrorist organization</term> means an organization that is designated as a foreign terrorist organization under section 219 of the Immigration and Nationality Act (<external-xref legal-doc="usc" parsable-cite="usc/8/1189">8 U.S.C. 1189</external-xref>).</text></paragraph><paragraph id="id67f80dbb74154de2987cfb96825ae3b1"><enum>(5)</enum><header>Illicit use</header><text>The term <term>illicit use</term> 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).</text></paragraph><paragraph id="id7557e90a03514ca7a87664afd040275c"><enum>(6)</enum><header>State sponsor of terrorism</header><text>The term <term>state sponsor of terrorism</term> 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 (<external-xref legal-doc="usc" parsable-cite="usc/22/2780">22 U.S.C. 2780</external-xref>) or section 620A of the Foreign Assistance Act of 1961 (<external-xref legal-doc="usc" parsable-cite="usc/22/2371">22 U.S.C. 2371</external-xref>).</text></paragraph><paragraph id="id7cc7010dfc75485fa4c6670951b65180"><enum>(7)</enum><header>Terrorist</header><text>The term <term>terrorist</term> 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).</text></paragraph><paragraph id="id2f57b18b95b04f42ac10fc7f3be2b492"><enum>(8)</enum><header>Transnational organized crime</header><text>The term <term>transnational organized crime</term> has the meaning given the term in section 284 of title 10, United States Code.</text></paragraph></subsection><subsection id="idc1ed6f4e40284854ac05bdb3ab2f548c"><enum>(c)</enum><header>Independent financial technology working group to combat terrorism, narcotics trafficking, and illicit financing</header><paragraph id="id5c3f5894629849a0a420fde9ce5c6451"><enum>(1)</enum><header>Establishment</header><text>There is established the Independent Financial Technology Working Group to Combat Terrorism, Narcotics Trafficking, and Illicit Financing (in this section referred to as the <quote>Working Group</quote> ), which shall consist of the following:</text><subparagraph id="id76bbf244d9ba4a5da041e85d90e1dab0"><enum>(A)</enum><text>The Secretary of the Treasury or their designee, who shall serve as the chair of the Working Group.</text></subparagraph><subparagraph id="id6282f45799644916865ca7d62e0825d6"><enum>(B)</enum><text>A senior-level representative from each of the following:</text><clause id="idc77d0a6024ec40c4b315efd572bd55e0"><enum>(i)</enum><text>The Department of the Treasury.</text></clause><clause id="id0c48b110ef2b48a6bea866acde754ffa"><enum>(ii)</enum><text>The Office of Terrorism and Financial Intelligence.</text></clause><clause id="idf91897cb5624415ab2680e8f97d6a82f"><enum>(iii)</enum><text>The Internal Revenue Service.</text></clause><clause id="id55a87723d9c54a96aa5ebc02a630f0da"><enum>(iv)</enum><text>The Department of Justice.</text></clause><clause id="ide98e99fa753f4c5cb802b6c6001b2390"><enum>(v)</enum><text>The Federal Bureau of Investigation.</text></clause><clause id="idd4542b742aaa4770a851a7b03297ea90"><enum>(vi)</enum><text>The Drug Enforcement Administration.</text></clause><clause id="id71173b9015c6469284568b9e7dd9f9a8"><enum>(vii)</enum><text>The Department of Homeland Security.</text></clause><clause id="id24b81e7d264742cb8158ba8a508dcfc6"><enum>(viii)</enum><text>The United States Secret Service.</text></clause><clause id="idbc23fe787d54487598f6ab91b815a853"><enum>(ix)</enum><text>The Department of State.</text></clause><clause id="idd0ce11c192114e6daa0d5ec0c16e5ddc"><enum>(x)</enum><text>The Office of the Director of National Intelligence.</text></clause></subparagraph><subparagraph id="id6e536739969e486ea3f61eb1e5b62877"><enum>(C)</enum><text>At least 5 individuals appointed by the Secretary of the Treasury to represent the following:</text><clause id="id32293b2e5c864b2bbed4efc6a8fa0c1b"><enum>(i)</enum><text>Digital asset companies.</text></clause><clause id="ide1ed0dc9efa445efb08551c93ef483df"><enum>(ii)</enum><text>Distributed ledger analytics companies.</text></clause><clause id="id66feb7fcf3884337a775d74dd8d9d8c8"><enum>(iii)</enum><text>Financial institutions.</text></clause><clause id="idf8859b7215214618a3e2ba49916da121"><enum>(iv)</enum><text>Institutions or organizations engaged in research.</text></clause><clause id="id380bc7e8ac11411581029d4299b00638"><enum>(v)</enum><text>Institutions or organizations focused on individual privacy and civil liberties.</text></clause></subparagraph><subparagraph id="ide49fee3391aa491b94cfc1ae90f6de8f"><enum>(D)</enum><text>Such additional individuals as the Secretary of the Treasury may appoint as necessary to accomplish the duties described in paragraph (2).</text></subparagraph></paragraph><paragraph id="id14652f9670844baba9cef3ec5d489a64"><enum>(2)</enum><header>Duties</header><text>The Working Group shall—</text><subparagraph id="idbe41e95d4b6844b4966661754e2e8d5e"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="idfd368e7886774bdeb82ee1544e979952"><enum>(B)</enum><text>develop legislative and regulatory proposals to improve anti-money laundering, counter-terrorist, and other counter-illicit financing efforts in the United States.</text></subparagraph></paragraph><paragraph id="id7a05864cbbf14bb9a237c7248f5a61f8"><enum>(3)</enum><header>Reports</header><subparagraph id="id0b9fef880123406496b563f01f6f056b"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="idbc149560b3af47b6978b845f06a7fad3"><enum>(B)</enum><header>Final report</header><text>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.</text></subparagraph></paragraph><paragraph id="id2525f39cbc134dcd9aa09b543647070a"><enum>(4)</enum><header>Sunset</header><subparagraph id="id3533225eb9e748bdacf110ff36d63d11"><enum>(A)</enum><header>In general</header><text>The Working Group shall terminate on the later of—</text><clause id="id14a380db2b3e45a29315dd918aba0e43"><enum>(i)</enum><text>the date that is 4 years after the date of enactment of this Act; or</text></clause><clause id="id623123f03b9644b38d2bc16ecf9b1ced"><enum>(ii)</enum><text>the date on which the Working Group completes any wind-up activities described in subparagraph (B).</text></clause></subparagraph><subparagraph id="iddf56deec956049c787bc8948183c1e74"><enum>(B)</enum><header>Authority to wind up activities</header><text>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.</text></subparagraph><subparagraph id="idd443b683c78e415395f268a505aa78ed"><enum>(C)</enum><header>Return of appropriated funds</header><text>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.</text></subparagraph></paragraph></subsection></section><section id="id613332fe616e4110977859b66c29f419"><enum>205.</enum><header>Digital asset kiosks</header><subsection id="id88cbe6923f844c00aad9903176e7e4c9"><enum>(a)</enum><header>Registration</header><text>Section 5330 of title 31, United States Code, is amended—</text><paragraph id="ida35ba54b479c40129c215389da90b9dc"><enum>(1)</enum><text>in subsection (d)—</text><subparagraph id="id9f2c7322deb442378087e4023dd78634"><enum>(A)</enum><text>in paragraph (1)(A), by inserting <quote>, any person who owns, operates, or manages a digital asset kiosk in the United States or its territories,</quote> after <quote>similar instruments</quote>; and</text></subparagraph><subparagraph id="id94f38d2672b64d259a90c60a5c5a5642"><enum>(B)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id71713c60cd9b4f28a7c762b41a685dd8" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="id05f35423387c428bb314d2be7b3c4c43"><enum>(3)</enum><header>Digital asset; digital asset address; digital asset kiosk; digital asset kiosk operator</header><text>The terms <term>digital asset</term>, <term>digital asset address</term>, <term>digital asset kiosk</term>, and <term>digital asset kiosk operator</term> have the meanings given those terms, respectively, in section 5337.</text></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph></paragraph><paragraph id="id9567b748598b43229d7298191e68a857"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="iddd72b6296cd64e5ab0d8101316ae7200" changed="added" reported-display-style="italic" committee-id="SSBK00"><subsection id="ide8d1cee30a724f07ab60cf9def1cb926"><enum>(f)</enum><header>Registration of digital asset kiosk locations</header><paragraph id="id4717abcd7a7d44afa3a4f61f94da0dcd"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id3db53725a8de4c99a50bd18a3b02f66f"><enum>(2)</enum><header>Form and manner of registration</header><text>Each submission by a digital asset kiosk operator pursuant to paragraph (1) shall include—</text><subparagraph id="id97a84353c7334d83a0ec404f307cfedd"><enum>(A)</enum><text>the legal name of the digital asset kiosk operator;</text></subparagraph><subparagraph id="id3a124e02af2b4326824a4df8482a8dfe"><enum>(B)</enum><text>any fictitious or trade name of the digital asset kiosk operator;</text></subparagraph><subparagraph id="idda9920c47b964acd9625ca822a12a5de"><enum>(C)</enum><text>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;</text></subparagraph><subparagraph id="id5e15a76e6ade4cb8bb8507287e59ed81"><enum>(D)</enum><text>the start date of operation of each digital asset kiosk;</text></subparagraph><subparagraph id="id00079bdefd894bcbaf48759bca50171d"><enum>(E)</enum><text>the end date of operation of each digital asset kiosk, if applicable; and</text></subparagraph><subparagraph id="id38325e731ae14a2c8aa6a704d014b111"><enum>(F)</enum><text>each digital asset address used by the digital asset kiosk operator.</text></subparagraph></paragraph><paragraph id="id8df19df4f6fe44bc93b3de4f81faa189"><enum>(3)</enum><header>False and incomplete information</header><text>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.</text></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection><subsection id="id08a06a1691d64e1eb1664f6444490260"><enum>(b)</enum><header>Preventing fraudulent transactions at digital asset kiosks</header><paragraph id="id02bf589eb5ed48be82565d1bd5536a60"><enum>(1)</enum><header>In general</header><text>Subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> of title 31, United States Code, is amended by adding at the end the following:</text><quoted-block style="USC" display-inline="no-display-inline" id="idd02fefc9b74a409faa87eb720884d8ef" changed="added" reported-display-style="italic" committee-id="SSBK00"><section id="idb445e2acb6344662bd7f7a8ee24d0407"><enum>5337.</enum><header>Digital asset kiosk fraud prevention</header><subsection id="idd8c4506d8acf464283bd1f8f19c24901"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id97c50fdfce8b4535bff3b6d5746293b1"><enum>(1)</enum><header>Customer</header><text>The term <term>customer</term> means any person that purchases or sells digital assets through a digital asset kiosk.</text></paragraph><paragraph id="ided412b1163aa42608ebc3040745f30db"><enum>(2)</enum><header>Distributed ledger analytics</header><text>The term <term>distributed ledger analytics</term> 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.</text></paragraph><paragraph id="id9f9faf4d31574d35a0588a93342b39a1"><enum>(3)</enum><header>Digital asset</header><text>The term <term>digital asset</term> has the meaning given the term in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>).</text></paragraph><paragraph id="ide01b911a82d84e50a65448f36b73e16f"><enum>(4)</enum><header>Digital asset address</header><text>The term <term>digital asset address</term> 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.</text></paragraph><paragraph id="idff2a1fdc6132451f89efbc40d9206669"><enum>(5)</enum><header>Digital asset kiosk</header><text>The term <term>digital asset kiosk</term> means a stand-alone machine that is capable of accepting or dispensing legal tender in exchange for digital assets.</text></paragraph><paragraph id="idd07d0333495c4fbd9cb30b99dec01d7b"><enum>(6)</enum><header>Digital asset kiosk operator</header><text>The term <term>digital asset kiosk operator</term> means a person who owns, operates, or manages a digital asset kiosk located in the United States or its territories.</text></paragraph><paragraph id="idf57c0646b4644b79951deafca111ec7f"><enum>(7)</enum><header>Digital asset kiosk transaction</header><text>The term <term>digital asset kiosk transaction</term> means the purchase or sale of digital assets via a digital asset kiosk.</text></paragraph><paragraph id="id4481e97e11f14fbc8bfad6602f37be8b"><enum>(8)</enum><header>Digital asset wallet</header><text>The term <term>digital asset wallet</term> means a software application or other mechanism providing a means for holding, storing, and transferring digital assets.</text></paragraph><paragraph id="id5ed1ac60f294469bb8a6476c0da0cdaf"><enum>(9)</enum><header>FinCEN</header><text>The term <term>FinCEN</term> means the Financial Crimes Enforcement Network of the Department of the Treasury.</text></paragraph><paragraph id="ida436775f71104722a97e333a0dc16f83"><enum>(10)</enum><header>New customer</header><text>The term <term>new customer,</term> 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.</text></paragraph><paragraph id="id05200f9c60194aceb4ca9ae9d9c56c39"><enum>(11)</enum><header>Transaction hash</header><text>The term <term>transaction hash</term> 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.</text></paragraph></subsection><subsection id="ide0bcbb7d03554805bf219c1d73122f80"><enum>(b)</enum><header>Disclosures</header><paragraph id="id3d0839d9d3684a288ab073c101df8327"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="id2ce285b5dd1241ee82be79df5b65ab10"><enum>(A)</enum><text>all relevant terms and conditions of the digital asset kiosk transaction, including—</text><clause id="id0d2fe2b553f04b15a585e74aedef6ee2"><enum>(i)</enum><text>the amount of the digital asset kiosk transaction;</text></clause><clause id="idd418e26cd7c84f859c10e41d496159ce"><enum>(ii)</enum><text>the type and nature of the digital asset kiosk transaction;</text></clause><clause id="idf2fe87ac3bb0483a8249e8905d7dff17"><enum>(iii)</enum><text>a warning that the digital asset kiosk transaction is final, is not refundable, and may not be reversed; and</text></clause><clause id="idbdc628bad41c4a1eac7fb326c99d8630"><enum>(iv)</enum><text>the type and amount of any fees or other expenses paid by the customer;</text></clause></subparagraph><subparagraph id="id9a595396ffd24acfaec4ab40118de12c"><enum>(B)</enum><text>a warning relating to consumer fraud including—</text><clause id="ida772a91c626a40b98ea1855fed2f5e1c"><enum>(i)</enum><text>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;</text></clause><clause id="ide0f3dac7e46644e999360d16d190eebf"><enum>(ii)</enum><text>the most common types of fraudulent schemes involving digital asset kiosks, such as—</text><subclause id="idec9b15b4186342b4b681fbeb59181086"><enum>(I)</enum><text>impersonation of a government official or a bank representative;</text></subclause><subclause id="id8e81ae4fdd7b421dabc5b58eafb31254"><enum>(II)</enum><text>threats of jail time or financial penalties;</text></subclause><subclause id="id966621ad54214231aa9e8884d633bbbc"><enum>(III)</enum><text>offers of a job or reward in exchange for payment, or offers of deals that seem too good to be true;</text></subclause><subclause id="idbc0c58c0a92b41d5a52ec221b20fee28"><enum>(IV)</enum><text>claims of a frozen bank account or credit card;</text></subclause><subclause id="id55ec3ddf780a4069ac8dc6ca3adeb403"><enum>(V)</enum><text>requests for donations to charity or disaster relief; or</text></subclause><subclause id="idfbec544f6fe44406af285685b620a379"><enum>(VI)</enum><text>payment to an individual the customer has never met; and</text></subclause></clause><clause id="id62ddd93cc1f649cc84ca01f9cea47ce1"><enum>(iii)</enum><text>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.</text></clause></subparagraph></paragraph><paragraph id="id80d8a124d9a6480ca545130bc29c8d96"><enum>(2)</enum><header>Additional disclosures</header><text>FinCEN may adopt rules relating to additional disclosures required to be made to customers prior to engaging in a transaction.</text></paragraph></subsection><subsection id="id5471ace6467143d2895ed7ad39e9bf0d"><enum>(c)</enum><header>Acknowledgment of disclosures</header><text>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.</text></subsection><subsection id="idb614d32049154503854fe2308637d7ee"><enum>(d)</enum><header>Receipts</header><text>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:</text><paragraph id="id7eca50f392184a43ad23d59cc632b4c3"><enum>(1)</enum><text>The name and contact information of the digital asset kiosk operator, including a telephone number for a customer service helpline.</text></paragraph><paragraph id="id67248d8da0be440c9be1d4b407d0d485"><enum>(2)</enum><text>The name of the customer.</text></paragraph><paragraph id="id25b2382fbc414d6dac7f5d76427764b9"><enum>(3)</enum><text>The type, value, date, and precise time of the digital asset kiosk transaction, transaction hash, and each applicable digital asset address.</text></paragraph><paragraph id="id06db6655060e44ea94b5e38bf949cc2e"><enum>(4)</enum><text>The amount of the digital asset kiosk transaction expressed in United States dollars.</text></paragraph><paragraph id="id4f8e2ffe23494d34a8e543523429a5a3"><enum>(5)</enum><text>All fees charged.</text></paragraph><paragraph id="id08cde1e770bc4300914537031583ab26"><enum>(6)</enum><text>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.</text></paragraph><paragraph id="id3b257030b7a74cd1a98c94105050b0a5"><enum>(7)</enum><text>The exchange rate applied.</text></paragraph><paragraph id="idd10d3eb4074a4c28bbe1ce8b8b551bc6"><enum>(8)</enum><text>Any additional information the digital asset kiosk operator determines appropriate.</text></paragraph></subsection><subsection id="idd14cf7a9f1bd46908d8ae1db1b4200e5"><enum>(e)</enum><header>Physical receipts available</header><text>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.</text></subsection><subsection id="idf7fb8659b7504b74a86399b6f1290f05"><enum>(f)</enum><header>Anti-Fraud policy</header><paragraph id="id12b24b9ec8bb46ecab873c9eae593cc1"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id4832c390a37d4e30a9185b86419d6f30"><enum>(2)</enum><header>Federal standard</header><text>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—</text><subparagraph id="ide170a86b5ab4407fb23c74dcbed3ef56"><enum>(A)</enum><text>the identification and assessment of fraud-related areas;</text></subparagraph><subparagraph id="idf87f1bd72c1b4fa681a4033856fe9bcd"><enum>(B)</enum><text>procedures and controls to protect against risks identified under subparagraph (A);</text></subparagraph><subparagraph id="id1475b675473b4017aa69e035995d2ea7"><enum>(C)</enum><text>allocation of responsibility for monitoring the risks identified under subparagraph (A); and</text></subparagraph><subparagraph id="idf9d88c034c80462aa99ebb540eb9f813"><enum>(D)</enum><text>procedures for the periodic evaluation and revision of the anti fraud procedures, controls, and monitoring mechanisms under subparagraphs (B) and (C).</text></subparagraph></paragraph></subsection><subsection id="id4ad7a0df113d474db459d71036816e09"><enum>(g)</enum><header>Appointment of compliance officer</header><text>Each digital asset kiosk operator shall designate and employ a compliance officer who—</text><paragraph id="id9f0b8a2681534e1bbde6785e16cf771d"><enum>(1)</enum><text>is qualified to coordinate and monitor compliance with this section and all other applicable Federal and State laws, rules, and regulations;</text></paragraph><paragraph id="id56d33c010f0443e997d7125badf963f4"><enum>(2)</enum><text>is employed full-time by the digital asset kiosk operator;</text></paragraph><paragraph id="id4bea6adbbd454f7b8cecc982227f2663"><enum>(3)</enum><text>is not the chief executive officer of the digital asset kiosk operator; and</text></paragraph><paragraph id="id34fb3b5e12f8443f97d528b7edcfb712"><enum>(4)</enum><text>does not own or control more than 10 percent of any interest in the digital asset kiosk operator.</text></paragraph></subsection><subsection id="id3dc911c24ae749bca330e28c50e8bc15"><enum>(h)</enum><header>Use of distributed ledger analytics and wallet pinning</header><paragraph id="id68c2e31c49d649cdb58fb68a244593a2"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="idf65dd6b25985495fb2d03bd899844ffa"><enum>(2)</enum><header>Wallet pinning</header><text>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.</text></paragraph><paragraph id="idfa6a080aea404bc3aac43c8967c62190"><enum>(3)</enum><header>Compliance</header><text>The Director of FinCEN may request evidence from any digital asset kiosk operator to confirm compliance with this subsection.</text></paragraph></subsection><subsection id="id56aca71fa2804016a3bcdacc730145bc"><enum>(i)</enum><header>Confirmation required before new customer transactions</header><text>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—</text><paragraph id="id9c0915d1dce742f58eba2a7bb00157de"><enum>(1)</enum><text>the new customer wishes to proceed with the digital asset kiosk transaction; and</text></paragraph><paragraph id="id000f44ed4e86493d93eb7b9cef66f6c2"><enum>(2)</enum><text>the new customer is not being fraudulently induced into engaging in the transaction.</text></paragraph></subsection><subsection id="idc13992e31d6a4b438a719ab2cbe491e0"><enum>(j)</enum><header>Holding period</header><text>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.</text></subsection><subsection id="id2be9e108a4974e73b264923641a679f6"><enum>(k)</enum><header>Transaction limits with respect to new customers</header><text>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.</text></subsection><subsection id="id3295677a2fc94915abcd9b295686f08c"><enum>(l)</enum><header>Interim transaction limits</header><text>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.</text></subsection><subsection id="idb24196091edf4047a7a0004b9a2d9e84"><enum>(m)</enum><header>Refunds</header><text>A digital asset kiosk operator shall issue a refund for a customer’s transaction fees within 30 days if—</text><paragraph id="ide91d9ff5a1474c129b5f3cd9196180be"><enum>(1)</enum><text>the customer was fraudulently induced into engaging in the digital asset kiosk transaction; and</text></paragraph><paragraph id="id777032fa0199467d8fc12a7c36c60ddb"><enum>(2)</enum><text>the customer files a complaint to the digital asset kiosk operator, which includes—</text><subparagraph id="id5d8ef5419e8546a1a1012782f1f26293"><enum>(A)</enum><text>the name, address, and phone number of the customer;</text></subparagraph><subparagraph id="id315b937bf807437b82cd72e2d9c18a7f"><enum>(B)</enum><text>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</text></subparagraph><subparagraph id="idc701db1ff9334e758daf9218e1a4d770"><enum>(C)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="id09d5b9e34c3747b99960dff72c252130"><enum>(n)</enum><header>Customer service helpline</header><text>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.</text></subsection><subsection id="idf67d806734874bbdb60a56efdd41699e"><enum>(o)</enum><header>Communications with law enforcement</header><text>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.</text></subsection><subsection id="idbeeeb12a308b4b8985310c99e5fe6aa5"><enum>(p)</enum><header>Civil penalties and state enforcement</header><text>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.</text></subsection><subsection id="idafeb2f0c3dd140768f26cc2634186514"><enum>(q)</enum><header>Rule of construction</header><text>Nothing in this section may be construed to prohibit a State from enacting a law, rule, or regulation that provides greater protection to customers.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id369e2ae4ab9e4f73a588711c6836966e"><enum>(2)</enum><header>Technical and conforming amendment</header><text>The table of sections for subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> of title 31, United States Code, is amended by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id060a0b01c81c46068cd841b855890509" changed="added" reported-display-style="italic" committee-id="SSBK00"><toc changed="added" reported-display-style="italic" committee-id="SSBK00"><toc-entry bold="off" level="section">5337. Digital asset kiosk fraud prevention.</toc-entry></toc><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection></section><section id="idf2fb401e7b324ec3a26757e032d835dc"><enum>206.</enum><header>Study on illicit use of digital assets</header><subsection id="id5a454390feed44cd91bfd4bd8638b4eb"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id340d21d04bd84622b8b2f0f1f4baa4db"><enum>(1)</enum><header>Foreign terrorist organization</header><text>The term <term>foreign terrorist organization</term> means an organization that is designated as a foreign terrorist organization under section 219 of the Immigration and Nationality Act (<external-xref legal-doc="usc" parsable-cite="usc/8/1189">8 U.S.C. 1189</external-xref>).</text></paragraph><paragraph id="id2b0a1e57039f4d4f816759a06f05b5a4"><enum>(2)</enum><header>Transnational organized criminal</header><text>The term <term>transnational organized criminal</term> means an individual who participates in transnational organized crime, as defined in section 284(i) of title 10, United States Code.</text></paragraph></subsection><subsection id="id30264f1a61c44c569fafd571defa593e"><enum>(b)</enum><header>Review</header><text>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.</text></subsection><subsection id="id3487d908357d407fb83a1401a41eafe6"><enum>(c)</enum><header>Report</header><text>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—</text><paragraph id="idfb1a5600242b4478b8caa23bf5fca022"><enum>(1)</enum><text>an assessment of how foreign terrorist organizations and transnational organized criminals utilize digital assets in connection with illicit activities; and</text></paragraph><paragraph id="id9a2bcd711d5f4d428669228e1505e8da"><enum>(2)</enum><text>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.</text></paragraph></subsection><subsection id="id4cc954898d1b420898679e78991ee668"><enum>(d)</enum><header>Additional agencies</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/6809">15 U.S.C. 6809</external-xref>), and the Commodity Futures Trading Commission.</text></subsection><subsection id="id0a68a10d785942f8939a81f50ab96125"><enum>(e)</enum><header>Classified annex</header><text>The report required under subsection (c) may include a classified annex, as appropriate.</text></subsection></section><enum>III</enum><header>Responsible innovation in decentralized finance</header><section id="idb58e9111277a4c779e359719402ab711" commented="no"><enum>301.</enum><header>Rulemaking on application of existing securities intermediary requirements and existing Bank Secrecy Act requirements to non-decentralized finance trading protocols</header><subsection id="id98bc8cfc8c8d485aa44ca67151b81227" commented="no"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idffcba78b2e674bc691d80b29e99b49fc" commented="no"><enum>(1)</enum><header>Decentralized finance trading protocol</header><text>The term <term>decentralized finance trading protocol</term> means a distributed ledger system through which multiple participants can execute a financial transaction—</text><subparagraph id="id1b9320089803448b9cd1d96cca3aaff0" commented="no"><enum>(A)</enum><text>in accordance with an automated rule or algorithm that is predetermined and non-discretionary; and</text></subparagraph><subparagraph id="id50bd75ef0ebf4af4b557ec51f69e6d2d" commented="no"><enum>(B)</enum><text>without reliance on a person other than the user to maintain custody or control of any digital assets subject to the financial transaction.</text></subparagraph></paragraph><paragraph id="idadf06265f65e4da2893f0b2f9160ac44" commented="no"><enum>(2)</enum><header>Non-decentralized finance trading protocol</header><subparagraph commented="no" display-inline="no-display-inline" id="id814538ec601c42aba6120c34e36935b3"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">The term <term>non-decentralized finance trading protocol</term> means a decentralized finance trading protocol that meets 1 or more of the following:</text><clause id="id15cba41443c443a3ad9ddef868cc609c" commented="no"><enum>(i)</enum><text>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.</text></clause><clause id="id8f6ef319d2ce4733a33bfa7f397a203e" commented="no"><enum>(ii)</enum><text>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.</text></clause><clause id="iddce5cd0d130d402f956a6be2fd276c10" commented="no"><enum>(iii)</enum><text>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.</text></clause></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idde64df14eb7947b898a08acad90927e3"><enum>(B)</enum><header>Special rule</header><text>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.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idb03c22ff093248e3b9622870f02d246a"><enum>(C)</enum><header>Exclusions</header><text>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.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="ida15941391a874a318274cadfff3c2179"><enum>(D)</enum><header>Scoping</header><text>In implementing this section, the Commission and the Department of the Treasury shall construe the term <term>non-decentralized finance trading protocol</term> in a manner consistent with section 15H of the Securities Exchange Act of 1934, as added by section 601.</text></subparagraph></paragraph></subsection><subsection id="ida362f8ad44bb48b8afc999ca9d78383b" commented="no"><enum>(b)</enum><header>Rules</header><paragraph commented="no" display-inline="no-display-inline" id="id844c64c2c41e4f139c78c9f4c55b5688"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), 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.</text></paragraph><paragraph id="id969223457c0f4a55ad2bda4e5bfb8088" commented="no"><enum>(2)</enum><header>Requirements</header><text>The rulemaking required under paragraph (1) shall—</text><subparagraph id="idfffbcef2e3b14782beeccbb7c9d951aa" commented="no"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id879651ef41e54cc39c3a5a1dac6df279" commented="no"><enum>(B)</enum><text>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; </text></subparagraph><subparagraph id="id77be5447cdca4766a623de20f16003d3" commented="no"><enum>(C)</enum><text>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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id0744f4a894a14a0cb1f2c17e9434391b"><enum>(D)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>).</text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id875f18560d8341ee8bbb5fd3dc790911"><enum>(3)</enum><header>Application</header><subparagraph commented="no" display-inline="no-display-inline" id="id749590f6a14b4201a332d03cf4e3eb91"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) (referred to in this paragraph as the <quote>Exchange Act</quote>) 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.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id0c9a7e019141412da0f2a56dd8f4f871"><enum>(B)</enum><header>Rulemaking</header><text>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—</text><clause commented="no" display-inline="no-display-inline" id="idbcbf02bdb07845c6920e4199335a1603"><enum>(i)</enum><text display-inline="yes-display-inline">controls the operation of a non-decentralized finance trading protocol identified in the rulemaking conducted under paragraph (1);</text></clause><clause commented="no" display-inline="no-display-inline" id="idbaebc8a1b4b44360995175d37007ab52"><enum>(ii)</enum><text>is required to register, or comply as a registrant, under the Exchange Act, as determined in the rulemaking conducted under paragraph (1); and</text></clause><clause commented="no" display-inline="no-display-inline" id="id1c7d6c9cd06248cb9087b83e0e2d8f0e"><enum>(iii)</enum><text>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).</text></clause></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id8d54d5943a8c4e3f951faf22774c5cc1"><enum>(c)</enum><header display-inline="yes-display-inline">Activity-Based application</header><text>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.</text></subsection><subsection id="id6801973f22fa43eaa179750fa2598f62" commented="no"><enum>(d)</enum><header>Rules of construction</header><paragraph commented="no" display-inline="no-display-inline" id="id3970fcb336124bc6b3b5c734bb71a172"><enum>(1)</enum><header display-inline="yes-display-inline">Registration not required</header><text>Nothing in this section, nor any rule adopted under this section, may be construed to—</text><subparagraph id="id4d77a8fa69bf42aebab961369b153af7" commented="no"><enum>(A)</enum><text>require a distributed ledger system or any software code to register with the Commission in its own capacity; or</text></subparagraph><subparagraph id="id312988fb2bc848aa922708ce6c67c3c3" commented="no"><enum>(B)</enum><text>prohibit the launch, deployment, or operation of a distributed ledger system.</text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id1e28667e9bd545d1b5db5a2fdf82e319"><enum>(2)</enum><header>No expansion of statutory authority</header><text>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— </text><subparagraph commented="no" display-inline="no-display-inline" id="id4d41c723e9904ca79a69685946bc3d39"><enum>(A)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id57d8caba708e4e8a85eabeb9eaeee787"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id4f8de38dc9144d24940b690bc0c65049"><enum>(3)</enum><header>No presumption of applicability</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) or the Bank Secrecy Act absent a determination made pursuant to a rulemaking required under this section.</text></paragraph></subsection><subsection id="idba49a4a1a11f43a7acfe72bcc227af65" commented="no"><enum>(e)</enum><header>Preservation of existing authorities</header><text>Nothing in this section may be construed to—</text><paragraph commented="no" display-inline="no-display-inline" id="idc64318c5ea7b4d63bb9368017a65c089"><enum>(1)</enum><text display-inline="yes-display-inline">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</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0a93921e85a84da1a9664fa868e64cf0"><enum>(2)</enum><text>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.</text></paragraph></subsection><subsection id="id325f66bf679a4be7bb43acae2b5b0d9d" commented="no"><enum>(f)</enum><header>Non-Decentralized finance trading protocols</header><paragraph id="id41c7d1873a6744d1aa79f9dea81a5184" commented="no"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="iddaa62c76730c41ee9eccb24dc383ff42" commented="no"><enum>(2)</enum><header>Emergency measures</header><subparagraph commented="no" display-inline="no-display-inline" id="id07dbf18ab0c24b54970eeedd3b3d58a0"><enum>(A)</enum><header display-inline="yes-display-inline">In general</header><text>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.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idad0b57a0c7ce46c495d32d41abc971a0"><enum>(B)</enum><header>Prohibition</header><text>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.</text></subparagraph></paragraph><paragraph id="idd1c49bbe15a144a185f40f92b34ab008" commented="no"><enum>(3)</enum><header>Standards</header><text>The standards criteria for temporary rules-based cybersecurity emergency measures under paragraph (2) shall be established by rulemaking pursuant to subsection (b).</text></paragraph></subsection></section><section id="id84f8c5c63bb74b9eb4f8c42f12a80744"><enum>302.</enum><header>Illicit finance obligations for distributed ledger messaging systems</header><subsection id="idaf2ba33108b44e3fbe90d16fa9d3b775"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id49239ce3e75842c5b46a7338c0d10117"><enum>(1)</enum><header>Distributed ledger messaging system</header><text>The term <term>distributed ledger messaging system</term>—</text><subparagraph id="id94768f5945554840b6cae3beac0e73e1"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="ide20f41cbb6d142de9a299ae47a4242aa"><enum>(B)</enum><text>does not include—</text><clause id="idb297bfdc31634d6d87bb1a6cfa003c58"><enum>(i)</enum><text>a distributed ledger application;</text></clause><clause id="idf69e524a041543a5bbfa4b11b9d680d2"><enum>(ii)</enum><text>a distributed ledger protocol;</text></clause><clause id="id91c77a5856f4432c809cb2464d801aee"><enum>(iii)</enum><text>a distributed ledger system;</text></clause><clause id="id3d9c9847508b40c184d02c257a65e967"><enum>(iv)</enum><text>a decentralized finance trading protocol;</text></clause><clause id="id808d2182f7ba4c70818e771c340d3715"><enum>(v)</enum><text>any client, node, validator, or other form of computational infrastructure with respect to a distributed ledger system; or</text></clause><clause id="id8e9e057b8b724fc5a1c0577c369e297d"><enum>(vi)</enum><text>any software or hardware wallet that facilitates the custody of an individual of their digital assets.</text></clause></subparagraph></paragraph><paragraph id="id73352ff25b844e8aa73a6f98e933524e"><enum>(2)</enum><header>United <enum-in-header>S</enum-in-header>tates sanction law</header><text>The term <term>United States sanction law</term> means any Federal law imposing, or authorizing the imposition of, economic sanctions.</text></paragraph></subsection><subsection id="id2a6f7fbf4d1946ac84181a4a97168e84"><enum>(b)</enum><header>Guidance</header><text>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—</text><paragraph id="id51a130694b374ff0bf4dabf1f12fc433"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id20612d7fd3c2422b9a21093855f07253"><enum>(2)</enum><text>blocking, rejecting, preventing the routing of, or otherwise restricting attempted transactions prohibited by United States sanction laws;</text></paragraph><paragraph id="id1a14d7696d694b1bb8172214f6f253d1"><enum>(3)</enum><text>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</text></paragraph><paragraph id="id8f903d1a69ce428fad0f81a4c9d8d65f"><enum>(4)</enum><text>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—</text><subparagraph commented="no" display-inline="no-display-inline" id="id59a04ffe4d534fa3b0b3224131c696a0"><enum>(A)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idede180c05b7a44f1a7cca515d7bda166"><enum>(B)</enum><text display-inline="yes-display-inline">complying, as applicable, with special measures implemented by the Secretary of the Treasury under section 5318A of title 31, United States Code.</text></subparagraph></paragraph></subsection><subsection id="id57d67dbafbe94b9686b8ecebb3e712e9"><enum>(c)</enum><header>Enforcement and penalties</header><text>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.</text></subsection><subsection id="idec11cf22674f4491b56d34d244be0c97"><enum>(d)</enum><header>Rules of construction</header><text>Nothing in this section may be construed to—</text><paragraph id="id7b8e22133b954b70b34cec652aa52c03"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id15659912e3af4090ba3be9204fb7968f"><enum>(2)</enum><text>expand or contract the applicability of—</text><subparagraph commented="no" display-inline="no-display-inline" id="idc8da6f85413347e8ac8833845427d836"><enum>(A)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph id="id285ab316703e40238b817bea81c0d4bc"><enum>(B)</enum><text>the definition of a <quote>financial institution</quote> under applicable laws, which shall not apply to non-controlling developers or providers as defined in section 604(b)(3); or</text></subparagraph></paragraph><paragraph id="id78f882dc55154b4cb468bbf91ffe0db4"><enum>(3)</enum><text>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.</text></paragraph></subsection></section><section id="id96a528043c2f4730b4b01cdf122e8c0c"><enum>303.</enum><header>Special measure relating to certain transmittals of funds</header><text display-inline="no-display-inline">Section 5318A of title 31, United States Code, is amended—</text><paragraph id="id75f38ea64bbd4d2d9216d411d6156e0d"><enum>(1)</enum><text>in subsection (a)(2)(C), by striking <quote>subsection (b)(5)</quote> and inserting <quote>paragraph (5) or (6) of subsection (b)</quote> and</text></paragraph><paragraph id="id386a69a4b14448419a62b7c03b09447c"><enum>(2)</enum><text>in subsection (b), by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id735a6259ebab4041b3b79573178f6c76" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="id000bf35f492c4cc19911c71eec2b5055"><enum>(6)</enum><header>Special measure for certain transmittals of funds</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>), 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.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></section><section id="id4d9608e5e43e463bab762d30373eaea9"><enum>304.</enum><header>Offshore stablecoin report</header><subsection id="idf87eea5230d84a3b9a033d745d83e5e3"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id53feaa8e6d2348059f80fece60733eaa"><enum>(1)</enum><header>Material volume of transactions</header><text>The term <term>material volume of transactions</term> means a sustained level of transaction activity that is—</text><subparagraph id="idabe38bec70fe42d3a30fbf38f23283a7"><enum>(A)</enum><text>publicly observable;</text></subparagraph><subparagraph id="id2b4c15d7edb2413eba22a85f84e00be9"><enum>(B)</enum><text>exceeds de minimis usage over a 12-month period; and</text></subparagraph><subparagraph id="ide0bb8557e3dd477cb0f0139b16676e5d"><enum>(C)</enum><text>is reasonably likely to affect the illicit finance or national security risk exposure of the United States.</text></subparagraph></paragraph><paragraph id="idc718479dabd5476db28ac04395f8d5da"><enum>(2)</enum><header>Payment stablecoin</header><text>The term <term>payment stablecoin</term> has the meaning given the term in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>).</text></paragraph><paragraph id="id7a247572f42949cc904afd52c86f5bdf"><enum>(3)</enum><header>United states-dependent offshore stablecoin</header><text>The term <term>United States-dependent offshore stablecoin</term> means a payment stablecoin—</text><subparagraph id="idc3b571ee7ad1409b99895515a98a3a7f"><enum>(A)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>));</text></subparagraph><subparagraph id="id017c10b75be54949a7e812d2e8857748"><enum>(B)</enum><text>that is issued by a person operating outside of the United States; and</text></subparagraph><subparagraph id="id7597aa7eb2364c6f9c775888b74340bf"><enum>(C)</enum><text>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—</text><clause id="idb358cbcfea364dff89c91e06d4a06536"><enum>(i)</enum><text>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;</text></clause><clause id="id41a8c505f2104a1e911b9d1d2680154a"><enum>(ii)</enum><text>deposits maintained at a banking entity or insured depository institution located in the United States, including correspondent or payable-through accounts;</text></clause><clause id="id572ea531a7004c24994cd05f65ebf1d2"><enum>(iii)</enum><text>securities issued or guaranteed by the United States or any agency or instrumentality thereof; or</text></clause><clause id="id21a96262753a4758a9b5c238403f2032"><enum>(iv)</enum><text>assets custodied, cleared, or settled through payment, clearing, or settlement systems located in the United States.</text></clause></subparagraph></paragraph></subsection><subsection id="id7a02e43c57a44726b72bf752afc7a4c0"><enum>(b)</enum><header>Report</header><text>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.</text></subsection><subsection id="id9d2fb7188fc347109d3c3e237ede05b7"><enum>(c)</enum><header>Contents</header><text>Each report required under subsection (b) shall include—</text><paragraph id="idd6b74e645b224c33ad1fc5c2af7ef97b"><enum>(1)</enum><text>an assessment of the illicit finance risk of each United States-dependent offshore stablecoin employed in a material volume of transactions;</text></paragraph><paragraph id="ide28777c1324443a68175ee0eba72b550"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="id0b8703c4d5aa463e9b8446f6d0efd8ce"><enum>(3)</enum><text>data and information regarding the volume of United States-dependent offshore stablecoins assessed to be employed in connection with illicit finance, as available;</text></paragraph><paragraph id="id3d518ac084114b78a82f83569511fb02"><enum>(4)</enum><text>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</text></paragraph><paragraph id="id2e6e64e205fe40cda85bea4c5d8a03cd"><enum>(5)</enum><text>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.</text></paragraph></subsection><subsection id="id743f8208a8c345559a29ddc5727bf170"><enum>(d)</enum><header>Classified annex</header><text>Each report required under subsection (b) shall be submitted in unclassified form, but may contain a classified annex.</text></subsection><subsection id="id57a6eee39a714c908c1f2a255652bb48"><enum>(e)</enum><header>National strategy</header><text>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 (<external-xref legal-doc="public-law" parsable-cite="pl/115/44">Public Law 115–44</external-xref>; 131 Stat. 934) for the reporting years.</text></subsection><subsection id="idfab343958b4b4bdf81bf49b8ac547eb2"><enum>(f)</enum><header>Rule of construction</header><text>Nothing in this section may be construed to authorize—</text><paragraph id="id59a2740d05a74d0faafb45a40f78cc08"><enum>(1)</enum><text>the disclosure of any information that is protected from disclosure under Federal law; and</text></paragraph><paragraph id="idd5353cf3050649888aae56afd06313ff"><enum>(2)</enum><text>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.</text></paragraph></subsection></section><section id="ida5655b6f5d4f40b7aef1a184b27323eb"><enum>305.</enum><header>Temporary hold for certain digital asset transactions</header><subsection id="id768a23fd77904df7aa68f482a6a85c26"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ida4e1c9e26e1f4f998b3b6541bd0dcd39"><enum>(1)</enum><header>Covered agency</header><text>The term <term>covered agency</term> means any State or Federal law enforcement agency, including the Department of the Treasury.</text></paragraph><paragraph id="idb6d68aa6abd0401fb81a8d935982fb02"><enum>(2)</enum><header>Covered person</header><text>The term <term>covered person</term> means a person that is— </text><subparagraph commented="no" display-inline="no-display-inline" id="id0e8f7bc36b224afabf1051759d665fc1"><enum>(A)</enum><text display-inline="yes-display-inline">a permitted payment stablecoin issuer; </text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idbd1d9e3aea544951b220bf0657ef2ebd"><enum>(B)</enum><text display-inline="yes-display-inline">a foreign payment stablecoin issuer (as defined in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>)) registered with the Office of the Comptroller of the Currency pursuant to section 18(c) of that Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5916">12 U.S.C. 5916(c)</external-xref>); or</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id93c944665daf4d899d1201352fb2850e"><enum>(C)</enum><text display-inline="yes-display-inline">a digital asset service provider, as that term is defined in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>).</text></subparagraph></paragraph><paragraph id="id4b462b08502f40d29be86fa0f4666662"><enum>(3)</enum><header>Payment stablecoin; permitted payment stablecoin issuer</header><text>The terms <term>payment stablecoin</term> and <term>permitted payment stablecoin issuer</term> have the meanings given those terms in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>).</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id5b88650c3a644f8fa5f06176c2f8d993"><enum>(4)</enum><header display-inline="yes-display-inline">Qualified written request</header><text>The term <term>qualified written request</term> means a written communication issued by an authorized official of a covered agency that—</text><subparagraph id="id79b2930a24644fba84eda98455940084"><enum>(A)</enum><text>identifies a specific wallet, address, account, or transaction reasonably suspected of being linked to illicit activity; </text></subparagraph><subparagraph id="id7ffa1794e6d6477e8ec62ed10f1e6a56"><enum>(B)</enum><text>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</text></subparagraph><subparagraph id="id9492aa7647b7437aa7711856d3a62c9b"><enum>(C)</enum><text>includes a designated agency contact.</text></subparagraph></paragraph><paragraph id="id0f36439c044645b08ed2f0d7ef187e80"><enum>(5)</enum><header>Temporary hold</header><text>The term <term>temporary hold</term> 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.</text></paragraph></subsection><subsection id="id4b3aca7b06774ec9b66c539ae0745122"><enum>(b)</enum><header>Protection from private causes of action</header><paragraph id="id6ef3e3abc83e409e844a56a2ad47ff50"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="id156593b3c2e045b19f8609c368625a7d"><enum>(A)</enum><text>the covered person or other person, as applicable—</text><clause id="id787bfd8b5f6845d3aa8a15a6476211f3"><enum>(i)</enum><text>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</text></clause><clause id="id76c7a8f80638448891d24885e13a3db3"><enum>(ii)</enum><text>implements the temporary hold after receiving a qualified written request from a covered agency;</text></clause></subparagraph><subparagraph id="id24ba1b7e0cf346cbb487466cebc8d084"><enum>(B)</enum><text>the covered person—</text><clause id="idd13a4d6461fe4eb6b6f55f22e670adfd"><enum>(i)</enum><text>makes reasonable efforts to notify the affected customer of the temporary hold;</text></clause><clause id="idc197d8da0db54760b024ded627cb3618"><enum>(ii)</enum><text>reasonably determines that notification would impede actual or potential law enforcement efforts; or</text></clause><clause id="id00be58acc0d84fc79d19f8593ba2e45d"><enum>(iii)</enum><text>receives a qualified written request from a covered agency that requests notification not be attempted; and</text></clause></subparagraph><subparagraph id="idd5a59fecf460403c86978656cef0792e"><enum>(C)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id9c38b6f78b044ae0895a3f3b2f9e5061"><enum>(2)</enum><header>Documentation</header><text>A covered person shall—</text><subparagraph id="id973ed432418741469ff5da9f5214b671"><enum>(A)</enum><text>maintain for the 3-year period following the implementation of a temporary hold documentation of the basis for applying a temporary hold; and</text></subparagraph><subparagraph id="idf4d222c95aa04aa5b96d8305c5462c94"><enum>(B)</enum><text>make available the documentation described in subparagraph (A) upon the request of a covered agency or the Federal Trade Commission.</text></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id354948684c6d491795f6867272ddb536"><enum>(c)</enum><header>Compliance with temporary lawful orders</header><text display-inline="yes-display-inline">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—</text><paragraph commented="no" display-inline="no-display-inline" id="idb3ba2f19e8ed400ebb4319af445a7787"><enum>(1)</enum><text display-inline="yes-display-inline">requires a person to freeze or prevent the transfer of payment stablecoins;</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id39a5dafec82844308158d10578b5f71f"><enum>(2)</enum><text>specifies the payment stablecoins or accounts subject to blocking with reasonable particularity; and</text></paragraph><paragraph id="iddbe8f73c1f244621acd221f82b2444dd" commented="no" display-inline="no-display-inline"><enum>(3)</enum><text>is subject to judicial or administrative review or appeal, as provided by law.</text></paragraph></subsection><subsection id="idf3523980ae804c329c474d8542f779d8"><enum>(d)</enum><header>Rules of construction</header><text>Nothing in this section may be construed to—</text><paragraph id="id133a7feecce84d01896f3f46156bfad3"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id04bf6621cdce4e359c33f6e33fcf6f7e"><enum>(2)</enum><text>limit or alter the authority of any government agency, including with respect to authority to pursue enforcement actions;</text></paragraph><paragraph id="id1ba79d3366f7458da105859200a435b4"><enum>(3)</enum><text>limit or affect the application of—</text><subparagraph id="id40bc0b95a0654de8bffc284d509f141c"><enum>(A)</enum><text>section 5318(g)(3) of title 31, United States Code, and any regulation requiring any financial institution to report suspicious activity; or</text></subparagraph><subparagraph id="id8681a1b4964e4369b71529e2c748c752"><enum>(B)</enum><text>any lawful authority to seize or freeze assets pursuant to a lawful order or sanctions designation; or</text></subparagraph></paragraph><paragraph id="id483f54d9c3e44a839ea1d5af81cce714"><enum>(4)</enum><text>limit the ability of a covered person to apply a temporary hold to any wallet, address, account, or transaction located outside the United States.</text></paragraph></subsection><subsection id="id3db55b1e01c74c35aef81039efa53b62"><enum>(e)</enum><header>Reporting</header><text>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.</text></subsection></section><section id="idaa5d1dac6b30496a812ddc406a35bc55"><enum>306.</enum><header>Voluntary cybersecurity program for decentralized finance trading protocols</header><subsection id="idd9d0776d97d14bc18fc32f30998bc0cb"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id0e67e6446acf4fbcaf9bdfd0dd0fb943"><enum>(1)</enum><header>Covered activities</header><text>The term <term>covered activities</term> means the activities described in section 15H(b) of the Securities Exchange Act of 1934, as added by section 601.</text></paragraph><paragraph id="idbdc98a7800d945c093d4d9665fc062e9"><enum>(2)</enum><header>Decentralized finance trading protocol</header><text>The term <term>decentralized finance trading protocol</term> has the meaning given the term in section 15H(a) of the Securities Exchange Act of 1934, as added by section 601.</text></paragraph><paragraph id="ida1126b7c5bea431a88ff6100fa55f510"><enum>(3)</enum><header>Director</header><text>The term <term>Director</term> means the Director of NIST.</text></paragraph><paragraph id="id2ad566c0765f4607adf90a347a57dc34"><enum>(4)</enum><header>NIST</header><text>The term <term>NIST</term> means the National Institute of Standards and Technology.</text></paragraph></subsection><subsection id="id926e5c5642ea4bad917ad5e01ab8427a"><enum>(b)</enum><header>Establishment of program</header><text>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.</text></subsection><subsection id="idecf215f9f4fd42e8a3209f75396e5aa7"><enum>(c)</enum><header>Development of program criteria</header><paragraph id="id5e34bf772fc840c19c711b38ce9e1f7e"><enum>(1)</enum><header>Request for information</header><text>The Director shall issue a request for information in the Federal Register to gather input from experts and industry stakeholders on—</text><subparagraph id="id162c792a8e1f4315863399c04aca17a5"><enum>(A)</enum><text>cybersecurity threats, vulnerabilities, and risks to decentralized finance trading protocols;</text></subparagraph><subparagraph id="ide77a8c7eb76f49daa71570014765e02f"><enum>(B)</enum><text>auditing and code security standards, including best practices for code audits;</text></subparagraph><subparagraph id="idad8540c5721b450994976e849d767f55"><enum>(C)</enum><text>consumer protection and code transparency best practices on decentralized finance trading protocols; and</text></subparagraph><subparagraph id="ided6ee23e08384073b70c9c42e681d478"><enum>(D)</enum><text>existing NIST standards, as of the day before the date of enactment of this Act, and their applicability to decentralized finance trading protocols.</text></subparagraph></paragraph><paragraph id="idef74bb9d2423481e95178451a7ba24be"><enum>(2)</enum><header>Report</header><text>The Director shall develop a report on the software development of decentralized finance protocols to assess technical input from paragraph (1).</text></paragraph><paragraph id="id589eeff3300146e39104205d6d727892"><enum>(3)</enum><header>Publication of program criteria</header><text>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.</text></paragraph><paragraph id="id5260688e649b477cbee51826cda984e0"><enum>(4)</enum><header>Requests for revision</header><subparagraph id="id9641bda91769402f90c111b8479bbe20"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="idcad54cf90f8f4d8185c71f2c7aceac87"><enum>(B)</enum><header>Petition</header><text>The public may petition the Director to reevaluate certain aspects of the program criteria published under paragraph (3).</text></subparagraph></paragraph><paragraph id="id9af4f45a21d349e39f2d6013e22dd4f8"><enum>(5)</enum><header>Program updates</header><text>As the technology underpinning decentralized finance trading protocols evolves, the Director shall update the special publication under paragraph (3) in compliance with subsection (d).</text></paragraph></subsection><subsection id="id678990d1bc644b669817bfae340c0cd8"><enum>(d)</enum><header>Program</header><paragraph id="id56130b1f69f9487f8a976fc3c4e30097"><enum>(1)</enum><header>Application</header><text>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.</text></paragraph><paragraph id="idccbba54caed147679b688d719fb5bc0f"><enum>(2)</enum><header>Review</header><text>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.</text></paragraph><paragraph id="idf52c529da7b14c0a8480cc4ba921a595"><enum>(3)</enum><header>Determination</header><text>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).</text></paragraph><paragraph id="id90df3e20299e48609e0f22153ee97d8d"><enum>(4)</enum><header>Notice</header><text>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.</text></paragraph></subsection><subsection id="idc860401490e547ee9d5b25cbc567ced7"><enum>(e)</enum><header>Benefits of program</header><paragraph id="id0256c4638e954bc8847799cbde241512"><enum>(1)</enum><header>Display</header><text>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.</text></paragraph><paragraph id="iddac4fc54fb5044aa8f9fd2ba2157b276"><enum>(2)</enum><header>Treatment of adoption</header><text>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.</text></paragraph></subsection><subsection id="id174915683d0e4028a42aa18a90d8feea"><enum>(f)</enum><header>Rule of construction relating to preemption</header><text>Nothing in this section may be construed to preempt any otherwise applicable provision of law of a State.</text></subsection></section><section id="id0f2fcda871b44e0dbf2b60b65453d4b3"><enum>307.</enum><header>Amendments to monetary instrument definition</header><subsection id="id1bfe71183f8e43da80d15938a18b4f97"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ida0d57ab4e1204a2e86dd3c8dd2246992"><enum>(1)</enum><header>Self-hosted wallet</header><text>The term <term>self-hosted wallet</term> means a digital interface—</text><subparagraph id="id8a880b20386f4242925d853eb93b3125"><enum>(A)</enum><text>that is used to secure and transfer digital assets; and</text></subparagraph><subparagraph id="id4f34a396ffb742b28f36a123cb1e2b0f"><enum>(B)</enum><text>under which the owner of digital assets secured and transferred under subparagraph (A) retains independent control over those digital assets.</text></subparagraph></paragraph><paragraph id="id2f3d075e41f6484491bb3032a3b179d8"><enum>(2)</enum><header>United states sanction law</header><text>The term <term>United States sanction law</term> has the meaning given the term in section 302(a).</text></paragraph></subsection><subsection id="idc220f5b3d871448ca24d1396e0656f5b"><enum>(b)</enum><header>Monetary instruments</header><text>Section 5312(a)(3)(D) of title 31, United States Code, is amended by inserting <quote>, including digital assets (as defined in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>)), as may be applicable,</quote> after <quote>value</quote>.</text></subsection><subsection id="id1525dfd62da940a7a626dc9dd04e600c"><enum>(c)</enum><header>Treasury risk assessment</header><text>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 (<external-xref legal-doc="public-law" parsable-cite="pl/115/44">Public Law 115–44</external-xref>; 131 Stat. 934), the Secretary of the Treasury shall consider—</text><paragraph id="id2747fdda968c4f4fb6e4df47f0b222e9"><enum>(1)</enum><text>illicit activity, such as money laundering and sanctions evasion, involving self-hosted wallets;</text></paragraph><paragraph id="id90df0d1cabc64fe3bbfc5d27278c5f87"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="id9d8dedf4c9cf452a8e1cf8f26e3817d8"><enum>(3)</enum><text>any illicit actors, including nation state actors, that pose a high risk of facilitating illicit activity through the use of self-hosted wallets;</text></paragraph><paragraph id="id14ac24d893c3489c9a91ad968e7f02cd"><enum>(4)</enum><text>the benefits of the use of self-hosted wallets to—</text><subparagraph id="id94d4abce73ea4f14a1f00c90a46bcdf7"><enum>(A)</enum><text>enhance user privacy and civil liberties through direct asset custody; and</text></subparagraph><subparagraph id="id763b87a395344fac958c7dcb99380d3a"><enum>(B)</enum><text>expand financial inclusion and access for communities underserved by traditional financial institutions; </text></subparagraph></paragraph><paragraph id="id8f78775ac3d54396b39ce6547e1916b4"><enum>(5)</enum><text>end user and counterparty risks associated with self-hosted wallets, including consumer fraud, cybersecurity, and identity verification;</text></paragraph><paragraph id="idebebe44e58814859b855362a0e79562d"><enum>(6)</enum><text>the use of hardware self-hosted wallets to smuggle digital assets for financing cross-border illicit activity;</text></paragraph><paragraph id="id3313a05a335d4980ad8fcdc9083edd2c"><enum>(7)</enum><text>the use of hardware self-hosted wallets for tax evasion and asset concealment; and</text></paragraph><paragraph id="id2c3c746247f94b91b7cd780cb3c238d2"><enum>(8)</enum><text>other considerations the Secretary may determine appropriate.</text></paragraph></subsection><subsection id="id20789e4a76634f5db85699c14f951f8e"><enum>(d)</enum><header>Guidance</header><text>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—</text><paragraph id="idd92946ca46f147e1bf223548556eeb2c"><enum>(1)</enum><text>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</text></paragraph><paragraph id="id2e95ea48b8d04ec584dd32e094a31cc6"><enum>(2)</enum><text>be construed to hinder, restrict, or otherwise impair the authority of any Federal agency to investigate, detect, counteract, or prevent illegal activity.</text></paragraph></subsection></section><section id="ida564bea1782944eda1e954f90963a555"><enum>308.</enum><header>Risk management standards for digital asset intermediaries</header><subsection id="idd2958ffe3907420a8f0e4b4bfa86d60a"><enum>(a)</enum><header>In general</header><text>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.</text></subsection><subsection id="idd342975ce5fb46b499878092a9ea6a32"><enum>(b)</enum><header>Requirements</header><text>The risk management standards applicable to a digital asset intermediary shall be comprised of the following:</text><paragraph id="idb5b777e60521424c9e935437736590ae"><enum>(1)</enum><text>Conducting an effective risk analysis with respect to the decentralized finance trading protocol, including—</text><subparagraph id="ida69525ca11eb40e4b89199adfcfcbd5d"><enum>(A)</enum><text>money laundering and sanctions evasion risks, including whether trading will involve activity relating to a primary money laundering concern;</text></subparagraph><subparagraph id="id35fc3092fe864a9d828e5b684d8b18e1"><enum>(B)</enum><text>fraud and market manipulation;</text></subparagraph><subparagraph id="id7c47f4baffbf47eebf20ea40d9af9b2c"><enum>(C)</enum><text>operational and cybersecurity risk, including settlement; and</text></subparagraph><subparagraph id="id754e62c991f44f10836813039bb3d580"><enum>(D)</enum><text>implementing robust policies and procedures to mitigate the risks identified under this paragraph.</text></subparagraph></paragraph><paragraph id="idb9069e3f7bc443f3a7092bf666d55f2f"><enum>(2)</enum><text>Disclosing the risks identified under paragraph (1) using plain language to customers.</text></paragraph><paragraph id="id54d49eaa029945c5ad8a51d0b0b6cbb1"><enum>(3)</enum><text>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.</text></paragraph><paragraph id="id8d93a112fb8c4171b3568e6482123092"><enum>(4)</enum><text>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.</text></paragraph><paragraph id="ida6543657efd1461fb02f45f694c82a7f"><enum>(5)</enum><text>Consistent with this subsection, implementing other reasonable standards which may be required by rule.</text></paragraph></subsection><subsection id="id66a23cd5b10142f2a34bdb6129ff312f"><enum>(c)</enum><header>Examinations</header><paragraph id="idfeb8bfd377424e4182cab1208320ecd4"><enum>(1)</enum><header>Compliance</header><text>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.</text></paragraph><paragraph id="idf52a2a6dc66c403892c137a3d2a55973"><enum>(2)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="id9614e8dd74184b1e84e6709ef443e28e"><enum>(d)</enum><header>Rulemaking</header><text>Rules shall be adopted to implement this section as follows:</text><paragraph id="idb8023f80e05e406d99f4547879893754"><enum>(1)</enum><text>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.</text></paragraph><paragraph id="idf85fe3c75f924de1bb57fd93a5ebf59d"><enum>(2)</enum><text>The Commission and the Commodity Futures Trading Commission shall adopt rules to implement this section other than the provisions described in paragraph (1).</text></paragraph><paragraph id="id21b2ca2ecdcd46ccb79301515cae3b28"><enum>(3)</enum><text>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.</text></paragraph></subsection></section><section id="id925155513cf3442c94a36e0fa3d7ed96"><enum>309.</enum><header>Study on digital asset mixers and tumblers</header><subsection id="id5873e0fe0c1b4b6dacb9a0a9a19e52c1"><enum>(a)</enum><header>Digital asset mixer and tumbler defined</header><text>In this section, the term <term>digital asset mixer and tumbler</term> 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.</text></subsection><subsection id="id3abf5e47d7fc47bd972705cfce1b71da"><enum>(b)</enum><header>Report</header><text>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:</text><paragraph id="idf4434ebe83f64fe49325c76213cbb8eb"><enum>(1)</enum><text>Current (as of the date on which the report is submitted) typologies of digital asset mixers and tumblers and historical transaction volume.</text></paragraph><paragraph id="idd2de51bc4a884bfb9099d82d507d7744"><enum>(2)</enum><text>Estimates of the percentage of transactions relating to digital asset mixers and tumblers that are used by actors engaged in illicit finance.</text></paragraph><paragraph id="id59e1a59ced8a44be8bea030d507f4ed7"><enum>(3)</enum><text>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.</text></paragraph><paragraph id="id2b1492a2698c4a2e9968a975f333b12e"><enum>(4)</enum><text>An assessment of potential non-illicit uses of mixers and tumblers described in paragraph (1), including privacy benefits.</text></paragraph><paragraph id="id3aed4b9b981344b9863198a0d5c525fc"><enum>(5)</enum><text>An analysis of regulatory approaches employed by other jurisdictions relating to digital asset mixers and tumblers.</text></paragraph><paragraph id="idd59e381bb34848aba11599708d162898"><enum>(6)</enum><text>Recommendations for legislation or regulation relating to digital asset mixers and tumblers.</text></paragraph></subsection></section><section id="ide38d7532f8a744eb8be411ec3018c527"><enum>310.</enum><header>GAO study on intermediaries in foreign jurisdictions</header><subsection id="id656553a506174876b061a5c3b3cae017"><enum>(a)</enum><header>In general</header><text>The Comptroller General of the United States, in consultation with the Secretary of the Treasury, shall conduct a study to—</text><paragraph id="id507f26d5b54c4fc7a1817118576a8ead"><enum>(1)</enum><text>assess the risks posed by digital asset intermediaries that— </text><subparagraph commented="no" display-inline="no-display-inline" id="id6ba138c746aa4e8ea870e3a857a30884"><enum>(A)</enum><text display-inline="yes-display-inline">are primarily located in foreign jurisdictions that lack regulatory requirements that are substantially similar to the requirements of the Bank Secrecy Act; and </text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id19377a20737840639a200e7dc0ccd789"><enum>(B)</enum><text display-inline="yes-display-inline">provide services to United States persons; and</text></subparagraph></paragraph><paragraph id="id1d82795e930e4442be94978d0e8d748e"><enum>(2)</enum><text>provide any regulatory or legislative recommendations to address the risks described in paragraph (1).</text></paragraph></subsection><subsection id="idbc746d90f2f64f2c954224649a80375a"><enum>(b)</enum><header>Report</header><text>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).</text></subsection></section><section id="id81c3cab8481746919c166e6f9858c390"><enum>311.</enum><header>Studies on foreign adversary activities</header><subsection id="idfc9e58d5ab2e484dac1846f29111b184"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ide4d65f5429ab4a6681f5e624ef8f16a7"><enum>(1)</enum><header>Foreign adversary</header><text>The term <term>foreign adversary</term> 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.</text></paragraph><paragraph id="id026854dc34b54718b2549b1772aad75c"><enum>(2)</enum><header>Relevant congressional committees</header><text>The term <term>relevant congressional committees</term> means—</text><subparagraph id="id08bb3a93d1294cbd937f6e99a92ff237"><enum>(A)</enum><text>the Committee on Banking, Housing, and Urban Affairs of the Senate;</text></subparagraph><subparagraph id="id8f71516237b9408c906a5bcd6dfa3bdc"><enum>(B)</enum><text>the Committee on Agriculture, Nutrition, and Forestry of the Senate;</text></subparagraph><subparagraph id="id7ae828de11684df092cadd2d462c1a78"><enum>(C)</enum><text>the Select Committee on Intelligence of the Senate;</text></subparagraph><subparagraph id="id8a5a9c7160a749e093005398d5dbc4ef"><enum>(D)</enum><text>the Committee on Financial Services of the House of Representatives;</text></subparagraph><subparagraph id="id1d98fd8682eb4bc6be8d62ce7a2242ba"><enum>(E)</enum><text>the Committee on Agriculture of the House of Representatives; and</text></subparagraph><subparagraph id="id795295ef369b44d68cd6ac76906f6616"><enum>(F)</enum><text>the Permanent Select Committee on Intelligence of the House of Representatives.</text></subparagraph></paragraph></subsection><subsection id="id27fe0d6256974e34866fbb8ed3bca8cc"><enum>(b)</enum><header>Treasury report</header><text>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—</text><paragraph id="id587659cf8abf477d9c4824fab776e438"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id09232f0aec514fd0900ddd0bf8376c8a"><enum>(2)</enum><text>determines whether any government of a foreign adversary is collecting trading data about United States persons in digital asset markets; and</text></paragraph><paragraph id="id89b1c39fd0ad41ea9907895af8678467"><enum>(3)</enum><text>evaluates whether any proprietary intellectual property of digital asset intermediaries is being misused or stolen by any government of a foreign adversary.</text></paragraph></subsection><subsection id="ide39b683bc3284463b593d8f76a112fb8"><enum>(c)</enum><header>GAO study and report</header><text>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—</text><paragraph id="idd634255e3b4544d3bce85bb2d022a4de"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id979e502b343546a08392f84cd9989be2"><enum>(2)</enum><text>determines whether any government of a foreign adversary is collecting trading data about United States persons in digital asset markets; and</text></paragraph><paragraph id="id45f617ffb8bd46f7a601e877edf112b0"><enum>(3)</enum><text>evaluates whether any proprietary intellectual property of digital asset intermediaries is being misused or stolen by any government of a foreign adversary.</text></paragraph></subsection></section><section id="id7f2427f92a604b1baf23c4058560ce80"><enum>312.</enum><header>Treasury study on cybersecurity standards</header><subsection id="id872202e6f11b4ced806f70df38cb5a69"><enum>(a)</enum><header>Study</header><text>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.</text></subsection><subsection id="id94bb91eaa9c74fe4ac8ad2456c0bf12a"><enum>(b)</enum><header>Report</header><paragraph id="id28098beb83124a83af04c7a6b555524f"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="iddebdbf206ccc437a8bcc1d76156c9db7"><enum>(A)</enum><text>the findings of the study under subsection (a); and</text></subparagraph><subparagraph id="idf7116311fed6459690cd71fe14e793eb"><enum>(B)</enum><text>any legislative recommendations.</text></subparagraph></paragraph><paragraph id="ide29fd34016304aa486d51adedd3ffa6f"><enum>(2)</enum><header>Classified annex</header><text>The report under paragraph (1) may include a classified annex, as appropriate.</text></paragraph></subsection></section><section id="ida9d197fd3f32427b997d5771653fa5ee"><enum>313.</enum><header>Studies on financial stability risks of decentralized finance trading and credit in digital commodity markets</header><text display-inline="no-display-inline">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—</text><paragraph id="id8c4e65e352bb4179be91a890bbafea3a"><enum>(1)</enum><text>conduct a study examining—</text><subparagraph id="ida1fc054a91504c7f84b966cbded8a855"><enum>(A)</enum><text>the role of decentralized finance protocols in the financial system, including—</text><clause id="id518b1869a6624367b4b46bc7ab69e2c5"><enum>(i)</enum><text>the functions of such protocols;</text></clause><clause id="id33c28bb0e38a4cafa826bc44813378ba"><enum>(ii)</enum><text>the use of such protocols to obtain leverage or financing;</text></clause><clause id="id51893b536bc045f789a7f99f7e31e0d1"><enum>(iii)</enum><text>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</text></clause><clause id="ide3b23d64953a4a148352ef68d5fbe613"><enum>(iv)</enum><text>the types and volumes of financial activity conducted through such protocols;</text></clause></subparagraph><subparagraph id="id22504bed9ad14b1c91dba05c896ceced"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="ide57fd15a73fd43cd82cea40d06cedf72"><enum>(C)</enum><text>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</text></subparagraph><subparagraph id="ide653db69d78b4b948976c89ed83ecb6c"><enum>(D)</enum><text>an assessment of whether the regulatory framework adequately controls any risk with respect to decentralized finance protocols; </text></subparagraph></paragraph><paragraph id="id63959a0d1d7447be8708deb6f55a3367"><enum>(2)</enum><text>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—</text><subparagraph commented="no" display-inline="no-display-inline" id="id99bc43b559d649679b65527024c71227"><enum>(A)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id33e7dd2498f04b608796cc683f661925"><enum>(B)</enum><text>the interconnections between leverage in the market for digital assets and the financial system; and</text></subparagraph></paragraph><paragraph id="ide907013dc77846cb8a435ecb40b2aff6"><enum>(3)</enum><text>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—</text><subparagraph id="idbb7582c6c4b945a49903bb7cdab66ab7"><enum>(A)</enum><text>shall include legislative and regulatory recommendations, as appropriate; and</text></subparagraph><subparagraph id="id8a80a3b7b8544650beaa6fc2e5a34152"><enum>(B)</enum><text>may include a classified annex.</text></subparagraph></paragraph></section><enum>IV</enum><header>Responsible banking innovation</header><section id="idd35e050a3f164b09b5b23763cef926c1"><enum>401.</enum><header>Permissibility of digital asset activities</header><subsection id="id509325e4f60e4051977ac772b42297d9"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id398d6cc326ea4fa6a93495876f6e96e2"><enum>(1)</enum><header>Appropriate Federal banking agency; State bank; State bank supervisor; State member bank</header><text>The terms <term>appropriate Federal banking agency</term>, <term>State bank</term>, <term>State bank supervisor</term>, and <term>State member bank</term> have the meanings given those terms in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>).</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idf1d5f0862f9347e1b1ad3232385c8c78"><enum>(2)</enum><header display-inline="yes-display-inline">Customer-driven transaction</header><text>The term <term>customer-driven transaction</term>— </text><subparagraph commented="no" display-inline="no-display-inline" id="id2a0602c839ee412e8aeabd126d1cfd76"><enum>(A)</enum><text display-inline="yes-display-inline">means a transaction that is entered into for a valid and independent business purpose of a customer; and </text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id8881ebc282bf49f09d6b340b53710638"><enum>(B)</enum><text display-inline="yes-display-inline">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.</text></subparagraph></paragraph><paragraph id="id0f6638f7289e4196b8ed762f9fdbee78"><enum>(3)</enum><header>Federal branch; State branch</header><text>The terms <term>Federal branch</term> and <term>State branch</term> have the meanings given those terms in section 1(b) of the International Banking Act of 1978 (<external-xref legal-doc="usc" parsable-cite="usc/12/3101">12 U.S.C. 3101</external-xref>).</text></paragraph><paragraph id="idfe937d37f16243b78dff605643ac5e65"><enum>(4)</enum><header>Federal credit union; insured credit union</header><text>The terms <term>Federal credit union</term> and <term>insured credit union</term> have the meanings given those terms in section 101 of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1752">12 U.S.C. 1752</external-xref>).</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idc58061c13dc44d2689d2f5f48156bc5d"><enum>(5)</enum><header display-inline="yes-display-inline">Financial holding company</header><text>The term <term>financial holding company</term> has the meaning given the term in section 2 of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1841">12 U.S.C. 1841</external-xref>).</text></paragraph><paragraph id="idfa74522499a64e8c8185b6b9bbcf9ee4"><enum>(6)</enum><header>Financial subsidiary</header><text>The term <term>financial subsidiary</term> has the meaning given the term in section 5136A(g)(3) of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/24a">12 U.S.C. 24a</external-xref>).</text></paragraph><paragraph id="id1877f5df6d4948ba8df54dc95a60a902"><enum>(7)</enum><header>Insured State bank</header><text>The term <term>insured State bank</term> means a State bank, the deposits of which are insured by the Federal Deposit Insurance Corporation.</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ida6567c45e67d44dd84cc198d590edb6e"><enum>(8)</enum><header display-inline="yes-display-inline">National bank</header><text>The term <term>national bank</term> means a national banking association.</text></paragraph></subsection><subsection id="idc9351efd230942e6a44ac8999a41c4b1"><enum>(b)</enum><header>Authorized activities for financial holding companies and financial subsidiaries</header><paragraph id="ida98c0b741ff34c01827f7c4553e06f5c"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id2c97738f71bb4249b2c0f2acf9c56a69"><enum>(2)</enum><header>Financial in nature</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/1843">12 U.S.C. 1843(k)</external-xref>) and section 5136A(b) of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/24a">12 U.S.C. 24a(b)</external-xref>).</text></paragraph><paragraph id="iddcd0a9587ccc47049060b0f4e3498cd9"><enum>(3)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="id1b60db487f22413a837903ceed130973"><enum>(c)</enum><header>Authorized activities for national banks</header><paragraph id="id23761f55a5734433a5a756dbcebf6317"><enum>(1)</enum><header>In general</header><subparagraph id="id66796599587642e28a99978b2c10aac2"><enum>(A)</enum><header>Authorized activities</header><text>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.</text></subparagraph><subparagraph id="idbc4514d0717e4825bb4163ce863a403b"><enum>(B)</enum><header>Branches of foreign banks</header><clause id="idd7cb1ac998ba4810bb5ca9bc315c00ef"><enum>(i)</enum><header>Federal branches</header><text>Consistent with section 4(b) of the International Banking Act of 1978 (<external-xref legal-doc="usc" parsable-cite="usc/12/3102">12 U.S.C. 3102(b)</external-xref>), 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 (<external-xref legal-doc="usc" parsable-cite="usc/12/3101">12 U.S.C. 3101 et seq.</external-xref>) if the activity were not performed, provided, or delivered using a digital asset or distributed ledger system.</text></clause><clause id="ida7fa81c60f924a97a91567e341725aeb"><enum>(ii)</enum><header>Rule of construction for State branches</header><text>For the purposes of activities engaged in by a State branch as principal under section 7(h) of the International Banking Act of 1978 (<external-xref legal-doc="usc" parsable-cite="usc/12/3105">12 U.S.C. 3105(h)</external-xref>), the activities authorized under clause (i) are permissible activities of a Federal branch.</text></clause></subparagraph></paragraph><paragraph id="idfc5c3736078c413cbd12e8815c990882"><enum>(2)</enum><header>Business of banking and other authorized activities</header><text>The activities described in subsection (g) are authorized as part of the business of banking under the paragraph designated as the <quote>Seventh</quote> of section 5136 of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/24">12 U.S.C. 24</external-xref>) or under other applicable law.</text></paragraph><paragraph id="idf42ded223bcf4562875d395e1fba259e"><enum>(3)</enum><header>Rules of construction</header><text>Nothing in this subsection may be construed to— </text><subparagraph commented="no" display-inline="no-display-inline" id="idb1d65f8fe88840919d1559dac9d6a990"><enum>(A)</enum><text display-inline="yes-display-inline">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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id47c7dd4a802e4756bd93de4efae4c55c"><enum>(B)</enum><text>expand or contract the meaning of <quote>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</quote>, as that term is used in section 5169(a) of the Revised Statutes (<external-xref legal-doc="usc" parsable-cite="usc/12/27">12 U.S.C. 27(a)</external-xref>).</text></subparagraph></paragraph></subsection><subsection id="id4a5a9f91d2464f8bbfb7049b285c1039"><enum>(d)</enum><header>State banks</header><text>The activities authorized under subsection (c) are permissible activities—</text><paragraph commented="no" display-inline="no-display-inline" id="id1bcbe922fee942e094b4b9c4ecad243c"><enum>(1)</enum><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/12/1831a">12 U.S.C. 1831a</external-xref>); and </text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0b3978c63f27483cb9f763975133e420"><enum>(2)</enum><text display-inline="yes-display-inline">of a State member bank, and any subsidiary of a State member bank, to engage in as principal.</text></paragraph></subsection><subsection id="id5d94af122c3b4c9a9eda6b07225e7c04"><enum>(e)</enum><header>Authorized activities for Federal credit unions</header><paragraph id="id10eebc4e172f46d1b59620907cbf228d"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id1f358afbb8fe4e838d65f7ddce401d20"><enum>(2)</enum><header>Business of credit unions</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/1757">12 U.S.C. 1757(17)</external-xref>).</text></paragraph><paragraph id="ideb862ada3f014e819bee42fb9b9bcbef"><enum>(3)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="ida0db83af7fc24d50b36e1139042b1fa8"><enum>(f)</enum><header>Insured credit unions</header><text>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.</text></subsection><subsection id="id13057f7e30f64bb1a875fa16c2eff2a4"><enum>(g)</enum><header>Activities described</header><text>The activities described in this subsection are—</text><paragraph id="idfe2861316a0e49a8a6d20ac8c62c6e17"><enum>(1)</enum><text>providing custodial, fiduciary, or safekeeping services for digital assets;</text></paragraph><paragraph id="idd6d0d6be978447cd8d60d901beb1e946"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="id0f0f8e676de241d7b2e70171a01d1451"><enum>(3)</enum><text>making loans collateralized by digital assets;</text></paragraph><paragraph id="idc409fb46223b4bf08b9a91120e3efe66"><enum>(4)</enum><text>engaging in payment activities involving digital assets, including facilitating customer or principal payments in connection with otherwise permissible activities;</text></paragraph><paragraph id="id389f0a36f45c4bf986de419865751533"><enum>(5)</enum><text>operating a node on a distributed ledger;</text></paragraph><paragraph id="id738a680cd5c04582905b5f49b24ace81"><enum>(6)</enum><text>providing self-custodial wallet software;</text></paragraph><paragraph id="id6e7848a4b6d6423ea8deada9d829596e"><enum>(7)</enum><text>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;</text></paragraph><paragraph id="id2c2e48385c914d60bffa4306f5cbed56"><enum>(8)</enum><text>providing brokerage services with respect to any digital asset, including clearing and execution services, whether alone or in combination with other permissible activities;</text></paragraph><paragraph id="id4236b7462d3d4b5aa8d4acaf9d79bb37"><enum>(9)</enum><text>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;</text></paragraph><paragraph id="id53d1c88113514df08d9f89734e2f0fc7"><enum>(10)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/1851">12 U.S.C. 1851</external-xref>) and only to the extent that the terms and prohibitions of that section apply to a transaction; and</text></paragraph><paragraph id="id0bc7cb21f2994043ba42bbc0d8ca79dc"><enum>(11)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/1851">12 U.S.C. 1851</external-xref>) and only to the extent that the terms and prohibitions of that section apply to a transaction.</text></paragraph></subsection><subsection id="ida6b3bcafd9ae4e29ab378f2323ce4e53"><enum>(h)</enum><header>Other requirements</header><text>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 <quote>An Act to place authority over the trust powers of national banks in the Comptroller of the Currency</quote>, approved September 28, 1962 (<external-xref legal-doc="usc" parsable-cite="usc/12/92a">12 U.S.C. 92a et seq.</external-xref>), the Federal Reserve Act (<external-xref legal-doc="usc" parsable-cite="usc/12/221">12 U.S.C. 221 et seq.</external-xref>), or the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1841">12 U.S.C. 1841 et seq.</external-xref>) and the regulations promulgated under those Acts.</text></subsection><subsection id="idcc8bfa32064048ac8ed1b4e242ff4d68"><enum>(i)</enum><header>Rule of construction</header><text>Nothing in this section may be construed to—</text><paragraph id="id1e25882e0d8744f894342565c4755c58"><enum>(1)</enum><text>exclude other possible permissible activities that are not activities described in subsection (g);</text></paragraph><paragraph id="ide4cfb7a69a694e35b3bdc74bba1e3d38"><enum>(2)</enum><text>imply that inclusion of an activity described in subsection (g) means that the activity is otherwise impermissible;</text></paragraph><paragraph id="idae23bdb6948245b8a3ba7ef98c94e0de"><enum>(3)</enum><text>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</text></paragraph><paragraph id="id1253cf7868064f4a929d1d88eb69e423"><enum>(4)</enum><text>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.</text></paragraph></subsection><subsection id="id6459db5ec23040de89e386461fcaa06a"><enum>(j)</enum><header>Application</header><text>The authorities described in this section shall not apply to nonfungible assets.</text></subsection></section><section id="idf533de7bcc0c4b83bbfa7750d0370170"><enum>402.</enum><header>Joint rules for portfolio margining determinations</header><subsection id="id6eea2ecfa7654266977ee8427a805e1f"><enum>(a)</enum><header>In general</header><text>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—</text><paragraph id="idda3f732567314f95af0f0f89f24bdb38"><enum>(1)</enum><text>a securities account carried by a registered broker or dealer or a security-based swap account carried by a registered security-based swap dealer;</text></paragraph><paragraph id="idd297a7b984164cbc93838a4909cbb530"><enum>(2)</enum><text>a futures or cleared swap account carried by a registered futures commission merchant;</text></paragraph><paragraph id="idb6e74d4a53284cd58684d09d56e82ffc"><enum>(3)</enum><text>a swap account carried by a swap dealer; or</text></paragraph><paragraph id="id9b172bae005b407d8c0cbf893cb75426"><enum>(4)</enum><text>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.</text></paragraph></subsection><subsection id="id3f8fd498d2644e3e9e263b74c3cc65b5"><enum>(b)</enum><header>Process</header><text>The rules required to be jointly issued under subsection (a) shall—</text><paragraph id="id6856e850f2e149cbabc73946ed7e5b22"><enum>(1)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>), title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5381">12 U.S.C. 5381 et seq.</external-xref>), or any other applicable insolvency law with respect to the person carrying the account;</text></paragraph><paragraph id="id501f2f9c2e954a3c996b684252b52966"><enum>(2)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>), title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5381">12 U.S.C. 5381 et seq.</external-xref>), or any other applicable insolvency law with respect to the person carrying the account;</text></paragraph><paragraph id="id0d0990a7681748319b1df461cf1f96a5"><enum>(3)</enum><text>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</text></paragraph><paragraph id="id5e9ab93ad69f465da1c3f0c37389f983"><enum>(4)</enum><text>require the Commission and the Commodity Futures Trading Commission to—</text><subparagraph id="id75fe279163ac4cea98f65dd6015aff59"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="ida74c942d727d4c7b83d5d3a2bf30c603"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection></section><section id="id36eaa5e9d4c34b8088238358bcb813fb"><enum>403.</enum><header>Capital requirements to address netting agreements</header><subsection id="idebaa93e05a2749a4baea0778ed0ca76f"><enum>(a)</enum><header>Definitions</header><text>In this section, the terms <term>depository institution holding company</term> and <term>insured depository institution</term> have the meanings given those terms in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>).</text></subsection><subsection id="id757a5404d5e84beda553d2fa70c44115"><enum>(b)</enum><header>Capital requirements</header><text>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.</text></subsection></section><section id="id59865122b0dd45599f6739c767f01744"><enum>404.</enum><header>Prohibiting interest and yield on payment stablecoins</header><subsection id="id3a34d2247a3c4ea99cd2abf5b3cf32d7"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ide2e4134c42a241aea3bc368df755c5e9"><enum>(1)</enum><header>Affiliate</header><text>The term <term>affiliate</term> means any entity that controls, is controlled by, or is under common control with another entity.</text></paragraph><paragraph id="ida93ca34d19af44d49899a4d341382801"><enum>(2)</enum><header>Commissions</header><text>The term <term>Commissions</term> means the Commission and the Commodity Futures Trading Commission.</text></paragraph><paragraph id="id8ddd832f0e564b3fb991e1d3dc9018d8"><enum>(3)</enum><header>Comptroller; foreign payment stablecoin issuer; payment stablecoin; permitted payment stablecoin issuer</header><text>The terms <term>Comptroller</term>, <term>foreign payment stablecoin issuer</term>, <term>payment stablecoin</term>, and <term>permitted payment stablecoin issuer</term> have the meanings given those terms in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>).</text></paragraph><paragraph id="idfbe2862e2cad4ad89b21f12bf3691ad1"><enum>(4)</enum><header>Covered party</header><text>The term <term>covered party</term> 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.</text></paragraph><paragraph id="id4a0d445b61e845c4aa6d458e1915b777"><enum>(5)</enum><header>Deposit</header><text>The term <term>deposit</term> has the meaning given the term in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>).</text></paragraph><paragraph id="idc46862e7d17940d9801ea8eb06925c56"><enum>(6)</enum><header>Restricted recipient</header><text>The term <term>restricted recipient</term> means a United States person that is a customer or user of a covered party.</text></paragraph><paragraph id="id0da7f9a5a1744f3e9d34f23929d0e15e"><enum>(7)</enum><header>United States person</header><text>The term <term>United States person</term> means a person that is a resident of the United States or is organized or incorporated under the laws of the United States.</text></paragraph></subsection><subsection id="id848a17b3c0714c1b96aa8472285e465b"><enum>(b)</enum><header>Sense of Congress</header><text>It is the sense of Congress that—</text><paragraph id="idc4cb9705a6be44f3b2bd7875422ea321"><enum>(1)</enum><text>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</text></paragraph><paragraph id="idb8ffe7a70ced4aee8da959a4ee64974f"><enum>(2)</enum><text>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.</text></paragraph></subsection><subsection id="id4948180c072746c0ad0b1d0ba9d1eaa8"><enum>(c)</enum><header>Prohibition on interest and yield</header><paragraph id="idb9f63972c2cc459d8637f2d2618880d6"><enum>(1)</enum><header>In general</header><text>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—</text><subparagraph id="id0f6d42a2347b49bca3050523ec979607"><enum>(A)</enum><text>solely in connection with the holding of the payment stablecoins of that restricted recipient; or</text></subparagraph><subparagraph id="idd9fc237554cb4e5d992e1dfbb03e3ba1"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="ide10888343ecd4e6e8ed1bcf5271e0f9f"><enum>(2)</enum><header>Activity-based or transaction-based rewards and incentives permitted</header><subparagraph id="id5e80b9e0cee641bab3df3a326940b699"><enum>(A)</enum><header>In general</header><text>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).</text></subparagraph><subparagraph id="idc5c1417070a547eba4fc20d02584dcb8"><enum>(B)</enum><header>Equivalence to bank deposits</header><text>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.</text></subparagraph></paragraph><paragraph id="id3f3f8a68454d42d2814e7d61aee0a860"><enum>(3)</enum><header>Rulemaking</header><subparagraph id="id83df3aea29144faead70402391fd6c63"><enum>(A)</enum><header>In general</header><text>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:</text><clause id="id6d949ca5bdda4de991217b860d447444"><enum>(i)</enum><text>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.</text></clause><clause id="id23ef004b33884734a532f78f40715834"><enum>(ii)</enum><text>Providing liquidity for market-marking activity, posting of collateral in connection with trading, or otherwise putting assets at credit or investment risk.</text></clause><clause id="ide1b8e8ad84644824aca8cdffb49b845a"><enum>(iii)</enum><text>The use of any product or service, including participation in governance, validation, staking, or a loyalty, promotional, subscription, or incentive program.</text></clause></subparagraph><subparagraph id="id281a042904db44c18e15c22a0d610d48"><enum>(B)</enum><header>Calculation by reference</header><text>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.</text></subparagraph></paragraph><paragraph id="id724d39b3b7d94b7fac7bd85ffae12e58"><enum>(4)</enum><header>Evasion</header><text>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).</text></paragraph><paragraph id="id386b585b2822468c99f96b16dcaca417"><enum>(5)</enum><header>Good faith reliance</header><text>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—</text><subparagraph id="ide63d91040ae244949981483dea761bb4"><enum>(A)</enum><text>the covered party comes into compliance within 90 days of such determination; and</text></subparagraph><subparagraph id="id487e0d1833904d73a70bc36e4cc5968c"><enum>(B)</enum><text>the violation is not substantially similar to a past violation by the covered party.</text></subparagraph></paragraph></subsection><subsection id="id94231849b66a4032aa4a22cdc45d50de"><enum>(d)</enum><header>Prohibition on specified representations</header><paragraph id="idc65bf6b7713e420db46ab476c8ffc4b7"><enum>(1)</enum><header>Certain marketing practices</header><text>No covered party shall represent that—</text><subparagraph id="id8c9ea4eee4bf428dbd29f0ccc973f490"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="idf2d5e1fe1395455d9c0f5d36310b9921"><enum>(B)</enum><text>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—</text><clause id="id67187ce2ce5d4776a53c5302fb272762"><enum>(i)</enum><text>paid or generated by the payment stablecoin itself, a permitted payment stablecoin issuer, or a foreign payment stablecoin issuer registered with the Comptroller;</text></clause><clause id="id80076c6c44354c969537252fee305425"><enum>(ii)</enum><text>risk-free or comparable to interest paid on a deposit; or</text></clause><clause id="id9f29987e9d6642428a2be50c78837309"><enum>(iii)</enum><text>offered, administered, or paid by a person other than the covered party.</text></clause></subparagraph></paragraph><paragraph id="id44e0f40d2a7f455eadf8b652b1cc630f"><enum>(2)</enum><header>Misleading</header><text>No covered party shall omit material information necessary to prevent any marketing, promotion, or description described in this subsection from being misleading.</text></paragraph></subsection><subsection id="id772dcd5ebf33471a8b6423a101dab6c4"><enum>(e)</enum><header>Disclosures</header><paragraph id="id30d71bc6e3244aa4918e116346131bd6"><enum>(1)</enum><header>In general</header><text>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).</text></paragraph><paragraph id="idee73b641b69849dba4e93b113de12533"><enum>(2)</enum><header>Requirements</header><text>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—</text><subparagraph id="id791557f522c34e21b3453a7862632b02"><enum>(A)</enum><text>is presented in a clear, factual, nonpromotional, and non-misleading manner;</text></subparagraph><subparagraph id="id79fc8822702b489792e925259d6e9824"><enum>(B)</enum><text>clearly identifies the circumstances under which such compensation can be paid;</text></subparagraph><subparagraph id="id6f464236365d432db225d58973d6888c"><enum>(C)</enum><text>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;</text></subparagraph><subparagraph id="idae818f7edb1c498184456219fc11ba5c"><enum>(D)</enum><text>outlines all material terms with respect to such compensation; and</text></subparagraph><subparagraph id="idf455f4d1a7e04abbafdfb043f3445c54"><enum>(E)</enum><text>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.</text></subparagraph></paragraph><paragraph id="idf5c9ab76bf7b45b08701b2ed35acaff5"><enum>(3)</enum><header>Prohibition</header><text>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.</text></paragraph><paragraph id="id23232530e06d489e9b5c1949f7c2e56e"><enum>(4)</enum><header>Satisfaction of requirement</header><text>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—</text><subparagraph id="idb75682e19041443f829aec3524778016"><enum>(A)</enum><text>any marketing, promotion, or description with respect to the applicable compensation does not contradict those disclosures; and</text></subparagraph><subparagraph id="id94eac9094f68413ba98eecd738aef890"><enum>(B)</enum><text>those disclosures are presented in plain English and in a clear and conspicuous manner.</text></subparagraph></paragraph></subsection><subsection id="idc37811cd49e245ffa0d6ab78ee76a382"><enum>(f)</enum><header>Penalty</header><paragraph id="idb818d7f40e8b469fb61cf6b168657d89"><enum>(1)</enum><header>Civil monetary penalty</header><text>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.</text></paragraph><paragraph id="id1bad634083034cb9af379792f720831e"><enum>(2)</enum><header>Determination of the number of violations</header><text>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—</text><subparagraph id="idabb947e90b8e4c9ca5bbb1197ea5eb98"><enum>(A)</enum><text>a common or substantially overlapping originating cause; or</text></subparagraph><subparagraph id="id2dbbb7efe3ee4488b1200ff3be29c821"><enum>(B)</enum><text>the same statement or publication.</text></subparagraph></paragraph></subsection><subsection id="ida2eb24c1dd7e4cd18750b9c16d7f8e92"><enum>(g)</enum><header>Referral to Secretary of the Treasury</header><text>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.</text></subsection><subsection id="id96307f2bdf61482a800c66844d17ad9c"><enum>(h)</enum><header>Report to Congress</header><text>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-name committee-id="SSBK00">Committee on Banking, Housing, and Urban Affairs of the Senate</committee-name> and the <committee-name committee-id="">Committee on Financial Services of the House of Representatives</committee-name> a report on payment stablecoin activity that—</text><paragraph id="id5bfde3acae6e47ef853c8f9642cf5a2e"><enum>(1)</enum><text>analyzes and quantifies—</text><subparagraph id="idbd96f8f16fe149cfb68c6104ac1ed20e"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id23223f850278476999ed0641169a3b45"><enum>(B)</enum><text>the effect of United States dollar-denominated payment stablecoins on the average yields of, and demand for, United States Treasury securities of various durations;</text></subparagraph><subparagraph id="ida5d030feeae04caf9aeb85225cd01c01"><enum>(C)</enum><text>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;</text></subparagraph><subparagraph id="ide469fc1c3ef64bb1ae7478f0b2e2ea97"><enum>(D)</enum><text>the effect of United States dollar-denominated payment stablecoins on increasing access to financial services for unbanked and underbanked persons, both domestically and globally;</text></subparagraph><subparagraph id="iddc79406e48a04b86bfd6aa10a7d26dfa"><enum>(E)</enum><text>the effect of United States dollar-denominated payment stablecoins on payment costs of consumers and merchants; and</text></subparagraph><subparagraph id="idaac52932f4fe43948cc8087d03745981"><enum>(F)</enum><text>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;</text></subparagraph></paragraph><paragraph id="id8701f14c24e74daa81b3352320758f86"><enum>(2)</enum><text>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</text></paragraph><paragraph id="id94edf3bfa1884820816b367f0e2e82ae"><enum>(3)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5903">12 U.S.C. 5903(a)(11)</external-xref>) on—</text><subparagraph id="idfe995dcaa1744c8aa40d54e1606d8b04"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id7d8921be047c497189279e538bf3875a"><enum>(B)</enum><text>net interest margin accrued to depository institutions;</text></subparagraph><subparagraph id="id8a23ec8b7e7842e5bcfaaa7b6249d165"><enum>(C)</enum><text>the average rate of interest paid to depositors at depository institutions;</text></subparagraph><subparagraph id="idb07800aafb1e43c4ac8445c51defb31a"><enum>(D)</enum><text>consumer and business access to credit;</text></subparagraph><subparagraph id="idec61a43c1d1447bfa5d891bb85f39e4e"><enum>(E)</enum><text>financial arrangements between depository institutions and digital asset service providers and issuers of payment stablecoins; and</text></subparagraph><subparagraph id="ideddb597f085945f596671ebfb12fc594"><enum>(F)</enum><text>the items described in paragraph (1).</text></subparagraph></paragraph></subsection><subsection id="idb6b90cceb3d647e78e3764d55ec30ee8"><enum>(i)</enum><header>No deeming of payment of interest or yield</header><text>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).</text></subsection><subsection id="id805177f873ca459493326a90b31d5000"><enum>(j)</enum><header>Clarification of scope and regulatory authority</header><paragraph id="idc28ad3fcf91c476eb029d37ab489f090"><enum>(1)</enum><header>Compensation</header><text>The prohibitions under subsections (c), (d), and (e) shall only apply to compensation paid in connection with a payment stablecoin or payment stablecoin balance.</text></paragraph><paragraph id="ide810b424d1504ddb8fa2ff170d958f5a"><enum>(2)</enum><header>Other assets</header><text>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.</text></paragraph></subsection><subsection id="id68b68223ed96452eb06b56f8d0a47cc2"><enum>(k)</enum><header>Non-applicability</header><text>Nothing in this section shall—</text><paragraph id="id37ad49c6e14540948d8b7ddf97a0978e"><enum>(1)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5903">12 U.S.C. 5903(a)(11)</external-xref>); or</text></paragraph><paragraph id="ida810930b1b0b4934b1089cbacb4e382a"><enum>(2)</enum><text>prohibit the disclosure by covered parties of truthful, non-misleading factual information or any information otherwise required by Federal law or regulation.</text></paragraph></subsection></section><section id="idD3977E78559E4D2A82F655E270A8E7CE"><enum>405.</enum><header>Expanded securities portfolio margin accounts under the Securities Investor Protection Act of 1970</header><subsection commented="no" display-inline="no-display-inline" id="idf15c9dd51dba42749cee1692a12e343c"><enum>(a)</enum><header display-inline="yes-display-inline">Amendments</header><text display-inline="yes-display-inline">The Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>) is amended—</text><paragraph commented="no" display-inline="no-display-inline" id="id98bea7a6704b4b76a93d9542ab11caed"><enum>(1)</enum><text display-inline="yes-display-inline">in section 9(a) (<external-xref legal-doc="usc" parsable-cite="usc/15/78fff-3">15 U.S.C. 78fff–3(a)</external-xref>)—</text><subparagraph commented="no" display-inline="no-display-inline" id="idd9a5badcfd6c4d608fe7f658a7e76a83"><enum>(A)</enum><text display-inline="yes-display-inline">in paragraph (4), by striking <quote>and</quote> at the end;</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id6a011ffe84cc4e139a3cbc7192af71f6"><enum>(B)</enum><text>in paragraph (5), by striking the period at the end and inserting <quote>; and</quote>; and</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idfcba345981de4e2b94ad6377e61a8c7d"><enum>(C)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id9093f91358af45edb393522a52ef0c3c" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="ide226d3b385444fc7bd1ace9c95530c95"><enum>(6)</enum><text>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.</text></paragraph><after-quoted-block>; </after-quoted-block></quoted-block></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ide1ebaadd78f24e2bbae599e834666552"><enum>(2)</enum><text>in section 10(g) (<external-xref legal-doc="usc" parsable-cite="usc/15/78fff-4">15 U.S.C. 78fff–4(g)</external-xref>), by striking <quote>16(12)</quote> and inserting <quote>16(13)</quote>; and</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idec9c4ccb608f46e09a33a0256492fb01"><enum>(3)</enum><text display-inline="yes-display-inline">in section 16 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll</external-xref>)—</text><subparagraph commented="no" display-inline="no-display-inline" id="id17afadc585b2469b984f7bfd8185dc3e"><enum>(A)</enum><text display-inline="yes-display-inline">by redesignating paragraphs (7) through (14) as paragraphs (8) through (15), respectively; </text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id1a77d9d9d087483d9032384e55eb8dec"><enum>(B)</enum><text>by inserting after paragraph (6) the following:</text><quoted-block id="idF12A1DECC4C5461D99CD3A9A87F7737B" style="OLC" act-name="" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="idF0B55133BAD642FC8181AC28BE67CD68"><enum>(7)</enum><header>Expanded securities portfolio margin account</header><text>The term <term>expanded securities portfolio margin account</term> means a customer account—</text><subparagraph id="id2421dd666f4142acb2b5005beca8d66f"><enum>(A)</enum><text>that is maintained by a broker or dealer registered with the Commission;</text></subparagraph><subparagraph id="id36678acb2ed3481289cce423a6152abb"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="idf90935b60de243fc99e0f3f6096dc743"><enum>(C)</enum><text>that is subject to portfolio margining requirements approved pursuant to section 402 of the Digital Asset Market Clarity Act; and</text></subparagraph><subparagraph id="id619c484c0dbc4cbebeca4a223169a266"><enum>(D)</enum><text>in which margin requirements are determined on a risk-based, portfolio-wide basis, rather than on an instrument-by-instrument basis.</text></subparagraph></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id2043e26685d14fea9b271664d8580921"><enum>(C)</enum><text>in paragraph (10), as so redesignated, in the matter following subparagraph (L), by striking <quote>a transaction in the portfolio margining account</quote> and inserting <quote>the portfolio margining account or expanded securities portfolio margin account</quote>.</text></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id803d2780a70d41a6aa6e8a8b24a92a44"><enum>(b)</enum><header>Rules</header><paragraph commented="no" display-inline="no-display-inline" id="id8bef7486208b452eb739a97d9c91ce05"><enum>(1)</enum><header display-inline="yes-display-inline">Definitions</header><text>In this subsection: </text><subparagraph commented="no" display-inline="no-display-inline" id="id2be8915b594042a4990738740eed0e2d"><enum>(A)</enum><header>Expanded securities portfolio margin account</header><text display-inline="yes-display-inline">The term <term>expanded securities portfolio margin account</term> has the meaning given the term in section 16 of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78lll">15 U.S.C. 78lll</external-xref>), as amended by this section.</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idcdc7669e5c8d4245975ed0270e34e1e4"><enum>(B)</enum><header>SIPC</header><text>The term <term>SIPC</term> means the Securities Investor Protection Corporation. </text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id316a4dc292c448fea0a92ecbbb1f7c75"><enum>(2)</enum><header display-inline="yes-display-inline">Issuance of rules</header><text display-inline="yes-display-inline">Notwithstanding any provision of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>), 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—</text><subparagraph id="id226c925c9ede4dba9afcf5b71a8647aa"><enum>(A)</enum><text>the transfer of accounts;</text></subparagraph><subparagraph id="id6f293fc0054f4e99837424163806254f"><enum>(B)</enum><text>the allocation of customer property among customers;</text></subparagraph><subparagraph id="id6485299ff4484ffe911593d9a7062f9d"><enum>(C)</enum><text>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;</text></subparagraph><subparagraph id="id360dd8ae2579455a9b557a91e69f4cef"><enum>(D)</enum><text>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; </text></subparagraph><subparagraph id="id18b06c5d2572444193e5f0684565e9c5"><enum>(E)</enum><text>further defining the terms, solely as relating to an expanded securities portfolio margin account, <quote>customer</quote>, <quote>customer property</quote>, and <quote>net equity</quote>, 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</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id14b99caa07de469a8173613add16ac6a"><enum>(F)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id033b3b9111954567b04d39aa52bfe784"><enum>(3)</enum><header>Process for issuance of rules</header><text>The requirements of section 402(b) shall apply with respect to the rules issued under this subsection.</text></paragraph></subsection><subsection id="id8f4d1a4059d94ec7a64dde73f98385ad" commented="no" display-inline="no-display-inline"><enum>(c)</enum><header>Effect of rules</header><text>An expanded securities portfolio margin account may not be offered, maintained, or utilized until the final rules required under subsection (b) are issued.</text></subsection></section><enum>V</enum><header>Responsible regulatory innovation</header><section id="id75bb7aa59ce0481bba33c1642d6946a8"><enum>501.</enum><header>CFTC-SEC Micro-Innovation Sandbox</header><subsection id="id0e30979839a14dc1b54cbd665556c7b5"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ide8a82ce4f7da4223aa7fe4422568aa61"><enum>(1)</enum><header>Commission</header><text>The term <term>Commission</term> means either of the Commissions, as the context requires.</text></paragraph><paragraph id="id2634e1ef4ba24ccfae13c55a7abbee2a"><enum>(2)</enum><header>Commissions</header><text>The term <term>Commissions</term> means the Securities and Exchange Commission and the Commodity Futures Trading Commission.</text></paragraph><paragraph id="id0c9cd952088c428f98f82e366fed38e5"><enum>(3)</enum><header>Eligible firm</header><text>The term <term>eligible firm</term> means a person that is eligible to participate in the Sandbox, in accordance with the requirements under this section.</text></paragraph><paragraph id="idf32c003c096d44f19e3837b8d4061e3e"><enum>(4)</enum><header>Innovative</header><text>The term <term>innovative</term> means new or emerging technology, or a novel application of technology, including artificial intelligence, that—</text><subparagraph id="idc32241621f4e4839886a05811bf35fb6"><enum>(A)</enum><text>provides a financial product, service, business model, or delivery mechanism to the public; and</text></subparagraph><subparagraph id="id06f31e6de4cb486aa115e97020a54c9a"><enum>(B)</enum><text>lacks—</text><clause id="id2e5eef59ffc34ff49d33923728eec43f"><enum>(i)</enum><text>a substantially comparable, widely available analogue in common use in the United States; and</text></clause><clause id="id5e0bc21a3ab342baa5f419680d722285"><enum>(ii)</enum><text>an analogous Federal regulatory regime.</text></clause></subparagraph></paragraph><paragraph id="id2a809d3d16b847c6bb898078809be0f2"><enum>(5)</enum><header>Person</header><text>The term <term>person</term> means a person, as defined in section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>) or section 1a of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1a">7 U.S.C. 1a</external-xref>).</text></paragraph><paragraph id="id1bd7b6fb6067470d8efd1332e7df62fd"><enum>(6)</enum><header>Sandbox</header><text>The term <term>Sandbox</term> means the CFTC-SEC Micro-Innovation Sandbox established under subsection (b).</text></paragraph><paragraph id="ida91e8c24d558478198933ac43e50c044"><enum>(7)</enum><header>Self-regulatory organization</header><text>The term <term>self-regulatory organization</term> means a self-regulatory organization, as defined in—</text><subparagraph id="id89179d7d560a4e7798e767199e4bb0d2"><enum>(A)</enum><text>section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>); or</text></subparagraph><subparagraph id="id1ed8ed643c9f481ca49965e37c4c08af"><enum>(B)</enum><text>section 1.52(a)(2) of title 17, Code of Federal Regulations, or any successor regulation.</text></subparagraph></paragraph></subsection><subsection id="id73b240a770a848038342fc40e45808e4"><enum>(b)</enum><header>Establishment</header><text>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—</text><paragraph id="id3bef0ec3e82a45308a4f5827e7efea42"><enum>(1)</enum><text>applicable Federal and State securities and commodities laws;</text></paragraph><paragraph id="id8633333952fc47369cd54999b96e7470"><enum>(2)</enum><text>other State laws that are not specific to the regulation of securities or commodities; and</text></paragraph><paragraph id="id965cbced852d4c85b25b25abad13b579"><enum>(3)</enum><text>the limitations of this section.</text></paragraph></subsection><subsection id="id0dfcdaecba8741adaa7381ab794f1146"><enum>(c)</enum><header>Eligible firm</header><paragraph id="idb98f3cec139f4da39864f9e32cb882ea"><enum>(1)</enum><header>In general</header><text>A United States-based person shall be an eligible firm, and shall be eligible to participate in the Sandbox, if the person—</text><subparagraph id="id767beef9e5d64d1bb58ebe6c8485527a"><enum>(A)</enum><text>submits an application under subsection (e) that is approved under that subsection;</text></subparagraph><subparagraph id="id9a9229c6d9ac4b6f9385cfaf84627284"><enum>(B)</enum><text>seeks to conduct an eligible and lawful innovative activity in the United States;</text></subparagraph><subparagraph id="iddd7d7e1b4c2145f6b31a9943d363c843"><enum>(C)</enum><text>is not subject to—</text><clause id="id27fe279d199b40c09547c3970551fbc6"><enum>(i)</enum><text>a statutory disqualification, as defined in section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>);</text></clause><clause id="idf51f1c6419094ccfae406db85b453ee6"><enum>(ii)</enum><text>a disqualification under section 8a(2) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/12a">7 U.S.C. 12a(2)</external-xref>); or</text></clause><clause id="idddf3f7aff2354fbeb405e85e1274edd2"><enum>(iii)</enum><text>a disqualification under State law;</text></clause></subparagraph><subparagraph id="idb14c94a7684243629187c9d72d370573"><enum>(D)</enum><text>does not have a criminal conviction for fraud;</text></subparagraph><subparagraph id="id0601faa1710c4431ab275cbe5f472a06"><enum>(E)</enum><text>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;</text></subparagraph><subparagraph id="id643d2f0299f5498481f851e69418fd37"><enum>(F)</enum><text>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;</text></subparagraph><subparagraph id="id73158c4842e64fec89cadfc9a19bdd48"><enum>(G)</enum><text>employs not more than 25 employees; and</text></subparagraph><subparagraph id="ide238b32e1742428b89c9e7ce76309212"><enum>(H)</enum><text>has annual gross revenues of not more than $10,000,000 in any fiscal year.</text></subparagraph></paragraph><paragraph id="id5588dc2f13e9491e8c9685deea8550d0"><enum>(2)</enum><header>Application of requirements</header><text>The requirements under paragraph (1) shall be satisfied during the entire period in which an eligible firm participates in the Sandbox.</text></paragraph></subsection><subsection id="id9f3fa479316d40ffb61bae6a9ac0c6e8"><enum>(d)</enum><header>Eligible activities and activity ceilings</header><paragraph id="idbf71bfeecacd41a7b0f50de89aec1d94"><enum>(1)</enum><header>List of eligible activities</header><subparagraph id="id53b16845d6264c1da397045bb5d5e5c2"><enum>(A)</enum><header>In general</header><text>After providing notice and an opportunity for public comment, the Commissions shall maintain and publish a list of eligible innovative activities, which shall be—</text><clause id="id45fad58fa3f1472bb4b51ac108b75999"><enum>(i)</enum><text>updated once every 2 years after providing notice and an opportunity for public comment;</text></clause><clause id="id4a953f2050e2415f9b602b25cd631d43"><enum>(ii)</enum><text>reasonably tailored to include activities that—</text><subclause id="id06a1605b34274e829e37cc4b4fd899b5"><enum>(I)</enum><text>further the purposes of this section; and</text></subclause><subclause id="id82f3dd2a4002421ea17e35a5566a78a9"><enum>(II)</enum><text>are consistent with the interests of the public and the protection of investors;</text></subclause></clause><clause id="idc181ac83b93342dbb864fa666e2c9754"><enum>(iii)</enum><text>sufficiently flexible to accommodate evolving technological developments, including distributed ledger-based products and services; and</text></clause><clause id="id9fa338a2d44f4ef9989b53ae93db7ccb"><enum>(iv)</enum><text>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.</text></clause></subparagraph><subparagraph id="id5a01111987154e948df704c9d8300720"><enum>(B)</enum><header>Identification of requirements</header><clause id="id0dc7a773a8da47e1b93c7300910ac632"><enum>(i)</enum><header>In general</header><text>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.</text></clause><clause id="idbd5f57d69cda4521bcfb86b90b42e744"><enum>(ii)</enum><header>Joint jurisdiction</header><text>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.</text></clause></subparagraph></paragraph><paragraph id="idb4868afe719d4910b4219d760454dc83"><enum>(2)</enum><header>Activity ceilings</header><text>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.</text></paragraph><paragraph id="id20c397f33a87444e8d455facf244899e"><enum>(3)</enum><header>Annual participation cap</header><text>Each of the Commissions may approve not more than 20 projects per year.</text></paragraph></subsection><subsection id="id4397812228c349629a75030eb48bf345"><enum>(e)</enum><header>Application</header><paragraph id="idbb930d4b9b5c4c4388d802dda49a8c57"><enum>(1)</enum><header>In general</header><text>An eligible firm seeking to participate in the Sandbox shall submit to the Commission or Commissions, as applicable, an application that—</text><subparagraph id="id560a65e3e0d54ad48d0ef1a4260b26b5"><enum>(A)</enum><text>describes the proposed innovative activity and the desired outcomes;</text></subparagraph><subparagraph id="idce2cb5770ea44b69910625cc15956572"><enum>(B)</enum><text>subject to approval of the applicable Commission, identifies the provisions of the securities laws, or of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>), from which the eligible firm proposes to be exempt during the period in which the eligible firm participates in the Sandbox, which—</text><clause id="id0038f17d3642418184a335a1a5ea05cf"><enum>(i)</enum><text>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</text></clause><clause id="id48c949f8a3e5417aa208b4f983754254"><enum>(ii)</enum><text>shall be subject to the limitations of this section;</text></clause></subparagraph><subparagraph id="id617a6ec12b9e4e2d90184a2f4424b842"><enum>(C)</enum><text>sets forth how relief from the provisions of law identified under subparagraph (B) is reasonably necessary to engage in the innovative activity;</text></subparagraph><subparagraph id="id643e233660984fb18a390ece0f0d25de"><enum>(D)</enum><text>identifies material risks to investors, customers, or market integrity and how the eligible firm will mitigate those risks;</text></subparagraph><subparagraph id="id15372a6152764360ac506006633209a4"><enum>(E)</enum><text>certifies that the eligible firm will comply with applicable Federal and State anti-fraud laws;</text></subparagraph><subparagraph id="id1d22aed0769642bc8e3b4a94954bff35"><enum>(F)</enum><text>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;</text></subparagraph><subparagraph id="id550709b76e2d4b889ff56bcbc48f6ab0"><enum>(G)</enum><text>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;</text></subparagraph><subparagraph id="id670c1f451db949b095dd4f66df295c0b"><enum>(H)</enum><text>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</text></subparagraph><subparagraph id="id685981ccbda44b1b8197736edb6a8461"><enum>(I)</enum><text>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.</text></subparagraph></paragraph><paragraph id="idc12ee220b6f74252ae0d978a71b43b06"><enum>(2)</enum><header>Deadline for decision</header><text>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.</text></paragraph><paragraph id="id45f23b1480a8408bb506d301cdf60998"><enum>(3)</enum><header>Updates and status reports</header><text>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—</text><subparagraph id="id1a921136274f4742945d4e50f1d687ab"><enum>(A)</enum><text>describes any material changes to the information originally provided under paragraph (1); and</text></subparagraph><subparagraph id="id66b5efbbe6a14cf78d4ee7e633db2248"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id4120c235c0d541d3b784cb61b0f4c55e"><enum>(4)</enum><header>Unredacted and redacted versions</header><subparagraph id="idd3531949280547779154dd924d553a52"><enum>(A)</enum><header>In general</header><text>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—</text><clause id="id0dc2a48cf246462abe487908624605ff"><enum>(i)</enum><text>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</text></clause><clause id="id2de8700f5605481ca9aee1e8483710e9"><enum>(ii)</enum><text>for the Commodity Futures Trading Commission, section 145.9 of title 17, Code of Federal Regulations, or any successor regulations.</text></clause></subparagraph><subparagraph id="idfd4a59cd04294a11af462ae25c668654"><enum>(B)</enum><header>Omitted information</header><text>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).</text></subparagraph><subparagraph id="idf33a4c407f9e4d6f9f0eeca5d9e4c87f"><enum>(C)</enum><header>Indication of confidential information</header><text>Any omission in a public posting under subsection (h) shall be clearly indicated by brackets with a prominent legend stating that—</text><clause id="idfae82d6d32044b9ebd8fea78e194c1e0"><enum>(i)</enum><text>confidential information has been omitted; and</text></clause><clause id="id49cbeb84813849fda670c05d9dda6a19"><enum>(ii)</enum><text>an unredacted version has been filed with the applicable Commission or the Commissions.</text></clause></subparagraph></paragraph></subsection><subsection id="idbf6574ed041b4d59b42fd07c227ae13d"><enum>(f)</enum><header>Duration of participation</header><paragraph id="idf58fbdd8105a422e9121c119685cf3fb"><enum>(1)</enum><header>Duration</header><text>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).</text></paragraph><paragraph id="idb12e97b267ff4395b245a6eb936c79fc"><enum>(2)</enum><header>Extension</header><subparagraph id="id4271b26a199c444091ed815740cf6175"><enum>(A)</enum><header>Sole jurisdiction</header><text>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—</text><clause id="idb2ef5b8a279a4288b739f57ba5397f53"><enum>(i)</enum><text>is actively pursuing the exit objective described in subsection (e)(1)(F) in good faith;</text></clause><clause id="id5720a02feef841a0ace0abaeedf2fdd9"><enum>(ii)</enum><text>is making demonstrable progress toward achieving such an exit; and</text></clause><clause id="ide872a76e4fad4dd8b2ff420de3316187"><enum>(iii)</enum><text>establishes that such an extension is necessary to achieve such an exit.</text></clause></subparagraph><subparagraph id="idbf01adedde8f48ceb474528499039fe5"><enum>(B)</enum><header>Joint jurisdiction</header><text>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).</text></subparagraph></paragraph></subsection><subsection id="id0e7b20e8448946549cda0d53d13c8cf3"><enum>(g)</enum><header>Conditions and enforcement</header><paragraph id="id08436c754b1742f48ec910a2ce1285da"><enum>(1)</enum><header>Conditions</header><text>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.</text></paragraph><paragraph id="id2a0dfe7a22bd4d28bf73147c76af5539"><enum>(2)</enum><header>Monitoring</header><text>The Commissions shall monitor Sandbox activities and enforce compliance with applicable regulatory conditions and Federal anti-fraud laws.</text></paragraph><paragraph id="id9e7e1faac23b47b2bdef7d0e7632e848"><enum>(3)</enum><header>Coordination</header><subparagraph id="id5f63928b247d4c059cb9f06c08d438d2"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="idb7f15d446758491ea93ccb63a936e568"><enum>(B)</enum><header>Cooperation with states</header><text>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.</text></subparagraph></paragraph><paragraph id="id8570176d016248bea04b73aa2496c9e5"><enum>(4)</enum><header>Self-regulatory organizations</header><text>Each self-regulatory organization shall recognize and respect Sandbox conditions that are applicable to a participant in the Sandbox.</text></paragraph><paragraph id="id848f46661c604324998f2d53e985d062"><enum>(5)</enum><header>Cessation of activities</header><text>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—</text><subparagraph id="ide2623e19ecec4a9da635c92d933e6232"><enum>(A)</enum><text>the requirements of this section;</text></subparagraph><subparagraph id="id2ba36bb02d1d40398c59cd2b839f48b3"><enum>(B)</enum><text>the terms or conditions of participation established by the Commissions; or</text></subparagraph><subparagraph id="id80095a4cf29147da8e3b87474d9fc566"><enum>(C)</enum><text>other applicable law.</text></subparagraph></paragraph></subsection><subsection id="id57cbfcf632bb49f09774014b5ab04709"><enum>(h)</enum><header>Public disclosure</header><paragraph id="id9078f86ed91147929d49c4dddb87c90d"><enum>(1)</enum><header>Initial posting</header><text>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).</text></paragraph><paragraph id="idfebb3b22918a429f8c5dbed006014610"><enum>(2)</enum><header>Updates</header><text>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.</text></paragraph><paragraph id="id8dc84ab8bcfc4654bcb3ce8871d2051c"><enum>(3)</enum><header>Disclosure requirements</header><text>Each post under this subsection shall satisfy the disclosure requirements of both Commissions where the jurisdictions of both Commissions are implicated.</text></paragraph></subsection><subsection id="ida1bd49dab953463a96d66f63ace6e7bc"><enum>(i)</enum><header>Use of data by commissions</header><text>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.</text></subsection><subsection id="id6f903cb8c8cb445a907f5dee05105227"><enum>(j)</enum><header>Publication by commissions</header><text>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—</text><paragraph id="id802487d234474cdc84bbbbf52fdde95d"><enum>(1)</enum><text>the number and general nature of eligible firms participating in the Sandbox;</text></paragraph><paragraph id="idf90e3be4e152460786e2666b5f130104"><enum>(2)</enum><text>the categories of innovative activities tested;</text></paragraph><paragraph id="id419feb9e4a564d718ecb1abaa93500d9"><enum>(3)</enum><text>the impact of Sandbox participation on innovation, investor protection, market integrity, and the public interest;</text></paragraph><paragraph id="id549c5741445c450c891d65f9fc0f18dd"><enum>(4)</enum><text>the disclosures posted by eligible firms under subsection (h)(1); and</text></paragraph><paragraph id="id9982f7a84a934ad6a422ed4779046f71"><enum>(5)</enum><text>exit outcomes, including the types of relief requested and actions taken by the Commissions.</text></paragraph></subsection><subsection id="ida3a8c77729174b258043558244d5de94"><enum>(k)</enum><header>Relationship of sandbox participation to state law</header><paragraph id="idebb4f6283cac47129d30b992957ccbd5"><enum>(1)</enum><header>Limited preemption for sandbox participants</header><text>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.</text></paragraph><paragraph id="idb902ca83f7824802b240e4a9ad23b31b"><enum>(2)</enum><header>State enforcement preserved</header><text>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—</text><subparagraph id="id3a481779ef8e4c9b874bd6fc365916bd"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id6f8e72bb726646e1be320135cda7d91b"><enum>(B)</enum><text>the anti-fraud provisions of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>) or State commodities laws; or</text></subparagraph><subparagraph id="idc47b7caecd7543f69058c2aa3a72409c"><enum>(C)</enum><text>any State law of general applicability, including such a law relating to banking, consumer protection, contracts, property, or criminal conduct.</text></subparagraph></paragraph><paragraph id="idd0980c3ad2a441e487bf5464bd465c44"><enum>(3)</enum><header>Notice filings</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77r">15 U.S.C. 77r(c)</external-xref>).</text></paragraph></subsection></section><section id="id00efd9b926ba484d98cb4f33839246e5"><enum>502.</enum><header>International cooperation</header><subsection id="id301cdd180be443799224636cbe666164"><enum>(a)</enum><header>Definition</header><text>In this section, the term <term>Commissions</term> means the Commission and the Commodity Futures Trading Commission.</text></subsection><subsection id="id1428527e91c143f18df632f18e411148"><enum>(b)</enum><header>Cooperation</header><text>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—</text><paragraph id="id187ec55502054c6e8f6293e373630129"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="idfe27a584bd3b42d39f75d017e00b90ba"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="id219a781719964ad4b92fec901a30ec27"><enum>(3)</enum><text>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;</text></paragraph><paragraph id="id25188242010c44df90a669be203beda3"><enum>(4)</enum><text>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</text></paragraph><paragraph id="id9b648254be7840b8af681c3716113a7c"><enum>(5)</enum><text>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.</text></paragraph></subsection><subsection id="id6d87fdc9dfaa4538a051a7e838d01208"><enum>(c)</enum><header>Cross-border sandbox</header><text>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.</text></subsection></section><section id="ida02dce530c754086bc5a9376e8a8f561"><enum>503.</enum><header>Automated regulatory compliance study</header><subsection id="idf41421bbe693405c9ff38340a2beb20b"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idc5ebf9cd08ae455ea0b5382ac85465f6"><enum>(1)</enum><header>Automated regulatory compliance</header><text>The term <term>automated regulatory compliance</term> 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.</text></paragraph><paragraph id="id31dfcfc998664c3ebcf28b2c2d557709"><enum>(2)</enum><header>Innovative</header><text>The term <term>innovative</term> has the meaning given the term in section 501(a).</text></paragraph></subsection><subsection id="id18650eaf7d4c4a0fa35132d388a4df57"><enum>(b)</enum><header>Study required</header><text>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—</text><paragraph id="id863eb607891747be9dd0c824ad4c4c6b"><enum>(1)</enum><text>to the extent feasible, identifies and evaluates—</text><subparagraph id="id0d12cd6c1249482f8302f684c831faa6"><enum>(A)</enum><text>the landscape of existing (as of the day before the date of enactment of this Act) distributed ledger-based compliance tools for—</text><clause id="id01cdfe3852a64184826f000038f00b9c"><enum>(i)</enum><text>statutory and regulatory disclosures;</text></clause><clause id="idf67a58f179d64896a02bb350573b985f"><enum>(ii)</enum><text>real-time reporting and audit-trail logging; and</text></clause><clause id="id30f81c76ea1a4572b4f3bdd88bfb3c1d"><enum>(iii)</enum><text>anti-money-laundering practices, sanctions screening, and customer-identification checks;</text></clause></subparagraph><subparagraph id="id14345191fe984017b011cd9bc7a4c1e5"><enum>(B)</enum><text>the feasibility, benefits, and risks of allowing regulated entities to satisfy applicable regulatory obligations through on-chain, code-based, or other automated mechanisms;</text></subparagraph><subparagraph id="id8ab19a234a9c4b7aaacf04bb7bfb0147"><enum>(C)</enum><text>the potential for interoperability with automated regulatory compliance mechanisms across and among each of those agencies;</text></subparagraph><subparagraph id="idb10310aeb3d34547ab93ba22fa4e13e7"><enum>(D)</enum><text>the data collection systems of each of those agencies; and</text></subparagraph><subparagraph id="id754e071420094bce95e13dcf01150c9d"><enum>(E)</enum><text>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;</text></subparagraph></paragraph><paragraph id="id984090c1dba642f3a29337a56c2325a2"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="idac60e22eb9c24d08ab908bbc7b31f920"><enum>(3)</enum><text>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;</text></paragraph><paragraph id="id20bc20a894824528b9d124b0d099fb2e"><enum>(4)</enum><text>benchmarks international efforts with respect to automated regulatory compliance mechanisms and consults with any appropriate State, Federal, or foreign regulators; and</text></paragraph><paragraph id="idc1090fc8d5f74e70b32a121cd6fc8abd"><enum>(5)</enum><text>evaluates whether existing (as of the day before the date of enactment of this Act) oversight, enforcement, and liability frameworks are sufficient to—</text><subparagraph id="idadf76ccad60f479f81618002ec8f9976"><enum>(A)</enum><text>ensure accountability, transparency, fairness, and consumer protection; and</text></subparagraph><subparagraph id="id41c34310422c46fdbff8839f21dc6969"><enum>(B)</enum><text>prevent misuse of distributed ledger-based compliance tools.</text></subparagraph></paragraph></subsection><subsection id="idc4397edebdde46dca538e3c3a784470e"><enum>(c)</enum><header>Report</header><text>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).</text></subsection></section><section id="idabd8782300f64648a83ce44b660d5f73"><enum>504.</enum><header>Report on legislative recommendations</header><subsection id="id5ac16e210dc742ca95b581487192202d"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id262c5f4b0f714b1b82117672804745ad"><enum>(1)</enum><header>Appropriate committees of congress</header><text>The term <term>appropriate committees of Congress</term> means—</text><subparagraph id="idec5ec9edfb6e451e95e5e4a0a2293523"><enum>(A)</enum><text>the Committee on Banking, Housing, and Urban Affairs of the Senate;</text></subparagraph><subparagraph id="idc5e8306b0e744b3190e667ccbbe603f3"><enum>(B)</enum><text>the Committee on Agriculture, Nutrition, and Forestry of the Senate;</text></subparagraph><subparagraph id="id5c3f4d64657f49a7bbb035c28c60bdbf"><enum>(C)</enum><text>the Committee on Financial Services of the House of Representatives; and</text></subparagraph><subparagraph id="idffa06c54473646d09ffb1be52e244558"><enum>(D)</enum><text>the Committee on Agriculture of the House of Representatives.</text></subparagraph></paragraph><paragraph id="id5debb87081814bd4ba2dd4ca85e8e773"><enum>(2)</enum><header>Federal financial regulator</header><text>The term <term>Federal financial regulator</term> means—</text><subparagraph id="id54ed4defe3244558a85804c3c564f8c4"><enum>(A)</enum><text>the Board of Governors of the Federal Reserve System;</text></subparagraph><subparagraph id="idd048b51463174dcaa0bb921d734972ee"><enum>(B)</enum><text>the Commodity Futures Trading Commission;</text></subparagraph><subparagraph id="ide11c792e021e4f7890338ae9b14c0fcf"><enum>(C)</enum><text>the Department of the Treasury;</text></subparagraph><subparagraph id="id68afcacdd7aa42039c876db7e858cd76"><enum>(D)</enum><text>the Federal Deposit Insurance Corporation;</text></subparagraph><subparagraph id="id0593c823097e4cf688d7702b3c11c04d"><enum>(E)</enum><text>the Federal Housing Finance Agency;</text></subparagraph><subparagraph id="id942a8469332b476985e3131015731238"><enum>(F)</enum><text>the National Credit Union Administration;</text></subparagraph><subparagraph id="id36ed7107a92c49ffad6b02be4b3ce48e"><enum>(G)</enum><text>the Office of the Comptroller of the Currency;</text></subparagraph><subparagraph id="id14b59e31b7f0489fab657cb6b1d8537c"><enum>(H)</enum><text>the Bureau of Consumer Financial Protection; and</text></subparagraph><subparagraph id="idcd4798c6d33c438ca0258c2857ccbdee"><enum>(I)</enum><text>the Commission.</text></subparagraph></paragraph></subsection><subsection id="ide66566ed0a20406eb5db90794d377994"><enum>(b)</enum><header>Requirement</header><text>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—</text><paragraph id="id7299d510f59e4c69987c8760262ef808"><enum>(1)</enum><text>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</text></paragraph><paragraph id="ida62c1bba3b1046c79f171d3ecbf97862"><enum>(2)</enum><text>any legislative recommendations for the further effective implementation of this Act and the amendments made by this Act.</text></paragraph></subsection></section><section id="idb90a0a9aae6341528ecdc629e535526b"><enum>505.</enum><header>Tokenization of securities</header><subsection id="id7e628a0a901942309c5b1f4f79580b01"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="ide31dec7271d6469b886ae029a080305d"><enum>(1)</enum><header>Tokenization</header><text>The term <term>tokenization</term> 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.</text></paragraph><paragraph id="ideeeea66b32a0455b9cd261a24b358073"><enum>(2)</enum><header>Tokenized</header><text>The term <term>tokenized</term>, with respect to an asset, means that the asset has undergone tokenization.</text></paragraph></subsection><subsection id="id7b79051bb4e840b3bde3c1945568d778"><enum>(b)</enum><header>Sense of Congress</header><text>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.</text></subsection><subsection id="id2684c85b6fda4f81aefd7abe8bc283de"><enum>(c)</enum><header>Study</header><text>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.</text></subsection><subsection id="id7665dcc06d5d4f4a92f98b00f6fc3abd"><enum>(d)</enum><header>Parity in regulatory treatment</header><paragraph commented="no" display-inline="no-display-inline" id="id7049679aeadc4336bb43e5a625c96274"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text>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—</text><subparagraph commented="no" display-inline="no-display-inline" id="id37d88fc4d63e403fb2ae333e3a08e6c1"><enum>(A)</enum><text display-inline="yes-display-inline">section 106(a); or</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id1ee8e9d9e2594eb585d554464d6128ab"><enum>(B)</enum><text>a rule, regulation, or order issued by the Commission.</text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id2c52f6338a1841e48ad608e75bc0bbb8"><enum>(2)</enum><header>Requirement</header><text>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—</text><subparagraph commented="no" display-inline="no-display-inline" id="id5ddfe0e5c088448eb04273ac92a4e32c"><enum>(A)</enum><text display-inline="yes-display-inline">in light of the unique technological or other characteristics of digital assets or substantially similar technology; and</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id27f0ad586e6748d5a6a0d78510c7d490"><enum>(B)</enum><text>consistent with—</text><clause commented="no" display-inline="no-display-inline" id="idd511b9cfac614595a725c08a10b8dc59"><enum>(i)</enum><text display-inline="yes-display-inline">what is necessary or appropriate in the public interest; and</text></clause><clause commented="no" display-inline="no-display-inline" id="id570dcaad33994b16a659d8097544c1a3"><enum>(ii)</enum><text>protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.</text></clause></subparagraph></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="idd8ca9df60e664cfcbe37c4ce28299099"><enum>(e)</enum><header display-inline="yes-display-inline">Prohibition on misrepresentation</header><text>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.</text></subsection><subsection commented="no" display-inline="no-display-inline" id="id9d04d5b0c8594719bb8f77b15f4da5ff"><enum>(f)</enum><header>Agency action for tokenized securities</header><paragraph commented="no" display-inline="no-display-inline" id="idbbfe1bc3a0b94d348609d75b6b9d2fb3"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text>The Commission may issue rules governing tokenized securities pursuant to the requirements of this section.</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0fc9b286c60149d08ef7be74639bbe04"><enum>(2)</enum><header>Requirements</header><text>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.</text></paragraph></subsection><subsection id="idc182b60a62e94bdda470d48111c87e77"><enum>(g)</enum><header>Rule of construction regarding enforcement</header><text>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.</text></subsection><subsection id="id4e4ff311091b48d7b54279261a6b0eab"><enum>(h)</enum><header>Savings clauses</header><paragraph id="ide15aef60d91b4d15bc4958284d602829"><enum>(1)</enum><header>Tokenized security</header><text>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.</text></paragraph><paragraph id="idb3c74fc6fb574eda9d8f7ea6bd8c4add"><enum>(2)</enum><header>Effect on State law</header><text>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.</text></paragraph><paragraph id="id950f7776999d4c84b29f90da4b8d75f5"><enum>(3)</enum><header>Rulemakings, orders, and other actions</header><text>Notwithstanding any other provision of this section, section 106 shall apply to any rulemaking, order, or other action of the Commission under this section.</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id8a529aad1a4f40beae92debbf54f9ae4"><enum>(4)</enum><header>No limit of ability to offer or sell</header><text>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. </text></paragraph></subsection></section><section id="id52c5894c312e460eb8843a8423f619f0"><enum>506.</enum><header>Voluntary adoption of National Institute of Standards and Technology post-quantum cryptography standards</header><subsection id="id5eb469af1825419faad1689063ce26d9"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id921cf5a2054f479483a98e75bf36eba5"><enum>(1)</enum><header>Appropriate congressional committees</header><text>The term <term>appropriate congressional committees</term> means—</text><subparagraph id="id74e6c8d3e7e74a6390276e956548f946"><enum>(A)</enum><text>the Committee on Banking, Housing, and Urban Affairs of the Senate;</text></subparagraph><subparagraph id="id656b164d3835429fa6f3dfe670097650"><enum>(B)</enum><text>the Committee on Agriculture, Nutrition, and Forestry of the Senate;</text></subparagraph><subparagraph id="id3b82623b6eb04485988042fb355bb377"><enum>(C)</enum><text>the Committee on Commerce, Science, and Transportation of the Senate;</text></subparagraph><subparagraph id="id2b39d70c79004349b6f56ddea8fc29d9"><enum>(D)</enum><text>the Committee on Financial Services of the House of Representatives;</text></subparagraph><subparagraph id="id7d71096c89b74334a726edc3fb2c30b2"><enum>(E)</enum><text>the Committee on Agriculture of the House of Representatives; and</text></subparagraph><subparagraph id="id1e79745524724619a1885c7c5dbc53cd"><enum>(F)</enum><text>the Committee on Energy and Commerce of the House of Representatives.</text></subparagraph></paragraph><paragraph id="id6ef55ca5b7d8429891cf6a8e40e230ec"><enum>(2)</enum><header>Director</header><text>The term <term>Director</term> means the Under Secretary of Commerce for Standards and Technology.</text></paragraph></subsection><subsection id="id0e2daeb346a44c2fa049ec6759982c69"><enum>(b)</enum><header>Findings</header><text>Congress finds the following:</text><paragraph id="id7d73811e88fe4fcaa2ee2a664cb405d7"><enum>(1)</enum><text>Technical standards with respect to digital assets ensure quality, interoperability, and reliability in products, processes, and services and facilitate innovation.</text></paragraph><paragraph id="id12bb79e39ada44ba9baa2b375b6dd7dc"><enum>(2)</enum><text>The digital asset ecosystem should harness standards to solve coordination problems and foster innovation, not through regulation, but through voluntary, market-driven measures.</text></paragraph><paragraph id="idb7f3d3fbdbff4d9d9080c7a9f899f396"><enum>(3)</enum><text>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.</text></paragraph></subsection><subsection id="id388320dd3a5f471facfa49ce70dc37d2"><enum>(c)</enum><header>Voluntary adoption</header><text>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—</text><paragraph id="id645453039cf3413abb12f42c1eb5757e"><enum>(1)</enum><text>disseminating and making publicly available guidance and resources to help organizations adopt and deploy those standards;</text></paragraph><paragraph id="id00032f3461574b36ab01319a0a55e74e"><enum>(2)</enum><text>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</text></paragraph><paragraph id="id01a3d55a1b6842519dbfec5f5bfed28f"><enum>(3)</enum><text>conducting such other activities determined necessary by the Director to promote the adoption and deployment of those standards across the United States.</text></paragraph></subsection><subsection id="id2558a875f5cb40ebb1ba136022187daa"><enum>(d)</enum><header>Industry consultation</header><text>In implementing subsection (c), the Director shall, at a minimum—</text><paragraph id="ida718121521e149c38dbcdab95e95e456"><enum>(1)</enum><text>solicit regular input from a broad range of industry stakeholders regarding the feasibility and practical challenges of adopting the standards described in that subsection;</text></paragraph><paragraph id="id1694db41ee11421a87eac5d5352f9f63"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="idcac24ae4d8a242679a93c56e210fe9b7"><enum>(3)</enum><text>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</text></paragraph><paragraph id="id7645def5e35947d99f363a0133afdb39"><enum>(4)</enum><text>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.</text></paragraph></subsection></section><section id="id8bc35b6bee0645979e4d5fe3d874540b"><enum>507.</enum><header>International coordination to combat digital asset illicit finance</header><subsection commented="no" display-inline="no-display-inline" id="id864d845c1c634af7acb6272c63eba0c4"><enum>(a)</enum><header display-inline="yes-display-inline">Definition</header><text>In this section, the term <term>Strategy</term> means the National Strategy to Combat International Digital Asset Illicit Finance submitted under subsection (d).</text></subsection><subsection id="id7b839c0e5cd94fe9858545c0cc5a593d"><enum>(b)</enum><header>Interagency initiative</header><text>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.</text></subsection><subsection id="idf2cb4f6e26f0463e8ed91c7d5261a2c8"><enum>(c)</enum><header>Objectives</header><text>The initiative established under subsection (b) shall—</text><paragraph id="id7162c63db6274e0a8dfdbefcd2308be0"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id2836aded730344d09e822ceb50d539be"><enum>(2)</enum><text>encourage the adoption and enforcement of effective regulatory and supervisory frameworks for digital asset service providers to ensure transparency and prevent illicit use;</text></paragraph><paragraph id="id8c6f2c0504a54e22b378ea778be3e173"><enum>(3)</enum><text>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;</text></paragraph><paragraph id="id85164f97c13240318fe4d0b245cefe54"><enum>(4)</enum><text>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</text></paragraph><paragraph id="id8d3f5a5097264ae9ad05b61287054625"><enum>(5)</enum><text>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.</text></paragraph></subsection><subsection id="id17f56b1405764fa9abe997980c4073b8"><enum>(d)</enum><header>National Strategy to Combat International Digital Asset Illicit Finance</header><text>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—</text><paragraph id="ided9d8e1ae7c74487b77d99e47563d49a"><enum>(1)</enum><text>assess global vulnerabilities with respect to the digital assets framework set out in the Strategy;</text></paragraph><paragraph id="idc8b4f6f68cfa4dae97e3b983446eb67d"><enum>(2)</enum><text>set measurable goals and timelines for multilateral engagement with respect to digital assets;</text></paragraph><paragraph id="idddd4919b414643f68ca0b8d306eebee7"><enum>(3)</enum><text>recommend resource and staffing requirements for Treasury attaches, financial intelligence liaisons, and other personnel necessary to implement the Strategy; and</text></paragraph><paragraph id="id7e3119df94ac4e0d8bfc99789af63631"><enum>(4)</enum><text>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—</text><subparagraph id="idb29d6d41ac3b4a9d86ba08334928df6e"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id9d17d90e8d00423b8f2bd5b2a467fa92"><enum>(B)</enum><text>money laundering offenses, asset seizure, and confiscation to recover proceeds of crime;</text></subparagraph><subparagraph id="idea5f192a71c445d5bb3d5b0afb769c76"><enum>(C)</enum><text>terrorist financing and proliferation-financing offenses and related targeted financial sanctions; and</text></subparagraph><subparagraph id="id942f3e9f1bd74ac9a7ab65312ad4911a"><enum>(D)</enum><text>regulation, supervision, and enforcement by competent authorities, including financial intelligence, law enforcement, and sanctions measures.</text></subparagraph></paragraph></subsection></section><section id="id0f0b3fe1e912499990b9f4f98720bb24"><enum>508.</enum><header>Annual report on foreign digital asset trading volume, compliance with United States standards and remediation actions</header><subsection id="id9447fca689f04ab9a947a19dc80489d2"><enum>(a)</enum><header>In general</header><text>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—</text><paragraph id="idd643f1d3f38e42948eb7e88c2c16527c"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="idab73bc5b27c34b63bd3ecac7d701017b"><enum>(2)</enum><text>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</text></paragraph><paragraph id="id45ea6fa0b5584e469678e391a9b859c0"><enum>(3)</enum><text>identifies foreign jurisdictions with—</text><subparagraph id="id465b77d6941643bba24e35c6db839fda"><enum>(A)</enum><text>material deficiencies in the implementation or enforcement of the standards described in paragraph (2); and</text></subparagraph><subparagraph id="idf4931ef5e28e4c85b230389c546a5180"><enum>(B)</enum><text>trading volumes that present systemic illicit finance risk to the United States.</text></subparagraph></paragraph></subsection><subsection id="idfaaca643d8a64918b6ce387f27e4519b"><enum>(b)</enum><header>Form</header><text>Each report required under subsection (a) shall be submitted in unclassified form, but may include a classified annex, as appropriate.</text></subsection><subsection id="id2255b11e94534b8e9f9d74dfcae02c50"><enum>(c)</enum><header>Remediation and engagement report</header><text>For each foreign jurisdiction identified pursuant to subsection (a)(3), the Secretary of the Treasury shall include in the applicable report—</text><paragraph id="ida11512aa9f6742889808132400e50b3f"><enum>(1)</enum><text>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;</text></paragraph><paragraph id="id006aa7ca6ae84be2970291d5bf19798b"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="id064c495d342b4a34a7019c7fbcc5f833"><enum>(3)</enum><text>any commitments obtained from the foreign jurisdiction to address identified deficiencies, including timeliness and benchmarks; and</text></paragraph><paragraph id="id98a9eb505647492384fffef44e0aedd0"><enum>(4)</enum><text>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.</text></paragraph></subsection></section><section id="id418a2da5f7f4490497328a6f97141a85"><enum>509.</enum><header>AI innovation labs</header><subsection id="id1993e42287114cecb94ca374571677a5"><enum>(a)</enum><header>Definitions</header><paragraph id="idc8e0db10b5e643bb8ef26763bb73a3b4"><enum>(1)</enum><header>AI test project</header><text>The term <term>AI test project</term> means a financial product, service, or activity—</text><subparagraph id="idcda8295762c34d0dba590c037255db67"><enum>(A)</enum><text>that makes substantial use of artificial intelligence;</text></subparagraph><subparagraph id="idb2ee17c6355e4c309587e8057e230ebb"><enum>(B)</enum><text>that is, or may be, subject to a Federal regulation or Federal statute; and</text></subparagraph><subparagraph id="idfc41d0b1e2434d3f936b4de24dd1df28"><enum>(C)</enum><text>for which a regulated entity submits an application for the waiver or modification of an applicable regulation subject to an alternative compliance strategy.</text></subparagraph></paragraph><paragraph id="id6e0556226d92420bb8e99f48a437085b"><enum>(2)</enum><header>Appropriate financial regulatory agency</header><text>The term <term>appropriate financial regulatory agency</term> means—</text><subparagraph id="id678b255570c04d8ebf2335084fc41d3e"><enum>(A)</enum><text>the appropriate Federal banking agency, as defined in section 3 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1813">12 U.S.C. 1813</external-xref>), with respect to an institution described in subsection (q) of that section;</text></subparagraph><subparagraph id="id0829cdc0dbc943898873e875bae39bb6"><enum>(B)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5481">12 U.S.C. 5481</external-xref>), that does not have an appropriate financial regulatory agency under subparagraph (A), (C), or (D) of this paragraph;</text></subparagraph><subparagraph id="id6aca11883d86452f8f38310b3eeb234f"><enum>(C)</enum><text>the National Credit Union Administration, with respect to an insured credit union, as defined in section 101 of the Federal Credit Union Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1752">12 U.S.C. 1752</external-xref>); and</text></subparagraph><subparagraph id="idfb7dcf34a014482286811e594c381bdd"><enum>(D)</enum><text>the Federal Housing Finance Agency, with respect to—</text><clause id="idb18ffd87669d4849b8f42f63c8c722b2"><enum>(i)</enum><text>a Federal Home Loan Bank;</text></clause><clause id="id7489724c051f4839a4df894ab439f45a"><enum>(ii)</enum><text>the Federal Home Loan Bank System;</text></clause><clause id="id1281114045684a49a9ae4a791d42c737"><enum>(iii)</enum><text>the Federal National Mortgage Association; and</text></clause><clause id="id62681872f3be4e0380e017f318d1cf7f"><enum>(iv)</enum><text>the Federal Home Loan Mortgage Corporation.</text></clause></subparagraph></paragraph><paragraph id="id7d54685dbc934845b9a127062b4ee83d"><enum>(3)</enum><header>Artificial intelligence; AI</header><text>The terms <term>artificial intelligence</term> and <term>AI</term> have the meaning given the term <term>artificial intelligence</term> in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (<external-xref legal-doc="usc" parsable-cite="usc/15/9401">15 U.S.C. 9401</external-xref>).</text></paragraph><paragraph id="id9d0ffb19f0c9423a842084f47114356c"><enum>(4)</enum><header>Financial product or service</header><text>The term <term>financial product or service</term>—</text><subparagraph id="idedc721f03d9a4f498c83b7c87550fcd9"><enum>(A)</enum><text>has the meaning given the term in section 1002 of the Consumer Financial Protection Act of 2010 (<external-xref legal-doc="usc" parsable-cite="usc/12/5481">12 U.S.C. 5481</external-xref>);</text></subparagraph><subparagraph id="id41012986793146a2823f0b65e862c5dc"><enum>(B)</enum><text>includes—</text><clause id="id6f7b415e5fea4fb9bbaa1e81284e1fe4"><enum>(i)</enum><text>activities that are financial in nature, as defined in section 4(k)(4) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1843">12 U.S.C. 1843(k)(4)</external-xref>); and</text></clause><clause id="ida8e9fe1f537f4583950b246af3c508c5"><enum>(ii)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5481">12 U.S.C. 5481</external-xref>); and</text></clause></subparagraph><subparagraph id="id6af74a77580a4df49a900d7d2e11b31b"><enum>(C)</enum><text>does not include the business of insurance.</text></subparagraph></paragraph><paragraph id="id6da6d32cc45e4e9dab958077fe19bbbb"><enum>(5)</enum><header>Financial regulatory agency</header><text>The term <term>financial regulatory agency</term> means—</text><subparagraph id="id4998cf3c7fd6426e9c4286fe1c2f9461"><enum>(A)</enum><text>the Board of Governors of the Federal Reserve System;</text></subparagraph><subparagraph id="id1c6272c62edb4dfbb742d82d136e2487"><enum>(B)</enum><text>the Federal Deposit Insurance Corporation;</text></subparagraph><subparagraph id="ideb103ab0fb0e46f4b7d7663533b471e7"><enum>(C)</enum><text>the Office of the Comptroller of the Currency;</text></subparagraph><subparagraph id="id503dcaf3fae14aa2b5958c68bd4310b4"><enum>(D)</enum><text>the Bureau of Consumer Financial Protection;</text></subparagraph><subparagraph id="id867c82b30ba14cd5ac416fecfb1af970"><enum>(E)</enum><text>the National Credit Union Administration; and</text></subparagraph><subparagraph id="id09548953086d4f319f2c2d1d84b543b0"><enum>(F)</enum><text>the Federal Housing Finance Agency.</text></subparagraph></paragraph><paragraph id="idb5d804784c604b28ab51b190b2576a98"><enum>(6)</enum><header>Regulated entity</header><text>The term <term>regulated entity</term> means an entity regulated by any financial regulatory agency.</text></paragraph></subsection><subsection id="idd8cc4c6a87ab4fd4a0dfa3d940866ee7"><enum>(b)</enum><header>Use of artificial intelligence by regulated financial entities</header><paragraph id="idc63bab4e8e1241acbd5ac936f4ff8ab7"><enum>(1)</enum><header>A<enum-in-header>I</enum-in-header> innovation labs</header><subparagraph id="id27fa26773a1b45a0b189dfd385538bac"><enum>(A)</enum><header>Establishment</header><text>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).</text></subparagraph><subparagraph id="ide1851d3cafd241f690b5ce7602e7f326"><enum>(B)</enum><header>Applications</header><clause id="idf9264bb5737d48e994ea98e1e5b28730"><enum>(i)</enum><header>Submission</header><subclause id="idebc394f4d2474d60ba3404bd6088418e"><enum>(I)</enum><header>In general</header><text>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).</text></subclause><subclause id="id93f7786c1977461d88a8ed2dd995a2e2"><enum>(II)</enum><header>Contents</header><text>An application submitted under subclause (I) shall include—</text><item id="id901281c8a188465c87ca6f50773c821f"><enum>(aa)</enum><text>a description of the AI test project proposed to be carried out by the regulated entity;</text></item><item id="id9cbcd860dc8848c9867dba512ba6af6f"><enum>(bb)</enum><text>an alternative compliance strategy that—</text><subitem id="iddefdcf516c084a70bccc8f76378fa997"><enum>(AA)</enum><text>identifies a regulation issued by the appropriate financial regulatory agency that the regulated entity requests be waived or modified; and</text></subitem><subitem id="ida220b773392b4ce09b4cf993b5dbaab7"><enum>(BB)</enum><text>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;</text></subitem></item><item id="iddf5b4720bc724a3b8a4bf94daceecbc8"><enum>(cc)</enum><text>an explanation of how under the strategy described in item (aa), the AI test project—</text><subitem id="id83913e3c1ccc460481cead928c3b5758"><enum>(AA)</enum><text>would serve the public interest, improve consumer or investor access to a financial product or service, or promote consumer or investor protection;</text></subitem><subitem id="id750a54ccc4134bb6a8a8deaafcc4e7e4"><enum>(BB)</enum><text>would enhance efficiency or operations, foster innovation or competitiveness, improve risk management and security, or enhance regulatory compliance;</text></subitem><subitem id="id255b9f897bd245bc903966836eea3605"><enum>(CC)</enum><text>would not present a systemic risk to the financial system of the United States;</text></subitem><subitem id="id5520fb4ca8084f6b8ebf4009cc6dca2d"><enum>(DD)</enum><text>is consistent with the purposes of the anti-money laundering and countering the financing of terrorism obligations under subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> of title 31, United States Code; and</text></subitem><subitem id="id538a48850cb144ebb6becfcd0c149009"><enum>(EE)</enum><text>would not present a national security risk to the United States;</text></subitem></item><item id="id729ca75e381e4ffeba264e5289c1245c"><enum>(dd)</enum><text>a proposed date on which the AI test project would terminate and an explanation as to why such termination date would be appropriate;</text></item><item id="id93e5c0eb13f24647a9a1c42db94f5d6a"><enum>(ee)</enum><text>proposed limitations on the size, scope, and growth of the AI test project;</text></item><item id="idc8e23f403c114c3bb363b5261c3bd2c9"><enum>(ff)</enum><text>a detailed business plan; and</text></item><item id="idaf6c3cf18b614e4395ab8696eb92f5a3"><enum>(gg)</enum><text>an estimate of the economic impact of the AI test project if approved.</text></item></subclause><subclause id="id7f4f951ea74849978e065716e3da13a7"><enum>(III)</enum><header>Joint applications</header><text>Two or more regulated entities may submit a joint application to the same financial regulatory agency under subclause (I).</text></subclause><subclause id="ide889844929d4405b85588bdd6ac22eda"><enum>(IV)</enum><header>Regulations of other agencies</header><item id="id31dd1274983b46bd859cf2e8c6de8851"><enum>(aa)</enum><header>In general</header><text>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.</text></item><item id="id26ab7148d5d94f9f8b44541ea97418e5"><enum>(bb)</enum><header>Requirements</header><text>An application described in item (aa) shall be subject to the same requirements as an application described in subclause (II), except that—</text><subitem id="id02471ba716c04be1942d413317fb3d3d"><enum>(AA)</enum><text>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</text></subitem><subitem id="id819554f9670c4f708698576009766345"><enum>(BB)</enum><text>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).</text></subitem></item></subclause><subclause id="id38f0d93b0f784dabb50db1cd79e8b4d8"><enum>(V)</enum><header>Notice</header><text>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.</text></subclause></clause><clause id="id6642d4af79454de280980e5b88f2022e"><enum>(ii)</enum><header>Agency review</header><subclause id="ida7728953a9fe4a5aac4c870125517c8d"><enum>(I)</enum><header>In general</header><text>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—</text><item id="id51a8a7549f204c7e872532e87bff1d99"><enum>(aa)</enum><text>review the application; and</text></item><item id="ide9df7226be5145de999fceda6f895250"><enum>(bb)</enum><text>submit to the applicant in writing a determination of the agency.</text></item></subclause><subclause id="id9669e931fbe24b60a212cb7813be24f5"><enum>(II)</enum><header>Approval</header><item id="id86f5cd369ffa414ea40de11bc55b74cc"><enum>(aa)</enum><header>In general</header><text>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—</text><subitem id="idc0e54fe720b744aaa14a704c48ed71af"><enum>(AA)</enum><text>the regulation that is the subject of the alternative compliance strategy;</text></subitem><subitem id="id0b6ef0fba26d497d839d65acaa1976d3"><enum>(BB)</enum><text>the terms of the alternative compliance strategy for the AI test project;</text></subitem><subitem id="iddbeb0e4c38504e498188cac6023f53d3"><enum>(CC)</enum><text>the date on which the AI test project will terminate;</text></subitem><subitem id="idc2e4effec74e409e9fdfbcea162a31bb"><enum>(DD)</enum><text>any limitations on the size, scope, or growth of the AI test project; and</text></subitem><subitem id="idb397fa0465fc4587b7360ab4c336366c"><enum>(EE)</enum><text>any additional limitations or conditions on the AI test project, as determined by the appropriate financial regulatory agency.</text></subitem></item><item id="id3b7792f84a9a4721b194db727b5737e6"><enum>(bb)</enum><header>Effect of approval</header><text>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)—</text><subitem id="id9098098548c544979624ed27fcb5fd0f"><enum>(AA)</enum><text>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</text></subitem><subitem id="id86ae7730025043579d24ea233f9954bf"><enum>(BB)</enum><text>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).</text></subitem></item><item id="id4a0461b9bfe54587a764001f5a531ddd"><enum>(cc)</enum><header>Enforcement by another financial regulatory agency</header><text>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.</text></item><item id="idf9297f09474f445c96fbe59bb64cad72"><enum>(dd)</enum><header>Rule of construction</header><text>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.</text></item></subclause><subclause id="idac8ef4d6ad6040b59e1c0f13fa1e2b60"><enum>(III)</enum><header>Denial</header><item id="id76b126d30ff345b092d3ac6b57a730ba"><enum>(aa)</enum><header>In general</header><text>If an agency denies an application submitted under clause (i), the agency—</text><subitem id="id19b2a03ab43045c4a303bebc28cb182e"><enum>(AA)</enum><text>shall submit to the applicant a written notice explaining the reason for denial; and</text></subitem><subitem id="id0aa1ec5802174b8b8dd9b9f917c55572"><enum>(BB)</enum><text>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).</text></subitem></item><item id="ide2d23a486cf7471c9779b490d238925b"><enum>(bb)</enum><header>Resubmittals</header><text>Each time an application submitted under clause (i) is denied, the regulated entity—</text><subitem id="id023637a6e98a47a7a9cff3ffb0189ca8"><enum>(AA)</enum><text>may submit an amended application after receiving feedback from the agency making such denial; and</text></subitem><subitem id="idbf6b4efc02ef4a339e18b7a815a67e67"><enum>(BB)</enum><text>may not resubmit more than 2 applications that are substantially similar to the denied application.</text></subitem></item><item id="idbac32ac0935b4b2b83f3cc250ed7a7c8"><enum>(cc)</enum><header>Injunctive relief</header><text>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—</text><subitem id="id69026832ad5f43bfbc8784a268dd98bb"><enum>(AA)</enum><text>to financial markets;</text></subitem><subitem id="idd0dc563453ae42a6ace3676cb79191b8"><enum>(BB)</enum><text>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;</text></subitem><subitem id="id98a44d71a3ca4a86917e5591ca5f86b3"><enum>(CC)</enum><text>of a violation of anti-money laundering and countering the financing of terrorism obligations under subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> of title 31, United States Code; or</text></subitem><subitem id="id5a7f6997dfd148b6b79b8fc9e89f595a"><enum>(DD)</enum><text>to the national security of the United States.</text></subitem></item></subclause><subclause id="id77b4cf35d40d42d393344376f3882646"><enum>(IV)</enum><header>Extension</header><text>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.</text></subclause><subclause id="id18604cfb4cf941279c9155212cfd6de9"><enum>(V)</enum><header>Additional information</header><text>Not later than the initial or extended approval deadline, as applicable, a financial regulatory agency may request additional information from the applicant.</text></subclause></clause><clause id="id3629009c8d634c80ba0d9ff4f179c8f1"><enum>(iii)</enum><header>Data security</header><text>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.</text></clause><clause id="ida7f62b4fc5024387823b307d176a27c3"><enum>(iv)</enum><header>Regulations</header><text>Not later than 180 days after the date of enactment of this Act, each financial regulatory agency shall promulgate regulations that—</text><subclause id="id2e2eb9bd0f4f4834b3f073fd536401f8"><enum>(I)</enum><text>shall be published in the Federal Register and provide a 60-day period for public notice and comment;</text></subclause><subclause id="id58b25178cfd54edf941b1ddfa6d5bf31"><enum>(II)</enum><text>include—</text><item id="id5c5ac78997ba47e08b38dd98efdfa5f6"><enum>(aa)</enum><text>procedures for modifying the AI test projects that are approved by the agency;</text></item><item id="ida322351b50a646a89041c7b3308c569b"><enum>(bb)</enum><text>consequences for failure to comply with the terms of an alternative compliance strategy;</text></item><item id="idabbc7e2da3c34db9b501c7a4d93b2628"><enum>(cc)</enum><text>a requirement that an AI test project will terminate not earlier than 1 year after the AI test project is approved;</text></item><item id="id8a32a47486274918b1c020b5c4469e08"><enum>(dd)</enum><text>procedures to extend the termination date described in item (cc);</text></item><item id="id70af3ca8a2124c35a9a8f38f9e5d33d3"><enum>(ee)</enum><text>procedures for confidentiality; and</text></item><item id="id01ae3a99416c4ec68ffdc05a7956790e"><enum>(ff)</enum><text>procedures for coordinating decisions relating to applications submitted jointly by multiple regulated entities or applications submitted to more than one financial regulatory agency.</text></item></subclause></clause></subparagraph></paragraph><paragraph id="idb9f7012f20544328bda3f2d1c0fb3fcd"><enum>(2)</enum><header>Report</header><text>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.</text></paragraph><paragraph id="id59494108ff304be1b0e19058394d900e" commented="no" display-inline="no-display-inline"><enum>(3)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection></section><enum>VI</enum><header>Protecting software developers and software innovation</header><section id="id312f799eae554e698ea6eba61b70fcf0"><enum>601.</enum><header>Protecting software developers</header><subsection id="id31d4f5d22daf4d4796286029b856444a"><enum>(a)</enum><header>Amendment to the securities act of 1933</header><text>The Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) is amended by inserting after section 27B (<external-xref legal-doc="usc" parsable-cite="usc/15/77z-2a">15 U.S.C. 77z–2a</external-xref>) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id13c62e34458f42f5852604e040a6385c" changed="added" reported-display-style="italic" committee-id="SSBK00"><section id="id352814fb82804833bbf2d9e120f97281"><enum>27C.</enum><header>Application to software developers</header><subsection id="id359234d4aef24261b55098afdd1759dc"><enum>(a)</enum><header>Distributed ledger system defined</header><text>In this section, the term <term>distributed ledger system</term> has the meaning given the term in section 2 of the <short-title>Digital Asset Market Clarity Act</short-title>.</text></subsection><subsection id="idd8f7d60d73334e4084c30d50a01b6b8f"><enum>(b)</enum><header>Application to software developers</header><text>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:</text><paragraph id="idf5fe8b71a47e42a0819c4e6af15f5931"><enum>(1)</enum><text>Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.</text></paragraph><paragraph id="id7e4010d0ca244fbfaf053c4da0dbb6dc"><enum>(2)</enum><text>Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="id35001f241b684d7384c2d59cb7c4572a"><enum>(b)</enum><header>Amendment to the securities exchange act of 1934</header><text>The Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) is amended by inserting after section 15G (<external-xref legal-doc="usc" parsable-cite="usc/15/78o-11">15 U.S.C. 78o–11</external-xref>) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id3d2304d9e0394b5d8ed6aebbe459d71c" changed="added" reported-display-style="italic" committee-id="SSBK00"><section id="idff7cd600e4aa436baebfe66bd8d29581"><enum>15H.</enum><header>Application to software developers</header><subsection id="idf69fe0e8652c4c709620535cd35b97ea"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id7cf6b9201e114477aca9d02f687df2ee"><enum>(1)</enum><header>Constitute</header><text>The term <term>constitute</term> means to compile, assemble, integrate, or otherwise combine software components into a complete software system.</text></paragraph><paragraph id="id3d44e32dae764255b59b45332d72ad11"><enum>(2)</enum><header>Decentralized finance trading protocol</header><subparagraph id="id5a79bf1e46f3496380dccbac29f84bab"><enum>(A)</enum><header>In general</header><text>The term <term>decentralized finance trading protocol</term> means a distributed ledger system through which multiple participants can execute a financial transaction—</text><clause id="id815e7a4239b048a18e65ba83087c5532"><enum>(i)</enum><text>in accordance with an automated rule or algorithm that is predetermined and non-discretionary; and</text></clause><clause id="id2236a5a4263d414baeca7219eb1e7f3a"><enum>(ii)</enum><text>without reliance on a person other than the user to maintain custody or control of the digital assets subject to the financial transaction.</text></clause></subparagraph><subparagraph id="id7a2b117ebcd242a49b62900d7b3c5b9d"><enum>(B)</enum><header>Exclusions</header><clause id="id0728fc1dd86642de93c524e0657ce6b3"><enum>(i)</enum><header>In general</header><text>The term <term>decentralized finance trading protocol</term> does not include a distributed ledger system if—</text><subclause id="idac35ab77e0b844c681003bf40ba95ca0"><enum>(I)</enum><text>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; </text></subclause><subclause id="id94831ff389f248d69ed10732a9598a01"><enum>(II)</enum><text>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</text></subclause><subclause id="idc7f96dc0ec3c449a99f4a84c99d52907"><enum>(III)</enum><text>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.</text></subclause></clause><clause id="ide5cf51a1c2854767ab8261bb26a6c568"><enum>(ii)</enum><header>Special rule</header><text>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.</text></clause></subparagraph></paragraph><paragraph id="id62fd6debffed4cb6bb744495dc8cfee0"><enum>(3)</enum><header>Deploy</header><text>The term <term>deploy</term> means to bring software or hardware onto a distributed ledger system for active use.</text></paragraph><paragraph id="id76dbf7c210a44351962569218bb89778"><enum>(4)</enum><header>Digital asset; distributed ledger application; distributed ledger system; distributed ledger protocol; decentralized governance system; smart contract</header><text>The terms <quote>digital asset</quote>, <quote>distributed ledger application</quote>, <quote>distributed ledger system</quote>, <quote>distributed ledger protocol</quote>, <quote>decentralized governance system</quote>, and <quote>smart contract</quote> have the meanings given those terms in section 2 of the <short-title>Digital Asset Market Clarity Act</short-title>.</text></paragraph><paragraph id="id32321f589d564a9fb664db40961b3fec"><enum>(5)</enum><header>Decentralized finance messaging system</header><subparagraph id="idda3d5aa7b7db46e0bfd9c839985508e4"><enum>(A)</enum><header>In general</header><text>The term <term>decentralized finance messaging system</term> 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.</text></subparagraph><subparagraph id="id410eb8e63302481a90329c7886e1e292"><enum>(B)</enum><header>Additional requirements</header><text>The term <term>decentralized finance messaging system</term> does not include any system that provides any person other than the user with—</text><clause id="id2ee3756a9c1c4e0fa3b2465e93d9d587"><enum>(i)</enum><text>control over the funds of the user; or</text></clause><clause id="id2f6d5d56380444ea8a68f4ca1ed83edb"><enum>(ii)</enum><text>the authority to execute any of the transaction of the user.</text></clause></subparagraph></paragraph></subsection><subsection id="id69a87b07d0a04c4e95561860e9b0fdba"><enum>(b)</enum><header>Application to software developers</header><text>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:</text><paragraph id="id7d5f17758d4243fab47d8e406d747125"><enum>(1)</enum><text>Compiling network transactions or relaying, searching, sequencing, validating, or acting in a similar capacity.</text></paragraph><paragraph id="idfd1c46b88ac2488aacc7f99f290b7ca1"><enum>(2)</enum><text>Providing computational work, operating a node or oracle service, or procuring, offering, or utilizing network bandwidth, or providing other similar incidental services.</text></paragraph><paragraph id="id662ed49000ad427b9049da8931388190"><enum>(3)</enum><text>Developing, publishing, or constituting—</text><subparagraph id="idf111b26e8053413bbbaee8b87b3456f1"><enum>(A)</enum><text>a distributed ledger system; or</text></subparagraph><subparagraph id="idc907ba942b4a46c5894b0fb892aaf3e6"><enum>(B)</enum><text>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.</text></subparagraph></paragraph></subsection><subsection id="id98a8305b3caa45b7918eb8c0eeca442d"><enum>(c)</enum><header>Rule of construction</header><text>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.</text></subsection><subsection id="idfc360876c1bd4feda58fa6ec08a48fe2"><enum>(d)</enum><header>Clarification</header><paragraph id="idccb8c20a1cfd43a3ae89817b39943b8a"><enum>(1)</enum><header>In general</header><text>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:</text><subparagraph id="idca9e460b0368476e8d7695deb635c0ab"><enum>(A)</enum><text>Providing a user interface that enables a user to read and access data.</text></subparagraph><subparagraph id="id63b879462fd147b38d554af2a31f06ca"><enum>(B)</enum><text>Administering, maintaining, or otherwise distributing a decentralized governance system relating to a decentralized finance trading protocol, or a decentralized finance trading protocol.</text></subparagraph><subparagraph id="id16a6aa5494c34ae38810444d92f68e1f"><enum>(C)</enum><text>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.</text></subparagraph><subparagraph id="iddc4a5d55ba004c83bab25018b8d45f8e"><enum>(D)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id7a6873385aca4b8f97503c875566153a"><enum>(2)</enum><header>Considerations</header><text>In providing the clarification under paragraph (1) the Commission shall—</text><subparagraph id="id31e74d3109fd46a58fa73fa127439714"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id73293ea74c374e3ea88657f75ef880e0"><enum>(B)</enum><text>provide that section 108(a) of the <short-title>Lummis-Gillibrand Responsible Financial Innovation Act of 2026</short-title> shall apply to such rules;</text></subparagraph><subparagraph id="id2996eeaef6da41bc829b4a71cdf115ae"><enum>(C)</enum><text>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</text></subparagraph><subparagraph id="id8a67261f6e624478bb65de5182b8bf35"><enum>(D)</enum><text>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.</text></subparagraph></paragraph><paragraph id="idae8e86e6e50748a7a94d8b242ae41c63"><enum>(3)</enum><header>Rule of construction</header><text>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.</text></paragraph></subsection><subsection id="idf926be048d824e149bcb10d4ffd2a72d"><enum>(e)</enum><header>Anti-Fraud, anti-Manipulation, and false reporting</header><text>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.</text></subsection><subsection id="idaa72b05045a34b97adba825191c2d628"><enum>(f)</enum><header>Rule of construction</header><text>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 <short-title>Digital Asset Market Clarity Act</short-title>, or expand the authority of the Commission beyond that which the Commission had before the date of enactment of the <short-title>Digital Asset Market Clarity Act</short-title> to regulate the activities described in subsection (d)(1).</text></subsection><subsection id="id4c3ca16c4ab24402bdce336adcd5e3b1"><enum>(g)</enum><header>Federal preemption</header><paragraph id="id7bc468976bc14e9eb2cdc2acfade028e"><enum>(1)</enum><header>In general</header><text>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).</text></paragraph><paragraph id="id2bb3234c11b74e049c8216ddace42619"><enum>(2)</enum><header>Rule of construction</header><text>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).</text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="iddcd7cbc5f1844922886052891cc9f9d0"><enum>(c)</enum><header>Applicability</header><text>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.</text></subsection></section><section id="id810b769b0a0c4479ad3ae9e173ad81bd"><enum>602.</enum><header>Safe harbor for nonfungible tokens</header><subsection id="idbebe5a0c459f4ce7bea808e0f802cd4a"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idf136ca4982a74286b3d86da60cf4a28d"><enum>(1)</enum><header>Nonfungible token</header><text>The term <term>nonfungible token</term> means a digital asset recorded on a distributed ledger that—</text><subparagraph id="id9824d8246efb45d08e9dc73bf16450ae"><enum>(A)</enum><text>is individually identifiable and distinguishable from any other digital asset;</text></subparagraph><subparagraph id="id37fdbf5cd00946bb86d849210af0bc15"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="id45b82226bd76424eb7893598b674c5f1"><enum>(C)</enum><text>is not interchangeable on a 1-to-1 basis with any other token or digital asset; and</text></subparagraph><subparagraph id="id00f49d1046bf48038570b2421501bbc1"><enum>(D)</enum><text>may be bought, sold, or transferred for consideration.</text></subparagraph></paragraph><paragraph id="id4642d5ba825e41718f2cf6bf5f52171a"><enum>(2)</enum><header>Promoter</header><text>The term <term>promoter</term> 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.</text></paragraph></subsection><subsection id="idf4f031a3ef3545919a5a04cc52de23f0"><enum>(b)</enum><header>Safe harbor</header><paragraph id="id03aac098eaef46d1827d7097b5f808ba"><enum>(1)</enum><header>In general</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>), the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>), or any equivalent State law, unless the transaction, in substance, involves all of the elements of an investment contract.</text></paragraph><paragraph id="id38e5e49ab1bb455ea539c05927de0f59"><enum>(2)</enum><header>Rules of construction</header><text>Neither of the following shall be considered to be a security under the Securities Act of 1933 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) or the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>):</text><subparagraph id="ide1cd94d7a2c24a54a6fd813adfa48aca"><enum>(A)</enum><text>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.</text></subparagraph><subparagraph id="id5c3265e49d4d4e0284d322929d0a137c"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id3d147c1f13104355bcae40f025906188"><enum>(3)</enum><header>Exceptions</header><text>The safe harbor under paragraph (1) shall not apply to—</text><subparagraph id="idc8ca8f6102fe42828748e9be26a51176"><enum>(A)</enum><text>a mass-minted series of items with substantially similar or nearly identical traits that are marketed or sold interchangeably;</text></subparagraph><subparagraph id="id445a7957952f41cb947c643a9bbb33ad"><enum>(B)</enum><text>a fractionalized interest in a nonfungible token; or</text></subparagraph><subparagraph id="idc79cff2c916146f9a41debcfb82379fe"><enum>(C)</enum><text>an interest representing a beneficial or economic claim on a nonfungible token or an asset that a nonfungible token represents.</text></subparagraph></paragraph><paragraph id="idf55ac9dadd6e4169b86dff2af5c66ea1"><enum>(4)</enum><header>Reliance; prospective effect</header><subparagraph id="id89f7464db6644954aa866ee88a947159"><enum>(A)</enum><header>Reliance</header><text>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.</text></subparagraph><subparagraph id="id0722cc1610fa4a00bdef5c50cb52672b"><enum>(B)</enum><header>Prospective effect</header><text>Any determination by the Commission that the safe harbor under this subsection does not apply to a particular circumstance shall—</text><clause id="id2c97dcdf81044198ab20091737765332"><enum>(i)</enum><text>be prospective only; and</text></clause><clause id="id16f202b030e9414280668bc20a7770fe"><enum>(ii)</enum><text>take effect not earlier than 60 days after the date on which the Commission publicly posts that determination.</text></clause></subparagraph></paragraph></subsection></section><section id="idc59b65cbf6634c5b90804434da1698d9"><enum>603.</enum><header>Study on nonfungible tokens</header><subsection id="id35ae1b7be3c245ddb21495b6eaae6cb6"><enum>(a)</enum><header>Definition</header><text>In this section, the term <term>nonfungible token</term> has the meaning given the term in section 602.</text></subsection><subsection id="ide25f104dde8f44ecb7584a683e6deb30"><enum>(b)</enum><header>Study</header><text>The Comptroller General of the United States shall carry out a study of nonfungible tokens that analyzes—</text><paragraph id="id11e3d640c40d4db2b602c2cbbd86440d"><enum>(1)</enum><text>the nature, size, role, purpose, and use of nonfungible tokens;</text></paragraph><paragraph id="ide35dd6d1c45e49129d4ecc1fc5f2a85f"><enum>(2)</enum><text>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;</text></paragraph><paragraph id="ide2aa01a09be24130bb382301798fad38"><enum>(3)</enum><text>how nonfungible tokens are minted by issuers and subsequently distributed to purchasers;</text></paragraph><paragraph id="id5c64c8d9d2964a46a9ef135866606104"><enum>(4)</enum><text>how nonfungible tokens are stored after being purchased by a consumer;</text></paragraph><paragraph id="idd946995195874592abaa93b6507f57e1"><enum>(5)</enum><text>the interoperability of nonfungible tokens between different distributed ledger systems;</text></paragraph><paragraph id="id1dd86a1572fc4d4eb1cacb37ea39c75d"><enum>(6)</enum><text>the scalability of different nonfungible token marketplaces;</text></paragraph><paragraph id="id3df99916d0ff45cca9d67c04828047e7"><enum>(7)</enum><text>the benefits of nonfungible tokens, including verifiable digital ownership;</text></paragraph><paragraph id="id59b01d6f64e64434b8007f851756f6b1"><enum>(8)</enum><text>the risks of nonfungible tokens, including—</text><subparagraph id="id2b0be4a3d5f94acaa3b7402f7babfc5b"><enum>(A)</enum><text>the infringement of intellectual property rights;</text></subparagraph><subparagraph id="idff50c5402d7d47c5ba12abe3cfa90078"><enum>(B)</enum><text>cybersecurity risks; and</text></subparagraph><subparagraph id="idaecbc325ae01481291e50270d62e333d"><enum>(C)</enum><text>market risks;</text></subparagraph></paragraph><paragraph id="id48acf482c3c841d8b27499d63a9818b0"><enum>(9)</enum><text>whether and how nonfungible tokens have been, or could be, integrated with traditional marketplaces, including marketplaces for music, real estate, gaming, events, and travel;</text></paragraph><paragraph id="id3dd7f82c0c704c1a8266e87b058935c8"><enum>(10)</enum><text>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;</text></paragraph><paragraph id="ida4f5f64899ec4471a124af398ec3291b"><enum>(11)</enum><text>any risks to traditional markets from the integration described in paragraph (9); and</text></paragraph><paragraph id="id2173416fc5804e5688e6a8573051c0b6"><enum>(12)</enum><text>the levels and types of illicit activity in nonfungible token markets.</text></paragraph></subsection><subsection id="id722c996fc7984f1180f97c1866b8ffd0"><enum>(c)</enum><header>Report</header><text>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).</text></subsection></section><section id="ida2e31775a89c4b299a8342585bc752bf"><enum>604.</enum><header>Blockchain Regulatory Certainty Act</header><subsection id="id6f8d6ccadb6b4dcc948ee7d1e4c61a6c"><enum>(a)</enum><header>Short title</header><text>This section may be cited as the <quote>Blockchain Regulatory Certainty Act</quote>.</text></subsection><subsection commented="no" display-inline="no-display-inline" id="idcf8f8874beb9496a921e19e46c58949f"><enum>(b)</enum><header display-inline="yes-display-inline">Definitions</header><text>In this section:</text><paragraph id="id48d8157659ae4c7e8f429a5ce58a9f51"><enum>(1)</enum><header>Developer or provider</header><text>The term <term>developer or provider</term> 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.</text></paragraph><paragraph id="id88a21638c8fb48528c3653f1da1baf29"><enum>(2)</enum><header>Distributed ledger service</header><text>The term <term>distributed ledger service</term> 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.</text></paragraph><paragraph id="id52a2939e4e364aa9a6003b2d335fe9bf"><enum>(3)</enum><header>Non-controlling developer or provider</header><text>The term <term>non-controlling developer or provider</term> 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.</text></paragraph></subsection><subsection id="idbec5d5d763f54c5f80c17ea812d5c5a3"><enum>(c)</enum><header>Treatment</header><text>Notwithstanding any other provision of law, a non-controlling developer or provider—</text><paragraph id="id2cf6b1fd477f46b9b687a62c0ccd4b05"><enum>(1)</enum><text>shall not be treated as—</text><subparagraph id="idce660d3436ec4f23a8d3ea77add32fd2"><enum>(A)</enum><text>a money transmitting business, as defined in section 5330 of title 31, United States Code, and the regulations promulgated under that section; or</text></subparagraph><subparagraph id="id39146fd3e229418cacd6258bccd8bab0"><enum>(B)</enum><text>engaged in money transmitting, as defined in section 1960 of title 18, United States Code; and</text></subparagraph></paragraph><paragraph id="id87c216905d5e43d194fca3cc289a826a"><enum>(2)</enum><text>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—</text><subparagraph id="idc443ae84c77a4e66a3449ee0d3938b19"><enum>(A)</enum><text>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;</text></subparagraph><subparagraph id="id93fc7d004d02499c9ea1e2c6825600da"><enum>(B)</enum><text>providing hardware or software to facilitate a customer’s own custody or safekeeping of the digital assets of the customer; or</text></subparagraph><subparagraph id="id2427badcd93745d197b17f20dcf4f2d7"><enum>(C)</enum><text>providing infrastructure support to maintain a distributed ledger service.</text></subparagraph></paragraph></subsection><subsection id="id8c04c6835d614111b05142fbde105068"><enum>(d)</enum><header>Clarification of treatment</header><text>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 <quote>initial person</quote>) that acts with the specific intent to transfer, on behalf of another person, funds that are known by the initial person to be—</text><paragraph commented="no" display-inline="no-display-inline" id="idf5ce30d9fed940969f96c0b414c9c1c4"><enum>(1)</enum><text display-inline="yes-display-inline">derived from a criminal offense; or</text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="idb4915dc3bc97413ca9e0fd3fd6c2785a"><enum>(2)</enum><text>intended to be used to promote or support unlawful activity.</text></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id79ca46f70f2545d7aaf9ae36bf949a58"><enum>(e)</enum><header display-inline="yes-display-inline">Rules of construction</header><text>Nothing in this section may be construed—</text><paragraph id="idf8c10a82fd61472a837bf44aaceb6b30"><enum>(1)</enum><text>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);</text></paragraph><paragraph id="idee3a69fb75fc40b5b65f588c29a1c373"><enum>(2)</enum><text>to affect whether a developer or provider is otherwise subject to classification or treatment as a financial institution under subchapter II of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/31/53">chapter 53</external-xref> 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);</text></paragraph><paragraph id="idad3bbf1489b24707961ec6e7fb2084bc"><enum>(3)</enum><text>to limit or expand any law pertaining to intellectual property;</text></paragraph><paragraph id="id32b63fe724f445ae9c20ae94ed570f26"><enum>(4)</enum><text>to prevent any State from enforcing any State law that is consistent with this section; or</text></paragraph><paragraph id="idf132d770d0614d858f677143ea139f93"><enum>(5)</enum><text>to create a cause of action or impose liability under any State or local law that is inconsistent with this section.</text></paragraph></subsection></section><section id="idf8cf05479df94ed5acd29ec9e401c243"><enum>605.</enum><header>Keep Your Coins Act</header><subsection commented="no" display-inline="no-display-inline" id="id580c1d6df65f40dba58d0d94c085d7e7"><enum>(a)</enum><header display-inline="yes-display-inline">Short title</header><text>This section may be cited as the <quote>Keep Your Coins Act</quote>.</text></subsection><subsection id="idebee2b30abdc43afb2b55cc6ff3818f2"><enum>(b)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id156f9167f2d2484dbba0dd8ba511c54b"><enum>(1)</enum><header>Covered user</header><text>The term <term>covered user</term> 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.</text></paragraph><paragraph id="idc47685e4e2cb4b029843392fd2ade354"><enum>(2)</enum><header>Self-hosted wallet</header><text>The term <term>self-hosted wallet</term> means a digital interface—</text><subparagraph id="id1f0be5a7b3404732af74dffa33d27b79"><enum>(A)</enum><text>that is used to secure and transfer digital assets; and</text></subparagraph><subparagraph id="iddf30a43c23af4cdaaf973fe373d5eff1"><enum>(B)</enum><text>under which the owner of digital assets secured and transferred under subparagraph (A) retains independent control over those digital assets.</text></subparagraph></paragraph></subsection><subsection id="id88564f06552e4c86b71dcc0e69287b77"><enum>(c)</enum><header>Self-Custody</header><text>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.</text></subsection><subsection id="idd31650526d144b23811975565eb2db93"><enum>(d)</enum><header>Rule of construction</header><text>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—</text><paragraph id="id3d7ebb4429f24863abd948f6c48fdd76"><enum>(1)</enum><text>the Bank Secrecy Act, section 9714 of the Combating Russian Money Laundering Act (<external-xref legal-doc="usc" parsable-cite="usc/31/5318A">31 U.S.C. 5318A</external-xref> note), and section 7213A of the Fentanyl Sanctions Act (<external-xref legal-doc="usc" parsable-cite="usc/21/2313a">21 U.S.C. 2313a</external-xref>); or</text></paragraph><paragraph id="id55f13906881943a7bce2c1f1c7853c98"><enum>(2)</enum><text>any other law relating to illicit finance, money laundering, terrorism financing, or United States sanctions.</text></paragraph></subsection></section><enum>VII</enum><header>Protecting customer property</header><section id="id1a5e8e196bb64156834cebb390ed7d09"><enum>701.</enum><header>Customer property protections for ancillary assets and digital commodities in bankruptcy</header><subsection id="id15aaf79265f9481ebb805621d5441b24"><enum>(a)</enum><header>Definitions for stockbroker liquidation</header><paragraph id="id4a0c7f68001e4295b223d3247a419cf6"><enum>(1)</enum><header>In general</header><text>Section 741 of title 11, United States Code, is amended—</text><subparagraph id="idd9ecc25d3f4040bfb956ea948113615c"><enum>(A)</enum><text>by redesignating paragraphs (5) through (9) as paragraphs (7) through (11), respectively;</text></subparagraph><subparagraph id="id162172eb59584d399a4559cd4b4a3a9e"><enum>(B)</enum><text>by redesignating paragraphs (1) through (4) as paragraphs (2) through (5), respectively;</text></subparagraph><subparagraph id="id560863d12e7a4475b5543051d57bd7c5"><enum>(C)</enum><text>by inserting before paragraph (2), as so redesignated, the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id318a1d77fdf44cf4aaeb0bb329ee6b40" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="id801cafb040964b3f9a895312993d4b5b"><enum>(1)</enum><text><quote>ancillary asset</quote> has the meaning given that term in section 2 of the <short-title>Digital Asset Market Clarity Act</short-title>;</text></paragraph><after-quoted-block>;</after-quoted-block></quoted-block></subparagraph><subparagraph id="idc9384516e3bd4ab0b944e6f49342eba4"><enum>(D)</enum><text>in paragraph (3), as so redesignated—</text><clause id="id24601f0d004442d897a58ffbe7511a9d"><enum>(i)</enum><text>in subparagraph (A)(vi), by striking <quote>and</quote> at the end;</text></clause><clause id="id97e18adff2bb4059a3e9ef2c17a625c5"><enum>(ii)</enum><text>by redesignating subparagraph (B) as subparagraph (C);</text></clause><clause id="id5aa4ad95014f4062ae3883796391fafd"><enum>(iii)</enum><text>by inserting after subparagraph (A) the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="id0b8878bfcee8443e908a408beb833df1" changed="added" reported-display-style="italic" committee-id="SSBK00"><subparagraph id="id9e34d929c21d42a0956de0b01b893fd8"><enum>(B)</enum><text>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</text></subparagraph><after-quoted-block>; and</after-quoted-block></quoted-block></clause><clause id="idd447e6df16f9424aba357cb8e377ac25"><enum>(iv)</enum><text>in subparagraph (C), as so redesignated—</text><subclause id="id94a04e90e6ad4c2b9e457b5d13e83d5d"><enum>(I)</enum><text>in clause (i)—</text><item id="id7cc19efa2d2541eabf3b0d35e0b99df3"><enum>(aa)</enum><text>by inserting <quote>, ancillary asset, or digital commodity</quote> after <quote>security</quote>; and</text></item><item id="id30e7e9767f7e417d9de0bf3221c41867"><enum>(bb)</enum><text>by inserting <quote>or (B)</quote> after <quote>subparagraph (A)</quote>; and</text></item></subclause><subclause id="idd7059e1d752c45f9a22330902ccd8522"><enum>(II)</enum><text>in clause (ii), by inserting <quote>an ancillary asset, a digital commodity,</quote> after <quote>a security,</quote>;</text></subclause></clause></subparagraph><subparagraph id="id246a68c922514705a347e6d856183846"><enum>(E)</enum><text>in paragraph (5), as so redesignated, in the matter preceding subparagraph (A), by inserting <quote>ancillary asset, digital commodity,</quote> after <quote>cash, security,</quote> each place it appears;</text></subparagraph><subparagraph id="idee8cb8e085b743239785865dea2f2df4"><enum>(F)</enum><text>by inserting after paragraph (5), as so redesignated, the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="ide152323a54df4eecb9bb47ae322543e9" changed="added" reported-display-style="italic" committee-id="SSBK00"><paragraph id="ida37ab3dacd784022b1fb673dfda4b1ce"><enum>(6)</enum><text><quote>digital commodity</quote> has the meaning given that term in section 2 of the <short-title>Digital Asset Market Clarity Act</short-title>;</text></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></subparagraph><subparagraph id="id6535fcf4fe1a430da852ab393a703c54"><enum>(G)</enum><text>in paragraph (8), as so redesignated, in subparagraph (A)(i), by inserting <quote>, ancillary asset positions, and digital commodities positions</quote> after <quote>securities positions</quote>.</text></subparagraph></paragraph></subsection><subsection id="idb094011b58e64a8f9969932b32c8749e"><enum>(b)</enum><header>Extent of customer claims</header><text>Section 746(b) of title 11, United States Code, is amended, in the matter preceding paragraph (1), by striking <quote>cash or a security</quote> and inserting <quote>cash, a security, an ancillary asset, or a digital commodity</quote>.</text></subsection><subsection id="idc8be3e5ac0394d0ab25246e0a40fcfbe"><enum>(c)</enum><header>Technical and conforming amendments</header><paragraph id="id10f3348143c64377a513ff6821957a35"><enum>(1)</enum><text>Section 546(e) of title 11, United States Code, is amended—</text><subparagraph id="id867001d4657342999ffd573679a8e470"><enum>(A)</enum><text>by striking <quote>section 741(7)</quote> and inserting <quote>section 741</quote>; and</text></subparagraph><subparagraph id="id0fea5561ae69466c8b74703a944416d6"><enum>(B)</enum><text>by striking <quote>section 761(4)</quote> and inserting <quote>section 761</quote>.</text></subparagraph></paragraph><paragraph id="id83b21b98b72e43449105900af5db35df"><enum>(2)</enum><text>Section 561(a) of title 11, United States Code, is amended—</text><subparagraph id="idca652e6a26eb47c9a4a0d51ae7cec361"><enum>(A)</enum><text>in paragraph (1), by striking <quote>section 741(7)</quote> and inserting <quote>section 741</quote>; and</text></subparagraph><subparagraph id="id739989c4fff44f199416222946bc9650"><enum>(B)</enum><text>in paragraph (2), by striking <quote>section 761(4)</quote> and inserting <quote>section 761</quote>.</text></subparagraph></paragraph><paragraph id="id34feb9b8769149d989bfb583669c5bed"><enum>(3)</enum><text>Section 752(c) of title 11, United States Code, is amended by striking <quote>section 741(4)(B)</quote> and inserting <quote>section 741(5)(B)</quote>.</text></paragraph></subsection><subsection id="id8f072cd9958f4703a1b9ff225ef3fd7c"><enum>(d)</enum><header>Clarifications</header><text>For the avoidance of doubt—</text><paragraph id="id13f90cbe57804e35a5fd5bf19964d47e"><enum>(1)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>);</text></paragraph><paragraph id="id80418ff5120141bc80156b58efeea12e"><enum>(2)</enum><text>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</text></paragraph><paragraph id="id811d78ebf15849c9bce6fc554bb1a858"><enum>(3)</enum><text>in any liquidation proceeding under subchapter III or IV of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/11/7">chapter 7</external-xref> 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.</text></paragraph></subsection></section><section id="id67d28397e873447ebbcf788a0bb45fa3"><enum>702.</enum><header>Insolvency safe harbor</header><subsection id="idf1ef76d70a344af3ba44d3bc63a182bb"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="id009ca9364b9741faa36dac96c8d422a1"><enum>(1)</enum><header>Commodity broker; financial institution; financial participant; securities clearing agency; stockbroker</header><text>The terms <quote>commodity broker</quote>, <quote>financial institution</quote>, <quote>financial participant</quote>, <quote>securities clearing agency</quote>, and <quote>stockbroker</quote> have the meanings given those terms in section 101 of title 11, United States Code.</text></paragraph><paragraph id="idd0f3926651a9432e9f09afe17d8126d2"><enum>(2)</enum><header>Commodity contract</header><text>The term <term>commodity contract</term> means a commodity contract described in paragraph (4)(A) of section 761 of title 11, United States Code.</text></paragraph></subsection><subsection id="id4abe4e7cc6cd40b5854d5662198a5667"><enum>(b)</enum><header>Safe harbor</header><text>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—</text><paragraph id="ideb1ebb9e877e49319b81a42eee716ac4"><enum>(1)</enum><text>a commodity contract for purposes of— </text><subparagraph commented="no" display-inline="no-display-inline" id="ide6dba59d58384eabbc06c9ffca810dd0"><enum>(A)</enum><text display-inline="yes-display-inline">sections 362(b)(6), 362(o), 546(e), 553, 556, 561, and 562 of title 11, United States Code;</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id4e2d0093fad241a68b10a9d6bb090191"><enum>(B)</enum><text display-inline="yes-display-inline">section 11 of the Federal Deposit Insurance Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1821">12 U.S.C. 1821</external-xref>);</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id3aa87257ab9641b19f0b780928f82f47"><enum>(C)</enum><text display-inline="yes-display-inline">section 210 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5390">12 U.S.C. 5390</external-xref>); and </text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id1e8740303bfb4b48951cb709e2410838"><enum>(D)</enum><text display-inline="yes-display-inline">section 5(b)(2)(C) of the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78eee">15 U.S.C. 78eee(b)(2)(C)</external-xref>); and</text></subparagraph></paragraph><paragraph id="idf6de0f1e392049119308df90b8ff08ae"><enum>(2)</enum><text>a margin payment for purposes of section 548(d)(2)(B) of title 11, United States Code.</text></paragraph></subsection></section><enum>VIII</enum><header>Customer protection</header><section id="id3009496428bb4c92a82ad0b353517a8c"><enum>801.</enum><header>Educational materials</header><text display-inline="no-display-inline">The Commission and the Commodity Futures Trading Commission shall require digital asset intermediaries to provide clear and accessible educational materials to the public, including—</text><paragraph id="id33f62beaffd140bf98df1c3629fa7be0"><enum>(1)</enum><text>an overview of how distributed ledger systems function;</text></paragraph><paragraph id="id824e070184e74030954651b7099e8853"><enum>(2)</enum><text>a description of common risks associated with digital assets;</text></paragraph><paragraph id="id04ede0ffc5b042fbaec8fe5b467f4192"><enum>(3)</enum><text>a description of the differences between digital asset markets and traditional financial markets;</text></paragraph><paragraph id="id4e14a53f19f749c5af0ab8fdef254e04"><enum>(4)</enum><text>information on reporting and disclosure requirements related to digital asset transactions and securities which may be accompanied by network tokens or ancillary assets; and</text></paragraph><paragraph id="idef2363e2e68249e983e63224447c1d36"><enum>(5)</enum><text>guidance on recognizing fraudulent schemes and instructions for reporting suspected fraud.</text></paragraph></section><section id="id953f4acbced84e7195047fc3eba26726"><enum>802.</enum><header>Savings clauses</header><subsection id="id01fed8feebcd43e3b603607acb6cb482"><enum>(a)</enum><header>Definitions</header><text>In this section:</text><paragraph id="idf12dffdc7a294cb4893ee5bde8e97085"><enum>(1)</enum><header>Digital consumer token</header><text>The term <term>digital consumer token</term> 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.</text></paragraph><paragraph id="idebd97c35d27341859ff6627e33b6582c"><enum>(2)</enum><header>Nonfungible token</header><text>The term <term>nonfungible token</term> means a digital asset recorded on a distributed ledger that—</text><subparagraph id="idc78f5e204f8f4cb4ac98ff5d5ed2b00c"><enum>(A)</enum><text>is individually identifiable and distinguishable from any other digital asset;</text></subparagraph><subparagraph id="id515c061f8f8c4125b7f1785938e0d27a"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="idd13fc2ed7956490e9d206d0237d4e3d0"><enum>(C)</enum><text>is not interchangeable on a 1-to-1 basis with any other token or digital asset; and</text></subparagraph><subparagraph id="id53939d93279c4fc598b1eeb0c15f3e09"><enum>(D)</enum><text>may be bought, sold, or transferred for consideration.</text></subparagraph></paragraph></subsection><subsection id="id85008243a8f54f538c88a02a5326f6f2"><enum>(b)</enum><header>Federal Trade Commission</header><text>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—</text><paragraph id="ida98387563e684a9ebfa287a6f5ea58c0"><enum>(1)</enum><text>investigations or enforcement actions under the Federal Trade Commission Act (<external-xref legal-doc="usc" parsable-cite="usc/15/41">15 U.S.C. 41 et seq.</external-xref>) 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;</text></paragraph><paragraph id="idb47c6c1a26c7484a9e086ec7f49ce542"><enum>(2)</enum><text>highlighting best practices relating to commerce in nonfungible tokens or digital consumer tokens;</text></paragraph><paragraph id="id14e094275b78450d9b3818c5e3c0a196"><enum>(3)</enum><text>promoting responsible innovation;</text></paragraph><paragraph id="idfcc89c41b5ba4574ac8c7a4b76f449c8"><enum>(4)</enum><text>consumer education relating to fraudulent digital asset activity; or</text></paragraph><paragraph id="id5baebdd03106431e9d698d0163f4d743"><enum>(5)</enum><text>investigating unlawful restraints of trade in the digital asset industry.</text></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="id2b1b0c17272d4caa8bdf443cc5f758c7"><enum>(c)</enum><header>Rule of construction</header><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5481">12 U.S.C. 5481 et seq.</external-xref>), 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 (<external-xref legal-doc="usc" parsable-cite="usc/12/5517">12 U.S.C. 5517</external-xref>).</text></subsection></section><section id="ide8c7d643c1004e2fbf75aed1f7bde62a"><enum>803.</enum><header>Study on expanding financial literacy</header><subsection id="idecf97faa25ce4809addce5cb27c2a5a3"><enum>(a)</enum><header>Study</header><text>The Commission and the Commodity Futures Trading Commission shall jointly conduct a study to identify—</text><paragraph id="id1a03c82af05348288cc8beb6a84c5266"><enum>(1)</enum><text>the existing (as of the day before the date of enactment of this Act) level of financial literacy among retail digital asset customers;</text></paragraph><paragraph id="idfdb053c9ab124ef3b4d489834ade7cec"><enum>(2)</enum><text>methods to improve the timing, content, and format of financial literacy materials regarding digital assets provided by the respective commissions;</text></paragraph><paragraph id="idfe80328a1f104c258921b1d6949f7ff9"><enum>(3)</enum><text>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;</text></paragraph><paragraph id="idbce00715ce9b43988d27ec5a59c66a84"><enum>(4)</enum><text>the efficacy of current financial literacy efforts with a focus on rural communities and communities with majority-minority populations;</text></paragraph><paragraph id="id937e9d487007457eb69e9c21816cedd3"><enum>(5)</enum><text>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;</text></paragraph><paragraph id="id0a9404906801432da8d586e8d5c20ce9"><enum>(6)</enum><text>the most effective public-private partnerships in providing financial literacy regarding digital assets;</text></paragraph><paragraph id="id6864404fdead4210a97074c8b9af53bd"><enum>(7)</enum><text>the most relevant metrics to measure successful improvement of the financial literacy of an individual after engaging with financial literacy efforts; and</text></paragraph><paragraph id="ide592eaf6aa3c484f926dabcd6d24cfde"><enum>(8)</enum><text>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.</text></paragraph></subsection><subsection id="id3b9a0b52ca4a4253836761dcfcf96168"><enum>(b)</enum><header>Report</header><text>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).</text></subsection></section><section commented="no" display-inline="no-display-inline" id="idacef9eed8c8f468097f8b931e92c7072"><enum>804.</enum><header>Consultation with SIPC regarding mandatory broker-dealer disclosures to investors concerning the status of payment stablecoins and digital commodities</header><subsection commented="no" display-inline="no-display-inline" id="idcb49e04514e84e1883de0d1369c4981f"><enum>(a)</enum><header display-inline="yes-display-inline">Definition</header><text>In this section, the term <term>payment stablecoin</term> has the meaning given the term in section 2 of the GENIUS Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5901">12 U.S.C. 5901</external-xref>).</text></subsection><subsection commented="no" display-inline="no-display-inline" id="idc1ddcd889a234de99abc66f6daee7184"><enum>(b)</enum><header display-inline="yes-display-inline">Rules</header><text display-inline="yes-display-inline">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— </text><paragraph commented="no" display-inline="no-display-inline" id="idb8cf88afa2aa48d39c84d06e337355ca"><enum>(1)</enum><text display-inline="yes-display-inline">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 </text></paragraph><paragraph commented="no" display-inline="no-display-inline" id="id52f1fa8101ae4f6bbf14f0fbfcb83597"><enum>(2)</enum><text display-inline="yes-display-inline">after the provision of the disclosures under paragraph (1), at such frequency as the Commission may prescribe.</text></paragraph></subsection><subsection commented="no" display-inline="no-display-inline" id="ide20b88d4345844ddb11975dbdf5ae54d"><enum>(c)</enum><header>Contents</header><text>The rules issued under subsection (b) shall include, as necessary or appropriate for the protection of investors—</text><paragraph commented="no" display-inline="no-display-inline" id="id91a5a987a9e3449eb85ba64932e17bc3"><enum>(1)</enum><text display-inline="yes-display-inline">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—</text><subparagraph commented="no" display-inline="no-display-inline" id="id6afe66f7db4b45a192766eba3fc5b9ab"><enum>(A)</enum><text display-inline="yes-display-inline">title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5381">12 U.S.C. 5381 et seq.</external-xref>);</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="idcb7f4317cd4c417ab5c410f8ff21639b"><enum>(B)</enum><text>the Securities Investor Protection Act of 1970 (<external-xref legal-doc="usc" parsable-cite="usc/15/78aaa">15 U.S.C. 78aaa et seq.</external-xref>); or</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id5da7b1e9918b471daa73bbccd133b647"><enum>(C)</enum><text>as applicable, chapter 7 or 11 of title 11, United States Code; and</text></subparagraph></paragraph><paragraph commented="no" display-inline="no-display-inline" id="ide96f8316667f4242ad711deb5f93c4e3"><enum>(2)</enum><text>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).</text></paragraph></subsection></section><enum>IX</enum><header>Other matters</header><section id="idde613254fa724b15b853aacc47dfbca1"><enum>901.</enum><header>Joint Advisory Committee on Digital Assets</header><subsection id="id8eb326dabe6146ff8d9c36a97b24ccb8"><enum>(a)</enum><header>Establishment</header><text>The Commodity Futures Trading Commission and the Commission (referred to collectively in this section as the <quote>Commissions</quote>) shall jointly establish the Joint Advisory Committee on Digital Assets (referred to in this section as the <quote>Committee</quote>).</text></subsection><subsection id="idb5d16d3053ec4ce4a3db9552e5ee1074"><enum>(b)</enum><header>Purpose</header><paragraph id="id3c55a9c51b724156b53633096830e4a7"><enum>(1)</enum><header>In general</header><text>The Committee shall—</text><subparagraph id="ide087375b3d464baea203e8d0cf8cc6b0"><enum>(A)</enum><text>provide the Commissions with official findings and nonbinding recommendations on—</text><clause id="id93fe83dcc72a4d93a1319ac49b4219ea"><enum>(i)</enum><text>the rules, regulations, oversight, and other matters of the Commissions relating to digital assets, including with respect to regulatory harmonization between the Commissions;</text></clause><clause id="idaa801a265bf94a809e81399b3e764491"><enum>(ii)</enum><text>how to further the regulatory harmonization of digital asset policy between the Commissions or areas in which that harmonization should occur; and</text></clause><clause id="id93c968c0fb874165bfa68e1e90578007"><enum>(iii)</enum><text>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;</text></clause></subparagraph><subparagraph id="idcc66fa08013646caa56e8755e7d65659"><enum>(B)</enum><text>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</text></subparagraph><subparagraph id="id85a248ef256c4a3e8444a88153ab245c"><enum>(C)</enum><text>issue nonbinding recommendations to assist in resolving disputes between the Commissions.</text></subparagraph></paragraph></subsection><subsection id="ida2fa9b1f161143cd87ec378041a4f66c"><enum>(c)</enum><header>Review by the commissions</header><text>Each of the Commissions shall—</text><paragraph id="id83a6724e1c57482eacafcc9fbeedc85e"><enum>(1)</enum><text>review the findings and nonbinding recommendations provided under subsection (b)(1)(A);</text></paragraph><paragraph id="idc696a8bdc6ad4afe8855d7e883174de3"><enum>(2)</enum><text>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—</text><subparagraph id="id6cd9a5358fb14507a1abe2df4d895f3d"><enum>(A)</enum><text>assesses the finding or recommendation; and</text></subparagraph><subparagraph id="id695f8951c7624816acadbdfb7a2113a4"><enum>(B)</enum><text>if applicable, discloses the action or decision not to take action; and</text></subparagraph></paragraph><paragraph id="id04d04679e69b415298198b7b69a4173a"><enum>(3)</enum><text>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).</text></paragraph></subsection><subsection id="id6baaaf9307a0412cab1953376b534c3b"><enum>(d)</enum><header>Membership and leadership</header><paragraph id="id30902ce5bd7643a98684fa8eb1ae7a5a"><enum>(1)</enum><header>Non-federal members; size and composition</header><subparagraph id="ida0081db32f3a4cb9a68e5de6e7e29afd"><enum>(A)</enum><header>In general</header><text>The Commissions shall appoint to the Committee not more than 14 nongovernmental voting members who—</text><clause id="idc1cdb4c43560418fb78075b8aadc75d1"><enum>(i)</enum><text>represent a broad spectrum of interests, equally divided between the Commissions; and</text></clause><clause id="idedeefeec1ef646ceb8533bdefd579976"><enum>(ii)</enum><text>serve at the pleasure of the appointing Commission.</text></clause></subparagraph><subparagraph id="idd18c713f35364bfdb741d550d75f6b54"><enum>(B)</enum><header>Specific members</header><text>For each of the Commissions, the appointees under subparagraph (A) of this paragraph shall include—</text><clause id="ide51ea0df00e8414db34ba0eeb79aa88d"><enum>(i)</enum><text>2 individuals described in paragraph (2)(A);</text></clause><clause id="ideaa6d377fedc4e89b6a77e7a63d6ceda"><enum>(ii)</enum><text>2 individuals described in paragraph (2)(B);</text></clause><clause id="id326062a3a93347a4a5747f4c1f1c2689"><enum>(iii)</enum><text>1 individual described in paragraph (2)(C);</text></clause><clause id="idbc4cffc9efd746fe92180eaff74732c7"><enum>(iv)</enum><text>2 individuals described in paragraph (2)(D); and</text></clause><clause id="id1294ec97b4fa4304815299da07f28e32"><enum>(v)</enum><text>1 individual described in paragraph (2)(E).</text></clause></subparagraph></paragraph><paragraph id="idae2939f2d90b402b9e5fa9d4500f4424"><enum>(2)</enum><header>Members described</header><text>A member described in this paragraph is—</text><subparagraph id="id352f5ff0abf241c0a22211a6c3ba4ce1"><enum>(A)</enum><text>an individual who is employed by, or is a related person with respect to, a digital asset market participant;</text></subparagraph><subparagraph id="id1176b2e0dc9047778e3ede8a68fefaf5"><enum>(B)</enum><text>a person registered with either of the Commissions and that is engaged in activities relating to digital assets;</text></subparagraph><subparagraph id="id70d4c7d398da4438b10ec61ccb53575d"><enum>(C)</enum><text>an individual engaged in academic research relating to digital assets;</text></subparagraph><subparagraph id="idb8498d46a96845f89996d0e5f202004f"><enum>(D)</enum><text>a retail user of digital assets; and</text></subparagraph><subparagraph id="id83ea85034b8b4b3aaa911da63e1182d9"><enum>(E)</enum><text>a State securities regulator.</text></subparagraph></paragraph><paragraph id="id920381f511b14b998b601903625edfe4"><enum>(3)</enum><header>NIST</header><text>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.</text></paragraph><paragraph id="idea86bfe10ff44c4eb8a25c07f0a92da3"><enum>(4)</enum><header>Co-designated Federal officers; commissioner support</header><subparagraph id="ide8006ebab5e14f9a9403dda38a1c0a48"><enum>(A)</enum><header>Co-designated Federal officers</header><clause id="idf2dbff91249e4fe3a01f78f24babb38b"><enum>(i)</enum><header>In general</header><text>Each Commission shall designate 1 Federal officer to serve as a co-designated Federal officer of the Committee.</text></clause><clause id="id1badb527ec6c49299b2e4286ff9852a2"><enum>(ii)</enum><header>Shared duties</header><text>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).</text></clause></subparagraph><subparagraph id="idea8339e827b94a188b5c9c7808960bdd"><enum>(B)</enum><header>Commissioner support</header><clause id="idd407baddebd24700bf074c7e5d348f95"><enum>(i)</enum><header>In general</header><text>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.</text></clause><clause id="id0edce5e18feb47139f2f3c6f6712d94f"><enum>(ii)</enum><header>Rule of construction</header><text>An officer or employee described in clause (i) shall not be considered to be a member of the Committee for purposes of <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/10">chapter 10</external-xref> of title 5, United States Code.</text></clause></subparagraph><subparagraph id="idf5a835e71595485d816f551cfd808fe6"><enum>(C)</enum><header>Information sharing</header><text>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.</text></subparagraph></paragraph><paragraph id="id2ff513abdbe64c5c81d98931fad700c3"><enum>(5)</enum><header>Committee leadership</header><text>The members of the Committee shall elect, from among the membership of the Committee, a secretary and an assistant secretary.</text></paragraph><paragraph id="id21685c1c7885467f94e3d9dd856cec3d"><enum>(6)</enum><header>Rotating chair</header><text>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.</text></paragraph><paragraph id="id306436aef6614654a9efeb56f5eb083d"><enum>(7)</enum><header>Terms; vacancies; holdover</header><subparagraph id="id886353b28fc14c1eb081fcdae265e650"><enum>(A)</enum><header>In general</header><text>Each non-Federal member of the Committee shall be appointed for a term of 4 years.</text></subparagraph><subparagraph id="id7b86a9afa6e84e5cb48133136bcdc0c7"><enum>(B)</enum><header>Service until new appointment</header><text>A member of the Committee may continue to serve after the expiration of the term of the member until a successor is appointed.</text></subparagraph><subparagraph id="idbffc4a76c41d49308050355945bb3b65"><enum>(C)</enum><header>Vacancies</header><text>A vacancy with respect to membership in the Committee shall be filled only for the remainder of the applicable term.</text></subparagraph><subparagraph id="id064073bafdaa459db2ce1a60dda2eb0c"><enum>(D)</enum><header>Reappointment</header><text>A member of the Committee may be reappointed.</text></subparagraph></paragraph><paragraph id="idf9a1ddd11fdd47a196d1b179ee7793c7"><enum>(8)</enum><header>Status of members</header><text>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.</text></paragraph></subsection><subsection id="id71b4271090b74630b955b77e58a7a9db"><enum>(e)</enum><header>No compensation for committee members</header><paragraph id="iddd8209107ed14f809a365e31f377e6e6"><enum>(1)</enum><header>Non-federal members</header><text>All Committee members appointed under subsection (d)(1) shall—</text><subparagraph id="id1e5abea6aa864944a08080845c61e206"><enum>(A)</enum><text>serve without compensation; and</text></subparagraph><subparagraph id="id707390812d514f04942fa9cb050f79e0"><enum>(B)</enum><text>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.</text></subparagraph></paragraph><paragraph id="id4f6f58be99f449ed9c3f117598167a70"><enum>(2)</enum><header>No compensation for co-designated federal officers</header><text>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.</text></paragraph></subsection><subsection id="ida551720f3526400bbec7066fcdb9258d"><enum>(f)</enum><header>Frequency of meetings</header><text>The Committee shall meet—</text><paragraph id="idaecc3f4ef0b74671bb425019a11b3e6b"><enum>(1)</enum><text>not less frequently than twice annually; and</text></paragraph><paragraph id="idfeb55f25ef0746cf968d3df79d695f40"><enum>(2)</enum><text>at such other times as either of the Commissions may request.</text></paragraph></subsection><subsection id="id3c91d0dd4e0d4903b1c448aa8ef6970f"><enum>(g)</enum><header>Procedures; advisory nature</header><paragraph id="idb9fefeb0d2854a92b01c20d9678f3c00"><enum>(1)</enum><header>In general</header><text>The Committee shall operate pursuant to <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/10">chapter 10</external-xref> of title 5, United States Code, except as otherwise expressly provided by this section.</text></paragraph><paragraph id="id96ad0288190d43de98160ccfdb559a81"><enum>(2)</enum><header>Advisory nature of recommendations</header><text>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.</text></paragraph></subsection><subsection id="idd19391ad4718408cb18a58552ac06b10"><enum>(h)</enum><header>Time limits</header><text>The Commissions shall—</text><paragraph id="id5c61e3ffa6094ab39de78f4db7f4c10b"><enum>(1)</enum><text>not later than 90 days after the date of enactment of this Act, adopt a joint charter for the Committee;</text></paragraph><paragraph id="idb3a5af72fa344147a88e24aa92d64187"><enum>(2)</enum><text>not later than 120 days after the date of enactment of this Act, make the appointments required under subsection (d)(1); and</text></paragraph><paragraph id="id1ea66aabe2154e61ad5338c10ea27388"><enum>(3)</enum><text>not later than 180 days after the date of enactment of this Act, hold the initial meeting of the Committee.</text></paragraph></subsection><subsection id="id90929fd5826d40528366456676fcae9e"><enum>(i)</enum><header>Funding</header><text>Subject to the availability of funds, the Commissions shall jointly fund the Committee.</text></subsection><subsection id="id9a0cb4bfa2e84145b1763f8273f1c433"><enum>(j)</enum><header>Duration and renewal</header><paragraph id="id66c5ec85f87e4ecaa861d686595f783c"><enum>(1)</enum><header>Initial period</header><text>The Committee shall remain in effect for 10 years beginning on the date of enactment of this Act.</text></paragraph><paragraph id="idf57c9ac8fc2b43748050dda6a473f64e"><enum>(2)</enum><header>Renewal thereafter</header><text>At the conclusion of the 10-year period described in paragraph (1)—</text><subparagraph id="idceb44a62586d4088937bdec0ab7502c4"><enum>(A)</enum><text>the Committee shall be subject to subsections (a) and (b) of section 1013 of title 5, United States Code; and</text></subparagraph><subparagraph id="idac639d2f27e343ebb77288b7b2270114"><enum>(B)</enum><text>the Commissions may renew the Committee for successive 2-year periods by publishing a notice in the Federal Register, consistent with <external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/5/10">chapter 10</external-xref> of title 5, United States Code.</text></subparagraph></paragraph></subsection></section><section id="id91bf54e4c2ba4473bc5b96d0df8b8f62"><enum>902.</enum><header>Memorandum of understanding</header><subsection id="id97b59d60cf0e420caef305243b8eccb0"><enum>(a)</enum><header>Memorandum of understanding</header><text>The Commission shall enter into a memorandum of understanding with the Commodity Futures Trading Commission to ensure—</text><paragraph id="id054b150e9cfe42c989289e4b4c65f309"><enum>(1)</enum><text>coordinated supervision and enforcement with respect to registrants of the Commission and the Commodity Futures Trading Commission, including with regard to—</text><subparagraph commented="no" display-inline="no-display-inline" id="id17c35fc41ce44af79b966aafb47f01d5"><enum>(A)</enum><text display-inline="yes-display-inline">the anti-fraud and anti-manipulation authorities of the Commission, such as with regard to insider trading; and</text></subparagraph><subparagraph commented="no" display-inline="no-display-inline" id="id311b31e5e24348508fd5e39a6a12b472"><enum>(B)</enum><text display-inline="yes-display-inline">the market integrity authorities of the Commodity Futures Trading Commission; and</text></subparagraph></paragraph><paragraph id="id30381efc763b48b6aee022ece0c4a625"><enum>(2)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/15/77a">15 U.S.C. 77a et seq.</external-xref>) (as amended by this Act), the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) (as amended by this Act), and the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/1">7 U.S.C. 1 et seq.</external-xref>).</text></paragraph></subsection><subsection id="id48483cd8f6bf485994ef2ca522aabf7b"><enum>(b)</enum><header>Rule of construction</header><text>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.</text></subsection><subsection id="id2b559af874e344cb9ee8f9148004dadf"><enum>(c)</enum><header>Rule of construction</header><text display-inline="yes-display-inline">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 (<external-xref legal-doc="usc" parsable-cite="usc/15/78u-1">15 U.S.C. 78u–1</external-xref>).</text></subsection></section><section id="id1ed3e8da691141a3b20b2b8ed8ae8ac3"><enum>903.</enum><header>FinCEN appropriations</header><subsection id="id419a1055182f4f478d36bade8108e416"><enum>(a)</enum><header>Authorization of appropriations</header><text>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:</text><paragraph id="idf59e5fa1c103405997e024610427b233"><enum>(1)</enum><text>$30,000,000 for fiscal year 2026, to remain available until September 30, 2027.</text></paragraph><paragraph id="id860a73049faa4be8badcc0d047c709c9"><enum>(2)</enum><text>$30,000,000 for fiscal year 2027, to remain available until September 30, 2028.</text></paragraph><paragraph id="id10cffbefbf804892b77163d5d4774dea"><enum>(3)</enum><text>$30,000,000 for fiscal year 2028, to remain available until September 30, 2029.</text></paragraph><paragraph id="idb45789eafcd84a5f83d4c9dfd47393d4"><enum>(4)</enum><text>$30,000,000 for fiscal year 2029, to remain available until September 30, 2030.</text></paragraph><paragraph id="id03e0669946b145d9b45d54b593d52e53"><enum>(5)</enum><text>$30,000,000 for fiscal year 2030, to remain available until September 30, 2031.</text></paragraph></subsection><subsection id="id183be211602f4e6d8394a44cdc64ad51"><enum>(b)</enum><header>Incentive premium for highly qualified individuals</header><text>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.</text></subsection></section><section commented="no" display-inline="no-display-inline" id="id56fe9875c5ac41ebb49eb0eb27d63128"><enum>904.</enum><header>Build Now Act</header><subsection commented="no" display-inline="no-display-inline" id="id65edba628e6a46a9ba25653ce6ec0226"><enum>(a)</enum><header display-inline="yes-display-inline">Definitions</header><text display-inline="yes-display-inline">In this section:</text><paragraph id="idb616a11061b04728af13c8d222a541f7"><enum>(1)</enum><header>Covered recipient</header><text>The term <term>covered recipient</term> means a metropolitan city or urban county, as those terms are defined in section 102 of the Housing and Community Development Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/42/5302">42 U.S.C. 5302</external-xref>), that receives funds under section 106.</text></paragraph><paragraph id="id581a2ab6d8c441c59e3c6bdf9190958f"><enum>(2)</enum><header>Current annual growth rate</header><text>The term <term>current annual growth rate</term>, 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—</text><subparagraph id="id8f890508dd794db0b4620748bd63ec6b"><enum>(A)</enum><text>beginning with the third quarter of the sixth preceding fiscal year; and</text></subparagraph><subparagraph id="id77d0250102eb44b4a370ab3ab0bdb3bc"><enum>(B)</enum><text>ending with the third quarter of the preceding fiscal year.</text></subparagraph></paragraph><paragraph id="id497f6246099840018463c19f0b17ca2e"><enum>(3)</enum><header>Eligible recipient</header><text>The term <term>eligible recipient</term> means any covered recipient unless—</text><subparagraph id="idd920e8a499c640f8adb1d54e62c71e05"><enum>(A)</enum><clause commented="no" display-inline="yes-display-inline" id="idb6cc80dfbfc04985a344343530971514"><enum>(i)</enum><text>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</text></clause><clause id="id2963b7cb7d2444c691ad545fce8c80f0" indent="up1"><enum>(ii)</enum><text>the median home value in the jurisdiction of the covered recipient is below the median home value for the United States;</text></clause></subparagraph><subparagraph id="idaf6437ae91ae47baafddcffc7f07e0e8"><enum>(B)</enum><text>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;</text></subparagraph><subparagraph id="id217be78a4fea411099e54142fc9aa2d2"><enum>(C)</enum><text>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 (<external-xref legal-doc="usc" parsable-cite="usc/42/5170">42 U.S.C. 5170</external-xref>, 5191); or</text></subparagraph><subparagraph id="idcbf4b489d9c6483cb7e82a35a5a2a7af"><enum>(D)</enum><text>the covered recipient lacks the legal authority to enact or update zoning and permitting ordinances.</text></subparagraph></paragraph><paragraph id="id6eb762f1d8614a3495861b3249e72e1b"><enum>(4)</enum><header>Extremely high-growth recipient</header><text>The term <term>extremely high-growth recipient</term> means an eligible recipient for which the current annual growth rate is at or above 4 percent.</text></paragraph><paragraph id="id49ec5c43e3b04506af0e136b8e50339d"><enum>(5)</enum><header>Housing growth improvement rate</header><text>The term <term>housing growth improvement rate</term>, with respect to an eligible recipient and a fiscal year, means the quotient of—</text><subparagraph id="idc7072443c83a44cc9f81beb755489cda"><enum>(A)</enum><clause commented="no" display-inline="yes-display-inline" id="idefabd1d21bfe41c9be9f668e451ceda1"><enum>(i)</enum><text>the current annual growth rate of the eligible recipient, minus</text></clause><clause commented="no" display-inline="no-display-inline" indent="up1" id="id3cf757b9d9004adf8afeec5f9d8224b7"><enum>(ii)</enum><text>the prior annual growth rate of the eligible recipient; and</text></clause></subparagraph><subparagraph id="idbb09b49c43134f90b01c705866ad47c8"><enum>(B)</enum><text>the sum obtained by adding the absolute values of the current annual growth rate and the prior annual growth rate of the eligible recipient.</text></subparagraph></paragraph><paragraph id="id2f7c5e03321a4017a10710f45947ab7f"><enum>(6)</enum><header>Prior annual growth rate</header><text>The term <term>prior annual growth rate</term>, 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—</text><subparagraph id="id199a1eea836d41b78aad1c0209a43f52"><enum>(A)</enum><text>beginning with the third quarter of the 11th preceding fiscal year; and</text></subparagraph><subparagraph id="id665ec84b7b264c82b35f3c72b9602a93"><enum>(B)</enum><text>ending with the third quarter of the sixth preceding fiscal year.</text></subparagraph></paragraph><paragraph id="id75672c413182472da409b480cdffe27b"><enum>(7)</enum><header>Secretary</header><text>The term <term>Secretary</term> means the Secretary of Housing and Urban Development.</text></paragraph><paragraph id="id14302da7b77f4876911ad6fa03912952"><enum>(8)</enum><header>Section 106</header><text>The term <term>section 106</term> means section 106 of the Housing and Community Development Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/42/5306">42 U.S.C. 5306</external-xref>).</text></paragraph></subsection><subsection id="idc636e75d6dce4d19b46b69b503040a30"><enum>(b)</enum><header>Adjustments to community development block grant allocations</header><paragraph id="idef3b52e882964b5695f5384ed123f0eb"><enum>(1)</enum><header>In general</header><text>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.</text></paragraph><paragraph id="id933952046167498ead53af8fb683c2f0"><enum>(2)</enum><header>Adjustments</header><subparagraph id="idc1d5983688614c7b9178a7b02be8f13e"><enum>(A)</enum><header>Housing growth improvement rate at or above median; extremely high-growth recipients</header><clause id="id446086af33474cb3a490fe6ff54ca1f7"><enum>(i)</enum><header>In general</header><text>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.</text></clause><clause id="id4f2673c20edf462080ac297fa675376f"><enum>(ii)</enum><header>Bonus amount</header><text>For purposes of clause (i), the bonus amount for an eligible recipient for a fiscal year shall be equal to the product of—</text><subclause id="id06ec9320bc4e49339ec818b37e47dd06"><enum>(I)</enum><text>the aggregate amount by which allocations to eligible recipients are decreased under subparagraph (B) for that fiscal year; and</text></subclause><subclause id="id1026d21ca2f74811831c0c130b8e82dd"><enum>(II)</enum><text>the quotient of—</text><item id="idd83bfdb8b2844bfb80d888ac4a2979d1"><enum>(aa)</enum><text>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</text></item><item id="id1c5c0d3726ed45149f04edc4c4faed75"><enum>(bb)</enum><text>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.</text></item></subclause></clause></subparagraph><subparagraph id="id1529d1c1f0694bbbbfaacfeb6f587d0a"><enum>(B)</enum><header>Housing growth improvement rate below median</header><text>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.</text></subparagraph></paragraph></subsection><subsection id="id8aa1a810be6e4792ae922df13b0ea7c7"><enum>(c)</enum><header>Calculation of housing units</header><paragraph id="iddc5f5b1f12f940f09b2e77658db451a4"><enum>(1)</enum><header>Housing and Urban Development requirements</header><text>In calculating the number of housing units in the jurisdiction of an eligible recipient under any provision of this section, the Secretary shall—</text><subparagraph id="id0d900dc8fef2471ba380fa9dba6d0436"><enum>(A)</enum><text>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</text></subparagraph><subparagraph id="idfd8472f528d344f8b5bf2edc8afb30cd"><enum>(B)</enum><text>make calculations at the block level, using boundaries that reflect the most current boundaries.</text></subparagraph></paragraph><paragraph id="idd2cd1728261f4d41ac2e7b1ffd47add1"><enum>(2)</enum><header>Census Bureau and Postal Service requirements</header><text>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).</text></paragraph><paragraph id="id617da7e9390f433b83c45981da013d94"><enum>(3)</enum><header>Adjustment of calculation periods</header><text>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.</text></paragraph></subsection><subsection id="id8c6ff640e83e4893893de9395d4359b8"><enum>(d)</enum><header>Annual report on housing growth improvement rate</header><text display-inline="yes-display-inline">Before allocating funds under section 106 for a fiscal year, the Secretary shall publish a report that—</text><paragraph id="id61c38f5f282d4ae19fffc090cc44b54c"><enum>(1)</enum><text>includes the housing growth improvement rate for each eligible recipient; and</text></paragraph><paragraph id="idd45b98c6d58d4d8688ff51f4c7d8582f"><enum>(2)</enum><text>lists, for the most recent fiscal year for which allocations were made under section 106—</text><subparagraph id="id3aa13b9d60d64bdc97600fd84e2eb2a7"><enum>(A)</enum><text>the eligible recipients that received a bonus amount under subsection (b)(2)(A) of this section; and</text></subparagraph><subparagraph id="id098317d42de74ddfa8f02d218af92ae3"><enum>(B)</enum><text>the eligible recipients for which the allocation under section 106 was decreased under subsection (b)(2)(B) of this section.</text></subparagraph></paragraph></subsection><subsection id="id89c86036d5484040b8c360da5e094139"><enum>(e)</enum><header>Notification; implementation dates</header><paragraph id="idb55246643ae140f1bf085eb4533e8e86"><enum>(1)</enum><header>Notification</header><subparagraph id="idfa222a70f139460dbfffed141d5bf1f2"><enum>(A)</enum><header>In general</header><text>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.</text></subparagraph><subparagraph id="id74cd600db985445d89b171275fc5042d"><enum>(B)</enum><header>Guidance</header><text>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.</text></subparagraph></paragraph><paragraph id="id33b9eed897d64553ae27f162859cb5bf"><enum>(2)</enum><header>Implementation dates</header><text>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.</text></paragraph><paragraph id="idcc36929f8f7e4b60911baf4e2ca11f6c"><enum>(3)</enum><header>No effect on previous appropriations</header><text>This section shall not apply to amounts appropriated before the date of enactment of this Act.</text></paragraph></subsection></section><section id="id7e9e4236fbea45759f2f77dac3ae5973"><enum>905.</enum><header>Rulemakings</header><text display-inline="no-display-inline">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.</text></section><section id="idb22b4697b3424cadbdaff04e9709b28b"><enum>906.</enum><header>Effective date</header><text display-inline="no-display-inline">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—</text><paragraph id="id5015c224ec4a42a1947b23005f3d0c9f"><enum>(1)</enum><text>the date that is 360 days after the date of enactment of this Act; or</text></paragraph><paragraph id="idb58590cf9c924edb86b69596cd7f6645"><enum>(2)</enum><text>the date that is 60 days after the publication in the Federal Register of the final rule implementing the provision.</text></paragraph></section>June 1, 2026Reported with an amendment