[Congressional Record Volume 170, Number 89 (Wednesday, May 22, 2024)]
[House]
[Pages H3419-H3463]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      FINANCIAL INNOVATION AND TECHNOLOGY FOR THE 21ST CENTURY ACT


                             general leave

  Mr. McHENRY. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous material on the bill (H.R. 4763).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from North Carolina?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 1243 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 4763.
  The Chair appoints the gentleman from Mississippi (Mr. Guest) to 
preside over the Committee of the Whole.

                              {time}  1448


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 4763) to provide for a system of regulation of digital assets by 
the Commodity Futures Trading Commission and the Securities and 
Exchange Commission, and for other purposes, with Mr. Guest in the 
chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  General debate shall be confined to the bill and shall not exceed 1 
hour equally divided and controlled by the chair and ranking minority 
member of the Committee on Financial Services or their respective 
designees.
  The gentleman from North Carolina (Mr. McHenry) and the gentlewoman 
from California (Ms. Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from North Carolina (Mr. McHenry).
  Mr. McHENRY. Mr. Chairman, I yield myself such time as I may consume.
  Today, Congress will establish a new high-water mark for digital 
asset policy. To be clear, this joint effort between the Financial 
Services Committee and the Agriculture Committee did not come together 
overnight. Far from it. We formed subcommittees, convened working 
groups, heard from countless stakeholders, and received input from 
Members across the ideological spectrum in the House of 
Representatives.
  Last July, we passed the bipartisan Financial Innovation and 
Technology for the 21st Century Act, FIT21, out of our respective 
committees. Each step in this process has created a new high-water 
mark.
  The next step will be a broad bipartisan vote today to finally 
provide the robust consumer protections and clear regulatory framework 
established by this bill. FIT21 will cement the United States' global 
leadership in technological innovation, invention, and adoption.
  Unfortunately, our current regulatory framework is preventing digital 
assets innovation from reaching its full potential. The SEC and the 
CFTC are currently in a food fight for control of these asset classes. 
They have created an impossible situation where the same firms are 
subject to competing and contradictory enforcement actions by the two 
different agencies, leaving consumers behind, leaving innovators 
behind.
  FIT21 fixes this by creating a regulatory framework that will provide 
clear rules of the road and strong guardrails for Americans engaging 
with the digital asset ecosystem.
  At its core, FIT21 applies time-tested consumer protections to ensure 
that the 20 percent of Americans who engage in the digital asset 
ecosystem can do so safely and so more Americans can engage, as well.
  Today, we have the opportunity to answer the calls of consumers, 
digital asset innovators, and the Biden administration. We can 
establish the next

[[Page H3420]]

high-water mark for digital assets here in the United States.
  Mr. Chair, I urge my colleagues to support consumer protection, 
innovation, and American leadership by voting for FIT21, and I reserve 
the balance of my time.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, I rise in strong opposition to H.R. 4763, which I am 
calling the not fit for purpose act.
  This bill would deregulate a substantial portion of the crypto 
industry, taking them out of the purview of the Securities and Exchange 
Commission, or SEC. It would allow them to operate either under a 
lighter touch regulatory regime under the Commodity Futures Trading 
Commission or in what I have called a regulatory no-man's-land, with no 
primary regulator and virtually no regulations. For crypto that would 
remain under the SEC's purview, this bill still provides major 
exemptions from critical securities laws.
  If this wasn't bad enough, this bill is not just about crypto. 
Language was added to the bill after it was marked up by the committees 
of jurisdiction that would allow even some traditional securities to 
also exist in this regulatory no-man's-land.
  Specifically, I am referring to title II of the bill that defines the 
term ``investment contract asset.'' Assets that fall under this 
definition are explicitly deemed not to be securities and, therefore, 
not under the SEC's purview, but the bill doesn't provide an 
alternative legal framework for these assets.
  This represents an extreme MAGA, libertarian approach where companies 
can operate without regulatory scrutiny, and consumers and investors 
are on their own in detecting and avoiding fraudulent schemes.
  While Republican defenders of this bill have argued that this 
definition of investment contract asset is limited to digital assets 
under the bill, this is disputed by legal experts and SEC Chair Gary 
Gensler himself, who confirmed in a recent statement regarding this 
bill that it would have a broader impact on traditional securities.
  Interestingly, I didn't hear any arguments from the Republicans at 
the Rules Committee hearing disputing that this would, in fact, be a 
regulatory no-man's-land, even if they insist it is just for crypto.
  Even for crypto that would be transferred over to the CFTC, I have 
serious concerns about the loss of protections for consumers and 
investors. The CFTC is generally designed to deal with sophisticated 
institutional investors and traders. It doesn't have the same kind of 
protections that the SEC has for retail investors and consumers.

  Under all three avenues provided for crypto under this bill: The 
CFTC's lighter touch regulatory regime, SEC's weaker regulatory regime 
for restricted digital assets, or the regulatory no-man's-land, these 
are just a few examples of protections that would be stripped away: the 
right of an investor to sue, gone; protections against conflicts of 
interest, gone; the right to critical disclosures that help investors 
make informed choices, gone; and enforcement by States against fraud; 
and enforcement by the SEC for all of the above protections, including 
antifraud.
  H.R. 4763 would also upend more than 170 enforcement cases the SEC 
has brought related to crypto violations. These actions have been 
brought by both Democratic and Republican administrations to protect 
investors against crypto bad actors.
  The SEC is the Federal agency on the front lines of enforcing our 
existing securities laws on crypto firms that have willfully chosen to 
ignore the law and defrauded consumers out of billions of dollars with 
these get-rich-quick schemes. Giving this industry a free pass to avoid 
most all regulations cannot be the answer to the serious concerns that 
Members have raised about crypto fraud.
  I have seen many efforts by Republicans, acting at the behest of the 
industry to pass deregulatory regulation, but this is perhaps the 
worst, most harmful proposal I have seen in a long time. This bill 
would deregulate crypto and certain traditional securities to the 
extent that I and other experts have expressed serious concerns about 
this bill causing a potential market crash and recession.
  I am also reminded of how, over the warnings of regulators, Congress 
moved to deregulate the over-the-counter derivatives. Remember the 
derivatives market back in 2000? The resulting financial crisis 
triggered the implosion of financial institutions, a wave of 
foreclosures, and trillions of dollars in lost wealth.
  Mr. Chair, I urge my colleagues not to forget. They should not repeat 
history with this bill.
  The Biden administration has released a Statement of Administration 
Policy opposing this bill. The bill is also opposed by a long list of 
investors and consumer advocates, State securities administrators 
concerned about State preemption, labor organizations worried about the 
retirement funds of their members, environmental groups concerned about 
the undisclosed risk of crypto mining, civic organizations worried 
about the undue influence of the financial and crypto industry over 
Congress' actions, academics, legal experts, and technologists.
  Mr. Chair, I urge my colleagues to stand up and to not be afraid of 
Big Crypto, to stand up for everyday investors and consumers.
  Mr. Chair, I urge my colleagues to vote ``no'' on this bill, and I 
reserve the balance of my time.

                              {time}  1500

  Mr. McHENRY. Mr. Chair, I yield 4 minutes to the gentleman from 
Pennsylvania (Mr. Thompson), the chair of the Agriculture Committee and 
partner in FIT21.
  Mr. THOMPSON of Pennsylvania. Mr. Chairman, I rise today in support 
of H.R. 4763, the Financial Innovation and Technology for the 21st 
Century Act, or FIT21, which establishes a regulatory framework for 
digital assets while protecting consumers and fostering innovation 
within the United States.
  This legislation has been a long time coming. Since 2018, the House 
Committee on Agriculture has held numerous hearings, roundtables, and 
meetings and introduced multiple pieces of legislation to bring 
certainty and clarity to the digital asset markets.
  For Congress to establish a comprehensive digital assets market 
framework, it was clear the House Committee on Agriculture and the 
House Committee on Financial Services needed to work in a collaborative 
manner.
  Chairman McHenry and I first met nearly 2 years ago to discuss this 
ambitious plan, and together, we aimed to develop the best policies 
possible.
  Over this Congress, members of both committees have engaged in robust 
and collaborative debates and educational sessions on current 
securities and commodities laws and regulations, as well as gaining a 
deeper understanding of the digital asset ecosystem.
  Through this process, we learned several key points, including: that 
the current process to determine if a digital asset is a security or 
not is unclear, unworkable, and impractical; the Commodity Futures 
Trading Commission lacks essential regulatory authority over retail-
serving intermediaries in the digital commodity spot market; and the 
treatment of customer assets held by intermediaries needs to be 
strengthened.
  Mr. Chairman, my colleagues on the other side of the aisle have 
claimed that this bill will allow a substantial portion of crypto and 
some traditional securities to escape nearly all laws and regulations, 
operating without any primary regulator. That is far from the truth. 
The legislation before us today enhances existing securities and 
commodities regulations to create an appropriate framework for digital 
assets.
  For example, a registered digital commodity exchange would follow 
regulations similar to those of the CFTC for derivatives exchanges, 
including monitoring trading activity, prohibiting abusive practices, 
reporting trading information, managing conflicts of interest, ensuring 
governance standards, upholding cybersecurity, and more.
  Mr. Chairman, Congress has a historic opportunity to enact 
legislation that not only protects consumers but also ensures that the 
United States remains at the forefront of technical innovation.
  By supporting FIT21, we can foster and create a safer, more 
transparent, and more competitive environment for digital assets.
  Let us seize this moment to provide clear guidelines and robust 
protections,

[[Page H3421]]

fostering a future where innovation can thrive responsibly within our 
borders.
  Mr. Chairman, I urge all of my colleagues to support this bill.
  Mr. Chairman, I understand that the gentlewoman from Washington 
State, the chair of the Energy and Commerce Committee, has a few 
questions for clarification.
  Mrs. RODGERS of Washington. Mr. Chairman, will the gentleman yield?
  Mr. THOMPSON of Pennsylvania. Mr. Chairman, I yield to the 
gentlewoman for the purpose of a colloquy.
  Mrs. RODGERS of Washington. Mr. Chairman, I rise in support of H.R. 
4763.
  Blockchains are a new foundational technology that will reshape our 
daily lives. Through innovative design approaches, blockchains can be 
used in all kinds of applications, like tracking products through 
supply chains or facilitating the tokenization of financial assets.
  Unfortunately, many American innovators are being pushed abroad by 
overzealous regulators. According to a report by Electric Capital, the 
U.S. share of blockchain developers has declined from 40 percent in 
2017 to 29 percent in 2022.
  I am excited about this legislation providing clear rules of the 
road. This is a clear complement to some of the work that we have been 
doing in the Energy and Commerce Committee to ensure American 
leadership in blockchain technology.
  I will clarify some of the nonfinancial applications and uses that 
may be unintentionally captured by the bill.
  The CHAIR. The time of the gentleman has expired.
  Mr. McHENRY. Mr. Chairman, I yield an additional 1 minute to the 
gentlewoman from Washington.
  Mrs. RODGERS of Washington. Mr. Chairman, I thank the gentleman for 
yielding time.
  Based on conversations I have had, it is my understanding that the 
intent of this bill is to ensure that the current authority over 
certain restricted digital asset transactions remains with the SEC and 
that the CFTC would only be authorized to regulate certain 
intermediaries in spot digital commodity markets. Is this correct?
  Mr. THOMPSON of Pennsylvania. Mr. Chairman, the gentlewoman's 
understanding of the legislation is correct.
  The intent of FIT21 is to draw jurisdictional lines between the SEC 
and the CFTC as it relates to certain spot digital asset transactions.
  Mrs. RODGERS of Washington. Can the gentleman clarify the intent when 
it comes to exclusive jurisdiction of the CFTC and how this would 
impact the current protections for Americans against fraud and market 
manipulation?
  Mr. THOMPSON of Pennsylvania. FIT21 provides the CFTC with exclusive 
jurisdiction over digital commodity spot market transactions that occur 
on or through entities registered with CFTC. FIT21 does not provide 
CFTC with the authority to directly regulate any transaction between 
two people which is not intermediated by an entity registered with the 
CFTC.
  Separate from FIT21, CFTC has existing authority to police spot 
market commodities for fraud and market manipulation, which FIT21 does 
not change.
  Mrs. RODGERS of Washington. Mr. Chairman, I thank Chairman Thompson, 
Chairman McHenry, and Representative Hill for the clarification and for 
all of their work.
  Ms. WATERS. Mr. Chairman, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Lynch), who is also the ranking member of the 
Subcommittee on Digital Assets, Financial Technology and Inclusion.
  Mr. LYNCH. Mr. Chairman, I thank the gentlewoman for yielding time.
  Mr. Chairman, I have been a Member of Congress for over 20 years, and 
I have to say that while this may not be the worst, it is in the top 
three in terms of the worst bills that I have seen actually progress to 
the floor of the House.
  Anybody who is excited about this bill either has not read it or does 
not understand it. This bill is a radical rewrite of the securities 
laws in this country.
  As most people who know our history realize, in 1929, when the 
markets crashed, we established the Securities and Exchange Commission 
in 1934, shortly after the crash.
  What that did was it created an agency that became the cop on the 
beat in financial services. They became the protectors of investors.
  Since that time in 1934, as courts have interpreted that law that is 
protecting investors, we built up a body of case law that now makes the 
United States financial markets the most robust, and they have become 
the marvel of the world. Everyone comes to the United States for 
investment because they know that their investment is protected and 
that they will be treated fairly in the courts because we have well-
defined laws.
  This bill undoes all of that. This bill is a radical rewriting of the 
securities laws since 1934. It redefines what a security is. It allows 
financial companies to escape the cop on the beat. Now, they can leave 
the jurisdiction of the SEC and go over to the CFTC, which is about six 
times as small as the SEC.
  What will happen here is you will see a migration of companies going 
out from under the SEC jurisdiction over to the CFTC, and this will 
cause havoc in our financial markets eventually.
  The one amendment I would have liked to see on this bill is that any 
company that becomes insolvent because of their involvement with crypto 
cannot receive a taxpayer bailout because that is where this bill is 
heading. This is going to cause infirmity in the financial institutions 
in this country as they get commingled with crypto, and eventually, we 
will be forced into a situation where we are going to have to bail some 
of these banks out because of their involvement in crypto.
  Mr. Chairman, this is a very bad bill, and I urge my colleagues to 
vote against it.
  Mr. McHENRY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Arkansas (Mr. Hill), the chairman of the Subcommittee on Digital 
Assets, Financial Technology and Inclusion, who has shepherded this 
bill along very well.
  Mr. HILL. Mr. Chairman, I thank the gentleman for yielding time.
  Mr. Chairman, for those watching at home, it is like the tale of two 
cities, where one side is offering a work of fiction and the other side 
a work of nonfiction.
  I think, over here, those who support this bill are supporting 
exactly the opposite of what I have heard on the other side of the 
aisle.
  Since last January, our two committees, Agriculture and Financial 
Services, have collaborated to make sure that we protect consumers and 
investors in the digital marketplace by preventing fraud, manipulation, 
front-running, and other abusive practices; applying Bank Secrecy Act/
AML requirements and know-your-customer rules; mitigating conflicts of 
interest; requiring firms to hold capital and segregate customer funds; 
have the right kind of custody policy; have registration for exchanges, 
dealers, and brokers that are working in digital assets; imposing 
reporting and bookkeeping requirements; and building on the existing 
exemption regime for the offer and sale of digital securities to 
include robust disclosures to anyone considering a purchase.
  With that said, we hear a lot about the lack of legal clarity for the 
treatment of digital assets, which was the impetus for this 
legislation. What does that even mean?
  Mr. Chairman, to this day, the SEC and the CFTC still contradict each 
other in court about whether a digital asset like Ethereum should be 
treated as a security or a commodity. Both cannot be true.
  When two Federal agencies in the same administration cannot agree on 
the law, it should be up to Congress, and that is the regulatory 
clarity that this FIT21 bill will bring.
  In fact, I would argue, Mr. Chairman, that FIT21 is responsive to 
President Biden's own executive order and the Financial Stability 
Oversight Council report calling on Congress to enact a framework for 
digital assets that are not securities. That is what we have done.
  I am also proud that this measure is the product of committee work 
done through regular order and through good-faith bipartisan efforts.
  Mr. Chairman, all Members should support this bill, and I encourage a 
full ``yes'' vote from both sides of the aisle.

[[Page H3422]]

  

  Ms. WATERS. Mr. Chairman, I yield 4 minutes to the gentleman from 
Illinois (Mr. Casten).
  Mr. CASTEN. Mr. Chairman, we have heard several times this 
legislation is better than the status quo. There are a whole lot of 
reasons that is not true, but I want to focus specifically on this 
bill's utter failure to address the use of cryptocurrency by 
terrorists, foreign adversaries, and criminals.
  By the way, Treasury asked us specifically to address those issues 
with a whole bunch of reasonable changes. We introduced amendments. 
Every one of those amendments was rejected.
  The anti-money laundering provisions that are in this bill simply 
duplicate existing requirements. Yet, the bill's supporters have 
actually argued, and Treasury has agreed, that the status quo is not 
sufficient to address the challenges created by cryptocurrencies.

  How do we know that cryptocurrencies are a problem for money 
laundering? Because the bad guys love crypto. Let's give some examples.
  North Korean hackers have stolen $3 billion in cryptocurrency since 
2017. White House national security officials said last year that 
crypto theft and cybercrime have funded half of North Korea's nuclear 
program.
  Russia and Venezuela are both using crypto to evade U.S. sanctions.
  Venezuela recently said that because of the bite of sanctions, they 
are now moving to accept payments in crypto because that allows them to 
get money that we, in Washington, cannot track.
  The Treasury Department is reviewing more than $20 billion of 
cryptocurrency that was laundered through a Russian-based 
cryptocurrency exchange.
  The Treasury Department has noted that Hamas, the Palestinian Islamic 
Jihad, ISIS, and al-Qaida are all using crypto to finance terrorist 
attacks globally.
  Crypto is the preferred means of payment for fentanyl trafficking. 
Chinese businesses that sell fentanyl chemical ingredients to Mexican 
cartels have accepted millions in crypto payments. They have sold 
enough ingredients to make more than $54 billion worth of fentanyl 
pills. That is enough to kill 8.6 billion people, if you are counting.
  Blockchain analytics firm Chainalysis said in January that virtual 
currency is the dominant choice for buyers and sellers of child sexual 
abuse content.
  FinCEN basically said the same thing. It said that perpetrators of 
online child sexual exploitation are increasingly using convertible 
virtual currency to avoid detection.
  I could go on and on. These are not cherry-picked statistics. These 
are statistics from U.S. officials and from crypto firms, people who 
are entrusted with protecting our national security and who care about 
this stuff.
  The Treasury Department asked for new rules to address this. Every 
single one of those proposals was objected to either in the Financial 
Services Committee, the Ag Committee, or in the Rules Committee.

                              {time}  1515

  If that was all this bill did, that would be one thing. In fact, this 
bill goes out of its way to make it weaker by basically saying that 
anybody who uses unhosted wallets, decentralized, or DeFi services is 
exempted from regulation, ignoring recommendations from both the Trump 
and Biden administrations.
  My Republican colleagues will boast that in this rule there is 
specific language that says brokers and dealers are required to comply 
with anti-money laundering requirements. They are already required to 
do that. This bill does nothing to address that. It is exactly the 
same. They are going to brag about saying it is now illegal to speed.
  What we should have done is we should have made provisions to ban 
anonymous actors, to prevent you from saying: I want to move crypto 
from my account to yours, and I am going to move it through an 
anonymous party so you can't tell what a bad guy I am. It should have 
banned people from using digital asset mixers that allow you to take a 
whole bunch of people, combine all their money together, and then give 
you something where you can't trace it through.
  If you want to understand how crazy this is, I would encourage you to 
go to your bank and try to deposit $10,000 in cash at your bank. Your 
bank will say: You have to tell me where that money came from. I am 
going to take you behind the counter, and we are going to have to take 
your picture and get your fingerprints, because I do not like money 
laundering, and I am obliged to protect it.
  By comparison, if you want to move a million dollars of crypto from 
one person's account to another, send it through these mixers or send 
it through these anonymizers, you can do it.
  The CHAIR. The time of the gentleman has expired.
  Ms. WATERS. Mr. Chair, I yield an additional 30 seconds to the 
gentleman from Illinois.
  Mr. CASTEN. Mr. Chair, we have got all of these mixers that are used. 
Why were they not included in there? I don't know.
  I know why the crypto industry doesn't want them included in there, 
because they are profiting from people who are using these illicit 
services.
  The largest cryptocurrency exchange that stands to benefit from this 
regime helped to finance a legal challenge to the Treasury Department's 
case against Tornado Cash, which was the largest asset mixer in the 
world.
  This is a bad bill. It fails to address known problems. What it does 
do, however, is make the United States safer for drug traffickers, for 
terrorist funders, for child and drug traffickers, and for those who 
buy and sell child pornography. I did not know those groups had such 
advocates in Congress, but I am proud to oppose them and encourage all 
my colleagues to do the same.
  Mr. McHENRY. Mr. Chair, I yield 2 minutes to the gentleman from South 
Dakota (Mr. Johnson), my good friend and the chair of the Commodity 
Markets, Digital Assets, and Rural Development Subcommittee of the 
Agriculture Committee.
  Mr. JOHNSON of South Dakota. Mr. Chair, here in Congress, we are 
supposed to be in the problem-solving business. My, oh, my, do we have 
problems in the digital asset space.
  In recent years, we have seen the FTX debacle, a debacle that 
happened under the regulatory regime that some Members are apparently 
so enamored with, a regime that does not work today. We have seen 
chronic and disruptive overreach by the Securities and Exchange 
Commission.
  We have seen innovation and investment flow overseas. Mr. Chair, they 
seek markets that are more predictable. We are the only G7 country that 
hasn't figured this out yet.
  Clearly, we have problems. I would submit that FIT21 is the solution. 
For more than a year, French Hill and I, working with Chairs McHenry 
and Thompson and Members on both sides of the aisle, have worked hard 
together to craft a solution that increases regulatory predictability, 
which increases consumer protection, and that will foster innovation.
  I know that success has many fathers and mothers, and so I do thank 
Messrs. McHenry, Thompson, Hill, Emmer, and Davidson on the Republican 
side, and I do need to especially recognize my colleagues on the 
Democratic side of the aisle, particularly Mr. Nickel and Ms. Caraveo, 
who have invested countless hours in getting this bill right. They have 
been joined by Representatives Himes, Crockett, Torres, Soto, 
Gottheimer, and Davis. This success would not be possible without their 
good-faith efforts, and I thank them.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  It is no mystery why the crypto industry prefers to be regulated by 
the CFTC rather than the SEC. Let's start with the substantial 
differences in funding and staff for the CFTC compared to SEC.
  In 2023, the CFTC employed roughly 680 full-time employees with an 
annual budget of $365 million. Wow. The Securities and Exchange 
Commission, the SEC, employed over 4,500 employees and had a budget of 
over $2 billion.
  Even with the limited funding provided to the CFTC under this bill, 
which is capped at $40 million and set to expire after 4 years, the 
CFTC's funding would be only one-fifth of the SEC's budget. Mr. Chair, 
$40 billion is not sufficient to oversee more than 16,000 
cryptocurrencies.

[[Page H3423]]

  Let's not forget that the same Republicans who are bringing this bill 
to the floor are the same ones who proposed cutting CFTC's budget last 
year. Moreover, the CFTC is designed to deal mostly with sophisticated 
institutional investors and traders rather than retail investors and 
consumers. Therefore, the CFTC does not have the same level of 
protections for retail investors and consumers.
  Mr. Chair, I would simply say that we should look at this example. 
The CFTC has no mandate like the SEC that requires entities to act in 
the best interests of the investors or to put their clients' interests 
first. This is just another reason why I am very concerned about the 
light-touch regulatory regime under the CFTC.

  Mr. Chair, I yield 5 minutes to the gentleman from California (Mr. 
Sherman), who is also the ranking member of the Subcommittee on Capital 
Markets.
  Mr. SHERMAN. Mr. Chair, last week we had police week. This week, the 
Republicans show us that they support crime in the suites. The effect 
of this bill in the short term will be to disempower the most effective 
investor protection crime investigation organization in the world, the 
SEC.
  The long-term objective of the crypto billionaire bros is to create a 
new currency, and they have named it well. Cryptocurrency literally 
means hidden money. If it ever becomes a currency, it means we will not 
be able to enforce our tax laws, except on wage earners, and we will 
not be able to enforce our laws against child traffickers, drug 
dealers, and those who violate our sanctions.
  The crypto bros have a lot of money. They make money by literally 
making money. They spread it around all of Washington. They had Sam 
Bankman-Fried do it. Now he is in jail, and others have stepped 
forward.
  They have a PR campaign. The Lakers don't play at ``enforce tax laws 
arena.'' They don't play at an arena dedicated to law enforcement. They 
play at Crypto.com Arena.
  In spite of all that money and power, three-quarters of Democrats 
voted ``no'' on this bill when it was before our committee. There are 
those who say they want clarity. We have clarity. The SEC has 
jurisdiction. What they really want is a patina of regulation, as 
little regulation as possible to claim to be regulated.
  Now, this bill would be bad enough if we were dealing with the 
original statute. I know a lot of my colleagues have had meetings in 
their offices, and they were told about this bill weeks ago or months 
ago. Some are leaning toward voting for it because they don't know that 
they dropped a new title in the bill just a few weeks ago.
  What does that new title do? Does it prohibit secret wallets, self-
custody wallets? No. Does it outlaw the mixers whose sole purpose is to 
mix up law enforcement? No. What does this new title do? It defines an 
investment contract in a new way, designed to make this bill not just 
applicable to crypto, but it says our regular stocks and bonds can be 
put on blockchain and have no regulation from the SEC. It is a dagger 
at the hundred-trillion-dollar capital markets we have that finance our 
whole economy. It doesn't just say you are moving from the SEC's tough 
regulation to the CFTC's weak regulation. It allows crypto to get no 
regulation by defining themselves as an investment contract.
  This is a bill that will gut regulation of crypto and may gut 
regulation of all our capital markets, but it goes beyond that. Its 
ultimate purpose is to move forward with this cryptocurrency project.
  Right now, crypto is not a currency. There are very few purchases of 
goods with crypto. You can't buy a sandwich, but the very few times, as 
Mr. Casten pointed out, that crypto is used as a means of exchange, it 
is used by the worst criminals in the world. If crypto does become a 
currency, then we will not be able to enforce our other laws.
  Now, we have to understand every time a billionaire cheats on his 
taxes, a member of the Freedom Caucus earns his wings. The patriotic 
anarchists come forward and say we want a strong America and we want to 
destroy the power of the American Government. You can't have it both 
ways.
  This is a bill that in the short term means no regulation of crypto; 
not just lighter regulation under the CFTC but no regulation under 
their new title. It is a bill that could gut all securities regulation 
for the stocks and bonds that power the American economy.
  In the longer term, it creates a competitor to the U.S. dollar which 
has one advantage right in the name: hidden money. Hide your money from 
the IRS, from our sanctions enforcers, from everyone involved in the 
U.S. Government.
  Finally, crypto declares that it wants to partially displace the U.S. 
dollar as a reserve currency.
  The Acting CHAIR (Mr. Curtis). The time of the gentleman has expired.
  Ms. WATERS. Mr. Chair, I yield an additional 30 seconds to the 
gentleman from California.
  Mr. SHERMAN. Mr. Chair, you have to understand how important it is.
  We, frankly, are not fiscally responsible in this House. We don't 
collect nearly as much in taxes as we spend in benefits. We are able to 
do that without too much harm because of the role of the U.S. dollar as 
a reserve currency. We have fiscal policies that would make Argentina 
blush, but we are able to do it. The crypto bros see the incredible 
amount of money and power the U.S. Government has by being the world's 
reserve currency and they say no. They want to appropriate that for 
themselves.
  Mr. McHENRY. Mr. Chair, may I inquire how much time I have remaining.
  The Acting CHAIR. The gentleman from North Carolina has 19\1/2\ 
minutes remaining.
  The gentlewoman from California has 7\1/2\ minutes remaining.
  Mr. McHENRY. Mr. Chair, I yield 1\1/2\ minutes to the gentleman from 
North Carolina (Mr. Nickel), my colleague and friend who has been a 
great leader on digital assets and pragmatic policy here in the House.
  Mr. NICKEL. Mr. Chair, I rise in support of the Financial Innovation 
and Technology for the 21st Century Act, or FIT21, which I am proud to 
cosponsor.
  This legislation is a product of hundreds and hundreds of hours of 
bipartisan collaboration, and I was proud to work with Chair McHenry, 
Digital Assets Subcommittee Chair Hill, and members of the House 
Financial Services Committee to get this bill on the floor.
  This is a big deal. We are currently relying on 90-year-old 
securities laws written before the internet even existed. Congress has 
never voted on a regulatory structure for crypto.
  Roughly 20 percent of Americans have invested, traded, or used 
crypto. It is not going anywhere. Whether you love crypto or you hate 
it, you should support regulation, because the status quo just isn't 
working. We can't wait for the next FTX to take action.
  It is clear there are regulatory gaps between the SEC and the CFTC. 
Right now, the United States is the global leader in financial services 
and technology. If we still want to hold this position in 50 years, 
then we need to pass FIT21.
  Support for U.S. leadership in digital assets shouldn't be a partisan 
issue. I urge my colleagues on both sides of the aisle to support this 
legislation.
  Mr. Chair, I include in the Record a letter of support from the 
Chamber of Progress outlining how FIT21 lays out strong rules of the 
road, consumer protections, and supports innovation.

                       [From Chamber of Progress]

 HR 4763: Financial Innovation and Technology for the 21st Century Act 
 (FIT21): Strong Rules, Consumer Protections, and More Oversight Over 
                             Digital Assets

       We need strong, clear federal rules and oversight over the 
     digital assets industry that embrace innovation while 
     protecting consumers and the integrity of markets.
       HR 4763, the Financial Innovation and Technology for the 
     21st Century Act (FIT21), is the first bill regulating the 
     digital assets industry that has received bipartisan approval 
     from both the House Financial Services and House Agriculture 
     Committees. It is scheduled for a floor vote this week.


               House Democrats Supported This Legislation

       A cross section of Members spanning the Democratic Caucus 
     have recognized that this bill provides an effective and 
     needed regulatory framework for digital assets. The 
     legislation:
       Passed the House Financial Services Committee on July 26 
     with six Democratic votes: Reps. Himes, Gottheimer, Torres, 
     Horsford, Nickel, Pettersen.
       Passed the House Agriculture Committee by voice vote on 
     July 27.


                What House Dems Are Saying About HR 4763

       Rep. Ritchie Torres (D-NY): ``For me, the lack of 
     protection for retail investors underscores the fierce 
     urgency around passing a

[[Page H3424]]

     market structure bill to protect the average American 
     consumer.''
       Rep. Jim Himes (D-CT): ``I'm a deep skeptic of this 
     industry, but we deserve better than the status quo.''
       Rep, Wiley Nickel (D-NC): ``I firmly believe in the SEC's 
     mission to protect investors, but for this to be effective, 
     Congress needs to pass legislation with a clear regulatory 
     framework.''
       Rep. Yadira Caraveo (D-CO): ``This is not a perfect bill. 
     But I believe that it is a good step in the right 
     direction.''


Bill Expands the Federal Government's Role in Regulating Digital Assets

       Current securities laws and regulations do not account for 
     the complexities of digital assets. This legislation expands 
     the authority of the CFTC and SEC, giving them joint 
     oversight over all digital assets, allowing them to issue 
     joint rulemakings, and ensuring market safety and investor 
     protection. HR 4763 also gives the SEC clear authority over 
     certain digital assets that do not meet requirements to be 
     regulated by the CFTC. This allows the SEC to allocate their 
     limited resources to regulating solely those digital assets 
     that fall within its jurisdiction. Additionally, the CFTC 
     will receive an increase in funding to adequately fulfill 
     their oversight responsibilities.
       HR 4763 also requires the GAO to conduct studies on the 
     development of emerging technology in digital assets, like 
     non-fungible tokens (NFTs), and directs the CFTC and SEC to 
     study the impact of digital assets on markets and investors 
     through codified FinTech programs and Joint Advisory 
     Committees.


                  Protects Consumers from the Next FTX

       Given that roughly 20 percent of Americans have invested, 
     traded or used cryptocurrency, the digital asset industry 
     will continue to attract American investors for years to 
     come. HR 4763 provides much-needed consumer protection by 
     filling the regulatory gaps between the SEC and CFTC, 
     creating accountability for digital asset companies through 
     registration and disclosures, requiring companies to 
     establish policies to mitigate potential conflicts of 
     interest, and giving regulators increased power over bad 
     actors.
       Communities of color are investing in digital assets at a 
     higher rate than most Americans. According to Pew Research 
     Center polls in 2021 and 2022, some 20 percent of Black, 
     Hispanic and Asian U.S. adults have bought, traded or used 
     cryptocurrency, compared with 13 percent of white adults. 
     These communities are at increased risk of losing their 
     investments if similar events like FTX, Terra/Luna and others 
     continue to happen without regulatory safeguards for 
     Americans.


Protects America's National Security & Ensures American Oversight Over 
                                 Crypto

       By enhancing oversight of digital assets through the CFTC 
     and SEC, HR 4763 ensures all digital assets will be subjected 
     to transparency and compliance metrics that would deter 
     illicit financing, money laundering and other financial 
     crimes. The ability for regulators to issue clear rules for 
     the digital asset industry will prevent threats to our 
     financial system and keep digital asset companies from 
     relocating abroad to countries with fewer rules.
       There are good national security reasons to keep the 
     industry under the Federal government's watchful eye. For 
     example, after Vladimir Putin ordered an invasion of Ukraine, 
     the U.S. government released economic sanctions against 
     Russia that included instructions for American digital asset 
     exchanges to block Russian users from handling currency 
     through their services.
       While U.S.-based digital asset exchanges abided by our 
     sanctions, international exchanges like Binance refused, 
     continuing to serve Russian users and creating a potential 
     loophole for Russian actors to finance war operations through 
     their markets. Throwing away our jurisdiction over an 
     emerging global financial industry, no matter its flaws, 
     would jeopardize America's influence on the world stage.

                              {time}  1530

  Ms. WATERS. Mr. Chair, I yield 4 minutes to the gentleman from 
Illinois (Mr. Foster), who is the ranking member of the Subcommittee on 
Financial Institutions and Monetary Policy.
  Mr. FOSTER. Mr. Chair, I thank Chair Waters for yielding.
  Mr. Chair, I rise in opposition to this bill.
  I am encouraged by the dialogue and collaboration that has taken 
place between the House Financial Services Committee and the House Ag 
Committee on this bill. I believe in the potential of distributive 
ledger technology. I am, in fact, the co-chair of the Congressional 
Blockchain Caucus and perhaps the only Member of Congress who has 
actually programmed a blockchain client.
  However, I cannot support this bill in its current form. To that end, 
my office submitted three constructive clarifying amendments, none of 
which were made in order by the Rules Committee.
  This legislation contains several fatal flaws.
  First, this legislation largely shifts oversight of the digital 
assets industry away from the Securities and Exchange Commission which 
has a long track record of successfully protecting retail investors 
from abuse in the financial markets toward the CFTC which has 
traditionally overseen markets with significantly less retail 
participation.
  Secondly, it would create a safe harbor for wannabe pirates through a 
so-called intent to register that shields crypto firms from SEC 
investor protection rules before the agencies even have time to write 
the rules.
  Thirdly, the bill was not crafted through regular order. This version 
of the bill contains a new and dangerous title that was never 
considered by the Financial Services Committee, title II, which would 
create a new class of investment in contract assets which has the 
potential to undermine decades of legal precedent governing the 
securities laws, and it would create opportunities for regulatory 
arbitrage.
  Instead, it was airdropped in during closed-door negotiations and 
before it was materialized for a final vote today. That is not regular 
order.
  Finally, this bill also fails to address fundamental challenges of 
digital assets related to uncontrolled anonymity of self-hosted digital 
wallets that I believe must be addressed for the digital asset industry 
to accede to a healthy and sustainable future over the long term.
  For example, to be regulated as a commodity under this bill, no 
person or group can have owned more than 20 percent of the assets at 
any point over the preceding 12 months.
  Mr. Chair, how can this possibly be guaranteed when unknown fractions 
of ownership are held in anonymous self-hosted wallets?
  This bill requires the SEC to issue beneficial ownership disclosure 
rules, however, the SEC has little or no means of compelling 
individuals or firms in other countries to comply with such a 
requirement.
  This beneficial ownership test could be skewed by noncompliant 
foreign owners, by individuals spreading their holdings across multiple 
wallets, or by dead or lost crypto that artificially inflates the 
amount of the asset that is currently judged to be in circulation.
  The list goes on.
  This legislation actually ties the hands of the top financial crimes 
watchdog, the FinCEN, by limiting their ability to respond to issues 
related to self-custody of digital wallets which they will tell you is 
the main issue that they struggle with every day in trying to prevent 
financial crimes.
  Given the widespread use of digital assets by bad actors, we should 
strengthen the authorities of FinCEN and not weaken them.
  My colleagues and I, as I said, offered several constructive 
amendments to this bill to clarify and address these issues, and the 
Rules Committee, controlled by the majority, unfortunately, chose to 
exclude every one of them from today's debate.
  Given the content of this bill and its failure to address these 
issues, I cannot support this bill, and I encourage my colleagues to 
vote ``no.''
  Mr. McHENRY. Mr. Chairman, I yield 2 minutes to the gentleman from 
Minnesota (Mr. Emmer), who is a great leader for digital assets, 
cryptocurrency, and innovation.
  Mr. EMMER. Mr. Chair, today we have an opportunity to determine 
whether the next iteration of the internet will be designed by 
Americans or if it will, instead, reflect the values of some other 
nation. FIT21 gives us that opportunity and unlocks a larger 
conversation beyond innovation.
  This bill is about national security. It is about consumer 
protection. It is about global competitiveness. It is about shaping 
what the future global digital economy looks like and how it functions.
  Currently, all online transactions are intermediated, but as we move 
deeper into the digital age, digital assets are key to decentralizing 
the internet so Americans can transact directly with each other, no 
intermediary needed.
  Without crypto, we don't have this ability, and I think giving 
Americans the choice to do business through an intermediary or directly 
with each other is important. Having that choice will fundamentally 
alter the digital economy, unlocking new opportunities for Americans 
and individuals across the world in ways we haven't even begun to 
contemplate.

[[Page H3425]]

  However, this Congress can no longer stand by as regulators squander 
this opportunity right within our grasp. This administration has 
demonstrated they simply are not willing to allow the digital asset 
industry to innovate in the United States. For every legal 
inconsistency or regulatory hurdle they produce, instead of coherent 
and informed guidance, they drive American digital asset users into 
less safe jurisdictions.
  Mr. Chair, this is why FIT21 is significant. It sets clear and 
consistent rules for American innovators. Among the many important 
provisions in this bill is my Securities Clarity Act, bipartisan 
language tailored specifically to digital assets that provides the 
legal flexibility for a digital asset project to transition from 
centralization to decentralization.

  This transition is critical to the future of the peer-to-peer digital 
economy. I thank the chairmen and my friends on the other side of the 
aisle for working with me to incorporate this section into the bill 
today. Their work on this extensive framework will allow Americans to, 
once again, lead the way.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, may I inquire as to the time remaining on 
both sides.
  The Acting CHAIR (Mr. Van Drew). The gentleman from North Carolina 
has 16 minutes remaining. The gentlewoman from California has 4 minutes 
remaining.
  Mr. McHENRY. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Colorado (Ms. Caraveo), who has been a fantastic leader on the 
Agriculture Committee on digital assets.
  Ms. CARAVEO. Mr. Chair, I thank Mr. McHenry for yielding.
  Mr. Chair, I rise today in support of H.R. 4763, the Financial 
Innovation and Technology for the 21st Century Act, because the time 
has come for us to establish a comprehensive regulatory system for 
digital assets.
  About 70 percent of digital assets are currently unregulated. That 
leaves a large number of retail investors unprotected in a volatile 
market where many people have already lost their life savings.
  There is clearly a gap in oversight over our digital asset cash 
markets, and I believe the status quo is unacceptable. Despite previous 
volatility, a significant number of Americans continue to own and 
invest in digital assets in an unprotected manner.
  As Congress falls behind other nations in the race to establish a 
clear regulatory framework, we run the risk of industry players taking 
their services and customers abroad, including to foreign jurisdictions 
with insufficient regulations.
  Since we began this process over a year ago, I made it a point to 
work across the aisle with Chairs Thompson and Johnson to improve this 
bill as much as possible. I am happy to report that the bill retains 
many of the provisions that I fought for, with one of the most 
important pieces being a funding mechanism for the CFTC. Increased 
funding will be vital for the CFTC as they take on further oversight 
activities and engage in a rulemaking process.
  I thank my colleagues, both Democrats and Republicans, who have 
helped strengthen the consumer protections in this bill, including 
strengthening disclosure requirements, market integrity, and 
transparency. Further protections include stricter regulatory 
requirements for emerging financial technologies, prohibiting 
commingling of customer funds with firm funds, and establishing a 
process of temporary oversight before rulemaking is complete.
  I am excited about the innovation these technologies have to offer, 
which is why I believe they deserve a comprehensive regulatory 
environment, but making sure customers and retail investors are 
protected as they navigate this space remains a top priority. I believe 
we have made significant improvements in that direction.
  I am looking forward to continuing to move this bill forward and 
taking a first real step toward regulation of a market that more of our 
constituents are engaging in every day.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, the gentlewoman from California has indeed 
been a great advocate for consumer protection.
  Mr. Chair, I yield 1 minute to the gentleman from New Jersey (Mr. 
Gottheimer).
  Mr. GOTTHEIMER. Mr. Chairman, I rise in support of the bipartisan 
Financial Innovation and Technology for the 21st Century Act. This 
well-reasoned and thoughtful bipartisan legislation is the result of 
rigorous research and bipartisan negotiation by the Financial Services 
Committee, which I proudly helped lead with Representatives McHenry and 
Hill.
  I thank them both and all of my colleagues on both sides of the aisle 
who have worked so hard to make sure that consumers in our country are 
protected.
  Cryptocurrency is here, and it has a tremendous economic potential 
for our country. My State, New Jersey, ranks second nationwide in 
crypto ownership by proportion, and the key is now in making sure we 
protect Americans who own it and ensure our country can realize the 
economic and jobs potential it has to offer.
  For that to happen, we need rules of the road to guide entrepreneurs 
and businesses, to embrace innovators, and to protect consumers.
  This bill offers protections that are fit for the 21st century. FIT21 
takes commonsense steps to safeguard consumers in their investments and 
strengthen market oversight.
  The legislation includes key transparency and accountability 
measures.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. McHENRY. Mr. Chair, I yield an additional 30 seconds to the 
gentleman from New Jersey.
  Mr. GOTTHEIMER. At the same time, FIT21 eliminates regulatory 
redundancies so the SEC and CFTC work together to protect investors and 
crack down on nefarious crypto users.
  Finally, this legislation spurs American-led innovation, encouraging 
entrepreneurs and businesses to invest here instead of going abroad to 
other nations with no consumer protections.
  Mr. Chair, I encourage my colleagues to vote for this important 
innovative and bipartisan legislation. It is fit to become law if we 
work together.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from New 
York (Mr. Molinaro), who is a leader on the Agriculture Committee.

  Mr. MOLINARO. Mr. Chairman, for far too long, the U.S. digital asset 
ecosystem has been plagued by regulatory uncertainty. Consumers, yes, 
have fallen victim to scams, hacks, market manipulation, and 
bankruptcies after intermediaries misused customer funds and were 
unable to meet their obligations.
  Thanks to the leadership of Chairmen McHenry and Thompson, 
Representatives Dusty Johnson and French Hill, we finally have a 
framework, thanks to the work of many before us today that will set a 
regulatory foundation to protect consumers and innovators alike all the 
while ensuring future American leadership in this space.
  This bipartisan bill does, in fact, provide consumer protections in a 
functional, regulatory framework that will ensure the digital asset 
ecosystem is safe for investors.
  This bill accomplishes this by delivering the transparency consumers 
expect and need to make informed decisions and prevent brokers from 
engaging in manipulative practices that harm American investors.
  This regulatory certainty will also drive financial inclusion by 
promoting technology that can foster economic growth in underserved 
communities and expand opportunities for economic participation.
  Mr. Chair, I encourage my colleagues to support the bill.
  Ms. WATERS. Mr. Chair, I continue to reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1\1/2\ minutes to the gentleman from 
Ohio (Mr. Davidson), who is the vice chair of the Individual Assets and 
Financial Technology Subcommittee and the OG, as they say, in the 
crypto space.
  Mr. DAVIDSON. Mr. Chair, I rise in strong support of this long 
overdue legislation. It builds on the framework that my colleagues and 
I have worked on for at least 6 years beginning with the Token Taxonomy 
Act in 2018.

[[Page H3426]]

  Its core is a bright-line test to define what digital assets or 
securities are regulated by the SEC and which are commodities under the 
jurisdiction of the CFTC.
  Innovators and investors will no longer risk their freedom and their 
fortunes by simply launching a company and raising capital. The law 
will be clear, and regulation by selective enforcement must end.
  Additionally, and perhaps most notably, this bill also provides 
first-ever Federal level protection for self-custody of digital assets. 
This protection, which is very intentional, mirrors my Keep Your Coins 
Act, and it is a giant step toward restoring the right to privacy and 
private property protecting permissionless transactions using digital 
assets.
  In an account-based financial system where Americans must rely on 
intermediaries, self-custody provides the only protection against third 
parties controlling the individual's transactions.
  Thirdly, self-custody provides the first line of consumer protection 
where individuals can eliminate third-party liabilities who hold their 
assets.
  For too long we have pushed innovation and investment in digital 
asset projects overseas as Congress has constantly failed to bring the 
clarity that we need. We finally have the chance to end this trend and 
solidify ourselves as the leaders in this industry.
  Mr. Chair, I urge the Senate to quickly take up this bipartisan 
legislation and send it to the President's desk as soon as possible. 
Please vote ``yes.''

                              {time}  1545

  Ms. WATERS. Mr. Chair, I include in the Record the following 
statements:
  The Statement of Administration Policy from the Biden administration 
opposing this bill;
  The statement from SEC Chair Gensler raising serious concerns about 
this bill;
  A letter from the Treasury Department to me, dated July 20, 2023, 
expressing serious concerns about this bill;
  A letter from the North American Securities Administrators 
Association opposing this bill; and
  A letter from 48 stakeholders opposing this bill.

                   Statement of Administration Policy


  H.R. 4763--Financial Innovation and Technology for the 21st Century 
              Act--Rep. Thompson, R-PA, and 11 cosponsors

       The Administration opposes passage of H.R. 4763, which 
     would affect the regulatory structure for digital assets in 
     the United States. The Administration is eager to work with 
     Congress to ensure a comprehensive and balanced regulatory 
     framework for digital assets, building on existing 
     authorities, which will promote the responsible development 
     of digital assets and payment innovation and help reinforce 
     United States leadership in the global financial system. H.R. 
     4763 in its current form lacks sufficient protections for 
     consumers and investors who engage in certain digital asset 
     transactions. The Administration looks forward to continued 
     collaboration with Congress on developing legislation for 
     digital assets that includes adequate guardrails for 
     consumers and investors while creating the conditions needed 
     for innovation, and further time will be needed for such 
     collaboration.
                                  ____

                                                     May 22, 2024.

   Statement on the Financial Innovation and Technology for the 21st 
                              Century Act

      (By Gary Gensler, Chair, Securities and Exchange Commission)


                              Introduction

       For 90 years, the federal securities laws have played a 
     crucial role in protecting the public. These critical 
     protections were created in the wake of the Great Depression 
     after many Americans suffered the consequences of 
     inadequately regulated capital markets. We saw sky-high 
     unemployment, bread lines, and shantytowns springing up due 
     to mass foreclosures.
       Back then, the rules didn't exist. That's why President 
     Roosevelt and Congress created the SEC and the laws it 
     administers.
       At their core is the critical concept of registering 
     securities that will be offered to the public and registering 
     the intermediaries that facilitate the exchange of those 
     securities. For securities, registration means that issuers 
     provide robust disclosures and are liable if their material 
     statements are untruthful. For intermediaries, registration 
     brings with it rulebooks that prevent fraud and manipulation, 
     safeguards against conflicts of interest, proper disclosures, 
     segregation of customer assets, oversight by a self-
     regulatory organization, and routine inspection by the SEC.
       Today, these rules do exist.
       Many market participants in the crypto industry, however, 
     have shown their unwillingness to comply with applicable laws 
     and regulations for more than a decade, variously arguing 
     that the laws do not apply to them or that a new set of rules 
     should be created and retroactively applied to them to excuse 
     their past conduct. Widespread noncompliance has resulted in 
     widespread fraud, bankruptcies, failures, and misconduct. As 
     a result of criminal charges and convictions, some of the 
     best-known leaders in the crypto industry are now in prison, 
     awaiting sentencing, or subject to extradition back to the 
     United States.
       The SEC, during both Republican and Democratic 
     Administrations, has allocated enforcement resources to 
     holding crypto market participants accountable. Courts have 
     time and again agreed with the SEC, ruling that the 
     securities laws apply when crypto assets or crypto-related 
     investment schemes are offered or sold as investment 
     contracts.


    The Financial Innovation and Technology for the 21st Century Act

       The Financial Innovation and Technology for the 21st 
     Century Act (``FIT21'') would create new regulatory gaps and 
     undermine decades of precedent regarding the oversight of 
     investment contracts, putting investors and capital markets 
     at immeasurable risk.
       First, the bill would remove investment contracts that are 
     recorded on a blockchain from the statutory definition of 
     securities and the time-tested protections of much of the 
     federal securities laws.
       Further, by removing this set of investment contracts from 
     the statutory list of securities, the bill implies what 
     courts have repeatedly ruled--but what crypto market 
     participants have attempted to deny--that many crypto assets 
     are being offered and sold as securities under existing law.
       Second, the bill allows issuers of crypto investment 
     contracts to self-certify that their products are a 
     ``decentralized'' system and then be deemed a special class 
     of ``digital commodities'' and thus not subject to SEC 
     oversight. Whether something is a ``digital commodity'' would 
     be subject to self-certification by ``any person'' that files 
     a certification. The SEC would only have 60 days to review 
     and challenge the certification that a product is a digital 
     commodity. Those that the SEC successfully challenges would 
     be re-classified as restricted digital assets and subject to 
     the bill's lighter-touch SEC oversight regime that excludes 
     many core protections. There are more than 16,000 crypto 
     assets that currently exist. Given limits on staff resources, 
     and no new resources provided by the bill, it is implausible 
     that the SEC could review and challenge more than a fraction 
     of those assets. The result could be that the vast majority 
     of the market might avoid even limited SEC oversight 
     envisioned by the bill for crypto asset securities.
       Third, the bin's regulatory structure abandons the Supreme 
     Court's long-standing Howey test that considers the economic 
     realities of an investment to determine whether it is subject 
     to the securities laws. Instead, the bill makes that 
     determination based on labels and the accounting ledger used 
     to record transactions. It is akin to determining the level 
     of investor protection based on whether a transaction is 
     recorded in a notebook or a software database. But it's the 
     economic realities that should determine whether an asset is 
     subject to the federal securities laws, not the type of 
     recordkeeping ledger. The bill's result would be weaker 
     investor protection than currently exists for those assets 
     that meet the Howey test.
       Fourth, for those crypto investment contracts that would 
     still fall under the SEC's remit the bill seeks to replace 
     Roosevelt's investor protection framework with fewer 
     protections than investors are afforded in every other type 
     of investment. Doing so increases risk to the American 
     public.
       Fifth, the bill specifically excludes crypto asset trading 
     systems from the definition of an exchange and thus removes, 
     for investors on crypto asset trading platforms, the 
     protections that benefit investors on registered exchanges. 
     These crypto trading platforms would be able to legally 
     comingle their functions in a way that fosters conflicts of 
     interest, may allow trading against their customers, and 
     reduces custody protections for their customers.
       Sixth, the legislation creates an exemption from regulation 
     under this Act for any entity or organization that falls 
     under a broadly defined category called ``Decentralized 
     Finance.'' Any number of firms would qualify for the 
     exemption, regardless of potential conflicts of interest. 
     This would include firms that intermediate crypto securities 
     transactions.
       Finally, the bill could be read to functionally eliminate 
     the current Regulation A and Regulation D offering 
     restrictions for crypto securities by creating a new exempt 
     offering framework. Non-accredited investors would be allowed 
     to purchase crypto assets worth up to 10 percent of their net 
     worth or annual income before the issuer would be required to 
     provide any disclosure. That's a lot of risk for ordinary 
     investors to take on without disclosure.


                  Risks to the Broader Capital Markets

       The self-certification process contemplated by the bill 
     risks investor protection not just in the crypto space; it 
     could undermine the broader $100 trillion capital markets by 
     providing a path for those trying to escape robust 
     disclosures, prohibitions preventing the loss and theft of 
     customer funds, enforcement by the SEC, and private rights of 
     action for investors in the federal courts. It

[[Page H3427]]

     could encourage non-compliant entities to try to choose what 
     regulatory regimes they wish to be subjected to--not based on 
     economic realities, but potentially based on a label.
       What if perpetrators of pump and dump schemes and penny 
     stock pushers contend that they're outside of the securities 
     laws by labeling themselves as crypto investment contracts or 
     self-certifying that they are decentralized systems? The SEC 
     would only have 60 days to contest their self-certification.


                               Conclusion

       History has shown for 90 years that robust securities 
     regulation both creates trust in markets and fosters 
     innovation. There are countless examples of American 
     companies across many industries that have made world-
     changing innovations while also registering their securities. 
     It is through the securities laws that we get full, fair, and 
     truthful disclosure that arms investors with the information 
     they need to make investment decisions and enables regulators 
     to guard against the types of fraud we've seen in the crypto 
     field.
       The crypto industry's record of failures, frauds, and 
     bankruptcies is not because we don't have rules or because 
     the rules are unclear. It's because many players in the 
     crypto industry don't play by the rules. We should make the 
     policy choice to protect the investing public over 
     facilitating business models of noncompliant firms.
                                  ____



                                   Department of the Treasury,

                                    Washington, DC, July 20, 2023.
     Hon. Maxine Waters,
     Ranking Member, Committee on Financial Services, House of 
         Representatives, Washington, DC.
       Dear Representative Waters: Thank you for your June 23, 
     2023, letter requesting feedback on a legislative proposal to 
     revise the market structure for digital assets.
       As you know, in response to President Biden's March 9, 
     2022, Executive Order 14067 on Ensuring Responsible 
     Development of Digital Assets, the U.S. Department of the 
     Treasury (``Treasury'') prepared reports covering a range of 
     topics related to digital assets, including current use cases 
     of digital assets and their effects on consumers, investors, 
     and businesses. In addition, the Financial Stability 
     Oversight Council (''FSOC'') published a report on the 
     potential financial stability risks posed by digital assets. 
     Events that have occurred since publishing these reports--
     including the failures of large crypto firms, runs on 
     stablecoins, and losses to investors and consumers--have 
     confirmed and reinforced many of the risks and concerns 
     identified in the reports.
       These events have also reinforced the reports' 
     recommendations for how to address these risks. First, the 
     existing market regulatory framework is designed to address 
     many of the risks posed by digital assets. For example, the 
     protections and principles of the existing framework--
     including governance and risk management standards, and 
     protections against commingling of customer assets--are 
     directly responsive to the failures of large crypto 
     platforms. Accordingly, where existing requirements apply, 
     they must be enforced rigorously so that the same protections 
     and principles that apply in markets for other financial 
     assets apply in markets for digital assets.
       At the same time, the FSOC report also identified discrete 
     gaps in existing regulatory authority and recommended that 
     Congress expand regulators' authorities to address these 
     gaps. First, the FSOC recommended that Congress provide 
     authority over the spot market for non-security digital 
     assets. Today, these markets are subject to limited direct 
     federal regulation and, as a result, are not subject to the 
     same protections that are designed to ensure orderly trading, 
     prevent conflicts of interest, and protect investors. Second, 
     the FSOC recommended that Congress ensure that regulators 
     have visibility into the activities of affiliates and 
     subsidiaries of federally regulated intermediaries. Today, 
     digital asset platforms may have affiliates or subsidiaries 
     operating under different regulatory frameworks, and no 
     single regulator may have visibility into the risks across 
     the entire business. Finally, and as we have discussed 
     previously, FSOC recommended establishing a regulatory 
     framework for stablecoins.
       In developing these recommendations and when considering 
     legislative proposals, we are guided by our and the FSOC's 
     prior work on digital assets. More specifically,
       Existing authorities should be preserved. As discussed 
     above, the existing market regulatory framework is designed 
     to address many of the risks of digital assets. Exceptions 
     and limitations to the existing framework--whether on a 
     provisional or ongoing basis--would leave investors without 
     critical protections and undermine market integrity. For 
     example, provisional or temporary exemptions should not 
     exclude core protections that are critical to an effective 
     market regulatory regime, such as requirements that ensure 
     orderly trading and to protect against conflicts of interest. 
     Immunizing issuers and platforms from enforcement of prior 
     violations prevents redress of harms done to investors and 
     undermines market integrity. On an ongoing basis, limiting 
     market regulators ability and discretion to act would 
     undermine their ability to provide clarity to market 
     participants.
       Same risk, same activity, same regulatory outcome. 
     Activities that bear the same risks should be subject to the 
     same regulatory outcome. To that end, when creating new 
     regulatory categories--e.g., new pathways to access capital 
     markets, or distinguishing a type of trading platforms--
     policymakers must consider carefully how existing products or 
     services may be affected, either disadvantaged relative to 
     the new category or migrating to take advantage of more 
     favorable treatment. Technological differences may be 
     relevant to regulatory treatment, but only insofar as these 
     distinctions inform the conduct of the activity and how risks 
     manifest. The process for accessing capital markets, along 
     with the conduct of secondary market activity within those 
     markets, should reflect the underlying risks, not the 
     technology used. Fraud, misstatements, and other misconduct 
     in digital asset markets do not suggest that the underlying 
     technology is associated with a reduction in or change to the 
     underlying risks for investors. Moreover, regulatory 
     distinctions based on technology alone are prone to arbitrage 
     or obsolescence, in part because they do not always 
     appropriately reflect the underlying risks. Finally, 
     regulatory arbitrage also may have a wide range of financial 
     stability and other risks if activities that bear the same 
     risks are subject to different rules or if firms can operate 
     in a manner that prevents regulators from assessing the 
     totality of the organization's risks. Today, the operations 
     and organizational structures of digital asset trading 
     platforms may result in having different regulatory regimes 
     for different affiliates or subsidiaries, such that no single 
     regulator has a view into operations of the whole. By adding 
     new regulatory distinctions without appropriately addressing 
     the underlying risks of the activity or conduct, the proposal 
     could amplify these risks.
       Robust regulation of spot markets. Investors in non-
     security digital asset spot markets, which includes many 
     retail investors, should have the same basic protections as 
     are present in other trading markets. Accordingly, and 
     consistent with the principles above, regulatory authority 
     should cover a range of subjects, including conflicts of 
     interest, abusive trading practices, margin, trade reporting, 
     governance, capital, recordkeeping, governance, custody, and 
     settlement. Regulatory authority should be accompanied by 
     resources sufficient to ensure that implementation is 
     effective.
       We appreciate your leadership on these issues and share 
     your concerns that many digital assets present significant 
     risks to consumers, investors, and businesses, and have the 
     potential to pose significant risks to the broader financial 
     system. We also appreciate your engagement with Treasury on 
     these issues, and we look forward to working with you and 
     your staff in the future. If you have any further questions, 
     please do not hesitate to contact the Office of Legislative 
     Affairs.
           Sincerely,
                                                Jonathan Davidson.
         North American Securities Administrators Association, 
           Inc.,
                                                     May 21, 2024.
     Re Vote NO on H.R. 4763, the Financial Innovation and 
         Technology Act for the 21st Century Act, As Amended

     Hon. Mike Johnson,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Hakeem Jeffries,
     Democratic Leader, House of Representatives,
     Washington, DC.
       Dear Speaker Johnson and Democratic Leader Jeffries: On 
     behalf of the North American Securities Administrators 
     Association, Inc. (``NASAA''), I write to express strong 
     opposition to H.R. 4763, the Financial Innovation and 
     Technology for the 21st Century Act, as amended (``H.R. 
     4763''). In short, H.R. 4763 would create a bespoke, light-
     touch regime under federal securities and commodities laws to 
     benefit market participants that elect to use blockchain and 
     other distributed ledger technologies (``DLTs'') to raise 
     capital, manage risk, and trade products. As explained below, 
     over time, this bill could upend decades of industry, 
     judicial, legislative, and regulatory work to build capital 
     markets that are the gold standard. Near-term, the bill would 
     nullify or otherwise severely complicate the ability of 
     securities regulators to fulfill their missions.
       To begin, H.R. 4763 would supplant long-standing and 
     critical components of securities laws through the 
     introduction of new defined terms into our federal market 
     frameworks for products such as ``digital assets,'' 
     ``investment contract assets,'' and ``digital commodities.'' 
     Indeed, the point of entry to access this regime would be the 
     definition of a ``digital asset.'' The bill would define such 
     products as any fungible digital representation of value that 
     (i) can be exclusively possessed and transferred, person to 
     person, without necessary reliance on an intermediary, (ii) 
     is recorded on a cryptographically secured public distributed 
     ledger, and (iii) is not a product enumerated in H.R. 4763, 
     which in short is a list of selected products treated as 
     securities and commodities under federal law. With respect to 
     ``digital assets'' that run on a DLT that is certified as 
     ``decentralized,'' meaning no one person or entity had 
     ``unilateral authority'' during the lookback period to 
     control the operation of or access to the system, H.R. 4763 
     would treat them as ``digital commodities.'' This designation 
     would place them and associated intermediaries under the 
     Commodity Futures Trading Commission (``CFTC''). By contrast, 
     for those ``digital assets'' that run

[[Page H3428]]

     on a DLT that is not ``decentralized'' enough to qualify as a 
     ``digital commodity,'' H.R. 4763 would treat them as 
     ``digital assets,'' ``restricted digital assets'' or 
     ``securities,'' depending on the facts. This designation 
     would place or keep them and associated intermediaries under 
     the Securities and Exchange Commission (``SEC''). Alarmingly, 
     H.R. 4763 would define ``investment contract assets'' by 
     carrying over the ``digital assets'' definition and then 
     essentially carving the product out of federal securities 
     laws, thereby creating a new gap, specifically the investment 
     contracts assets gap with no federal market regulator in 
     charge.
       Staying on the bill's impact on the SEC's regulation of 
     ``digital assets,'' the legislation would establish a new 
     minimally transparent market for transactions ``involving the 
     offer or sale of units of a digital asset'' that meet 
     specified criteria. In short, H.R. 4763 would create an 
     exemptive pathway for raising capital under the Securities 
     Act of 1933 (``1933 Act''). Issuers relying on the exemption 
     could raise as much as $75 million within a 12-month period 
     with certain limits on sales to non-accredited investors.
       Importantly, while H.R. 4763 would prevent state 
     governments from requiring issuers to register their digital 
     asset offerings with the states, the legislation would 
     preserve the ability of states to investigate and if 
     appropriate bring enforcement actions for fraud and require 
     notice filings and associated fees. Anti-fraud authority and 
     notice filings are important tools that mirror existing state 
     authority for certain other federal ``covered securities.'' 
     However, they are insufficient regulatory tools when it comes 
     to authority meant to stop potential harm before it is 
     inflicted on retail investors. Unfortunately, fraud tied to 
     the offer and sale of digital asset securities has been and 
     continues to be a top investor threat.
       Further, H.R. 4763 would introduce several new defined 
     terms under federal securities law for intermediaries 
     associated with ``digital assets'' such as a new category 
     called a ``digital asset broker.'' Creating such bespoke new 
     categories, particularly when they would or could be 
     redundant of existing categories such as broker-dealer 
     agents, would add complexity and costs to our federal market 
     frameworks, with no net-benefit for investors. Indeed, years 
     after the adoption of SEC Regulation Best Interest and Form 
     CRS, many investors still struggle to distinguish between 
     broker-dealer agents and investment adviser representatives. 
     Injecting new, largely redundant digital asset intermediaries 
     would only create more confusion and more conflicts for 
     retail investors.
       Undoubtedly, the deregulatory nature of this bill would 
     prompt so-called traditional market participants to explore 
     the use of DLTs if only to access a regime that has less 
     transparency and less robust standards than the present one. 
     We have seen time-and-again that market behaviors shift to 
     more opaque areas of the markets, a move observable most 
     recently in the now widespread use of the SEC Regulation D, 
     Rule 506(b) exemption in lieu of public offerings. In 
     addition to further reducing transparency in our markets, 
     such a shift would create new competition concerns, 
     particularly for small market participants who generally 
     cannot afford to use the latest technology.
       In sum, we believe this legislation began as a well-
     intentioned effort to fill what was described initially as a 
     potential regulatory gap for so-called virtual currencies. 
     Fast forward to today, the legislation that has emerged in 
     the form of H.R. 4763 introduces anti-competitive, overly 
     complicated, costly, and unwarranted changes to the laws that 
     have protected investors and promoted robust capital markets 
     for decades.
       Should you have any questions, please do not hesitate to 
     contact me or Kristen Hutchens, NASAA's Director of Policy 
     and Government Affairs, and Policy Counsel.
           Respectfully,
                                                     Joseph Brady,
     NASAA Executive Director.
                                  ____

                                                     May 20, 2024.
     Hon. Mike Johnson,
     Speaker of the House, House of Representatives,
     Washington, DC.
     Hon. Hakeem Jeffries,
     Minority Leader, House of Representatives,
     Washington, DC.
       Dear Speaker Johnson and Minority Leader Jeffries, We, the 
     undersigned organizations and individuals, write to you today 
     to express our opposition to H.R. 4763, the Financial 
     Innovation and Technology for the 21st Century Act (The 
     ``FIT'' Act). We urge you and Members of Congress to vote 
     against this bill when it comes to floor this week. Many 
     signatories of this letter also wrote to the House Financial 
     Services and Agriculture Committees last year expressing 
     their opposition to this bill when it was marked up in 
     Committee. We see little in the new version of this bill 
     (despite format and cosmetic changes) to assuage our 
     concerns.
       Consumers have lost trillions due to the 2022-2023 crypto 
     collapse, in addition to the billions lost directly to 
     widespread scams, fraud and theft found throughout the 
     industry. Public opinion has largely soured on these 
     speculative investments. Venture capital funding, which 
     pumped crypto hype for years, often for their own firms' 
     benefit, plummeted during the crash, migrating to the next 
     shiny object of discussion--AI. Most of the industry's wounds 
     are self-inflicted, and are a result of either failure to 
     adhere to the most basic financial management principles, 
     rampant fraud, or both. Even now, after the prosecutions of 
     Sam Bankman-Fried, Changpeng Zhao, and other seminal crypto 
     players, many industry players large and small are still 
     facing civil and criminal enforcement actions at the state, 
     national and international level, as well as class-action 
     lawsuits from defrauded customers. After 15 years, crypto 
     still struggles to demonstrate viable use cases outside of 
     speculative investment. While other tech has proven its 
     usefulness many times over, crypto's big moment is always 
     just over the horizon. The industry has superficially 
     recovered this year, in part due to controversial approval of 
     spot BTC ETPs by the Securities Exchange Commission. Yet, the 
     scams, hacks, theft, instability, reckless promotional 
     activities, and regulatory evasion that were present during 
     the last crypto bull market remain endemic in the industry 
     today.
       In the midst of this new bubble, a concentrated lobbying 
     effort by the crypto industry, backed primarily by wealthy 
     venture capital investors seeking short-term returns on risky 
     investments, has moved lawmakers to advance this proposal 
     with potentially radical implications that would, in the name 
     of ``crypto innovation'' and so-called ``regulatory 
     clarity,'' complicate and weaken consumer and investor 
     protections for both traditional and crypto investors. It 
     would also broadly reshape financial regulatory agencies' 
     jurisdictions and weaken regulatory oversight of financial 
     products and services writ large. All this could result in 
     real harm to consumers and investors, whether they invest in 
     crypto or not.
       We have numerous concerns about the bill; we discuss a set 
     of crucial problems below.
       A potential backdoor path to undermine the Howey Test. For 
     decades, the Howey Test--a legal framework outlined by a 
     Supreme Court ruling that is used to determine whether 
     certain transactions qualify as investment contracts, and 
     thus must adhere to robust investor safeguards--has a been a 
     vetted and reliable formula used by the courts and regulators 
     to determine whether certain investment activities, assets 
     and actors should subject to investor protection standards 
     under securities law. The crypto industry's efforts to 
     contest the notion that crypto assets aren't securities under 
     Howey have had a rocky trajectory--a few wins, many more 
     losses and settlements in court. As described further below, 
     much of this bill seeks to circumvent these standards, in 
     part by creating a fast-track, rubber stamp process to 
     designate crypto assets as ``commodities,'' thus narrowing 
     application of securities regulation to those assets and 
     related actors.
       But, leaving nothing to chance, Title II of the FIT Act 
     also declares that, if enacted, all ``investment contracts 
     assets''--which are defined in the bill as digital assets--
     are not securities, full stop. This would likely not only 
     undermine application of the Howey Test to crypto assets and 
     activities writ large (even when evidently appropriate) but 
     would also invite non-crypto actors to use this new 
     terminology to evade coverage of the Howey Test for their 
     investment products and activities as well. Instead of 
     applying the principles of ``same activities, same risks, 
     same rules'' which helps create consistent regulatory 
     standards, this bill seeks to re-write large swathes of 
     securities law to create special exceptions and lighter 
     regulations for crypto. And it does so in ways that are 
     likely to undermine consistent regulation and investor 
     protection more broadly. That means even investors who never 
     touch crypto may be harmed by this bill if enacted.
       A blueprint for unregistered stock offerings. This bill 
     creates a blueprint for crypto asset issuers to effectively 
     issue ``unregistered stock,'' by enacting a static 
     decentralized system definition that would allow crypto asset 
     issuers and traders to qualify as decentralized when certain 
     conditions are met, and therefore be exempt from most 
     meaningful securities regulatory oversight. This approach 
     effectively codifies existing crypto business models that are 
     all too often used to exploit retail investors for the 
     benefit of a smaller group of initial investors.
       A roadmap for traditional financial firms to use 
     ``decentralized networks'' to evade more rigorous oversight. 
     Not only could the decentralization framework named above 
     allow crypto firms to largely continue with dangerous 
     business practices as usual; it could also enable traditional 
     financial firms to evade more robust regulatory oversight by 
     claiming their products and platforms meet this 
     decentralization rubric (e.g. ``slap a blockchain on it''), 
     and thus are exempt from conventional regulatory requirements 
     for securities issuers and actors. This would create huge 
     potential risks for consumers, investors, and markets due to 
     less rigorous oversight than they would otherwise see with 
     traditional regulatory approaches.
       A rubber-stamp certification scheme for crypto 
     ``commodities.'' The bill's self-certification process for 
     crypto industry actors makes it very easy for anyone to 
     declare they fall under CFTC jurisdiction (as crypto 
     commodity issuers, brokers, etc.) The SEC is given nominal 
     authority to intervene in these certifications, but the bill 
     sets a 60-day time limit for such interventions, requires the 
     agency to do extensive legal analysis, and allows the CFTC to 
     intervene and applicants to file appeals. This process and 
     unreasonable timeline stacks the deck against the appropriate 
     securities regulation of crypto assets that should fall under 
     the SEC's jurisdiction, and all but guarantees many asset 
     issuers and traders will flood the system seeking 
     registration under the CFTC. This

[[Page H3429]]

     also flies in the face of arguments that this bill is 
     intended to address a targeted gap in crypto spot market 
     regulation, when it's clear the scope of assets and actors 
     that can and would likely seek registration with the CFTC is 
     far greater.
       A vague mandate for CFTC that lacks clarity or sufficient 
     investor and consumer protections. The bill grants the CFTC 
     new regulatory authority over crypto commodities and crypto 
     commodity traders, but the language regarding consumer and 
     investor protection provisions in the bill is vague, narrowly 
     cast, or left up to rulemakings, and not fully commensurate 
     with investor protection provisions found in the securities 
     regulatory framework. If and when the agency sought to 
     further define these elements--especially if they were to do 
     so in a robust way--they would likely face significant 
     litigation from crypto and non-crypto entities alike, as the 
     bill's proposals are not fully supported by or consistent 
     with its current statutory mandate, which is largely focused 
     on anti-fraud and market manipulation measures meant to 
     address activity by large, sophisticated trading firms, not 
     retail crypto investors buying crypto from their phone on an 
     app.
       The legal wrangling that would likely ensue could take 
     years, if not decades, to resolve--leaving crypto investors 
     without adequate regulatory protections in the interim. 
     Lastly, it's possible the regulatory authority given to the 
     CFTC under this bill could undermine the authority of 
     agencies such as the CFPB to regulate and oversee crypto 
     consumer financial products and services as well. All told, 
     instead of the so-called ``regulatory clarity'' the crypto 
     industry claims it needs to be compliant with basic investor 
     protection safeguards, this bill is more likely to introduce 
     regulatory chaos for crypto and non-crypto actors alike.
       Weaker regulatory requirements for many crypto securities. 
     The bill's regulatory provisions for those crypto assets that 
     are deemed `securities' allow for major exemptions for crypto 
     asset issuers whose sales are under $75 million a year--a 
     threshold that would exclude thousands of tokens currently on 
     the market. This exemption would allow crypto securities 
     issuers to issue what amount to private offerings to the 
     broader investor public, without adequate regulatory 
     oversight. Numerous crypto scams and pump and dump schemes 
     have fleeced crypto consumers with sales volumes of far less.
       An expansive temporary safe harbor that tacitly rewards 
     non-compliance. Finally, this bill, via a ``notice of intent 
     to file'' provision, creates an expansive safe harbor for 
     crypto platforms and crypto asset issuers, whereby firms can 
     offer nominal information about their business regulators and 
     ``provisionally'' register with the SEC or CFTC while these 
     agencies enact more formal rules. By giving such safe harbor 
     (which given rulemaking timelines, could potentially last for 
     years) crypto firms currently out of compliance with existing 
     financial regulatory laws would be sheltered from current or 
     future legal action, and would be free to continue with 
     business as usual. We fear this would give such firms a 
     patina of legitimacy which could draw unwary consumers back 
     to crypto, exposing them to more risk and harm.
       A lack of action to protect the right to private action for 
     consumers and investors. The recent collapse or bankruptcy of 
     multiple crypto firms--Terraform Labs, 3AC, Voyager Digital, 
     Celsius Network, BlockFI, Genesis Global Capital, Gemini 
     Trust, FTX, and many others--has illustrated how important it 
     is to preserve investor rights that provide to access US 
     courts, help hold bad actors accountable and enable investors 
     to recover their losses. Yet, this bill fails to create such 
     protections within this framework, does nothing to preserve 
     existing investor rights and does not include a savings 
     clause to retain these rights under state law as well. The 
     bill also fails to address the widespread use by crypto firms 
     of forced arbitration clauses and other onerous limitations 
     on consumers' and investors' rights.
       All told, we believe this bill as written introduces a 
     policy ``cure'' that would be far worse than the disease and 
     create significant harm within and far beyond the crypto 
     industry. Regulators already have extensive existing powers 
     to regulate this industry, the same way other financial 
     products and services are regulated. Those regulatory gaps 
     that may exist require a targeted, narrow, and measured 
     approach, but this bill is sweeping and broad in scope, and 
     should it become law it would profoundly undermine the SEC's 
     ability to support orderly markets and protect investors from 
     harm.
       Instead of pursuing this ill-advised proposal, the best 
     immediate step Congress could take to protect consumers who 
     choose to participate in crypto markets would be to support 
     regulators' ongoing efforts to enforce existing regulatory 
     standards that apply to crypto actors, assets and 
     activities--the very basic elements of securities, banking 
     and consumer finance regulation which provide the foundation 
     for consumer and investor protections in the financial 
     regulatory realm.
       Thank you.
           Signed,


                             organizations

       American Federation of State, County and Municipal 
     Employees (AFSCME); American Association for Justice; 
     American Economic Liberties Project; AFL-CIO; Americans for 
     Financial Reform; Center for American Progress; Center for 
     Economic Integrity: Center for Responsible Lending; Clean 
     Energy Action; Communication Workers of America; Consumer 
     Federation of America; Consumer Federation of California; 
     Consumer Reports; DC Consumer Rights Coalition; Demand 
     Progress; Democracy for America Advocacy Fund; Economic 
     Action Maryland; Empower Our Future.
       Food and Water Watch; Groundwork Data; ISAIAH (MN); 
     Institute for Agriculture and Trade Policy; Maine People's 
     Alliance; National Community Reinvestment Coalition; National 
     Consumer Law Center, on behalf of its low-income clients; P 
     Street; Public Citizen; RAISE Texas; Revolving Door Project; 
     Rise Economy; US PIRG; Take On Wall Street; Texas Appleseed; 
     THIS! Is What We Did; Virginia Poverty Law Center; Woodstock 
     Institute; 20/20 Vision; 350Hawaii.


   Individuals (titles and institutions provided for identification 
    purposes only and do not constitute institutional endorsements)

       Anat Admati, George G.C. Parker Professor of Finance and 
     Economics, Graduate School of Business, Stanford University
       Hilary J. Allen, Professor of Law, Associate Dean for 
     Scholarship, American University Washington College of Law
       Raul Carrillo, Academic Fellow, Columbia Law School
       Brian Flick, Ohio State Chair, National Association of 
     Consumer Advocates
       Richard W. Painter, S. Walter Richey Professor of Corporate 
     Law, University of Minnesota Law School
       Todd Phillips, Assistant Professor of Legal Studies, 
     Robinson College of Business, Georgia State University
       Lee Reiners, Lecturing Fellow, Duke Financial Economics 
     Center and Duke Law
       Jennifer Taub, Professor of Law, Wayne State University Law 
     School (Fall 2024)
       Urska Velikonja, Associate Dean For Academic Affairs, 
     Professor of Law and Anne Fleming Research Professor, 
     Georgetown Law School
       Arthur E. Wilmarth, Jr., Professor Emeritus of Law, George 
     Washington University Law School

  Ms. WATERS. Mr. Chair, I also include an excerpt from Coinbase's Form 
S-1 filing acknowledging the risk that Coinbase could be found to be 
illegally acting outside of securities laws, excerpts from the SEC's 
complaint against Coinbase alleging that Coinbase was illegally acting 
outside of securities laws; and a summary of, and key excerpt from, the 
decision in the case of SEC v. Coinbase, finding that Coinbase was 
indeed acting illegally by failing to comply with existing laws.

                            SEC v. Coinbase


          Excerpt from Coinbase S-1 Filing on ``Risk Factors''

       As indicated in the above complaint, in its Form S-1 filing 
     with the SEC Coinbase acknowledged the risks that the crypto 
     assets it makes available on its platform could be deemed 
     securities, and therefore Coinbase could be found to be 
     engaging in unregistered brokerage, exchange, and/or 
     clearing-agency activity:
       ``A particular crypto asset's status as a ``security'' in 
     any relevant jurisdiction is subject to a high degree of 
     uncertainty and if we are unable to properly characterize a 
     crypto asset, we may be subject to regulatory scrutiny, 
     investigations, fines, and other penalties, which may 
     adversely affect our business, operating results, and 
     financial condition. The SEC and its staff have taken the 
     position that certain crypto assets fall within the 
     definition of a ``security'' under the U.S. federal 
     securities laws. The legal test for determining whether any 
     given crypto asset is a security is a highly complex, fact-
     driven analysis that evolves over time, and the outcome is 
     difficult to predict. The SEC generally does not provide 
     advance guidance or confirmation on the status of any 
     particular crypto asset as a security. Furthermore, the SEC's 
     views in this area have evolved over time and it is difficult 
     to predict the direction or timing of any continuing 
     evolution. It is also possible that a change in the governing 
     administration or the appointment of new SEC commissioners 
     could substantially impact the views of the SEC and its staff 
     . . . With respect to all other crypto assets, there is 
     currently no certainty under the applicable legal test that 
     such assets are not securities, notwithstanding the 
     conclusions we may draw based on our risk-based assessment 
     regarding the likelihood that a particular crypto asset could 
     be deemed a ``security'' under applicable laws.
       The classification of a crypto asset as a security under 
     applicable law has wide-ranging implications for the 
     regulatory obligations that flow from the offer, sale, 
     trading, and clearing of such assets. Persons that effect 
     transactions in crypto assets that are securities in the 
     United States may be subject to registration with the SEC as 
     a ``broker'' or ``dealer.'' Platforms that bring together 
     purchasers and sellers to trade crypto assets that are 
     securities in the United States are generally subject to 
     registration as national securities exchanges, or must 
     qualify for an exemption, such as by being operated by a 
     registered broker-dealer as an alternative trading system, or 
     ATS, in compliance with rules for ATSs. Persons facilitating 
     clearing and settlement of securities may be subject to 
     registration with the SEC as a clearing agency.

[[Page H3430]]

  



  Summary and excerpt from opinion of the judge from the US District 
Court for the Southern District of New York, denying Coinbase's Motion 
               to Dismiss in the case of SEC v. Coinbase

       In March 2024, U.S. District Court Judge Katherine Polk 
     Failla of the Southern District of New York made a 
     preliminary ruling in the Coinbase case, holding that because 
     at least some crypto trades on the Coinbase platform met the 
     longstanding definition of an investment contract, the SEC 
     can move ahead with claims that Coinbase improperly operated 
     as a securities exchange, broker and clearing agency. She 
     also said the SEC adequately alleged that Coinbase sold 
     unregistered securities through its staking program. In an 
     84-page opinion, the judge asserted, among other things, that 
     ``the `crypto' nomenclature may be of recent vintage, but the 
     challenged transactions fall comfortably within the framework 
     that courts have used to identify securities for nearly 
     eighty years.''


 excerpts from the sec's complaint filed against coinbase in june 2023

       ``In September 2019, Coinbase released a framework for 
     analyzing crypto assets that assigned to the crypto asset a 
     score ranging from 1 to 5, with a score of 1 indicating that 
     an ``asset has few or no characteristics consistent with 
     treatment as an investment contract,'' and a score of 5 
     meaning that an ``asset has many characteristics strongly 
     consistent with treatment as a security.'' Meanwhile, between 
     2019 and 2020, Coinbase more than doubled the number of 
     crypto assets available for trading on its platform, and it 
     more than doubled that number again in 2021. During this 
     period, Coinbase made available on its platform crypto assets 
     with high ``risk'' scores under the CRC framework it had 
     adopted. In other words, to realize exponential growth of the 
     Coinbase Platform and boost its own trading profits, Coinbase 
     made the strategic business decision to add crypto assets to 
     the Coinbase Platform even where it recognized the crypto 
     assets had the characteristics of securities.''
       Coinbase generates most of its revenue from transaction 
     fees collected on crypto asset trades made through the 
     Coinbase Platform, Prime, and Wallet. Fox example, in 2021, 
     Coinbase generated $6.8 billion in ``transaction revenue,'' 
     out of a total net revenue of $7.4 billion. Likewise, in 
     2022, Coinbase generated over $2.2 billion in transaction 
     revenue out of a total net revenue of $3.1 billion.
       ``Coinbase also worked closely with issuers of crypto 
     assets who sought to have their crypto assets listed on 
     Coinbase. Coinbase's ``Listings Team'' engaged in a dialogue 
     with issuers focused on identifying potential ``roadblocks'' 
     under Howey. For example, on one occasion, Coinbase 
     identified ``problematic statements'' by an issuer that 
     described its crypto asset ``with language traditionally 
     associated with securities,'' ``implying that the asset is an 
     investment or way to earn profit,'' ``emphasizing the 
     profitability of a project and/or the historic or potential 
     appreciation of the value of the assets,'' and ``using terms 
     referring to the assets that are commonly associated with 
     securities such as `dividend,' `interest,' `investment' or 
     `investors.' '' As ``possible mitigation,'' Coinbase 
     suggested that the issuer ``remove any existing problematic 
     statements, and refrain from making problematic statements in 
     the future.'' Coinbase was thus aware of the risk that it 
     could be making available for trading on the Coinbase 
     Platform crypto assets that were being offered and sold as 
     securities. Indeed, Coinbase touted to the investing public 
     its familiarity with the relevant legal analysis governing 
     the offer and sale of securities.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from Kansas 
(Mr. Mann).
  Mr. MANN. Mr. Chair, my home State of Kansas is a leader when it 
comes to agriculture innovation. A lesson that I have learned from 
Kansans is that we must be ready to respond to new technological 
developments as they come to life. Digital asset markets are no 
exception.
  As these markets have grown, they have lacked congressional guidance 
over who has regulatory and enforcement authority over them. Currently, 
participants are at the mercy of regulators who continue to assert 
jurisdiction and extend their authority through enforcement actions, 
all without legislation and direction from Congress.
  Mr. Chair, I urge my colleagues to support this bill to establish a 
framework consistent with existing financial market requirements while 
acknowledging the uniqueness of digital assets. We can and should give 
consumers, developers, and institutions a clear set of rules that 
provide certainty as they explore this new, innovative technology.
  Digital assets and related blockchain technology have the potential 
to lead us to the next generation of internet technology. Everyone here 
should want America to be a place where this flourishes. That is what 
FIT21 does. It allows America to build on this potential. If we do not 
act now, we cede American leadership, talent, and innovation.
  Mr. Chair, I urge my colleagues to vote ``yes'' on FIT21.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from 
Nebraska (Mr. Flood), a great legislator in the innovation space.
  Mr. FLOOD. Mr. Chair, I would like to focus on one particular aspect 
of this bill. It is exactly responsive to the problems in the digital 
assets market that we have seen over the last couple of years.
  In the aftermath of the collapse of FTX in 2022, we need to ensure 
that there are investor protection rules that prevent anything from 
happening like that again in the United States.
  Under the regulatory structure created by this bill, FTX would not 
have been able to register. FTX would not have been able to comingle 
customer funds that hurt so many of their investors.
  Some of my friends on the other side of the aisle have spoken about 
protecting investors. The great irony is that they are opposing a bill 
that would do just that. If you believe in investor protection, if you 
believe we need to respond to the disaster of FTX, then we need to pass 
a bill that would prevent the next FTX.
  The status quo will not work. It did not work in 2022, and it will 
not work today.
  Mr. Chair, I urge my colleagues to support this bill.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from 
Tennessee (Mr. Rose), a great leader on the Agriculture and Financial 
Services Committees.
  Mr. ROSE. Mr. Chair, I rise in support of H.R. 4763, the Financial 
Innovation and Technology for the 21st Century Act, or the FIT21.
  As a member of the House Financial Services and Agriculture 
Committees, I am proud to support this bill. This product is a joint 
effort between both committees. I commend both Chairman McHenry and 
Chairman Thompson for working on this bipartisan legislation.
  This bill confronts the litigation-heavy approach toward digital 
assets of the Securities and Exchange Commission led by rogue regulator 
Gary Gensler. Chair Gensler has blown past the SEC's statutory mandate 
and instead forced investors and companies to operate in the dark, thus 
risking the United States' standing as a world leader in digital 
innovation.
  The Financial Innovation and Technology for the 21st Century Act will 
allow the U.S. to reclaim our place as a world leader in innovation and 
provides clear rules of the road for cryptocurrencies.
  Mr. Chair, I urge Members to join me in voting ``yes.''
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, may I inquire how much time is remaining.
  The Acting CHAIR. The gentleman from North Carolina has 7 minutes 
remaining. The gentlewoman from California 4 has minutes remaining.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from 
Oklahoma (Mr. Lucas), a leader on the Agriculture Committee, a former 
chair of the Agriculture Committee, a great leader on the Financial 
Services Committee, and also the chair of the Science Committee, before 
I forget.
  Mr. LUCAS. Mr. Chair, the United States has no meaningful Federal 
regulation of the digital asset markets. The attempts by regulators to 
apply existing laws are arbitrary and unclear.
  The fact is, the status quo does not work. Without a clear Federal 
framework, we fail to provide adequate consumer protections and forfeit 
our international competitiveness. This hurts U.S. consumers, 
investors, and the entire economy.
  This is why this bill is so important. The legislation establishes a 
market structure framework that accounts for the unique characteristics 
of digital assets, adhering to the core principles of the Commodity 
Exchange Act.
  U.S. consumers are actively participating in the digital asset 
market, and we should ensure they are protected from fraud and scams. 
This bill does that.
  Mr. Chair, I thank Chairman McHenry and Chairman Thompson for

[[Page H3431]]

all of their work on this legislation, and I urge my colleagues to 
support the bill.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from 
Michigan (Mr. Huizenga), the chair of the Oversight and Investigations 
Subcommittee of the House Financial Services Committee.
  Mr. HUIZENGA. Mr. Chair, since the first cryptocurrency network was 
created nearly 15 years ago, the rules governing the digital asset 
ecosystem have remained unclear.
  As I learned while serving as chairman of the Capital Markets 
Subcommittee, regulators have been using opaque guidelines and 
regulation by enforcement. Meanwhile, Congress has been working on a 
bipartisan path forward.
  Digital assets have the potential to revolutionize payment systems in 
the United States by allowing financial systems to become more 
efficient and more accessible to consumers.
  By passing a comprehensive market structure framework, responsible 
actors will now have greater certainty and consumers will have greater 
protection from bad actors.
  Mr. Chair, our markets are the envy of the world. We must not cede 
any ground. American innovation is a critical element of job creation 
and economic opportunity here in the United States. Congress must look 
to preserve this competitive advantage and not let it leave our shores. 
FIT21 is a historic first step.
  Mr. Chair, I urge all of my colleagues to support this legislation.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, does the gentlewoman have any additional 
speakers?
  Ms. WATERS. Mr. Chair, if the gentleman has no more speakers, I am 
prepared to close.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentlewoman from 
California (Mrs. Kim).
  Mrs. KIM of California. Mr. Chair, millions of Americans from all 
backgrounds see digital assets as one of the many options to take 
wealth creation into their own hands. Unfortunately, the U.S. is 
falling behind compared to other countries, and we have yet to 
establish a viable regulatory framework for digital assets.
  H.R. 4763 establishes a much-needed digital asset market structure 
framework that provides clear rules for digital asset firms while 
providing robust consumer protections. Thus, I believe this bill is 
very fit for the 21st century.
  FIT21 would enable innovation to flourish and the United States to 
lead the world in the development of digital assets. The EU, the U.K., 
Hong Kong--and the list goes on--have established or are in the process 
of establishing a regulatory framework.
  The development of technologies and new financial services tools 
should be taking place here, not elsewhere. Mr. Chair, I urge a ``yes'' 
vote on H.R. 4763.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from 
Wisconsin (Mr. Steil), the chair of the House Administration Committee 
and a great member of the Financial Services Committee on innovation 
policy.
  Mr. STEIL. Mr. Chair, I rise in support of the Financial Innovation 
and Technology for the 21st Century Act.
  Blockchain and digital assets are transforming finance and reshaping, 
in particular, the way the internet works, but responsible innovators 
are being held back by stubborn Washington bureaucrats. It is pushing 
jobs and opportunities overseas.
  For the first time in generations, the U.S. is at risk of missing out 
on leading the next wave of technology. FIT21 provides clear rules for 
digital assets and related businesses. It protects consumers and 
strengthens transparency and accountability. It establishes the United 
States as a technology leader.
  Mr. Chair, I urge my colleagues to support the bill and bring jobs, 
opportunities, and innovation in digital assets to the United States.
  Ms. WATERS. Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield 1 minute to the gentleman from Utah 
(Mr. Curtis).
  Mr. CURTIS. Mr. Chair, I rise in favor of the Financial Innovation 
and Technology for the 21st Century Act, which establishes a much-
needed regulatory framework for digital assets.
  Currently, the lack of clear direction from Congress, combined with 
broad definitions of securities and commodities, has allowed the SEC to 
insert itself into the regulation of cryptocurrency. This has created 
uncertainty and hindered innovation.
  Meanwhile, other countries like Singapore, UAE, and even China have 
capitalized on our unclear regulatory environment. They have developed 
their own framework, positioning themselves as hubs for the digital 
asset ecosystem.
  I believe the United States, and particularly Utah's Silicon Slopes, 
which boasts a growing and thriving blockchain industry, should be the 
global center for digital assets.
  This bill creates an appropriate framework for cryptocurrency 
regulation that fosters innovation and ensures U.S. leadership in 
blockchain technology while also protecting against bad actors like 
FTX.
  The Financial Innovation and Technology for the 21st Century Act 
realigns the SEC with its appropriate regulatory role and designates 
the Commodity Futures Trading Commission as the primary regulator of 
cryptocurrency as a commodity. It also clarifies the SEC's role in 
regulating digital assets.
  Ms. WATERS. Mr. Chair, I yield myself the balance of my time.
  Mr. Chair, as we have heard today, the entities that stand to benefit 
from this bill are not ordinary investors trying to build wealth but 
rather the crypto firms that have chosen not to register with the SEC 
or otherwise comply with the securities laws.
  They have already made billions of dollars unlawfully issuing or 
facilitating the buying and selling of crypto securities, and 
Republicans are now proposing to reward these illegal activities by 
making these activities legal. This is truly preposterous.

  Mr. Lynch, when he spoke, said this was one of the worst pieces of 
legislation he has experienced during his entire career. I understood 
why when I examined this bill and I saw that the Republicans created 
this new definition. This new definition is known as the investment 
contract assets.
  We have talked about this, but even in the Rules Committee, while 
they were talking about how this bill was going to protect consumers, 
they did not debate us about this investment contract asset because 
they know that it created a void. It created a no-man's-land. This was 
created basically so that the crypto companies could be in a space 
without regulation, but it goes further than that.

                              {time}  1600

  It also covers traditional securities so they can be in a space 
without regulations.
  It is not enough to say this is a bad bill. This is not only a bad 
bill, this is a bill where the crypto companies decided they didn't 
like the SEC, they do not want to be regulated, and they were going to 
come to the Congress of the United States. They were going to use their 
power, they were going to use their influence to change the rules of 
the game, and they were going to now go to where the commodities are 
regulated, and they are going to take the securities over there.
  I explained to you that the CFTC is a small agency. I explained to 
you that they don't have a lot of money. I explained to you how much 
smaller they are than the SEC.
  The SEC are the experts. They have been developing regulations for 
this country for 90 years. The SEC is 90 years old, and it is respected 
all over the world. We are the envy of the world because we have an 
SEC.
  When I talk about this void that has been created, there is no way 
that the Members of this Congress can allow that to happen, to allow 
this no-man's-land to exist where the same crypto companies are now 
refusing to register, who are unlawful, that you are going to exonerate 
and then you are going to further give them the opportunity to operate 
without regulation.
  This is unbelievable. How can this happen in the Congress of the 
United States in the House of Representatives where we are supposed to 
represent the people?
  We have an SEC that is a cop on the block. We have an SEC that is 
expert

[[Page H3432]]

in securities. The SEC goes into the courts, and they fight tough 
battles. These battles are long. These battles are hard because they 
are fought by the crypto companies. They don't give up because at least 
they have people who can begin to work on it. We try to give the SEC 
more money to do their work, but they are denied additional 
appropriations by the other side of the aisle.
  The Acting CHAIR (Mr. Fulcher). The time of the gentlewoman has 
expired.
  Mr. McHENRY. Mr. Chair, may I inquire as to how much time I have 
remaining.
  The Acting CHAIR. The gentleman from North Carolina has 2 minutes 
remaining.
  Mr. McHENRY. Mr. Chair, I yield myself the balance of my time.
  Let me speak to this. The void is the lack of a definition of what is 
a digital asset in Federal law. We have none. This bill establishes it. 
We have no consumer protections for crypto today. This bill establishes 
it both at the CFTC with a robust oversight of this industry and the 
SEC with real clarity. That is what this bill does is provide clarity 
for investors and consumers and innovators.
  We are falling behind Europe. This bill catches us up so that we do 
not lose out on innovation policy to the Europeans, to the folks in the 
U.K., to Singapore, to Japan, to Hong Kong that all have regimes 
similar to what we are doing in this bill.
  This is an important bill. It is bipartisan work. Hundreds of hours 
have been put into developing this bill with Members and staff.
  I thank the great partnership I have had with French Hill of the 
Financial Services Committee and Chairman GT Thompson on the Ag 
Committee and Dusty Johnson on the Ag Committee. I also thank the great 
staff on the House Financial Services Committee, Allison Behuniak, who 
has shepherded this bill to this point and Paul Balzano on the Ag 
Committee. They have worked in great partnership and friendship and 
worked through major issues. I thank them for this important 
legislative product.
  We can promote American innovation, consumer protection, and 
leadership with a clear regulatory framework for digital assets. The 
next generation of internet technology is being written. It should be 
written by American innovators here in the United States. We can allow 
that innovation to pass us by, or we can seize the opportunity and pass 
this bill to provide real clarity for innovation policy here in the 
United States.
  Regulatory clarity and consumer protection, that is FIT21.
  Let's vote ``yes'' on this bill and establish bipartisan support for 
crypto in America. Mr. Chair, I yield back the balance of my time.
  The Acting CHAIR. All time for general debate has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule.
  In lieu of the amendments in the nature of a substitute recommended 
by the Committees on Agriculture and Financial Services, printed in the 
bill, an amendment in the nature of a substitute consisting of the text 
of Rules Committee Print 118-33, modified by the amendment printed in 
part A of House Report 118-516, shall be considered as adopted. The 
bill, as amended, shall be considered as the original bill for purpose 
of further amendment under the 5-minute rule and shall be considered as 
read.
  The text of the bill, as amended, is as follows:

                               H.R. 4763

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Financial 
     Innovation and Technology for the 21st Century Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

     TITLE I--DEFINITIONS; RULEMAKING; NOTICE OF INTENT TO REGISTER

Sec. 101. Definitions under the Securities Act of 1933.
Sec. 102. Definitions under the Securities Exchange Act of 1934.
Sec. 103. Definitions under the Commodity Exchange Act.
Sec. 104. Definitions under this Act.
Sec. 105. Rulemakings.
Sec. 106. Notice of intent to register for digital commodity exchanges, 
              brokers, and dealers.
Sec. 107. Notice of intent to register for digital asset brokers, 
              dealers, and trading systems.
Sec. 108. Commodity Exchange Act savings provisions.
Sec. 109. Administrative requirements.
Sec. 110. International harmonization.
Sec. 111. Implementation.

 TITLE II--CLARITY FOR ASSETS OFFERED AS PART OF AN INVESTMENT CONTRACT

Sec. 201. Short title.
Sec. 202. Treatment of investment contract assets.

             TITLE III--OFFERS AND SALES OF DIGITAL ASSETS

Sec. 301. Exempted transactions in digital assets.
Sec. 302. Requirements for offers and sales of certain digital assets.
Sec. 303. Enhanced disclosure requirements.
Sec. 304. Certification of certain digital assets.
Sec. 305. Effective date.

    TITLE IV--REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES AT THE 
                   SECURITIES AND EXCHANGE COMMISSION

Sec. 401. Treatment of digital commodities and other digital assets.
Sec. 402. Authority over permitted payment stablecoins and restricted 
              digital assets.
Sec. 403. Registration of digital asset trading systems.
Sec. 404. Requirements for digital asset trading systems.
Sec. 405. Registration of digital asset brokers and digital asset 
              dealers.
Sec. 406. Requirements of digital asset brokers and digital asset 
              dealers.
Sec. 407. Rules related to conflicts of interest.
Sec. 408. Treatment of certain digital assets in connection with 
              federally regulated intermediaries.
Sec. 409. Exclusion for decentralized finance activities.
Sec. 410. Registration and requirements for notice-registered digital 
              asset clearing agencies.
Sec. 411. Treatment of custody activities by banking institutions.
Sec. 412.  Effective date; administration.
Sec. 413. Discretionary Surplus Fund.

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

Sec. 501. Commission jurisdiction over digital commodity transactions.
Sec. 502. Requiring futures commission merchants to use qualified 
              digital commodity custodians.
Sec. 503. Trading certification and approval for digital commodities.
Sec. 504. Registration of digital commodity exchanges.
Sec. 505. Qualified digital commodity custodians.
Sec. 506. Registration and regulation of digital commodity brokers and 
              dealers.
Sec. 507. Registration of associated persons.
Sec. 508. Registration of commodity pool operators and commodity 
              trading advisors.
Sec. 509. Exclusion for decentralized finance activities.
Sec. 510. Funding for implementation and enforcement.
Sec. 511. Effective date.

            TITLE VI--INNOVATION AND TECHNOLOGY IMPROVEMENTS

Sec. 601. Findings; sense of Congress.
Sec. 602. Codification of the SEC Strategic Hub for Innovation and 
              Financial Technology.
Sec. 603. Codification of LabCFTC.
Sec. 604. CFTC-SEC Joint Advisory Committee on Digital Assets.
Sec. 605. Study on decentralized finance.
Sec. 606. Study on non-fungible digital assets.
Sec. 607. Study on expanding financial literacy amongst digital asset 
              holders.
Sec. 608. Study on financial market infrastructure improvements.

     TITLE I--DEFINITIONS; RULEMAKING; NOTICE OF INTENT TO REGISTER

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

       Section 2(a) of the Securities Act of 1933 (15 U.S.C. 
     77b(a)) is amended by adding at the end the following:
       ``(20) Affiliated person.--
       ``(A) In general.--The term `affiliated person' means a 
     person (including a related person) that--
       ``(i) with respect to a digital asset issuer--

       ``(I) directly, or indirectly through one or more 
     intermediaries, controls, or is controlled by, or is under 
     common control with, such digital asset issuer; or
       ``(II) was described under clause (i) at any point in the 
     previous 3-month period; or

       ``(ii) with respect to any digital asset--

       ``(I) beneficially owns 5 percent or more of the units of 
     such digital asset that are then outstanding; or
       ``(II) was described under clause (i) at any point in the 
     previous 3-month period.

       ``(B) Beneficial ownership disclosure.--The Commission 
     shall issue rules to require a person that beneficially owns 
     5 percent or more of the units of a digital asset that are 
     then outstanding to file with the Commission a report at such 
     time as the Commission determines appropriate.
       ``(21) Blockchain.--The term `blockchain' means any 
     technology--

[[Page H3433]]

       ``(A) where data is--
       ``(i) shared across a network to create a public ledger of 
     verified transactions or information among network 
     participants;
       ``(ii) linked using cryptography to maintain the integrity 
     of the public ledger and to execute other functions; and
       ``(iii) distributed among network participants in an 
     automated fashion to concurrently update network participants 
     on the state of the public ledger and any other functions; 
     and
       ``(B) composed of source code that is publicly available.
       ``(22) Blockchain protocol.--The term `blockchain protocol' 
     means any executable software deployed to a blockchain 
     composed of source code that is publicly available and 
     accessible, including a smart contract or any network of 
     smart contracts.
       ``(23) Blockchain system.--The term `blockchain system' 
     means any blockchain or blockchain protocol.
       ``(24) Decentralized governance system.--
       ``(A) In general.--The term `decentralized governance 
     system' means, with respect to a blockchain system, any 
     rules-based system permitting persons using the blockchain 
     system or the digital assets related to such blockchain 
     system to form consensus or reach agreement in the 
     development, provision, publication, management, or 
     administration of such blockchain system.
       ``(B) Relationship of persons to decentralized governance 
     systems.--Persons acting through a decentralized governance 
     system shall be treated as separate persons unless such 
     persons are under common control.
       ``(C) Exclusion.--The term `decentralized governance 
     system' does not include a system in which--
       ``(i) a person or group of persons under common control 
     have the ability to--

       ``(I) unilaterally alter the rules of consensus or 
     agreement for the blockchain system; or
       ``(II) determine the final outcome of decisions related to 
     the development, provision, publication, management, or 
     administration of such blockchain system;

       ``(ii) a person or group of persons is directly engaging in 
     an activity that requires registration with the Commission or 
     the Commodity Futures Trading Commission other than--

       ``(I) developing, providing, publishing, managing, or 
     administering a blockchain system; or
       ``(II) an activity with respect to which the organization 
     is exempt from such registration; or

       ``(iii) a person or group of persons seeking to knowingly 
     evade the requirements imposed on a digital asset issuer, a 
     related person, an affiliated person, or any other person 
     registered (or required to be registered) under the 
     securities laws, the Financial Innovation and Technology for 
     the 21st Century Act, or the Commodity Exchange Act.
       ``(25) Decentralized system.--With respect to a blockchain 
     system to which a digital asset relates, the term 
     `decentralized system' means the following conditions are 
     met:
       ``(A) During the previous 12-month period, no person--
       ``(i) had the unilateral authority, directly or indirectly, 
     through any contract, arrangement, understanding, 
     relationship, or otherwise, to control or materially alter 
     the functionality or operation of the blockchain system; or
       ``(ii) had the unilateral authority to restrict or prohibit 
     any person who is not a digital asset issuer, related person, 
     or an affiliated person from--

       ``(I) using, earning, or transmitting the digital asset;
       ``(II) deploying software that uses or integrates with the 
     blockchain system;
       ``(III) participating in a decentralized governance system 
     with respect to the blockchain system; or
       ``(IV) operating a node, validator, or other form of 
     computational infrastructure with respect to the blockchain 
     system.

       ``(B) During the previous 12-month period--
       ``(i) no digital asset issuer or affiliated person 
     beneficially owned, in the aggregate, 20 percent or more of 
     the total amount of units of such digital asset that--

       ``(I) can be created, issued, or distributed in such 
     blockchain system; and
       ``(II) were freely transferrable or otherwise used or 
     available to be used for the purposes of such blockchain 
     system;

       ``(ii) no digital asset issuer or affiliated person had the 
     unilateral authority to direct the voting, in the aggregate, 
     of 20 percent or more of the outstanding voting power of such 
     digital asset or related decentralized governance system; or
       ``(iii) the digital asset did not include voting power with 
     respect to any decentralized governance system of the 
     blockchain system.
       ``(C) During the previous 3-month period, the digital asset 
     issuer, any affiliated person, or any related person has not 
     implemented or contributed any intellectual property to the 
     source code of the blockchain system that materially alters 
     the functionality or operation of the blockchain system, 
     unless such implementation or contribution to the source 
     code--
       ``(i) addressed vulnerabilities, errors, regular 
     maintenance, cybersecurity risks, or other technical changes 
     to the blockchain system; or
       ``(ii) were adopted through the consensus or agreement of a 
     decentralized governance system.
       ``(D) During the previous 3-month period, neither any 
     digital asset issuer nor any affiliated person described 
     under paragraph (20)(A) has marketed to the public the 
     digital assets as an investment.
       ``(E) During the previous 12-month period, all issuances of 
     units of such digital asset through the programmatic 
     functioning of the blockchain system were end user 
     distributions. For purposes of the previous sentence, any 
     units of such digital asset that are made available over time 
     and were created in the initial block of the blockchain 
     system shall be considered issued at the point in time of 
     creation.
       ``(26) Digital asset.--
       ``(A) In general.--The term `digital asset' means any 
     fungible digital representation of value that can be 
     exclusively possessed and transferred, person to person, 
     without necessary reliance on an intermediary, and is 
     recorded on a cryptographically secured public distributed 
     ledger.
       ``(B) Exclusions.--The term `digital asset' does not 
     include--
       ``(i) any note, stock, treasury stock, security future, 
     security-based swap, bond, debenture, evidence of 
     indebtedness, certificate of interest or participation in any 
     profit-sharing agreement, collateral-trust certificate, 
     preorganization certificate or subscription, transferable 
     share, voting-trust certificate, certificate of deposit for a 
     security, fractional undivided interest in oil, gas, or other 
     mineral rights, any put, call, straddle, option, privilege on 
     any security, certificate of deposit, or group or index of 
     securities (including any interest therein or based on the 
     value thereof); or
       ``(ii) any asset which, based on its terms and other 
     characteristics, is, represents, or is functionally 
     equivalent to an agreement, contract, or transaction that 
     is--

       ``(I) a contract of sale of a commodity (as defined under 
     section 1a of the Commodity Exchange Act) for future delivery 
     or an option thereon;
       ``(II) a security futures product;
       ``(III) a swap;
       ``(IV) an agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) or 2(c)(2)(D)(i) of the Commodity 
     Exchange Act;
       ``(V) a commodity option authorized under section 4c of the 
     Commodity Exchange Act; or
       ``(VI) a leverage transaction authorized under section 19 
     of the Commodity Exchange Act.

       ``(C) Rule of construction.--Nothing in this paragraph 
     shall be construed to create a presumption that a digital 
     asset is a representation of any type of security not 
     excluded from the definition of digital asset.
       ``(D) Relationship to a blockchain system.--A digital asset 
     is considered to relate to a blockchain system if the digital 
     asset is intrinsically linked to the blockchain system, 
     including--
       ``(i) where the digital asset's value is reasonably 
     expected to be generated by the programmatic functioning of 
     the blockchain system;
       ``(ii) where the digital asset has voting rights with 
     respect to the decentralized governance system of the 
     blockchain system; or
       ``(iii) where the digital asset is issued through the 
     programmatic functioning of the blockchain system.
       ``(E) Treatment of certain digital assets sold pursuant to 
     an investment contract.--A digital asset offered or sold or 
     intended to be offered or sold pursuant to an investment 
     contract is not and does not become a security as a result of 
     being sold or otherwise transferred pursuant to that 
     investment contract.
       ``(27) Digital asset issuer.--
       ``(A) In general.--With respect to a digital asset, the 
     term `digital asset issuer' means any person that, in 
     exchange for any consideration--
       ``(i) issues or causes to be issued a unit of such digital 
     asset to a person; or
       ``(ii) offers or sells a right to a future issuance of a 
     unit of such digital asset to a person.
       ``(B) Exclusion.--The term `digital asset issuer' does not 
     include any person solely because such person deploys source 
     code that creates or issues units of a digital asset that are 
     only distributed in end user distributions.
       ``(C) Prohibition on evasion.--It shall be unlawful for any 
     person to knowingly evade classification as a `digital asset 
     issuer' and facilitate an arrangement for the primary purpose 
     of effecting a sale, distribution, or other issuance of a 
     digital asset.
       ``(28) Digital asset maturity date.--The term `digital 
     asset maturity date' means, with respect to any digital 
     asset, the first date on which 20 percent or more of the 
     total units of such digital asset that are then outstanding 
     as of such date are--
       ``(A) digital commodities; or
       ``(B) digital assets that have been registered with the 
     Commission.
       ``(29) Digital commodity.--The term `digital commodity' has 
     the meaning given that term under section 1a of the Commodity 
     Exchange Act (7 U.S.C. 1a).
       ``(30) End user distribution.--
       ``(A) In general.--The term `end user distribution' means 
     an issuance of a unit of a digital asset that--
       ``(i) does not involve an exchange of more than a nominal 
     value of cash, property, or other assets; and
       ``(ii) is distributed in a broad, equitable, and non-
     discretionary manner based on conditions capable of being 
     satisfied by any participant in the blockchain system, 
     including, as incentive-based rewards--

       ``(I) to users of the digital asset or any blockchain 
     system to which the digital asset relates;
       ``(II) for activities directly related to the operation of 
     the blockchain system, such as mining, validating, staking, 
     or other activity directly tied to the operation of the 
     blockchain system; or
       ``(III) to the existing holders of another digital asset, 
     in proportion to the total units of such other digital asset 
     as are held by each person.

       ``(B) Prohibition on evasion.--It shall be unlawful for any 
     person to facilitate an end user distribution to knowingly 
     evade classification as a digital asset issuer, related 
     person, or an affiliated person, or the requirements related 
     to a digital asset issuance.
       ``(31) Functional system.--With respect to a blockchain 
     system to which a digital asset relates, the term `functional 
     system' means the

[[Page H3434]]

     network allows network participants to use such digital asset 
     for--
       ``(A) the transmission and storage of value on the 
     blockchain system;
       ``(B) the participation in services provided by or an 
     application running on the blockchain system; or
       ``(C) the participation in the decentralized governance 
     system of the blockchain system.
       ``(32) Permitted payment stablecoin.--
       ``(A) In general.--The term `permitted payment stablecoin' 
     means a digital asset--
       ``(i) that is or is designed to be used as a means of 
     payment or settlement;
       ``(ii) the issuer of which--

       ``(I) is obligated to convert, redeem, or repurchase for a 
     fixed amount of monetary value; or
       ``(II) represents will maintain or creates the reasonable 
     expectation that it will maintain a stable value relative to 
     the value of a fixed amount of monetary value;

       ``(iii) the issuer of which is subject to regulation by a 
     Federal or State regulator with authority over entities that 
     issue payment stablecoins; and
       ``(iv) that is not--

       ``(I) a national currency; or
       ``(II) a security issued by an investment company 
     registered under section 8(a) of the Investment Company Act 
     of 1940 (15 U.S.C. 80a-8(a)).

       ``(B) Monetary value defined.--For purposes of subparagraph 
     (A), the term `monetary value' means a national currency, 
     deposit (as defined under section 3 of the Federal Deposit 
     Insurance Act), or an equivalent instrument that is 
     denominated in a national currency.
       ``(33) Related person.--With respect to a digital asset 
     issuer, the term `related person' means--
       ``(A) a founder, promoter, employee, consultant, advisor, 
     or person serving in a similar capacity;
       ``(B) any person that is or was in the previous 6-month 
     period an executive officer, director, trustee, general 
     partner, advisory board member, or person serving in a 
     similar capacity;
       ``(C) any equity holder or other security holder; or
       ``(D) any other person that received a unit of digital 
     asset from such digital asset issuer through--
       ``(i) an exempt offering, other than an offering made in 
     reliance on section 4(a)(8); or
       ``(ii) a distribution that is not an end user distribution 
     described under section 42(d)(1) of the Securities Exchange 
     Act of 1934.
       ``(34) Restricted digital asset.--
       ``(A) In general.--The term `restricted digital asset' 
     means--
       ``(i) prior to the first date on which each blockchain 
     system to which a digital asset relates is a functional 
     system and certified to be a decentralized system under 
     section 44 of the Securities Exchange Act of 1934, any unit 
     of the digital asset held by a person, other than the digital 
     asset issuer, a related person, or an affiliated person, that 
     was--

       ``(I) issued to such person through a distribution, other 
     than an end user distribution described under section 
     42(d)(1) of the Securities Exchange Act of 1934; or
       ``(II) acquired by such person in a transaction that was 
     not executed on a digital commodity exchange;

       ``(ii) during any period when any blockchain system to 
     which a digital asset relates is not a functional system or 
     not certified to be a decentralized system under section 44 
     of the Securities Exchange Act of 1934, any digital asset 
     held by a related person or an affiliated person; and
       ``(iii) any unit of a digital asset held by the digital 
     asset issuer.
       ``(B) Exclusion.--The term `restricted digital asset' does 
     not include a permitted payment stablecoin.
       ``(35) Securities laws.--The term `securities laws' has the 
     meaning given that term under section 3(a) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)).
       ``(36) Source code.--With respect to a blockchain system, 
     the term `source code' means a listing of commands to be 
     compiled or assembled into an executable computer program.''.

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

       Section 3(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)) is amended--
       (8) by redesignating the second paragraph (80) (relating to 
     funding portals) as paragraph (81); and
       (9) by adding at the end the following:
       ``(82) Bank secrecy act.--The term `Bank Secrecy Act' 
     means--
       ``(A) section 21 of the Federal Deposit Insurance Act (12 
     U.S.C. 1829b);
       ``(B) chapter 2 of title I of Public Law 91-508 (12 U.S.C. 
     1951 et seq.); and
       ``(C) subchapter II of chapter 53 of title 31, United 
     States Code.
       ``(83) Digital asset broker.--The term `digital asset 
     broker'--
       ``(A) means any person engaged in the business of effecting 
     transactions in restricted digital assets for the account of 
     others; and
       ``(B) does not include--
       ``(i) a blockchain protocol or a person or group of persons 
     solely because of their development of a blockchain protocol; 
     or
       ``(ii) a bank engaging in certain banking activities with 
     respect to a restricted digital asset in the same manner as a 
     bank is excluded from the definition of a broker under 
     paragraph (4).
       ``(84) Digital asset custodian.--The term `digital asset 
     custodian' means an entity in the business of providing 
     custodial or safekeeping services for restricted digital 
     assets for others.
       ``(85) Digital asset dealer.--The term `digital asset 
     dealer'--
       ``(A) means any person engaged in the business of buying 
     and selling restricted digital assets for such person's own 
     account through a broker or otherwise; and
       ``(B) does not include--
       ``(i) a person that buys or sells restricted digital assets 
     for such person's own account, either individually or in a 
     fiduciary capacity, but not as a part of a regular business;
       ``(ii) a blockchain protocol or a person or group of 
     persons solely because of their development of a blockchain 
     protocol; or
       ``(iii) a bank engaging in certain banking activities with 
     respect to a restricted digital asset in the same manner as a 
     bank is excluded from the definition of a dealer under 
     paragraph (5).
       ``(86) Digital asset trading system.--The term `digital 
     asset trading system'--
       ``(A) means any organization, association, person, or group 
     of persons, whether incorporated or unincorporated, that 
     constitutes, maintains, or provides a market place or 
     facilities for bringing together purchasers and sellers of 
     restricted digital assets or for otherwise performing with 
     respect to restricted digital assets the functions commonly 
     performed by a stock exchange within the meaning of section 
     240.3b-16 of title 17, Code of Federal Regulations, as in 
     effect on the date of enactment of this paragraph; and
       ``(B) does not include a blockchain protocol or a person or 
     group of persons solely because of their development of a 
     blockchain protocol.
       ``(87) Notice-registered digital asset clearing agency.--
     The term `notice-registered digital asset clearing agency' 
     means a clearing agency that has registered with the 
     Commission pursuant to section 17A(b)(9).
       ``(88) Additional digital asset-related terms.--
       ``(A) Securities act of 1933.--The terms `affiliated 
     person', `blockchain system', `decentralized governance 
     system', `decentralized system', `digital asset', `digital 
     asset issuer', `digital asset maturity date', `end user 
     distribution', `functional system', `permitted payment 
     stablecoin', `related person', `restricted digital asset', 
     and `source code' have the meaning given those terms, 
     respectively, under section 2(a) of the Securities Act of 
     1933 (15 U.S.C. 77b(a)).
       ``(B) Commodity exchange act.--The terms `digital 
     commodity', `digital commodity broker', `digital commodity 
     dealer', and `digital commodity exchange' have the meaning 
     given those terms, respectively, under section 1a of the 
     Commodity Exchange Act (7 U.S.C. 1a).''.

     SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.

       Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is 
     amended--
       (1) in paragraph (10)(A)--
       (A) by redesignating clauses (iii) and (iv) as clauses (iv) 
     and (v), respectively; and
       (B) by inserting after clause (ii) the following:
       ``(iii) digital commodity;'';
       (2) in paragraph (11)--
       (A) in subparagraph (A)(i)--
       (i) by redesignating subclauses (III) and (IV) as 
     subclauses (IV) and (V), respectively; and
       (ii) by inserting after subclause (II) the following:

       ``(III) digital commodity;''; and

       (B) by redesignating subparagraph (B) as subparagraph (C) 
     and inserting after subparagraph (A) the following:
       ``(B) Exclusion.--The term `commodity pool operator' does 
     not include--
       ``(i) a decentralized governance system; or
       ``(ii) any excluded activity, as described in section 
     4v.'';
       (3) in paragraph (12)(A)(i)--
       (A) in subclause (II), by adding at the end a semicolon;
       (B) by redesignating subclauses (III) and (IV) as 
     subclauses (IV) and (V), respectively; and
       (C) by inserting after subclause (II) the following:

       ``(III) a digital commodity;'';

       (4) in paragraph (40)--
       (A) by striking ``and'' at the end of subparagraph (E);
       (B) by striking the period at the end of subparagraph (F) 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(G) a digital commodity exchange registered under section 
     5i.''; and
       (5) by adding at the end the following:
       ``(52) Associated person of a digital commodity broker.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `associated person of a digital commodity broker' 
     means a person who is associated with a digital commodity 
     broker as a partner, officer, employee, or agent (or any 
     person occupying a similar status or performing similar 
     functions) in any capacity that involves--
       ``(i) the solicitation or acceptance of an order for the 
     purchase or sale of a digital commodity; or
       ``(ii) the supervision of any person engaged in the 
     solicitation or acceptance of an order for the purchase or 
     sale of a digital commodity.
       ``(B) Exclusion.--The term `associated person of a digital 
     commodity broker' does not include any person associated with 
     a digital commodity broker the functions of which are solely 
     clerical or ministerial.
       ``(53) Associated person of a digital commodity dealer.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `associated person of a digital commodity dealer' 
     means a person who is associated with a digital commodity 
     dealer as a partner, officer, employee, or agent (or any 
     person occupying a similar status or performing similar 
     functions) in any capacity that involves--
       ``(i) the solicitation or acceptance of an order for the 
     purchase or sale of a digital commodity; or
       ``(ii) the supervision of any person engaged in the 
     solicitation or acceptance of an order for the purchase or 
     sale of a digital commodity.
       ``(B) Exclusion.--The term `associated person of a digital 
     commodity dealer' does not include any person associated with 
     a digital commodity dealer the functions of which are solely 
     clerical or ministerial.

[[Page H3435]]

       ``(54) Bank secrecy act.--The term `Bank Secrecy Act' 
     means--
       ``(A) section 21 of the Federal Deposit Insurance Act (12 
     U.S.C. 1829b);
       ``(B) chapter 2 of title I of Public Law 91-508 (12 U.S.C. 
     1951 et seq.); and
       ``(C) subchapter II of chapter 53 of title 31, United 
     States Code.
       ``(55) Digital commodity.--
       ``(A) In general.--The term `digital commodity' means--
       ``(i) any unit of a digital asset held by a person, other 
     than the digital asset issuer, a related person, or an 
     affiliated person, before the first date on which each 
     blockchain system to which the digital asset relates is a 
     functional system and certified to be a decentralized system 
     under section 44 of the Securities Exchange Act of 1934, that 
     was--

       ``(I) issued to the person through an end user distribution 
     described under section 42(d)(1) of the Securities Exchange 
     Act of 1934; or
       ``(II) acquired by such person in a transaction that was 
     executed on a digital commodity exchange;

       ``(ii) any unit of a digital asset held by a person, other 
     than the digital asset issuer, a related person, or an 
     affiliated person, after the first date on which each 
     blockchain system to which the digital asset relates is a 
     functional system and certified to be a decentralized system 
     under section 44 of the Securities Exchange Act of 1934; and
       ``(iii) any unit of a digital asset held by a related 
     person or an affiliated person during any period when any 
     blockchain system to which the digital asset relates is a 
     functional system and certified to be a decentralized system 
     under section 44 of the Securities Exchange Act of 1934.
       ``(B) Exclusion.--The term `digital commodity' does not 
     include a permitted payment stablecoin.
       ``(C) Treatment of adjudicated non-securities.--If, before 
     enactment of this paragraph, a Federal court in a Securities 
     and Exchange Commission enforcement action determines that a 
     digital asset transaction is not an offer or sale of a 
     security, any unit of a digital asset transferred pursuant to 
     the transaction shall be considered a digital commodity, 
     unless the determination is overturned.
       ``(56) Digital commodity broker.--
       ``(A) In general.--The term `digital commodity broker' 
     means any person who, in a digital commodity cash or spot 
     market, is--
       ``(i) engaged in soliciting or accepting orders for the 
     purchase or sale of a unit of a digital commodity from a 
     person that is not an eligible contract participant;
       ``(ii) engaged in soliciting or accepting orders for the 
     purchase or sale of a unit of a digital commodity from a 
     person on or subject to the rules of a registered entity; or
       ``(iii) registered with the Commission as a digital 
     commodity broker.
       ``(B) Exceptions.--The term `digital commodity broker' does 
     not include a person solely because the person--
       ``(i) enters into a digital commodity transaction the 
     primary purpose of which is to make, send, receive, or 
     facilitate payments, whether involving a payment service 
     provider or on a peer-to-peer basis;
       ``(ii) validates a digital commodity transaction, operates 
     a node, or engages in similar activity to participate in 
     facilitating, operating, or securing a blockchain system; or
       ``(iii) is a bank (as defined under section 3(a) of the 
     Securities Exchange Act of 1934) engaging in certain banking 
     activities with respect to a digital commodity in the same 
     manner as a bank is excluded from the definition of a broker 
     under section 3(a)(4) of the Securities Exchange Act of 1934.
       ``(57) Digital commodity custodian.--The term `digital 
     commodity custodian' means an entity in the business of 
     holding, maintaining, or safeguarding digital commodities for 
     others.
       ``(58) Digital commodity dealer.--
       ``(A) In general.--The term `digital commodity dealer' 
     means any person who--
       ``(i) in digital commodity cash or spot markets--

       ``(I) holds itself out as a dealer in a digital commodity;
       ``(II) makes a market in a digital commodity;
       ``(III) has an identifiable business of dealing in a 
     digital commodity as principal for its own account; or
       ``(IV) engages in any activity causing the person to be 
     commonly known in the trade as a dealer or market maker in a 
     digital commodity;

       ``(ii) has an identifiable business of entering into any 
     agreement, contract, or transaction described in subsection 
     (c)(2)(D)(i) involving a digital commodity; or
       ``(iii) is registered with the Commission as a digital 
     commodity dealer.
       ``(B) Exception.--The term `digital commodity dealer' does 
     not include a person solely because the person--
       ``(i) enters into a digital commodity transaction with an 
     eligible contract participant;
       ``(ii) enters into a digital commodity transaction on or 
     through a registered digital commodity exchange;
       ``(iii) 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;
       ``(iv) enters into a digital commodity transaction the 
     primary purpose of which is to make, send, receive, or 
     facilitate payments, whether involving a payment service 
     provider or on a peer-to-peer basis;
       ``(v) validates a digital commodity transaction, operates a 
     node, or engages in similar activity to participate in 
     facilitating, operating, or securing a blockchain system; or
       ``(vi) is a bank (as defined under section 3(a) of the 
     Securities Exchange Act of 1934) engaging in certain banking 
     activities with respect to a digital commodity in the same 
     manner as a bank is excluded from the definition of a dealer 
     under section 3(a)(5) of the Securities Exchange Act of 1934.
       ``(59) Digital commodity exchange.--The term `digital 
     commodity exchange' means a trading facility that offers or 
     seeks to offer a cash or spot market in at least 1 digital 
     commodity.
       ``(60) Digital asset-related definitions.--
       ``(A) Securities act of 1933.--The terms `affiliated 
     person', `blockchain system', `decentralized governance 
     system', `decentralized system', `digital asset', `digital 
     asset issuer', `end user distribution', `functional system', 
     `permitted payment stablecoin', `related person', and 
     `restricted digital asset' have the meaning given the terms, 
     respectively, under section 2(a) of the Securities Act of 
     1933 (15 U.S.C. 77b(a)).
       ``(B) Securities exchange act of 1934.--The terms `digital 
     asset broker' and `digital asset dealer' have the meaning 
     given those terms, respectively, under section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
       ``(61) Mixed digital asset transaction.--The term `mixed 
     digital asset transaction' means an agreement, contract, or 
     transaction involving a digital commodity and--
       ``(A) a security; or
       ``(B) a restricted digital asset.''.

     SEC. 104. DEFINITIONS UNDER THIS ACT.

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

     SEC. 105. RULEMAKINGS.

       (a) Definitions.--The Commodity Futures Trading Commission 
     and the Securities and Exchange Commission shall jointly 
     issue rules to further define the following terms:
       (1) The terms ``affiliated person'', ``blockchain'', 
     ``blockchain system'', ``blockchain protocol'', 
     ``decentralized system'', ``decentralized governance 
     system'', ``digital asset'', ``digital asset issuer'', 
     ``digital asset maturity date'', ``end user distribution'', 
     ``functional system'', ``related person'', ``restricted 
     digital asset'', and ``source code'', as defined under 
     section 2(a) of the Securities Act of 1933.
       (2) The term ``digital commodity'', as defined under 
     section 1a of the Commodity Exchange Act.
       (b) Joint Rulemaking for Exchanges and Intermediaries.--The 
     Commodity Futures Trading Commission and the Securities and 
     Exchange Commission shall jointly issue rules to exempt 
     persons dually registered with the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission from 
     duplicative, conflicting, or unduly burdensome provisions of 
     this Act, the securities laws, and the Commodity Exchange Act 
     and the rules thereunder, to the extent such exemption would 
     foster the development of fair and orderly markets in digital 
     assets, be necessary or appropriate in the public interest, 
     and be consistent with the protection of investors.
       (c) Joint Rulemaking for Mixed Digital Asset 
     Transactions.--The Commodity Futures Trading Commission and 
     the Securities and Exchange 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.
       (d) Protection of Self-custody.--
       (1) In general.--The Financial Crimes Enforcement Network 
     may not issue any rule or order that would prohibit a U.S. 
     individual from--
       (A) maintaining a hardware wallet, software wallet, or 
     other means to facilitate such individual's own custody of 
     digital assets; or
       (B) conducting transactions with and self-custody of 
     digital assets for any lawful purpose.
       (2) Rule of construction.--Paragraph (1) may not be 
     construed to limit the ability of Financial Crimes 
     Enforcement Network to carry out any enforcement action.
       (e) Joint Rulemaking, Procedures, or Guidance for 
     Delisting.--Not later than 30 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 sections 106 and 107 of 
     this Act if the Commissions determine that the listing is 
     inconsistent with the Commodity Exchange Act, the securities 
     laws (including regulations under those laws), or this Act.

[[Page H3436]]

       (f) Joint Rulemaking for Capital Requirements.--The 
     Commodity Futures Trading Commission and the Securities and 
     Exchange Commission shall jointly issue rules to require a 
     person with multiple registrations with the Commodity Futures 
     Trading Commission, the Securities and Exchange Commission, 
     or both such agencies to maintain sufficient capital to 
     comply with the stricter of any applicable capital 
     requirements to which such person is subject to by reason of 
     such registrations.

     SEC. 106. NOTICE OF INTENT TO REGISTER FOR DIGITAL COMMODITY 
                   EXCHANGES, BROKERS, AND DEALERS.

       (a) In General.--
       (1) Notice of intent to register.--Any person may file a 
     notice of intent to register with the Commodity Futures 
     Trading Commission (in this subsection referred to as the 
     ``Commission'') as a--
       (A) digital commodity exchange, for a person intending to 
     register as a digital commodity exchange under section 5i of 
     the Commodity Exchange Act;
       (B) digital commodity broker, for a person intending to 
     register as a digital commodity broker under section 4u of 
     such Act; or
       (C) digital commodity dealer, for a person intending to 
     register as a digital commodity dealer under section 4u of 
     such Act.
       (2) Conditions.--A person filing a notice of intent to 
     register under paragraph (1) shall be in compliance with this 
     section if the person--
       (A) submits to the Commission and continues to materially 
     update a statement of the nature of the registrations the 
     filer intends to pursue;
       (B) submits to the Commission and continues to materially 
     update the information required by subsections (b) and (c);
       (C) complies with subsection (d);
       (D) is a member of a futures association registered under 
     section 17 of the Commodity Exchange Act, and complies with 
     the rules of the association, including the rules of the 
     association pertaining to customer disclosures and protection 
     of customer assets; and
       (E) pays all fees and penalties imposed on the person under 
     section 510 of this Act.
       (b) Disclosure of General Information.--A person filing a 
     notice of intent to register under subsection (a) shall 
     disclose to the Commission the following:
       (1) Information concerning the management of the person, 
     including information describing--
       (A) the ownership and management of the person;
       (B) the financial condition of the person;
       (C) affiliated entities;
       (D) potential conflicts of interest;
       (E) the address of the person, including--
       (i) the place of incorporation;
       (ii) principal place of business; and
       (iii) an address for service of process; and
       (F) a list of the States in which the person has 
     operations.
       (2) Information concerning the operations of the person, 
     including--
       (A) a general description of the person's business and the 
     terms of service for United States customers;
       (B) a description of the person's account approval process;
       (C) any rulebook or other customer order fulfilment rules;
       (D) risk management procedures;
       (E) a description of the product listing process; and
       (F) anti-money laundering policies and procedures.
       (c) Listing Information.--A person filing a notice of 
     intent to register under subsection (a) shall provide to the 
     Commission and the Securities and Exchange Commission a 
     detailed description of--
       (1) the specific characteristics of each digital asset 
     listed or offered by the person, including information 
     regarding the digital asset's market activity, distribution, 
     and functional use; and
       (2) the product listing determination made by the person 
     for each asset listed or offered for trading by the person.
       (d) Requirements.--A person filing a notice of intent to 
     register under subsection (a) shall comply with the following 
     requirements:
       (1) Statutory disqualifications.--Except to the extent 
     otherwise specifically provided by Commission or registered 
     futures association rule, regulation, or order, the person 
     shall not permit an individual who is subject to a statutory 
     disqualification under paragraph (2) or (3) of section 8a of 
     the Commodity Exchange Act to effect or be involved in 
     effecting transactions on behalf of the person, if the person 
     knew, or in the exercise of reasonable care should have 
     known, of the statutory disqualification.
       (2) Books and records.--The person shall keep their books 
     and records open to inspection and examination by the 
     Commission and by any registered futures association of which 
     the person is a member.
       (3) Customer disclosures.--The person shall disclose to 
     customers--
       (A) information about the material risks and 
     characteristics of the assets listed for trading on the 
     person;
       (B) information about the material risks and 
     characteristics of the transactions facilitated by the 
     person;
       (C) information about the location and manner in which the 
     digital assets of the customer will be and are custodied;
       (D) information concerning the policies and procedures of 
     the person that are related to the protection of the data of 
     customers of the person; and
       (E) in their disclosure documents, offering documents, and 
     promotional material--
       (i) in a prominent manner, that they are not registered 
     with or regulated by the Commission; and
       (ii) the contact information for the whistleblower, 
     complaint, and reparation programs of the Commission.
       (4) Customer assets.--
       (A) In general.--The person shall--
       (i) 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 money, assets, and property of 
     the customer;
       (ii) treat and deal with all money, assets, and property, 
     including any rights associated with any such money, assets, 
     or property, of any customer received as belonging to the 
     customer;
       (iii) calculate the total digital asset obligations of the 
     person, and at all times hold money, assets, or property 
     equal to or in excess of the total digital asset obligations; 
     and
       (iv) not commingle such money, assets and property held to 
     meet the total commodity obligation with the funds of the 
     person or use the money, assets, or property to margin, 
     secure, or guarantee any trade or contract, or to secure or 
     extend the credit, of any customer or person other than the 
     one for whom the same are held, except that--

       (I) the money, assets, and property of any customer may be 
     commingled with that of any other customer, if separately 
     accounted for; and
       (II) the share of the money, assets, and property, as in 
     the normal course of business are necessary to margin, 
     guarantee, secure, transfer, adjust, or settle a contract of 
     sale of a commodity asset, may be withdrawn and applied to do 
     so, including the payment of commissions, brokerage, 
     interest, taxes, storage, and other charges lawfully accruing 
     in connection with the contract of sale of a digital 
     commodity.

       (B) Additional resources.--
       (i) In general.--This section shall not prevent or be 
     construed to prevent the person from adding to the customer 
     money, assets, and property required to be segregated under 
     subparagraph (A), additional amounts of money, assets, or 
     property from the account of the person as the person 
     determines necessary to hold money, assets, or property equal 
     to or in excess of the total digital asset obligations of the 
     person.
       (ii) Treatment as customer funds.--Any money, assets, or 
     property deposited pursuant to clause (i) shall be considered 
     customer property within the meaning of this subsection.
       (e) Compliance.--
       (1) In general.--A person who has filed a notice of intent 
     to register under this section and is in compliance with this 
     section shall be exempt from Securities and Exchange 
     Commission rules and regulations pertaining to registering as 
     a national securities exchange, broker, dealer, or clearing 
     agency, for activities related to a digital asset.
       (2) Noncompliance.--Paragraph (1) shall not apply if, after 
     notice from the Commission and a reasonable opportunity to 
     correct the deficiency, a person who has submitted a notice 
     of intent to register is not in compliance with this section.
       (3) Anti-fraud and anti-manipulation.--Paragraph (1) shall 
     not be construed to limit any anti-fraud, anti-manipulation, 
     or false reporting enforcement authority of the Commission, 
     the Securities and Exchange Commission, a registered futures 
     association, or a national securities association.
       (4) Delisting.--Paragraph (1) shall not be construed to 
     limit the authority of the Commission and the Securities and 
     Exchange Commission to jointly require a person to delist an 
     asset for trading if the Commission and the Securities and 
     Exchange Commission determines that the listing is 
     inconsistent with the Commodity Exchange Act, the securities 
     laws (including regulations under those laws), or this Act.
       (f) Registration.--
       (1) In general.--A person may not file a notice of intent 
     to register with the Commission after the Commission has 
     finalized its rules for the registration of digital commodity 
     exchanges, digital commodity brokers, or digital commodity 
     dealers, as appropriate.
       (2) Transition to registration.--Subsection (e)(1) shall 
     not apply to a person who has submitted a notice of intent to 
     register if--
       (A) the Commission--
       (i) determines that the person has failed to comply with 
     the requirements of this section; or
       (ii) denies the application of the person to register; or
       (B) the digital commodity exchange, digital commodity 
     broker, or digital commodity dealer that filed a notice of 
     intent to register failed to apply for registration as such 
     with the Commission within 180 days after the effective date 
     of the final rules of the Commission for the registration of 
     digital commodity exchanges, digital commodity brokers, or 
     digital commodity dealers, as appropriate.
       (g) Rulemaking.--
       (1) In general.--Within 180 days after the date of the 
     enactment of this Act, a registered futures association shall 
     adopt and enforce rules applicable to persons required by 
     subsection (a)(3) to be members of the association.
       (2) Fees.--The rules adopted under paragraph (1) may 
     provide for dues in accordance with section 17(b)(6) of the 
     Commodity Exchange Act.
       (3) Effect.--A registered futures association shall submit 
     to the Commission any rule adopted under paragraph (1), which 
     shall take effect pursuant to the requirements of section 
     17(j) of the Commodity Exchange Act.
       (h) Liability of the Filer.--It shall be unlawful for any 
     person to provide false information in support of a filing 
     under this section if the person knew or reasonably should 
     have known that the information was false.
       (i) Whistleblower Enforcement.--For purposes of section 23 
     of the Commodity Exchange Act, the term ``this Act'' includes 
     this section.

     SEC. 107. NOTICE OF INTENT TO REGISTER FOR DIGITAL ASSET 
                   BROKERS, DEALERS, AND TRADING SYSTEMS.

       (a) In General.--
       (1) Notice of intent to register.--Any person may file a 
     notice of intent to register with

[[Page H3437]]

     the Securities and Exchange Commission (in this section 
     referred to as the ``Commission'') as--
       (A) a digital asset trading system, for a person intending 
     to register as a digital asset trading system under section 
     6(m) of the Securities Exchange Act of 1934;
       (B) a digital asset broker, for a person intending to 
     register as a digital asset broker under section 15H of the 
     Securities Exchange Act of 1934; or
       (C) a digital asset dealer, for a person intending to 
     register as a digital asset dealer under section 15H of the 
     Securities Exchange Act of 1934.
       (2) Conditions.--A person filing a notice of intent to 
     register under paragraph (1) shall be in compliance with this 
     section if the person--
       (A) submits to the Commission and continues to materially 
     update a statement of the nature of the registrations the 
     filer intends to pursue;
       (B) submits to the Commission and continues to materially 
     update the information required by subsections (b) and (c);
       (C) complies with the requirements of subsection (d); and
       (D) is a member of a national securities association 
     registered under section 15A of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78o-3) and complies with the rules of the 
     association, including the rules of the association 
     pertaining to customer disclosures and protection of customer 
     assets.
       (b) Disclosure of General Information.--A person filing a 
     notice of intent to register under subsection (a) shall 
     disclose to the Commission the following:
       (1) Information concerning the management of the person, 
     including information describing--
       (A) the ownership and management of the person;
       (B) the financial condition of the person;
       (C) affiliated entities;
       (D) potential conflicts of interest;
       (E) the address of the person, including--
       (i) the place of incorporation;
       (ii) the principal place of business; and
       (iii) an address for service of process; and
       (F) a list of the States in which the person has 
     operations.
       (2) Information concerning the operations of the person, 
     including--
       (A) a general description of the person's business and the 
     terms of service for United States customers;
       (B) a description of the person's account approval process;
       (C) any rulebook or other customer order fulfilment rules;
       (D) risk management procedures;
       (E) a description of the product listing process; and
       (F) anti-money laundering policies and procedures.
       (c) Listing Information.--A person filing a notice of 
     intent to register under subsection (a) shall provide to the 
     Commission and the Commodity Futures Trading Commission a 
     detailed description of--
       (1) the specific characteristics of each digital asset 
     listed or offered for trading by the person, including 
     information regarding the digital asset's market activity, 
     distribution, and functional use; and
       (2) the product listing determination made by the person 
     for each asset listed or offered for trading by the person.
       (d) Requirements.--A person filing a notice of intent to 
     register under subsection (a) shall comply with the following 
     requirements:
       (1) Statutory disqualification.--Except to the extent 
     otherwise specifically provided by Commission or a national 
     securities association rule, regulation, or order, the person 
     may not permit an individual who is subject to a statutory 
     disqualification (as defined under section 3(a) of the 
     Securities Exchange Act of 1934) to effect or be involved in 
     effecting transactions on behalf of the person if the person 
     knows, or in the exercise of reasonable discretion should 
     know, the individual is subject to a statutory 
     disqualification.
       (2) Books and records.--The person shall keep their books 
     and records open to inspection and examination by the 
     Commission and any national securities association of which 
     they are a member.
       (3) Customer disclosures.--The person shall disclose to 
     customers--
       (A) information about the material risks and 
     characteristics of the assets listed for trading on the 
     person;
       (B) information about the material risks and 
     characteristics of the transactions facilitated by the 
     person;
       (C) information about the location and manner in which the 
     digital assets of the customer will be and are custodied;
       (D) information concerning the person's policies and 
     procedures related to the protection of customers' data; and
       (E) in their disclosure documents, offering documents, and 
     promotional material--
       (i) in a prominent manner, that they are not registered 
     with or regulated by the Commission; and
       (ii) the contact information for the whistleblower, 
     complaint, and reparation programs of the Commission.
       (4) Customer assets.--
       (A) In general.--The person shall--
       (i) 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 money, assets, and property of 
     the customer;
       (ii) treat and deal with all money, assets, and property, 
     including any rights associated with any such money, assets, 
     or property, of any customer received as belonging to the 
     customer;
       (iii) segregate all money, assets, and property received 
     from any customer of the person from the funds of the person, 
     except that--

       (I) the money, assets, and property of any customer may be 
     commingled with that of any other customer, if separately 
     accounted for; and
       (II) the share of the money, assets, and property, as in 
     the normal course of business are necessary to margin, 
     guarantee, secure, transfer, adjust, or settle a contract of 
     sale of a digital asset, may be withdrawn and applied to do 
     so, including the payment of commissions, brokerage, 
     interest, taxes, storage, and other charges lawfully accruing 
     in connection with the contract of sale of a digital asset.

       (B) Additional resources.--
       (i) In general.--This section shall not prevent or be 
     construed to prevent the person from adding to the customer 
     money, assets, and property required to be segregated under 
     subparagraph (A) additional amounts of money, assets, or 
     property from the account of the person as the person 
     determines necessary to hold money, assets, or property equal 
     to or in excess of the total digital asset obligation of the 
     person.
       (ii) Treatment as customer funds.--Any money, assets, or 
     property deposited pursuant to clause (i) shall be considered 
     customer property within the meaning of this subsection.
       (e) Compliance.--
       (1) In general.--A person who has filed a notice of intent 
     to register under this section and is in compliance with this 
     section shall be exempt from Commission rules and regulations 
     pertaining to registering as a national securities exchange, 
     broker, dealer, or clearing agency, for activities related to 
     a digital asset.
       (2) Noncompliance.--Paragraph (1) shall not apply if, after 
     notice from the Commission and a reasonable opportunity to 
     correct the deficiency, a person who has submitted a notice 
     of intent to register is not in compliance with this section.
       (3) Anti-fraud and anti-manipulation.--Paragraph (1) shall 
     not be construed to limit any fraud, anti-manipulation, or 
     false reporting enforcement authority of the Commission, the 
     Commodity Futures Trading Commission, a registered futures 
     association, or a national securities association.
       (4) Delisting.--Paragraph (1) shall not be construed to 
     limit the authority of the Commission and the Commodity 
     Futures Trading Commission to jointly require a person to 
     delist an asset for trading if the Commission and the 
     Commodity Futures Trading Commission determines that the 
     listing is inconsistent with the Commodity Exchange Act, the 
     securities laws (including regulations under those laws), or 
     this Act.
       (f) Registration.--
       (1) In general.--A person may not file a notice of intent 
     to register with the Commission after the Commission has 
     finalized its rules for the registration of digital asset 
     brokers, digital asset dealers, digital asset trading 
     systems, and notice-registered clearing agencies, as 
     appropriate.
       (2) Transition to registration.--Subsection (e)(1) shall 
     not apply to a person who has submitted a notice of intent to 
     register if--
       (A) the Commission--
       (i) determines that the person has failed to comply with 
     the requirements of this section; or
       (ii) denies the application of the person to register; or
       (B) the digital asset broker, digital asset dealer, or 
     digital asset trading system that filed a notice of intent to 
     register failed to apply for registration as such with the 
     Commission within 180 days after the effective date of the 
     Commission's final rules for the registration of digital 
     asset brokers, digital asset dealers, and digital asset 
     trading systems, as appropriate.
       (g) Liability of the Filer.--It shall be unlawful for any 
     person to provide false information in support of a filing 
     under this section if the person knew or reasonably should 
     have known that the information was false.
       (h) National Securities Association.--
       (1) In general.--A national securities association may 
     adopt and enforce rules written specifically for persons 
     filing a notice of intent to register under subsection (a), 
     including rules that prescribe reasonable fees and charges to 
     defray the costs of the national securities association 
     related to overseeing such persons.
       (2) Approval by the commission.--With respect to a 
     provisional rule described under paragraph (1) filed with the 
     Commission, the Commission shall--
       (A) not later than 90 days following the date of such 
     filing, approve the rule if the Commission determines that 
     the rule effectuates the purposes of this section; and
       (B) make such approval on a summary basis pursuant to 
     section 19(b)(3)(B) of the Securities Exchange Act of 1934.
       (i) Whistleblower Enforcement.--For purposes of section 21F 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78u-6), the 
     term ``securities laws'' includes this section.

     SEC. 108. COMMODITY EXCHANGE ACT SAVINGS PROVISIONS.

       (a) In General.--Nothing in this Act shall affect or apply 
     to, or be interpreted to affect or apply to--
       (1) any agreement, contract, or transaction that is subject 
     to the Commodity Exchange Act as--
       (A) a contract of sale of a commodity for future delivery 
     or an option on such a contract;
       (B) a swap;
       (C) a security futures product;
       (D) an option authorized under section 4c of such Act;
       (E) an agreement, contract, or transaction described in 
     section 2(c)(2)(C)(i) of such Act; or
       (F) a leverage transaction authorized under section 19 of 
     such Act; or
       (2) the activities of any person with respect to any such 
     agreement, contract, or transaction.
       (b) Prohibitions on Spot Digital Commodity Entities.--
     Nothing in this Act authorizes, or shall be interpreted to 
     authorize, a digital commodity exchange, digital commodity

[[Page H3438]]

     broker, or digital commodity dealer to engage in any 
     activities involving any transaction, contract, or agreement 
     described in subsection (a)(1), solely by virtue of being 
     registered or filing notice of intent to register as a 
     digital commodity exchange, digital commodity broker, or 
     digital commodity dealer.
       (c) Definitions.--In this section, each term shall have the 
     meaning provided in the Commodity Exchange Act or the 
     regulations prescribed under such Act.

     SEC. 109. ADMINISTRATIVE REQUIREMENTS.

       (a) Securities and Exchange Act of 1934.--Section 21A of 
     the Securities and Exchange Act of 1934 (15 U.S.C. 78u-1) is 
     amended by adding at the end the following:
       ``(j) Duty of Members and Federal Employees Related to 
     Digital Assets.--
       ``(1) In general.--Solely for purposes of the insider 
     trading prohibitions arising under this Act, including 
     section 10 and Rule 10b-5 thereunder, each individual who is 
     a Member of Congress, an employee of Congress, or an employee 
     or agent of any department or agency of the Federal 
     Government owes a duty arising from a relationship of trust 
     and confidence to the Congress, the United States Government, 
     and the citizens of the United States with respect to 
     material, nonpublic information related to a restricted 
     digital asset that is derived from such individual's position 
     as a Member of Congress, employee of Congress, or as an 
     employee or agent of a department or agency of the Federal 
     Government or gained from the performance of such 
     individual's official responsibilities.
       ``(2) Definitions.--ln this subsection, the terms `Member 
     of Congress' and `employee of Congress' have the meaning 
     given those terms, respectively, under subsection (g)(2).''.
       (b) Commodity Exchange Act.--Section 4c(a) of the Commodity 
     Exchange Act (7 U.S.C. 6c(a)) is amended--
       (1) in paragraph (3)--
       (A) in subparagraph (B), by striking ``or'' at the end;
       (B) in subparagraph (C), by striking the period and 
     inserting ``; or''; and
       (C) by adding at the end the following:
       ``(D) a contract of sale of a digital commodity.'';
       (2) in paragraph (4)--
       (A) in subparagraph (A)--
       (i) in clause (ii), by striking ``or'' at the end;
       (ii) in clause (iii), by striking the period and inserting 
     ``; or''; and
       (iii) by adding at the end the following:
       ``(iv) a contract of sale of a digital commodity.'';
       (B) in subparagraph (B)--
       (i) in clause (ii), by striking ``or'' at the end;
       (ii) in clause (iii), by striking the period and inserting 
     ``; or''; and
       (iii) by adding at the end the following:
       ``(iv) a contract of sale of a digital commodity.''; and
       (C) in subparagraph (C)--
       (i) in clause (ii), by striking ``or'' at the end;
       (ii) by striking ``(iii) a swap, provided however,'' and 
     inserting the following:
       ``(iii) a swap; or
       ``(iv) a contract of sale of a digital commodity,
     provided, however,''; and
       (iii) by striking ``clauses (i), (ii), or (iii)'' and 
     insert ``any of clauses (i) through (iv)''.

     SEC. 110. INTERNATIONAL HARMONIZATION.

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

     SEC. 111. IMPLEMENTATION.

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

 TITLE II--CLARITY FOR ASSETS OFFERED AS PART OF AN INVESTMENT CONTRACT

     SEC. 201. SHORT TITLE.

       This title may be referred to as the ``Securities Clarity 
     Act of 2024''.

     SEC. 202. TREATMENT OF INVESTMENT CONTRACT ASSETS.

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

             TITLE III--OFFERS AND SALES OF DIGITAL ASSETS

     SEC. 301. EXEMPTED TRANSACTIONS IN DIGITAL ASSETS.

       (a) In General.--The Securities Act of 1933 (15 U.S.C. 77a 
     et seq.) is amended--
       (1) in section 4(a), by adding at the end the following:
       ``(8) transactions involving the offer or sale of units of 
     a digital asset by a digital asset issuer, if--
       ``(A) the aggregate amount of units of the digital asset 
     sold by the digital asset issuer in reliance on the exemption 
     provided under this paragraph, during the 12-month period 
     preceding the date of such transaction, including the amount 
     sold in such transaction, is not more than $75,000,000 (as 
     such amount is annually adjusted by the Commission to reflect 
     the change in the Consumer Price Index for All Urban 
     Consumers published by the Bureau of Labor Statistics of the 
     Department of Labor);
       ``(B) with respect to a transaction involving the purchase 
     of units of a digital asset by a person who is not an 
     accredited investor, the aggregate amount of all units of 
     digital assets purchased by such person during the 12-month 
     period preceding the date of such transaction, including the 
     unit of a digital asset purchased in such transaction, does 
     not exceed the greater of--
       ``(i) 10 percent of the person's annual income or joint 
     income with that person's spouse or spousal equivalent; or
       ``(ii) 10 percent of the person's net worth or joint net 
     worth with the person's spouse or spousal equivalent;
       ``(C) after the completion of the transaction, the 
     purchaser does not own more than 10 percent of the total 
     amount of the units of the digital asset sold in reliance on 
     the exemption under this paragraph;
       ``(D) the transaction does not involve the offer or sale of 
     any digital asset not offered as part of an investment 
     contract;
       ``(E) the transaction does not involve the offer or sale of 
     a unit of a digital asset by a digital asset issuer that--
       ``(i) is not organized under the laws of a State, a 
     territory of the United States, or the District of Columbia;
       ``(ii) is a development stage company that either--

       ``(I) has no specific business plan or purpose; or
       ``(II) has indicated that the business plan of the company 
     is to merge with or acquire an unidentified company;

       ``(iii) is an investment company, as defined in section 3 
     of the Investment Company Act of 1940 (15 U.S.C. 80a-3), or 
     is excluded from the definition of investment company by 
     section 3(b) or section 3(c) of that Act (15 U.S.C. 80a-3(b) 
     or 80a-3(c));
       ``(iv) is issuing fractional undivided interests in oil or 
     gas rights, or a similar interest in other mineral rights;
       ``(v) is, or has been, subject to any order of the 
     Commission entered pursuant to section 12(j) of the 
     Securities Exchange Act of 1934 during the 5-year period 
     before the filing of the offering statement; or
       ``(vi) is disqualified pursuant to section 230.262 of title 
     17, Code of Federal Regulations; and
       ``(F) the issuer meets the requirements of section 
     4B(a).''; and
       (2) by inserting after section 4A the following:

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

       ``(a) Requirements for Digital Asset Issuers.--

[[Page H3439]]

       ``(1) Information required in statement.--A digital asset 
     issuer offering or selling a unit of digital asset in 
     reliance on section 4(a)(8) shall file with the Commission a 
     statement containing the following information:
       ``(A) The name, legal status (including the jurisdiction in 
     which the issuer is organized and the date of organization), 
     and website of the digital asset issuer.
       ``(B) The address and telephone number of the issuer or a 
     legal representative of the issuer.
       ``(C) A certification that the digital asset issuer meets 
     the relevant requirements described under section 4(a)(8).
       ``(D) An overview of the material aspects of the offering.
       ``(E) A description of the purpose and intended use of the 
     offering proceeds.
       ``(F) A description of the plan of distribution of any unit 
     of a digital asset that is to be offered.
       ``(G) A description of the material risks surrounding 
     ownership of a unit of a digital asset.
       ``(H) A description of the material aspects of the digital 
     asset issuer's business.
       ``(I) A description of exempt offerings conducted within 
     the past three years by the digital asset issuer.
       ``(J) A description of the digital asset issuer and the 
     current number of employees of the digital asset issuer.
       ``(K) A description of any material transactions or 
     relationships between the digital asset issuer and affiliated 
     persons.
       ``(L) A description of exempt offerings conducted within 
     the past three years.
       ``(2) Information required for purchasers.--A digital asset 
     issuer that has filed a statement under paragraph (1) to 
     offer and sell a unit of a digital asset in reliance on 
     section 4(a)(8) shall disclose the information described 
     under section 43 of the Securities Exchange Act of 1934 on a 
     freely accessible public website.
       ``(3) Ongoing disclosure requirements.--A digital asset 
     issuer that has filed a statement under paragraph (1) to 
     offer and sell a unit of a digital asset in reliance on 
     section 4(a)(8) shall file the following with the Commission:
       ``(A) Annual reports.--An annual report that includes any 
     material changes to the information described under paragraph 
     (2) for the current fiscal year and for any fiscal year 
     thereafter, unless the issuer is no longer obligated to file 
     such annual report pursuant to paragraph (4).
       ``(B) Semiannual reports.--Along with each annual report 
     required under subparagraph (A), and separately six months 
     thereafter, a report containing--
       ``(i) an updated description of the current state and 
     timeline for the development of the blockchain system to 
     which the digital asset relates, showing how and when the 
     blockchain system intends or intended to be considered a 
     functional system and a decentralized system;
       ``(ii) the amount of money raised by the digital asset 
     issuer in reliance on section 4(a)(8), how much of that money 
     has been spent, and the general categories and amounts on 
     which that money has been spent; and
       ``(iii) any material changes to the information in the most 
     recent annual report.
       ``(C) Current reports.--A current report shall be filed 
     with the Commission reflecting any material changes to the 
     information previously reported to the Commission by the 
     digital asset issuer.
       ``(4) Termination of reporting requirements.--
       ``(A) In general.--The ongoing reporting requirements under 
     paragraph (3) shall not apply to a digital asset issuer 180 
     days after the end of the covered fiscal year.
       ``(B) Covered fiscal year defined.--In this paragraph, the 
     term `covered fiscal year' means the first fiscal year of an 
     issuer in which the blockchain system to which the digital 
     asset relates is a functional system and certified to be a 
     decentralized system under section 44 of the Securities 
     Exchange Act of 1934.
       ``(b) Requirements for Intermediaries.--
       ``(1) In general.--A person acting as an intermediary in a 
     transaction involving the offer or sale of a unit of a 
     digital asset in reliance on section 4(a)(8) shall--
       ``(A) register with the Commission as a digital asset 
     broker; and
       ``(B) be a member of a national securities association 
     registered under section 15A of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78o-3).
       ``(2) Purchaser qualification.--
       ``(A) In general.--Each time, before accepting any 
     commitment (including any additional commitment from the same 
     person), an intermediary or digital asset issuer shall have a 
     reasonable basis for believing that the purchaser satisfies 
     the requirements of section 4(a)(8).
       ``(B) Reliance on purchaser's representations.--For 
     purposes of subparagraph (A), an intermediary or digital 
     asset issuer may rely on a purchaser's representations 
     concerning the purchaser's annual income and net worth and 
     the amount of the purchaser's other investments made, unless 
     the intermediary or digital asset issuer has reason to 
     question the reliability of the representation.
       ``(C) Reliance on issuer.--For purposes of determining 
     whether a transaction meets the requirements described under 
     subparagraph (A) through (C) of section 4(a)(8), an 
     intermediary may rely on the efforts of a digital asset 
     issuer.
       ``(c) Additional Provisions.--
       ``(1) Acceptance of written offers; sales.--After an issuer 
     files a statement under paragraph (1) to offer and sell a 
     digital asset in reliance on section 4(a)(8)--
       ``(A) written offers of the digital asset may be made; and
       ``(B) the issuer may sell the digital assets in reliance on 
     section 4(a)(8), if such sales meet all other requirements.
       ``(2) Solicitation of interest.--
       ``(A) In general.--At any time before the filing of a 
     statement under paragraph (1), a digital asset issuer may 
     communicate orally or in writing to determine whether there 
     is any interest in a contemplated offering. Such 
     communications are deemed to be an offer of a unit of a 
     digital asset for sale for purposes of the anti-fraud 
     provisions of the Federal securities laws. No solicitation or 
     acceptance of money or other consideration, nor of any 
     commitment, binding or otherwise, from any person is 
     permitted until the statement is filed.
       ``(B) Conditions.--In any communication described under 
     subparagraph (A), the digital asset issuer shall--
       ``(i) state that no money or other consideration is being 
     solicited, and if sent in response, will not be accepted;
       ``(ii) state that no offer to buy a unit of a digital asset 
     can be accepted and no part of the purchase price can be 
     received until the statement is filed and then only through 
     an intermediary; and
       ``(iii) state that a person's indication of interest 
     involves no obligation or commitment of any kind.
       ``(C) Indications of interest.--Any written communication 
     described under subparagraph (A) may include a means by which 
     a person may indicate to the digital asset issuer that such 
     person is interested in a potential offering. A digital asset 
     issuer may require a name, address, telephone number, or 
     email address in any response form included with a 
     communication described under subparagraph (A).
       ``(3) Disqualification provisions.--The Commission shall 
     issue rules to apply the disqualification provisions under 
     section 230.262 of title 17, Code of Federal Regulations, to 
     the exemption provided under section 4(a)(8).''.
       (b) Additional Exemptions.--
       (1) Certain registration requirements.--Section 12(g)(6) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is 
     amended by striking ``under section 4(6)'' and inserting 
     ``under section 4(a)(6) or 4(a)(8)''.
       (2) Exemption from state regulation.--Section 18(b)(4) of 
     the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
       (A) in section (B), by striking ``section 4(4)'' and 
     inserting ``section 4(a)(4)'';
       (B) in section (C), by striking ``section 4(6)'' and 
     inserting ``section 4(a)(6)'';
       (C) in subparagraph (F)--
       (i) by striking ``section 4(2)'' each place such term 
     appears and inserting ``section 4(a)(2)'';
       (ii) by striking ``or'' at the end;
       (D) in subparagraph (G), by striking the period and 
     inserting ``; or''; and
       (E) by adding at the end the following:
       ``(H) section 4(a)(8).''.

     SEC. 302. REQUIREMENTS FOR OFFERS AND SALES OF CERTAIN 
                   DIGITAL ASSETS.

       (a) In General.--Title I of the Securities Exchange Act of 
     1934 (15 U.S.C. 78a et seq.) is amended by adding at the end 
     the following:

     ``SEC. 42. REQUIREMENTS FOR OFFERS AND SALES OF CERTAIN 
                   DIGITAL ASSETS.

       ``(a) Offers and Sales of Certain Restricted Digital 
     Assets.--
       ``(1) In general.--Notwithstanding any other provision of 
     law, subject to paragraph (2), a restricted digital asset may 
     be offered and sold on a digital asset trading system by any 
     person other than a digital asset issuer if, at the time of 
     such offer or sale, any blockchain system to which the 
     restricted digital asset relates is a functional system and 
     the information described in section 43 has been certified 
     and made publicly available for any blockchain system to 
     which the restricted digital asset relates.
       ``(2) Additional rules for related persons and affiliated 
     persons.--Except as provided under subsection (c), a 
     restricted digital asset owned by a related person or an 
     affiliated person may only be offered or sold after 12 months 
     after the later of--
       ``(A) the date on which such restricted digital asset was 
     acquired; or
       ``(B) the digital asset maturity date.
       ``(b) Offers and Sales of Certain Digital Commodities.--
       ``(1) In general.--Subject to paragraph (2), a digital 
     commodity may be offered and sold by any person.
       ``(2) Rules for related and affiliated persons.--Except as 
     provided under subsection (c), a digital commodity may only 
     be offered or sold by a related person or an affiliated 
     person if--
       ``(A) the holder of the digital commodity originally 
     acquired the digital asset while it was a restricted digital 
     asset not less than 12 months after the later of--
       ``(i) the date on which such restricted digital asset was 
     acquired; or
       ``(ii) the digital asset maturity date;
       ``(B) any blockchain system to which the digital commodity 
     relates is certified to be a decentralized system under 
     section 44; and
       ``(C) the digital commodity is offered or sold on or 
     subject to the rules of a digital commodity exchange 
     registered under section 5i of the Commodity Exchange Act.
       ``(3) Not an investment contract.--For purposes of the 
     securities laws, an offer or sale of a digital commodity that 
     does not violate paragraph (2) shall not be a transaction in 
     an investment contract.
       ``(c) Sales Restrictions for Affiliated Persons.--A digital 
     asset may be offered and sold by an affiliated person under 
     subsection (a) or (b) if--
       ``(1) the aggregate amount of such digital assets sold in 
     any 3-month period by the affiliated person is not greater 
     than one percent of the digital assets then outstanding; or
       ``(2) the affiliated person promptly, following the 
     placement of an order to sell one percent or more of the 
     digital assets then outstanding during any 3-month period, 
     reports the sale to--
       ``(A) the Commodity Futures Trading Commission, in the case 
     of an order to sell a digital

[[Page H3440]]

     commodity on or subject to the rules of a digital commodity 
     exchange; or
       ``(B) the Securities and Exchange Commission, in the case 
     of a sell order for a restricted digital asset placed with a 
     digital asset trading system.
       ``(d) Treatment of Certain End User Distributions Under the 
     Securities Laws.--
       ``(1) In general.--With respect to a digital asset, an end 
     user distribution is described under this paragraph if--
       ``(A) each blockchain system to which such digital asset 
     relates is a functional system; and
       ``(B) with respect to the digital asset and each blockchain 
     system to which such digital asset relates, the information 
     described in section 43 has been certified and made publicly 
     available.
       ``(2) Not an investment contract.--For purposes of the 
     securities laws, an end user distribution described under 
     paragraph (1) shall not be a transaction in an investment 
     contract.
       ``(3) Exemption.--Section 5 of the Securities Act of 1933 
     (15 U.S.C. 77e) shall not apply to an end user distribution 
     described under paragraph (1) or a transaction in a unit of 
     digital asset issued in such a distribution.''.
       (b) Rule of Construction.--Nothing in this Act or the 
     amendments made by this Act may be construed to restrict the 
     use of a digital asset, except as expressly provided in 
     connection with--
       (1) the offer or sale of a restricted digital asset or 
     digital commodity; or
       (2) an intermediary's custody of a restricted digital asset 
     or digital commodity.

     SEC. 303. ENHANCED DISCLOSURE REQUIREMENTS.

       Title I of the Securities Exchange Act of 1934 (15 U.S.C. 
     78a et seq.), as amended by section 302, is further amended 
     by adding at the end the following:

     ``SEC. 43. ENHANCED DISCLOSURE REQUIREMENTS WITH RESPECT TO 
                   DIGITAL ASSETS.

       ``(a) Disclosure Information.--With respect to a digital 
     asset and any blockchain system to which the digital asset 
     relates, the information described under this section is as 
     follows:
       ``(1) Source code.--The source code for any blockchain 
     system to which the digital asset relates.
       ``(2) Transaction history.--A description of the steps 
     necessary to independently access, search, and verify the 
     transaction history of any blockchain system to which the 
     digital asset relates.
       ``(3) Digital asset economics.--A description of the 
     purpose of any blockchain system to which the digital asset 
     relates and the operation of any such blockchain system, 
     including--
       ``(A) 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 assets to be 
     created, the release schedule for the digital assets, and the 
     total number of digital assets then outstanding;
       ``(B) information on any applicable consensus mechanism or 
     process for validating transactions, method of generating or 
     mining digital assets, and any process for burning or 
     destroying digital assets on the blockchain system;
       ``(C) an explanation of governance mechanisms for 
     implementing changes to the blockchain system or forming 
     consensus among holders of such digital assets; and
       ``(D) sufficient information for a third party to create a 
     tool for verifying the transaction history of the digital 
     asset.
       ``(4) Plan of development.--The current state and timeline 
     for the development of any blockchain system to which the 
     digital asset relates, showing how and when the blockchain 
     system intends or intended to be considered a functional 
     system and decentralized system.
       ``(5) Development disclosures.--A list of all persons who 
     are related persons or affiliated persons who have been 
     issued a unit of a digital asset by a digital asset issuer or 
     have a right to a unit of a digital asset from a digital 
     asset issuer.
       ``(6) Risk factor disclosures.--A description of the 
     material risks surrounding ownership of a unit of a digital 
     asset.
       ``(b) Certification.--
       ``(1) In general.--With respect to a digital asset and any 
     blockchain system to which the digital asset relates, the 
     information described under this section has been certified 
     if the digital asset issuer, an affiliated person, a 
     decentralized governance system, or a digital commodity 
     exchange certifies on a quarterly basis to the Commodity 
     Futures Trading Commission and the Securities and Exchange 
     Commission that the information is true and correct.
       ``(2) Prior disclosures.--Information described under this 
     section which was made available to the public prior to the 
     date of enactment of this section may be certified as true 
     and correct on the date such information was published in 
     final form.
       ``(3) Rulemaking.--The Commission and the Commodity Futures 
     Trading Commission may jointly issue rules regarding the 
     certification process described under paragraph (1).''.

     SEC. 304. CERTIFICATION OF CERTAIN DIGITAL ASSETS.

       Title I of the Securities Exchange Act of 1934 (15 U.S.C. 
     78a et seq.), as amended by section 303, is further amended 
     by adding at the end the following:

     ``SEC. 44. CERTIFICATION OF CERTAIN DIGITAL ASSETS.

       ``(a) Certification.--Any person may certify to the 
     Securities and Exchange Commission that the blockchain system 
     to which a digital asset relates is a decentralized system.
       ``(b) Filing Requirements.--A certification described under 
     subsection (a) shall be filed with the Commission, and 
     include--
       ``(1) information regarding the person making the 
     certification;
       ``(2) a description of the blockchain system and the 
     digital asset which relates to such blockchain system, 
     including--
       ``(A) the operation of the blockchain system;
       ``(B) the functionality of the related digital asset;
       ``(C) any decentralized governance system which relates to 
     the blockchain system; and
       ``(D) the process to develop consensus or agreement within 
     such decentralized governance system;
       ``(3) a description of the development of the blockchain 
     system and the digital asset which relates to the blockchain 
     system, including--
       ``(A) a history of the development of the blockchain system 
     and the digital asset which relates to such blockchain 
     system;
       ``(B) a description of the issuance process for the digital 
     asset which relates to the blockchain system;
       ``(C) information identifying the digital asset issuer of 
     the digital asset which relates to the blockchain system; and
       ``(D) a list of any affiliated person related to the 
     digital asset issuer;
       ``(4) an analysis of the factors on which such person based 
     the certification that the blockchain system is a 
     decentralized system, including--
       ``(A) an explanation of the protections and prohibitions 
     available during the previous 12 months against any one 
     person being able to--
       ``(i) control or materially alter the blockchain system;
       ``(ii) exclude any other person from using or participating 
     on the blockchain system; and
       ``(iii) exclude any other person from participating in a 
     decentralized governance system;
       ``(B) information regarding the beneficial ownership of the 
     digital asset which relates to such blockchain system and the 
     distribution of voting power in any decentralized governance 
     system during the previous 12 months;
       ``(C) information regarding the history of upgrades to the 
     source code for such blockchain system during the previous 3 
     months, including--
       ``(i) a description of any consensus or agreement process 
     utilized to process or approve changes to the source code;
       ``(ii) a list of any material changes to the source code, 
     the purpose and effect of the changes, and the contributor of 
     the changes, if known; and
       ``(iii) any changes to the source code made by the digital 
     asset issuer, a related person, or an affiliated person;
       ``(D) information regarding any activities conducted to 
     market the digital asset which relates to the blockchain 
     system during the previous 3 months by the digital asset 
     issuer or an affiliated person of the digital asset issuer; 
     and
       ``(E) information regarding any issuance of a unit of the 
     digital asset which relates to such blockchain system during 
     the previous 12 months; and
       ``(5) with respect to a blockchain system for which a 
     certification has previously been rebutted under this section 
     or withdrawn under section 5i(m) of the Commodity Exchange 
     Act, specific information relating to the analysis provided 
     in subsection (f)(2) in connection with such rebuttal or such 
     section 5i(m)(1)(C) in connection with such withdrawal.
       ``(c) Rebuttable Presumption.--The Commission may rebut a 
     certification described under subsection (a) with respect to 
     a blockchain system if the Commission, within 60 days of 
     receiving such certification, determines that the blockchain 
     system is not a decentralized system.
       ``(d) Certification Review.--
       ``(1) In general.--Any blockchain system that relates to a 
     digital asset for which a certification has been made under 
     subsection (a) shall be considered a decentralized system 60 
     days after the date on which the Commission receives a 
     certification under subsection (a), unless the Commission 
     notifies the person who made the certification within such 
     time that the Commission is staying the certification due 
     to--
       ``(A) an inadequate explanation by the person making the 
     certification; or
       ``(B) any novel or complex issues which require additional 
     time to consider.
       ``(2) Public notice.--The Commission shall make the 
     following available to the public and provide a copy to the 
     Commodity Futures Trading Commission:
       ``(A) Each certification received under subsection (a).
       ``(B) Each stay of the Commission under this section, and 
     the reasons therefore.
       ``(C) Any response from a person making a certification 
     under subsection (a) to a stay of the certification by the 
     Commission.
       ``(3) Consolidation.--The Commission may consolidate and 
     treat as one submission multiple certifications made under 
     subsection (a) for the same blockchain system which relates 
     to a digital asset which are received during the review 
     period provided under this subsection.
       ``(e) Stay of Certification.--
       ``(1) In general.--A notification by the Commission 
     pursuant to subsection (d)(1) shall stay the certification 
     once for up to an additional 120 days from the date of the 
     notification.
       ``(2) Public comment period.--Before the end of the 60-day 
     period described under subsection (d)(1), the Commission may 
     begin a public comment period of at least 30 days in 
     conjunction with a stay under this section.
       ``(f) Disposition of Certification.--
       ``(1) In general.--A certification made under subsection 
     (a) shall--
       ``(A) become effective--
       ``(i) upon the publication of a notification from the 
     Commission to the person who made the certification that the 
     Commission does not object to the certification; or
       ``(ii) at the expiration of the certification review 
     period; and
       ``(B) not become effective upon the publication of a 
     notification from the Commission to the person who made the 
     certification that the Commission has rebutted the 
     certification.

[[Page H3441]]

       ``(2) Detailed analysis included with rebuttal.--The 
     Commission shall include, with each publication of a 
     notification of rebuttal described under paragraph (1)(B), a 
     detailed analysis of the factors on which the decision was 
     based.
       ``(g) Recertification.--With respect to a blockchain system 
     for which a certification has been rebutted under this 
     section, no person may make a certification under subsection 
     (a) with respect to such blockchain system during the 90-day 
     period beginning on the date of such rebuttal.
       ``(h) Appeal of Rebuttal.--
       ``(1) In general.--If a certification is rebutted under 
     this section, the person making such certification may appeal 
     the decision to the United States Court of Appeals for the 
     District of Columbia, not later than 60 days after the notice 
     of rebuttal is made.
       ``(2) Review.--In an appeal under paragraph (1), the court 
     shall have de novo review of the determination to rebut the 
     certification.''.

     SEC. 305. EFFECTIVE DATE.

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

    TITLE IV--REGISTRATION FOR DIGITAL ASSET INTERMEDIARIES AT THE 
                   SECURITIES AND EXCHANGE COMMISSION

     SEC. 401. TREATMENT OF DIGITAL COMMODITIES AND OTHER DIGITAL 
                   ASSETS.

       (a) Securities Act of 1933.--Section 2(a)(1) of the 
     Securities Act of 1933 (15 U.S.C. 77b(a)(1)) is amended by 
     adding at the end the following: ``The term does not include 
     a digital commodity or permitted payment stablecoin.''.
       (b) Securities Exchange Act of 1934.--Section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is 
     amended--
       (1) in paragraph (1), by adding at the end the following: 
     ``The term `exchange' does not include a digital asset 
     trading system or a blockchain protocol offering digital 
     assets, or any person or group of persons solely because of 
     their development of such a blockchain protocol.'';
       (2) in paragraph (2), by adding at the end the following: 
     ``A digital asset trading system is not a `facility' of an 
     exchange.'';
       (3) in paragraph (4)(A), by inserting ``, other than 
     restricted digital assets,'' after ``securities'';
       (4) in paragraph (5)(A), by inserting ``restricted digital 
     assets or'' after ``not including'';
       (5) in paragraph (26) by inserting ``(other than a notice-
     registered digital asset clearing agency)'' after ``or 
     registered clearing agency'';
       (6) in paragraph (28) by inserting ``(other than a notice-
     registered digital asset clearing agency)'' after 
     ``registered clearing agency''; and
       (7) in paragraph (10), by adding at the end the following: 
     ``The term does not include a digital commodity or permitted 
     payment stablecoin.''.
       (c) Investment Advisers Act of 1940.--Section 202(a) of the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-2) is 
     amended--
       (1) in paragraph (18), by adding at the end the following: 
     ``The term does not include a digital commodity or permitted 
     payment stablecoin.'';
       (2) by redesignating the second paragraph (29) (relating to 
     commodity pools) as paragraph (31);
       (3) by adding at the end, the following:
       ``(32) Digital asset-related terms.--The terms `digital 
     commodity' and `permitted payment stablecoin' have the 
     meaning given those terms, respectively, under section 2(a) 
     of the Securities Act of 1933 (15 U.S.C. 77b(a)).''.
       (d) Investment Company Act of 1940.--Section 2(a) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-2) is amended--
       (1) in paragraph (36), by adding at the end the following: 
     ``The term does not include a digital commodity or permitted 
     payment stablecoin.''; and
       (2) by adding at the end, the following:
       ``(55) Digital asset-related terms.--The terms `digital 
     commodity' and `permitted payment stablecoin' have the 
     meaning given those terms, respectively, under section 2(a) 
     of the Securities Act of 1933 (15 U.S.C. 77b(a)).''.

     SEC. 402. AUTHORITY OVER PERMITTED PAYMENT STABLECOINS AND 
                   RESTRICTED DIGITAL ASSETS.

       (a) In General.--Section 10 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78j) is amended--
       (1) by moving subsection (c) so as to appear after 
     subsection (b);
       (2) by designating the undesignated matter at the end of 
     that section as subsection (d); and
       (3) by adding at the end the following:
       ``(e)(1) Rules promulgated under subsection (b) that 
     prohibit fraud, manipulation, or insider trading (but not 
     rules imposing or specifying reporting or recordkeeping 
     requirements, procedures, or standards as prophylactic 
     measures against fraud, manipulation, or insider trading), 
     and judicial precedents decided under subsection (b) and 
     rules promulgated thereunder that prohibit fraud, 
     manipulation, or insider trading, shall apply with respect to 
     permitted payment stablecoin transactions and restricted 
     digital assets transactions engaged in by a broker, dealer, 
     digital asset broker, or digital asset dealer or through an 
     alternative trading system or digital asset trading system to 
     the same extent as they apply to securities transactions.
       ``(2) Judicial precedents decided under section 17(a) of 
     the Securities Act of 1933 and sections 9, 15, 16, 20, and 
     21A of this title, and judicial precedents decided under 
     applicable rules promulgated under such sections, shall apply 
     to permitted payment stablecoins and restricted digital 
     assets with respect to those circumstances in which the 
     permitted payment stablecoins or restricted digital assets 
     are brokered, traded, or custodied by a broker, dealer, 
     digital asset broker, digital asset dealer, or through an 
     alternative trading system or digital asset trading system to 
     the same extent as they apply to securities.
       ``(3) Nothing in this subsection may be construed to 
     provide the Commission authority to make any rule, 
     regulation, or requirement or impose any obligation or 
     limitation on a permitted payment stablecoin issuer or a 
     digital asset issuer regarding any aspect of the operations 
     of a permitted payment stablecoin issuer, a digital asset 
     issuer, a permitted payment stablecoin, or a restricted 
     digital asset.''.
       (b) Treatment of Permitted Payment Stablecoins.--Title I of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), 
     as amended by section 404, is amended by inserting after 
     section 6B the following

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

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

     SEC. 403. REGISTRATION OF DIGITAL ASSET TRADING SYSTEMS.

       Section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78f) is amended by adding at the end the following:
       ``(m) Digital Asset Trading System.--
       ``(1) In general.--It shall be unlawful for any digital 
     asset trading system to make use of the mails or any means or 
     instrumentality of interstate commerce within or subject to 
     the jurisdiction of the United States to effect any 
     transaction in a restricted digital asset, unless such 
     digital asset trading system is registered with the 
     Commission.
       ``(2) Application.--A person desiring to register as a 
     digital asset trading system 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.
       ``(3) Exemptions.--A digital asset trading system that 
     offers or seeks to offer at least one restricted digital 
     asset shall not be required to register under this section 
     (and paragraph (1) shall not apply to such digital asset 
     trading system) if the trading system satisfies any exemption 
     contained on a list of exemptions prepared by the Commission 
     to be as close as practicable to those exemptions set forth 
     in section 240.3b-16(b) of title 17, Code of Federal 
     Regulations, applicable to the definition of an exchange.
       ``(4) Additional registrations.--
       ``(A) With the commission.--
       ``(i) In general.--A registered digital asset trading 
     system shall be permitted to maintain any other registration 
     with the Commission relating to the other activities of the 
     registered digital asset trading system, including as a--

       ``(I) national securities exchange;
       ``(II) broker;
       ``(III) dealer;
       ``(IV) alternative trading system, pursuant to part 242 of 
     title 17, Code of Federal Regulations, as in effect on the 
     date of enactment of this subsection;
       ``(V) digital asset broker; or
       ``(VI) digital asset dealer.

       ``(ii) Rulemaking.--The Commission shall prescribe rules 
     for an entity with multiple registrations described under 
     clause (i) to exempt the entity from duplicative, 
     conflicting, or unduly burdensome provisions of this Act and 
     the rules under this Act, to the extent such an exemption 
     would protect investors, maintain fair, orderly, and 
     efficient markets, and facilitate capital formation.
       ``(B) With the commodity futures trading commission.--A 
     registered digital asset trading system shall be permitted to 
     maintain a registration with the Commodity Futures Trading 
     Commission as a digital commodity exchange to offer contracts 
     of sale for digital commodities.''.

     SEC. 404. REQUIREMENTS FOR DIGITAL ASSET TRADING SYSTEMS.

       Title I of the Securities Exchange Act of 1934 (15 U.S.C. 
     78a et seq.) is amended by inserting after section 6 the 
     following:

     ``SEC. 6A. REQUIREMENTS FOR DIGITAL ASSET TRADING SYSTEMS.

       ``(a) Holding of Customer Assets.--
       ``(1) Qualified digital asset custodian required.--A 
     digital asset trading system shall hold customer restricted 
     digital assets with a qualified digital asset custodian 
     described under section 6B.

[[Page H3442]]

       ``(2) Custody prohibited.--A digital asset trading system, 
     in its capacity as such, may not hold custody of customer 
     money, assets, or property.
       ``(3) Custody in other capacity.--Nothing in this Act may 
     be construed to prohibit a person registered as a digital 
     asset trading system from holding custody of customer money, 
     assets, or property in any other permitted capacity, 
     including as a digital asset broker, digital asset dealer, or 
     qualified digital asset custodian in compliance with the 
     requirements of this Act.
       ``(b) Rulemaking.--The Commission shall prescribe rules for 
     digital asset trading systems relating to the following:
       ``(1) Notice.--Notice to the Commission of the initial 
     operation of a digital asset trading system or any material 
     change to the operation of the digital asset trading system.
       ``(2) Order display.--The thresholds at which a digital 
     asset trading system is required to display the orders of the 
     digital asset trading system, and the manner of such display.
       ``(3) Fair access.--The thresholds at which a digital asset 
     trading system is required to have policies regarding 
     providing fair access to the digital asset trading system.
       ``(4) Capacity, integrity, and security of automated 
     systems.--Policies and procedures reasonably designed to 
     ensure the capacity, integrity, and security of the digital 
     asset trading system, taking into account the particular 
     nature of digital asset trading systems.
       ``(5) Examinations, inspections, and investigations.--The 
     examination and inspection of the premises, systems, and 
     records of the digital asset trading system by the Commission 
     or by a self-regulatory organization of which such digital 
     asset trading system is a member.
       ``(6) Recordkeeping.--The making, keeping current, and 
     preservation of records related to trading activity on the 
     digital asset trading system.
       ``(7) Reporting.--The reporting of transactions in digital 
     assets that occur through the digital asset trading system.
       ``(8) Procedures.--The establishment of adequate written 
     safeguards and written procedures to protect confidential 
     trading information.
       ``(c) Name Requirement.--A digital asset trading system may 
     not use the word `exchange' in the name of the digital asset 
     trading system, unless the digital asset trading system--
       ``(1) is operated by a registered national securities 
     exchange; and
       ``(2) is clearly indicated as being provided outside of the 
     system's capacity as a national securities exchange.
       ``(d) Treatment Under the Bank Secrecy Act.--A digital 
     asset trading system shall be treated as a financial 
     institution for purposes of the Bank Secrecy Act.

     ``SEC. 6B. REQUIREMENTS FOR QUALIFIED DIGITAL ASSET 
                   CUSTODIANS.

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

     SEC. 405. REGISTRATION OF DIGITAL ASSET BROKERS AND DIGITAL 
                   ASSET DEALERS.

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

     ``SEC. 15H. REGISTRATION OF DIGITAL ASSET BROKERS AND DIGITAL 
                   ASSET DEALERS.

       ``(a) Registration.--
       ``(1) In general.--It shall be unlawful for any digital 
     asset broker or digital asset dealer (other than a natural 
     person associated with a registered digital asset broker or 
     registered digital asset dealer, and other than such a 
     digital asset broker or digital asset dealer whose business 
     is exclusively intrastate and who does not make use of a 
     digital asset trading system) to make use of the mails or any 
     means or instrumentality of interstate commerce to effect any 
     transactions in, or to induce or attempt to induce the 
     purchase or sale of, any restricted digital asset unless such 
     digital asset broker or digital asset dealer is registered in 
     accordance with this section.
       ``(2) Application.--A person desiring to register as a 
     digital asset broker or digital asset dealer 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.
       ``(b) National Securities Association Membership.--
       ``(1) In general.--A digital asset broker or digital asset 
     dealer may not register or maintain registration under this 
     section unless such digital asset broker or digital asset 
     dealer is a member of a national securities association 
     registered under section 15A.
       ``(2) Treatment under section 15a.--
       ``(A) In general.--For purposes of section 15A--
       ``(i) the term `broker' includes a digital asset broker and 
     the term `registered broker' includes a registered digital 
     asset broker;
       ``(ii) the term `dealer' includes a digital asset dealer 
     and the term `registered dealer' includes a registered 
     digital asset dealer; and
       ``(iii) the term `security' includes a restricted digital 
     asset.
       ``(B) Clarification.--Notwithstanding subparagraph (A), a 
     national securities association shall, with respect to the 
     restricted digital asset activities of a digital asset broker 
     or a digital asset dealer, only examine for and enforce 
     against such digital asset broker or digital asset dealer--
       ``(i) rules of such national securities association written 
     specifically for digital asset brokers or digital asset 
     dealers;
       ``(ii) the provisions of the Financial Innovation and 
     Technology for the 21st Century Act and rules issued 
     thereunder applicable to digital asset brokers and digital 
     asset dealers; and
       ``(iii) the provisions of the securities laws and the rules 
     thereunder applicable to digital asset brokers and digital 
     asset dealers.
       ``(c) Additional Registrations With the Commission.--
       ``(1) In general.--A registered digital asset broker or 
     registered digital asset dealer shall be permitted to 
     maintain any other registration with the Commission relating 
     to the other activities of the registered digital asset 
     broker or registered digital asset dealer, including as--
       ``(A) a national securities exchange;
       ``(B) a broker;
       ``(C) a dealer;
       ``(D) an alternative trading system, pursuant to part 242 
     of title 17, Code of Federal Regulations, as in effect on the 
     date of enactment of this section; or

[[Page H3443]]

       ``(E) a digital asset trading system.
       ``(2) Rulemaking.--The Commission shall prescribe rules for 
     an entity with multiple registrations described under 
     paragraph (1) to exempt the entity from duplicative, 
     conflicting, or unduly burdensome provisions of this Act and 
     the rules under this Act, to the extent such an exemption 
     would protect investors, maintain fair, orderly, and 
     efficient markets, and facilitate capital formation.
       ``(3) Self-regulatory organizations.--The Commission shall 
     require any self-regulatory organization with a registered 
     digital asset broker or registered digital asset dealer as a 
     member to provide such rules as may be necessary to further 
     compliance with this section, protect investors, maintain 
     fair, orderly, and efficient markets, and facilitate capital 
     formation.
       ``(d) Additional Registrations With the Commodity Futures 
     Trading Commission.--A registered digital asset broker or 
     registered digital asset dealer shall be permitted to 
     maintain a registration with the Commodity Futures Trading 
     Commission as a digital commodity broker or digital commodity 
     dealer, to list or trade contracts of sale for digital 
     commodities.''.

     SEC. 406. REQUIREMENTS OF DIGITAL ASSET BROKERS AND DIGITAL 
                   ASSET DEALERS.

       (a) In General.--Section 15H of the Securities Exchange Act 
     of 1934, as added by section 405, is amended by adding at the 
     end the following:
       ``(e) Anti-fraud.--No digital asset broker or digital asset 
     dealer shall make use of the mails or any means or 
     instrumentality of interstate commerce to effect any 
     transaction in, or to induce or attempt to induce the 
     purchase or sale of, any restricted digital asset by means of 
     any manipulative, deceptive, or other fraudulent device or 
     contrivance.
       ``(f) Holding of Customer Assets.--
       ``(1) In general.--A digital asset broker or digital asset 
     dealer shall hold customer money, assets, and property in a 
     manner to minimize the risk of loss to the customer or 
     unreasonable delay in the access to the money, assets, and 
     property of the customer.
       ``(2) Qualified digital asset custodian required.--A 
     digital asset broker or digital asset dealer shall hold 
     customer restricted digital assets described in paragraph (1) 
     with a qualified digital asset custodian described under 
     section 6B.
       ``(3) Segregation of funds.--
       ``(A) In general.--A digital asset broker or digital asset 
     dealer shall treat and deal with all money, assets, and 
     property held for a customer of the digital asset broker or 
     digital asset dealer, or that accrues to a customer as a 
     result of trading in restricted digital assets, as belonging 
     to the customer.
       ``(B) Commingling prohibited.--Money, assets, and property 
     of a customer described in subparagraph (A) shall be 
     separately accounted for and shall not be commingled with the 
     funds of the digital asset broker or digital asset dealer or 
     be used to margin, secure, or guarantee any trades of any 
     person other than the customer of the digital asset broker or 
     digital asset dealer for whom the same are held.
       ``(4) Exceptions.--
       ``(A) Use of funds.--
       ``(i) In general.--Notwithstanding paragraph (4), money, 
     assets, and property of customers of a digital asset broker 
     or digital asset dealer described in paragraph (4) may be 
     maintained and deposited in the same account or accounts with 
     any bank, trust company, or qualified digital asset custodian 
     described under section 6B, if the money, assets, and 
     property remain segregated from the money, assets, and 
     property of the digital asset broker or digital asset dealer.
       ``(ii) Withdrawal.--Notwithstanding paragraph (4), such 
     share of the money, assets, and property described in 
     paragraph (4) as in the normal course of business shall be 
     necessary to transfer, adjust, or settle a restricted digital 
     asset transaction pursuant to a customer's instruction 
     (standing or otherwise) may be withdrawn and applied to such 
     purposes, including the withdrawal and payment of 
     commissions, brokerage, interest, taxes, storage, and other 
     charges lawfully accruing in connection with a restricted 
     digital asset transaction.
       ``(iii) Commission action.--In accordance with such terms 
     and conditions as the Commission may prescribe by rule, 
     regulation, or order, any money, assets, or property of a 
     customer of a digital asset broker or digital asset dealer 
     described in paragraph (4) may be commingled and deposited as 
     provided in this section with any other money, assets, or 
     property received by the digital asset broker or digital 
     asset dealer and required by the Commission to be separately 
     accounted for and treated and dealt with as belonging to the 
     customer of the digital asset broker or digital asset dealer.
       ``(B) Participation in blockchain services.--
       ``(i) In general.--A customer shall have the right to waive 
     the restrictions in paragraph (4) for any unit of a digital 
     asset to be used under clause (ii), by affirmatively 
     electing, in writing to the digital asset broker or digital 
     asset dealer, to waive the restrictions.
       ``(ii) Use of funds.--Customer digital assets removed from 
     segregation under clause (i) may be pooled and used by the 
     digital asset broker or digital asset dealer or its designee 
     to provide a blockchain service for a blockchain system to 
     which the unit of the digital asset removed from segregation 
     under clause (i) relates.
       ``(iii) Limitations.--

       ``(I) In general.--The Commission may, by rule, establish 
     notice and disclosure requirements, and any other limitations 
     and rules related to the waiving of any restrictions under 
     this subparagraph that are reasonably necessary to protect 
     customers.
       ``(II) Customer choice.--A digital asset broker or digital 
     asset dealer may not require a waiver from a customer 
     described in clause (i) as a condition of doing business with 
     the digital asset broker or digital asset dealer.

       ``(iv) Blockchain service defined.--In this subparagraph, 
     the term `blockchain service' means any activity relating to 
     validating transactions on a blockchain system, providing 
     security for a blockchain system, or other similar activity 
     required for the ongoing operation of a blockchain system.
       ``(5) Further limitations.--No person shall treat or deal 
     with a restricted digital asset held on behalf of any 
     customer pursuant to paragraph (4) by utilizing any unit of 
     such restricted digital asset to participate in a blockchain 
     service (as defined in paragraph (5)(B)(iv)) or a 
     decentralized governance system associated with the 
     restricted digital asset or the blockchain system to which 
     the restricted digital asset relates in any manner other than 
     that which is expressly directed by the customer from which 
     such unit of a restricted digital asset was received.
       ``(g) Capital Requirements.--
       ``(1) In general.--Each registered digital asset broker and 
     registered digital asset dealer shall meet such minimum 
     capital requirements as the Commission may prescribe to 
     ensure that the digital asset broker or digital asset dealer 
     is able to--
       ``(A) conduct an orderly wind-down of the activities of the 
     digital asset broker or digital asset dealer; and
       ``(B) fulfill the customer obligations of the digital asset 
     broker or digital asset dealer.
       ``(2) Calculation.--For purposes of any Commission rule or 
     order adopted under this section or any interpretation 
     thereof regulating a digital asset broker or digital asset 
     dealer's financial responsibility obligations and capital 
     requirements, a registered digital asset broker or digital 
     asset dealer that maintains control of customer digital 
     assets in a manner that satisfies the rules issued by the 
     Commission under subsection (f)(2) shall not be required to 
     include the custodial obligation with respect to such digital 
     assets as liabilities or such digital assets as assets of the 
     digital asset broker or digital asset dealer.
       ``(h) Reporting and Recordkeeping.--Each registered digital 
     asset broker and digital asset dealer--
       ``(1) shall make such reports as are required by the 
     Commission by rule or regulation regarding the transactions, 
     positions, and financial condition of the digital asset 
     broker or digital asset dealer;
       ``(2) shall keep books and records in such form and manner 
     and for such period as may be prescribed by the Commission by 
     rule or regulation; and
       ``(3) shall keep the books and records open to inspection 
     and examination by any representative of the Commission.
       ``(i) Treatment Under the Bank Secrecy Act.--A digital 
     asset broker and a digital asset dealer shall be treated as a 
     financial institution for purposes of the Bank Secrecy 
     Act.''.
       (b) Definition of Clearing Agency.--Section 3(a)(23)(B) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(23)(B)) 
     is amended by inserting ``digital asset broker, digital asset 
     dealer,'' after ``broker, dealer,'' each place such term 
     appears.

     SEC. 407. RULES RELATED TO CONFLICTS OF INTEREST.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
     is amended by inserting after section 10D the following:

     ``SEC. 10E. CONFLICTS OF INTEREST RELATED TO DIGITAL ASSETS.

       ``Each registered digital asset trading system, registered 
     digital asset broker, registered digital asset dealer, and 
     notice-registered digital asset clearing agency shall 
     establish, maintain, and enforce written policies and 
     procedures reasonably designed, taking into consideration the 
     nature of such person's business, to mitigate any conflicts 
     of interest and transactions or arrangements with 
     affiliates.''.

     SEC. 408. TREATMENT OF CERTAIN DIGITAL ASSETS IN CONNECTION 
                   WITH FEDERALLY REGULATED INTERMEDIARIES.

       Section 18(b) of the Securities Act of 1933 (15 U.S.C. 
     77r(b)) is amended by adding at the end the following:
       ``(5) Exemption for certain digital assets in connection 
     with federally regulated intermediaries.--A restricted 
     digital asset is treated as a covered security with respect 
     to a transaction that is exempt from registration under this 
     Act when it is--
       ``(A) brokered, traded, custodied, or cleared by a digital 
     asset broker or digital asset dealer registered under section 
     15H of the Securities Exchange Act of 1934; or
       ``(B) traded through a digital asset trading system.''.

     SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.

       The Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.), as amended by section 405, is further amended by 
     inserting after section 15H the following:

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

       ``(a) In General.--Notwithstanding any other provision of 
     this Act, a person shall not be subject to this Act and the 
     regulations thereunder based on the person directly or 
     indirectly engaging in any of the following activities, 
     whether singly or in combination thereof, in relation to the 
     operation of a blockchain system or in relation to 
     decentralized finance (as defined in section 605(d) of the 
     Financial Innovation and Technology for the 21st Century 
     Act):
       ``(1) Compiling network transactions, operating or 
     participating in a liquidity pool, relaying, searching, 
     sequencing, validating, or acting in a similar capacity with 
     respect to a digital asset.

[[Page H3444]]

       ``(2) Providing computational work, operating a node, or 
     procuring, offering, or utilizing network bandwidth, or other 
     similar incidental services with respect to a digital asset.
       ``(3) Providing a user-interface that enables a user to 
     read and access data about a blockchain system, send 
     messages, or otherwise interact with a blockchain system.
       ``(4) Developing, publishing, constituting, administering, 
     maintaining, or otherwise distributing a blockchain system.
       ``(5) Developing, publishing, constituting, administering, 
     maintaining, or otherwise distributing software or systems 
     that create or deploy a hardware or software wallet or other 
     system facilitating an individual user's own personal ability 
     to keep, safeguard, or custody such user's digital assets or 
     related private keys.
       ``(b) Exceptions.--Subsection (a) shall not be construed to 
     apply to the anti-fraud and anti-manipulation authorities of 
     the Commission.''.

     SEC. 410. REGISTRATION AND REQUIREMENTS FOR NOTICE-REGISTERED 
                   DIGITAL ASSET CLEARING AGENCIES.

       Section 17A(b) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78q-1(b)) is amended--
       (1) in subsection (1), by inserting after the first 
     sentence the following: ``The previous sentence shall not 
     apply to a notice-registered digital asset clearing agency 
     with respect to a restricted digital asset.''; and
       (2) by adding at the end the following:
       ``(9) Registration and requirements for notice-registered 
     digital asset clearing agency.--
       ``(A) Eligibility.--A person may register with the 
     Commission as a notice-registered digital asset clearing 
     agency if the person--
       ``(i) is otherwise registered as a digital asset broker or 
     digital asset dealer with the Commission and is engaging in a 
     business involving restricted digital assets, in compliance 
     with Commission rules pursuant to section 15H(f);
       ``(ii) is a bank; or
       ``(iii) is a clearing agency already registered with the 
     Commission pursuant to this section.
       ``(B) Registration.--A person may register with the 
     Commission as a notice-registered digital asset clearing 
     agency by filing with the Commission a notice of the 
     activities of the person or planned activities in such form 
     as the Commission determines appropriate.
       ``(C) Effectiveness of registration.--
       ``(i) In general.--The registration of a person filing a 
     notice described under subparagraph (B) as a notice-
     registered digital asset clearing agency shall be effective 
     upon publication by the Commission of such notice, which 
     shall occur no later than 14 days after the date of such 
     filing.
       ``(ii) Initial registrations.--

       ``(I) In general.--A person registered as a notice-
     registered digital asset clearing agency before the date on 
     which the Commission adopts rules under subparagraph (D) 
     shall, after such rules are adopted, renew the person's 
     registration pursuant to such rules.
       ``(II) Exception.--Notwithstanding subclause (I), a person 
     registered as a notice-registered digital asset clearing 
     agency before the end of the 2-year period beginning on the 
     date of the enactment of this section shall have such 
     registration remain in effect until the end of such 2-year 
     period.

       ``(D) Rulemaking.--The Commission may adopt rules, which 
     may not take effect until at least 360 days following the 
     date of enactment of this paragraph, with regard to the 
     activities of notice-registered digital asset clearing 
     agencies, taking into account the nature of restricted 
     digital assets.''.

     SEC. 411. TREATMENT OF CUSTODY ACTIVITIES BY BANKING 
                   INSTITUTIONS.

       (a) Treatment of Custody Activities.--The appropriate 
     Federal banking agency (as defined under section 3 of the 
     Federal Deposit Insurance Act (12 U.S.C. 1813)), the National 
     Credit Union Administration (in the case of a credit union), 
     and the Securities and Exchange Commission may not require, 
     or take supervisory action that would cause, a depository 
     institution, national bank, Federal credit union, State 
     credit union, or trust company, or any affiliate (as such 
     term is defined under section 2 of the Bank Holding Company 
     Act of 1956) thereof--
       (1) to include assets held in custody or safekeeping, or 
     the assets associated with a cryptographic key held in 
     custody or safekeeping, as a liability on such institution's 
     financial statement or balance sheet, except that cash held 
     for a third party by such institution that is commingled with 
     the general assets of such institution may be reflected as a 
     liability on a financial statement or balance sheet;
       (2) to hold additional regulatory capital against assets in 
     custody or safekeeping, or the assets associated with a 
     cryptographic key held in custody or safekeeping, except as 
     necessary to mitigate against operational risks inherent with 
     the custody or safekeeping services, as determined by--
       (A) the appropriate Federal banking agency;
       (B) the National Credit Union Administration (in the case 
     of a credit union);
       (C) a State bank supervisor (as defined under section 3 of 
     the Federal Deposit Insurance Act (12 U.S.C. 1813)); or
       (D) a State credit union supervisor (as defined under 
     section 6003 of the Anti-Money Laundering Act of 2020);
       (3) to recognize a liability for any obligations related to 
     activities or services performed for digital assets with 
     respect to which such institution does not have beneficial 
     ownership if that liability would exceed the expense 
     recognized in the income statement as a result of the 
     corresponding obligation.
       (b) Definitions.--In this section:
       (1) Depository institution.--The term ``depository 
     institution'' has the meaning given that term under section 3 
     of the Federal Deposit Insurance Act.
       (2) Credit union terms.--The terms ``Federal credit union'' 
     and ``State credit union'' have the meaning given those 
     terms, respectively, under section 101 of the Federal Credit 
     Union Act.

     SEC. 412. EFFECTIVE DATE; ADMINISTRATION.

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

     SEC. 413. DISCRETIONARY SURPLUS FUND.

       (a) In General.--The dollar amount specified under section 
     7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 
     289(a)(3)(A)) is reduced by $15,000,000.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on September 30, 2034.

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

     SEC. 501. COMMISSION JURISDICTION OVER DIGITAL COMMODITY 
                   TRANSACTIONS.

       (a) Savings Clause.--Section 2(a)(1) of the Commodity 
     Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the 
     end the following:
       ``(J) Except as expressly provided in this Act, nothing in 
     the Financial Innovation and Technology for the 21st Century 
     Act shall affect or apply to, or be interpreted to affect or 
     apply to--
       ``(i) any agreement, contract, or transaction that is 
     subject to this Act as--

       ``(I) a contract of sale of a commodity for future delivery 
     or an option on such a contract;
       ``(II) a swap;
       ``(III) a security futures product;
       ``(IV) an option authorized under section 4c of this Act;
       ``(V) an agreement, contract, or transaction described in 
     subparagraph (C)(i) or (D)(i) of subsection (c)(2) of this 
     section; or
       ``(VI) a leverage transaction authorized under section 19 
     of this Act; or

       ``(ii) the activities of any person with respect to any 
     such an agreement, contract, or transaction.''.
       (b) Limitation on Authority Over Permitted Payment 
     Stablecoins.--Section 2(c)(1) of the Commodity Exchange Act 
     (7 U.S.C. 2(c)(1)) is amended--
       (1) in subparagraph (F), by striking ``or'' at the end;
       (2) in subparagraph (G), by striking the period and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(H) permitted payment stablecoins.''.
       (c) Commission Jurisdiction Over Digital Asset 
     Transactions.--Section 2(c)(2) of the Commodity Exchange Act 
     (7 U.S.C. 2(c)(2)) is amended--
       (1) in subparagraph (D)--
       (A) in clause (ii)--
       (i) in subclause (I) by inserting ``(other than an 
     agreement, contract, or transaction in a permitted payment 
     stablecoin)'' after ``paragraph (1)'';
       (ii) in subclause (III)--

       (I) in the matter that precedes item (aa), by inserting 
     ``of a commodity, other than a digital commodity or a 
     permitted payment stablecoin,'' before ``that''; and
       (II) in item (bb), by striking ``or'' at the end; and

       (iii) by redesignating subclauses (IV) and (V) as 
     subclauses (VI) and (VII) and inserting after subclause (III) 
     the following:

       ``(IV) a contract of sale of a digital commodity or a 
     permitted payment stablecoin that results in actual delivery, 
     as the Commission shall by rule determine, within 2 days or 
     such other period as the Commission may determine by rule or 
     regulation based upon the typical commercial practice in cash 
     or spot markets for the digital commodity involved;
       ``(V) a contract of sale of a digital commodity or a 
     permitted payment stablecoin that--

       ``(aa) is executed with a registered digital commodity 
     dealer--
       ``(AA) directly;
       ``(BB) through a registered digital commodity broker; or
       ``(CC) on or subject to the rules of a registered digital 
     commodity exchange; and
       ``(bb) is not a contract of sale of--
       ``(AA) a digital commodity or a permitted payment 
     stablecoin that references, represents an interest in, or is 
     functionally equivalent to an agricultural commodity, an 
     excluded commodity, or an exempt commodity, other than the 
     digital commodity itself, as shall be further defined by the 
     Commission; or
       ``(BB) a digital commodity or a permitted payment 
     stablecoin to which the Commission determines, by rule or 
     regulation, it is not in the public interest for this section 
     to apply;''; and
       (B) by redesignating clause (iv) as clause (v) and 
     inserting after clause (iii) the following:
       ``(iv) The Commission shall adopt rules and regulations 
     applicable to digital commodity dealers and digital commodity 
     brokers in connection with the agreements, contracts or 
     transactions in digital commodities or permitted payment 
     stablecoins described in clause (ii)(V) of this subparagraph, 
     which shall set forth minimum requirements related to 
     disclosure, recordkeeping, margin and financing arrangements, 
     capital, reporting, business conduct, documentation, and 
     supervision of employees and agents. Except as prohibited in 
     subparagraph (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,

[[Page H3445]]

     or to accomplish any of the purposes of, this Act in 
     connection with agreements, contracts, or transactions 
     described in such clause (ii)(V), which may include, without 
     limitation, requirements regarding registration with the 
     Commission and membership in a registered futures 
     association.''; and
       (2) by adding at the end the following:
       ``(F) Commission Jurisdiction With Respect to Digital 
     Commodity Transactions.--
       ``(i) In general.--Subject to sections 6d and 12(e), the 
     Commission shall have exclusive jurisdiction with respect to 
     any account, agreement, contract, or transaction involving a 
     contract of sale of a digital commodity in interstate 
     commerce, including in a digital commodity cash or spot 
     market, that is offered, solicited, traded, facilitated, 
     executed, cleared, reported, or otherwise dealt in--
       ``(I) on or subject to the rules of a registered entity or 
     an entity that is required to be registered as a registered 
     entity; or
       ``(II) by any other entity registered, or required to be 
     registered, with the Commission.
       ``(ii) Limitations.--Clause (i) shall not apply with 
     respect to custodial or depository activities for a digital 
     commodity, or custodial or depository activities for any 
     promise or right to a future 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).
       ``(iii) Mixed digital asset transactions.--
       ``(I) In general.--Clause (i) shall not apply to a mixed 
     digital asset transaction.
       ``(II) Reports on mixed digital asset transactions.--A 
     digital asset issuer, related person, affiliated person, or 
     other person registered with the Securities and Exchange 
     Commission that engages in a mixed digital asset transaction, 
     shall, on request, open to inspection and examination by the 
     Commodity Futures Trading Commission all books and records 
     relating to the mixed digital asset transaction, subject to 
     the confidentiality and disclosure requirements of section 8.
       ``(G) Agreements, Contracts, and Transactions in 
     Stablecoins.--
       ``(i) Treatment of permitted payment stablecoins on 
     commission-registered entities.--Subject to clauses (ii) and 
     (iii), the Commission shall have jurisdiction over a cash or 
     spot agreement, contract, or transaction in a permitted 
     payment stablecoin that is offered, offered to enter into, 
     entered into, executed, confirmed the execution of, 
     solicited, or accepted--
       ``(I) on or subject to the rules of a registered entity; or
       ``(II) by any other entity registered with the Commission.
       ``(ii) Permitted payment stablecoin transaction rules.--
     This Act shall apply to a transaction described in clause (i) 
     only for the purpose of regulating the offer, execution, 
     solicitation, or acceptance of a cash or spot permitted 
     payment stablecoin transaction on a registered entity or by 
     any other entity registered with the Commission, as if the 
     permitted payment stablecoin were a digital commodity.
       ``(iii) No authority over permitted payment stablecoins.--
     Notwithstanding clauses (i) and (ii), the Commission shall 
     not make a rule or regulation, impose a requirement or 
     obligation on a registered entity or other entity registered 
     with the Commission, or impose a requirement or obligation on 
     a permitted payment stablecoin issuer, regarding the 
     operation of a permitted payment stablecoin issuer or a 
     permitted payment stablecoin.''.
       (d) Conforming Amendment.--Section 2(a)(1)(A) of such Act 
     (7 U.S.C. 2(a)(1)(A)) is amended in the 1st sentence by 
     inserting ``subparagraphs (F) and (G) of subsection (c)(2) of 
     this section or'' before ``section 19''.

     SEC. 502. REQUIRING FUTURES COMMISSION MERCHANTS TO USE 
                   QUALIFIED DIGITAL COMMODITY CUSTODIANS.

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

     SEC. 503. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL 
                   COMMODITIES.

       Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is 
     amended--
       (1) in subsection (a), by striking ``5(d) and 5b(c)(2)'' 
     and inserting ``5(d), 5b(c)(2), and 5i(c)'';
       (2) in subsection (b)--
       (A) in each of paragraphs (1) and (2), by inserting 
     ``digital commodity exchange,'' before ``derivatives''; and
       (B) in paragraph (3), by inserting ``digital commodity 
     exchange,'' before ``derivatives'' each place it appears;
       (3) in subsection (c)--
       (A) in paragraph (2), by inserting ``or participants'' 
     before ``(in'';
       (B) in paragraph (4)(B), by striking ``1a(10)'' and 
     inserting ``1a(9)''; and
       (C) in paragraph (5), by adding at the end the following:
       ``(D) Special rules for digital commodity contracts.--In 
     certifying any new rule or rule amendment, or listing any new 
     contract or instrument, in connection with a contract of sale 
     of a commodity for future delivery, option, swap, or other 
     agreement, contract, or transaction, that is based on or 
     references a digital commodity, a registered entity shall 
     make or rely on a certification under subsection (d) for the 
     digital commodity.''; and
       (4) by inserting after subsection (c) the following:
       ``(d) Certifications for Digital Commodity Trading.--
       ``(1) In general.--Notwithstanding subsection (c), for the 
     purposes of listing or offering a digital commodity for 
     trading in a digital commodity cash or spot market, an 
     eligible entity shall issue a written certification that the 
     digital commodity meets the requirements of this Act 
     (including the regulations prescribed under this Act).
       ``(2) Contents of the certification.--
       ``(A) In general.--In making a written certification under 
     this paragraph, the eligible entity shall furnish to the 
     Commission--
       ``(i) an analysis of how the digital commodity meets the 
     requirements of section 5i(c)(3);
       ``(ii) information about the digital commodity regarding--

       ``(I) its purpose and use;
       ``(II) its unit creation or release process;
       ``(III) its consensus mechanism;
       ``(IV) its governance structure;
       ``(V) its participation and distribution; and
       ``(VI) its current and proposed functionality; and

       ``(iii) any other information, analysis, or documentation 
     the Commission may, by rule, require.
       ``(B) Reliance on prior disclosures.--In making a 
     certification under this subsection, an eligible entity may 
     rely on the records and disclosures of any relevant person 
     registered with the Securities and Exchange Commission or 
     other State or Federal agency.
       ``(3) Modifications.--
       ``(A) In general.--An eligible entity shall modify a 
     certification made under paragraph (1) to--
       ``(i) account for significant changes in any information 
     provided to the Commission under paragraph (2)(A)(ii); or
       ``(ii) permit or restrict trading in units of a digital 
     commodity held by a related person or an affiliated person.
       ``(B) Recertification.--Modifications required by this 
     subsection shall be subject to the same disapproval and 
     review process as a new certification under paragraphs (4) 
     and (5).
       ``(4) Disapproval.--
       ``(A) In general.--The written certification described in 
     paragraph (1) shall become effective unless the Commission 
     finds that the digital asset does not meet the requirements 
     of this Act or the rules and regulations thereunder.
       ``(B) Analysis required.--The Commission shall include, 
     with any findings referred to in subparagraph (A), a detailed 
     analysis of the factors on which the decision was based.
       ``(C) Public findings.--The Commission shall make public 
     any disapproval decision, and any related findings and 
     analysis, made under this paragraph.
       ``(5) Review.--
       ``(A) In general.--Unless the Commission makes a 
     disapproval decision under paragraph (4), the written 
     certification described in paragraph (1) shall become 
     effective, pursuant to the certification by the eligible 
     entity and notice of the certification to the public (in a 
     manner determined by the Commission) on the date that is--
       ``(i) 20 business days after the date the Commission 
     receives the certification (or such shorter period as 
     determined by the Commission by rule or regulation), in the 
     case of a digital commodity that has not been certified under 
     this section or for which a certification is being modified 
     under paragraph (3); or
       ``(ii) 2 business days after the date the Commission 
     receives the certification (or such shorter period as 
     determined by the Commission by rule or regulation) for any 
     digital commodity that has been certified under this section.
       ``(B) Extensions.--The time for consideration under 
     subparagraph (A) may be extended through notice to the 
     eligible entity that there are novel or complex issues that 
     require additional time to analyze, that the explanation by 
     the submitting eligible entity is inadequate, or of a 
     potential inconsistency with this Act--
       ``(i) once, for 30 business days, through written notice to 
     the eligible entity by the Chairman; and
       ``(ii) once, for an additional 30 business days, through 
     written notice to the digital commodity exchange from the 
     Commission that includes a description of any deficiencies 
     with the certification, including any--

       ``(I) novel or complex issues which require additional time 
     to analyze;
       ``(II) missing information or inadequate explanations; or
       ``(III) potential inconsistencies with this Act.

       ``(6) Certification required.--Notwithstanding any other 
     provision of this Act, a registered entity or other entity 
     registered with the Commission shall not list for trading, 
     accept for clearing, offer to enter into, enter into, 
     execute, confirm the execution of, or conduct any office or 
     business anywhere in the United States, its territories or 
     possessions, for the purpose of soliciting, or accepting any 
     order for, or otherwise dealing in, any transaction in, or in 
     connection with, a digital commodity, unless a certification 
     has been made under this section for the digital commodity.
       ``(7) Prior approval before registration.--
       ``(A) In general.--A person applying for registration with 
     the Commission for the purposes of listing or offering a 
     digital commodity for trading in a digital commodity cash or 
     spot market may request that the Commission grant prior 
     approval for the person to list or offer the digital 
     commodity on being registered with the Commission.
       ``(B) Request for prior approval.--A person seeking prior 
     approval under subparagraph (A) shall furnish the Commission 
     with a written certification that the digital commodity meets

[[Page H3446]]

     the requirements of this Act (including the regulations 
     prescribed under this Act) and the information described in 
     paragraph (2).
       ``(C) Deadline.--The Commission shall take final action on 
     a request for prior approval not later than 90 business days 
     after submission of the request, unless the person submitting 
     the request agrees to an extension of the time limitation 
     established under this subparagraph.
       ``(D) Disapproval.--
       ``(i) In general.--The Commission shall approve a new 
     contract or other instrument unless the Commission finds that 
     the new contract or other instrument would violate this Act 
     (including a regulations prescribed under this Act).
       ``(ii) Analysis required.--The Commission shall include, 
     with any findings made under clause (i), a detailed analysis 
     of the factors on which the decision is based.
       ``(iii) Public findings.--The Commission shall make public 
     any disapproval decision, and any related findings and 
     analysis, made under this paragraph.
       ``(8) Eligible entity defined.--In this subsection, the 
     term `eligible entity' means a registered entity or group of 
     registered entities acting jointly.''.

     SEC. 504. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.

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

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

       ``(a) In General.--
       ``(1) Registration.--
       ``(A) In general.--A trading facility that offers or seeks 
     to offer a cash or spot market in at least 1 digital 
     commodity shall register with the Commission as a digital 
     commodity exchange.
       ``(B) Application.--A person desiring to register as a 
     digital commodity exchange shall submit to the Commission an 
     application in such form and containing such information as 
     the Commission may require for the purpose of making the 
     determinations required for approval.
       ``(C) Exemptions.--A trading facility that offers or seeks 
     to offer a cash or spot market in at least 1 digital 
     commodity shall not be required to register under this 
     section if the trading facility--
       ``(i) permits no more than a de minimis amount of trading 
     activity in a digital commodity; or
       ``(ii) serves only customers in a single State or 
     territory.
       ``(2) Additional registrations.--
       ``(A) With the commission.--
       ``(i) In general.--A registered digital commodity exchange 
     may also register as--

       ``(I) a designated contract market; or
       ``(II) a swap execution facility.

       ``(ii) Rules.--For an entity with multiple registrations 
     under clause (i), the Commission--

       ``(I) shall prescribe rules to exempt the entity from 
     duplicative, conflicting, or unduly burdensome provisions of 
     this Act and the rules under this Act, to the extent such an 
     exemption would foster the development of fair and orderly 
     cash or spot markets in digital commodities, be necessary or 
     appropriate in the public interest, and be consistent with 
     the protection of customers; and
       ``(II) may, after an analysis of the risks and benefits, 
     prescribe rules to provide for portfolio margining, as may be 
     necessary to protect market participants, promote fair and 
     equitable trading in digital commodity markets, and promote 
     responsible economic or financial innovation.

       ``(B) With the securities and exchange commission.--A 
     registered digital commodity exchange may register with the 
     Securities and Exchange Commission as a digital asset trading 
     system to list or trade contracts of sale for restricted 
     digital assets.
       ``(C) With a registered futures association.--
       ``(i) In general.--A registered digital commodity exchange 
     shall also be a member of a registered futures association 
     and comply with rules related to such activity, if the 
     registered digital commodity exchange accepts customer funds 
     required to be segregated under subsection (d).
       ``(ii) Rulemaking required.--The Commission shall require 
     any registered futures association with a digital commodity 
     exchange as a member to provide such rules as may be 
     necessary to further compliance with subsection (d), protect 
     customers, and promote the public interest.
       ``(D) Registration required.--A person required to be 
     registered as a digital commodity exchange under this section 
     shall register with the Commission as such regardless of 
     whether the person is registered with another State or 
     Federal regulator.
       ``(b) Trading.--
       ``(1) Prohibition on certain trading practices.--
       ``(A) Section 4b shall apply to any agreement, contract, or 
     transaction in a digital commodity as if the agreement, 
     contract, or transaction were a contract of sale of a 
     commodity for future delivery.
       ``(B) Section 4c shall apply to any agreement, contract, or 
     transaction in a digital commodity as if the agreement, 
     contract, or transaction were a transaction involving the 
     purchase or sale of a commodity for future delivery.
       ``(C) Section 4b-1 shall apply to any agreement, contract, 
     or transaction in a digital commodity as if the agreement, 
     contract, or transaction were a contract of sale of a 
     commodity for future delivery.
       ``(2) Prohibition on acting as a counterparty.--
       ``(A) In general.--A digital commodity exchange or any 
     affiliate of such an exchange shall not trade on or subject 
     to the rules of the digital commodity exchange for its own 
     account.
       ``(B) Exceptions.--The Commission shall, by rule, permit a 
     digital commodity exchange or any affiliate of a digital 
     commodity exchange to engage in trading on an affiliated 
     exchange so long as the trading is not solely for the purpose 
     of the profit of the exchange, including the following:
       ``(i) Customer direction.--A transaction for, or entered 
     into at the direction of, or for the benefit of, an 
     unaffiliated customer.
       ``(ii) Risk management.--A transaction to manage the risks 
     associated with the digital commodity business of the 
     exchange.
       ``(iii) Functional use.--A transaction related to the 
     functional operation of a blockchain network.
       ``(C) Notice requirement.--In order for a digital commodity 
     exchange or any affiliate of a digital commodity exchange to 
     engage in trading on the affiliated exchange pursuant to 
     subsection (B), notice must be given to the Commission that 
     shall enumerate how any proposed activity is consistent with 
     the exceptions in subsection (B) and the principles of the 
     Act.
       ``(D) Delegation.--The Commission may, by rule, delegate 
     authority to the Director of the Division of Market 
     Oversight, or such other employee or employees as the 
     Director of the Division of Market Oversight may designate 
     from time to time, to carry out these provisions.
       ``(3) Trading securities.--A registered digital commodity 
     exchange that is also registered with the Securities and 
     Exchange Commission may offer a contract of sale of a 
     restricted digital asset.
       ``(4) Rules for certain digital asset sales.--The digital 
     commodity exchange shall have in place such rules as may be 
     necessary to reasonably ensure the orderly sale of any unit 
     of a digital commodity sold by a related person or an 
     affiliated person.
       ``(c) Core Principles for Digital Commodity Exchanges.--
       ``(1) Compliance with core principles.--
       ``(A) In general.--To be registered, and maintain 
     registration, as a digital commodity exchange, a digital 
     commodity exchange shall comply with--
       ``(i) the core principles described in this subsection; and
       ``(ii) any requirement that the Commission may impose by 
     rule or regulation pursuant to section 8a(5).
       ``(B) Reasonable discretion of a digital commodity 
     exchange.--Unless otherwise determined by the Commission by 
     rule or regulation, a digital commodity exchange described in 
     subparagraph (A) shall have reasonable discretion in 
     establishing the manner in which the digital commodity 
     exchange complies with the core principles described in this 
     subsection.
       ``(2) Compliance with rules.--A digital commodity exchange 
     shall--
       ``(A) establish and enforce compliance with any rule of the 
     digital commodity exchange, including--
       ``(i) the terms and conditions of the trades traded or 
     processed on or through the digital commodity exchange; and
       ``(ii) any limitation on access to the digital commodity 
     exchange;
       ``(B) establish and enforce trading, trade processing, and 
     participation rules that will deter abuses and have the 
     capacity to detect, investigate, and enforce those rules, 
     including means--
       ``(i) to provide market participants with impartial access 
     to the market; and
       ``(ii) to capture information that may be used in 
     establishing whether rule violations have occurred; and
       ``(C) establish rules governing the operation of the 
     exchange, including rules specifying trading procedures to be 
     used in entering and executing orders traded or posted on the 
     facility.
       ``(3) Listing standards for digital commodities.--
       ``(A) In general.--A digital commodity exchange shall 
     permit trading only in a digital commodity that is not 
     readily susceptible to manipulation.
       ``(B) Public information requirements.--
       ``(i) In general.--A digital commodity exchange shall 
     permit trading only in a digital commodity if the information 
     required in clause (ii) is correct, current, and available to 
     the public.
       ``(ii) Required information.-- With respect to a digital 
     commodity and each blockchain system to which the digital 
     commodity relates for which the digital commodity exchange 
     will make the digital commodity available to the customers of 
     the digital commodity exchange, the information required in 
     this clause is as follows:

       ``(I) Source code.--The source code for any blockchain 
     system to which the digital commodity relates.
       ``(II) Transaction history.--A narrative description of the 
     steps necessary to independently access, search, and verify 
     the transaction history of any blockchain system to which the 
     digital commodity relates.
       ``(III) Digital asset economics.--A narrative description 
     of the purpose of any blockchain system to which the digital 
     asset relates and the operation of any such blockchain 
     system, including--

       ``(aa) information explaining the launch and supply 
     process, including the number of digital assets to be issued 
     in an initial allocation, the total number of digital assets 
     to be created, the release schedule for the digital assets, 
     and the total number of digital assets then outstanding;
       ``(bb) information detailing any applicable consensus 
     mechanism or process for validating transactions, method of 
     generating or mining digital assets, and any process for 
     burning or destroying digital assets on the blockchain 
     system;
       ``(cc) an explanation of governance mechanisms for 
     implementing changes to the blockchain system or forming 
     consensus among holders of the digital assets; and

[[Page H3447]]

       ``(dd) sufficient information for a third party to create a 
     tool for verifying the transaction history of the digital 
     asset.

       ``(IV) Trading volume and volatility.--The trading volume 
     and volatility of the digital commodity.
       ``(V) Additional information.--Such additional information 
     as the Commission may, by rule, determine to be necessary for 
     a customer to understand the financial and operational risks 
     of a digital commodity, and to be in the public interest or 
     in furtherance of the requirements of this Act.

       ``(iii) Format.--The Commission shall prescribe rules and 
     regulations for the standardization and simplification of 
     disclosures under clause (ii), including requiring that 
     disclosures--

       ``(I) be conspicuous;
       ``(II) use plain language comprehensible to customers; and
       ``(III) succinctly explain the information that is required 
     to be communicated to the customer.

       ``(C) Additional listing considerations.--In addition to 
     the requirements of subparagraphs (A) and (B), a digital 
     commodity exchange shall consider--
       ``(i) if a sufficient percentage of the units of the 
     digital asset are units of a digital commodity to permit 
     robust price discovery;
       ``(ii) if it is reasonably unlikely that the transaction 
     history can be fraudulently altered by any person or group of 
     persons acting collectively;
       ``(iii) if the operating structure and system of the 
     digital commodity is secure from cybersecurity threats;
       ``(iv) if the functionality of the digital commodity will 
     protect holders from operational failures;
       ``(v) if sufficient public information about the operation, 
     functionality, and use of the digital commodity is available; 
     and
       ``(vi) any other factor which the Commission has, by rule, 
     determined to be in the public interest or in furtherance of 
     the requirements of this Act.
       ``(D) Restricted digital assets.--A digital commodity 
     exchange shall not permit the trading of a unit of a digital 
     asset that is a restricted digital asset.
       ``(4) Treatment of customer assets.--A digital commodity 
     exchange shall establish standards and procedures that are 
     designed to protect and ensure the safety of customer money, 
     assets, and property.
       ``(5) Monitoring of trading and trade processing.--
       ``(A) In general.--A digital commodity exchange shall 
     provide a competitive, open, and efficient market and 
     mechanism for executing transactions that protects the price 
     discovery process of trading on the exchange.
       ``(B) Protection of markets and market participants.--A 
     digital commodity exchange shall establish and enforce 
     rules--
       ``(i) to protect markets and market participants from 
     abusive practices committed by any party, including abusive 
     practices committed by a party acting as an agent for a 
     participant; and
       ``(ii) to promote fair and equitable trading on the 
     exchange.
       ``(C) Trading procedures.--A digital commodity exchange 
     shall--
       ``(i) establish and enforce rules or terms and conditions 
     defining, or specifications detailing--

       ``(I) trading procedures to be used in entering and 
     executing orders traded on or through the facilities of the 
     digital commodity exchange; and
       ``(II) procedures for trade processing of digital 
     commodities on or through the facilities of the digital 
     commodity exchange; and

       ``(ii) monitor trading in digital commodities to prevent 
     manipulation, price distortion, and disruptions of the 
     delivery or cash settlement process through surveillance, 
     compliance, and disciplinary practices and procedures, 
     including methods for conducting real-time monitoring of 
     trading and comprehensive and accurate trade reconstructions.
       ``(6) Ability to obtain information.--A digital commodity 
     exchange shall--
       ``(A) establish and enforce rules that will allow the 
     facility to obtain any necessary information to perform any 
     of the functions described in this section;
       ``(B) provide the information to the Commission on request; 
     and
       ``(C) have the capacity to carry out such international 
     information-sharing agreements as the Commission may require.
       ``(7) Emergency authority.--A digital commodity exchange 
     shall adopt rules to provide for the exercise of emergency 
     authority, in consultation or cooperation with the Commission 
     or a registered entity, as is necessary and appropriate, 
     including the authority to facilitate the liquidation or 
     transfer of open positions in any digital commodity or to 
     suspend or curtail trading in a digital commodity.
       ``(8) Timely publication of trading information.--
       ``(A) In general.--A digital commodity exchange shall make 
     public timely information on price, trading volume, and other 
     trading data on digital commodities to the extent prescribed 
     by the Commission.
       ``(B) Capacity of digital commodity exchange.--A digital 
     commodity exchange shall have the capacity to electronically 
     capture and transmit trade information with respect to 
     transactions executed on the exchange.
       ``(9) Recordkeeping and reporting.--
       ``(A) In general.--A digital commodity exchange shall--
       ``(i) maintain records of all activities relating to the 
     business of the facility, including a complete audit trail, 
     in a form and manner acceptable to the Commission for a 
     period of 5 years;
       ``(ii) report to the Commission, in a form and manner 
     acceptable to the Commission, such information as the 
     Commission determines to be necessary or appropriate for the 
     Commission to perform the duties of the Commission under this 
     Act; and
       ``(iii) keep any such records of digital commodities which 
     relate to a security open to inspection and examination by 
     the Securities and Exchange Commission.
       ``(B) Information-sharing.--Subject to section 8, and on 
     request, the Commission shall share information collected 
     under subparagraph (A) with--
       ``(i) the Board;
       ``(ii) the Securities and Exchange Commission;
       ``(iii) each appropriate Federal banking agency;
       ``(iv) each appropriate State bank supervisor (within the 
     meaning of section 3 of the Federal Deposit Insurance Act);
       ``(v) the Financial Stability Oversight Council;
       ``(vi) the Department of Justice; and
       ``(vii) any other person that the Commission determines to 
     be appropriate, including--

       ``(I) foreign financial supervisors (including foreign 
     futures authorities);
       ``(II) foreign central banks; and
       ``(III) foreign ministries.

       ``(C) Confidentiality agreement.--Before the Commission may 
     share information with any entity described in subparagraph 
     (B), the Commission shall receive a written agreement from 
     the entity stating that the entity shall abide by the 
     confidentiality requirements described in section 8 relating 
     to the information on digital commodities that is provided.
       ``(D) Providing information.--A digital commodity exchange 
     shall provide to the Commission (including any designee of 
     the Commission) information under subparagraph (A) in such 
     form and at such frequency as is required by the Commission.
       ``(10) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, a digital 
     commodity exchange shall not--
       ``(A) adopt any rules or take any actions that result in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on 
     trading.
       ``(11) Conflicts of interest.--A registered digital 
     commodity exchange shall implement conflict-of-interest 
     systems and procedures that--
       ``(A) establish structural and institutional safeguards--
       ``(i) to minimize conflicts of interest that might 
     potentially bias the judgment or supervision of the digital 
     commodity exchange and contravene the principles of fair and 
     equitable trading and the business conduct standards 
     described in this Act, including conflicts arising out of 
     transactions or arrangements with affiliates (including 
     affiliates engaging in digital commodity activities) or 
     between self-regulatory obligations and commercial interests, 
     which may include information partitions, restrictions on 
     employees and directors, and the legal separation of 
     different persons or entities involved in digital commodity 
     activities; and
       ``(ii) to ensure that the activities of any person within 
     the digital commodity exchange or any affiliated entity 
     relating to research or analysis of the price or market for 
     any digital commodity or acting in a role of providing 
     dealing, brokering, or advising activities are separated by 
     appropriate informational partitions within the digital 
     commodity exchange or any affiliated entity from the review, 
     pressure, or oversight of persons whose involvement in 
     pricing, trading, exchange, or clearing activities might 
     potentially bias their judgment or supervision and contravene 
     the core principles of open access and the business conduct 
     standards described in this Act; and
       ``(B) address such other issues as the Commission 
     determines to be appropriate.
       ``(12) Financial resources.--
       ``(A) In general.--A digital commodity exchange shall have 
     adequate financial, operational, and managerial resources, as 
     determined by the Commission, to discharge each 
     responsibility of the digital commodity exchange.
       ``(B) Minimum amount of financial resources.--A digital 
     commodity exchange shall possess financial resources that, at 
     a minimum, exceed the greater of--
       ``(i) the total amount that would enable the digital 
     commodity exchange to conduct an orderly wind-down of its 
     activities or
       ``(ii) 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.
       ``(13) Disciplinary procedures.--A digital commodity 
     exchange shall establish and enforce disciplinary procedures 
     that authorize the digital commodity exchange to discipline, 
     suspend, or expel members or market participants that violate 
     the rules of the digital commodity exchange, or similar 
     methods for performing the same functions, including 
     delegation of the functions to third parties.
       ``(14) Governance fitness standards.--
       ``(A) Governance arrangements.--A digital commodity 
     exchange shall establish governance arrangements that are 
     transparent to fulfill public interest requirements.
       ``(B) Fitness standards.--A digital commodity exchange 
     shall establish and enforce appropriate fitness standards 
     for--
       ``(i) directors; and
       ``(ii) any individual or entity with direct access to, or 
     control of, customer assets.
       ``(15) System safeguards.--A digital commodity exchange 
     shall--
       ``(A) establish and maintain a program of risk analysis and 
     oversight to identify and minimize sources of operational and 
     security risks, through the development of appropriate 
     controls and procedures, and automated systems, that--

[[Page H3448]]

       ``(i) are reliable and secure; and
       ``(ii) have adequate scalable capacity;
       ``(B) establish and maintain emergency procedures, backup 
     facilities, and a plan for disaster recovery that allow for--
       ``(i) the timely recovery and resumption of operations; and
       ``(ii) the fulfillment of the responsibilities and 
     obligations of the digital commodity exchange; and
       ``(C) periodically conduct tests to verify that the backup 
     resources of the digital commodity exchange are sufficient to 
     ensure continued--
       ``(i) order processing and trade matching;
       ``(ii) price reporting;
       ``(iii) market surveillance; and
       ``(iv) maintenance of a comprehensive and accurate audit 
     trail.
       ``(d) Holding of Customer Assets.--
       ``(1) In general.--A digital commodity exchange shall hold 
     customer money, assets, and property in a manner to minimize 
     the risk of loss to the customer or unreasonable delay in the 
     access to the money, assets, and property of the customer.
       ``(A) Segregation of funds.--
       ``(i) In general.--A digital commodity exchange shall treat 
     and deal with all money, assets, and property that is 
     received by the digital commodity exchange, or accrues to a 
     customer as the result of trading in digital commodities, as 
     belonging to the customer.
       ``(ii) Commingling prohibited.--Money, assets, and property 
     of a customer described in clause (i) shall be separately 
     accounted for and shall not be commingled with the funds of 
     the digital commodity exchange or be used to margin, secure, 
     or guarantee any trades or accounts of any customer or person 
     other than the person for whom the same are held.
       ``(B) Exceptions.--
       ``(i) Use of funds.--

       ``(I) In general.--Notwithstanding subparagraph (A), money, 
     assets, and property of customers of a digital commodity 
     exchange described in subparagraph (A) may, for convenience, 
     be commingled and deposited in the same account or accounts 
     with any bank, trust company, derivatives clearing 
     organization, or qualified digital commodity custodian.
       ``(II) Withdrawal.--Notwithstanding subparagraph (A), such 
     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 of sale of a digital commodity.

       ``(ii) Commission action.--Notwithstanding subparagraph 
     (A), in accordance with such terms and conditions as the 
     Commission may prescribe by rule, regulation, or order, any 
     money, assets, or property of the customers of a digital 
     commodity exchange described in subparagraph (A) may be 
     commingled and deposited in customer accounts with any other 
     money, assets, or property received by the digital commodity 
     exchange and required by the Commission to be separately 
     accounted for and treated and dealt with as belonging to the 
     customer of the digital commodity exchange.
       ``(2) Permitted investments.--Money described in 
     subparagraph (A) may be invested in obligations of the United 
     States, in general obligations of any State or of any 
     political subdivision of a State, and in obligations fully 
     guaranteed as to principal and interest by the United States, 
     or in any other investment that the Commission may by rule or 
     regulation prescribe, and such investments shall be made in 
     accordance with such rules and regulations and subject to 
     such conditions as the Commission may prescribe.
       ``(3) Customer protection during bankruptcy.--
       ``(A) Customer property.--All assets held on behalf of a 
     customer by a digital commodity exchange, and all money, 
     assets, and property of any customer received by a digital 
     commodity exchange for trading or custody, or to facilitate, 
     margin, guarantee, or secure contracts of sale of a digital 
     commodity (including money, assets, or property accruing to 
     the customer as the result of the transactions), shall be 
     considered customer property for purposes of section 761 of 
     title 11, United States Code.
       ``(B) Transactions.--A transaction involving 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 the purposes of the definition of a `commodity 
     contract' in section 761 of title 11, United States Code.
       ``(C) Exchanges.--A digital commodity exchange shall be 
     considered a futures commission merchant for purposes of 
     section 761 of title 11, United States Code.
       ``(D) Assets removed from segregation.--Assets removed from 
     segregation due to a customer election under paragraph (5) 
     shall not be considered customer property for purposes of 
     section 761 of title 11, United States Code.
       ``(4) Misuse of customer property.--
       ``(A) In general.--It shall be unlawful--
       ``(i) for any digital commodity exchange that has received 
     any customer money, assets, or property for custody to 
     dispose of, or use any such money, assets, or property as 
     belonging to the digital commodity exchange or any person 
     other than a customer of the digital commodity exchange; or
       ``(ii) for any other person, including any depository, 
     other digital commodity exchange, or digital 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, or property, as belonging to the 
     depositing digital commodity exchange or any person other 
     than the customers of the digital commodity exchange.
       ``(B) Use further defined.--For purposes of this section, 
     `use' of a digital commodity includes utilizing any unit of a 
     digital asset to participate in a blockchain service defined 
     in paragraph (5) or a decentralized governance system 
     associated with the digital commodity or the blockchain 
     system to which the digital commodity relates in any manner 
     other than that expressly directed by the customer from whom 
     the unit of a digital commodity was received.
       ``(5) Participation in blockchain services.--
       ``(A) In general.--A customer shall have the right to waive 
     the restrictions in paragraph (1) for any unit of a digital 
     commodity to be used under subparagraph (B), by affirmatively 
     electing, in writing to the digital commodity exchange, to 
     waive the restrictions.
       ``(B) Use of funds.--Customer digital commodities removed 
     from segregation under subparagraph (A) may be pooled and 
     used by the digital commodity exchange or its designee to 
     provide a blockchain service for a blockchain system to which 
     the unit of the digital asset removed from segregation in 
     subparagraph (A) relates.
       ``(C) Limitations.--
       ``(i) In general.--The Commission may, by rule, establish 
     notice and disclosure requirements, and any other limitations 
     and rules related to the waiving of any restrictions under 
     this paragraph that are reasonably necessary to protect 
     customers, including eligible contract participants, non-
     eligible contract participants, or any other class of 
     customers.
       ``(ii) Customer choice.--A digital commodity exchange may 
     not require a waiver from a customer described in 
     subparagraph (A) as a condition of doing business on the 
     exchange.
       ``(D) Blockchain service defined.--In this subparagraph, 
     the term `blockchain service' means any activity relating to 
     validating transactions on a blockchain system, providing 
     security for a blockchain system, or other similar activity 
     required for the ongoing operation of a blockchain system.
       ``(e) Market Access Requirements.--
       ``(1) In general.--A digital commodity exchange shall 
     require any person who is not an eligible contract 
     participant to access trading on the exchange through a 
     digital commodity broker.
       ``(2) Affiliated commodity brokers.--A registered digital 
     commodity exchange may permit an affiliated digital commodity 
     broker to facilitate access to the digital commodity 
     exchange.
       ``(3) Direct access for eligible contract participants.--
     Nothing in this section shall prohibit a digital commodity 
     exchange in compliance with this section from permitting 
     direct access for eligible contract participants.
       ``(4) Additional requirements.--The Commission may, by 
     rule, impose any additional requirements related to the 
     operations and activities of the digital commodity exchange 
     and an affiliated digital commodity broker necessary to 
     protect market participants, promote fair and equitable 
     trading on the digital commodity exchange, and promote 
     responsible economic or financial innovation.
       ``(f) Designation of Chief Compliance Officer.--
       ``(1) In general.--A digital commodity exchange shall 
     designate an individual to serve as a chief compliance 
     officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the exchange;
       ``(B) review compliance with the core principles in this 
     subsection;
       ``(C) in consultation with the board of the exchange, a 
     body performing a function similar to that of a board, or the 
     senior officer of the exchange, resolve any conflicts of 
     interest that may arise;
       ``(D) establish and administer the policies and procedures 
     required to be established pursuant to this section;
       ``(E) ensure compliance with this Act and the rules and 
     regulations issued under this Act, including rules prescribed 
     by the Commission pursuant to this section; and
       ``(F) establish procedures for the remediation of 
     noncompliance issues found during compliance office reviews, 
     look backs, internal or external audit findings, self-
     reported errors, or through validated complaints.
       ``(3) Requirements for procedures.--In establishing 
     procedures under paragraph (2)(F), the chief compliance 
     officer shall design the procedures to establish the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(4) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the digital commodity exchange with 
     this Act; and
       ``(ii) the policies and procedures, including the code of 
     ethics and conflict of interest policies, of the digital 
     commodity exchange.
       ``(B) Requirements.--The chief compliance officer shall--
       ``(i) submit each report described in subparagraph (A) with 
     the appropriate financial report of the digital commodity 
     exchange that is required to be submitted to the Commission 
     pursuant to this section; and
       ``(ii) include in the report a certification that, under 
     penalty of law, the report is accurate and complete.
       ``(g) Appointment of Trustee.--
       ``(1) In general.--If a proceeding under section 5e results 
     in the suspension or revocation of the registration of a 
     digital commodity exchange, or if a digital commodity 
     exchange

[[Page H3449]]

     withdraws from registration, the Commission, on notice to the 
     digital commodity exchange, may apply to the appropriate 
     United States district court where the digital commodity 
     exchange is located for the appointment of a trustee.
       ``(2) Assumption of jurisdiction.--If the Commission 
     applies for appointment of a trustee under paragraph (1)--
       ``(A) the court may take exclusive jurisdiction over the 
     digital commodity exchange and the records and assets of the 
     digital commodity exchange, wherever located; and
       ``(B) if the court takes jurisdiction under subparagraph 
     (A), the court shall appoint the Commission, or a person 
     designated by the Commission, as trustee with power to take 
     possession and continue to operate or terminate the 
     operations of the digital commodity exchange in an orderly 
     manner for the protection of customers subject to such terms 
     and conditions as the court may prescribe.
       ``(h) Qualified Digital Commodity Custodian.--A digital 
     commodity exchange shall hold in a qualified digital 
     commodity custodian each unit of a digital commodity that 
     is--
       ``(1) the property of a customer of the digital commodity 
     exchange;
       ``(2) required to be held by the digital commodity exchange 
     under subsection (c)(12) of this section; or
       ``(3) otherwise so required by the Commission to reasonably 
     protect customers or promote the public interest.
       ``(i) Exemptions.--
       ``(1) In order to promote responsible economic or financial 
     innovation and fair competition, or protect customers, the 
     Commission may (on its own initiative or on application of 
     the registered digital commodity exchange) exempt, either 
     unconditionally or on stated terms or conditions or for 
     stated periods and either retroactively or prospectively, or 
     both, a registered digital commodity exchange from the 
     requirements of this section, if the Commission determines 
     that--
       ``(A) the exemption would be consistent with the public 
     interest and the purposes of this Act; and
       ``(B) the exemption will not have a material adverse effect 
     on the ability of the Commission or the digital commodity 
     exchange to discharge regulatory or self-regulatory duties 
     under this Act.
       ``(2) The Commission may exempt, conditionally or 
     unconditionally, a digital commodity exchange from 
     registration under this section if the Commission finds that 
     the digital commodity exchange is subject to comparable, 
     comprehensive supervision and regulation on a consolidated 
     basis by the appropriate governmental authorities in the home 
     country of the facility.
       ``(j) Customer Defined.--In this section, the term 
     `customer' means any person that maintains an account for the 
     trading of digital commodities directly with a digital 
     commodity exchange (other than a person that is owned or 
     controlled, directly or indirectly, by the digital commodity 
     exchange) for its own behalf or on behalf of any other 
     person.
       ``(k) Federal Preemption.--Notwithstanding any other 
     provision of law, the Commission shall have exclusive 
     jurisdiction over any digital commodity exchange registered 
     under this section.
       ``(l) Treatment Under the Bank Secrecy Act.--A digital 
     commodity exchange shall be treated as a financial 
     institution for purposes of the Bank Secrecy Act.
       ``(m) Withdrawal of Certification of a Blockchain System.--
       ``(1) In general.--
       ``(A) Determination by a digital commodity exchange.--With 
     respect to a certification of a blockchain system that 
     becomes effective pursuant to section 44(f) of the Securities 
     Exchange Act of 1934, if a digital commodity exchange 
     determines that the blockchain system may not be a 
     decentralized system, the digital commodity exchange shall 
     notify the Commission of such determination.
       ``(B) Withdrawal process.--With respect to each 
     notification received under subparagraph (A), the Commission 
     shall initiate a withdrawal process under which the 
     Commission shall--
       ``(i) publish a notice announcing the proposed withdrawal;
       ``(ii) provide a 30 day comment period with respect to the 
     proposed withdrawal; and
       ``(iii) after the end of the 30-day comment required under 
     clause (ii), publish either--

       ``(I) a notification of withdrawal of the applicable 
     certification; or
       ``(II) a notice that the Commission is not withdrawing the 
     certification.

       ``(C) Detailed analysis required.--The Commission shall 
     include, with each publication of a notification of 
     withdrawal described under subparagraph (B)(iii)(I), a 
     detailed analysis of the factors on which the decision was 
     based.
       ``(2) Recertification.--With respect to a blockchain system 
     for which a certification has been withdrawn under this 
     subsection, no person may make a certification under section 
     44(a) of the Securities Exchange Act of 1934 with respect to 
     such blockchain system during the 90-day period beginning on 
     the date of such withdrawal.
       ``(3) Appeal of withdrawal.--
       ``(A) In general.--If a certification is withdrawn under 
     this subsection, a person making 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 
     withdrawal is made.
       ``(B) Review.--In an appeal under subparagraph (A), the 
     court shall have de novo review of the determination to 
     withdraw the certification.''.

     SEC. 505. QUALIFIED DIGITAL COMMODITY CUSTODIANS.

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

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

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

     SEC. 506. REGISTRATION AND REGULATION OF DIGITAL COMMODITY 
                   BROKERS AND DEALERS.

       The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended 
     by the preceding provisions of

[[Page H3450]]

     this Act, is amended by inserting after section 4t the 
     following:

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

       ``(a) Registration.--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.
       ``(b) Requirements.--
       ``(1) In general.--A person shall register as a digital 
     commodity broker or digital commodity dealer by filing a 
     registration application with the Commission.
       ``(2) Contents.--
       ``(A) In general.--The application shall be made in such 
     form and manner as is prescribed by the Commission, and shall 
     contain such information as the Commission considers 
     necessary concerning the business in which the applicant is 
     or will be engaged.
       ``(B) Continual reporting.--A person that is registered as 
     a digital commodity broker or digital commodity dealer shall 
     continue to submit to the Commission reports that contain 
     such information pertaining to the business of the person as 
     the Commission may require.
       ``(3) Statutory disqualification.--Except to the extent 
     otherwise specifically provided by rule, regulation, or 
     order, it shall be unlawful for a digital commodity broker or 
     digital commodity dealer to permit any person who is 
     associated with a digital commodity broker or a digital 
     commodity dealer and who is subject to a statutory 
     disqualification to effect or be involved in effecting a 
     contract of sale of a digital commodity on behalf of the 
     digital commodity broker or the digital commodity dealer, 
     respectively, if the digital commodity broker or digital 
     commodity dealer, respectively, knew, or in the exercise of 
     reasonable care should have known, of the statutory 
     disqualification.
       ``(4) Limitations on certain assets.--A digital commodity 
     broker or digital commodity dealer shall not offer, offer to 
     enter into, enter into, or facilitate any contract of sale of 
     a digital commodity that has not been certified under section 
     5c(d).
       ``(c) Additional Registrations.--
       ``(1) With the commission.--Any person required to be 
     registered as a digital commodity broker or digital commodity 
     dealer may also be registered as a futures commission 
     merchant, introducing broker, or swap dealer.
       ``(2) With the securities and exchange commission.--Any 
     person required to be registered as a digital commodity 
     broker or digital commodity dealer under this section may 
     register with the Securities and Exchange Commission as a 
     digital asset broker or digital asset dealer, pursuant to 
     section 15(b) of the Securities Exchange Act of 1934.
       ``(3) With membership in a registered futures 
     association.--Any person required to be registered as a 
     digital commodity broker or digital commodity dealer under 
     this section shall be a member of a registered futures 
     association.
       ``(4) Registration required.--Any person required to be 
     registered as a digital commodity broker or digital commodity 
     dealer under this section shall register with the Commission 
     as such regardless of whether the person is registered with 
     another State or Federal regulator.
       ``(d) Rulemaking.--
       ``(1) In general.--The Commission shall prescribe such 
     rules applicable to registered digital commodity brokers and 
     registered digital commodity dealers as are appropriate to 
     carry out this section, including rules in the public 
     interest that limit the activities of digital commodity 
     brokers and digital commodity dealers.
       ``(2) Multiple registrants.--The Commission shall prescribe 
     rules or regulations permitting, or may otherwise authorize, 
     exemptions or additional requirements applicable to persons 
     with multiple registrations under this Act, including as 
     futures commission merchants, introducing brokers, digital 
     commodity brokers, digital commodity dealers, or swap 
     dealers, as may be in the public interest to reduce 
     compliance costs and promote customer protection.
       ``(e) Capital Requirements.--
       ``(1) In general.--Each digital commodity broker and 
     digital commodity dealer shall meet such minimum capital 
     requirements as the Commission may prescribe to address the 
     risks associated with digital commodity trading and to ensure 
     that the digital commodity broker or digital commodity 
     dealer, respectively, is able to--
       ``(A) meet, and continue to meet, at all times, the 
     obligations of such a registrant; and
       ``(B) in the case of a digital commodity dealer, fulfill 
     the counterparty obligations of the digital commodity dealer 
     for any margined, leveraged, or financed transactions.
       ``(2) Rule of construction.--Nothing in this section shall 
     limit, or be construed to limit, the authority of the 
     Securities and Exchange Commission to set financial 
     responsibility rules for a broker or dealer registered 
     pursuant to section 15(b) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78o(b)) (except for section 15(b)(11) of such 
     Act (15 U.S.C. 78o(b)(11)) in accordance with section 
     15(c)(3) of such Act (15 U.S.C. 78o(c)(3)).
       ``(3) Futures commission merchants and other dealers.--Each 
     futures commission merchant, introducing broker, digital 
     commodity broker, digital commodity dealer, broker, and 
     dealer shall maintain sufficient capital to comply with the 
     stricter of any applicable capital requirements to which the 
     futures commission merchant, introducing broker, digital 
     commodity broker, digital commodity dealer, broker, or 
     dealer, respectively, is subject under this Act or the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
       ``(f) Reporting and Recordkeeping.--Each digital commodity 
     broker and digital commodity dealer--
       ``(1) shall make such reports as are required by the 
     Commission by rule or regulation regarding the transactions, 
     positions, and financial condition of the digital commodity 
     broker or digital commodity dealer, respectively;
       ``(2) shall keep books and records in such form and manner 
     and for such period as may be prescribed by the Commission by 
     rule or regulation; and
       ``(3) shall keep the books and records open to inspection 
     and examination by any representative of the Commission.
       ``(g) Daily Trading Records.--
       ``(1) In general.--Each digital commodity broker and 
     digital commodity dealer shall maintain daily trading records 
     of the transactions of the digital commodity broker or 
     digital commodity dealer, respectively, and all related 
     records (including related forward or derivatives 
     transactions) and recorded communications, including 
     electronic mail, instant messages, and recordings of 
     telephone calls, for such period as the Commission may 
     require by rule or regulation.
       ``(2) Information requirements.--The daily trading records 
     shall include such information as the Commission shall 
     require by rule or regulation.
       ``(3) Counterparty records.--Each digital commodity broker 
     and digital commodity dealer shall maintain daily trading 
     records for each customer or counterparty in a manner and 
     form that is identifiable with each digital commodity 
     transaction.
       ``(4) Audit trail.--Each digital commodity broker and 
     digital commodity dealer shall maintain a complete audit 
     trail for conducting comprehensive and accurate trade 
     reconstructions.
       ``(h) Business Conduct Standards.--
       ``(1) In general.--Each digital commodity broker and 
     digital commodity dealer shall conform with such business 
     conduct standards as the Commission, by rule or regulation, 
     prescribes related to--
       ``(A) fraud, manipulation, and other abusive practices 
     involving spot or margined, leveraged, or financed digital 
     commodity transactions (including transactions that are 
     offered but not entered into);
       ``(B) diligent supervision of the business of the 
     registered digital commodity broker or digital commodity 
     dealer, respectively; and
       ``(C) such other matters as the Commission deems 
     appropriate.
       ``(2) Business conduct requirements.--The Commission shall, 
     by rule, prescribe business conduct requirements which--
       ``(A) require disclosure by a registered digital commodity 
     broker and registered digital commodity dealer to any 
     counterparty to the transaction (other than an eligible 
     contract participant) of--
       ``(i) information about the material risks and 
     characteristics of the digital commodity;
       ``(ii) information about the material risks and 
     characteristics of the transaction;
       ``(B) establish a duty for such a digital commodity broker 
     and such a digital commodity dealer to communicate in a fair 
     and balanced manner based on principles of fair dealing and 
     good faith;
       ``(C) establish standards governing digital commodity 
     broker and digital commodity dealer marketing and 
     advertising, including testimonials and endorsements; and
       ``(D) establish such other standards and requirements as 
     the Commission may determine are--
       ``(i) in the public interest;
       ``(ii) appropriate for the protection of customers; or
       ``(iii) otherwise in furtherance of the purposes of this 
     Act.
       ``(3) Prohibition on fraudulent practices.--It shall be 
     unlawful for a digital commodity broker or digital commodity 
     dealer to--
       ``(A) employ any device, scheme, or artifice to defraud any 
     customer or counterparty;
       ``(B) engage in any transaction, practice, or course of 
     business that operates as a fraud or deceit on any customer 
     or counterparty; or
       ``(C) engage in any act, practice, or course of business 
     that is fraudulent, deceptive, or manipulative.
       ``(i) Duties.--
       ``(1) Risk management procedures.--Each digital commodity 
     broker and digital commodity dealer shall establish robust 
     and professional risk management systems adequate for 
     managing the day-to-day business of the digital commodity 
     broker or digital commodity dealer, respectively.
       ``(2) Disclosure of general information.--Each digital 
     commodity broker and digital commodity dealer shall disclose 
     to the Commission information concerning--
       ``(A) the terms and conditions of the transactions of the 
     digital commodity broker or digital commodity dealer, 
     respectively;
       ``(B) the trading operations, mechanisms, and practices of 
     the digital commodity broker or digital commodity dealer, 
     respectively;
       ``(C) financial integrity protections relating to the 
     activities of the digital commodity broker or digital 
     commodity dealer, respectively; and
       ``(D) other information relevant to trading in digital 
     commodities by the digital commodity broker or digital 
     commodity dealer, respectively.
       ``(3) Ability to obtain information.--Each digital 
     commodity broker and digital commodity dealer shall--
       ``(A) establish and enforce internal systems and procedures 
     to obtain any necessary information to perform any of the 
     functions described in this section; and
       ``(B) provide the information to the Commission, on 
     request.
       ``(4) Conflicts of interest.--Each digital commodity broker 
     and digital commodity dealer shall implement conflict-of-
     interest systems and procedures that--
       ``(A) establish structural and institutional safeguards--
       ``(i) to minimize conflicts of interest that might 
     potentially bias the judgment or supervision of the digital 
     commodity broker or digital

[[Page H3451]]

     commodity dealer, respectively, and contravene the principles 
     of fair and equitable trading and the business conduct 
     standards described in this Act, including conflicts arising 
     out of transactions or arrangements with affiliates 
     (including affiliates acting as digital asset issuers, 
     digital commodity dealers, or qualified digital commodity 
     custodians), which may include information partitions and the 
     legal separation of different persons involved in digital 
     commodity activities; and
       ``(ii) to ensure that the activities of any person within 
     the digital commodity broker or digital commodity dealer 
     relating to research or analysis of the price or market for 
     any digital commodity or acting in a role of providing 
     exchange activities or making determinations as to accepting 
     exchange customers are separated by appropriate informational 
     partitions within the digital commodity broker or digital 
     commodity dealer from the review, pressure, or oversight of 
     persons whose involvement in pricing, trading, exchange, or 
     clearing activities might potentially bias their judgment or 
     supervision and contravene the core principles of open access 
     and the business conduct standards described in this Act; and
       ``(B) address such other issues as the Commission 
     determines to be appropriate.
       ``(5) Antitrust considerations.--Unless necessary or 
     appropriate to achieve the purposes of this Act, a digital 
     commodity broker or digital commodity dealer shall not--
       ``(A) adopt any process or take any action that results in 
     any unreasonable restraint of trade; or
       ``(B) impose any material anticompetitive burden on trading 
     or clearing.
       ``(j) Designation of Chief Compliance Officer.--
       ``(1) In general.--Each digital commodity broker and 
     digital commodity dealer shall designate an individual to 
     serve as a chief compliance officer.
       ``(2) Duties.--The chief compliance officer shall--
       ``(A) report directly to the board or to the senior officer 
     of the registered digital commodity broker or registered 
     digital commodity dealer;
       ``(B) review the compliance of the registered digital 
     commodity broker or registered digital commodity dealer with 
     respect to the registered digital commodity broker and 
     registered digital commodity dealer requirements described in 
     this section;
       ``(C) in consultation with the board of directors, a body 
     performing a function similar to the board, or the senior 
     officer of the organization, resolve any conflicts of 
     interest that may arise;
       ``(D) be responsible for administering each policy and 
     procedure that is required to be established pursuant to this 
     section;
       ``(E) ensure compliance with this Act (including 
     regulations), including each rule prescribed by the 
     Commission under this section;
       ``(F) establish procedures for the remediation of 
     noncompliance issues identified by the chief compliance 
     officer through any--
       ``(i) compliance office review;
       ``(ii) look-back;
       ``(iii) internal or external audit finding;
       ``(iv) self-reported error; or
       ``(v) validated complaint; and
       ``(G) establish and follow appropriate procedures for the 
     handling, management response, remediation, retesting, and 
     closing of noncompliance issues.
       ``(3) Annual reports.--
       ``(A) In general.--In accordance with rules prescribed by 
     the Commission, the chief compliance officer shall annually 
     prepare and sign a report that contains a description of--
       ``(i) the compliance of the registered digital commodity 
     broker or registered digital commodity dealer with respect to 
     this Act (including regulations); and
       ``(ii) each policy and procedure of the registered digital 
     commodity broker or registered digital commodity dealer of 
     the chief compliance officer (including the code of ethics 
     and conflict of interest policies).
       ``(B) Requirements.--The chief compliance officer shall 
     ensure that a compliance report under subparagraph (A)--
       ``(i) accompanies each appropriate financial report of the 
     registered digital commodity broker or registered digital 
     commodity dealer that is required to be furnished to the 
     Commission pursuant to this section; and
       ``(ii) includes a certification that, under penalty of law, 
     the compliance report is accurate and complete.
       ``(k) Segregation of Digital Commodities.--
       ``(1) Holding of customer assets.--
       ``(A) In general.--Each digital commodity broker and 
     digital commodity dealer shall hold customer money, assets, 
     and property in a manner to minimize the risk of loss to the 
     customer or unreasonable delay in customer access to the 
     money, assets, and property of the customer.
       ``(B) Qualified digital commodity custodian.--Each digital 
     commodity broker and digital commodity dealer shall hold in a 
     qualified digital commodity custodian each unit of a digital 
     commodity that is--
       ``(i) the property of a customer or counterparty of the 
     digital commodity broker or digital commodity dealer, 
     respectively;
       ``(ii) required to be held by the digital commodity broker 
     or digital commodity dealer under subsection (e); or
       ``(iii) otherwise so required by the Commission to 
     reasonably protect customers or promote the public interest.
       ``(2) Segregation of funds.--
       ``(A) In general.--Each digital commodity broker and 
     digital commodity dealer shall treat and deal with all money, 
     assets, and property that is received by the digital 
     commodity broker or digital commodity dealer, or accrues to a 
     customer as the result of trading in digital commodities, as 
     belonging to the customer.
       ``(B) Commingling prohibited.--
       ``(i) In general.--Except as provided in clause (ii), each 
     digital commodity broker and digital commodity dealer shall 
     separately account for money, assets, and property of a 
     digital commodity customer, and shall not commingle any such 
     money, assets, or property with the funds of the digital 
     commodity broker or digital commodity dealer, respectively, 
     or use any such money, assets, or property to margin, secure, 
     or guarantee any trades or accounts of any customer or person 
     other than the person for whom the money, assets, or property 
     are held.
       ``(ii) Exceptions.--

       ``(I) Use of funds.--

       ``(aa) In general.--A digital commodity broker or digital 
     commodity dealer may, for convenience, commingle and deposit 
     in the same account or accounts with any bank, trust company, 
     derivatives clearing organization, or qualified digital 
     commodity custodian money, assets, and property of customers.
       ``(bb) Withdrawal.--The share of the money, assets, and 
     property described in item (aa) as in the normal course of 
     business shall be necessary to margin, guarantee, secure, 
     transfer, adjust, or settle a contract of sale of a digital 
     commodity with a registered entity may be withdrawn and 
     applied to such purposes, including the payment of 
     commissions, brokerage, interest, taxes, storage, and other 
     charges, lawfully accruing in connection with the contract.

       ``(II) Commission action.--In accordance with such terms 
     and conditions as the Commission may prescribe by rule, 
     regulation, or order, any money, assets, or property of the 
     customers of a digital commodity broker or digital commodity 
     dealer may be commingled and deposited in customer accounts 
     with any other money, assets, or property received by the 
     digital commodity broker or digital commodity dealer, 
     respectively, and required by the Commission to be separately 
     accounted for and treated and dealt with as belonging to the 
     customer of the digital commodity broker or digital commodity 
     dealer, respectively.

       ``(3) Permitted investments.--Money described in paragraph 
     (2) may be invested in obligations of the United States, in 
     general obligations of any State or of any political 
     subdivision of a State, in obligations fully guaranteed as to 
     principal and interest by the United States, or in any other 
     investment that the Commission may by rule or regulation 
     allow.
       ``(4) Customer protection during bankruptcy.--
       ``(A) Customer property.--All money, assets, or property 
     described in paragraph (2) shall be considered customer 
     property for purposes of section 761 of title 11, United 
     States Code.
       ``(B) Transactions.--A transaction involving a unit of a 
     digital commodity occurring with a digital commodity dealer 
     shall be considered a `contract for the purchase or sale of a 
     commodity for future delivery, on or subject to the rules of, 
     a contract market or board of trade' for purposes of the 
     definition of a `commodity contract' in section 761 of title 
     11, United States Code.
       ``(C) Brokers and dealers.--A digital commodity dealer and 
     a digital commodity broker shall be considered a futures 
     commission merchant for purposes of section 761 of title 11, 
     United States Code.
       ``(D) Assets removed from segregation.--Assets removed from 
     segregation due to a customer election under paragraph (6) 
     shall not be considered customer property for purposes of 
     section 761 of title 11, United States Code.
       ``(5) Misuse of customer property.--
       ``(A) In general.--It shall be unlawful--
       ``(i) for any digital commodity broker or digital commodity 
     dealer that has received any customer money, assets, or 
     property for custody to dispose of, or use any such money, 
     assets, or property as belonging to the digital commodity 
     broker or digital commodity dealer, respectively, or any 
     person other than a customer of the digital commodity broker 
     or digital commodity dealer, respectively; or
       ``(ii) for any other person, including any depository, 
     digital commodity exchange, other digital commodity broker, 
     other digital commodity dealer, or digital commodity 
     custodian that has received any customer money, assets, or 
     property for deposit, to hold, dispose of, or use any such 
     money, assets, or property, as belonging to the depositing 
     digital commodity broker or digital commodity dealer or any 
     person other than the customers of the digital commodity 
     broker or digital commodity dealer, respectively.
       ``(B) Use further defined.--For purposes of this section, 
     `use' of a digital commodity includes utilizing any unit of a 
     digital asset to participate in a blockchain service defined 
     in paragraph (6) or a decentralized governance system 
     associated with the digital commodity or the blockchain 
     system to which the digital commodity relates in any manner 
     other than that expressly directed by the customer from whom 
     the unit of a digital commodity was received.
       ``(6) Participation in blockchain services.--
       ``(A) In general.--A customer shall have the right to waive 
     the restrictions in paragraph (1) for any unit of a digital 
     commodity to be used under subparagraph (B), by affirmatively 
     electing, in writing to the digital commodity broker or 
     digital commodity dealer, to waive the restrictions.
       ``(B) Use of funds.--Customer digital commodities removed 
     from segregation under subparagraph (A) may be pooled and 
     used by the digital commodity broker or digital commodity 
     dealer, or one of their designees, to provide a blockchain 
     service for a blockchain system to which the unit of the 
     digital asset removed from segregation in subparagraph (A) 
     relates.
       ``(C) Limitations.--

[[Page H3452]]

       ``(i) In general.--The Commission may, by rule, establish 
     notice and disclosure requirements, and any other limitations 
     and rules related to the waiving of any restrictions under 
     this paragraph that are reasonably necessary to protect 
     customers, including eligible contract participants, non-
     eligible contract participants, or any other class of 
     customers.
       ``(ii) Customer choice.--A digital commodity broker or 
     digital commodity dealer may not require a waiver from a 
     customer described in subparagraph (A) as a condition of 
     doing business with the broker or dealer.
       ``(D) Blockchain service defined.--In this subparagraph, 
     the term `blockchain service' means any activity relating to 
     validating transactions on a blockchain system, providing 
     security for a blockchain system, or other similar activity 
     required for the ongoing operation of a blockchain system.
       ``(l) Federal Preemption.--Notwithstanding any other 
     provision of law, the Commission shall have exclusive 
     jurisdiction over any digital commodity broker or digital 
     commodity dealer registered under this section.
       ``(m) Exemptions.--In order to promote responsible economic 
     or financial innovation and fair competition, or protect 
     customers, the Commission may (on its own initiative or on 
     application of the registered digital commodity broker or 
     registered digital commodity dealer) exempt, unconditionally 
     or on stated terms or conditions, or for stated periods, and 
     retroactively or prospectively, or both, a registered digital 
     commodity broker or registered digital commodity dealer from 
     the requirements of this section, if the Commission 
     determines that--
       ``(1)(A) the exemption would be consistent with the public 
     interest and the purposes of this Act; and
       ``(B) the exemption will not have a material adverse effect 
     on the ability of the Commission to discharge regulatory 
     duties under this Act; or
       ``(2) the registered digital commodity broker or registered 
     digital commodity dealer is subject to comparable, 
     comprehensive supervision and regulation by the appropriate 
     government authorities in the home country of the registered 
     digital commodity broker or registered digital commodity 
     dealer, respectively.
       ``(n) Treatment Under the Bank Secrecy Act.--A digital 
     commodity broker and a digital commodity dealer shall be 
     treated as a financial institution for purposes of the Bank 
     Secrecy Act.''.

     SEC. 507. REGISTRATION OF ASSOCIATED PERSONS.

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

     SEC. 508. REGISTRATION OF COMMODITY POOL OPERATORS AND 
                   COMMODITY TRADING ADVISORS.

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

     SEC. 509. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.

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

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

       ``(a) In General.--Notwithstanding any other provision of 
     this Act, a person shall not be subject to this Act and the 
     regulations promulgated under this Act based on the person 
     directly or indirectly engaging in any of the following 
     activities, whether singly or in combination, in relation to 
     the operation of a blockchain system or in relation to 
     decentralized finance (as defined in section 605(d) of the 
     Financial Innovation and Technology for the 21st Century 
     Act):
       ``(1) Compiling network transactions, operating or 
     participating in a liquidity pool, relaying, searching, 
     sequencing, validating, or acting in a similar capacity with 
     respect to contract of sale of a digital asset.
       ``(2) Providing computational work, operating a node, or 
     procuring, offering, or utilizing network bandwidth, or other 
     similar incidental services with respect to a contract of 
     sale of a digital asset.
       ``(3) Providing a user-interface that enables a user to 
     read, and access data about a blockchain system, send 
     messages, or otherwise interact with a blockchain system.
       ``(4) Developing, publishing, constituting, administering, 
     maintaining, or otherwise distributing a blockchain system.
       ``(5) 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 commodities or related private keys.
       ``(b) Exceptions.--Subsection (a) shall not be interpreted 
     to apply to the anti-fraud, anti-manipulation, or false 
     reporting enforcement authorities of the Commission.''.

     SEC. 510. FUNDING FOR IMPLEMENTATION AND ENFORCEMENT.

       (a) Collection of Fees.--
       (1) In general.--The Commodity Futures Trading Commission 
     (in this section referred to as the ``Commission'') shall 
     charge and collect a filing fee from each person who files 
     with the Commission a notice of intent to register as a 
     digital commodity exchange, digital commodity broker, or 
     digital commodity dealer pursuant to section 106.
       (2) Amount.--The fees authorized under paragraph (1) may be 
     collected and available for obligation only in the amounts 
     provided in advance in an appropriation Act.
       (2) Authority to adjust fees.--Notwithstanding the 
     preceding provisions of this subsection, to promote fair 
     competition or innovation, the Commission, in its sole 
     discretion, may reduce or eliminate any fee otherwise 
     required to be paid by a small or medium filer under this 
     subsection.
       (b) Fee Schedule.--
       (1) In general.--The Commission shall publish in the 
     Federal Register a schedule of the fees to be charged and 
     collected under this section.
       (2) Content.--The fee schedule for a fiscal year shall 
     include a written analysis of the estimate of the Commission 
     of the total costs of carrying out the functions of the 
     Commission under this Act during the fiscal year.
       (3) Submission to congress.--Before publishing the fee 
     schedule for a fiscal year, the Commission shall submit a 
     copy of the fee schedule to the Congress.
       (4) Timing.--
       (A) 1st fiscal year.--The Commission shall publish the fee 
     schedule for the fiscal year in which this Act is enacted, 
     within 30 days after the date of the enactment of this Act.
       (B) Subsequent fiscal years.--The Commission shall publish 
     the fee schedule for each subsequent fiscal year, not less 
     than 90 days before the due date prescribed by the Commission 
     for payment of the annual fee for the fiscal year.
       (c) Late Payment Penalty.--
       (1) In general.--The Commission may impose a penalty 
     against a person that fails to pay an annual fee charged 
     under this section, within 30 days after the due date 
     prescribed by the Commission for payment of the fee.
       (2) Amount.--The amount of the penalty shall be--
       (A) 5 percent of the amount of the fee due; multiplied by
       (B) the whole number of consecutive 30-day periods that 
     have elapsed since the due date.
       (d) Reimbursement of Excess Fees.--To the extent that the 
     total amount of fees collected under this section during a 
     fiscal year that begins after the date of the enactment of 
     this Act exceeds the amount provided under subsection (a)(2) 
     with respect to the fiscal year, the Commission shall 
     reimburse the excess amount to the persons who have timely 
     paid their annual fees, on a pro-rata basis that excludes 
     penalties, and shall do so within 60 days after the end of 
     the fiscal year.
       (e) Deposit of Fees Into the Treasury.--All amounts 
     collected under this section shall be credited to the 
     currently applicable appropriation, account, or fund of the 
     Commission as discretionary offsetting collections, and shall 
     be available for the purposes authorized in subsection (f) 
     only to the extent and in the amounts provided in advance in 
     appropriation Acts.
       (f) Authorization of Appropriations.--In addition to 
     amounts otherwise authorized to be appropriated to the 
     Commission, there is authorized to be appropriated to the 
     Commission amounts collected under this section to cover the 
     costs the costs of carrying out the functions of the 
     Commission under this Act.
       (g) Sunset.--The authority to charge and collect fees under 
     this section shall expire at the end of the 4th fiscal year 
     that begins after the date of the enactment of this Act.

     SEC. 511. EFFECTIVE DATE.

       Unless otherwise provided in this title, this title and the 
     amendments made by this title shall take effect 360 days 
     after the date of enactment of this Act, except that, to the 
     extent a provision of this title requires a rulemaking, the 
     provision shall take effect on the later of--

[[Page H3453]]

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

            TITLE VI--INNOVATION AND TECHNOLOGY IMPROVEMENTS

     SEC. 601. FINDINGS; SENSE OF CONGRESS.

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

     SEC. 602. CODIFICATION OF THE SEC STRATEGIC HUB FOR 
                   INNOVATION AND FINANCIAL TECHNOLOGY.

       Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78d) is amended by adding at the end the following:
       ``(l) Strategic Hub for Innovation and Financial 
     Technology.--
       ``(1) Office established.--There is established within the 
     Commission the Strategic Hub for Innovation and Financial 
     Technology (referred to in this section as the `FinHub').
       ``(2) Purposes.--The purposes of FinHub are as follows:
       ``(A) To assist in shaping the approach of the Commission 
     to technological advancements.
       ``(B) To examine financial technology innovations among 
     market participants.
       ``(C) To coordinate the response of the Commission to 
     emerging technologies in financial, regulatory, and 
     supervisory systems.
       ``(3) Director of finhub.--FinHub shall have a Director who 
     shall be appointed by the Commission, from among individuals 
     having experience in both emerging technologies and Federal 
     securities laws and serve at the pleasure of the Commission. 
     The Director shall report directly to the Commission and 
     perform such functions and duties as the Commission may 
     prescribe.
       ``(4) Responsibilities.--FinHub shall--
       ``(A) foster responsible technological innovation and fair 
     competition within the Commission, including around financial 
     technology, regulatory technology, and supervisory 
     technology;
       ``(B) provide internal education and training to the 
     Commission regarding financial technology;
       ``(C) advise the Commission regarding financial technology 
     that would serve the Commission's functions;
       ``(D) analyze technological advancements and the impact of 
     regulatory requirements on financial technology companies;
       ``(E) advise the Commission with respect to rulemakings or 
     other agency or staff action regarding financial technology;
       ``(F) provide businesses working in emerging financial 
     technology fields with information on the Commission, its 
     rules and regulations; and
       ``(G) encourage firms working in emerging technology fields 
     to engage with the Commission and obtain feedback from the 
     Commission on potential regulatory issues.
       ``(5) Access to documents.--The Commission shall ensure 
     that FinHub has full access to the documents and information 
     of the Commission and any self-regulatory organization, as 
     necessary to carry out the functions of FinHub.
       ``(6) Report to congress.--
       ``(A) In general.--Not later than October 31 of each year 
     after 2024, FinHub 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 
     on the activities of FinHub during the immediately preceding 
     fiscal year.
       ``(B) Contents.--Each report required under subparagraph 
     (A) shall include--
       ``(i) the total number of persons that met with FinHub;
       ``(ii) the total number of market participants FinHub met 
     with, including the classification of those participants;
       ``(iii) a summary of general issues discussed during 
     meetings with persons;
       ``(iv) information on steps FinHub has taken to improve 
     Commission services, including responsiveness to the concerns 
     of persons;
       ``(v) recommendations--

       ``(I) with respect to the regulations of the Commission and 
     the guidance and orders of the Commission; and
       ``(II) for such legislative actions as FinHub determines 
     appropriate; and

       ``(vi) any other information, as determined appropriate by 
     the Director of FinHub.
       ``(C) Confidentiality.--A report under subparagraph (A) may 
     not contain confidential information.
       ``(7) Systems of records.--
       ``(A) In general.--The Commission shall establish a 
     detailed system of records (as defined under section 552a of 
     title 5, United States Code) to assist FinHub in 
     communicating with interested parties.
       ``(B) Entities covered by the system.--Entities covered by 
     the system required under subparagraph (A) include entities 
     or persons submitting requests or inquiries and other 
     information to Commission through FinHub.
       ``(C) Security and storage of records.--FinHub shall 
     store--
       ``(i) electronic records--

       ``(I) in the system required under subparagraph (A); or
       ``(II) on the secure network or other electronic medium, 
     such as encrypted hard drives or back-up media, of the 
     Commission; and

       ``(ii) paper records in secure facilities.
       ``(8) Effective date.--This subsection shall take effect on 
     the date that is 180 days after the date of the enactment of 
     this subsection.''.

     SEC. 603. CODIFICATION OF LABCFTC.

       (a) In General.--Section 18 of the Commodity Exchange Act 
     (7 U.S.C. 22) is amended by adding at the end the following:
       ``(c) LabCFTC.--
       ``(1) Establishment.--There is established in the 
     Commission LabCFTC.
       ``(2) Purpose.--The purposes of LabCFTC are to--
       ``(A) promote responsible financial technology innovation 
     and fair competition for the benefit of the American public;
       ``(B) serve as an information platform to inform the 
     Commission about new financial technology innovation; and
       ``(C) provide outreach to financial technology innovators 
     to discuss their innovations and the regulatory framework 
     established by this Act and the regulations promulgated 
     thereunder.
       ``(3) Director.--LabCFTC shall have a Director, who shall 
     be appointed by the Commission and serve at the pleasure of 
     the Commission. Notwithstanding section 2(a)(6)(A), the 
     Director shall report directly to the Commission and perform 
     such functions and duties as the Commission may prescribe.
       ``(4) Duties.--LabCFTC shall--
       ``(A) advise the Commission with respect to rulemakings or 
     other agency or staff action regarding financial technology;
       ``(B) provide internal education and training to the 
     Commission regarding financial technology;
       ``(C) advise the Commission regarding financial technology 
     that would bolster the Commission's oversight functions;
       ``(D) engage with academia, students, and professionals on 
     financial technology issues, ideas, and technology relevant 
     to activities under this Act;
       ``(E) provide persons working in emerging technology fields 
     with information on the Commission, its rules and 
     regulations, and the role of a registered futures 
     association; and
       ``(F) encourage persons working in emerging technology 
     fields to engage with the Commission and obtain feedback from 
     the Commission on potential regulatory issues.
       ``(5) Access to documents.--The Commission shall ensure 
     that LabCFTC has full access to the documents and information 
     of the Commission and any self-regulatory organization or 
     registered futures association, as necessary to carry out the 
     functions of LabCFTC.
       ``(6) Report to congress.--
       ``(A) In general.--Not later than October 31 of each year 
     after 2024, 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.

[[Page H3454]]

       ``(B) Contents.--Each report required under paragraph (1) 
     shall include--
       ``(i) the total number of persons that met with LabCFTC;
       ``(ii) a summary of general issues discussed during 
     meetings with the person;
       ``(iii) information on steps LabCFTC has taken to improve 
     Commission services, including responsiveness to the concerns 
     of persons;
       ``(iv) recommendations made to the Commission with respect 
     to the regulations, guidance, and orders of the Commission 
     and such legislative actions as may be appropriate; and
       ``(v) any other information determined appropriate by the 
     Director of LabCFTC.
       ``(C) Confidentiality.--A report under paragraph (A) shall 
     abide by the confidentiality requirements in section 8.
       ``(7) Systems of records.--
       ``(A) In general.--The Commission shall establish a 
     detailed system of records (as defined in section 552a of 
     title 5, United States Code) to assist LabCFTC in 
     communicating with interested parties.
       ``(B) Persons covered by the system.--The persons covered 
     by the system of records shall include persons submitting 
     requests or inquiries and other information to the Commission 
     through LabCFTC.
       ``(C) Security and storage of records.--The system of 
     records shall store records electronically or on paper in 
     secure facilities, and shall store electronic records on the 
     secure network of the Commission and on other electronic 
     media, such as encrypted hard drives and back-up media, as 
     needed.''.
       (b) Conforming Amendments.--Section 2(a)(6)(A) of such Act 
     (7 U.S.C. 2(a)(6)(A)) is amended--
       (1) by striking ``paragraph and in'' and inserting 
     ``paragraph,''; and
       (2) by inserting ``and section 18(c)(3),'' before ``the 
     executive''.
       (c) Effective Date.--The Commodity Futures Trading 
     Commission shall implement the amendments made by this 
     section (including complying with section 18(c)(7) of the 
     Commodity Exchange Act) within 180 days after the date of the 
     enactment of this Act.

     SEC. 604. CFTC-SEC JOINT ADVISORY COMMITTEE ON DIGITAL 
                   ASSETS.

       (a) Establishment.--The Commodity Futures Trading 
     Commission and the Securities and Exchange Commission (in 
     this section referred to as the ``Commissions'') shall 
     jointly establish the Joint Advisory Committee on Digital 
     Assets (in this section referred to as the ``Committee'').
       (b) Purpose.--
       (1) In general.--The Committee shall--
       (A) provide the Commissions with advice on the rules, 
     regulations, and policies of the Commissions related to 
     digital assets;
       (B) further the regulatory harmonization of digital asset 
     policy between the Commissions;
       (C) examine and disseminate methods for describing, 
     measuring, and quantifying digital asset--
       (i) decentralization;
       (ii) functionality;
       (iii) information asymmetries; and
       (iv) transaction and network security;
       (D) examine the potential for digital assets, blockchain 
     systems, and distributed ledger technology to improve 
     efficiency in the operation of financial market 
     infrastructure and better protect financial market 
     participants, including services and systems which provide--
       (i) improved customer protections;
       (ii) public availability of information;
       (iii) greater transparency regarding customer funds;
       (iv) reduced transaction cost; and
       (v) increased access to financial market services; and
       (E) discuss the implementation by the Commissions of this 
     Act and the amendments made by this Act.
       (2) Review by agencies.--Each Commission shall--
       (A) review the findings and recommendations of the 
     Committee;
       (B) promptly issue a public statement each time the 
     Committee submits a finding or recommendation to a 
     Commission--
       (i) assessing the finding or recommendation of the 
     Committee;
       (ii) disclosing the action or decision not to take action 
     made by the Commission in response to a finding or 
     recommendation; and
       (iii) explaining the reasons for the action or decision not 
     to take action; and
       (C) each time the Committee submits a finding or 
     recommendation to a Commission, provide the Committee with a 
     formal response to the finding or recommendation not later 
     than 3 months after the date of the submission of the finding 
     or recommendation.
       (c) Membership and Leadership.--
       (1) Non-federal members.--
       (A) In general.--The Commissions shall appoint at least 20 
     nongovernmental stakeholders who represent a broad spectrum 
     of interests, equally divided between the Commissions, to 
     serve as members of the Committee. The appointees shall 
     include--
       (i) digital asset issuers;
       (ii) persons registered with the Commissions and engaged in 
     digital asset related activities;
       (iii) individuals engaged in academic research relating to 
     digital assets; and
       (iv) digital asset users.
       (B) Members not commission employees.--Members appointed 
     under subparagraph (A) shall not be deemed to be employees or 
     agents of a Commission solely by reason of membership on the 
     Committee.
       (2) Co-designated federal officers.--
       (A) Number; appointment.--There shall be 2 co-designated 
     Federal officers of the Committee, as follows:
       (i) The Director of LabCFTC of the Commodity Futures 
     Trading Commission.
       (ii) The Director of the Strategic Hub for Innovation and 
     Financial Technology of the Securities and Exchange 
     Commission.
       (B) Duties.--The duties required by chapter 10 of title 5, 
     United States Code, to be carried out by a designated Federal 
     officer with respect to the Committee shall be shared by the 
     co-designated Federal officers of the Committee.
       (3) Committee leadership.--
       (A) Composition; election.--The Committee members shall 
     elect, from among the Committee members--
       (i) a chair;
       (ii) a vice chair;
       (iii) a secretary; and
       (iv) an assistant secretary.
       (B) Term of office.--Each member elected under subparagraph 
     (A) in a 2-year period referred to in section 1013(b)(2) of 
     title 5, United States Code, shall serve in the capacity for 
     which the member was so elected, until the end of the 2-year 
     period.
       (d) No Compensation for Committee Members.--
       (1) Non-federal members.--All Committee members appointed 
     under subsection (c)(1) shall--
       (A) serve without compensation; and
       (B) while away from the home or regular place of business 
     of the member in the performance of services for the 
     Committee, be allowed travel expenses, including per diem in 
     lieu of subsistence, in the same manner as persons employed 
     intermittently in the Government service are allowed expenses 
     under section 5703(b) of title 5, United States Code.
       (2) No compensation for co-designated federal officers.--
     The co-designated Federal officers shall serve without 
     compensation in addition to that received for their services 
     as officers or employees of the United States.
       (e) Frequency of Meetings.--The Committee shall meet--
       (1) not less frequently than twice annually; and
       (2) at such other times as either Commission may request.
       (f) Duration.--Section 1013(a)(2) of title 5, United States 
     Code, shall not apply to the Committee.
       (g) Time Limits.--The Commissions shall--
       (1) adopt a joint charter for the Committee within 90 days 
     after the date of the enactment of this section;
       (2) appoint members to the Committee within 120 days after 
     such date of enactment; and
       (3) hold the initial meeting of the Committee within 180 
     days after such date of enactment.
       (h) Funding.--Subject to the availability of funds, the 
     Commissions shall jointly fund the Committee.

     SEC. 605. STUDY ON DECENTRALIZED FINANCE.

       (a) In General.--The Commodity Futures Trading Commission 
     and the Securities and Exchange Commission shall jointly 
     carry out a study on decentralized finance that analyzes--
       (1) the nature, size, role, and use of decentralized 
     finance blockchain protocols;
       (2) the operation of blockchain protocols that comprise 
     decentralized finance;
       (3) the interoperability of blockchain protocols and 
     blockchain systems;
       (4) the interoperability of blockchain protocols and 
     software-based systems, including websites and wallets;
       (5) the decentralized governance systems through which 
     blockchain protocols may be developed, published, 
     constituted, administered, maintained, or otherwise 
     distributed, including--
       (A) whether the systems enhance or detract from--
       (i) the decentralization of the decentralized finance; and
       (ii) the inherent benefits and risks of the decentralized 
     governance system; and
       (B) any procedures, requirements, or best practices that 
     would mitigate the risks identified in subparagraph (A)(ii);
       (6) the benefits of decentralized finance, including--
       (A) operational resilience and availability of blockchain 
     systems;
       (B) interoperability of blockchain systems;
       (C) market competition and innovation;
       (D) transaction efficiency;
       (E) transparency and traceability of transactions; and
       (F) disintermediation;
       (7) the risks of decentralized finance, including--
       (A) pseudonymity of users and transactions;
       (B) disintermediation; and
       (C) cybersecurity vulnerabilities;
       (8) the extent to which decentralized finance has 
     integrated with the traditional financial markets and any 
     potential risks or improvements to the stability of the 
     markets;
       (9) how the levels of illicit activity in decentralized 
     finance compare with the levels of illicit activity in 
     traditional financial markets;
       (10) methods for addressing illicit activity in 
     decentralized finance and traditional markets that are 
     tailored to the unique attributes of each;
       (11) how decentralized finance may increase the 
     accessibility of cross-border transactions; and
       (12) the feasibility of embedding self-executing compliance 
     and risk controls into decentralized finance.
       (b) Consultation.--In carrying out the study required under 
     subsection (a), the Commodity Futures Trading Commission and 
     the Securities and Exchange Commission shall consult with the 
     Secretary of the Treasury on the factors described under 
     paragraphs (7) through (10) of subsection (a).
       (c) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission shall 
     jointly submit

[[Page H3455]]

     to the relevant congressional committees a report that 
     includes the results of the study required by subsection (a).
       (d) GAO Study.--The Comptroller General of the United 
     States shall--
       (1) carry out a study on decentralized finance that 
     analyzes the information described under paragraphs (1) 
     through (12) of subsection (a); and
       (2) not later than 1 year after the date of enactment of 
     this Act, submit to the relevant congressional committees a 
     report that includes the results of the study required by 
     paragraph (1).
       (e) Definitions.--In this section:
       (1) Decentralized finance.--
       (A) In general.--The term ``decentralized finance'' means 
     blockchain protocols 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 assets of a user during any part of the 
     transactions.
       (B) Relationship to excluded activities.--The term 
     ``decentralized finance'' shall not be interpreted to limit 
     or exclude any activity from the activities described in 
     section 15I(a) of the Securities Exchange Act of 1934 or 
     section 4v(a) of the Commodity Exchange Act.
       (2) Relevant congressional committees.--The term ``relevant 
     congressional committees'' means--
       (A) the Committees on Financial Services and Agriculture of 
     the House of Representatives; and
       (B) the Committees on Banking, Housing, and Urban Affairs 
     and Agriculture, Nutrition, and Forestry of the Senate.

     SEC. 606. STUDY ON NON-FUNGIBLE DIGITAL ASSETS.

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

     SEC. 607. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST 
                   DIGITAL ASSET HOLDERS.

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

     SEC. 608. STUDY ON FINANCIAL MARKET INFRASTRUCTURE 
                   IMPROVEMENTS.

       (a) In General.--The Commodity Futures Trading Commission 
     and the Securities and Exchange Commission shall jointly 
     conduct a study to assess whether additional guidance or 
     rules are necessary to facilitate the development of 
     tokenized securities and derivatives products, and to the 
     extent such guidance or rules would foster the development of 
     fair and orderly financial markets, be necessary or 
     appropriate in the public interest, and be consistent with 
     the protection of investors and customers.
       (b) Report.--
       (1) Time limit.--Not later than 1 year after the date of 
     enactment of this Act, the Commodity Futures Trading 
     Commission and the Securities and Exchange Commission shall 
     jointly submit to the relevant congressional committees a 
     report that includes the results of the study required by 
     subsection (a).
       (2) Relevant congressional committees defined.--In this 
     section, the term ``relevant congressional committees'' 
     means--
       (A) the Committees on Financial Services and on Agriculture 
     of the House of Representatives; and
       (B) the Committees on Banking, Housing, and Urban Affairs 
     and on Agriculture, Nutrition, and Forestry of the Senate.
  The Acting CHAIR: No further amendment to the bill, as amended, shall 
be in order except those printed in part B of House Report 118-516. 
Each such further amendment may be offered only in the order printed in 
the report, by a member designated in the report, shall be considered 
read, shall be debatable for the time specified in the report, equally 
divided and controlled by the proponent and an opponent, shall not be 
subject to amendment, and shall not be subject to a demand for division 
of the question.


                  Amendment No. 1 Offered by Mr. Casar

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in part B of House Report 118-516.
  Mr. CASAR. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 68, line 11, strike ``$75,000,000'' and insert 
     ``$5,000,000''.

  The Acting CHAIR. Pursuant to House Resolution 1243, the gentleman 
from Texas (Mr. Casar) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Texas.
  Mr. CASAR. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, from 2017 to 2022, Americans who invested in the SSP Index 
received about a 61 percent return on their investment, but Americans 
who invested in one of the top 12 cryptocurrencies that existed during 
that 5-year period did not make money. In fact, on average, they lost 
about half of their money. Three out of every four bitcoin traders 
during that time period also lost money. From FTX to Celsius to 
Blockchain ATMs, the industry has repeatedly lost everyday Americans 
their money.
  Whether you are a crypto booster or a crypto sceptic, we can all 
agree based on the facts that crypto investment is a risk.
  Since it is a risk, we should want more oversight to protect 
Americans. This bill before us today doesn't provide us more 
regulation. It doesn't even provide many Americans the same level of 
regulation as traditional finance.
  Instead, it creates a light-touch regulatory regime that can be 
manipulated by bad actors in both crypto and traditional finance, 
putting Americans and our 90-year-old securities laws at risk.
  My amendment focuses on one key area where everyday people who would 
invest in crypto under this bill will, in fact, receive less protection 
than Americans invested in traditional finance.
  The current flawed bill before us creates a crowdfunding registration 
exemption for crypto that is 15 times weaker than the crowdfunding 
exemption that exists in traditional finance.
  In the existing bill before us, someone could crowdfund up to $75 
million from everyday Americans, and those Americans would receive just 
the most minimal of protections. We would never allow that in the non-
crypto finance world.
  My amendment changes the exemption cap to $5 million, putting that 
cap

[[Page H3456]]

in line with other current laws, so at the very least Americans making 
investments in crypto can get the same level of protection as 
crowdfunding investors in traditional finance.
  I hope that whether you are for the underlying bill or against the 
underlying bill like me, we can agree that this commonsense amendment 
will help protect everyday people, and I urge everyone to support it.
  Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I rise in opposition to the amendment.
  The Acting CHAIR. The gentleman from North Carolina is recognized for 
5 minutes.
  Mr. McHENRY. Mr. Chair, I am opposed to this amendment. Today, 
digital asset issuers rely on exemptions under the current securities 
regime. Each exemption includes its own requirements under traditional 
securities law. What we provide in this act is purpose built for 
digital assets. What this does today is if you are raising money for a 
digital asset offering, the exemption is built for those other types of 
securities in the space.
  The SEC's disclosure regime is supposed to give investors the 
information they need to make informed decisions, but it is not built 
for digital assets.
  What we do in this act is provide certain disclosures for investors 
in digital assets, such as source code, token supply, government 
mechanisms, and other aspects unique to crypto. That is what this bill 
does.
  What the gentleman from Texas is proposing to do is limit that 
aperture from $75 million to $5 million of those folks that can invest 
in these early-stage innovations. What he is doing is restricting the 
opportunity for average, everyday investors to get options like high-
wealth investors get today under securities law.
  The original exemption for regulation crowdfunding was something we 
put in law with bipartisan support. Maxine Waters was my cosponsor on 
the regulation crowdfunding, this very exemption.
  I have enhanced this. I put additional requirements here to make sure 
there are more disclosures, and we open up the aperture to $75 million 
so more folks can participate and so those blockchains can develop. 
When you make it $5 million, it makes it impossible for you to actually 
scale up, especially with these inflationary times that our people are 
facing.
  What I would urge is the House reject this amendment. The gentleman's 
arguments against this exemption have nothing to do with the exemption 
but have everything to do with opposition to the bill.
  Mr. Chair, I urge a ``no'' vote, and I reserve the balance of my 
time.
  Mr. CASAR. Mr. Chair, I yield 1 minute to the distinguished 
gentlewoman from California (Ms. Waters).
  Ms. WATERS. Mr. Chair, I thank the gentleman from Texas for 
attempting this amendment. As a matter of fact, there have been any 
number of Members from this side of the aisle who have been attempting 
to amend this bill to try and make it better. While I have great 
respect for all of those attempts, if my friends had listened, if they 
had accepted, perhaps they could have made this a better bill. 
Unfortunately, at this point in time, no, with all the work that this 
gentleman has done, Mr. Casar and others, my friends will not accept 
any amendments. They are not going to accept his amendment. They don't 
think that the bill can be made better, and unfortunately, the bill is 
so bad, I don't think it can be made better either.
  Mr. McHENRY. Mr. Chair, I am prepared to close, and I reserve the 
balance of my time.
  Mr. CASAR. Mr. Chair, I am prepared to close, and I yield myself the 
balance of my time.
  Our securities laws were created after the Great Depression when this 
country understood that strong regulation protects Americans and is 
necessary for innovation and for our economy to thrive. We cannot 
hold cryptocurrency to a lower standard than traditional finance.

  My amendment ensures that when it comes to crowdfunding, 
cryptocurrency is held to the same standard.
  Mr. Chair, I urge all Members to support my amendment, and I yield 
back the balance of my time.
  Mr. McHENRY. Mr. Chair, may I inquire of the Chair how much time I 
have remaining.
  The Acting CHAIR. The gentleman from North Carolina has 3 minutes 
remaining.
  Mr. McHENRY. Mr. Chair, I yield myself the balance of my time. Let me 
close with this, Mr. Chairman. We have this push and pull on the 
Financial Services Committee. Generally speaking, we have elected 
officials that say the American people's hard-earned savings are their 
hard-earned savings. Then we have paternalistic amendments like the one 
before us today that say: No, you are not smart enough to invest your 
own money. We have to put in these safeguards to protect you from 
yourself.
  Well, I think that goes way too far.
  What we have done with securities laws is take average, everyday 
investors and disintermediate them from the greater economy so average, 
everyday Americans don't get the benefit of economic growth, of Wall 
Street doing great, and earnings going up in corporate America. We have 
separated it because we have made it harder for average, everyday folks 
to invest in companies and have ownership of companies.
  What we are trying to do is open that up a little bit from $5 million 
of an exemption when you are raising money to $75 million. In the scope 
of our economy, in the scope of our capital markets, in the scope of 
economic opportunity and innovation, which is a very small aperture we 
are opening here. We have done that. We have constructed this provision 
with a lot of Democratic input and Republican input, and that is how we 
came to the number of $75 million.
  It is already a compromise.
  What the gentleman offers with this amendment is nothing more than 
saying: I am paternalistic, and I am, therefore, going to restrict your 
opportunity to invest your money as you see fit.
  Reject the amendment. Vote ``no'' on this amendment, and vote ``yes'' 
on final passage.
  Mr. Chair, I yield back the balance of my time.

                              {time}  1615

  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Texas (Mr. Casar).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. CASAR. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Texas will 
be postponed.


                Amendment No. 2 Offered by Ms. Pettersen

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in part B of House Report 118-516.
  Ms. PETTERSEN. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       In title I, add at the end the following:

     SEC. 112. APPLICATION OF THE BANK SECRECY ACT.

       (a) In General.--Section 5312 of title 31, United States 
     Code, is amended--
       (1) in subsection (a)(2)(G), by striking ``or dealer'' and 
     inserting ``, dealer, digital asset broker, digital asset 
     dealer, or digital asset trading system''; and
       (2) in subsection (c)(1)(A)--
       (A) by inserting ``digital commodity broker, digital 
     commodity dealer,'' after ``futures commission merchant,''; 
     and
       (B) by inserting before the period the following: ``and any 
     digital commodity exchange registered, or required to 
     register, under the Commodity Exchange Act which permits 
     direct customer access''.
       (b) GAO Study.--
       (1) In general.--The Comptroller General of the United 
     States, in consultation with the Secretary of the Treasury, 
     shall conduct a study to--
       (A) assess the risks posed by centralized intermediaries 
     that are primarily located in foreign jurisdictions that 
     provide services to U.S. persons without regulatory 
     requirements that are substantially similar to the 
     requirements of the Bank Secrecy Act; and
       (B) provide any regulatory or legislative recommendations 
     to address these risks under subparagraph (A).
       (2) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Comptroller General shall issue a 
     report to Congress containing all findings and determinations 
     made in carrying out the study required under paragraph (1).
       Page 105, strike lines 1 through 4.

[[Page H3457]]

       Page 121, strike line 7 and all that follows through ``Bank 
     Secrecy Act.'' on line 10.
       Page 183, strike lines 14 through 17.
       Page 215, strike line 6 and all that follows through ``Bank 
     Secrecy Act.'' on line 9.
  The Acting CHAIR. Pursuant to House Resolution 1243, the gentlewoman 
from Colorado (Ms. Pettersen) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from Colorado.
  Ms. PETTERSEN. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, more than 20 percent of Americans have owned or traded 
cryptocurrency.
  Despite this, the U.S. still lacks a clear regulatory structure for 
digital assets which is hurting American competitiveness and 
incentivizing some companies, unfortunately, to move overseas.
  While there may be disagreement about how to best establish the 
appropriate market regulatory structure, there is broad bipartisan 
agreement for preventing criminals from using cryptocurrencies for 
illicit purposes, such as money laundering, terrorist financing, and 
sanctioned evasion.
  My amendment would provide clarity and conformity to how the Bank 
Secrecy Act and regulations safeguarding our financial system from 
criminals are applied to digital assets.
  The base bill already calls for the Bank Secrecy Act to apply to 
digital assets; however, by amending the BSA directly and explicitly 
expanding the definition of financial institution in the BSA to cover 
digital asset entities, we are providing certainty to the regulators 
and the Department of Treasury in their authorities to protect our 
financial system.
  Additionally, the amendment would also require a study to assess the 
risk posed by centralized intermediaries based in jurisdictions that 
lack robust anti-money laundering enforcement.
  While in most cases, American digital asset companies are already 
complying with the applicable requirements under the Bank Secrecy Act, 
we also have to be thinking about the threat of foreign companies with 
U.S. touchpoints that are not complying with equivalent controls or 
reporting standards.
  I thank Chairman McHenry and Representative Hill for working with me 
on this issue, and their commitment to strengthening the anti-money 
laundering provisions in this bill.
  This amendment, combined with the underlying bill, will help provide 
more oversight into the digital asset market and support regulators' 
work to protect consumers and investors. While there is more work to be 
done to ensure the integrity of our digital assets market, this 
amendment is an important step forward and I urge my colleagues to 
support the adoption of the amendment and the underlying bill.
  Mr. Chair, I reserve the balance of my time.
  Mr. McHENRY. Mr. Chair, I ask unanimous consent to claim the time in 
opposition, although I am not opposed to it.
  The Acting CHAIR. Is there objection to the request of the gentleman?
  There was no objection.
  The gentleman is recognized for 5 minutes.
  Mr. McHENRY. Mr. Chair, I am prepared to accept this amendment.
  I think it is important that as we establish a new comprehensive 
regulatory framework for the digital asset markets, we also have to 
ensure that we have a consistent application of the Bank Secrecy Act 
and anti-money laundering provisions in existing law. These 
requirements on the digital asset intermediaries and exchanges are 
necessary so that bad actors don't exploit these markets for nefarious 
purposes.
  Mr. Chair, I thank the gentlewoman from Colorado for her work on this 
amendment. She has been focused on AML/BSA-related issues in the build 
up to us writing FIT21 during the markup process in the Financial 
Services Committee and then the process through the Rules Committee. I 
appreciate her sincere engagement on this matter and for coming up with 
a very good amendment.
  Mr. Chair, I urge support of this amendment, and I reserve the 
balance of my time.
  Ms. PETTERSEN. Mr. Chair, I yield myself the balance of my time.
  Mr. Chair, I, again, thank the chairman from North Carolina for 
working with me and others to bring a bipartisan bill with broad 
support to the House. This has been years in the making, and I 
congratulate him for getting it to this point. I appreciate his 
willingness to work with me. I also thank my team for helping me 
address an issue that I had concerns about.
  Mr. Chair, I ask for the support of my colleagues, and I yield back 
the balance of my time.
  Mr. McHENRY. Mr. Chair, I yield such time as he may consume to the 
gentleman from Arkansas (Mr. Hill), the chair of the Digital Assets, 
Financial Technology and Inclusion Subcommittee on the Financial 
Services Committee.
  Mr. HILL. Mr. Chair, I thank Chairman McHenry for the time.
  Mr. Chair, I congratulate the gentlewoman from Colorado on this very 
effective amendment because she shares that passion that we have all 
had through this entire process, which is to recognize that we need to 
have vigorous anti-money laundering/Bank Secrecy Act and Know Your 
Customer protections around digital finance just like we do in the 
analog financial services system. Her bill will strengthen that.
  I was just reviewing the Treasury Department's 2024 national security 
for combating terrorists and other illicit financing, and it brings to 
mind what a better regime it is to have blockchain.
  Because a blockchain, Mr. Chair, has the identity connected with the 
transaction. It leaves an indelible mark cryptographically of those 
transactions that makes illicit finance easier to identify, not less. 
The Treasury Department points out that the top abusers, the top 
concern about illicit finance, are misuse of cash, including bulk cash, 
misuse of financial products and services like money orders; easy 
formation and limited information required to create a legal entity. An 
example is the use of casinos.
  That is what the Treasury Department says are the toughest, most-
challenging aspects of terror finance, and that is why this study will 
help us make sure that using blockchain is a more effective way to 
counter illicit finance in the world.
  Mr. Chair, I thank the gentlewoman from Colorado for her support and 
for being such a constructive source of dynamic support for crafting 
FIT21.
  Mr. McHENRY. Mr. Chair, again, I will echo what Congressman Hill just 
stated for the Record.
  The gentlewoman from Colorado has been a sterling advocate for 
enhanced BSA-AML protections, ensuring that we work against illicit 
finance. I thank her for the efforts, and I am willing to accept the 
amendment and urge its adoption.
  Mr. Chair, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentlewoman from Colorado (Ms. Pettersen).
  The amendment was agreed to.


                 Amendment No. 3 Offered by Mr. Norman

  The Acting CHAIR. It is now in order to consider amendment No. 3 
printed in part B of House Report 118-516.
  Mr. NORMAN. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       At the end of title IV, add the following:

     SEC. 414. STUDIES ON FOREIGN ADVERSARY PARTICIPATION.

       (a) In General.--The Secretary of the Treasury, in 
     consultation with the Commodity Futures Trading Commission 
     and the Securities and Exchange Commission, shall, not later 
     than 1 year after date of the enactment of this section, 
     conduct a study and submit a report to the relevant 
     congressional committees that--
       (1) identifies any digital asset registrants which are 
     owned by governments of foreign adversaries;
       (2) determines whether any governments of foreign 
     adversaries are collecting personal data or trading data 
     about United States persons in the digital asset markets; and
       (3) evaluates whether any proprietary intellectual property 
     of digital asset registrants is being misused or stolen by 
     any governments of foreign adversaries.
       (b) GAO Study and Report.--
       (1) In general.--The Comptroller General shall, not later 
     than 1 year after date of the enactment of this section, 
     conduct a study and submit a report to the relevant 
     congressional committees that--
       (A) identifies any digital asset registrants which are 
     owned by governments of foreign adversaries;
       (B) determines whether any governments of foreign 
     adversaries are collecting personal

[[Page H3458]]

     data or trading data about United States persons in the 
     digital asset markets; and
       (C) evaluates whether any proprietary intellectual property 
     of digital asset registrants is being misused or stolen by 
     any governments of foreign adversaries.
       (c) Definitions.--In this section:
       (1) Digital asset registrant.--The term ``digital asset 
     registrant'' means any person required to register as a 
     digital asset trading system, digital asset broker, digital 
     asset dealer, digital commodity exchange, digital commodity 
     broker, or digital commodity dealer under this Act.
       (2) Foreign adversaries.--The term ``foreign adversaries'' 
     means the foreign governments and foreign non-government 
     persons determined by the Secretary of Commerce to be foreign 
     adversaries under section 7.4(a) of title 15, Code of Federal 
     Regulations.
       (3) Relevant congressional committees.--The term ``relevant 
     congressional committees'' means--
       (A) the Committees on Financial Services and Agriculture of 
     the House of Representatives; and
       (B) the Committees on Banking, Housing, and Urban Affairs 
     and Agriculture, Nutrition, and Forestry of the Senate.
  The Acting CHAIR. Pursuant to House Resolution 1243, the gentleman 
from South Carolina (Mr. Norman) and a Member opposed each will control 
5 minutes.
  The Chair recognizes the gentleman from South Carolina.
  Mr. NORMAN. Mr. Chair, my amendment is pretty simple. It requires the 
Treasury Secretary in consultation with the CFTC and the SEC to 
complete a study and submit a report to Congress that identifies any 
digital asset registrants that are owned by governments of foreign 
adversaries.
  The report will determine whether foreign adversary governments are 
collecting or trading personal data about American citizens in the 
digital asset markets and evaluate whether foreign adversary 
governments are misusing or stealing any proprietary intellectual 
property of digital asset registrants.
  The GAO is required to complete a study and submit a report to 
Congress on the very same issues.
  This amendment would promote transparency regarding how our Nation's 
strategic enemies may be exploiting the digital asset marketplace to 
invade the privacy of Americans and steal valuable intellectual 
property.
  In June 2023, the Financial Services hearings that focused on the 
very bill that we are considering today, Aaron Kaplan, the CEO of, 
Prometheum, the first and only SEC/FINRA approved Special Purpose 
Broker-Dealer for digital assets, stated that Prometheum and its CCP 
partners entered into a joint agreement in December 2018 to develop a 
blockchain trading system where the Chinese partner took a 20 percent 
stake in Prometheum.
  In case anyone has any doubts about the CCP ties, Prometheum's 
Chinese partner company was founded in 1969 by a former senior CCP 
official. In 2021, the party's central committee posthumously named him 
a ``National Excellent Communist Party member.''
  In July 2023, several of my colleagues and I sent a letter to the SEC 
and the DOJ expressing our concerns with inconsistencies in 
Prometheum's public filings and the CCP's ownership of an entity that 
had the blessing of the SEC and FINRA to operate in the United States.
  I followed up on this letter in a September 2023 hearing with the SEC 
Chair Gary Gensler, where he dodged my question and did not take my 
concerns of the 20 percent CCP ownership of Prometheum seriously.
  The fact of the matter is that because Chinese companies are 
generally required by Chinese law to share data with the Chinese 
Government, these companies present substantial risks to United States 
individual privacy and our national security. Chinese-owned broker-
dealers like Prometheum, Webull, and MooMoo operate as registered 
entities here in the United States, and the Biden administration and 
Chair Gensler do not seem to care, yet they attack American businesses 
operating in good faith with no regulatory clarity.
  This is simply how the CCP and other foreign adversaries operate. 
They infiltrate our markets while the Biden administration looks the 
other way and punishes American companies who are only trying to 
operate in the United States but face endless regulation by enforcement 
of the Biden administration.
  We need to pass FIT21 into law because the SEC's current regulation 
by enforcement is putting the United States at a disadvantage and 
allowing foreign adversaries to gain an advantage in our U.S. crypto 
markets, all while Gary Gensler attacks American public companies who 
have tried to work with the SEC and come in and register.
  I urge my colleagues to vote in favor of this amendment to protect 
Americans from having their personal data shared with the CCP and other 
foreign adversaries.
  Mr. Chair, I reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I claim the time in opposition to the 
amendment, but I am not opposed to it.
  The Acting CHAIR. Without objection, the gentlewoman from California 
is recognized for 5 minutes.
  There was no objection.
  Ms. WATERS. Mr. Chair, while I do not oppose this amendment, I will 
emphasize that the broad deregulatory nature of the not fit for purpose 
act is such that it would severely weaken our capital markets and make 
us more vulnerable to bad actors, both domestic and foreign.
  This amendment and the underlying bill do not protect consumers and 
investors. This amendment only requires a study on whether or not 
foreign adversaries are operating as digital asset registrants under 
the bill and collecting data on the U.S. consumer or investors.
  We should not just be studying this issue; we should be legislating 
strong data privacy protections that apply all across the board.
  Moreover, if TikTok was the inspiration for this bill, I will note 
that TikTok is not directly owned by the Chinese Government. The 
concern was that it was vulnerable to being unduly influenced by the 
Chinese Communist Party. If a China-based company was operating as a 
digital asset registrant under this bill, it would not fall within this 
study unless it was directly owned by the Chinese Communist Party. It 
would be easy for our adversaries to simply stand up proxy companies 
that appear to have no direct affiliation with them to evade the 
scrutiny of the study in the bill.
  While I plan to support this amendment, I don't think it provides any 
meaningful safeguards on consumer privacy and it certainly does nothing 
to fix the underlying problems of the not fit for purpose act.
  Mr. Chair, I reserve the balance of my time.

                              {time}  1630

  Mr. NORMAN. Mr. Speaker, may I inquire as to how much time I have 
remaining.
  The Acting CHAIR. The gentleman from South Carolina has 45 seconds 
remaining.
  Mr. NORMAN. Mr. Chair, I yield the balance of my time to the 
gentleman from Arkansas (Mr. Hill).
  Mr. HILL. Mr. Chair, I thank the gentleman from South Carolina for 
yielding to me to speak in support of this amendment. It allows me to 
illustrate two things.
  First is that Prometheum, while it was approved as a special purpose 
broker-dealer for digital assets, has not accomplished anything. It has 
no business, yet it also has this partnership with the CCP, so there is 
an illustration that FIT21 would allow us to have the guidance on how 
to register a broker-dealer.
  Secondly, I fully support Mr. Norman and his concerns about the 
influence of foreign adversaries on people registered in the United 
States. It is a clear issue, and we have an investigation going on, on 
why the SEC has not pursued this itself.
  I rise in support of Mr. Norman's effort. It is a good amendment. 
Let's add it to the bill and pass FIT21.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  The bill's supporters have claimed that this bill is necessary to 
provide legal clarity as to when a digital asset is considered a 
security and when it is considered a commodity, but this bill is 
anything but clear. It is 253 pages of highly convoluted and poorly 
defined language.
  At the Rules Committee hearing yesterday, the Republicans testifying 
on the panel in defense of the bill could not answer a simple question 
from a fellow Republican as to whether dogecoin would qualify as a 
security or a commodity under this bill.

[[Page H3459]]

  They pointed to their five-part decentralization test in the bill, 
which is, again, anything but clear. The current test for determining 
whether something is a security is called the Howey Test. It has stood 
the test of time, with guidance from the SEC clarifying its 
application, in addition to decades of case law expounding on how it 
applies to a variety of different assets. Even the courts have agreed 
with SEC's interpretation of the Howey Test, classifying digital assets 
as securities in a strikingly consistent manner.
  The five-part decentralization test in this bill has not been tested, 
and it would create a slew of new litigation trying to decipher how it 
applies. Instead of a study, we should remember the fact that Members 
of Congress and legal experts struggling to agree on basic facts about 
what this bill would do foreshadows the mountains of litigation that 
this bill would result in to figure that out.
  This bill provides the opposite of legal clarity, as the bill 
supporters claim. Instead, it provides several more convoluted and 
untested definitions to replace the time-tested Howey Test in place 
today.
  The only thing clear about this 253-page bill is that it results in 
the substantial deregulation of crypto, just as the crypto industry has 
asked for.
  Mr. Chair, I yield to the gentleman from California (Mr. Sherman).
  Mr. SHERMAN. Mr. Chair, this amendment gives the illusion that it 
prevents the bill from being useful to our foreign adversaries when, in 
fact, we see Iran using crypto to avoid sanctions, North Korea 
profiting from crypto, and Hamas raising huge amounts of money and 
being able to sneak around our efforts by using crypto. Finally, we see 
the crypto advocates viewing this bill as their ticket to move crypto 
into a competitor with the U.S. dollar. With tomorrow's bill, they try 
to hobble the dollar by saying it can't be digital and we can't have a 
better payment system involving the dollar, and that is their system 
for having crypto outcompete the dollar.
  The administration opposes this bill. Even if you looked at it a few 
weeks ago, it has gotten much, much worse. I want to reemphasize that 
they added a new title that allows crypto to be completely unregulated 
and would allow for nonregulation of our stocks and bonds, so even if 
you liked this bill when you saw it 3 weeks ago, vote ``no.''
  Ms. WATERS. Mr. Chair, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from South Carolina (Mr. Norman).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from South 
Carolina will be postponed.


                  Amendment No. 4 Offered by Mr. Perry

  The Acting CHAIR. It is now in order to consider amendment No. 4 
printed in part B of House Report 118-516.
  Mr. PERRY. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       At the end of title V, add the following:

     SEC. __. SENSE OF THE CONGRESS.

       It is the sense of the 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.

  The Acting CHAIR. Pursuant to House Resolution 1243, the gentleman 
from Pennsylvania (Mr. Perry) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Pennsylvania.
  Mr. PERRY. Mr. Chairman, I offer a simple but important amendment.
  While the underlying legislation allows the Commodity Futures Trading 
Commission the authority to regulate digital asset spot markets, 
nothing in the bill should be construed as giving the CFTC power beyond 
digital assets.
  We all have seen good intentions around here, and nothing is punished 
like good intentions, so let's make clear what the strike zone is for 
everybody. We are trying to define that strike zone.
  This amendment adds a 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. That is it. That is the whole thing.
  Again, this amendment simply aims to combat mission creep, if you 
want to call it that, somewhere outside the strike zone and makes clear 
that Congress' intent is to only address digital asset spot markets in 
this bill and no more. With this amendment, the courts won't have any 
questions, and Mr. Gensler can't say, ``Well, I am not sure they did 
this,'' or ``They surely must have meant that.''
  No. We cannot allow these agencies to take more and more power in the 
absence of express congressional approval. We have already seen Mr. 
Gensler aggressively pursue litigation against the crypto industry, 
people trying to do it the right way.
  While trying to rein him in, we ought to ensure the CFTC knows 
exactly what they can and cannot do because he is not going to be there 
forever. There is going to be some next person that comes along and 
says that Congress wasn't really sure.
  We are sure, and that is what this amendment does.
  Madam Chair, I reserve the balance of my time.
  Ms. WATERS. Madam Chair, I claim the time in opposition.
  The Acting CHAIR (Mrs. Bice). The gentlewoman from California is 
recognized for 5 minutes.
  Ms. WATERS. Madam Chair, under H.R. 4763, crypto that is deemed to be 
a digital commodity would come under the CFTC's purview, which would 
include a new explicit authority for the CFTC to regulate crypto spot 
markets. However, this amendment would ensure that this new authority 
for the CFTC to regulate crypto spot markets does not include 
traditional commodity spot markets.
  It is already bad enough that this bill would result in mass 
deregulation of crypto and even some traditional securities, too. This 
amendment takes the bill to the next level by trying to preemptively 
block the CFTC to oversee non-crypto spot markets.
  The bill's supporters continue to insist that this bill is only about 
crypto, but it has serious implications for traditional securities. 
With this amendment, it would now appear to have serious implications 
for traditional commodities also.
  It is wholly unclear why Republicans, who have placed so much faith 
in the CFTC to police the spot markets of digital commodities, think 
that this agency is unable to oversee the spot markets of everyday 
commodities they currently regulate, like oil, wheat, and livestock. 
Excessive speculation in spot markets of tangible commodities is a real 
problem that can harm working families' budgets.
  For this reason, Democratic CFTC Commissioner Christy Goldsmith 
Romero has called on the CFTC to study excessive and harmful 
speculations in the commodities markets. Specifically, she has stated: 
``The CFTC has an impressive surveillance program and an equally 
impressive cadre of commodity markets experts to rely upon as it seeks 
to understand these pressures of working families, farmers, and 
producers. We should use them more, and more publicly.'' I agree with 
her.
  Madam Chair, I urge my colleagues to stand up for working families 
and farmers by leaving the CFTC's existing authority to protect them 
from speculation in the traditional securities market fully intact.
  Madam Chair, I urge my colleagues to vote ``no'' on this amendment, 
and I reserve the balance of my time.
  Mr. PERRY. Madam Chair, I yield 2 minutes to the gentleman from South 
Dakota (Mr. Johnson).
  Mr. JOHNSON of South Dakota. Madam Chair, I commend the gentleman 
from Pennsylvania for his thoughtful and forward-looking amendment.
  I think it is important that we set the record straight. This 
amendment would not, as some have alleged, strip the CFTC of all of its 
spot market regulatory authority. All of the antifraud and 
antimanipulation powers that they currently hold would remain in place.

[[Page H3460]]

This sense of Congress simply makes it clear that, within FIT21, it 
does not provide the CFTC with grand new authorities over non-digital 
asset spot markets.
  I think it is important we do that. There are clear and important 
differences between the traditional spot markets for commodities. Think 
about people buying and selling barrels of oil. That is not something 
everyday Americans are doing, but we do have everyday Americans engaged 
in the spot market for digital assets.
  Also, with regard to digital asset commodities, we also have a number 
of intermediaries that would be interacting with these retail 
consumers. Some of those intermediaries would certainly hold the cash 
of consumers, either pending or after a trade. That is an important 
situation that we need to protect for that is not exactly like that in 
the traditional commodity markets--different marketplace, different 
threats, different set of tools.
  As chair of the Commodity Markets, Digital Assets, and Rural 
Development Subcommittee, I want to make it clear that I support the 
gentleman's amendment. I do not want any part of FIT21 to change the 
CFTC's authority over non-digital asset commodities.
  Madam Chair, I commend the gentleman for his work, and I urge a 
``yes'' vote on the amendment.

  Ms. WATERS. Madam Chair, at the Rules Committee hearing, Republicans 
revealed their true intentions with this bill. My friend, Mr. Norman, 
stated, regarding the investors who were defrauded by FTX:

       I blame the investor. I mean, would I get on an airplane 
     with two wheels missing and one wing? They should have done 
     their homework.

  Representative Austin Scott of Georgia on the Rules Committee doubled 
down on this kind of victim blaming, saying that he believed we should 
use a buyer-beware approach.
  This is entirely offensive to consumers to simply say that they 
should have known better than to get defrauded. The very definition of 
fraud implies that the consumer could not have been expected to know or 
understand some facet of a contract.
  I would venture to say that this bill is even worse than just a 
buyer-beware approach. This bill creates a facade of regulation that is 
designed to make ordinary investors and consumers think they are 
protected and that the investments are safe. In reality, this bill 
would facilitate and legitimize fraud rather than warning consumers to 
beware of the risk.
  In addition to blaming millions of defrauded investors, Republicans 
continue to move forward with a bill that exempts the same crypto firms 
that were unlawfully issuing or facilitating crypto securities, giving 
them a get-out-of-jail-free card.
  This is what Republicans love to do. They blame consumers and 
investors who have been defrauded while also advancing bills to protect 
those same firms that are ripping off consumers and investors.
  Madam Chair, I reserve the balance of my time.
  Mr. PERRY. Madam Chair, I yield the balance of my time of my time to 
the gentleman from Arkansas (Mr. Hill).
  Mr. HILL. Madam Chair, I thank the gentleman from Pennsylvania for 
his constructive amendment. I think it is the absolute right approach. 
I want to associate myself with the comments from the chairman of the 
Commodity Markets, Digital Assets, and Rural Development Subcommittee 
from the House Ag Committee, Mr. Johnson, on that.
  Madam Chair, FIT21 does exactly the opposite of what has been argued 
by the minority today. It gives a clear regulatory framework. It 
prevents fraud. It does require registration, custody, capital 
requirements. It gives clarity for the first time in American history 
to how we do securities and commodity oversight for digital assets.
  The minority has also charged time and time again that somehow a 
great securities loophole is being opened in this bill.

                              {time}  1645

  It is just not true. It is not a factual statement. The term 
``investment contract'' is a fungible, digital representation. It is 
not all these other items.
  In fact, the bill specifically says the term ``digital asset'' does 
not include notes, stock, Treasury stock, securities, security-based 
swaps, and a whole list. It does not open the loophole that the ranking 
member of the Financial Services Committee charges.
  I urge a ``yes'' vote on the bill and a ``yes'' vote for Mr. Perry's 
amendment. Let's have regulatory credibility and clarity for a 
competitive United States in the 21st century.
  Ms. WATERS. Madam Chair, I yield the balance of my time to the 
gentleman from California (Mr. Sherman).
  Mr. SHERMAN. Mr. Chairman, this amendment illustrates the problem. A 
commodity other than a digital commodity, but any commodity can become 
a digital commodity, or you can have a contract or a derivative tied to 
the physical commodity that now becomes a digital coin.
  We are told that the bill does not allow stocks and bonds to be 
digital assets, but it does allow them to be defined as investment 
contracts. If you get defined as an investment contract, you are 
without regulation.
  As to the underlying bill, keep in mind, the administration opposes 
it, and three-quarters of Democrats voted against it before it got much 
worse.
  The bill got much worse a few weeks ago. If you studied it before 
then, and I know the bill has been out there since July of last year, 
your analysis won't show you how this bill now allows digital crypto to 
go without regulation and opens the door to taking our traditional 
stocks and bonds out from the SEC.
  Vote ``no'' on the amendment, but especially vote ``no'' on the bill.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Pennsylvania (Mr. Perry).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Pennsylvania 
will be postponed.


                    Announcement by the Acting Chair

  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, proceedings 
will now resume on those amendments printed in part B of House Report 
118-516 on which further proceedings were postponed, in the following 
order:
  Amendment No. 1 by Mr. Casar of Texas.
  Amendment No. 3 by Mr. Norman of South Carolina.
  Amendment No. 4 by Mr. Perry of Pennsylvania.
  The Chair will reduce to 2 minutes the minimum time for any 
electronic vote after the first vote in this series.


                  Amendment No. 1 Offered by Mr. Casar

  The Acting CHAIR. The unfinished business is the demand for a 
recorded vote on amendment No. 1, printed in B of House Report 118-516, 
offered by the gentleman from Texas (Mr. Casar), on which further 
proceedings were postponed and on which the noes prevailed by voice 
vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The Acting CHAIR. A recorded vote has been demanded.
  A recorded vote was ordered.
  The vote was taken by electronic device, and there were--ayes 204, 
noes 209, not voting 23, as follows:

                             [Roll No. 223]

                               AYES--204

     Adams
     Aguilar
     Allred
     Amo
     Auchincloss
     Balint
     Barragan
     Beatty
     Bera
     Beyer
     Bishop (GA)
     Blunt Rochester
     Bonamici
     Bowman
     Boyle (PA)
     Brown
     Brownley
     Budzinski
     Bush
     Caraveo
     Carbajal
     Cardenas
     Carson
     Carter (LA)
     Cartwright
     Casar
     Case
     Casten
     Castor (FL)
     Castro (TX)
     Cherfilus-McCormick
     Chu
     Clark (MA)
     Clarke (NY)
     Cleaver
     Clyburn
     Cohen
     Connolly
     Correa
     Courtney
     Craig
     Crockett
     Crow
     Cuellar
     Davids (KS)
     Davis (IL)
     Davis (NC)
     Dean (PA)
     DeGette
     DeLauro
     DelBene
     Deluzio
     DeSaulnier
     Dingell
     Doggett
     Escobar
     Eshoo
     Espaillat
     Fletcher
     Foster
     Foushee
     Frankel, Lois
     Frost
     Gallego
     Garamendi
     Garcia (IL)
     Garcia (TX)
     Garcia, Robert
     Golden (ME)
     Goldman (NY)
     Gomez
     Gonzalez, Vicente
     Gottheimer
     Green, Al (TX)
     Harder (CA)
     Hayes

[[Page H3461]]


     Himes
     Horsford
     Houlahan
     Hoyer
     Hoyle (OR)
     Huffman
     Ivey
     Jackson (IL)
     Jackson (NC)
     Jacobs
     Jayapal
     Jeffries
     Johnson (GA)
     Kamlager-Dove
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Khanna
     Kildee
     Kilmer
     Kim (NJ)
     Krishnamoorthi
     Kuster
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Lee (NV)
     Lee (PA)
     Leger Fernandez
     Levin
     Lieu
     Lofgren
     Lynch
     Manning
     Matsui
     McBath
     McClellan
     McCollum
     McGarvey
     McGovern
     Meeks
     Menendez
     Meng
     Mfume
     Morelle
     Moskowitz
     Moulton
     Mrvan
     Mullin
     Nadler
     Napolitano
     Neal
     Neguse
     Nickel
     Norcross
     Norton
     Ocasio-Cortez
     Omar
     Pallone
     Panetta
     Pappas
     Pascrell
     Pelosi
     Peltola
     Perez
     Peters
     Pettersen
     Phillips
     Pingree
     Plaskett
     Pocan
     Porter
     Pressley
     Quigley
     Ramirez
     Raskin
     Ross
     Ruiz
     Ruppersberger
     Ryan
     Salinas
     Sanchez
     Sarbanes
     Scanlon
     Schakowsky
     Schiff
     Schneider
     Scholten
     Schrier
     Scott (VA)
     Scott, David
     Sewell
     Sherman
     Sherrill
     Slotkin
     Smith (WA)
     Sorensen
     Soto
     Spanberger
     Stanton
     Stevens
     Strickland
     Suozzi
     Swalwell
     Sykes
     Takano
     Thanedar
     Thompson (CA)
     Thompson (MS)
     Titus
     Tlaib
     Tokuda
     Tonko
     Torres (CA)
     Torres (NY)
     Trahan
     Trone
     Underwood
     Vargas
     Vasquez
     Veasey
     Wasserman Schultz
     Waters
     Watson Coleman
     Wexton
     Wild
     Williams (GA)

                               NOES--209

     Aderholt
     Alford
     Allen
     Amodei
     Armstrong
     Arrington
     Babin
     Bacon
     Baird
     Balderson
     Banks
     Barr
     Bean (FL)
     Bentz
     Bergman
     Bice
     Biggs
     Bilirakis
     Bishop (NC)
     Boebert
     Bost
     Brecheen
     Buchanan
     Bucshon
     Burchett
     Burgess
     Burlison
     Calvert
     Cammack
     Carey
     Carl
     Carter (GA)
     Carter (TX)
     Chavez-DeRemer
     Ciscomani
     Cline
     Cloud
     Clyde
     Cole
     Collins
     Comer
     Crane
     Crawford
     Crenshaw
     Curtis
     D'Esposito
     De La Cruz
     DesJarlais
     Diaz-Balart
     Donalds
     Duarte
     Duncan
     Dunn (FL)
     Edwards
     Ellzey
     Emmer
     Estes
     Ezell
     Fallon
     Feenstra
     Ferguson
     Finstad
     Fischbach
     Fitzgerald
     Fitzpatrick
     Fleischmann
     Flood
     Foxx
     Franklin, Scott
     Fry
     Fulcher
     Gaetz
     Garbarino
     Garcia, Mike
     Gimenez
     Gonzales, Tony
     Good (VA)
     Gooden (TX)
     Gosar
     Granger
     Graves (LA)
     Graves (MO)
     Green (TN)
     Greene (GA)
     Griffith
     Grothman
     Guest
     Guthrie
     Hageman
     Harris
     Harshbarger
     Hern
     Higgins (LA)
     Hill
     Hinson
     Houchin
     Hudson
     Huizenga
     Issa
     Jackson (TX)
     James
     Johnson (LA)
     Johnson (SD)
     Jordan
     Joyce (OH)
     Joyce (PA)
     Kean (NJ)
     Kelly (MS)
     Kelly (PA)
     Kiggans (VA)
     Kiley
     Kim (CA)
     Kustoff
     LaHood
     LaLota
     Lamborn
     Langworthy
     Latta
     LaTurner
     Lawler
     Lee (FL)
     Lesko
     Letlow
     Lucas
     Luetkemeyer
     Luna
     Luttrell
     Mace
     Malliotakis
     Maloy
     Mann
     Mast
     McCaul
     McClain
     McClintock
     McCormick
     McHenry
     Meuser
     Miller (IL)
     Miller (OH)
     Miller (WV)
     Miller-Meeks
     Mills
     Molinaro
     Moolenaar
     Mooney
     Moore (AL)
     Moore (UT)
     Moran
     Moylan
     Nehls
     Newhouse
     Norman
     Obernolte
     Ogles
     Owens
     Palmer
     Pence
     Perry
     Pfluger
     Posey
     Reschenthaler
     Rodgers (WA)
     Rogers (AL)
     Rogers (KY)
     Rose
     Rosendale
     Rouzer
     Roy
     Rutherford
     Salazar
     Schweikert
     Scott, Austin
     Self
     Sessions
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smucker
     Stauber
     Steel
     Stefanik
     Steil
     Steube
     Strong
     Tenney
     Thompson (PA)
     Tiffany
     Timmons
     Turner
     Valadao
     Van Drew
     Van Duyne
     Van Orden
     Wagner
     Walberg
     Waltz
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Williams (NY)
     Williams (TX)
     Wilson (SC)
     Wittman
     Womack
     Yakym
     Zinke

                             NOT VOTING--23

     Blumenauer
     Costa
     Davidson
     Evans
     Gonzalez-Colon
     Grijalva
     Hunt
     Jackson Lee
     LaMalfa
     Landsman
     Loudermilk
     Magaziner
     Massie
     Moore (WI)
     Murphy
     Nunn (IA)
     Radewagen
     Sablan
     Scalise
     Spartz
     Stansbury
     Velazquez
     Wilson (FL)

                              {time}  1721

  Messrs. ZINKE, WILLIAMS of Texas, ROGERS of Kentucky, BUCSHON, GRAVES 
of Missouri, Ms. VAN DUYNE, Messrs. OBERNOLTE, DUNN of Florida, ROSE, 
and Ms. GREENE of Georgia changed their vote from ``aye'' to ``no.''
  Mrs. WATSON COLEMAN, Ms. TLAIB, and Mr. CUELLAR changed their vote 
from ``no'' to ``aye.''
  Ms. GRANGER changed her vote from ``present'' to ``no.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.


                 Amendment No. 3 Offered by Mr. Norman

  The Acting CHAIR. The unfinished business is the demand for a 
recorded vote on amendment No. 3, printed in part B of House Report 
118-516, offered by the gentleman from South Carolina (Mr. Norman), on 
which further proceedings were postponed and on which the ayes 
prevailed by voice vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The Acting CHAIR. A recorded vote has been demanded.
  A recorded vote was ordered.
  The Acting CHAIR. This will be a 2-minute vote.
  The vote was taken by electronic device, and there were--ayes 411, 
noes 0, not voting 25, as follows:

                             [Roll No. 224]

                               AYES--411

     Adams
     Aderholt
     Aguilar
     Alford
     Allen
     Allred
     Amo
     Amodei
     Armstrong
     Arrington
     Auchincloss
     Babin
     Bacon
     Baird
     Balderson
     Balint
     Banks
     Barr
     Barragan
     Bean (FL)
     Beatty
     Bentz
     Bera
     Bergman
     Beyer
     Bice
     Biggs
     Bilirakis
     Bishop (GA)
     Bishop (NC)
     Blunt Rochester
     Boebert
     Bonamici
     Bost
     Bowman
     Boyle (PA)
     Brecheen
     Brown
     Brownley
     Buchanan
     Bucshon
     Budzinski
     Burchett
     Burgess
     Burlison
     Bush
     Cammack
     Caraveo
     Carbajal
     Cardenas
     Carey
     Carson
     Carter (GA)
     Carter (LA)
     Carter (TX)
     Cartwright
     Casar
     Case
     Casten
     Castor (FL)
     Castro (TX)
     Chavez-DeRemer
     Cherfilus-McCormick
     Chu
     Ciscomani
     Clark (MA)
     Clarke (NY)
     Cleaver
     Cline
     Cloud
     Clyburn
     Clyde
     Cohen
     Cole
     Collins
     Comer
     Connolly
     Correa
     Courtney
     Crane
     Crawford
     Crenshaw
     Crockett
     Crow
     Cuellar
     Curtis
     D'Esposito
     Davids (KS)
     Davis (IL)
     Davis (NC)
     De La Cruz
     Dean (PA)
     DeGette
     DeLauro
     DelBene
     Deluzio
     DeSaulnier
     DesJarlais
     Diaz-Balart
     Dingell
     Doggett
     Donalds
     Duarte
     Duncan
     Dunn (FL)
     Edwards
     Ellzey
     Emmer
     Escobar
     Eshoo
     Espaillat
     Estes
     Ezell
     Fallon
     Feenstra
     Ferguson
     Finstad
     Fischbach
     Fitzgerald
     Fitzpatrick
     Fleischmann
     Fletcher
     Flood
     Foster
     Foushee
     Foxx
     Frankel, Lois
     Franklin, Scott
     Frost
     Fry
     Fulcher
     Gaetz
     Garamendi
     Garbarino
     Garcia (IL)
     Garcia (TX)
     Garcia, Mike
     Garcia, Robert
     Gimenez
     Golden (ME)
     Goldman (NY)
     Gomez
     Gonzales, Tony
     Gonzalez, Vicente
     Good (VA)
     Gooden (TX)
     Gosar
     Gottheimer
     Granger
     Graves (LA)
     Graves (MO)
     Green (TN)
     Green, Al (TX)
     Greene (GA)
     Griffith
     Grothman
     Guest
     Guthrie
     Hageman
     Harder (CA)
     Harris
     Harshbarger
     Hayes
     Hern
     Higgins (LA)
     Hill
     Himes
     Hinson
     Horsford
     Houchin
     Houlahan
     Hoyer
     Hoyle (OR)
     Hudson
     Huffman
     Huizenga
     Issa
     Ivey
     Jackson (IL)
     Jackson (NC)
     Jackson (TX)
     Jacobs
     James
     Jayapal
     Jeffries
     Johnson (GA)
     Johnson (LA)
     Johnson (SD)
     Jordan
     Joyce (OH)
     Joyce (PA)
     Kamlager-Dove
     Kaptur
     Kean (NJ)
     Keating
     Kelly (IL)
     Kelly (MS)
     Kelly (PA)
     Kennedy
     Khanna
     Kiggans (VA)
     Kildee
     Kiley
     Kilmer
     Kim (CA)
     Kim (NJ)
     Krishnamoorthi
     Kuster
     Kustoff
     LaHood
     LaLota
     LaMalfa
     Lamborn
     Langworthy
     Larsen (WA)
     Larson (CT)
     Latta
     LaTurner
     Lawler
     Lee (CA)
     Lee (FL)
     Lee (NV)
     Lee (PA)
     Leger Fernandez
     Lesko
     Letlow
     Levin
     Lieu
     Lofgren
     Lucas
     Luetkemeyer
     Luna
     Luttrell
     Lynch
     Mace
     Malliotakis
     Maloy
     Mann
     Manning
     Mast
     Matsui
     McBath
     McCaul
     McClain
     McClellan
     McClintock
     McCollum
     McCormick
     McGarvey
     McGovern
     McHenry
     Meeks
     Menendez
     Meng
     Meuser
     Mfume
     Miller (IL)
     Miller (OH)
     Miller (WV)
     Miller-Meeks
     Mills
     Molinaro
     Moolenaar
     Mooney
     Moore (AL)
     Moore (UT)
     Moran
     Morelle
     Moskowitz
     Moulton
     Moylan
     Mrvan
     Mullin
     Nadler
     Napolitano
     Neal
     Neguse
     Nehls
     Newhouse
     Nickel
     Norcross
     Norman
     Norton
     Obernolte
     Ocasio-Cortez
     Ogles
     Omar
     Owens
     Pallone
     Palmer
     Panetta
     Pappas
     Pascrell
     Pelosi
     Peltola
     Pence
     Perez
     Perry
     Peters
     Pettersen
     Pfluger
     Phillips
     Pingree
     Plaskett
     Pocan
     Porter
     Posey
     Pressley
     Quigley
     Ramirez
     Raskin
     Reschenthaler
     Rodgers (WA)
     Rogers (AL)
     Rogers (KY)
     Rose
     Rosendale
     Ross
     Rouzer
     Roy
     Ruiz
     Ruppersberger
     Rutherford
     Ryan
     Salazar
     Salinas
     Sanchez
     Sarbanes
     Scanlon
     Schakowsky
     Schiff
     Schneider
     Scholten
     Schrier
     Schweikert
     Scott (VA)
     Scott, Austin
     Scott, David
     Self
     Sessions
     Sewell
     Sherman
     Sherrill
     Simpson
     Slotkin
     Smith (MO)
     Smith (NJ)
     Smith (WA)
     Smucker
     Sorensen
     Soto
     Spanberger

[[Page H3462]]


     Spartz
     Stanton
     Stauber
     Steel
     Stefanik
     Steil
     Steube
     Stevens
     Strickland
     Strong
     Suozzi
     Swalwell
     Sykes
     Takano
     Tenney
     Thanedar
     Thompson (CA)
     Thompson (MS)
     Thompson (PA)
     Tiffany
     Timmons
     Titus
     Tlaib
     Tokuda
     Tonko
     Torres (CA)
     Torres (NY)
     Trahan
     Trone
     Turner
     Underwood
     Valadao
     Van Drew
     Van Duyne
     Van Orden
     Vargas
     Vasquez
     Veasey
     Wagner
     Walberg
     Waltz
     Wasserman Schultz
     Waters
     Watson Coleman
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Wexton
     Wild
     Williams (GA)
     Williams (NY)
     Williams (TX)
     Wilson (FL)
     Wilson (SC)
     Wittman
     Womack
     Yakym
     Zinke

                             NOT VOTING--25

     Blumenauer
     Calvert
     Carl
     Costa
     Craig
     Davidson
     Evans
     Gallego
     Gonzalez-Colon
     Grijalva
     Hunt
     Jackson Lee
     Landsman
     Loudermilk
     Magaziner
     Massie
     Moore (WI)
     Murphy
     Nunn (IA)
     Radewagen
     Sablan
     Scalise
     Smith (NE)
     Stansbury
     Velazquez


                    Announcement by the Acting Chair

  The Acting CHAIR (during the vote). There is 1 minute remaining.

                              {time}  1726

  So the amendment was agreed to.
  The result of the vote was announced as above recorded.


                  Amendment No. 4 Offered by Mr. Perry

  The Acting CHAIR. The unfinished business is the demand for a 
recorded vote on amendment No. 4, printed in part B of House Report 
118-516, offered by the gentleman from Pennsylvania (Mr. Perry), on 
which further proceedings were postponed and on which the ayes 
prevailed by voice vote.
  The Clerk will redesignate the amendment.
  The Clerk redesignated the amendment.


                             Recorded Vote

  The Acting CHAIR. A recorded vote has been demanded.
  A recorded vote was ordered.
  The Acting CHAIR. This is a 2-minute vote.
  The vote was taken by electronic device, and there were--ayes 225, 
noes 191, not voting 20, as follows:

                             [Roll No. 225]

                               AYES--225

     Aderholt
     Alford
     Allen
     Amodei
     Armstrong
     Arrington
     Babin
     Bacon
     Baird
     Balderson
     Banks
     Barr
     Bean (FL)
     Bentz
     Bergman
     Bice
     Biggs
     Bilirakis
     Bishop (NC)
     Boebert
     Bost
     Brecheen
     Buchanan
     Bucshon
     Budzinski
     Burchett
     Burgess
     Burlison
     Calvert
     Cammack
     Caraveo
     Carey
     Carl
     Carter (GA)
     Carter (TX)
     Chavez-DeRemer
     Ciscomani
     Cline
     Cloud
     Clyde
     Cole
     Collins
     Comer
     Craig
     Crane
     Crawford
     Crenshaw
     Curtis
     D'Esposito
     Davidson
     De La Cruz
     DesJarlais
     Diaz-Balart
     Donalds
     Duarte
     Duncan
     Dunn (FL)
     Edwards
     Ellzey
     Emmer
     Estes
     Ezell
     Fallon
     Feenstra
     Ferguson
     Finstad
     Fischbach
     Fitzgerald
     Fitzpatrick
     Fleischmann
     Flood
     Foxx
     Franklin, Scott
     Fry
     Fulcher
     Gaetz
     Garbarino
     Garcia, Mike
     Gimenez
     Golden (ME)
     Gonzales, Tony
     Good (VA)
     Gooden (TX)
     Gosar
     Granger
     Graves (LA)
     Graves (MO)
     Green (TN)
     Greene (GA)
     Griffith
     Grothman
     Guest
     Guthrie
     Hageman
     Harder (CA)
     Harris
     Harshbarger
     Hern
     Higgins (LA)
     Hill
     Hinson
     Houchin
     Hudson
     Huizenga
     Issa
     Jackson (TX)
     James
     Johnson (LA)
     Johnson (SD)
     Jordan
     Joyce (OH)
     Joyce (PA)
     Kean (NJ)
     Kelly (MS)
     Kelly (PA)
     Kiggans (VA)
     Kiley
     Kim (CA)
     Kuster
     Kustoff
     LaHood
     LaLota
     LaMalfa
     Lamborn
     Langworthy
     Latta
     LaTurner
     Lawler
     Lee (FL)
     Lesko
     Letlow
     Lofgren
     Lucas
     Luetkemeyer
     Luna
     Luttrell
     Mace
     Malliotakis
     Maloy
     Mann
     Mast
     McCaul
     McClain
     McClintock
     McCormick
     McHenry
     Meuser
     Miller (IL)
     Miller (OH)
     Miller (WV)
     Miller-Meeks
     Mills
     Molinaro
     Moolenaar
     Mooney
     Moore (AL)
     Moore (UT)
     Moran
     Moylan
     Nehls
     Newhouse
     Norman
     Obernolte
     Ogles
     Owens
     Palmer
     Peltola
     Pence
     Perez
     Perry
     Pfluger
     Posey
     Reschenthaler
     Rodgers (WA)
     Rogers (AL)
     Rogers (KY)
     Rose
     Rosendale
     Rouzer
     Roy
     Rutherford
     Salazar
     Schweikert
     Scott, Austin
     Self
     Sessions
     Sherrill
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smucker
     Sorensen
     Spartz
     Stanton
     Stauber
     Steel
     Stefanik
     Steil
     Steube
     Strong
     Tenney
     Thompson (PA)
     Tiffany
     Timmons
     Turner
     Valadao
     Van Drew
     Van Duyne
     Van Orden
     Veasey
     Wagner
     Walberg
     Waltz
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Williams (NY)
     Williams (TX)
     Wilson (SC)
     Wittman
     Womack
     Yakym
     Zinke

                               NOES--191

     Adams
     Aguilar
     Allred
     Amo
     Auchincloss
     Balint
     Barragan
     Beatty
     Bera
     Beyer
     Bishop (GA)
     Blunt Rochester
     Bonamici
     Bowman
     Boyle (PA)
     Brown
     Brownley
     Bush
     Carbajal
     Cardenas
     Carson
     Carter (LA)
     Cartwright
     Casar
     Case
     Casten
     Castor (FL)
     Castro (TX)
     Cherfilus-McCormick
     Chu
     Clark (MA)
     Clarke (NY)
     Cleaver
     Clyburn
     Cohen
     Connolly
     Correa
     Courtney
     Crockett
     Crow
     Cuellar
     Davids (KS)
     Davis (IL)
     Davis (NC)
     Dean (PA)
     DeGette
     DeLauro
     DelBene
     Deluzio
     DeSaulnier
     Dingell
     Doggett
     Escobar
     Eshoo
     Espaillat
     Fletcher
     Foster
     Foushee
     Frankel, Lois
     Frost
     Garamendi
     Garcia (IL)
     Garcia (TX)
     Garcia, Robert
     Goldman (NY)
     Gomez
     Gonzalez, Vicente
     Gottheimer
     Green, Al (TX)
     Hayes
     Himes
     Horsford
     Houlahan
     Hoyer
     Hoyle (OR)
     Huffman
     Ivey
     Jackson (IL)
     Jackson (NC)
     Jacobs
     Jayapal
     Jeffries
     Johnson (GA)
     Kamlager-Dove
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Khanna
     Kildee
     Kilmer
     Kim (NJ)
     Krishnamoorthi
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Lee (NV)
     Lee (PA)
     Leger Fernandez
     Levin
     Lieu
     Lynch
     Manning
     Matsui
     McBath
     McClellan
     McCollum
     McGarvey
     McGovern
     Meeks
     Menendez
     Meng
     Mfume
     Morelle
     Moskowitz
     Moulton
     Mrvan
     Mullin
     Nadler
     Napolitano
     Neal
     Neguse
     Nickel
     Norcross
     Norton
     Ocasio-Cortez
     Omar
     Pallone
     Panetta
     Pappas
     Pascrell
     Pelosi
     Peters
     Pettersen
     Phillips
     Pingree
     Plaskett
     Pocan
     Porter
     Pressley
     Quigley
     Ramirez
     Raskin
     Ross
     Ruiz
     Ruppersberger
     Ryan
     Salinas
     Sanchez
     Sarbanes
     Scanlon
     Schakowsky
     Schiff
     Schneider
     Scholten
     Schrier
     Scott (VA)
     Scott, David
     Sewell
     Sherman
     Slotkin
     Smith (WA)
     Soto
     Spanberger
     Stevens
     Strickland
     Suozzi
     Swalwell
     Sykes
     Takano
     Thanedar
     Thompson (CA)
     Thompson (MS)
     Titus
     Tlaib
     Tokuda
     Tonko
     Torres (CA)
     Torres (NY)
     Trahan
     Trone
     Underwood
     Vargas
     Vasquez
     Wasserman Schultz
     Waters
     Watson Coleman
     Wexton
     Wild
     Williams (GA)
     Wilson (FL)

                             NOT VOTING--20

     Blumenauer
     Costa
     Evans
     Gallego
     Gonzalez-Colon
     Grijalva
     Hunt
     Jackson Lee
     Landsman
     Loudermilk
     Magaziner
     Massie
     Moore (WI)
     Murphy
     Nunn (IA)
     Radewagen
     Sablan
     Scalise
     Stansbury
     Velazquez


                    Announcement by the Acting Chair

  The Acting CHAIR (during the vote). There is 1 minute remaining.

                              {time}  1730

  So the amendment was agreed to.
  The result of the vote was announced as above recorded.
  The Acting CHAIR. There being no further amendment, under the rule, 
the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mrs. 
Bice) having assumed the chair, Ms. Malliotakis, Acting Chair of the 
Committee of the Whole House on the state of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 4763) to 
provide for a system of regulation of digital assets by the Commodity 
Futures Trading Commission and the Securities and Exchange Commission, 
and for other purposes, and, pursuant to House Resolution 1243, she 
reported the bill back to the House with sundry further amendments 
adopted in the Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  Is a separate vote demanded on any further amendment reported from 
the Committee of the Whole? If not, the Chair will put them en gros.
  The amendments were agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Ms. WATERS. Madam Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 279, 
noes 136, not voting 15, as follows:

[[Page H3463]]

  


                             [Roll No. 226]

                               AYES--279

     Aderholt
     Aguilar
     Alford
     Allen
     Allred
     Amodei
     Armstrong
     Arrington
     Auchincloss
     Babin
     Bacon
     Baird
     Balderson
     Banks
     Barr
     Bean (FL)
     Bentz
     Bera
     Bergman
     Beyer
     Bice
     Bilirakis
     Bishop (NC)
     Boebert
     Bost
     Boyle (PA)
     Brecheen
     Buchanan
     Bucshon
     Budzinski
     Burchett
     Burgess
     Burlison
     Calvert
     Cammack
     Caraveo
     Carey
     Carl
     Carter (GA)
     Carter (TX)
     Chavez-DeRemer
     Ciscomani
     Clark (MA)
     Cline
     Cloud
     Clyde
     Cole
     Collins
     Comer
     Costa
     Craig
     Crane
     Crawford
     Crenshaw
     Crockett
     Cuellar
     Curtis
     D'Esposito
     Davidson
     Davis (NC)
     De La Cruz
     DelBene
     DesJarlais
     Diaz-Balart
     Donalds
     Duarte
     Duncan
     Dunn (FL)
     Edwards
     Ellzey
     Emmer
     Eshoo
     Estes
     Ezell
     Fallon
     Feenstra
     Ferguson
     Finstad
     Fischbach
     Fitzgerald
     Fitzpatrick
     Fleischmann
     Flood
     Foxx
     Franklin, Scott
     Fry
     Fulcher
     Gaetz
     Gallego
     Garbarino
     Garcia, Mike
     Garcia, Robert
     Gimenez
     Goldman (NY)
     Gomez
     Gonzales, Tony
     Gonzalez, Vicente
     Good (VA)
     Gooden (TX)
     Gosar
     Gottheimer
     Granger
     Graves (LA)
     Graves (MO)
     Green (TN)
     Greene (GA)
     Griffith
     Grothman
     Guest
     Guthrie
     Hageman
     Harder (CA)
     Harris
     Harshbarger
     Hern
     Higgins (LA)
     Hill
     Himes
     Hinson
     Horsford
     Houchin
     Houlahan
     Hudson
     Huizenga
     Issa
     Jackson (IL)
     Jackson (NC)
     Jackson (TX)
     James
     Johnson (LA)
     Johnson (SD)
     Jordan
     Joyce (OH)
     Joyce (PA)
     Kamlager-Dove
     Kean (NJ)
     Kelly (MS)
     Kelly (PA)
     Kennedy
     Khanna
     Kiggans (VA)
     Kiley
     Kim (CA)
     Kim (NJ)
     Krishnamoorthi
     Kuster
     Kustoff
     LaHood
     LaMalfa
     Lamborn
     Langworthy
     Latta
     LaTurner
     Lawler
     Lee (FL)
     Lee (NV)
     Lesko
     Letlow
     Levin
     Lieu
     Lofgren
     Lucas
     Luetkemeyer
     Luna
     Luttrell
     Mace
     Malliotakis
     Maloy
     Mann
     Mast
     McBath
     McCaul
     McClain
     McClintock
     McCormick
     McHenry
     Menendez
     Meuser
     Miller (IL)
     Miller (OH)
     Miller (WV)
     Miller-Meeks
     Mills
     Molinaro
     Moolenaar
     Mooney
     Moore (AL)
     Moore (UT)
     Moran
     Moskowitz
     Moulton
     Mullin
     Nehls
     Newhouse
     Nickel
     Norman
     Obernolte
     Ogles
     Owens
     Palmer
     Panetta
     Pelosi
     Peltola
     Pence
     Perry
     Peters
     Pettersen
     Pfluger
     Phillips
     Posey
     Quigley
     Reschenthaler
     Rodgers (WA)
     Rogers (AL)
     Rogers (KY)
     Rose
     Rouzer
     Roy
     Rutherford
     Ryan
     Salazar
     Schiff
     Schneider
     Scholten
     Schweikert
     Scott, Austin
     Self
     Sessions
     Sherrill
     Simpson
     Slotkin
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smucker
     Sorensen
     Soto
     Spanberger
     Spartz
     Stanton
     Stauber
     Steel
     Stefanik
     Steil
     Steube
     Stevens
     Strickland
     Strong
     Suozzi
     Swalwell
     Tenney
     Thanedar
     Thompson (CA)
     Thompson (PA)
     Tiffany
     Timmons
     Titus
     Torres (NY)
     Turner
     Valadao
     Van Drew
     Van Duyne
     Van Orden
     Veasey
     Wagner
     Walberg
     Waltz
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Wild
     Williams (NY)
     Williams (TX)
     Wilson (SC)
     Wittman
     Womack
     Yakym
     Zinke

                               NOES--136

     Adams
     Amo
     Balint
     Barragan
     Beatty
     Biggs
     Bishop (GA)
     Blunt Rochester
     Bonamici
     Bowman
     Brown
     Brownley
     Bush
     Carbajal
     Cardenas
     Carson
     Carter (LA)
     Cartwright
     Casar
     Case
     Casten
     Castor (FL)
     Castro (TX)
     Cherfilus-McCormick
     Chu
     Clarke (NY)
     Cleaver
     Clyburn
     Cohen
     Connolly
     Correa
     Courtney
     Crow
     Davids (KS)
     Davis (IL)
     Dean (PA)
     DeGette
     DeLauro
     Deluzio
     DeSaulnier
     Dingell
     Doggett
     Escobar
     Espaillat
     Fletcher
     Foster
     Foushee
     Frankel, Lois
     Frost
     Garamendi
     Garcia (IL)
     Garcia (TX)
     Golden (ME)
     Green, Al (TX)
     Hayes
     Hoyer
     Hoyle (OR)
     Huffman
     Ivey
     Jacobs
     Jayapal
     Jeffries
     Johnson (GA)
     Kaptur
     Keating
     Kelly (IL)
     Kildee
     Kilmer
     LaLota
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Lee (PA)
     Leger Fernandez
     Lynch
     Manning
     Matsui
     McClellan
     McCollum
     McGarvey
     McGovern
     Meeks
     Meng
     Mfume
     Morelle
     Mrvan
     Nadler
     Napolitano
     Neal
     Neguse
     Norcross
     Ocasio-Cortez
     Omar
     Pallone
     Pappas
     Pascrell
     Perez
     Pingree
     Pocan
     Porter
     Pressley
     Ramirez
     Raskin
     Rosendale
     Ross
     Ruiz
     Ruppersberger
     Salinas
     Sanchez
     Sarbanes
     Scanlon
     Schakowsky
     Schrier
     Scott (VA)
     Scott, David
     Sewell
     Sherman
     Smith (WA)
     Sykes
     Takano
     Thompson (MS)
     Tlaib
     Tokuda
     Tonko
     Torres (CA)
     Trahan
     Trone
     Underwood
     Vargas
     Vasquez
     Wasserman Schultz
     Waters
     Watson Coleman
     Wexton
     Williams (GA)
     Wilson (FL)

                             NOT VOTING--15

     Blumenauer
     Evans
     Grijalva
     Hunt
     Jackson Lee
     Landsman
     Loudermilk
     Magaziner
     Massie
     Moore (WI)
     Murphy
     Nunn (IA)
     Scalise
     Stansbury
     Velazquez


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). There are 2 minutes 
remaining.

                              {time}  1738

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.


                          personal explanation

  Mr. BLUMENAUER. Madam Speaker, had I been present for the vote today 
on Roll Call No. 221, Ordering the Previous Question on H. Res. 1243, I 
would have voted NAY.
  Had I been present for the vote on Roll Call No. 222, H. Res. 1243, I 
would have voted ``no.''
  Had I been present for the vote on Roll Call No. 223, Casar Amendment 
No. 1, I would have voted ``aye.''
  Had I been present for the vote on Roll Call No. 224, Norman 
Amendment No. 3, I would have voted ``aye.''
  Had I been present for the vote on Roll Call No. 225, Perry Amendment 
No. 4, I would have voted ``no.''
  Had I been present for the vote on Roll Call No. 226, H.R. 4763, I 
would have voted ``no.''


                          personal explanation

  Mr. LANDSMAN. Madam Speaker, for personal reasons, I was unable to 
make votes. Had I been present, I would have voted NAY on Roll Call No. 
221, NAY on Roll Call No. 222, YEA on Roll Call No. 223, YEA on Roll 
Call No. 224, NAY on Roll Call No. 225, and YEA on Roll Call No. 226.


                          personal explanation

  Mr. NUNN of Iowa. Madam Speaker, due to a natural disaster event in 
my district, I made an emergency trip back to Iowa to provide 
assistance to my constituents. Had I been present, I would have voted 
NAY on Roll Call No. 223, Casar Amendment No. 1 to H.R. 4763, YEA on 
Roll Call No. 224, Norman Amendment No. 3 to H.R. 4763, YEA on Roll 
Call No. 225, Perry Amendment No. 4 to H.R. 4763, and YEA on Roll Call 
No. 226, H.R. 4763.

                          ____________________