[Congressional Record Volume 171, Number 123 (Thursday, July 17, 2025)]
[House]
[Pages H3373-H3405]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DIGITAL ASSET MARKET CLARITY ACT OF 2025
Mr. HILL of Arkansas. Mr. Speaker, pursuant to House Resolution 580,
I call up the bill (H.R. 3633) to provide for a system of regulation of
the offer and sale of digital commodities by the Securities and
Exchange Commission and the Commodity Futures Trading Commission, and
for other purposes, and ask for its immediate consideration in the
House.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Smith of Nebraska). Pursuant to House
Resolution 580, 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 119-6, modified by the
amendment printed in part B of House Report 119-199, is adopted and the
bill, as amended, is considered read.
The text of the bill, as amended, is as follows:
H.R. 3633
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Digital
Asset Market Clarity Act of 2025'' or the ``CLARITY Act of
2025''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION
Sec. 101. Definitions under the Securities Act of 1933.
Sec. 102. Definitions under the Securities Exchange Act of 1934.
Sec. 103. Definitions under the Commodity Exchange Act.
Sec. 104. Definitions under this Act.
Sec. 105. Rulemakings.
Sec. 106. Expedited registration for digital commodity exchanges,
brokers, and dealers; provisional status.
Sec. 107. Commodity Exchange Act and securities laws savings
provisions.
Sec. 108. Administrative requirements.
Sec. 109. Treatment of certain non-controlling blockchain developers.
Sec. 110. Application of the Bank Secrecy Act.
Sec. 111. Rule of construction.
Sec. 112. Implementation.
TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
Sec. 201. Treatment of investment contract assets.
Sec. 202. Exempted primary transactions in digital commodities.
Sec. 203. Treatment of secondary transactions in digital commodities
that originally involved investment contracts.
Sec. 204. Requirements for offers and sales of digital commodities by
digital commodity related persons and digital commodity
affiliated persons.
Sec. 205. Mature blockchain system requirements.
Sec. 206. Effective date.
TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
EXCHANGE COMMISSION
Sec. 301. Treatment of digital commodities and permitted payment
stablecoins.
Sec. 302. Anti-fraud authority over permitted payment stablecoins and
certain digital commodity transactions.
Sec. 303. Eligibility of alternative trading systems.
Sec. 304. Rulemaking for dual-registered entities.
Sec. 305. Modernization of recordkeeping requirements.
Sec. 306. Exemptive authority.
Sec. 307. Additional registrations with the Commodity Futures Trading
Commission.
Sec. 308. Exempting digital commodities from State securities laws.
Sec. 309. Exclusion for decentralized finance activities.
Sec. 310. Treatment of custody activities by banking institutions.
Sec. 311. Broker and dealer disclosures regarding the treatment of
assets.
[[Page H3374]]
Sec. 312. Digital commodity activities that are financial in nature.
Sec. 313. Effective date; administration.
Sec. 314. Educational material requirements.
Sec. 315. Discretionary Surplus Fund.
TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
COMMODITY FUTURES TRADING COMMISSION
Sec. 401. Commission jurisdiction over digital commodity transactions.
Sec. 402. Requiring futures commission merchants to use qualified
digital asset custodians.
Sec. 403. Trading certification and approval for digital commodities.
Sec. 404. Registration of digital commodity exchanges.
Sec. 405. Qualified digital asset custodians.
Sec. 406. Registration and regulation of digital commodity brokers and
dealers.
Sec. 407. Registration of associated persons.
Sec. 408. Registration of commodity pool operators and commodity
trading advisors.
Sec. 409. Exclusion for decentralized finance activities.
Sec. 410. Resources for implementation and enforcement.
Sec. 411. Requirements related to control persons.
Sec. 412. Other tradable assets.
Sec. 413. Conflict of interest rulemaking.
Sec. 414. Effective date.
Sec. 415. Sense of Congress.
TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
Sec. 501. Findings; sense of Congress.
Sec. 502. Strategic Hub for Innovation and Financial Technology.
Sec. 503. Codification of LabCFTC.
Sec. 504. Study on decentralized finance.
Sec. 505. Study on non-fungible tokens.
Sec. 506. Study on expanding financial literacy amongst digital
commodity holders.
Sec. 507. Study on financial market infrastructure improvements.
Sec. 508. Study on blockchain in payments.
Sec. 509. Study on illicit use of digital assets.
Sec. 510. GAO study on certain centralized intermediaries that are
primarily located in foreign jurisdictions.
Sec. 511. Studies on foreign adversary participation.
Sec. 512. Conforming amendments.
TITLE I--DEFINITIONS; RULEMAKING; EXPEDITED REGISTRATION
SEC. 101. DEFINITIONS UNDER THE SECURITIES ACT OF 1933.
Section 2(a) of the Securities Act of 1933 (15 U.S.C.
77b(a)) is amended by adding at the end the following:
``(20) Blockchain.--The term `blockchain' means--
``(A) any technology--
``(i) where data is--
``(I) shared across a network to create a distributed
ledger of independently verifiable transactions or
information among network participants;
``(II) linked using cryptography to maintain the integrity
of the distributed ledger and to execute other functions; and
``(III) propagated among network participants to reach
consensus on the state of the distributed ledger and any
other functions; and
``(ii) composed of source code that is publicly available;
and
``(B) any similar technology to the technology described in
subparagraph (A).
``(21) Blockchain application.--The term `blockchain
application' means any executable software that is deployed
to a blockchain and composed of source code that is publicly
available, including a smart contract or any network of smart
contracts, or other similar technology.
``(22) Blockchain protocol.--The term `blockchain protocol'
means publicly available source code of a blockchain that is
executed by the network participants of a blockchain to
facilitate its functioning, or other similar technology.
``(23) Blockchain system.--The term `blockchain system'
means any blockchain, together with its blockchain protocol
or any blockchain application or network of blockchain
applications.
``(24) Decentralized governance system.--
``(A) In general.--The term `decentralized governance
system' means, with respect to a blockchain system, any
transparent, rules-based system permitting persons to form
consensus or reach agreement in the development, provision,
publication, maintenance, or administration of such
blockchain system, where participation is not limited to, or
under the effective control of, any person or group of
persons under common control.
``(B) Relationship of persons to decentralized governance
systems.--With respect to a decentralized governance system,
the decentralized governance system and any persons
participating in the decentralized governance system shall be
treated as separate persons unless such persons are under
common control or acting pursuant to an agreement to act in
concert.
``(C) Legal entities for decentralized governance
systems.--The term `decentralized governance system' shall
include a legal entity used to implement the rules-based
system described in subparagraph (A), provided that the legal
entity does not operate pursuant to centralized management.
For the purposes of this subparagraph, the delegation of
ministerial or administrative authority at the direction of
the participants in a decentralized governance system shall
not be construed to be centralized management.
``(25) Digital asset.--The term `digital asset' means any
digital representation of value which is recorded on a
cryptographically-secured distributed ledger or other similar
technology.
``(26) Digital commodity.--The term `digital commodity' has
the meaning given that term under section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
``(27) Digital commodity affiliated person.--The term
`digital commodity affiliated person'--
``(A) means a person (including a digital commodity related
person) that, with respect to any digital commodity--
``(i) acquires or has any right to acquire 5 percent or
more of the total outstanding units of such digital commodity
from a digital commodity issuer or an agent or underwriter
thereof;
``(ii) is a founder of the digital commodity issuer; or
``(iii) is an executive officer, director, trustee, general
partner, or person serving in a similar capacity of the
digital commodity issuer or held such role at any point in
the previous 12-month period; and
``(B) does not include a decentralized governance system.
``(28) Digital commodity issuer.--
``(A) In general.--With respect to a digital commodity, the
term `digital commodity issuer' means any person that--
``(i) issues or causes to be issued, or proposes to issue
or cause to be issued, a unit of such digital commodity to a
person; or
``(ii) offers or sells a right to a future issuance of a
unit of such digital commodity to a person.
``(B) Prohibition on evasion.--It shall be unlawful for any
person to knowingly evade classification as a `digital
commodity issuer' and facilitate an arrangement for the
primary purpose of effecting an offer, sale, distribution, or
other issuance of a digital commodity, including via any
arrangement involving the transfer of intellectual property
associated with the blockchain system to which the digital
commodity relates.
``(29) Digital commodity related person.--
``(A) In general.--With respect to a digital commodity
issuer, the term `digital commodity related person'--
``(i) means a person--
``(I) that is or was in the previous 6-month period a
promoter, senior employee, advisory board member, consultant,
advisor, or person serving in a similar capacity; or
``(II) that acquires or has any right to acquire 1 percent
or more of the total outstanding units of such digital
commodity from a digital commodity issuer or an agent or
underwriter thereof; and
``(ii) does not include a decentralized governance system.
``(B) Senior employee defined.--In this paragraph and with
respect to a digital commodity issuer, the term `senior
employee' means any employee materially involved in the
management of the digital commodity issuer, including
management of the development of the blockchain system to
which the digital commodity relates.
``(30) End user distribution.--
``(A) In general.--The term `end user distribution' means a
distribution of a unit of a digital commodity 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 and equitable manner based
on conditions capable of being satisfied by any participant
in the blockchain system, including, as incentive-based
rewards--
``(I) to users of the digital commodity or any blockchain
system to which the digital commodity relates;
``(II) for activities directly related to the operation of
the blockchain system, such as mining, validating, staking,
or other activity directly tied to the operation of the
blockchain system; or
``(III) to the existing holders of another digital
commodity, in proportion to the total units of such other
digital commodity as are held by each person.
``(B) Protocol consensus participation.--The term `end user
distribution' includes the following:
``(i) Self staking.--The distribution of a unit of a
digital commodity as a programmatic result of validating or
staking activity for a blockchain system's consensus
mechanism, including the staking of a digital commodity and
the operation of a node or validator for such activity where
the owner of the staked digital commodity and operator of the
node or validator are the same person or entity.
``(ii) Self-custodial staking with a third party.--The
distribution of a unit of a digital commodity as a
programmatic result of validating or staking activity for a
blockchain system's consensus mechanism, including the
staking of a digital commodity and the operation of a node or
validator for such activity where--
``(I) the owner of the staked digital commodity and
operator of the node or validator for such activity are
different persons or entities; and
``(II) the operator of the node or validator does not
maintain custody or control of the staked digital commodity.
``(iii) Custodial and ancillary staking services.--Subject
to the rules issued pursuant to subparagraph (C), the
provision of custodial or ancillary staking services enabling
the owner of a digital commodity to participate in validating
or staking activity for a blockchain system's consensus
mechanism that results in the programmatic distribution of a
unit of a digital commodity, provided that such custodial or
ancillary services are exclusively administrative or
ministerial in nature.
``(C) Rulemaking to define the custodial and ancillary
staking services.--Not later than 270 days after the date of
the enactment of this paragraph, the Commission shall issue
rules defining the custodial and ancillary staking
[[Page H3375]]
services described in subparagraph (B)(iii) that are
exclusively administrative or ministerial in nature,
consistent with what is necessary or appropriate for the
public interest or for the protection of investors.
``(31) Mature blockchain system.--The term `mature
blockchain system' means a blockchain system, together with
its related digital commodity, that is not controlled by any
person or group of persons under common control.
``(32) Permitted payment stablecoin.--The term `permitted
payment stablecoin' means a payment stablecoin (as defined in
section 2 of the GENIUS Act) issued by a permitted payment
stablecoin issuer.
``(33) Permitted payment stablecoin issuer.--The term
`permitted payment stablecoin issuer' has the meaning given
that term in section 2 of the GENIUS Act.''.
SEC. 102. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF
1934.
Section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)) is amended--
(1) by redesignating the second paragraph (80) (relating to
funding portals) as paragraph (81); and
(2) by adding at the end the following:
``(82) Bank secrecy act.--The term `Bank Secrecy Act'
means--
``(A) section 21 of the Federal Deposit Insurance Act (12
U.S.C. 1829b);
``(B) chapter 2 of title I of Public Law 91-508 (12 U.S.C.
1951 et seq.); and
``(C) subchapter II of chapter 53 of title 31, United
States Code.
``(83) Additional digital commodity-related terms.--
``(A) Securities act of 1933.--The terms `blockchain
system', `decentralized governance system', `digital asset',
`digital commodity affiliated person', `digital commodity
issuer', `digital commodity related person', `end user
distribution', `mature blockchain system', `permitted payment
stablecoin', and `permitted payment stablecoin issuer' have
the meaning given those terms, respectively, under section
2(a) of the Securities Act of 1933 (15 U.S.C. 77b(a)).
``(B) Commodity exchange act.--The terms `digital
commodity', `digital commodity broker', `digital commodity
dealer', `digital commodity exchange', `decentralized finance
messaging system', and `decentralized finance trading
protocol' have the meaning given those terms, respectively,
under section 1a of the Commodity Exchange Act (7 U.S.C.
1a).''.
SEC. 103. DEFINITIONS UNDER THE COMMODITY EXCHANGE ACT.
(a) In General.--Section 1a of the Commodity Exchange Act
(7 U.S.C. 1a) is amended--
(1) in paragraph (10)--
(A) in subparagraph (A)--
(i) by redesignating clauses (iii) and (iv) as clauses (iv)
and (v), respectively; and
(ii) by inserting after clause (ii) the following:
``(iii) digital commodity;''; and
(B) by redesignating subparagraph (B) as subparagraph (C)
and inserting after subparagraph (A) the following:
``(B) Exclusion.--For purposes of this paragraph, the term
`trading in commodity interests' shall not include
transacting in digital commodities for the purpose of--
``(i) acting as a digital commodity custodian;
``(ii) establishing, maintaining, or managing inventory or
payment instruments for commercial purposes; or
``(iii) maintaining or supporting the operation of, or
validating transactions on, a blockchain system.'';
(2) in paragraph (11)--
(A) in subparagraph (A)(i)--
(i) by redesignating subclauses (III) and (IV) as
subclauses (IV) and (V), respectively; and
(ii) by inserting after subclause (II) the following:
``(III) digital commodity;''; and
(B) by redesignating subparagraph (B) as subparagraph (C)
and inserting after subparagraph (A) the following:
``(B) Exclusion.--For purposes of this paragraph, the term
`trading in commodity interests' shall not include
transacting in digital commodities for the purpose of--
``(i) acting as a digital commodity custodian;
``(ii) establishing, maintaining, or managing inventory or
payment instruments for commercial purposes; or
``(iii) maintaining or supporting the operation of, or
validating transactions on, a blockchain system.'';
(3) in paragraph (12)(A)(i)--
(A) in subclause (II), by adding at the end a semicolon;
(B) by redesignating subclauses (III) and (IV) as
subclauses (IV) and (V), respectively; and
(C) by inserting after subclause (II) the following:
``(III) a digital commodity;'';
(4) by redesignating paragraphs (16) through (51) as
paragraphs (17) through (52), respectively, and inserting
after paragraph (15) the following:
``(16) Terms related to digital commodities.--
``(A) Associated person of a digital commodity broker.--
``(i) In general.--Except as provided in clause (ii), the
term `associated person of a digital commodity broker' means
a person who is associated with a digital commodity broker as
a partner, officer, employee, or agent (or any person
occupying a similar status or performing similar functions)
in any capacity that involves--
``(I) the solicitation or acceptance of an order for the
purchase or sale of a digital commodity; or
``(II) the supervision of any person engaged in the
solicitation or acceptance of an order for the purchase or
sale of a digital commodity.
``(ii) Exclusion.--The term `associated person of a digital
commodity broker' does not include any person associated with
a digital commodity broker the functions of which are solely
clerical or ministerial.
``(B) Associated person of a digital commodity dealer.--
``(i) In general.--Except as provided in clause (ii), the
term `associated person of a digital commodity dealer' means
a person who is associated with a digital commodity dealer as
a partner, officer, employee, or agent (or any person
occupying a similar status or performing similar functions)
in any capacity that involves--
``(I) the solicitation or acceptance of a contract for the
purchase or sale of a digital commodity; or
``(II) the supervision of any person engaged in the
solicitation or acceptance of a contract for the purchase or
sale of a digital commodity.
``(ii) Exclusion.--The term `associated person of a digital
commodity dealer' does not include any person associated with
a digital commodity dealer the functions of which are solely
clerical or ministerial.
``(C) Bank secrecy act.--The term `Bank Secrecy Act'
means--
``(i) section 21 of the Federal Deposit Insurance Act (12
U.S.C. 1829b);
``(ii) chapter 2 of title I of Public Law 91-508 (12 U.S.C.
1951 et seq.); and
``(iii) subchapter II of chapter 53 of title 31, United
States Code.
``(D) Decentralized finance messaging system.--
``(i) In general.--The term `decentralized finance
messaging system' means a software application that provides
a user with the ability to create or submit an instruction,
communication, or message to a decentralized finance trading
protocol for the purpose of executing a transaction by the
user.
``(ii) Additional requirements.--The term `decentralized
finance messaging system' does not include any system that
provides any person other than the user with control over--
``(I) the funds of the user; or
``(II) the execution of the transaction of the user.
``(E) Decentralized finance trading protocol.--
``(i) In general.--The term `decentralized finance trading
protocol' means a blockchain system through which multiple
participants can execute a financial transaction--
``(I) in accordance with an automated rule or algorithm
that is predetermined and non-discretionary; and
``(II) without reliance on any other person to maintain
control of the digital assets of the user during any part of
the financial transaction.
``(ii) Exclusions.--
``(I) In general.--The term `decentralized finance trading
protocol' does not include a blockchain system if--
``(aa) a person or group of persons under common control or
acting pursuant to an agreement to act in concert has the
authority, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise, to
control or materially alter the functionality, operation, or
rules of consensus or agreement of the blockchain system; or
``(bb) the blockchain system does not operate, execute, and
enforce its operations and transactions based solely on pre-
established, transparent rules encoded directly within the
source code of the blockchain system.
``(II) Special rule.--For purposes of subclause (I), a
decentralized governance system shall not be considered to be
a person or a group of persons under common control or acting
pursuant to an agreement to act in concert.
``(F) Digital commodity.--
``(i) In general.--The term `digital commodity' means a
digital asset that is intrinsically linked to a blockchain
system, and the value of which is derived from or is
reasonably expected to be derived from the use of the
blockchain system.
``(ii) Relationship to a blockchain system.--For purposes
of this subparagraph, a digital asset is intrinsically linked
to a blockchain system if the digital asset is directly
related to the functionality or operation of the blockchain
system or to the activities or services for which the
blockchain system is created or utilized, including where the
digital asset is--
``(I) issued or generated by the programmatic functioning
of the blockchain system;
``(II) used to transfer value between participants in the
blockchain system;
``(III) used to access the activities or services of the
blockchain system;
``(IV) used to participate in the decentralized governance
system of the blockchain system;
``(V) used or removed from circulation in whole or in part
to pay fees or otherwise verify or validate transactions on
the blockchain system;
``(VI) used as payment or incentive to participants in the
blockchain system to engage in the activities of the
blockchain system, provide services to other participants in
the blockchain system, or otherwise participate in the
functionality of the blockchain system; or
``(VII) used as payment or incentive to participants in the
blockchain system to validate transactions, secure the
blockchain system, provide computational services, maintain
or distribute information, or otherwise participate in the
operations of the blockchain system.
``(iii) Exclusion.--The term `digital commodity' does not
include any of the following:
``(I) Security.--
``(aa) Any security, other than a note, an investment
contract, or a certificate of interest or participation in
any profit-sharing agreement.
``(bb) A note, an investment contract, or a certificate of
interest or participation in any profit-sharing agreement
that--
``(AA) represents or gives the holder an ownership interest
or other interest in the revenues, profits, obligations,
debts, assets, or assets or
[[Page H3376]]
debts to be acquired of the issuer of the digital asset or
another person (other than a decentralized governance
system);
``(BB) makes the holder a creditor of the issuer of the
digital asset or another person; or
``(CC) represents or gives the holder the right to receive
interest or the return of principal from the issuer of the
digital asset or another person.
``(II) Security derivative.--A digital asset that, based on
its terms and other characteristics, is, represents, or is
functionally equivalent to an agreement, contract, or
transaction that is--
``(aa) a security future, as defined in section 2a of the
Securities Act of 1933;
``(bb) a security-based swap, as defined in section 2a of
the Securities Act of 1933;
``(cc) a put, call, straddle, option, or privilege on any
security, certificate of deposit, or group or index of
securities (including any interest therein or based on the
value thereof), as defined in section 2a of the Securities
Act of 1933; or
``(dd) a put, call, straddle, option, or privilege on any
security, as defined in section 2a of the Securities Act of
1933.
``(III) Permitted payment stablecoin.--A digital asset that
is a permitted payment stablecoin.
``(IV) Banking deposit.--
``(aa) A deposit (as defined under section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813)), regardless of the
technology used to record the deposit.
``(bb) An account (as defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752)), regardless of the
technology used to record the account.
``(V) Commodity.--A digital asset that references,
represents an interest in, or is functionally equivalent to--
``(aa) an agricultural commodity;
``(bb) an excluded commodity, other than a security; or
``(cc) an exempt commodity, other than the digital
commodity itself, as shall be further defined by the
Commission.
``(VI) Commodity derivative.--A digital asset that, based
on its terms and other characteristics, is, represents, or is
functionally equivalent to an agreement, contract, or
transaction that is--
``(aa) a contract of sale of a commodity for future
delivery or an option thereon;
``(bb) a security futures product;
``(cc) a swap;
``(dd) an agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(ee) a commodity option authorized under section 4c; or
``(ff) a leverage transaction authorized under section 19.
``(VII) Pooled investment vehicle.--
``(aa) In general.--A digital asset not described by
subclause (I) that, based on its terms and other
characteristics, is, represents, or is functionally
equivalent to an interest in--
``(AA) a commodity pool, as defined in this Act; or
``(BB) a pooled investment vehicle.
``(bb) Pooled investment vehicle defined.--In this
subclause, the term `pooled investment vehicle' means--
``(AA) any investment company as defined in section 3(a) of
the Investment Company Act of 1940 (15 U.S.C. 80a-3(a));
``(BB) any company (as defined in section 2 of such Act (15
U.S.C. 80a-2)) that would be an investment company under
section 3(a) of such Act but for the exclusions provided from
that definition by section 3(c) of such Act, if for purposes
of this subclause the company were assumed to be an issuer
(as defined in section 2 of such Act); or
``(CC) any entity or person that is not an investment
company but holds or will hold assets other than securities.
``(VIII) Good, collectible, and other non-commodity
asset.--A digital asset that has value, utility, or
significance beyond its mere existence as a digital asset,
including the digital equivalent of a tangible or intangible
good, such as--
``(aa) a work of art, a musical composition, a literary
work, or other intellectual property;
``(bb) collectibles, merchandise, virtual land, and video
game assets;
``(cc) affinity, rewards, or loyalty points, including
airline miles or credit card points, that are not primarily
speculative in nature; or
``(dd) rights, licenses, and tickets.
``(iv) Rule of construction.--No presumption shall exist
that a digital asset is a security, nor shall a digital asset
be excluded from being a digital commodity pursuant to clause
(iii)(I), solely due to--
``(I) the digital asset providing voting or economic rights
with respect to the blockchain system to which the digital
asset relates or the decentralized governance system of the
blockchain system to which the digital asset relates;
``(II) the value of the digital asset having the potential
to appreciate or depreciate in response to the efforts,
operations, or financial performance of the blockchain system
to which the digital asset relates or the decentralized
governance system of the blockchain system to which the
digital asset relates; or
``(III) the value of the digital asset appreciating or
depreciating due to the use of the blockchain system to which
the digital asset relates or the decentralized governance
system of the blockchain system to which the digital asset
relates.
``(G) Digital commodity broker.--
``(i) In general.--The term `digital commodity broker'
means any person who, as a regular business--
``(I) is engaged in--
``(aa) soliciting or accepting an order from a customer
for--
``(AA) the purchase or sale of a digital commodity; or
``(BB) an agreement, contract, or transaction described in
section 2(c)(2)(D)(iv); and
``(bb) in conjunction with the activities in item (aa),
accepts or maintains control over--
``(AA) the funds of any customer; or
``(BB) the execution of any transaction of a customer;
``(II) is engaged in soliciting or accepting orders from a
customer for the purchase or sale of a unit of a digital
commodity on or subject to the rules of a registered entity;
or
``(III) is registered with the Commission as a digital
commodity broker.
``(ii) Exceptions.--The term `digital commodity broker'
does not include a person solely because the person--
``(I) solicits or accepts an order described in clause
(i)(I)(aa)(AA) from a customer who is an eligible contract
participant;
``(II) enters into 1 or more digital commodity transactions
that are attributable or solely incidental to making,
sending, receiving, or facilitating payments, whether
involving a payment service provider or on a peer-to-peer
basis; or
``(III) is a bank (as defined under section 3(a) of the
Securities Exchange Act of 1934) engaging in certain banking
activities with respect to a digital commodity in the same or
a similar manner as a bank is excluded from the definition of
a broker under such section, as determined by the Commission.
``(iii) Further definition.--The Commission, by rule or
regulation, may exclude from the term `digital commodity
broker' any person or class of persons if the Commission
determines that the rule or regulation will effectuate the
purposes of this Act.
``(H) Digital commodity dealer.--
``(i) In general.--The term `digital commodity dealer'
means any person who, as a regular business--
``(I) is, or offers to be a counterparty to a person for
the purchase or sale of a digital commodity as a regular
business, and in conjunction with the activities, accepts or
maintains control over the funds of any counterparty; or
``(II) is registered with the Commission as a digital
commodity dealer.
``(ii) Exception.--The term `digital commodity dealer' does
not include a person solely because the person--
``(I) is or offers to be a counterparty to a person who is
an eligible contract participant;
``(II) enters into a digital commodity transaction with an
eligible contract participant;
``(III) enters into a digital commodity transaction on or
through a registered digital commodity exchange, with a
registered digital commodity broker, or through a
decentralized finance trading protocol;
``(IV) enters into a digital commodity transaction for the
person's own account, either individually or in a fiduciary
capacity, but not as a part of a regular business;
``(V) enters into 1 or more digital commodity transactions
that are attributable or solely incidental to making,
sending, receiving, or facilitating payments, whether
involving a payment service provider or on a peer-to-peer
basis; or
``(VI) is a bank (as defined under section 3(a) of the
Securities Exchange Act of 1934) engaging in certain banking
activities with respect to a digital commodity in the same or
a similar manner as a bank is excluded from the definition of
a dealer under section 3(a)(5) of such Act, as determined by
the Commission.
``(iii) Further definition.--The Commission, by rule or
regulation, may exclude from the term `digital commodity
dealer' any person or class of persons if the Commission
determines that the rule or regulation will effectuate the
purposes of this Act.
``(I) Digital commodity exchange.--The term `digital
commodity exchange' means a trading facility that offers or
seeks to offer a cash or spot market in at least 1 digital
commodity.
``(J) Mixed digital asset transaction.--The term `mixed
digital asset transaction' means a transaction in which a
digital commodity is traded for a security.
``(K) Terms defined under the securities act of 1933.--The
terms `blockchain system', `decentralized governance system',
`digital asset', `digital commodity issuer', `digital
commodity affiliated person', `digital commodity related
person', `end user distribution', `mature blockchain system',
`permitted payment stablecoin', and `permitted payment
stablecoin issuer' have the meaning given those terms,
respectively, under section 2(a) of the Securities Act of
1933 (15 U.S.C. 77b(a)).''; and
(5) in paragraph (41) (as so redesignated by paragraph (4)
of this subsection)--
(A) by striking ``and'' at the end of subparagraph (E);
(B) by striking the period at the end of subparagraph (F)
and inserting ``; and''; and
(C) by adding at the end the following:
``(G) a digital commodity exchange registered under section
5i.''.
(b) Conforming Amendments.--
(1) Each of the following provisions of law is amended by
striking ``1a(18)'' and inserting ``1a(19)'':
(A) Section 4s(h)(5)(A)(i) of the Commodity Exchange Act (7
U.S.C. 6s(h)(5)(A)(i)).
(B) Section 5(e) of the Securities Act of 1933 (15 U.S.C.
77e(e)).
(C) Section 6(g)(5)(B) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(5)(B)).
(D) Section 15F(h)(5)(A)(i) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-10(h)(5)(A)(i)).
(2) Section 752 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8325) is amended by
striking ``1a(39)'' and inserting ``1a(40)''.
(3) Section 4s(f)(1)(D) of the Commodity Exchange Act (7
U.S.C. 6s(f)(1)(D)) is amended by striking ``1a(47)(A)'' and
inserting ``1a(48)(A)''.
(4) Each of the following provisions of the Commodity
Exchange Act is amended by striking ``1a(47)(A)(v)'' and
inserting ``1a(48)(A)(v)'':
[[Page H3377]]
(A) Section 4t(b)(1)(C) (7 U.S.C. 6t(b)(1)(C)).
(B) Section 5(d)(23) (7 U.S.C. 7(d)(23)).
(C) Section 5b(k)(3) (7 U.S.C. 7a-1(k)(3)).
(D) Section 5h(f)(10)(A)(iii) (7 U.S.C. 7b-
3(f)(10)(A)(iii)).
(5) Section 21(f)(4)(C) of the Commodity Exchange Act (7
U.S.C. 24a(f)(4)(C)) is amended by striking ``1a(48)'' and
inserting ``1a(49)''.
(6) Section 403 of the Legal Certainty for Bank Products
Act of 2000 (7 U.S.C. 27a) is amended--
(A) in subsection (a)(2), by striking ``1a(47)(A)(v)'' and
inserting ``1a(48)(A)(v)''; and
(B) in each of subsections (b)(1) and (c)(2), by striking
``1a(47)'' and inserting ``1a(48)''.
(7) Section 712 of the Wall Street Transparency and
Accountability Act of 2010 (15 U.S.C. 8302) is amended--
(A) in subsection (a)(8), by striking ``1a(47)(D)'' each
place it appears and inserting ``1a(48)(D)''; and
(B) in subsection (d)(1), by striking ``1a(47)(A)(v)'' each
place it appears and inserting ``1a(48)(A)(v)''.
SEC. 104. DEFINITIONS UNDER THIS ACT.
In this Act:
(1) Definitions under the commodity exchange act.--The
terms ``decentralized finance messaging system'',
``decentralized finance trading protocol'', ``digital
commodity'', ``digital commodity broker'', ``digital
commodity dealer'', ``digital commodity exchange'', and
``mixed digital asset transaction'' have the meaning given
those terms, respectively, under section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
(2) Definitions under the securities act of 1933.--The
terms ``blockchain'', ``blockchain system'', ``blockchain
protocol'', ``decentralized governance system'', ``digital
asset'', ``digital commodity issuer'', ``end user
distribution'', ``mature blockchain system'', ``permitted
payment stablecoin'', and ``permitted payment stablecoin
issuer'' have the meaning given those terms, respectively,
under section 2(a) of the Securities Act of 1933 (15 U.S.C.
77b(a)).
(3) Definitions under the securities exchange act of
1934.--The terms ``Bank Secrecy Act'', ``securities laws'',
and ``self-regulatory organization'' have the meaning given
those terms, respectively, under section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
SEC. 105. RULEMAKINGS.
(a) Definitions.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly
issue rules to further define the following terms:
(1) The terms--
(A) ``blockchain'', ``blockchain application'',
``blockchain system'', ``blockchain protocol'',
``decentralized governance system'', ``digital commodity
affiliated person'', ``digital commodity issuer'', ``digital
commodity related person'', ``end user distribution'', and
``mature blockchain system'', as defined under section 2(a)
of the Securities Act of 1933;
(B) ``unilateral authority'', as such term is used in
section 42 of the Securities Exchange Act of 1934 and section
1a of the Commodity Exchange Act; and
(C) ``programmatic functioning'', as such term is used in
sections 4C of the Securities Act of 1933, section 42 of the
Securities Exchange Act of 1934, and section 1a of the
Commodity Exchange Act.
(2) The terms ``digital commodity'', ``decentralized
finance messaging system'', and ``decentralized finance
trading protocol'', as defined under section 1a of the
Commodity Exchange Act.
(b) Joint Rulemaking for Mixed Digital Asset
Transactions.--The Securities and Exchange Commission and the
Commodity Futures Trading Commission shall jointly issue
rules applicable to mixed digital asset transactions under
this Act and the amendments made by this Act, including by
further defining such term.
(c) Protection of Self-Custody.--
(1) In general.--A United States individual shall retain
the right to--
(A) maintain a hardware wallet or software wallet for the
purpose of facilitating the individual's own lawful custody
of digital assets; and
(B) engage in direct, peer-to-peer transactions in digital
assets with another individual or entity for the individual's
own lawful purposes using a hardware wallet or software
wallet, if--
(i) such other individual or entity is not a financial
institution (as defined in section 5312 of title 31, United
States Code); and
(ii) the transactions do not involve any property or
interests in property that are blocked pursuant to, or are
otherwise prohibited by, United States sanctions.
(2) Application.--This subsection--
(A) applies solely to personal use by individuals; and
(B) does not apply to individuals acting in a custodial or
fiduciary capacity for others.
(3) Rule of construction.--Nothing in this subsection shall
be construed to limit the authority of the Secretary of the
Treasury, the Securities and Exchange Commission, the
Commodity Futures Trading Commission, the Board of Governors
of the Federal Reserve System, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, or the
National Credit Union Administration to carry out any
enforcement action or special measure authorized under
applicable law, including--
(A) the Bank Secrecy Act, section 9714 of the Combating
Russian Money Laundering Act (31 U.S.C. 5318A note), and
section 7213A of the Fentanyl Sanctions Act (21 U.S.C.
2313a); or
(B) any other law relating to illicit finance, money
laundering, terrorism financing, or United States sanctions.
(d) Joint Rulemaking, Procedures, or Guidance for
Delisting.--Not later than 180 days after the date of the
enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly issue rules, procedures, or guidance (as determined
appropriate by the Commissions) regarding the process to
delist an asset for trading under section 106 if the
Commissions determine that the listing is inconsistent with
the Commodity Exchange Act, the securities laws (including
regulations under those laws), or this Act.
(e) Joint Rules for Portfolio Margining Determinations.--
(1) In general.--Not later than 360 days after the date of
the enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly issue rules describing the process for persons
registered with either such Commission to seek a joint order
or determination with respect to margin, customer protection,
segregation, or other requirements as necessary to facilitate
portfolio margining of securities (including related
extensions of credit), security-based swaps, contracts for
future delivery, options on a contract for future delivery,
swaps, and digital commodities, or any subset thereof, in--
(A) a securities account carried by a registered broker or
dealer or a security-based swap account carried by a
registered security-based swap dealer;
(B) a futures or cleared swap account carried by a
registered futures commission merchant;
(C) a swap account carried by a swap dealer; or
(D) a digital commodity account carried by a registered
digital commodity broker or digital commodity dealer that is
also registered in such other capacity as is necessary to
also carry the other customer or counterparty positions being
held in the account.
(2) Process.--With respect to a joint order or
determination described in paragraph (1), the rules required
to be issued pursuant to paragraph (1) shall require--
(A) the joint order or determination to be issued only if
the order or determination is in the public interest and
provides for the appropriate protection of customers;
(B) applicants to file a standard application, in a form
and manner determined by the Securities and Exchange
Commission and the Commodity Futures Trading Commission,
which shall include the information necessary to make the
joint order or determination;
(C) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to make a final
determination not later than 270 days after the filing of a
completed application;
(D) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to consider the public
interest of the joint order or determination through the
solicitation of public comments; and
(E) the Securities and Exchange Commission and the
Commodity Futures Trading Commission to consult with other
relevant foreign or domestic regulators, including the Board
of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation, and the Office of the
Comptroller of the Currency, as appropriate.
(f) Capital Requirements to Address Netting Agreements.--No
later than 360 days following the date of enactment of this
Act, the Board of Governors of the Federal Reserve System,
the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation shall develop risk-based and leverage
capital requirements for insured depository institutions,
depository institution holding companies, and nonbank
financial companies supervised by the Board of Governors that
address netting agreements that provide for termination and
close-out netting across multiple types of financial
transactions, consistent with subsection (e), in the event of
a counterparty's default.
SEC. 106. EXPEDITED REGISTRATION FOR DIGITAL COMMODITY
EXCHANGES, BROKERS, AND DEALERS; PROVISIONAL
STATUS.
(a) Registration.--
(1) In general.--Unless exempted from registration, a
person shall not act as a digital commodity broker, digital
commodity dealer, or digital commodity exchange after the end
of the 90-day period beginning on the date the process
described in paragraph (2) is adopted by the Commodity
Futures Trading Commission, unless, as the case may be, the
person is registered as a--
(A) digital commodity broker pursuant to section 4u of the
Commodity Exchange Act;
(B) digital commodity dealer pursuant to section 4u of the
Commodity Exchange Act; or
(C) digital commodity exchange pursuant to section 5i of
the Commodity Exchange Act.
(2) Expedited process.--Within 180 days after the date of
the enactment of this Act, the Commodity Futures Trading
Commission shall adopt, by rule, regulation, or order, a
process for expedited registration of persons required to be
registered pursuant to paragraph (1).
(b) Provisional Status.--
(1) In general.--A person who is registered in accordance
with subsection (a) of this section shall be in provisional
status until--
(A) in the case of a digital commodity broker or dealer,
270 days after the final effective date of the rulemakings
required under section 4u of the Commodity Exchange Act; or
(B) in the case of a digital commodity exchange, 270 days
after the final effective date of the rulemakings required
under section 5i of such Act.
(2) Payment of fees.--A person in provisional status shall
pay all fees and penalties required under section 410.
(c) Operations Prior to Regulations.--
(1) Requirements.--A person in provisional status shall be
subject to the requirements of this section and the Commodity
Exchange Act and any rules or regulations promulgated under
this section or the Commodity Exchange Act, as applicable.
[[Page H3378]]
(2) Listings.--
(A) In general.--Except as provided in subparagraph (B), a
person in provisional status may continue to offer, solicit,
trade, facilitate, execute, clear, report, or otherwise deal
in any digital asset offered on or through the facilities of
the person before the date of registration under this
section, until such time as the joint rulemaking on
definitions required under section 105(a) is effective.
(B) Delisting.--Before the effective date of the joint
rulemaking on definitions under section 105(a), a person in
provisional status shall cease offering, soliciting, trading,
facilitating, executing, clearing, reporting, or otherwise
dealing in any digital asset required to be delisted pursuant
to a joint delisting process established under section
105(d).
(3) Exemptive authority.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commodity Futures Trading Commission may exempt any persons
or class of persons registered pursuant to subsection (a) and
in provisional status pursuant to subsection (b) from any
requirements of this section or the Commodity Exchange Act or
any rules or regulations promulgated under this section or
the Commodity Exchange Act, as applicable.
(d) Customer Disclosure Before Registration.--
(1) In general.--Beginning 30 days after the date of the
enactment of this Act, any person acting as a digital
commodity exchange, digital commodity broker, or digital
commodity dealer shall disclose to the customers of the
person so acting, in the disclosure documents, offering
documents, and promotional material of the person so acting,
in a prominent manner, that the person is not registered with
or regulated by the Commodity Futures Trading Commission.
(2) Expiration.--Paragraph (1) of this subsection shall not
apply to any person who registers pursuant to subsection (a).
SEC. 107. COMMODITY EXCHANGE ACT AND SECURITIES LAWS SAVINGS
PROVISIONS.
(a) In General.--Nothing in this Act shall affect or apply
to, or be interpreted to affect or apply to--
(1) any agreement, contract, or transaction that is subject
to the Commodity Exchange Act as--
(A) a contract of sale of a commodity for future delivery
or an option on such a contract;
(B) a swap;
(C) a security futures product;
(D) an option authorized under section 4c of such Act;
(E) an agreement, contract, or transaction described in
section 2(c)(2)(C)(i) of such Act; or
(F) a leverage transaction authorized under section 19 of
such Act;
(2) any agreement, contract, or transaction that is subject
to the securities laws as--
(A) a security-based swap;
(B) a security futures product; or
(C) an option on or based on the value of a security; or
(3) the activities of any person with respect to any such
agreement, contract, or transaction.
(b) Prohibitions on Spot Digital Commodity Entities.--
Nothing in this Act authorizes, or shall be interpreted to
authorize, a digital commodity exchange, digital commodity
broker, or digital commodity dealer to engage in any
activities involving any transaction, contract, or agreement
described in subsection (a)(1), solely by virtue of being
registered as a digital commodity exchange, digital commodity
broker, or digital commodity dealer.
(c) Definitions.--In this section, each term shall have the
meaning provided in the Commodity Exchange Act or the
regulations prescribed under such Act.
SEC. 108. ADMINISTRATIVE REQUIREMENTS.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C.
6c(a)) is amended--
(1) in paragraph (3)--
(A) in subparagraph (B), by striking ``or'' at the end;
(B) in subparagraph (C), by striking the period and
inserting ``; or''; and
(C) by adding at the end the following:
``(D) a contract of sale of a digital commodity.'';
(2) in paragraph (4)--
(A) in subparagraph (A)--
(i) in clause (ii), by striking ``or'' at the end;
(ii) in clause (iii), by striking the period and inserting
``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital commodity.'';
(B) in subparagraph (B)--
(i) in clause (ii), by striking ``or'' at the end;
(ii) in clause (iii), by striking the period and inserting
``; or''; and
(iii) by adding at the end the following:
``(iv) a contract of sale of a digital commodity.''; and
(C) in subparagraph (C)--
(i) in clause (ii), by striking ``or'' at the end;
(ii) by striking ``(iii) a swap, provided however,'' and
inserting the following:
``(iii) a swap; or
``(iv) a contract of sale of a digital commodity,
provided, however,''; and
(iii) by striking ``clauses (i), (ii), or (iii)'' and
insert ``any of clauses (i) through (iv)''.
SEC. 109. TREATMENT OF CERTAIN NON-CONTROLLING BLOCKCHAIN
DEVELOPERS.
(a) In General.--Notwithstanding applicable law, a non-
controlling blockchain developer or provider of a blockchain
service shall not be treated as a money transmitter or as
engaged in ``money transmitting'' or, following the date of
enactment of this Act, be otherwise subject to any new
registration requirement that is substantially similar to the
requirement that currently applies to money transmitters,
solely on the basis of--
(1) creating or publishing software to facilitate the
creation of, or provision of maintenance services to, a
blockchain or blockchain service;
(2) providing hardware or software to facilitate a
customer's own custody or safekeeping of the customer's
digital assets; or
(3) providing infrastructure support to maintain a
blockchain service.
(b) Rule of Construction.--Nothing in this section shall be
construed to affect whether a blockchain developer or
provider of a blockchain service is otherwise subject to
classification or treatment as a money transmitter, or as
engaged in ``money transmitting'', under applicable State or
Federal law, including laws relating to anti-money laundering
or countering the financing of terrorism, based on conduct
outside the scope of subsection (a). Nothing in this section
shall be construed to affect whether a blockchain developer
or provider of a blockchain service is otherwise subject to
classification or treatment as a financial institution under
the Bank Secrecy Act, this Act, or any Act enacted after the
date of enactment of this Act.
(c) Effect on Other Laws.--
(1) Intellectual property law.--Nothing in this section
shall be construed to limit or expand any law pertaining to
intellectual property.
(2) State law.--Nothing in this section shall be construed
to prevent any State from enforcing any State law that is
consistent with this section. No cause of action may be
brought and no liability may be imposed under any State or
local law that is inconsistent with this section.
(d) Definitions.--In this section:
(1) Blockchain developer.--The term ``blockchain
developer'' means any person or business that creates or
publishes software to facilitate the creation of, or provide
maintenance to, a blockchain or a blockchain service.
(2) Blockchain service.--The term ``blockchain service''
means any information, transaction, or computing service or
system that provides or enables access to a blockchain
network by multiple users, including specifically a service
or system that enables users to send, receive, exchange, or
store digital assets described by blockchain networks.
(3) Non-controlling blockchain developer or provider of a
blockchain service.--The term ``non-controlling blockchain
developer or provider of a blockchain service'' means a
blockchain developer or provider of a blockchain service that
in the regular course of operations, does not have the legal
right or the unilateral and independent ability to control,
initiate upon demand, or effectuate transactions involving
digital assets that users are entitled to, without the
approval, consent, or direction of any other third party.
SEC. 110. APPLICATION OF THE BANK SECRECY ACT.
(a) In General.--Section 5312(c)(1)(A) of title 31, United
States Code, is amended--
(1) by inserting ``digital commodity broker, digital
commodity dealer,'' after ``futures commission merchant,'';
and
(2) by inserting before the period the following: ``and any
digital commodity exchange registered, or required to
register, under the Commodity Exchange Act which permits
direct customer access''.
(b) Bank Secrecy Act Requirements.--
(1) Regulations.--The Secretary of the Treasury, acting
through the Director of the Financial Crimes Enforcement
Network, and in consultation with Commodity Futures Trading
Commission, shall issue requirements consistent with the
requirements of futures commission merchants to apply the
Bank Secrecy Act to digital commodity brokers, digital
commodity dealers, and digital commodity exchanges that are
tailored to the size and complexity of such entities,
including by requiring each such entity to--
(A) establish and maintain an anti-money laundering and
countering the financing of terrorism program, which shall
include--
(i) an appropriate risk assessment;
(ii) the development of internal policies, procedures, and
controls;
(iii) the designation of a compliance officer;
(iv) an ongoing employee training program; and
(v) an independent audit function to test such program;
(B) retain appropriate records of transactions;
(C) monitor and report suspicious activity, which may
include use of appropriate distributed ledger analytics; and
(D) maintain an effective customer identification program
to identify and verify account holders and carry out
appropriate customer due diligence.
(2) Compliance with sanctions.--A digital commodity broker,
digital commodity dealer, or digital commodity exchange shall
comply with all laws and regulations related to United States
sanctions administered by the Office of Foreign Assets
Control.
SEC. 111. RULE OF CONSTRUCTION.
Nothing in this Act, or the amendments made by this Act,
shall be construed to limit or prevent the continued
application of applicable ethics statutes and regulations
administered by the Office of Government Ethics, or the
ethics rules of the Senate and the House of Representatives,
including section 208 of title 18, United States Code, and
sections 2635.702 and 2635.802 of title 5, Code of Federal
Regulations. For the avoidance of doubt, existing Office of
Government Ethics laws and the ethics rules of the Senate and
the House of Representatives prohibit any member of Congress
or senior executive branch official from issuing a digital
commodity during their time in public service. For the
purposes of this section, an employee described in section
202 of title 18, United States Code, shall be deemed an
executive branch employee for purposes of complying with
section 208 of that title.
[[Page H3379]]
SEC. 112. IMPLEMENTATION.
(a) Global Rulemaking Timeframe.--Unless otherwise provided
in this Act or an amendment made by this Act, the Commodity
Futures Trading Commission and the Securities and Exchange
Commission, or both, shall individually, and jointly where
required, promulgate rules and regulations required of each
Commission under this Act or an amendment made by this Act
not later than 360 days after the date of enactment of this
Act.
(b) Rules and Registration Before Final Effective Dates.--
(1) In general.--In order to prepare for the implementation
of this Act, the Commodity Futures Trading Commission and the
Securities and Exchange Commission may, before any effective
date provided in this Act--
(A) promulgate rules, regulations, or orders permitted or
required by this Act;
(B) conduct studies and prepare reports and recommendations
required by this Act;
(C) register persons under this Act; and
(D) exempt persons, agreements, contracts, or transactions
from provisions of this Act, under the terms contained in
this Act.
(2) Limitation on effectiveness.--An action by the
Commodity Futures Trading Commission or the Securities and
Exchange Commission under paragraph (1) shall not become
effective before the effective date otherwise applicable to
the action under this Act.
TITLE II--OFFERS AND SALES OF DIGITAL COMMODITIES
SEC. 201. TREATMENT OF INVESTMENT CONTRACT ASSETS.
(a) Securities Act of 1933.--Section 2(a) of the Securities
Act of 1933 (15 U.S.C. 77b(a)), as amended by section 101, is
further amended--
(1) in paragraph (1), by adding at the end the following:
``The term `investment contract' does not include an
investment contract asset.''; and
(2) by adding at the end the following:
``(36) The term `investment contract asset' means a digital
commodity--
``(A) that can be exclusively possessed and transferred,
person to person, without necessary reliance on an
intermediary, and is recorded on a blockchain; and
``(B) sold or otherwise transferred, or intended to be sold
or otherwise transferred, pursuant to an investment
contract.''.
(b) Investment Advisers Act of 1940.--Section 202(a)(18) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(18))
is amended by adding at the end the following: ``The term
`investment contract' does not include an investment contract
asset (as such term is defined under section 2(a) of the
Securities Act of 1933).''.
(c) Investment Company Act of 1940.--Section 2(a)(36) of
the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(36))
is amended by adding at the end the following: ``The term
`investment contract' does not include an investment contract
asset (as such term is defined under section 2(a) of the
Securities Act of 1933).''.
(d) Securities Exchange Act of 1934.--Section 3(a)(10) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)) is
amended by adding at the end the following: ``The term
`investment contract' does not include an investment contract
asset (as such term is defined under section 2(a) of the
Securities Act of 1933).''.
(e) Securities Investor Protection Act of 1970.--Section
16(14) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78lll(14)) is amended by adding at the end the
following: ``The term `investment contract' does not include
an investment contract asset (as such term is defined under
section 2(a) of the Securities Act of 1933).''.
SEC. 202. EXEMPTED PRIMARY TRANSACTIONS IN DIGITAL
COMMODITIES.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a
et seq.) is amended--
(1) in section 4(a), by adding at the end the following:
``(8) the offer or sale of an investment contract involving
units of a digital commodity by its digital commodity issuer
(including all entities controlled by or under common control
with the issuer), if--
``(A) the blockchain system to which the digital commodity
relates, together with the digital commodity, is certified as
a mature blockchain system under section 42 of the Securities
Exchange Act of 1934 or the issuer intends for the blockchain
system to which the digital commodity relates to be a mature
blockchain system by the later of--
``(i) the date that is four years after the first sale of
the investment contract involving a unit of such digital
commodity in reliance on the exemption provided under this
paragraph, subject to any extensions as may be granted by the
Commission; or
``(ii) the date that is four years after the effective date
of this paragraph;
``(B) the sum of all cash and other consideration to be
received by the digital commodity issuer in reliance on the
exemption provided under this paragraph, during the 12-month
period preceding the date of such offering, including the
amount received in such offering, is not more than
$50,000,000 (as such amount is annually adjusted by the
Commission to reflect the change in the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor);
``(C) after the completion of the transaction, a purchaser
does not own more than 10 percent of the total amount of the
outstanding units of the digital commodity;
``(D) the transaction does not involve the offer or sale of
an investment contract involving units of a digital commodity
by its digital commodity issuer that--
``(i) is not organized under the laws of a State, a
territory of the United States, or the District of Columbia;
``(ii) is a development stage company that either--
``(I) has no specific business plan or purpose; or
``(II) has indicated that the business plan of the company
is to merge with or acquire an unidentified company;
``(iii) is an investment company, as defined in section 3
of the Investment Company Act of 1940 (15 U.S.C. 80a-3), or
is excluded from the definition of investment company by
section 3(c) of that Act (15 U.S.C. 80a-3(b) or 80a-3(c));
``(iv) is issuing fractional undivided interests in oil or
gas rights, or a similar interest in other mineral rights;
``(v) is, or has been, subject to any order of the
Commission entered pursuant to section 12(j) of the
Securities Exchange Act of 1934 during the 5-year period
before the filing of the offering statement; or
``(vi) is disqualified pursuant to section 230.262 of title
17, Code of Federal Regulations; and
``(E) the issuer meets the requirements of section
4B(b).''; and
(2) by inserting after section 4A the following:
``SEC. 4B. REQUIREMENTS WITH RESPECT TO CERTAIN DIGITAL
COMMODITY TRANSACTIONS.
``(a) Commission Jurisdiction.--For the purposes of this
section:
``(1) The Commission shall have jurisdiction and
enforcement authority with respect to disclosures described
in this section.
``(2) Section 17 shall apply to a statement made in an
offering statement, disclosure, or report filed under this
section to the same extent as such section 17 applies to a
statement made in any other offering statement, disclosure,
or report filed under this Act.
``(b) Requirements for Digital Commodity Issuers.--
``(1) Terms and conditions.--A digital commodity issuer
offering or selling an investment contract involving units of
a digital commodity in reliance on section 4(a)(8) shall file
with the Commission an offering statement and any related
documents, in such form and with such content as prescribed
by the Commission, including financial information, a
description of the issuer and the operations of the issuer,
the financial condition of the issuer, a description of the
plan of distribution of any unit of a digital commodity that
is to be offered as well as the intended use of the offering
proceeds, and a description of the development plan for the
blockchain system, and the related digital commodity, to
become a mature blockchain system, if such blockchain system
is not already certified as a mature blockchain system
pursuant to section 42 of the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.).
``(2) Information required for purchasers.--A digital
commodity issuer that has filed a statement under paragraph
(1) to offer and sell an investment contract involving a unit
of a digital commodity in reliance on section 4(a)(8) shall
include in such statement the following information:
``(A) Maturity status.--Whether the blockchain system to
which the digital commodity relates has been certified as a
mature blockchain system pursuant to section 42 of the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and,
where such blockchain system is not so certified, a statement
of the digital commodity issuer's intent for the blockchain
system to which the digital commodity relates to be a mature
blockchain system within the time period described in section
4(a)(8)(A).
``(B) Source code.--The source code, or a publicly
accessible webpage displaying such source code, for any
blockchain system to which the digital commodity relates, and
whether the source code was sourced from an external third
party, whether there are any existing external dependencies,
and whether the code underwent a third-party security audit,
along with material results of any such audit.
``(C) Transaction history.--A description of the steps
necessary to independently access, search, and verify the
transaction history of any blockchain system to which the
digital commodity relates, to the extent any such independent
access, search, and verification activities are technically
feasible with respect to such blockchain system.
``(D) Digital commodity economics.--A description of the
purpose of any blockchain system to which the digital
commodity relates and the operation of any such blockchain
system, including--
``(i) information explaining the launch and supply process,
including the number of units of the digital commodity to be
issued in an initial allocation, the total number of units of
the digital commodity to be created, the release schedule for
the units of the digital commodity, and the total number of
units of the digital commodity outstanding;
``(ii) information explaining the technical requirements
for holding, accessing, and transferring the digital
commodity;
``(iii) information on any applicable consensus mechanism
or process for validating transactions, method of generating
or mining digital commodities, and any process for burning or
destroying units of the digital commodity on the blockchain
system;
``(iv) an explanation of any mechanism for driving value to
the digital commodity of such blockchain system; and
``(v) an explanation of governance mechanisms for
implementing changes to the blockchain system or forming
consensus among holders of units of such digital commodity.
``(E) Plan of development.--The current state and timeline
for the development of any blockchain system to which the
digital commodity relates, detailing how and when the
blockchain system is intended to be a mature blockchain
system, if the blockchain system is not yet certified as a
mature blockchain system,
[[Page H3380]]
and the various roles that exist or are intended to exist in
connection with the blockchain system, such as users, service
providers, developers, transaction validators, and governance
participants, including a discussion of any mechanisms by
which control or authority are exerted with respect to the
blockchain system or its related digital commodity, and any
critical operational dependencies of the blockchain system or
its related digital commodity.
``(F) Ownership disclosures.--
``(i) In general.--A list of all persons who are digital
commodity related persons or digital commodity affiliated
persons who have been issued a unit of the digital commodity
by the digital commodity issuer or have a right to a unit of
the digital commodity from the digital commodity issuer.
``(ii) Confidentiality.--The Commission shall keep each
list described under clause (i) confidential, consistent with
what is necessary or appropriate in the public interest or
for the protection of investors.
``(G) Risk factor disclosures.--A description of the
material risks surrounding ownership of a unit of a digital
commodity.
``(3) Ongoing disclosure requirements for maturing
blockchain systems.--Subject to paragraph (5), the issuer of
a digital commodity related to a blockchain system that is
not yet certified as a mature blockchain system under section
42 of the Securities Exchange Act of 1934 that has filed a
statement under paragraph (1) to offer and sell an investment
contract involving a unit of a digital commodity in reliance
on section 4(a)(8) shall file the following with the
Commission:
``(A) Semiannual reports.--Every 6 months, a report
containing--
``(i) an updated description of the current state and
timeline for the development of the blockchain system to
which the digital commodity relates, showing how and when the
blockchain is intended to be a mature blockchain system;
``(ii) a description of the efforts of the issuer and
digital commodity related persons in developing the
blockchain system to which the digital commodity relates;
``(iii) the amount of money raised by the digital commodity
issuer in reliance on section 4(a)(8), how much of that money
has been spent, and the general categories of activities for
which that money has been spent and amounts spent per
category; and
``(iv) financial statements, where applicable.
``(B) Current reports.--A current report reflecting any
material changes relevant to the information previously
reported to the Commission by the digital commodity issuer,
which shall be filed as soon as practicable after the
material change occurred, in accordance with such rules as
the Commission may prescribe as necessary or appropriate in
the public interest or for the protection of investors.
``(4) Rulemaking.--Not later than 360 days after the date
of the enactment of this section, the Commission shall
prescribe rules on requirements applicable to issuers of
digital commodities in reliance on section 4(a)(8).
``(5) Termination of certain reporting requirements; post-
maturity reporting requirements.--
``(A) In general.--The ongoing reporting requirements under
paragraph (3) shall not apply to a digital commodity issuer
180 days after the end of the covered fiscal year, if the
information with respect to the digital commodity and the
blockchain system to which it relates described in
subparagraphs (A) through (C) of paragraph (2) is made
publicly available and the disclosure requirements under
subparagraph (C) of this paragraph are satisfied.
``(B) Covered fiscal year defined.--In this paragraph, the
term `covered fiscal year' means, with respect to a digital
commodity, the first fiscal year of a digital commodity
issuer in which the blockchain system to which such digital
commodity relates is certified as a mature blockchain system
under section 42 of the Securities Exchange Act of 1934.
``(C) Post-maturity reporting requirements.--After the
blockchain system to which a digital commodity relates is
certified as a mature blockchain system under section 42 of
the Securities Exchange Act of 1934, any digital commodity
issuer that has filed a statement under paragraph (1) to
offer and sell an investment contract involving a unit of a
digital commodity in reliance on section 4(a)(8) and is
engaged in material ongoing efforts related to the mature
blockchain system shall disclose, in a manner reasonably
calculated to inform the public, and at such frequency as the
Commission may prescribe, by rule, a description of such
efforts, including--
``(i) any participation in a decentralized governance
system of such blockchain system;
``(ii) any participation in alterations or proposed
alterations to the functionality or operation of such
blockchain system;
``(iii) the use or planned use of any funds raised in
reliance on section 4(a)(8) or any rulemaking pursuant to
section 202(c) of the CLARITY Act of 2025 in such efforts;
``(iv) the amount of units of the digital commodity, or
rights thereto, owned and controlled by such issuer and any
use, sale, trading, or other disposition thereof; and
``(v) any affiliations of such issuer material to the
efforts of such issuer.
``(D) Termination of and exemption from post-maturity
reporting requirements.--Not later than 270 days after the
date of the enactment of this section, the Commission shall
issue rules--
``(i) for terminating the disclosure requirements described
in subparagraph (C) during the first fiscal year in which the
digital commodity issuer does not engage in material ongoing
efforts related to the mature blockchain system; and
``(ii) to, as is necessary or appropriate in the public
interest or for the protection of investors, exempt a digital
commodity issuer from the requirements described in
subparagraph (C) where only a de minimis amount of market
activity involving the digital commodity of such digital
commodity issuer is taking place.
``(E) Rule of construction.--Nothing in subparagraph (C)
may be construed to make any digital commodity described in
such subparagraph a security.
``(c) Requirements for Intermediaries.--A person acting as
an intermediary in connection with the offer or sale of an
investment contract involving units of a digital commodity in
reliance on section 4(a)(8) shall--
``(1) register with the Commission as a broker or dealer;
and
``(2) be a member of a national securities association
registered under section 15A of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-3).
``(d) Disqualification Provisions.--The Commission shall
issue rules to apply the disqualification provisions under
section 230.262 of title 17, Code of Federal Regulations, to
the exemption provided under section 4(a)(8).
``(e) Failure To Mature.--
``(1) In general.--Not later than 270 days after the date
of the enactment of this section, the Commission shall issue
rules applying such additional obligations and disclosures
for the digital commodity issuers, digital commodity related
persons, and digital commodity affiliated persons of a
blockchain system described under subsection (b)(1) that does
not become a mature blockchain system within the time period
described in section 4(a)(8)(A) as are necessary or
appropriate in the public interest or for the protection of
investors. Such obligations and disclosures shall include the
following:
``(A) Disclosures.--Disclosures regarding the following:
``(i) Failure to mature.--A detailed explanation of the
reason that the blockchain system has not become a mature
blockchain system within the time period described in section
4(a)(8)(A).
``(ii) Development plans.--The future plans of development
of the blockchain system, including information required
under subsection (b)(3).
``(iii) Risk factor disclosures.--The material risks
surrounding ownership of a unit of a digital commodity that
relates to a blockchain system described under subsection
(b)(1) that has not become a mature blockchain system within
the time period described in section 4(a)(8)(A).
``(B) Obligations.--Transaction reporting and beneficial
ownership disclosure obligations applicable to digital
commodity related persons and digital commodity affiliated
persons of such blockchain system.
``(2) Qualification required.--The Commission may not
permit any additional reliance on an exempt offering for the
offer or sale of an investment contract involving a unit of a
digital commodity by the issuer of the digital commodity
related to a blockchain system described under subsection
(a)(1) that has not become a mature blockchain system within
the time period described in section 4(a)(8)(A) unless the
Commission has qualified any offering statement related to
such exempt offering.''.
(b) Additional Exemptions.--
(1) Certain registration requirements.--Section 12(g)(6) of
the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(6)) is
amended by striking ``under section 4(6)'' and inserting
``under section 4(a)(6) or 4(a)(8)''.
(2) Exemption from state regulation.--Section 18(b)(4) of
the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
(A) in subparagraph (B), by striking ``section 4(4)'' and
inserting ``section 4(a)(4)'';
(B) in subparagraph (C), by striking ``section 4(6)'' and
inserting ``section 4(a)(6)'';
(C) in subparagraph (F)--
(i) by striking ``section 4(2)'' each place such term
appears and inserting ``section 4(a)(2)''; and
(ii) by striking ``or'' at the end;
(D) in subparagraph (G), by striking the period and
inserting ``; or''; and
(E) by adding at the end the following:
``(H) section 4(a)(8).''.
(c) Use of Other Exemptions.--
(1) Rule of construction.--Except as provided in this
subsection, nothing in this section or the amendments made by
this section may be construed as prohibiting the offer or
sale of an investment contract involving units of a digital
commodity in reliance on an exemption from registration under
the Securities Act of 1933, including as provided under
section 3, 4(a), or 19 of the Securities Act of 1933, other
than that provided under section 4(a)(8) of the Securities
Act of 1933.
(2) Rulemakings.--
(A) The Securities and Exchange Commission may issue
rules--
(i) to permit the issuer of a digital commodity related to
a blockchain system described under section 4B(b)(1) of the
Securities Act of 1933 that has not become a mature
blockchain system within the time period described in section
4(a)(8)(A) of such Act, or the issuer of a digital commodity
described in subparagraph (B)(iii), to utilize an exempt
offering to offer or sell an investment contract involving
the digital commodity, if the Commission qualifies any
offering statement related to such exempt offering; and
(ii) for the offer and sale of investment contracts
involving units of a digital commodity by issuers that are
not organized under the laws of a State, a territory of the
United States, or the District of Columbia.
(B) Not later than 270 days after the date of the enactment
of this section, the Securities and Exchange Commission shall
issue the following rules:
(i) A rule requiring a digital commodity issuer that last
offered or sold an investment contract
[[Page H3381]]
involving units of a digital commodity in reliance on an
exemption from registration under the Securities Act of 1933,
including as provided under section 3, 4(a), or 19 of the
Securities Act of 1933, prior to the date of enactment of
this Act, to file a comparable set of disclosures to those
described under section 4B of the Securities Act of 1933 as
the Commission determines appropriate based on the exemption,
the maturity of the blockchain system to which such digital
commodity relates, and any material ongoing efforts of such
digital commodity issuer (provided that for blockchains
certified as a mature blockchain system under section 42 of
the Securities Exchange Act of 1934, such disclosures shall
be comparable to those under section 4B(b)(5)(C)), not later
than the later of--
(I) one year after the effective date of this section; or
(II) the date of any secondary market sale of such digital
commodity made in reliance on section 203.
(ii) A rule requiring a digital commodity issuer that
offers or sells an investment contract involving units of a
digital commodity in reliance on an exemption from
registration under the Securities Act of 1933, including as
provided under section 3, 4(a), or 19 of the Securities Act
of 1933, other than that provided under section 4(a)(8) of
the Securities Act of 1933, on or after the date of enactment
of this Act, to file a comparable set of disclosures to those
described under section 4B of the Securities Act of 1933 as
the Commission determines appropriate based on the exemption,
the maturity of the blockchain system to which such digital
commodity relates, and any material ongoing efforts of such
digital commodity issuer, prior to the date of any secondary
market sale of such digital commodity made in reliance on
section 203.
(iii) With respect to a digital commodity where the digital
commodity issuer is required to file disclosures under clause
(i) or (ii) and where the blockchain system to which the
digital commodity relates is not certified as a mature
blockchain system pursuant to section 42 of the Securities
Exchange Act of 1934 after the 4-year period beginning on the
date that the first such disclosure is filed--
(I) a rule prohibiting the offer or sale of an investment
contract involving units of the digital commodity unless the
Commission has qualified any offering statement related to
such offer or sale, where such offer or sale is permitted
pursuant to subparagraph (A)(i); and
(II) a rule requiring the digital commodity issuer to make
disclosures comparable to those described in 4B(e)(1)(A) of
the Securities Act of 1933.
(iv) A rule permitting a successor to a digital commodity
issuer, or such other appropriate person as designated by the
Commission, to make the disclosures required under clause
(i), where such issuer does not make the required
disclosures.
SEC. 203. TREATMENT OF SECONDARY TRANSACTIONS IN DIGITAL
COMMODITIES THAT ORIGINALLY INVOLVED INVESTMENT
CONTRACTS.
(a) Secondary Market Treatment.--Notwithstanding any other
provision of law, the offer or sale of a digital commodity
that originally involved an investment contract by a person
other than the issuer of such digital commodity, or an agent
or underwriter thereof, shall be deemed not to be an offer or
sale of such investment contract between the issuer of the
investment contract involving the digital commodity, or an
agent or underwriter thereof, and the purchaser of such
digital commodity under--
(1) the Securities Act of 1933 (15 U.S.C. 77a et seq.);
(2) the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.);
(3) the Investment Company Act of 1940 (15 U.S.C. 80a-1 et
seq.);
(4) the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.);
(5) the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.); and
(6) any applicable provisions of State law.
(b) End User Distributions Not an Offer or Sale of a
Security.--An end user distribution does not involve the
offer or sale of a security.
(c) Agent Defined.--In this section and with respect to a
digital commodity issuer, the term ``agent'' means any person
directly or indirectly controlled by the issuer or under
direct or indirect common control with the issuer.
SEC. 204. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL
COMMODITIES BY DIGITAL COMMODITY RELATED
PERSONS AND DIGITAL COMMODITY AFFILIATED
PERSONS.
The Securities Act of 1933 (15 U.S.C. 77a et seq.), as
amended by section 202, is further amended by inserting after
section 4B the following:
``SEC. 4C. REQUIREMENTS FOR OFFERS AND SALES OF DIGITAL
COMMODITIES BY DIGITAL COMMODITY RELATED
PERSONS AND DIGITAL COMMODITY AFFILIATED
PERSONS.
``(a) In General.--It shall be a violation of this Act for
a digital commodity affiliated person or a digital commodity
related person to offer or sell a digital commodity acquired
directly from its issuer, or an agent or underwriter thereof,
pursuant to an investment contract in reliance on section
4(a)(8) or another exemption under this Act, other than as
provided in this section.
``(b) Commission Jurisdiction.--
``(1) Where a digital commodity affiliated person or a
digital commodity related person offers or sells a digital
commodity acquired directly from its issuer, or an agent or
underwriter thereof, pursuant to an investment contract in
reliance on section 4(a)(8), or another exemption under this
Act, other than as provided in this section, such digital
commodity affiliated person or digital commodity related
person shall be considered an issuer of such investment
contract.
``(2) For the purposes of this section, the Commission
shall have jurisdiction and enforcement authority with
respect to an offer or sale of a digital commodity described
in subsection (a).
``(c) Restrictions on Digital Commodity Related Persons and
Digital Commodity Affiliated Persons.--
``(1) Prior to being a mature blockchain system.--Prior to
the blockchain system to which a digital commodity relates
being certified as a mature blockchain system under section
42 of the Securities Exchange Act of 1934, units of the
digital commodity acquired by a digital commodity related
person or digital commodity affiliated person directly from
its issuer (or an agent or underwriter thereof) pursuant to
an investment contract in reliance on section 4(a)(8), or
another exemption under this Act, may be offered or sold by
such digital commodity related person or digital commodity
affiliated person if--
``(A) reports with respect to such digital commodity, where
required under section 4B(b)(3) (or, with respect to a
digital commodity not issued in reliance on section 4(a)(8),
a comparable set of reports where required by the Commission)
have been filed with the Commission;
``(B) the digital commodity related person or digital
commodity affiliated person has held the units for not less
than 12 months; and
``(C) the aggregate amount of the units of the digital
commodity offered or sold by the digital commodity related
person or digital commodity affiliated person is--
``(i) in any 12-month period, or shorter period as the
Commission may prescribe, not less than 5 percent or greater
than 20 percent of the total units of the digital commodity
acquired directly from its issuer (or an agent or underwriter
thereof) by the digital commodity related person or digital
commodity affiliated person, as determined by the Commission
pursuant to paragraph (3); and
``(ii) an amount, as determined by the Commission pursuant
to paragraph (3), not less than 30 percent or greater than 50
percent of the total units of the digital commodity acquired
directly from its issuer (or an agent or underwriter thereof)
by the digital commodity related person or digital commodity
affiliated person.
``(2) After becoming a mature blockchain system.--After the
blockchain system to which a digital commodity relates is
certified as a mature blockchain system under section 42 of
the Securities Exchange Act of 1934, units of the digital
commodity acquired by a digital commodity related person or
digital commodity affiliated person directly from its issuer
(or an agent or underwriter thereof) pursuant to an
investment contract in reliance on section 4(a)(8) or another
exemption under this Act, may be--
``(A) offered or sold by a digital commodity related
person; or
``(B) offered or sold by a digital commodity affiliated
person if--
``(i) information described in section 4B(b)(5)(C), where
required (or, with respect to a digital commodity not issued
in reliance on section 4(a)(8), a comparable set of
information, where required) is publicly available;
``(ii) the digital commodity affiliated person has held the
units for not less than the earlier of--
``(I) 12 months; or
``(II) 3 months following the date on which the blockchain
system is certified as a mature blockchain system under
section 42 of the Securities Exchange Act of 1934; and
``(iii) the aggregate amount of the units of the digital
commodity offered or sold by the digital commodity affiliated
person in any 12-month period is an amount, as determined by
the Commission pursuant to paragraph (3), not less than 5
percent or greater than 10 percent of the total outstanding
amount of the digital commodity.
``(3) Rulemakings required.--Not later than 270 days after
the date of the enactment of this section, consistent with
protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation, and to
foster the development of mature blockchain systems, the
Commission, by rule, after notice and comment--
``(A) shall set the percentage amounts described in
paragraphs (1)(C)(i), (1)(C)(ii), and (2)(B)(iii); and
``(B) may provide an exemption from the limitation
described in paragraph (1)(C)(ii), if the Commission requires
any offer or sale pursuant to such exemption of a digital
commodity related to a blockchain system that has failed to
become a mature blockchain system under this Act or any rule
promulgated hereunder to be accompanied by the disclosures
required under, as applicable, section 4B(e)(1)(A) or section
202(c)(2)(B)(iii)(II) of the CLARITY Act of 2025.
``(d) Rules of Construction.--For purposes of this section,
the use of a digital commodity in the programmatic
functioning of the blockchain system to which it relates is
not an offer or sale of a digital commodity.
``(e) Manipulative and Deceptive Devices; Reporting.--
``(1) In general.--It shall be unlawful for any digital
commodity issuer, digital commodity related person, or
digital commodity affiliated person, directly or indirectly,
by the use of any means or instrumentality of interstate
commerce or of the mails, to use or employ, in connection
with the purchase or sale of any digital commodity, any
manipulative or deceptive device or contrivance in
contravention of such rules and regulations as the Commission
may prescribe as necessary or appropriate in the public
interest or for the protection of investors.
``(2) Affirmative defense.--Not later than 270 days after
the date of the enactment of this section, the Commission
shall issue rules to implement paragraph (1), including by
providing
[[Page H3382]]
any affirmative defenses to an enforcement action thereunder
as the Commission may prescribe as necessary or appropriate
in the public interest or for the protection of investors.
``(3) Reporting.--Not later than 270 days after the date of
the enactment of this section, the Commission shall issue
rules to prescribe such transaction reporting and beneficial
ownership disclosure obligations applicable to digital
commodity related persons and digital commodity affiliated
persons, as necessary or appropriate in the public interest
or for the protection of investors.
``(4) Differentiation between persons.--In issuing rules
required under paragraphs (2) and (3), the Commission shall
differentiate between digital commodity related persons and
digital commodity affiliated persons, as necessary or
appropriate in the public interest or for the protection of
investors.
``(f) Certain Units Received Prior to Enactment.--A unit of
a digital commodity received from the digital commodity
issuer prior to the date of the enactment of this section
through an offer or sale of an investment contract involving
units of a digital commodity in reliance on an exemption from
registration under this Act, including as provided under
section 3, 4(a), or 19, may be offered or sold by a digital
commodity related person or digital commodity affiliated
person, if--
``(1) the digital commodity issuer is no longer engaged in
material ongoing efforts related to the blockchain system to
which the digital commodity relates and the blockchain system
to which the digital commodity relates is certified as a
mature blockchain system under section 42 of the Securities
Exchange Act of 1934; or
``(2) the appropriate disclosures required under section
202(c)(2)(B) of the CLARITY Act of 2025 have been made with
the Commission.
``(g) Rulemaking on Further Usage of Digital Commodities.--
The Commission, consistent with protecting investors,
maintaining fair, orderly, and efficient markets, and
facilitating capital formation, as well as fostering the
development of mature blockchain systems, may, by rule,
exempt unconditionally or on stated terms or conditions, a
digital commodity related person or a digital commodity
affiliated person, or any class thereof, from the
requirements of this section for the offer or sale of a
digital commodity, including for the purposes of promoting
market liquidity.''.
SEC. 205. MATURE BLOCKCHAIN SYSTEM REQUIREMENTS.
Title I of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) is amended by adding at the end the following:
``SEC. 42. MATURE BLOCKCHAIN SYSTEMS.
``(a) Certification of Blockchain Systems.--
``(1) Certification.--A digital commodity issuer, digital
commodity related person, digital commodity affiliated
person, decentralized governance system of the blockchain
system, or a registered digital commodity exchange, or any
other appropriate person as designated by the Commission, may
certify to the Commission that the blockchain system to which
a digital commodity relates is a mature blockchain system.
``(2) Filing requirements.--A certification described under
paragraph (1) shall be filed with the Commission, and include
such information that is reasonably necessary to establish
that the blockchain system is not controlled by any person or
group of persons under common control, which may include
information regarding--
``(A) the operation of the blockchain system;
``(B) the functionality of the related digital commodity;
``(C) how the market value of the digital commodity is
substantially derived from the programmatic functioning of
such blockchain system;
``(D) any decentralized governance system which relates to
the blockchain system; and
``(E) the current roles, if any, of the digital commodity
issuer, digital commodity affiliated persons, and digital
commodity related persons where such roles are material to
the development or operation of such blockchain system or the
decentralized governance system of such blockchain system.
``(3) Rebuttable presumption.--The Commission may rebut a
certification described under paragraph (1) with respect to a
blockchain system if the Commission, within 60 days of
receiving such certification, determines that the blockchain
system is not a mature blockchain system.
``(4) Certification review.--
``(A) In general.--Any blockchain system that relates to a
digital commodity for which a certification has been made
under paragraph (1) shall be considered a mature blockchain
system 60 days after the date on which the Commission
receives a certification under paragraph (1), unless the
Commission notifies the person who made the certification
within such time that the Commission is staying the
certification due to--
``(i) an inadequate explanation by the person making the
certification; or
``(ii) any novel or complex issues which require additional
time to consider.
``(B) Public notice.--The Commission shall make the
following available to the public and provide a copy to the
Commodity Futures Trading Commission:
``(i) Each certification received under paragraph (1).
``(ii) Each stay of the Commission under this subsection,
and the reasons therefor.
``(iii) Any response from a person making a certification
under paragraph (1) to a stay of the certification by the
Commission.
``(C) Consolidation.--The Commission may consolidate and
treat as one submission multiple certifications made under
paragraph (1) for the same blockchain system which relates to
a digital commodity which are received during the review
period provided under this paragraph.
``(5) Stay of certification.--
``(A) In general.--A notification by the Commission
pursuant to paragraph (4)(A) shall stay the certification
once for up to an additional 120 days from the date of the
notification.
``(B) Public comment period.--Before the end of the 60-day
period described under paragraph (4)(A), the Commission may
begin a public comment period of at least 30 days in
conjunction with a stay under this subsection.
``(6) Disposition of certification.--A certification made
under paragraph (1) shall--
``(A) become effective--
``(i) upon the publication of a notification from the
Commission to the person who made the certification that the
Commission does not object to the certification; or
``(ii) at the expiration of the certification review
period; and
``(B) not become effective upon the publication of a
notification from the Commission to the person who made the
certification that the Commission has rebutted the
certification.
``(7) Recertification.--With respect to a blockchain system
for which a certification has been rebutted under this
subsection, no person may make a certification under
paragraph (1) with respect to such blockchain system during
the 90-day period beginning on the date of such rebuttal.
``(8) Appeal of rebuttal.--
``(A) In general.--If a certification is rebutted under
this section, the person making such certification may appeal
the decision to the United States Court of Appeals for the
District of Columbia, not later than 60 days after the notice
of rebuttal is made.
``(B) Review.--In an appeal under subparagraph (A), the
court shall have de novo review of the determination to rebut
the certification.
``(b) Maturity Criteria.--
``(1) Sense of congress.--It is the sense of the Congress
that protecting investors, maintaining fair, orderly, and
efficient markets, and facilitating capital formation
necessitates establishing clear criteria for blockchain
systems to be deemed mature, as well as enabling the
Commission to develop, without prejudice to any such criteria
codified in statute, alternative criteria by which blockchain
systems may be considered not to be controlled by any person
or group of persons under common control in order to
accommodate changes in markets and technology.
``(2) In general.--The Commission may issue rules
identifying conditions by which a blockchain system, together
with its related digital commodity, shall be considered a
mature blockchain system, consistent with the protection of
investors, maintenance of fair, orderly, and efficient
markets, and the facilitation of capital formation.
``(3) Rules of construction.--
``(A) Nothing in this subsection may be construed to permit
the Commission to impose additional criteria to the criteria
in subsection (c) for certifying that a blockchain system is
a mature blockchain system pursuant to subsection (c).
``(B) Nothing in this subsection or subsection (c) may be
construed to limit the Commission's ability to identify
alternative conditions and criteria by which a blockchain
system may be considered a mature blockchain system.
``(c) Deemed Mature.--
``(1) In general.--Notwithstanding subsection (b), for the
purposes of subsection (a), a digital commodity issuer,
digital commodity related person, digital commodity
affiliated person, or decentralized governance system of the
blockchain system may establish that a blockchain system,
together with its related digital commodity, is not
controlled by any person or group of persons under common
control, if the blockchain system, together with its related
digital asset, meets the requirements described in paragraph
(2) or (3).
``(2) Criteria for any blockchain system.--The requirements
described in this paragraph are the following:
``(A) System value.--
``(i) Market value.--The digital commodity has a value that
is substantially derived from the use and functioning of the
blockchain system.
``(ii) Development of value mechanism substantially
completed.--Where the digital commodity issuer has made
public a development plan describing how the digital
commodity's value is reasonably expected to be derived from
the programmatic functioning of the blockchain system, the
development of such mechanisms has been substantially
completed.
``(B) Functional system.--The blockchain system allows
network participants to engage in the activities the
blockchain system is intended to provide, including--
``(i) using, transmitting, or storing value, or otherwise
executing transactions, on the blockchain system;
``(ii) deploying, executing, or accessing software or
services, or otherwise offering or participating in services,
deployed on or integrated with the blockchain system;
``(iii) participating in the consensus mechanism,
transaction validation process, or decentralized governance
system of the blockchain system; or
``(iv) operating any client, node, validator, or other form
of computational infrastructure with respect to the
blockchain system.
``(C) Open and interoperable system.--The blockchain
system--
``(i) is composed of source code that is open source; and
``(ii) does not restrict or prohibit based on the exercise
of unilateral authority any person, other than a digital
commodity issuer, digital commodity related person, or
digital commodity affiliated person from engaging in the
activities the blockchain system is intended to provide,
including the activities described in subparagraph (B).
[[Page H3383]]
``(D) Programmatic system.--The blockchain system operates,
executes, and enforces its operations and transactions based
solely on pre-established, transparent rules encoded directly
within the source code of the blockchain system.
``(E) System governance.--No person or group of persons
under common control--
``(i) has the unilateral authority, directly or indirectly,
through any contract, arrangement, understanding,
relationship, or otherwise, to control or materially alter
the functionality, operation, or rules of consensus or
agreement of the blockchain system or its related digital
commodity; or
``(ii) has the unilateral authority to direct the voting,
in the aggregate, of 20 percent or more of the outstanding
voting power of such blockchain system by means of a related
digital commodity, nodes or validators, a decentralized
governance system, or otherwise, in a blockchain system which
can be altered by a voting system.
``(F) Impartial system.--No person or group of persons
under common control possesses a unique permission or
privilege with respect to functionality, operation, or rules
of consensus or agreement of the blockchain system or its
related digital commodity, unless such alteration--
``(i) addresses errors, regular maintenance, or
cybersecurity risks of the blockchain system that affect the
programmatic functioning of the blockchain system; and
``(ii) is adopted through the consensus or agreement of a
decentralized governance system.
``(G) Distributed ownership.--No digital commodity issuer,
digital commodity related person, or digital commodity
affiliated person beneficially owns, in the aggregate, 20
percent or more of the total amount of units of the digital
commodity.
``(3) Optional criteria for preexisting blockchain
systems.--The requirements described in this paragraph are
that the blockchain system--
``(A) was created prior to the date of enactment of this
section;
``(B) met the requirements of subparagraphs (A) through (F)
of paragraph (2) prior to the date of enactment of this
section; and
``(C) at least 50 percent of the units of the digital
commodity related to the blockchain system are held by
persons other than the digital commodity issuer, a digital
commodity related person, or a digital commodity affiliated
person.
``(d) Decentralized Governance System.--
``(1) For the purposes of this section, a decentralized
governance system is not a `person' or a `group of persons
under common control'.
``(2) A blockchain system, together with its digital
commodity, shall not be precluded from being considered a
mature blockchain system solely based on a functional,
administrative, clerical, or ministerial action of a
decentralized governance system, including any such action
taken by a person acting on behalf of and at the direction of
the decentralized governance system, as determined by the
Commission and consistent with the protection of investors,
maintenance of fair, orderly, and efficient markets, and the
facilitation of capital formation.
``(e) Rulemaking.--Not more than 270 days after the date of
enactment of this section, the Commission shall issue rules
to carry out this section.''.
SEC. 206. EFFECTIVE DATE.
Unless otherwise provided in this title, this title and the
amendments made by this title shall take effect 360 days
after the date of enactment of this Act, except that, to the
extent a provision of this title requires a rulemaking, the
provision shall take effect on the later of--
(1) 360 days after the date of enactment of this Act; or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
TITLE III--REGISTRATION FOR INTERMEDIARIES AT THE SECURITIES AND
EXCHANGE COMMISSION
SEC. 301. TREATMENT OF DIGITAL COMMODITIES AND PERMITTED
PAYMENT STABLECOINS.
(a) Securities Act of 1933.--Section 2(a)(1) of the
Securities Act of 1933 (15 U.S.C. 77b(a)(1)), as amended by
the GENIUS Act, is amended by striking the final sentence and
inserting the following: ``The term does not include a
digital commodity or permitted payment stablecoin.''.
(b) Securities Exchange Act of 1934.--Section 3(a)(10) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as
amended by the GENIUS Act, is amended by striking the final
sentence and inserting the following: ``The term does not
include a digital commodity or permitted payment
stablecoin.''.
(c) Investment Advisers Act of 1940.--Section 202(a) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is
amended--
(1) in paragraph (18), as amended by the GENIUS Act, by
striking the final sentence and inserting the following:
``The term does not include a digital commodity or permitted
payment stablecoin.'';
(2) by redesignating the second paragraph (29) (relating to
commodity pools) as paragraph (31); and
(3) by adding at the end, the following:
``(32) Digital commodity-related terms.--The terms `digital
commodity' and `permitted payment stablecoin' have the
meaning given those terms, respectively, under section 2(a)
of the Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(d) Investment Company Act of 1940.--Section 2(a) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2) is amended--
(1) in paragraph (36), as amended by the GENIUS Act, by
striking the final sentence and inserting the following:
``The term does not include a digital commodity or permitted
payment stablecoin.''; and
(2) by adding at the end, the following:
``(55) Digital commodity-related terms.--The terms `digital
commodity' and `permitted payment stablecoin' have the
meaning given those terms, respectively, under section 2(a)
of the Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(e) Securities Investor Protection Act of 1970.--Section 16
of the Securities Investor Protection Act of 1970 (15 U.S.C.
78lll) is amended--
(1) in paragraph (14), as amended by the GENIUS Act, by
striking the final sentence and inserting the following:
``The term does not include a digital commodity or permitted
payment stablecoin, as such terms are defined, respectively,
under section 2(a) of the Securities Act of 1933 (15 U.S.C.
77b(a))''; and
(2) by adding at the end the following:
``(15) Treatment of permitted payment stablecoins.--A
permitted payment stablecoin, as defined in section 2(a) of
the Securities Act of 1933, shall not qualify as `cash' and a
claim for a permitted payment stablecoin shall not qualify as
a `claim for cash'.''.
SEC. 302. ANTI-FRAUD AUTHORITY OVER PERMITTED PAYMENT
STABLECOINS AND CERTAIN DIGITAL COMMODITY
TRANSACTIONS.
(a) In General.--Section 10 of the Securities Exchange Act
of 1934 (15 U.S.C. 78j) is amended--
(1) by moving subsection (c) so as to appear after
subsection (b);
(2) by inserting after subsection (c) the following:
``(d) To use or employ, in connection with the purchase or
sale of any permitted payment stablecoin or digital
commodity, by or through, as applicable, a broker, dealer,
national securities exchange, or an alternative trading
system, any manipulative or deceptive device or contrivance
in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate in the
public interest or for the protection of investors.''; and
(3) by adding at the end the following: ``Rules promulgated
under subsection (b) that prohibit fraud, manipulation, or
insider trading (but not rules imposing or specifying
reporting or recordkeeping requirements, procedures, or
standards as prophylactic measures against fraud,
manipulation, or insider trading), and judicial precedents
decided under subsection (b) and rules promulgated thereunder
that prohibit fraud, manipulation, or insider trading, shall
apply with respect to permitted payment stablecoin and
digital commodity transactions engaged in by or through a
broker or dealer or through an alternative trading system or,
as applicable, a national securities exchange to the same
extent as they apply to securities transactions. Judicial
precedents decided under section 17(a) of the Securities Act
of 1933 and sections 9, 15, 16, 20, and 21A of this title,
and judicial precedents decided under applicable rules
promulgated under such sections, shall apply to permitted
payment stablecoins and digital commodities with respect to
those circumstances in which the permitted payment
stablecoins and digital commodities are, as applicable,
brokered, traded, or custodied by or through a broker or
dealer or through an alternative trading system or a national
securities exchange to the same extent as they apply to
securities.''.''.
(b) Treatment of Permitted Payment Stablecoins.--Title I of
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 6 the following:
``SEC. 6A. TREATMENT OF TRANSACTIONS IN PERMITTED PAYMENT
STABLECOINS.
``(a) Authority To Broker, Trade, and Custody Permitted
Payment Stablecoins.--Permitted payment stablecoins may be
brokered, traded, or custodied by a broker or dealer or
through an alternative trading system or national securities
exchange.
``(b) Commission Jurisdiction.--The Commission shall only
have jurisdiction over a transaction in a permitted payment
stablecoin with respect to those circumstances in which a
permitted payment stablecoin is brokered, traded, or
custodied--
``(1) by a broker or dealer;
``(2) through a national securities exchange; or
``(3) through an alternative trading system.
``(c) Limitation.--Subsection (b) shall only apply to a
transaction described in subsection (b) for the purposes of
regulating the offer, execution, solicitation, or acceptance
of a permitted payment stablecoin in those circumstances in
which the permitted payment stablecoin is brokered, traded,
or custodied--
``(1) by a broker or dealer;
``(2) through a national securities exchange; or
``(3) through an alternative trading system.''.
SEC. 303. ELIGIBILITY OF ALTERNATIVE TRADING SYSTEMS.
(a) In General.--Section 5 of the Securities Exchange Act
of 1934 (15 U.S.C. 78e) is amended--
(1) by striking ``It'' and inserting the following:
``(a) In General.--It''; and
(2) by adding at the end the following:
``(b) Digital Commodity Protections.--
``(1) In general.--The Commission may not preclude a
trading platform from operating pursuant to a covered
exemption to exchange registration under section 6 of this
title on the basis that the assets traded or to be traded on
such platform include--
``(A) digital commodities or permitted payment stablecoins;
and
``(B) securities.
``(2) Covered exemption.--In this subsection, the term
`covered exemption' means an exemption--
``(A) described in subsection (a)(2); or
``(B) with respect to any other rule of the Commission
relating to the definition of `exchange'.''.
[[Page H3384]]
(b) Securities Exchange Act of 1934.--Section 3(a)(2) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(2)) is
amended by adding at the end the following: ``Neither an
alternative trading system predominantly facilitating the
trading of digital commodities, permitted payment
stablecoins, or both, relative to its securities traded, nor
a digital commodity exchange, is a `facility' of an
exchange.''.
(c) Rule of Construction.--Nothing in this section, the
amendments made by this section, or section 304 may be
construed to--
(1) prohibit a national securities exchange from owning or
operating any other type of alternative trading system; or
(2) create a presumption that any other type of alternative
trading system owned or operated by a national securities
exchange is a facility of that exchange.
SEC. 304. RULEMAKING FOR DUAL-REGISTERED ENTITIES.
(a) Conflict of Interest Policies and Procedures.--Each
person or entity dual-registered with the Commodity Futures
Trading Commission as permitted under section 15(p) of the
Securities Exchange Act of 1934 shall establish, maintain,
and, as applicable, enforce and comply with written policies
and procedures reasonably designed to mitigate any conflicts
of interest, including with respect to transactions or
arrangements with affiliates registered with the Securities
and Exchange Commission, taking into consideration the nature
of the business of such person or entity.
(b) Exemption From Duplicative, Conflicting, or Unduly
Burdensome Provisions.--The Securities and Exchange
Commission shall prescribe rules for a person or entity with
multiple registrations, where at least one such registration
includes any dual registration permitted under section 15(p)
of the Securities Exchange Act of 1934, to exempt the person
or entity from duplicative, conflicting, or unduly burdensome
provisions of the Securities Exchange Act of 1934 and rules
thereunder, to the extent such an exemption would protect
investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation.
(c) Implementing Organizations.--The Securities and
Exchange Commission shall require any registered national
securities association that has as a member a registered
broker or registered dealer that is registered with the
Commodity Futures Trading Commission as a digital commodity
broker or digital commodity dealer as permitted under section
15(p)(1) of the Securities Exchange Act of 1934 or otherwise
transacts in permitted payment stablecoins to revise such
rules as may be necessary to further the purposes of and
compliance with this section.
(d) Memorandum of Understanding.--The Securities and
Exchange Commission shall enter into a memorandum of
understanding with the Commodity Futures Trading Commission
to ensure--
(1) non-duplicative supervision and enforcement with
respect to registrants of the Securities and Exchange
Commission dual-registered with the Commodity Futures Trading
Commission as permitted under section 15(p) of the Securities
Exchange Act of 1934; and
(2) appropriate information sharing between the Commissions
to further the purposes of and compliance with this section,
the Securities Exchange Act of 1934, and the Commodity
Exchange Act.
(e) Rule of Construction.--Nothing in this section shall be
construed to limit the anti-fraud, anti-manipulation, or
false reporting enforcement authorities of the Commodity
Futures Trading Commission with respect to a contract of sale
of a commodity and persons effecting such contracts.
SEC. 305. MODERNIZATION OF RECORDKEEPING REQUIREMENTS.
(a) In General.--For purposes of books and records
requirements for brokers, dealers, transfer agents, national
securities exchanges under the Securities and Exchange Act of
1934 (15 U.S.C. 78a et seq.), investment advisers under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.),
and investment companies under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.), a person may, consistent with
any rules promulgated under subsection (b), utilize records
from a blockchain system.
(b) Revision of Rules.--Not later than 180 days after the
date of enactment of this Act, the Securities and Exchange
Commission shall issue and revise such rules as may be
necessary to implement this section.
SEC. 306. EXEMPTIVE AUTHORITY.
Section 28 of the Securities Act of 1933 (15 U.S.C. 77z-3)
is amended by striking ``by rule or regulation'' and
inserting ``by rule, regulation, or order''.
SEC. 307. ADDITIONAL REGISTRATIONS WITH THE COMMODITY FUTURES
TRADING COMMISSION.
Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o) is amended by adding at the end the following:
``(p) Additional Registrations With the Commodity Futures
Trading Commission.--
``(1) Registered brokers and dealers.--A registered broker
or registered dealer shall be permitted to maintain a
registration with the Commodity Futures Trading Commission as
a digital commodity broker or digital commodity dealer.
``(2) National securities exchanges.--A national securities
exchange or affiliate thereof shall be permitted to maintain
a registration with the Commodity Futures Trading Commission
as a digital commodity exchange.
``(3) Alternative trading systems.--An alternative trading
system, and the operator thereof, shall be permitted to
maintain a registration with the Commodity Futures Trading
Commission as a digital commodity exchange.
``(4) Notice of application.--Any person or entity
described in paragraph (1) through (3) shall provide to the
Securities and Exchange Commission, at such time and in such
form and manner as the Securities and Exchange Commission
shall prescribe, notice of any application to register with
the Commodity Futures Trading Commission as a digital
commodity broker, digital commodity dealer, or digital
commodity exchange.''.
SEC. 308. EXEMPTING DIGITAL COMMODITIES FROM STATE SECURITIES
LAWS.
(a) Covered Security.--Section 18(b) of the Securities Act
of 1933 (15 U.S.C. 77r(b)) is amended by adding at the end
the following:
``(5) Exemption in connection with digital commodities.--A
digital commodity shall be treated as a covered security.''.
(b) Rule of Construction.--Nothing in this section, section
202, or the amendments made by such sections may be construed
to limit the existing authority described in section 18(c)(1)
of the Securities Act of 1933 (15 U.S.C. 77r(c)(1)) of a
securities commission (or any agency or office performing
like functions) of any State with respect to a covered
security or any security.
SEC. 309. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 15G the following:
``SEC. 15H. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO
THIS ACT.
``(a) In General.--Notwithstanding any other provision of
this Act, a person shall not be subject to this Act and the
regulations promulgated under this Act based on the person
directly or indirectly engaging in any of the following
activities, whether singly or in combination, in relation to
the operation of a blockchain system or in relation to a
decentralized finance trading protocol:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or providing other similar incidental services.
``(3) Providing a user-interface that enables a user to
read and access data about a blockchain system.
``(4) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a blockchain system or
a decentralized finance trading protocol.
``(5) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing a decentralized
finance messaging system, or operating or participating in a
liquidity pool, for the purpose of executing a spot contract
for the purchase or sale of a digital commodity in relation
to a decentralized finance trading protocol.
``(6) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing software or systems
that create or deploy hardware or software, including wallets
or other systems, facilitating an individual user's own
personal ability to keep, safeguard, or custody the user's
digital assets or related private keys.
``(b) Exceptions.--Subsection (a) shall not apply to the
anti-fraud and anti-manipulation authorities of the
Commission.''.
SEC. 310. TREATMENT OF CUSTODY ACTIVITIES BY BANKING
INSTITUTIONS.
(a) Treatment of Custody Activities.--The appropriate
Federal banking agency, the National Credit Union
Administration (in the case of a credit union), and the
Securities and Exchange Commission may not require a
depository institution, national bank, Federal credit union,
State credit union, trust company, broker, or dealer, or any
affiliate thereof (the ``entity'')--
(1) to include assets held in custody that are not
accounted for as assets of the entity as a liability on the
financial statement or balance sheet of the entity, including
digital commodity or permitted payment stablecoin custody or
safekeeping services; and
(2) to hold regulatory capital against assets, including
reserves backing such assets, in custody or safekeeping,
except as necessary to mitigate against operational risks
inherent with the custody or safekeeping services, as
determined by--
(A) the appropriate Federal banking agency;
(B) the National Credit Union Administration (in the case
of a credit union);
(C) a State bank supervisor;
(D) a State credit union supervisor (as defined in section
6003 of the Anti-Money Laundering Act of 2020 (31 U.S.C. 5311
note)); or
(E) the Securities and Exchange Commission (in the case of
a broker or dealer).
(b) Definitions.--In this section:
(1) Banking terms.--The terms ``appropriate Federal banking
agency'', ``depository institution'', ``national bank'', and
``State bank supervisor'' have the meaning given those terms,
respectively, under section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
(2) Credit union terms.--The terms ``Federal credit union''
and ``State credit union'' have the meaning given those
terms, respectively, under section 101 of the Federal Credit
Union Act (12 U.S.C. 1752).
SEC. 311. BROKER AND DEALER DISCLOSURES REGARDING THE
TREATMENT OF ASSETS.
(a) In General.--Not later than 270 days after the date of
the enactment of this Act, the Securities and Exchange
Commission shall issue rules requiring written disclosures
regarding the treatment of customer assets in the event of an
insolvency, resolution, or liquidation proceeding to be
provided by a registered broker or dealer to an investor
before a digital commodity, a permitted payment stablecoin,
or an investment contract involving a unit of a digital
commodity is received, acquired, or held by the broker or
dealer for the account of the investor, which
[[Page H3385]]
shall include, as necessary or appropriate for the protection
of investors--
(1) a description of the manner in which any digital
commodity, permitted payment stablecoin, or investment
contact involving a unit of a digital commodity received,
acquired, or held by the broker or dealer for the account of
such investor would be treated in an insolvency, resolution,
or liquidation proceeding with respect to the broker or
dealer under--
(A) title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (12 U.S.C. 5381 et seq.);
(B) the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.); or
(C) as applicable, chapter 7 or chapter 11 of title 11,
United States Code; and
(2) how the treatment described in paragraph (1) differs
from the treatment of securities and cash received, acquired,
or held by the broker or dealer for the account of such
investor in the event of an insolvency, resolution, or
liquidation proceeding with respect to the broker or dealer
under each law described under subparagraph (A) through (C)
of paragraph (1).
SEC. 312. DIGITAL COMMODITY ACTIVITIES THAT ARE FINANCIAL IN
NATURE.
(a) Digital Commodity Activities That Are Financial in
Nature.--Section 4(k)(4) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(k)(4)) is amended--
(1) in subparagraph (A), by striking ``or securities'' and
inserting ``, securities, or digital commodities''; and
(2) in subparagraph (E), by inserting ``or digital
commodities'' before the period at the end.
(b) National Bank Activity.--
(1) In general.--A national bank may use a digital asset or
blockchain system to perform, provide, or deliver any
activity, function, product, or service that the national
bank is otherwise authorized by law to perform, provide, or
deliver.
(2) Rule of construction.--Nothing in this subsection may
be construed to exempt a national bank's performance,
provision, or delivery of an activity, function, product, or
service from a requirement that would apply if the activity
were not performed, provided, or delivered using a digital
asset or blockchain system.
(c) Insured State Banks and Subsidiaries of Insured State
Banks.--For purposes of sections 24(a) and 24(d) of the
Federal Deposit Insurance Act (12 U.S.C. 1831a(a) and (d)),
all of the activities authorized for a national bank under
subsection (b) that are principal activities shall be
permissible for an insured State bank and subsidiary of an
insured State bank.
SEC. 313. EFFECTIVE DATE; ADMINISTRATION.
Except as otherwise provided under this title, this title
and the amendments made by this title shall take effect 360
days after the date of enactment of this Act, except that, to
the extent a provision of this title requires a rulemaking,
the provision shall take effect on the later of--
(1) 360 days after the date of enactment of this Act; or
(2) 60 days after the publication in the Federal Register
of the final rule implementing the provision.
SEC. 314. EDUCATIONAL MATERIAL REQUIREMENTS.
The Securities and Exchange Commission, in consultation
with the Commodity Futures Trading Commission, shall require
any registered entity that facilitates the trading of digital
commodities or investment contracts involving units of a
digital commodity to provide clear and accessible educational
materials to the public, including--
(1) an overview of how blockchain technology functions;
(2) a description of common risks associated with digital
commodities;
(3) a description of the differences between digital
commodity markets and traditional financial markets;
(4) information on reporting requirements related to
digital commodity transactions or investment contracts
involving units of a digital commodity; and
(5) guidance on recognizing fraudulent schemes and
instructions for reporting suspected fraud.
SEC. 315. 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, 2035.
TITLE IV--REGISTRATION FOR DIGITAL COMMODITY INTERMEDIARIES AT THE
COMMODITY FUTURES TRADING COMMISSION
SEC. 401. COMMISSION JURISDICTION OVER DIGITAL COMMODITY
TRANSACTIONS.
(a) Savings Clause.--Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the
end the following:
``(J) Except as expressly provided in this Act, nothing in
the CLARITY Act of 2025 shall affect or apply to, or be
interpreted to affect or apply to--
``(i) any agreement, contract, or transaction that is
subject to this Act as--
``(I) a contract of sale of a commodity for future delivery
or an option on such a contract;
``(II) a swap;
``(III) a security futures product;
``(IV) an option authorized under section 4c of this Act;
``(V) an agreement, contract, or transaction described in
subparagraph (C)(i) or (D)(i) of subsection (c)(2) of this
section; or
``(VI) a leverage transaction authorized under section 19;
or
``(ii) the activities of any person with respect to any
such an agreement, contract, or transaction.''.
(b) Limitation on Authority Over Permitted Payment
Stablecoins.--Section 2(c)(1) of the Commodity Exchange Act
(7 U.S.C. 2(c)(1)) is amended--
(1) in subparagraph (F), by striking ``or'' at the end;
(2) in subparagraph (G), by striking the period and
inserting ``; or''; and
(3) by adding at the end the following:
``(H) permitted payment stablecoins.''.
(c) Commission Jurisdiction Over Financing Agreements.--
Section 2(c)(2)(D) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)(D)) is amended--
(1) in clause (ii)(I), by inserting after ``paragraph (1)''
the following: ``(other than an agreement, contract, or
transaction in a permitted payment stablecoin)''; and
(2) by redesignating clause (iv) as clause (v) and
inserting after clause (iii) the following:
``(iv) Agreements for margin financing.--Notwithstanding
clause (iii), a digital commodity broker may, subject to the
requirements of section 4u(c)(2), offer to or enter into an
agreement for margin financing with a customer for the
purchase or sale of a digital commodity, provided any
purchase or sale made pursuant to the agreement shall result
in the delivery of the digital commodity into or from an
account carried for the customer by the digital commodity
broker, as determined by the Commission by rule or
regulation, based on commercial spot market practices.''.
(d) Commission Authority Over Certain Digital Commodity and
Stablecoin Spot Transactions.--Section 2(c)(2) of the
Commodity Exchange Act (7 U.S.C. 2(c)(2)) is amended by
adding at the end the following:
``(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 or tradable asset (as
defined in section 4x) in interstate commerce, including in a
digital commodity or tradable asset (as so defined) cash or
spot market, that is offered, solicited, traded, facilitated,
executed, cleared, reported, or otherwise dealt in--
``(I) on or subject to the rules of a registered entity or
an entity that is required to be registered as a registered
entity; or
``(II) by any other entity registered, or required to be
registered, with the Commission.
``(ii) Limitations.--Clause (i) shall not apply with
respect to--
``(I) custodial or depository activities for a digital
commodity of an entity regulated by an appropriate Federal
banking agency or a State bank supervisor (within the meaning
of section 3 of the Federal Deposit Insurance Act); or
``(II) an offer or sale of an investment contract involving
a digital commodity or of a securities offer or sale
involving a digital commodity.
``(iii) Mixed digital asset transactions.--
``(I) In general.--Clause (i) shall not apply to a mixed
digital asset transaction.
``(II) Reports on mixed digital asset transactions.--A
digital commodity issuer, digital commodity related person,
digital commodity affiliated person, or other person
registered with the Securities and Exchange Commission that
engages in a mixed digital asset transaction, shall, on
request of the Commission, open to inspection and examination
by the Commission all books and records relating to the mixed
digital asset transaction, subject to the confidentiality and
disclosure requirements of section 8.
``(G) Agreements, contracts, and transactions in
stablecoins.--
``(i) Treatment of permitted payment stablecoins on
commission-registered entities.--Subject to clauses (ii) and
(iii), the Commission shall have jurisdiction over a cash or
spot agreement, contract, or transaction in a permitted
payment stablecoin that is offered, offered to enter into,
entered into, executed, solicited, or accepted, or for which
the execution of is confirmed--
``(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.''.
(e) Conforming Amendments.--The Commodity Exchange Act is
amended--
(1) in section 1a(9) (7 U.S.C. 1a(9)), as amended by the
GENIUS Act, by striking the second sentence; and
(2) in section 2(a)(1)(A) (7 U.S.C. 2(a)(1)(A)), in the 1st
sentence, by inserting ``subparagraphs (F) and (G) of
subsection (c)(2) of this section or'' before ``section 19''.
SEC. 402. REQUIRING FUTURES COMMISSION MERCHANTS TO USE
QUALIFIED DIGITAL ASSET CUSTODIANS.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is
amended--
(1) in subsection (a)(2)--
(A) in the 1st proviso, by striking ``any bank or trust
company'' and inserting ``any bank, trust company, or
qualified digital asset custodian, as applicable,''; and
[[Page H3386]]
(B) by inserting ``: Provided further, That any such
property that is a digital asset shall be held in a qualified
digital asset custodian'' before the period at the end; and
(2) in subsection (f)(3)(A)(i), by striking ``any bank or
trust company'' and inserting ``any bank, trust company, or
qualified digital asset custodian''.
SEC. 403. TRADING CERTIFICATION AND APPROVAL FOR DIGITAL
COMMODITIES.
Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
amended--
(1) in subsection (a), by striking ``5(d) and 5b(c)(2)''
and inserting ``5(d), 5b(c)(2), and 5i(c)'';
(2) in subsection (b)--
(A) in each of paragraphs (1) and (2), by inserting
``digital commodity exchange,'' before ``derivatives''; and
(B) in paragraph (3), by inserting ``digital commodity
exchange,'' before ``derivatives'' each place it appears;
(3) in subsection (c)--
(A) in paragraph (2), by inserting ``or participants''
before ``(in a'';
(B) in paragraph (4)(B), by striking ``1a(10)'' and
inserting ``1a(9)''; and
(C) in paragraph (5), by adding at the end the following:
``(D) Special rules for digital commodity contracts.--In
certifying any new rule or rule amendment, or listing any new
contract or instrument, in connection with a contract of sale
of a commodity for future delivery, option, swap, or other
agreement, contract, or transaction, that is based on or
references a digital commodity, a registered entity shall
make or rely on a certification under subsection (d) for the
digital commodity.''; and
(4) by inserting after subsection (c) the following:
``(d) Certifications for Digital Commodity Trading.--
``(1) In general.--Notwithstanding subsection (c), for the
purposes of listing or offering a digital commodity for
trading in a digital commodity cash or spot market, an
eligible entity shall submit a written certification to the
Commission that the digital commodity meets the requirements
of this Act (including the regulations prescribed under this
Act).
``(2) Contents of the certification.--
``(A) In general.--In making a written certification under
this paragraph, the eligible entity shall furnish to the
Commission an analysis of how the digital commodity meets the
requirements of section 5i(c)(3).
``(B) Reliance on prior disclosures.--In making a
certification under this subsection, an eligible entity may
rely on the records and disclosures of any relevant person
registered with the Securities and Exchange Commission or
other State or Federal agency.
``(3) Modifications.--
``(A) In general.--An eligible entity shall modify a
certification made under paragraph (1) to--
``(i) account for significant changes in any information
provided to the Commission under paragraph (2)(A)(ii); or
``(ii) permit or restrict trading in units of a digital
commodity held by a digital commodity related person or a
digital commodity affiliated person.
``(B) Recertification.--Modifications required by this
subsection shall be subject to the same disapproval and
review process as a new certification under paragraphs (4)
and (5).
``(4) Disapproval.--
``(A) In general.--The written certification described in
paragraph (1) shall become effective unless the Commission
finds that the listing of the digital commodity is
inconsistent with the requirements of this Act or the rules
and regulations prescribed under this Act.
``(B) Analysis required.--The Commission shall include,
with any findings referred to in subparagraph (A), a detailed
analysis of the factors on which the decision was based.
``(C) Public findings.--The Commission shall make public
any disapproval decision, and any related findings and
analysis, made under this paragraph.
``(5) Review.--
``(A) In general.--Unless the Commission makes a
disapproval decision under paragraph (4), the written
certification described in paragraph (1) shall become
effective, pursuant to the certification by the eligible
entity and notice of the certification to the public (in a
manner determined by the Commission) on the date that is--
``(i) 20 business days after the date the Commission
receives the certification (or such shorter period as
determined by the Commission by rule or regulation), in the
case of a digital commodity that has not been certified under
this section or for which a certification is being modified
under paragraph (3); or
``(ii) 1 business day after the date the Commission
receives the certification (or such shorter period as
determined by the Commission by rule or regulation) for any
digital commodity that has been certified under this section.
``(B) Extensions.--The time for consideration under
subparagraph (A) may be extended through notice to the
eligible entity that there are novel or complex issues that
require additional time to analyze, that the explanation by
the submitting eligible entity is inadequate, or of a
potential inconsistency with this Act--
``(i) once, for 30 business days, through written notice to
the eligible entity by the Commission; and
``(ii) once, for an additional 30 business days, through
written notice to the eligible entity from the Commission
that includes a description of any deficiencies with the
certification, including any--
``(I) novel or complex issues which require additional time
to analyze;
``(II) missing information or inadequate explanations; or
``(III) potential inconsistencies with this Act.
``(6) Prior approval before registration.--
``(A) In general.--A person applying for registration with
the Commission for the purposes of listing or offering a
digital commodity for trading in a digital commodity cash or
spot market may request that the Commission grant prior
approval for the person to list or offer the digital
commodity on being registered with the Commission.
``(B) Request for prior approval.--A person seeking prior
approval under subparagraph (A) shall furnish the Commission
with a written certification that the digital commodity meets
the requirements of this Act (including the regulations
prescribed under this Act) and the information described in
paragraph (2).
``(C) Deadline.--The Commission shall take final action on
a request for prior approval not later than 90 business days
after submission of the request, unless the person submitting
the request agrees to an extension of the time limitation
established under this subparagraph.
``(D) Disapproval.--
``(i) In general.--The Commission shall approve the listing
of the digital commodity unless the Commission finds that the
listing is inconsistent with this Act (including any
regulation prescribed under this Act).
``(ii) Analysis required.--The Commission shall include,
with any findings made under clause (i), a detailed analysis
of the factors on which the decision is based.
``(iii) Public findings.--The Commission shall make public
any disapproval decision, and any related findings and
analysis, made under this paragraph.
``(7) Eligible entity defined.--In this subsection, the
term `eligible entity' means a registered entity or group of
registered entities acting jointly.''.
SEC. 404. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 5h the following:
``SEC. 5I. REGISTRATION OF DIGITAL COMMODITY EXCHANGES.
``(a) In General.--
``(1) Registration.--
``(A) In general.--A trading facility that offers or seeks
to offer a cash or spot market in at least 1 digital
commodity shall register with the Commission as a digital
commodity exchange.
``(B) Application.--A person desiring to register as a
digital commodity exchange shall submit to the Commission an
application in such form and containing such information as
the Commission may require for the purpose of making the
determinations required for approval.
``(C) Exemptions.--A trading facility that offers or seeks
to offer a cash or spot market in at least 1 digital
commodity shall not be required to register under this
section if the trading facility--
``(i) permits no more than a de minimis amount of trading
activity, as the Commission may determine by rule or
regulation, in a digital commodity; or
``(ii) serves only customers in a single State, territory,
or possession of the United States.
``(2) Additional registrations.--
``(A) With the commission.--In order to foster the
development of fair and orderly markets, protect customers,
and promote responsible innovation, the Commission--
``(i) shall prescribe rules to exempt an entity registered
with the Commission under more than 1 section of this Act
from duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this Act;
``(ii) shall prescribe rules to address conflicts of
interests and activities of the entity; and
``(iii) may, after an analysis of the risks and benefits,
prescribe rules to provide for portfolio margining.
``(B) With a registered futures association.--
``(i) In general.--A registered digital commodity exchange
shall become and remain a member of a registered futures
association and comply with rules related to such activity,
if the registered digital commodity exchange accepts customer
funds required to be segregated under subsection (d).
``(ii) Rulemaking required.--The Commission shall require
any registered futures association with a digital commodity
exchange as a member to provide such rules as may be
necessary to further compliance with subsection (d), protect
customers, and promote the public interest.
``(C) Registration required.--A person required to be
registered as a digital commodity exchange under this section
shall register with the Commission as such regardless of
whether the person is registered with another State or
Federal regulator.
``(b) Trading.--
``(1) Prohibition on certain trading practices.--
``(A) Section 4b shall apply to any agreement, contract, or
transaction in a digital commodity as if the agreement,
contract, or transaction were a contract of sale of a
commodity for future delivery.
``(B) Section 4c shall apply to any agreement, contract, or
transaction in a digital commodity as if the agreement,
contract, or transaction were a transaction involving the
purchase or sale of a commodity for future delivery.
``(C) Section 4b-1 shall apply to any agreement, contract,
or transaction in a digital commodity as if the agreement,
contract, or transaction were a contract of sale of a
commodity for future delivery.
``(2) Prohibition on acting as a counterparty.--
``(A) In general.--A digital commodity exchange or any
affiliate of such an exchange
[[Page H3387]]
shall not trade on or subject to the rules of the digital
commodity exchange for its own account.
``(B) Exceptions.--Subject to any conditions, requirements,
or limitations imposed by the Commission pursuant to
subparagraph (C), a digital commodity exchange may engage in
trading on the exchange so long as the trading is not solely
for the purpose of the profit of the exchange, including the
following:
``(i) Customer direction.--A transaction for, or entered
into at the direction of, or for the benefit of, an
unaffiliated customer.
``(ii) Risk management.--A transaction to manage the
credit, market, and liquidity risks associated with the
digital commodity business of the exchange.
``(iii) Operational needs.--A transaction related to the
operational needs of the business of the digital commodity
exchange or its affiliate.
``(iv) Functional use.--A transaction related to the
functional operation of a blockchain system.
``(C) Rulemaking.--The Commission may, by rule, establish
conditions, requirements, or other limitations on the
activities of a digital commodity exchange and its affiliate
permitted pursuant to subparagraph (B) that are necessary for
the protection of customers, the promotion of innovation, or
the maintenance of fair, orderly, and efficient markets.
``(D) Notice requirement.--In order for a digital commodity
exchange or any affiliate of a digital commodity exchange to
engage in trading on the affiliated exchange pursuant to
subsection (B), notice must be given to the Commission that
shall enumerate how any proposed activity is consistent with
the exceptions in subsection (B) and the purposes of this
Act.
``(c) Core Principles for Digital Commodity Exchanges.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a digital commodity exchange, a digital
commodity exchange shall comply with--
``(i) the core principles described in this subsection; and
``(ii) any requirement that the Commission may impose by
rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of a digital commodity
exchange.--Unless otherwise determined by the Commission by
rule or regulation, a digital commodity exchange described in
subparagraph (A) shall have reasonable discretion in
establishing the manner in which the digital commodity
exchange complies with the core principles described in this
subsection.
``(2) Compliance with rules.--A digital commodity exchange
shall--
``(A) establish and enforce compliance with any rule of the
digital commodity exchange, including--
``(i) the terms and conditions of the trades traded or
processed on or through the digital commodity exchange; and
``(ii) any limitation on access to the digital commodity
exchange;
``(B) establish and enforce trading, trade processing, and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including means--
``(i) to provide market participants with impartial access
to the market; and
``(ii) to capture information that may be used in
establishing whether rule violations have occurred; and
``(C) establish rules governing the operation of the
exchange, including rules specifying trading procedures to be
used in entering and executing orders traded or posted on the
facility.
``(3) Listing standards for digital commodities.--
``(A) In general.--A digital commodity exchange shall
establish policies and procedures to permit trading in a
digital commodity only if--
``(i) reports with respect to the digital commodity
required under, as applicable, section 4B(b)(3) or
4B(b)(5)(C) of the Securities Act of 1933 (or, with respect
to a digital commodity not issued in reliance on section
4(a)(8) of the Securities Act of 1933, a comparable set of
reports, where required by the Securities and Exchange
Commission) have been filed with the Securities and Exchange
Commission; or
``(ii) such other similar information as the Commission
may, by rule or regulation require, that is related to the
ongoing development plan of the blockchain system and is able
to be publicly ascertained, has been provided to the public.
``(B) Public information requirements.--
``(i) In general.--A digital commodity exchange shall--
``(I) permit trading in a digital commodity only if the
digital commodity exchange reasonably determines that the
information required by clause (ii) is correct, current, and
available to the public; and
``(II) establish policies and procedures to determine that
the information provided pursuant to clause (ii) is correct,
current, and available to the public.
``(ii) Required information.--With respect to a digital
commodity and each blockchain system to which the digital
commodity relates for which the digital commodity exchange
will make the digital commodity available to the customers of
the digital commodity exchange, the following information:
``(I) Source code.--The source code for any blockchain
system to which the digital commodity relates.
``(II) Transaction history.--A description of the steps
necessary to independently access, search, and verify the
transaction history of any blockchain system to which the
digital commodity relates, to the extent any such independent
access, search, and verification activities are technically
feasible with respect to the blockchain system.
``(III) Digital commodity economics.--A narrative
description of the purpose of any blockchain system to which
the digital commodity relates and the operation of any such
blockchain system, including--
``(aa) information explaining the launch and supply
process, including the number of digital assets to be issued
in an initial allocation, the total number of digital
commodities to be created, the release schedule for the
digital commodities, and the total number of digital
commodities then outstanding;
``(bb) information detailing any applicable consensus
mechanism or process for validating transactions, method of
generating or mining digital commodities, and any process for
burning or destroying digital commodities on the blockchain
system;
``(cc) an explanation of governance mechanisms for
implementing changes to the blockchain system or forming
consensus among holders of the digital commodities; and
``(dd) sufficient information for a third party to create a
tool for verifying the transaction history of the digital
asset.
``(IV) Trading volume and volatility.--The trading volume
and volatility of the digital commodity on the exchange.
``(V) Additional information.--Such additional information
as the Commission may determine by rule to be necessary for a
customer to understand the financial and operational risks of
a digital commodity, and to be practically feasible to
provide.
``(iii) Format.--The Commission shall prescribe rules and
regulations for the standardization and simplification of
disclosures under clause (ii), including requiring that
disclosures--
``(I) be conspicuous;
``(II) use plain language comprehensible to customers;
``(III) are not drafted in a way that presumes the customer
already has a base knowledge, familiarity, or understanding
of the basic terminology, operation, and function of
blockchain systems; and
``(IV) succinctly explain the information that is required
to be communicated to the customer.
``(iv) Reliance on previous disclosures.--In complying with
this subparagraph, a digital commodity exchange may rely on
and make available to the public relevant information
publicly disclosed to the Commission, the Securities and
Exchange Commission, or an appropriate Federal banking
agency.
``(C) Digital commodities held by related and digital
commodity affiliated persons.--A digital commodity exchange
shall establish policies and procedures designed to permit
the trading of a unit of a digital commodity acquired from
the issuer and held by a digital commodity affiliated person
or a digital commodity related person, only in accordance
with the requirements of section 4C of the Securities Act of
1933.
``(4) Treatment of customer assets.--A digital commodity
exchange shall establish policies and procedures that are
designed to protect and ensure the safety of customer money,
assets, and property.
``(5) Monitoring of trading and trade processing.--
``(A) In general.--A digital commodity exchange shall
provide a competitive, open, and efficient market and
mechanism for executing transactions that protects the price
discovery process of trading on the exchange.
``(B) Protection of markets and market participants.--A
digital commodity exchange shall establish and enforce
rules--
``(i) to protect markets and market participants from
abusive practices committed by any party, including abusive
practices committed by a party acting as an agent for a
participant; and
``(ii) to promote fair and equitable trading on the
exchange.
``(C) Trading procedures.--A digital commodity exchange
shall--
``(i) establish and enforce rules or terms and conditions
defining, or specifications detailing--
``(I) trading procedures to be used in entering and
executing orders traded on or through the facilities of the
digital commodity exchange; and
``(II) procedures for trade processing of digital
commodities on or through the facilities of the digital
commodity exchange; and
``(ii) monitor trading in digital commodities to prevent
manipulation, price distortion, and disruptions, through
surveillance, compliance, and disciplinary practices and
procedures, including methods for conducting real-time
monitoring of trading and comprehensive and accurate trade
reconstructions.
``(6) Ability to obtain information.--A digital commodity
exchange shall--
``(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform any
of the functions described in this section;
``(B) provide the information to the Commission on request;
and
``(C) have the capacity to carry out such international
information-sharing agreements as the Commission may require.
``(7) Emergency authority.--A digital commodity exchange
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission
or a registered entity, as is necessary and appropriate,
including the authority to facilitate the liquidation or
transfer of open positions in any digital commodity or to
suspend or curtail trading in a digital commodity.
``(8) Timely publication of trading information.--
``(A) In general.--A digital commodity exchange shall make
public timely information on price, trading volume, and other
trading data on digital commodities to the extent prescribed
by the Commission.
``(B) Capacity of digital commodity exchange.--A digital
commodity exchange shall
[[Page H3388]]
have the capacity to electronically capture and transmit
trade information with respect to transactions executed on
the exchange.
``(9) Recordkeeping and reporting.--
``(A) In general.--A digital commodity exchange shall--
``(i) maintain records relating to the business of the
exchange, including a complete audit trail, in a form and
manner acceptable to the Commission for a period of 5 years;
``(ii) report to the Commission, in a form and manner
acceptable to the Commission, such information as the
Commission determines to be necessary or appropriate for the
Commission to perform the duties of the Commission under this
Act; and
``(iii) keep any such records of digital commodities which
relate to a security open to inspection and examination by
the Securities and Exchange Commission.
``(B) Information-sharing.--Subject to section 8, and on
request, the Commission shall share information collected
under subparagraph (A) with--
``(i) the Board;
``(ii) the Securities and Exchange Commission;
``(iii) each appropriate Federal banking agency;
``(iv) each appropriate State bank supervisor (within the
meaning of section 3 of the Federal Deposit Insurance Act);
``(v) the Financial Stability Oversight Council;
``(vi) the Department of Justice; and
``(vii) any other person that the Commission determines to
be appropriate, including--
``(I) foreign financial supervisors (including foreign
futures authorities);
``(II) foreign central banks; and
``(III) foreign ministries.
``(C) Confidentiality agreement.--Before the Commission may
share information with any entity described in subparagraph
(B), the Commission shall receive a written agreement from
the entity stating that the entity shall abide by the
confidentiality requirements described in section 8 relating
to the information on digital commodities that is provided.
``(D) Providing information.--A digital commodity exchange
shall provide to the Commission (including any designee of
the Commission) information under subparagraph (A) in such
form and at such frequency as is required by the Commission.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a digital
commodity exchange shall not--
``(A) adopt any rules or take any actions that result in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on
trading.
``(11) Conflicts of interest.--The digital commodity
exchange shall establish and enforce rules--
``(A) to minimize conflicts of interest in the decision
making processes of the contract market; and
``(B) to establish a process for resolving conflicts of
interest referred to in subparagraph (A).
``(12) Financial resources.--
``(A) In general.--A digital commodity exchange shall have
adequate financial, operational, and managerial resources, as
determined by the Commission, to discharge each
responsibility of the digital commodity exchange.
``(B) Minimum amount of financial resources.--A digital
commodity exchange shall possess financial resources that, at
a minimum, exceed the sum of--
``(i) the total amount that would enable the digital
commodity exchange to cover the operating costs of the
digital commodity exchange for a 1-year period, as calculated
on a rolling basis; and
``(ii) the total amount necessary to meet the financial
obligations of the digital commodity exchange to all
customers of the digital commodity exchange.
``(13) Disciplinary procedures.--A digital commodity
exchange shall establish and enforce disciplinary procedures
that authorize the digital commodity exchange to discipline,
suspend, or expel members or market participants that violate
the rules of the digital commodity exchange, or similar
methods for performing the same functions, including
delegation of the functions to third parties.
``(14) Governance fitness standards.--
``(A) Governance arrangements.--A digital commodity
exchange shall establish governance arrangements that are
transparent and designed to permit consideration of the views
of market participants.
``(B) Fitness standards.--A digital commodity exchange
shall establish and enforce appropriate fitness standards
for--
``(i) officers and directors; and
``(ii) any individual or entity with direct access to, or
control of, customer assets.
``(15) System safeguards.--A digital commodity exchange
shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational and
security risks, through the development of appropriate
controls and procedures, and automated systems in accordance
with industry standards, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
resources, and a plan for disaster recovery that allow for--
``(i) the timely recovery and resumption of operations; and
``(ii) the fulfillment of the responsibilities and
obligations of the digital commodity exchange; and
``(C) periodically conduct tests to verify that the backup
resources of the digital commodity exchange are sufficient to
ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and accurate audit
trail.
``(d) Holding of Customer Assets.--
``(1) In general.--A digital commodity exchange shall hold
customer money, assets, and property in a manner to minimize
the risk of loss to the customer or unreasonable delay in
customer access to the money, assets, and property of the
customer.
``(2) Segregation of funds.--
``(A) In general.--A digital commodity exchange shall treat
and deal with all money, assets, and property that is
received by the digital commodity exchange, or accrues to a
customer as the result of trading in digital commodities, as
belonging to the customer.
``(B) Commingling prohibited.--Money, assets, and property
described in subparagraph (A) shall be separately accounted
for and shall not be commingled with the funds of the digital
commodity exchange or be used to margin, secure, or guarantee
any trades or accounts of any customer or person other than
the person for whom the same are held.
``(C) Exceptions.--
``(i) Use of funds.--
``(I) In general.--Notwithstanding subparagraph (A), money,
assets, and property described in subparagraph (A) may, for
convenience, be commingled and deposited in the same account
or accounts with any bank, trust company, derivatives
clearing organization, or qualified digital asset custodian.
``(II) Withdrawal.--Notwithstanding subparagraph (A), such
share of the money, assets, and property described in
subparagraph (A) as in the normal course of business shall be
necessary to margin, guarantee, secure, transfer, adjust, or
settle a contract of sale of a digital commodity with a
registered entity may be withdrawn and applied to such
purposes, including the payment of commissions, brokerage,
interest, taxes, storage, and other charges, lawfully
accruing in connection with the contract.
``(ii) Commission action.--Notwithstanding subparagraph
(A), in accordance with such terms and conditions as the
Commission may prescribe by rule, regulation, or order, any
money, assets, or property of the customers of a digital
commodity exchange may be commingled and deposited in
customer accounts with any other money, assets, or property
received by the digital commodity exchange and required by
the Commission to be separately accounted for and treated and
dealt with as belonging to the customer of the digital
commodity exchange.
``(3) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, and in obligations fully guaranteed
as to principal and interest by the United States, or in any
other investment that the Commission may by rule or
regulation prescribe, and such investments shall be made in
accordance with such rules and regulations and subject to
such conditions as the Commission may prescribe.
``(4) Customer protection during bankruptcy.--
``(A) Customer property.--All assets held on behalf of a
customer by a digital commodity exchange, and all money,
assets, and property of any customer received by a digital
commodity exchange for trading or custody, or to facilitate,
margin, guarantee, or secure contracts of sale of a digital
commodity (including money, assets, or property accruing to
the customer as the result of the transactions), shall be
considered customer property for purposes of section 761 of
title 11, United States Code.
``(B) Transactions.--A transaction involving the sale of a
unit of a digital commodity occurring on or subject to the
rules of a digital commodity exchange shall be considered a
contract for the purchase or sale of a commodity for future
delivery, on or subject to the rules of, a contract market or
board of trade for purposes of the definition of `commodity
contract' in section 761 of title 11, United States Code.
``(C) Exchanges.--A digital commodity exchange shall be
considered a futures commission merchant for purposes of
section 761 of title 11, United States Code.
``(D) Assets removed from segregation.--Assets removed from
segregation due to a customer election under paragraph (6)
shall not be considered customer property for purposes of
section 761 of title 11, United States Code.
``(5) Misuse of customer property.--
``(A) In general.--It shall be unlawful--
``(i) for any digital commodity exchange that has received
any customer money, assets, or property for custody to
dispose of, or use any such money, assets, or property as
belonging to the digital commodity exchange or any person
other than a customer of the digital commodity exchange; or
``(ii) for any other person, including any depository,
other digital commodity exchange, or digital asset custodian
that has received any customer money, assets, or property for
deposit, to hold, dispose of, or use any such money, assets,
or property, or property, as belonging to the depositing
digital commodity exchange or any person other than the
customers of the digital commodity exchange.
``(B) Use further defined.--For purposes of this section,
`use' of a digital commodity includes utilizing any unit of a
digital asset to participate in a blockchain service defined
in paragraph (6) or a decentralized governance system
associated with the digital commodity or the blockchain
system to which the digital commodity relates in any manner
other than that expressly directed by the customer from whom
the unit of a digital commodity was received.
``(6) Participation in blockchain services.--
``(A) Use of funds.--A digital commodity exchange (or a
designee of a digital commodity exchange) may use a unit of a
digital commodity
[[Page H3389]]
belonging to a customer to provide a blockchain service for a
blockchain system to which the unit of the digital commodity
relates if--
``(i) the customer expressly permits the use, in writing to
the digital commodity exchange; and
``(ii) the digital commodity exchange complies with
subparagraph (B).
``(B) Limitations.--
``(i) In general.--The Commission shall, by rule, establish
notice and disclosure requirements, and may, by rule,
establish any other limitations and rules related to a
permission provided under subparagraph (A) that are
reasonably necessary to protect customers, including eligible
contract participants, non-eligible contract participants, or
any other class of customers.
``(ii) Customer choice.--A digital commodity exchange may
not require a customer to provide the permission referred to
in subparagraph (A) as a condition of doing business on the
exchange.
``(C) Requirements.--The Commission may, by rule, waive or
modify the requirements of paragraph (2) or subsection (h),
to facilitate the use of a unit of a digital commodity
belonging to a customer to provide a blockchain service.
``(D) Blockchain service defined.--In this paragraph, the
term `blockchain service' means any activity relating to
validating transactions on a blockchain system, providing
security for a blockchain system, or other similar activity,
including protocol consensus participation activities
described in section 2(a)(30)(B) of the Securities Act of
1933, required for the ongoing operation of a blockchain
system.
``(e) Market Access Requirements.--The Commission may, by
rule, impose any additional requirements related to the
operations and activities of the digital commodity exchange
and an affiliated digital commodity broker necessary to
protect market participants, promote fair and equitable
trading on the digital commodity exchange, and promote
responsible innovation.
``(f) Designation of Chief Compliance Officer.--
``(1) In general.--A digital commodity exchange shall
designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the exchange;
``(B) review compliance with the core principles in this
subsection;
``(C) in consultation with the board of the exchange, a
body performing a function similar to that of a board, or the
senior officer of the exchange, resolve any conflicts of
interest that may arise;
``(D) establish and administer the policies and procedures
required to be established pursuant to this section;
``(E) ensure compliance with this Act and the rules and
regulations issued under this Act, including rules prescribed
by the Commission pursuant to this section; and
``(F) establish procedures for the remediation of
noncompliance issues found during compliance office reviews,
look backs, internal or external audit findings, self-
reported errors, or through validated complaints.
``(3) Requirements for procedures.--In establishing
procedures under paragraph (2)(F), the chief compliance
officer shall design the procedures to establish the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(4) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the digital commodity exchange with
this Act; and
``(ii) the policies and procedures, including the code of
ethics and conflicts of interest policies, of the digital
commodity exchange.
``(B) Requirements.--The chief compliance officer shall--
``(i) submit each report described in subparagraph (A) with
the appropriate financial report of the digital commodity
exchange that is required to be submitted to the Commission
pursuant to this section; and
``(ii) include in the report a certification that, under
penalty of law, the report is accurate and complete.
``(g) Appointment of Trustee.--
``(1) In general.--If a proceeding under section 5e results
in the suspension or revocation of the registration of a
digital commodity exchange, or if a digital commodity
exchange withdraws from registration, the Commission, on
notice to the digital commodity exchange, may apply to the
appropriate United States district court where the digital
commodity exchange is located for the appointment of a
trustee.
``(2) Assumption of jurisdiction.--If the Commission
applies for appointment of a trustee under paragraph (1)--
``(A) the court may take exclusive jurisdiction over the
digital commodity exchange and the records and assets of the
digital commodity exchange, wherever located; and
``(B) if the court takes jurisdiction under subparagraph
(A), the court shall appoint the Commission, or a person
designated by the Commission, as trustee with power to take
possession and continue to operate or terminate the
operations of the digital commodity exchange in an orderly
manner for the protection of customers subject to such terms
and conditions as the court may prescribe.
``(h) Qualified Digital Asset Custodian.--A digital
commodity exchange shall hold in a qualified digital asset
custodian each unit of a digital asset that is--
``(1) the property of a customer of the digital commodity
exchange;
``(2) required to be held by the digital commodity exchange
under subsection (c)(12) of this section; or
``(3) otherwise so required by the Commission to reasonably
protect customers.
``(i) Exemptions.--
``(1) In general.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commission may (on its own initiative or on application of
the digital commodity exchange) exempt, either
unconditionally or on stated terms or conditions or for
stated periods and either retroactively or prospectively, or
both, a digital commodity exchange from the requirements of
this Act, if the Commission determines that--
``(A) the exemption would be consistent with the public
interest and the purposes of this Act; and
``(B) the exemption will not have a material adverse effect
on the ability of the Commission or the digital commodity
exchange to discharge regulatory or self-regulatory duties
under this Act.
``(2) Foreign exchanges.--The Commission may exempt,
conditionally or unconditionally, a digital commodity
exchange from registration under this section if the
Commission finds that the digital commodity exchange is
subject to comparable, comprehensive supervision and
regulation on a consolidated basis by the appropriate
governmental authorities in the home country of the facility.
``(j) Customer Defined.--In this section, the term
`customer' means any person that maintains an account for the
trading of digital commodities directly with a digital
commodity exchange (other than a person that is owned or
controlled, directly or indirectly, by the digital commodity
exchange) for its own behalf or on behalf of any other
person.
``(k) Federal Preemption.--Notwithstanding any other
provision of law, the Commission shall have exclusive
jurisdiction over any digital commodity exchange registered
under this section with respect to activities and
transactions subject to this Act.''.
SEC. 405. QUALIFIED DIGITAL ASSET CUSTODIANS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended
by the preceding provisions of this Act, is amended by
inserting after section 5i the following:
``SEC. 5J. QUALIFIED DIGITAL ASSET CUSTODIANS.
``(a) In General.--A person is a qualified digital asset
custodian for purposes of this Act if the person--
``(1) holds digital assets on behalf of a person registered
under this Act or a customer of a person registered under
this Act; and
``(2) is in compliance with subsections (b) and (c).
``(b) Supervision Requirement.--A person is in compliance
with this subsection if the person is subject to--
``(1) supervision and examination for custody and
safekeeping of digital assets by an appropriate Federal
banking agency, the National Credit Union Administration, the
Commission, or the Securities and Exchange Commission; or
``(2) adequate supervision and appropriate regulation for
custody and safekeeping of digital assets by--
``(A) a State bank supervisor (within the meaning of
section 3 of the Federal Deposit Insurance Act);
``(B) a State officer, agency, or other entity which has
primary regulatory authority over nondepository State trust
companies;
``(C) a State credit union supervisor, as defined under
section 6003 of the Anti-Money Laundering Act of 2020; or
``(D) an appropriate foreign governmental authority in the
home country of such person.
``(c) Other Requirements.--A person shall be in compliance
with this subsection if:
``(1) Not otherwise prohibited.--The person has not been
prohibited by its supervisor from engaging in an activity
with respect to the custody and safekeeping of digital
assets.
``(2) Information sharing.--
``(A) In general.--The person shares information with the
Commission on request and complies with such requirements for
periodic sharing of information regarding customer accounts
that the person holds on behalf of an entity registered with
the Commission as the Commission determines by rule are
reasonably necessary to effectuate any of the provisions, or
to accomplish any of the purposes, of this Act.
``(B) Provision of information.--If the person is subject
to regulation and examination by an appropriate Federal
banking agency, the person may satisfy any information
request described in subparagraph (A) by providing the
Commission with a detailed listing, in writing, of the
digital assets of a customer in the custody of, or use by,
the person.
``(C) Rulemaking for cftc entities.--
``(i) In general.--The Commission shall prescribe rules to
permit a person registered with the Commission to be a
qualified digital asset custodian in compliance with this
section.
``(ii) Content.--In prescribing the rules under
subparagraph (A), the Commission shall require a person
registered with the Commission to--
``(I) implement requirement consistent with the
requirements in subsection (d)(1);
``(II) establish sufficient system safeguards;
``(III) prevent or mitigate conflicts of interest, as
appropriate; and
``(IV) establish separate governance arrangements for the
custodial function of the entity.
``(d) Adequate Supervision and Appropriate Regulation.--
``(1) In general.--For purposes of subsection (b), the
terms `adequate supervision' and `appropriate regulation'
mean such minimum standards for supervision and regulation as
are reasonably necessary to protect the digital assets held
by a person registered under this Act, including standards
relating to the licensing, examination, and supervisory
processes that require the person to, at a minimum--
[[Page H3390]]
``(A) receive a review and evaluation of ownership,
character and fitness, conflicts of interest, business model,
financial statements, funding resources, and policies and
procedures of the person;
``(B) hold capital sufficient for the financial integrity
of the person;
``(C) protect customer assets;
``(D) establish and maintain books and records regarding
the business of the person;
``(E) submit financial statements and audited financial
statements to the applicable supervisor described in
subsection (b);
``(F) provide disclosures to the applicable supervisor
described in subsection (b) regarding actions, proceedings,
and other items as determined by the supervisor;
``(G) maintain and enforce policies and procedures for
compliance with applicable State and Federal laws, including
those related to anti-money laundering and cybersecurity;
``(H) establish a business continuity plan to ensure
functionality in cases of disruption; and
``(I) establish policies and procedures to resolve
complaints.
``(2) Rulemaking with respect to definitions.--
``(A) In general.--For purposes of this section, the
Commission may, by rule, further define the terms `adequate
supervision' and `appropriate regulation' as necessary and
appropriate for the protection of customers, and consistent
with the purposes of this Act.
``(B) Existing digital asset custodians.--A trust company
operating as a digital asset custodian before the effective
date of a rulemaking under subparagraph (A) is deemed subject
to adequate supervision and appropriate regulation if--
``(i) the trust company is expressly permitted by a State
bank supervisor to engage in the custody and safekeeping of
digital assets;
``(ii) the State bank supervisor has established licensing,
examination, and supervisory processes that require the trust
company to, at a minimum, meet the conditions described in
subparagraphs (A) through (I) of paragraph (1); and
``(iii) the trust company is in good standing with its
State bank supervisor.
``(C) Transition period for certain custodians.--In
implementing the rulemaking under subparagraph (A), the
Commission shall provide a transition period of not less than
2 years for any trust company that is deemed subject to
adequate supervision and appropriate regulation under
subparagraph (B) on the effective date of the rulemaking.
``(e) Authority to Temporarily Suspend Standards.--The
Commission may, by rule or order, temporarily suspend, in
whole or in part, any requirement imposed under, or any
standard referred to in, this section, or any requirement to
utilize a qualified digital asset custodian, if the
Commission determines that the suspension would be consistent
with the public interest and the purposes of this Act.''.
SEC. 406. REGISTRATION AND REGULATION OF DIGITAL COMMODITY
BROKERS AND DEALERS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended
by inserting after section 4t the following:
``SEC. 4U. REGISTRATION AND REGULATION OF DIGITAL COMMODITY
BROKERS AND DEALERS.
``(a) Registration.--
``(1) Requirement.--It shall be unlawful for any person to
act as a digital commodity broker or digital commodity dealer
unless the person is registered as such with the Commission.
``(2) Additional registration.--
``(A) Rules.--In order to foster the development of fair
and orderly markets, protect customers, and promote
responsible innovation, the Commission--
``(i) shall prescribe rules to exempt an entity registered
with the Commission under more than 1 section of this Act
from duplicative, conflicting, or unduly burdensome
provisions of this Act and the rules under this Act;
``(ii) shall prescribe rules to address conflicts of
interests and the activities of the entity; and
``(iii) may after an analysis of the risks and benefits,
prescribe rules to provide for portfolio margining.
``(B) With membership in a registered futures
association.--Any person required to be registered as a
digital commodity broker or digital commodity dealer under
this section shall become and remain a member of a registered
futures association.
``(b) Requirements.--
``(1) In general.--A person shall register as a digital
commodity broker or digital commodity dealer by filing a
registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in such
form and manner as is prescribed by the Commission, and shall
contain such information as the Commission considers
necessary concerning the business in which the applicant is
or will be engaged.
``(B) Continual reporting.--A person that is registered as
a digital commodity broker or digital commodity dealer shall
continue to submit to the Commission reports that contain
such information pertaining to the business of the person as
the Commission may require.
``(3) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or
order, it shall be unlawful for a digital commodity broker or
digital commodity dealer to permit any person who is
associated with a digital commodity broker or a digital
commodity dealer and who is subject to a statutory
disqualification to effect or be involved in effecting a
contract of sale of a digital commodity on behalf of the
digital commodity broker or the digital commodity dealer,
respectively, if the digital commodity broker or digital
commodity dealer, respectively, knew, or in the exercise of
reasonable care should have known, of the statutory
disqualification.
``(c) Rulemaking.--
``(1) In general.--The Commission shall prescribe such
rules applicable to registered digital commodity brokers and
registered digital commodity dealers as are appropriate to
carry out this section, including rules in the public
interest that limit the activities of digital commodity
brokers and digital commodity dealers.
``(2) Financing agreements.--
``(A) In general.--The Commission shall prescribe rules and
regulations applicable to digital commodity brokers or
digital commodity dealers which shall set forth minimum
requirements related to disclosure, recordkeeping, margin
financing arrangements, rehypothecation, capital, reporting,
business conduct, documentation, and supervision of employees
and agents, in connection with--
``(i) an agreement described in section 2(c)(2)(D)(iv); or
``(ii) any other margined, leveraged, or financing
arrangement for the purchase or sale of a digital commodity
with an eligible contract participant.
``(B) Specific authority.--Except as prohibited in section
2(c)(2)(G)(iii), the Commission may also make, promulgate,
and enforce such rules and regulations as, in the judgment of
the Commission, are reasonably necessary to effectuate any of
the provisions of, or to accomplish any of the purposes of,
this Act in connection with an agreement referred to in
subparagraph (A) of this paragraph.
``(d) Capital Requirements.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall meet such minimum capital
requirements as the Commission may prescribe to address the
risks associated with digital commodity trading and to ensure
that the digital commodity broker or digital commodity
dealer, respectively, is able, at all times, to--
``(A) meet, and continue to meet the obligations of such a
registrant; and
``(B) fulfill obligations to customers or counterparties
for any margined, leveraged, or financed transactions.
``(2) Futures commission merchants and other dealers.--Each
futures commission merchant, introducing broker, digital
commodity broker, digital commodity dealer, broker, and
dealer shall maintain sufficient capital to comply with the
stricter of any applicable capital requirements to which the
futures commission merchant, introducing broker, digital
commodity broker, digital commodity dealer, broker, or
dealer, respectively, is subject under this Act or the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(e) Reporting and Recordkeeping.--Each digital commodity
broker and digital commodity dealer--
``(1) shall make such reports as are required by the
Commission by rule or regulation regarding the transactions,
positions, and financial condition of the digital commodity
broker or digital commodity dealer, respectively;
``(2) shall keep books and records in such form and manner
and for such period as may be prescribed by the Commission by
rule or regulation; and
``(3) shall keep the books and records open to inspection
and examination by any representative of the Commission.
``(f) Daily Trading Records.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall maintain daily trading records
of the transactions of the digital commodity broker or
digital commodity dealer, respectively, and all related
records (including related forward or derivatives
transactions) and recorded communications, including
electronic mail, instant messages, and recordings of
telephone calls, for such period as the Commission may
require by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall
require by rule or regulation.
``(3) Counterparty records.--Each digital commodity broker
and digital commodity dealer shall maintain daily trading
records for each customer or counterparty in a manner and
form that is identifiable with each digital commodity
transaction.
``(4) Audit trail.--Each digital commodity broker and
digital commodity dealer shall maintain a complete audit
trail for conducting comprehensive and accurate trade
reconstructions.
``(g) Business Conduct Standards.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall conform with such business
conduct standards as the Commission, by rule or regulation,
prescribes related to--
``(A) fraud, manipulation, and other abusive practices
involving spot or margined, leveraged, or financed digital
commodity transactions (including transactions that are
offered but not entered into);
``(B) diligent supervision of the business of the
registered digital commodity broker or digital commodity
dealer, respectively; and
``(C) such other matters as the Commission deems
appropriate.
``(2) Business conduct requirements.--The Commission shall,
by rule, prescribe business conduct requirements which--
``(A) require disclosure by a registered digital commodity
broker and registered digital commodity dealer to any
counterparty to the transaction (other than an eligible
contract participant) of--
``(i) information about the material risks and
characteristics of the digital commodity; and
``(ii) information about the material risks and
characteristics of the transaction;
``(B) establish a duty for such a digital commodity broker
and such a digital commodity
[[Page H3391]]
dealer to communicate in a fair and balanced manner based on
principles of fair dealing and good faith;
``(C) establish standards governing digital commodity
broker and digital commodity dealer marketing and
advertising, including testimonials and endorsements; and
``(D) establish such other standards and requirements as
the Commission may determine are appropriate for the
protection of customers.
``(3) Prohibition on fraudulent practices.--It shall be
unlawful for a digital commodity broker or digital commodity
dealer to--
``(A) employ any device, scheme, or artifice to defraud any
customer or counterparty;
``(B) engage in any transaction, practice, or course of
business that operates as a fraud or deceit on any customer
or counterparty; or
``(C) engage in any act, practice, or course of business
that is fraudulent, deceptive, or manipulative.
``(h) Duties.--
``(1) Risk management procedures.--Each digital commodity
broker and digital commodity dealer shall establish robust
and professional risk management systems adequate for
managing the day-to-day business of the digital commodity
broker or digital commodity dealer, respectively.
``(2) Disclosure of general information.--Each digital
commodity broker and digital commodity dealer shall disclose
to the Commission information concerning--
``(A) the terms and conditions of the transactions of the
digital commodity broker or digital commodity dealer,
respectively;
``(B) the trading operations, mechanisms, and practices of
the digital commodity broker or digital commodity dealer,
respectively;
``(C) financial integrity protections relating to the
activities of the digital commodity broker or digital
commodity dealer, respectively; and
``(D) other information relevant to trading in digital
commodities by the digital commodity broker or digital
commodity dealer, respectively.
``(3) Ability to obtain information.--Each digital
commodity broker and digital commodity dealer shall--
``(A) establish and enforce internal systems and procedures
to obtain any necessary information to perform any of the
functions described in this section; and
``(B) provide the information to the Commission, on
request.
``(4) Conflicts of interest.--Each digital commodity broker
and digital commodity dealer shall establish, maintain, and
enforce written policies and procedures reasonably designed,
taking into consideration the nature of the business of the
person, to mitigate any conflicts of interest in transactions
or arrangements with affiliates.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a digital
commodity broker or digital commodity dealer shall not--
``(A) adopt any process or take any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(i) Designation of Chief Compliance Officer.--
``(1) In general.--Each digital commodity broker and
digital commodity dealer shall designate an individual to
serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the registered digital commodity broker or registered
digital commodity dealer;
``(B) review the compliance of the registered digital
commodity broker or registered digital commodity dealer with
respect to the registered digital commodity broker and
registered digital commodity dealer requirements described in
this section;
``(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of
interest that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations), including each rule prescribed by the
Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the registered digital commodity
broker or registered digital commodity dealer with this Act
(including regulations); and
``(ii) each policy and procedure of the registered digital
commodity broker or registered digital commodity dealer
followed by the chief compliance officer (including the code
of ethics and conflict of interest policies).
``(B) Requirements.--The chief compliance officer shall
ensure that a compliance report under subparagraph (A)--
``(i) accompanies each appropriate financial report of the
registered digital commodity broker or registered digital
commodity dealer that is required to be furnished to the
Commission pursuant to this section; and
``(ii) includes a certification that, under penalty of law,
the compliance report is accurate and complete.
``(j) Segregation of Digital Commodities.--
``(1) Holding of customer assets.--
``(A) In general.--Each digital commodity broker and
digital commodity dealer shall hold customer money, assets,
and property in a manner to minimize the risk of loss to the
customer or unreasonable delay in customer access to the
money, assets, and property of the customer.
``(B) Qualified digital asset custodian.--Each digital
commodity broker and digital commodity dealer shall hold in a
qualified digital asset custodian each unit of a digital
asset that is--
``(i) the property of a customer or counterparty of the
digital commodity broker or digital commodity dealer,
respectively;
``(ii) required to be held by the digital commodity broker
or digital commodity dealer under subsection (e); or
``(iii) otherwise so required by the Commission to
reasonably protect customers or promote the public interest.
``(2) Segregation of funds.--
``(A) In general.--Each digital commodity broker and
digital commodity dealer shall treat and deal with all money,
assets, and property that is received by the digital
commodity broker or digital commodity dealer, or accrues to a
customer as the result of trading in digital commodities, as
belonging to the customer.
``(B) Commingling prohibited.--
``(i) In general.--Except as provided in clause (ii), each
digital commodity broker and digital commodity dealer shall
separately account for money, assets, and property of a
digital commodity customer, and shall not commingle any such
money, assets, or property with the funds of the digital
commodity broker or digital commodity dealer, respectively,
or use any such money, assets, or property to margin, secure,
or guarantee any trades or accounts of any customer or person
other than the person for whom the money, assets, or property
are held.
``(ii) Exceptions.--
``(I) Use of funds.--
``(aa) In general.--A digital commodity broker or digital
commodity dealer may, for convenience, commingle and deposit
in the same account or accounts with any bank, trust company,
derivatives clearing organization, or qualified digital asset
custodian money, assets, and property of customers.
``(bb) Withdrawal.--The share of the money, assets, and
property described in item (aa) as in the normal course of
business shall be necessary to margin, guarantee, secure,
transfer, adjust, or settle a contract of sale of a digital
commodity with a registered entity may be withdrawn and
applied to such purposes, including the payment of
commissions, brokerage, interest, taxes, storage, and other
charges, lawfully accruing in connection with the contract.
``(II) Commission action.--In accordance with such terms
and conditions as the Commission may prescribe by rule,
regulation, or order, any money, assets, or property of the
customers of a digital commodity broker or digital commodity
dealer may be commingled and deposited in customer accounts
with any other money, assets, or property received by the
digital commodity broker or digital commodity dealer,
respectively, and required by the Commission to be separately
accounted for and treated and dealt with as belonging to the
customer of the digital commodity broker or digital commodity
dealer, respectively.
``(3) Permitted investments.--Money described in paragraph
(2) may be invested in obligations of the United States, in
general obligations of any State or of any political
subdivision of a State, in obligations fully guaranteed as to
principal and interest by the United States, or in any other
investment that the Commission may by rule or regulation
allow.
``(4) Customer protection during bankruptcy.--
``(A) Customer property.--All money, assets, or property
described in paragraph (2) shall be considered customer
property for purposes of section 761 of title 11, United
States Code.
``(B) Transactions.--A transaction involving a unit of a
digital commodity occurring with a digital commodity broker
or digital commodity dealer shall be considered a contract
for the purchase or sale of a commodity for future delivery,
on or subject to the rules of, a contract market or board of
trade for purposes of the definition of a `commodity
contract' in section 761 of title 11, United States Code.
``(C) Brokers and dealers.--A digital commodity broker and
a digital commodity dealer shall be considered a futures
commission merchant for purposes of section 761 of title 11,
United States Code.
``(D) Assets removed from segregation.--Assets removed from
segregation due to a customer election under paragraph (6)
shall not be considered customer property for purposes of
section 761 of title 11, United States Code.
``(5) Misuse of customer property.--
``(A) In general.--It shall be unlawful--
``(i) for any digital commodity broker or digital commodity
dealer that has received any customer money, assets, or
property for custody to dispose of, or use any such money,
assets, or property as belonging to the digital commodity
broker or digital commodity dealer, respectively, or any
person other than a customer of the digital commodity broker
or digital commodity dealer, respectively; or
``(ii) for any other person, including any depository,
digital commodity exchange, other digital commodity broker,
other digital commodity dealer, or digital commodity
custodian that has received any customer money, assets, or
property for deposit, to hold, dispose of, or use any such
money, assets, or property, as belonging to
[[Page H3392]]
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) Use of funds.--A digital commodity broker or digital
commodity dealer (or a designee of a digital commodity broker
or a digital commodity dealer) may use a unit of a digital
commodity belonging to a customer to provide a blockchain
service for a blockchain system to which the unit of the
digital commodity relates if--
``(i) the customer expressly permits the use, in writing to
the digital commodity broker or digital commodity dealer, as
the case may be; and
``(ii) the digital commodity broker or the digital
commodity dealer, as the case may be, complies with
subparagraph (B).
``(B) Limitations.--
``(i) In general.--The Commission shall, by rule, establish
notice and disclosure requirements, and may, by rule,
establish any other limitations and rules related to a
permission provided under subparagraph (A) that are
reasonably necessary to protect customers, including eligible
contract participants, non-eligible contract participants, or
any other class of customers.
``(ii) Customer choice.--A digital commodity broker or
digital commodity dealer may not require a customer to
provide the permission referred to in subparagraph (A) as a
condition of doing business with the broker or dealer.
``(C) Requirements.--The Commission may, by rule, waive or
modify the requirements of paragraph (2) or subsection (h),
to facilitate the use of a unit of a digital commodity
belonging to a customer to provide a blockchain service.
``(D) Blockchain service defined.--In this paragraph, the
term `blockchain service' means any activity relating to
validating transactions on a blockchain system, providing
security for a blockchain system, or other similar activity,
including protocol consensus participation activities
described in section 2(a)(30)(B) of the Securities Act of
1933, required for the ongoing operation of a blockchain
system.
``(k) Federal Preemption.--Notwithstanding any other
provision of law, the Commission shall have exclusive
jurisdiction over any digital commodity broker or digital
commodity dealer registered under this section with respect
to activities subject to this Act.
``(l) Exemptions.--In order to promote responsible
innovation and fair competition, or protect customers, the
Commission may (on its own initiative or on application of
the digital commodity broker or digital commodity dealer)
exempt, unconditionally or on stated terms or conditions, or
for stated periods, and retroactively or prospectively, or
both, a digital commodity broker or digital commodity dealer
from the requirements of this Act, if the Commission
determines that--
``(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 digital commodity broker or digital commodity
dealer is subject to comparable, comprehensive supervision
and regulation by the appropriate government authorities in
the home country of the digital commodity broker or digital
commodity dealer, respectively.''.
SEC. 407. REGISTRATION OF ASSOCIATED PERSONS.
(a) In General.--Section 4k of the Commodity Exchange Act
(7 U.S.C. 6k) is amended--
(1) by redesignating subsections (4) through (6) as
subsections (5) through (7), respectively;
(2) by inserting after subsection (3) the following:
``(4) It shall be unlawful for any person to act as an
associated person of a digital commodity broker or an
associated person of a digital commodity dealer unless the
person is registered with the Commission under this Act and
such registration shall not have expired, been suspended (and
the period of suspension has not expired), or been revoked.
It shall be unlawful for a digital commodity broker or a
digital commodity dealer to permit such a person to become or
remain associated with the digital commodity broker or
digital commodity dealer if the digital commodity broker or
digital commodity dealer knew or should have known that the
person was not so registered or that the registration had
expired, been suspended (and the period of suspension has not
expired), or been revoked.''; and
(3) in subsection (5) (as so redesignated), by striking
``or of a commodity trading advisor'' and inserting ``of a
commodity trading advisor, of a digital commodity broker, or
of a digital commodity dealer''.
(b) Conforming Amendments.--The Commodity Exchange Act (7
U.S.C. 1a et seq.) is amended by striking ``section 4k(6)''
each place it appears and inserting ``section 4k(7)''.
SEC. 408. REGISTRATION OF COMMODITY POOL OPERATORS AND
COMMODITY TRADING ADVISORS.
(a) In General.--Section 4m(3) of the Commodity Exchange
Act (7 U.S.C. 6m(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``any commodity trading advisor'' and
inserting ``a commodity pool operator or commodity trading
advisor''; and
(B) by striking ``acting as a commodity trading advisor''
and inserting ``acting as a commodity pool operator or
commodity trading advisor''; and
(2) in subparagraph (C), by inserting ``digital
commodities,'' after ``physical commodities,''.
(b) Exemptive Authority.--Section 4m of such Act (7 U.S.C.
6m) is amended by adding at the end the following:
``(4) Exemptive Authority.--The Commission shall promulgate
rules to provide appropriate exemptions for commodity pool
operators and commodity trading advisors, to provide relief
from duplicative, conflicting, or unduly burdensome
requirements or to promote responsible innovation, to the
extent the exemptions foster the development of fair and
orderly cash or spot digital commodity markets, are necessary
or appropriate in the public interest, and are consistent
with the protection of customers.''.
SEC. 409. EXCLUSION FOR DECENTRALIZED FINANCE ACTIVITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended
by the preceding provisions of this Act, is amended by
inserting after section 4u the following:
``SEC. 4V. DECENTRALIZED FINANCE ACTIVITIES NOT SUBJECT TO
THIS ACT.
``(a) In General.--Notwithstanding any other provision of
this Act, a person shall not be subject to this Act and the
regulations promulgated under this Act based on the person
directly or indirectly engaging in any of the following
activities, whether singly or in combination, in relation to
the operation of a blockchain system or in relation to
decentralized finance trading protocol:
``(1) Compiling network transactions or relaying,
searching, sequencing, validating, or acting in a similar
capacity.
``(2) Providing computational work, operating a node or
oracle service, or procuring, offering, or utilizing network
bandwidth, or other similar incidental services.
``(3) Providing a user-interface that enables a user to
read, and access data about a blockchain system.
``(4) Developing, publishing, or otherwise distributing a
blockchain system or a decentralized finance messaging
system.
``(5) Constituting, administering, or maintaining a
decentralized finance messaging system or decentralized
finance trading protocol, or operating or participating in a
liquidity pool with respect thereto, for the purpose of
executing a spot transaction for the purchase or sale of a
digital commodity.
``(6) Developing, publishing, constituting, administering,
maintaining, or otherwise distributing software or systems
that create or deploy hardware or software, including wallets
or other systems, facilitating an individual user's own
personal ability to keep, safeguard, or custody the user's
digital assets or related private keys.
``(b) Exceptions.--Subsection (a) shall not be interpreted
to apply to the anti-fraud, anti-manipulation, or false
reporting enforcement authorities of the Commission.''.
SEC. 410. RESOURCES FOR IMPLEMENTATION AND ENFORCEMENT.
(a) Collection of Fees.--
(1) In general.--The Commodity Futures Trading Commission
(in this section referred to as the ``Commission'') shall
charge and collect a fee from each person in provisional
status registered with the Commission pursuant to section
106, on--
(A) the filing of the initial application for registration;
and
(B) an annual basis thereafter for maintaining provisional
status.
(2) Amount.--The fees authorized under paragraph (1) may be
collected and available for obligation only in the amounts
provided in advance in an appropriation Act.
(3) Authority to adjust fees.--Notwithstanding the
preceding provisions of this subsection, to promote fair
competition or innovation, the Commission, in its sole
discretion, may reduce or eliminate any fee otherwise
required to be paid by a small or medium filer under this
subsection.
(b) Fee Schedule.--
(1) In general.--The Commission shall publish in the
Federal Register a schedule of the fees to be charged and
collected under this section.
(2) Content.--The fee schedule for a fiscal year shall
include a written analysis of the estimate of the Commission
of the total costs of carrying out the functions of the
Commission under this Act during the fiscal year.
(3) Submission to congress.--Before publishing the fee
schedule for a fiscal year, the Commission shall submit a
copy of the fee schedule to the Committees on Agriculture and
on Appropriations of the House of Representatives and the
Committees on Agriculture, Nutrition, and Forestry and on
Appropriations of the Senate.
(4) Timing.--
(A) 1st fiscal year.--The Commission shall publish the fee
schedule for the fiscal year in which this Act is enacted,
within 30 days after the date of the enactment of this Act.
(B) Subsequent fiscal years.--The Commission shall publish
the fee schedule for each subsequent fiscal year, not less
than 90 days before the due date prescribed by the Commission
for payment of the annual fee for the fiscal year.
(c) Late Payment Penalty.--
(1) In general.--The Commission may impose a penalty
against a person that fails to pay an annual fee charged
under this section, within 30 days after the due date
prescribed by the Commission for payment of the fee.
(2) Amount.--The amount of the penalty shall be--
(A) 5 percent of the amount of the fee due, multiplied by
(B) the whole number of consecutive 30-day periods that
have elapsed since the due date.
[[Page H3393]]
(d) Reimbursement of Excess Fees.--To the extent that the
total amount of fees collected under this section during a
fiscal year that begins after the date of the enactment of
this Act exceeds the amount provided under subsection (a)(2)
with respect to the fiscal year, the Commission shall
reimburse the excess amount to the persons who have timely
paid their annual fees, on a pro-rata basis that excludes
penalties, and shall do so within 60 days after the end of
the fiscal year.
(e) Deposit of Fees Into the Treasury.--All amounts
collected under this section shall be credited to the
currently applicable appropriation, account, or fund of the
Commission as discretionary offsetting collections, and shall
be available for the purposes authorized in subsection (f)
only to the extent and in the amounts provided in advance in
appropriations Acts.
(f) Authorization of Appropriations.--In addition to
amounts otherwise authorized to be appropriated to the
Commission, there is authorized to be appropriated to the
Commission amounts collected under this section to cover the
costs of carrying out the functions of the Commission under
this Act.
(g) Expedited Hiring Authority.--
(1) Appointment authority.--The Chairman, pursuant to
section 6(a), may appoint individuals to a position described
in paragraph (2) of this subsection--
(A) in accordance with the statutes, rules, and regulations
governing appointments to positions in the excepted service
(as defined in section 2103 of title 5, United States Code);
and
(B) without regard to any statute, rule, or regulation
governing appointments to positions in the competitive
service (as defined in section 2102 of such title).
(2) Position described.--A position referred to in
subparagraph (1) is a position at the Commission that--
(A) is in the competitive service (as defined in section
2102 of such title); and
(B) requires specialized knowledge of digital commodities
markets, financial and capital market formation or
regulation, financial market structures or surveillance, data
collection or analysis, or information technology,
cybersecurity, or system safeguards.
(3) Rule of construction.--The appointment of a candidate
to a position under this subsection shall not be considered
to cause the position to be converted from the competitive
service to the excepted service.
(h) Sunset.--The authorities provided by this section shall
expire at the end of the 4th fiscal year that begins after
the date of the enactment of this Act.
SEC. 411. REQUIREMENTS RELATED TO CONTROL PERSONS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended
the preceding provisions of this Act, is amended by inserting
after section 4v the following:
``SEC. 4W. LIMITATION ON TRANSACTIONS BY BLOCKCHAIN CONTROL
PERSONS.
``(a) Limitation.--It shall be unlawful for a blockchain
control person with respect to a blockchain system certified
as a mature blockchain system in accordance with section 42
of the Securities Exchange Act of 1934 to sell a unit of a
digital commodity related to the blockchain system unless the
person files notice with the Commission, in a form and manner
determined by the Commission, that the person has or intends
to obtain an authority described in subsection (b)(1) with
respect to the blockchain system, and complies with rules
adopted by the Commission that require--
``(1) disclosure of information to the Commission and the
public about the material activities, as determined by the
Commission, of the blockchain control person; and
``(2)(A) the use of a digital commodity broker to effect
the sale; or
``(B) such other sales restrictions applicable to the
blockchain control person, or any affiliated blockchain
control person, to prevent manipulation and distortion of the
value of the digital commodity and promote further maturity
of the blockchain system to which the digital commodity
relates.
``(b) Definitions.--In this section:
``(1) Blockchain control person.--The term `blockchain
control person' means, with respect to a blockchain system,
any person or group of persons under common control, other
than a decentralized governance system, who--
``(A) has the unilateral authority, directly or indirectly,
through any contract, arrangement, understanding,
relationship, or otherwise, to control or materially alter
the functionality, operation, or rules of consensus or
agreement of the blockchain system or its related digital
commodity; or
``(B) has the unilateral authority to direct the voting, in
the aggregate, of 20 percent or more of the outstanding
voting power of the blockchain system by means of a related
digital commodity, nodes or validators, a decentralized
governance system, or otherwise, in a blockchain system which
can be altered by a voting system.
``(2) Affiliated blockchain control person.--The term
`affiliated blockchain control person' means any person
directly or indirectly controlling, controlled by, or under
common control with a blockchain control person, as the
Commission by rule or regulation, may determine will
effectuate the purposes of this section.''.
SEC. 412. OTHER TRADABLE ASSETS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.), as amended
by the preceding provisions of this Act, is amended--
(1) by inserting after section 4w the following:
``SEC. 4X. TRADING REQUIREMENTS FOR OTHER TRADABLE ASSETS.
``(a) Limitation.--A contract of sale of a tradable asset
shall not be offered, solicited, traded, facilitated,
executed, cleared, reported, or otherwise dealt in, on or
subject to the rules of a registered entity, or by any other
entity registered with the Commission, except in accordance
with subsection (b).
``(b) Requirements.--
``(1) Treatment of tradable assets.--A contract of sale of
a tradable asset that is offered, solicited, traded,
facilitated, executed, cleared, reported, or otherwise dealt
in on or subject to the rules of a registered entity, or by
any other entity registered with the Commission, shall be
treated as a digital commodity for purposes of this Act.
``(2) Additional rulemaking authority.--In addition to the
other requirements of this Act, the Commission may, by rule
or regulation, impose additional obligations on any person
registered under this Act offering, soliciting, trading,
facilitating, executing, clearing, reporting, or otherwise
dealing in a contract of sale of a tradable asset, or class
thereof, pursuant to paragraph (1) as are necessary for the
protection of customers, the promotion of innovation, and the
maintenance of fair, orderly, and efficient markets,
including additional obligations related to--
``(A) disclosure;
``(B) recordkeeping;
``(C) capital;
``(D) reporting;
``(E) business conduct;
``(F) documentation;
``(G) supervision of employees; and
``(H) segregation.
``(c) Tradable Asset Defined.--In this section, the term
`tradable asset' means a digital asset other than--
``(1) a digital commodity that is treated as such other
than by reason of subsection (b)(1) of this section; or
``(2) a digital asset excluded from the definition of
digital commodity pursuant to subclause (I) through (VII) of
section 1a(16)(F)(iii).''; and
(2) by inserting after section 6d the following:
``SEC. 6E. PROHIBITION ON TRADING CERTAIN DIGITAL ASSETS.
``(a) In General.--A contract of sale of a digital
commodity or tradable asset (as defined in section 4x) shall
not be offered, solicited, traded, facilitated, executed,
cleared, reported, or otherwise dealt in on or subject to the
rules of a registered entity, or by any other entity
registered with the Commission, if the primary purpose of the
digital commodity or tradable asset is to be used to--
``(1) commit fraud or market manipulation;
``(2) further a scheme found in a final action by a court
of competent jurisdiction to be in violation of campaign
finance or government ethics laws; or
``(3) engage in any other conduct that would result in
abusive practices or be disruptive to market integrity.
``(b) Guidance on Fraudulent, Manipulative, or Disruptive
Tradable Assets.--The Commission may, after public notice and
comment, issue guidance establishing criteria for determining
if the primary purpose of a digital commodity or tradable
asset (as so defined) is to be used to commit fraud or market
manipulation, or engage in any other conduct that would
result in abusive practices or be disruptive to market
integrity.''.
SEC. 413. CONFLICT OF INTEREST RULEMAKING.
Not later than 360 days after the date of the enactment of
this Act, the Commodity Futures Trading Commission shall
issue rules establishing requirements for the identification,
mitigation, and resolution of conflicts of interest among and
across registered entities (within the meaning of the
Commodity Exchange Act) and persons required to be registered
with the Commission, including conflicts of interest related
to vertically integrated market structures and their varying
responsibilities.
SEC. 414. EFFECTIVE DATE.
Unless otherwise provided in this title, this title and the
amendments made by this title shall take effect 270 days
after the date of the enactment of this Act.
SEC. 415. SENSE OF CONGRESS.
It is the sense of Congress that nothing in this Act or any
amendment made by this Act should be interpreted to authorize
any entity to regulate any commodity, other than a digital
commodity, on any spot market.
TITLE V--INNOVATION AND TECHNOLOGY IMPROVEMENTS
SEC. 501. FINDINGS; SENSE OF CONGRESS.
(a) Findings.--Congress finds the following:
(1) Entrepreneurs and innovators are building and deploying
this next generation of the internet.
(2) Digital commodity networks represent a new way for
people to join together and cooperate with one another to
undertake certain activities.
(3) Digital commodities have the potential to be the
foundational building blocks of these systems, aligning the
economic incentive for individuals to cooperate with one
another to achieve a common purpose.
(4) The digital commodity ecosystem has the potential to
grow our economy and improve everyday lives of Americans by
facilitating collaboration through the use of technology to
manage activities, allocate resources, and facilitate
decision making.
(5) Blockchain systems and the digital commodities they
empower provide control, enhance transparency, reduce
transaction costs, and increase efficiency if proper
protections are put in place for investors, consumers, our
financial system, and our national security.
(6) Blockchain technology facilitates new types of network
participation which businesses in the United States may
utilize in innovative ways.
(7) Other digital commodity companies are setting up their
operations outside of the United
[[Page H3394]]
States, where countries are establishing frameworks to
embrace the potential of blockchain technology and digital
commodities and provide safeguards for consumers.
(8) Digital commodities, despite the purported anonymity,
provide law enforcement with an exceptional tracing tool to
identify illicit activity and bring criminals to justice.
(9) The Financial Services Committee of the House of
Representatives has held multiple hearings highlighting
various risks that digital commodities can pose to the
financial markets, consumers, and investors that must be
addressed as we seek to harness the benefits of these
innovations.
(b) Sense of Congress.--It is the sense of Congress that--
(1) the United States should seek to prioritize
understanding the potential opportunities of the next
generation of the internet;
(2) the United States should seek to foster advances in
technology that have robust evidence indicating they can
improve our financial system and create more fair and
equitable access to financial services for everyday Americans
while protecting our financial system, investors, and
consumers;
(3) the United States must support the responsible
development of digital commodities and the underlying
technology in the United States or risk the shifting of the
development of such assets and technology outside of the
United States, to less regulated countries;
(4) Congress should consult with public and private sector
stakeholders to understand how to enact a functional
framework tailored to the specific risks and unique benefits
of different digital commodity-related activities,
distributed ledger technology, distributed networks, and
mature blockchain systems;
(5) Congress should enact a functional framework tailored
to the specific risks of different digital commodity-related
activities and unique benefits of distributed ledger
technology, distributed networks, and mature blockchain
systems; and
(6) consumers and market participants will benefit from a
framework for digital commodities consistent with
longstanding investor protections in securities and
commodities markets, yet tailored to the unique benefits and
risks of the digital commodity ecosystem.
SEC. 502. STRATEGIC HUB FOR INNOVATION AND FINANCIAL
TECHNOLOGY.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
``(k) Strategic Hub for Innovation and Financial
Technology.--
``(1) Establishment.--Not later than 180 days after the
date of the enactment of this subsection, the Securities and
Exchange Commission shall establish a committee to be known
as the Strategic Hub for Innovation and Financial Technology
(referred to in this subsection as the `FinHub') to support
engagement on emerging technologies in the financial sector.
``(2) Members.--The composition of FinHub shall be
determined by the Commission, drawing from relevant divisions
as appropriate, including the Division of Trading and
Markets, Division of Corporate Finance, and Division of
Investment Management.
``(3) Responsibilities.--FinHub shall--
``(A) serve as a resource for the Commission on emerging
financial technology advancements;
``(B) engage with market participants working on emerging
financial technologies; and
``(C) facilitate communication between the Commission and
businesses working in emerging financial technology fields
with information on the Commission, its rules, and
regulations.
``(4) Report to the commission.--
``(A) In general.--Not later than October 31 of each year
after 2025, FinHub shall provide an annual summary of its
engagement activities to the Commission, which shall be
included in the Commission's annual report to Congress.
``(B) Confidentiality.--Each report submitted under this
paragraph shall not contain confidential information.''.
SEC. 503. CODIFICATION OF LABCFTC.
(a) In General.--Section 18 of the Commodity Exchange Act
(7 U.S.C. 22) is amended by adding at the end the following:
``(c) LabCFTC.--
``(1) Establishment.--There is established in the
Commission LabCFTC.
``(2) Purpose.--The purposes of LabCFTC are to--
``(A) promote responsible financial technology innovation
and fair competition for the benefit of the American public;
``(B) serve as an information platform to inform the
Commission about new financial technology innovation; and
``(C) provide outreach to financial technology innovators
to discuss their innovations and the regulatory framework
established by this Act and the regulations promulgated
thereunder.
``(3) Director.--LabCFTC shall have a Director, who shall
be appointed by the Commission and serve at the pleasure of
the Commission. Notwithstanding section 2(a)(6)(A), the
Director shall report directly to the Commission and perform
such functions and duties as the Commission may prescribe.
``(4) Duties.--LabCFTC shall--
``(A) advise the Commission with respect to rulemakings or
other agency or staff action regarding financial technology;
``(B) provide internal education and training to the
Commission regarding financial technology;
``(C) advise the Commission regarding financial technology
that would bolster the Commission's oversight functions;
``(D) engage with academia, students, and professionals on
financial technology issues, ideas, and technology relevant
to activities under this Act;
``(E) provide persons working in emerging technology fields
with information on the Commission, its rules and
regulations, and the role of a registered futures
association; and
``(F) encourage persons working in emerging technology
fields to engage with the Commission and obtain feedback from
the Commission on potential regulatory issues.
``(5) Report to congress.--
``(A) In general.--Not later than October 31 of each year
after 2025, LabCFTC shall submit to the Committee on
Agriculture of the House of Representatives and the Committee
on Agriculture, Nutrition, and Forestry of the Senate a
report on its activities.
``(B) Contents.--Each report required under paragraph (1)
shall include--
``(i) the total number of persons that met with LabCFTC;
``(ii) a summary of general issues discussed during
meetings with the person;
``(iii) information on steps LabCFTC has taken to improve
Commission services, including responsiveness to the concerns
of persons;
``(iv) recommendations made to the Commission with respect
to the regulations, guidance, and orders of the Commission
and such legislative actions as may be appropriate; and
``(v) any other information determined appropriate by the
Director of LabCFTC.
``(C) Confidentiality.--A report under paragraph (A) shall
abide by the confidentiality requirements in section 8.
``(6) Records and engagement.--The Commission shall--
``(A) maintain systems of records to track engagements with
the public through LabCFTC;
``(B) store communications and materials received in
connection with any such engagement in accordance with
Commission policies and procedures on data retention and
confidentiality; and
``(C) take reasonable steps to protect any confidential or
proprietary information received through LabCFTC
engagement.''.
(b) Conforming Amendments.--Section 2(a)(6)(A) of such Act
(7 U.S.C. 2(a)(6)(A)) is amended--
(1) by striking ``paragraph and in'' and inserting
``paragraph,''; and
(2) by inserting ``and section 18(c)(3),'' before ``the
executive''.
(c) Effective Date.--The Commodity Futures Trading
Commission shall implement the amendments made by this
section (including complying with section 18(c)(7) of the
Commodity Exchange Act) within 180 days after the date of the
enactment of this Act.
SEC. 504. STUDY ON DECENTRALIZED FINANCE.
(a) In General.--The Commodity Futures Trading Commission,
the Securities and Exchange Commission, and the Secretary of
the Treasury shall jointly carry out a study on decentralized
finance that analyzes--
(1) the nature, size, role, and use of decentralized
finance blockchain applications;
(2) the operation of blockchain applications that comprise
decentralized finance;
(3) the interoperability of blockchain applications and
other blockchain systems;
(4) the interoperability of blockchain applications and
software-based systems, including websites and wallets;
(5) the decentralized governance systems through which
blockchain applications may be developed, published,
constituted, administered, maintained, or otherwise
distributed, including--
(A) whether the systems enhance or detract from--
(i) the decentralization of the decentralized finance; and
(ii) the inherent benefits and risks of the decentralized
governance system; and
(B) any procedures, requirements, or best practices that
would mitigate the risks identified in subparagraph (A)(ii);
(6) the benefits of decentralized finance, including--
(A) operational resilience and availability of blockchain
systems;
(B) interoperability of blockchain systems;
(C) market competition and innovation;
(D) transaction efficiency;
(E) transparency and traceability of transactions; and
(F) disintermediation;
(7) the risks of decentralized finance, including--
(A) pseudonymity of users and transactions;
(B) disintermediation; and
(C) cybersecurity vulnerabilities;
(8) the extent to which decentralized finance has
integrated with the traditional financial markets and any
potential risks or improvements to the stability of the
markets;
(9) how the levels of illicit activity in decentralized
finance compare with the levels of illicit activity in
traditional financial markets;
(10) methods for addressing illicit activity in
decentralized finance and traditional markets that are
tailored to the unique attributes of each;
(11) how decentralized finance may increase the
accessibility of cross-border transactions; and
(12) the feasibility of embedding self-executing compliance
and risk controls into decentralized finance.
(b) Consultation.--In carrying out the study required under
subsection (a), the Commodity Futures Trading Commission and
the Securities and Exchange Commission shall consult with the
Secretary of the Treasury on the factors described under
paragraphs (7) through (10) of subsection (a).
(c) Report.--Not later than 1 year after the date of
enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly submit to the relevant congressional committees a
report that includes the results of the study required by
subsection (a).
[[Page H3395]]
(d) GAO Study.--The Comptroller General of the United
States shall--
(1) carry out a study on decentralized finance that
analyzes the information described under paragraphs (1)
through (12) of subsection (a); and
(2) not later than 1 year after the date of enactment of
this Act, submit to the relevant congressional committees a
report that includes the results of the study required by
paragraph (1).
(e) Definitions.--In this section:
(1) Decentralized finance.--
(A) In general.--The term ``decentralized finance'' means
blockchain applications (including decentralized finance
trading protocols and related decentralized finance messaging
systems) that allow users to engage in financial transactions
in a self-directed manner so that a third-party intermediary
does not effectuate the transactions or take custody of
digital commodities of a user during any part of the
transactions.
(B) Relationship to excluded activities.--The term
``decentralized finance'' shall not be interpreted to limit
or exclude any activity from the activities described in
section 15I(a) of the Securities Exchange Act of 1934 or
section 4v(a) of the Commodity Exchange Act.
(2) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committees on Financial Services and Agriculture of
the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban Affairs
and Agriculture, Nutrition, and Forestry of the Senate.
SEC. 505. STUDY ON NON-FUNGIBLE TOKENS.
(a) In General.--The Comptroller General of the United
States shall carry out a study of non-fungible tokens that
analyzes--
(1) the nature, size, role, purpose, and use of non-
fungible tokens;
(2) the similarities and differences between non-fungible
tokens and other digital commodities, including digital
commodities and permitted payment stablecoins, and how the
markets for those digital commodities intersect with each
other;
(3) how non-fungible tokens are minted by issuers and
subsequently administered to purchasers;
(4) how non-fungible tokens are stored after being
purchased by a consumer;
(5) the interoperability of non-fungible tokens between
different blockchain systems;
(6) the scalability of different non-fungible tokens
marketplaces;
(7) the benefits of non-fungible tokens, including
verifiable digital ownership;
(8) the risks of non-fungible tokens, including--
(A) intellectual property rights;
(B) cybersecurity risks; and
(C) market risks;
(9) whether and how non-fungible tokens have integrated
with traditional marketplaces, including those for music,
real estate, gaming, events, and travel;
(10) whether and how non-fungible tokens can be used to
facilitate commerce or other activities through the
representation of documents, identification, contracts,
licenses, and other commercial, government, or personal
records;
(11) any potential risks to traditional markets from such
integration; and
(12) the levels and types of illicit activity in non-
fungible tokens markets.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Comptroller General, shall make
publicly available a report that includes the results of the
study required by subsection (a).
SEC. 506. STUDY ON EXPANDING FINANCIAL LITERACY AMONGST
DIGITAL COMMODITY HOLDERS.
(a) In General.--The Commodity Futures Trading Commission
with the Securities and Exchange Commission shall jointly
conduct a study to identify--
(1) the existing level of financial literacy among retail
digital commodity holders, including subgroups of investors
identified by the Commodity Futures Trading Commission with
the Securities and Exchange Commission;
(2) methods to improve the timing, content, and format of
financial literacy materials regarding digital commodities
provided by the Commodity Futures Trading Commission and the
Securities and Exchange Commission;
(3) methods to improve coordination between the Securities
and Exchange Commission and the Commodity Futures Trading
Commission with other agencies, including the Financial
Literacy and Education Commission as well as nonprofit
organizations and State and local jurisdictions, to better
disseminate financial literacy materials;
(4) the efficacy of current financial literacy efforts with
a focus on rural communities and communities with majority
minority populations;
(5) the most useful and understandable relevant
information, including clear disclosures, that retail digital
commodity holders need to make informed financial decisions
before engaging with or purchasing a digital commodity or
service that is typically sold to retail investors of digital
commodities;
(6) the most effective public-private partnerships in
providing financial literacy regarding digital commodities to
consumers;
(7) the most relevant metrics to measure successful
improvement of the financial literacy of an individual after
engaging with financial literacy efforts; and
(8) in consultation with the Financial Literacy and
Education Commission, a strategy (including to the extent
practicable, measurable goals and objectives) to increase
financial literacy of investors regarding digital
commodities.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly submit a written report on the study required by
subsection (a) to the Committees on Financial Services and on
Agriculture of the House of Representatives and the
Committees on Banking, Housing, and Urban Affairs and on
Agriculture, Nutrition, and Forestry of the Senate.
SEC. 507. STUDY ON FINANCIAL MARKET INFRASTRUCTURE
IMPROVEMENTS.
(a) In General.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly
conduct a study to assess whether additional guidance or
rules are necessary to facilitate the development of
tokenized securities and derivatives products, and to the
extent such guidance or rules would foster the development of
fair and orderly financial markets, be necessary or
appropriate in the public interest, and be consistent with
the protection of investors and customers.
(b) Report.--
(1) Time limit.--Not later than 1 year after the date of
enactment of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
jointly submit to the relevant congressional committees a
report that includes the results of the study required by
subsection (a).
(2) Relevant congressional committees defined.--In this
section, the term ``relevant congressional committees''
means--
(A) the Committees on Financial Services and on Agriculture
of the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban Affairs
and on Agriculture, Nutrition, and Forestry of the Senate.
SEC. 508. STUDY ON BLOCKCHAIN IN PAYMENTS.
(a) Study Required.--The Secretary of the Treasury shall
conduct a study on the potential use of blockchain technology
by the domestic private sector to address--
(1) fraud in payments;
(2) transaction costs and transaction times;
(3) automated payments; and
(4) efficiency in commercial transactions.
(b) Report to Congress.--Not later than one year after the
date of enactment of this Act, the Secretary shall submit a
report to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate that summarizes the findings of
the study required under subsection (a).
(c) Rule of Construction.--Nothing in this section shall be
construed to mandate the use of blockchain technology by any
public or private entity.
SEC. 509. STUDY ON ILLICIT USE OF DIGITAL ASSETS.
(a) In General.--One year after the date of the enactment
of this Act, the Secretary of the Treasury, in consultation
with the Securities and Exchange Commission and the Commodity
Futures Trading Commission, shall conduct a comprehensive
review of how Foreign Terrorist Organizations and
Transnational Criminal Syndicates utilize digital assets in
connection with illicit activities.
(b) Report.--Not later than 180 days after completing the
review under subsection (a), the Secretary of the Treasury
shall issue a report to the Committees on Agriculture and on
Financial Services of the House of Representatives and the
Committees on Agriculture, Nutrition, and Forestry and on
Banking, Housing, and Urban Affairs of the Senate on the
findings of the Secretary, including--
(1) an assessment of how Foreign Terrorist Organizations
and Transnational Criminal Syndicates utilize digital assets
in connection with illicit activities; and
(2) recommendations to assist the Securities and Exchange
Commission and the Commodity Futures Trading Commission in
strengthening compliance and enforcement of digital assets-
related entities registered with their respective agencies.
SEC. 510. GAO STUDY ON CERTAIN CENTRALIZED INTERMEDIARIES
THAT ARE PRIMARILY LOCATED IN FOREIGN
JURISDICTIONS.
(a) In General.--The Comptroller General of the United
States, in consultation with the Secretary of the Treasury,
shall conduct a study to--
(1) assess the risks posed by 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
(2) provide any regulatory or legislative recommendations
to address these risks under paragraph (1).
(b) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall issue a
report to Congress containing all findings and determinations
made in carrying out the study required under subsection (a).
SEC. 511. STUDIES ON FOREIGN ADVERSARY PARTICIPATION.
(a) In General.--The Secretary of the Treasury, in
consultation with the Commodity Futures Trading Commission
and the Securities and Exchange Commission, shall, not later
than 1 year after date of the enactment of this section,
conduct a study and submit a report to the relevant
congressional committees that--
(1) identifies any digital commodity registrants which are
owned by governments of foreign adversaries;
(2) determines whether any governments of foreign
adversaries are collecting trading data about United States
persons in the digital commodity markets; and
(3) evaluates whether any proprietary intellectual property
of digital commodity registrants is being misused or stolen
by any governments of foreign adversaries.
[[Page H3396]]
(b) GAO Study and Report.--
(1) In general.--The Comptroller General shall, not later
than 1 year after date of the enactment of this section,
conduct a study and submit a report to the relevant
congressional committees that--
(A) identifies any digital commodity registrants which are
owned by governments of foreign adversaries;
(B) determines whether any governments of foreign
adversaries are collecting trading data about United States
persons in the digital commodity markets; and
(C) evaluates whether any proprietary intellectual property
of digital commodity registrants is being misused or stolen
by any governments of foreign adversaries.
(c) Definitions.--In this section:
(1) Digital commodity registrant.--The term ``digital
commodity registrant'' means any person required to register
as a digital commodity exchange, digital commodity broker, or
digital commodity dealer under the Commodity Exchange Act.
(2) Foreign adversaries.--The term ``foreign adversaries''
means the foreign governments and foreign non-government
persons determined by the Secretary of Commerce to be foreign
adversaries under section 7.4(a) of title 15, Code of Federal
Regulations.
(3) Relevant congressional committees.--The term ``relevant
congressional committees'' means--
(A) the Committees on Financial Services and Agriculture of
the House of Representatives; and
(B) the Committees on Banking, Housing, and Urban Affairs
and Agriculture, Nutrition, and Forestry of the Senate.
SEC. 512. CONFORMING AMENDMENTS.
The GENIUS Act is amended--
(1) in section 2, by amending paragraph (7) to read as
follows:
``(7) Digital asset service provider.--The term `digital
asset service provider' means any entity registered or
required to be registered with the Securities and Exchange
Commission or the Commodity Futures Trading Commission.'';
(2) in section 4(a)--
(A) by amending paragraph (3) to read as follows:
``(3) Monthly certification; examination of reports by
registered public accounting firm.--
``(A) In general.--A permitted payment stablecoin issuer
shall, each month, have the information disclosed in the
previous month-end report required under paragraph (1)(C)
examined by a registered public accounting firm and such
examination shall be performed in accordance with standards
for attestation engagements issued or adopted by the primary
Federal payment stablecoin regulator or, in the case of a
State qualified payment stablecoin issuer, the State payment
stablecoin regulator.
``(B) Certification.--Each month, the Chief Executive
Officer and Chief Financial Officer of a permitted payment
stablecoin issuer shall submit to, as applicable, the primary
Federal payment stablecoin regulator or, in the case of a
State qualified payment stablecoin issuer, the State payment
stablecoin regulator, a certification that, based on such
officers' knowledge, the previous monthly report required
under paragraph (1)(C)--
``(i) does not contain any untrue statement of material
fact or omit to state a material fact necessary in order to
make the statements made, in light of the circumstances under
which such statements were made, not misleading; and
``(ii) fairly presented in all material respects the
information required under paragraph (1)(C) for the period
presented in such report.
``(C) Criminal penalty.--Any person who submits a
certification required under subparagraph (B) knowing that
such certification is false shall be subject to the same
criminal penalties as those set forth under section 1350(c)
of title 18, United States Code.
``(D) Internal controls over permitted payment stablecoin
issuer's requirements.--
``(i) In general.--Management of a permitted payment
stablecoin issuer shall establish and maintain an adequate
internal control structure and procedures for the
requirements under this paragraph and paragraphs (1) and (2)
in accordance with a framework determined acceptable by the
primary Federal payment stablecoin regulator or, in the case
of a State qualified payment stablecoin issuer, the State
payment stablecoin regulator.
``(ii) Attestation report.--A permitted payment stablecoin
issuer shall obtain an annual attestation report by an
independent registered public accounting firm attesting to
management's assertions concerning the effectiveness of the
internal control structure and procedures for compliance with
the requirements described in this paragraph and paragraphs
(1) and (2). Such attestation shall be made in accordance
with standards for attestation engagements issued or adopted
by the primary Federal payment stablecoin regulator or, in
the case of a State qualified payment stablecoin issuer, the
State payment stablecoin regulator.''; and
(B) by amending paragraph (12) to read as follows:
``(12) Non-financial companies.--
``(A) Prohibition on non-financial company ownership.--It
shall be unlawful for a company that derives a majority of
its revenues from activities that are not financial
activities to retain or acquire control of a nonbank entity
that is--
``(i) a Federal qualified payment stablecoin issuer; or
``(ii) a State qualified payment stablecoin issuer.
``(B) Financial activities defined.--
``(i) In general.--In this paragraph, the term `financial
activities' means--
``(I) a financial activity, within the meaning of section
4(k) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k));
``(II) issuing, redeeming, providing custodial or
safekeeping services for, buying, selling, making a market
in, or managing a reserve for payment stablecoins;
``(III) providing electronic wallet services for payment
stablecoins; or
``(IV) an activity determined by the Board to be a
financial activity pursuant to clause (ii).
``(ii) Establishing additional financial activities.--Not
later than 180 days after the date of enactment of the
CLARITY Act of 2025, the Board, in consultation with the
Secretary of the Treasury and the Comptroller, shall issue
rules, consistent with the purposes of this Act, to
establish--
``(I) a list of additional activities that are financial
activities for purposes of clause (i), including applicable
digital asset activities that are financial activities; and
``(II) a streamlined procedure for a nonbank entity to
submit an activity to the Board for purposes of the Board
determining whether such activity should be added to the list
of additional activities that are financial activities for
purposes of clause (i).''; and
(3) by adding at the end the following:
``SEC. 21. COMMODITY-BACKED PAYMENT STABLECOINS.
``(a) Rule of Construction.--Nothing in this Act shall be
construed to prohibit or limit a commodity-backed payment
stablecoin issuer from issuing a commodity-backed payment
stablecoin in accordance with regulations established by a
State commodity-backed payment stablecoin regulator.
``(b) Preservation of Federal Authority.--Nothing in this
section shall be construed to alter or limit the jurisdiction
of the Commodity Futures Trading Commission over any matter
within the Commission's authority under applicable law.
``(c) Definitions.--For purposes of this section:
``(1) Commodity-backed payment stablecoin.--The term
`commodity-backed payment stablecoin' means a digital asset--
``(A) that is, or is designed to be, used as a means of
payment or settlement;
``(B) that is denominated in a highly liquid, publicly
traded physical commodity, such as gold;
``(C) the issuer of which is obligated to--
``(i) convert, redeem, or repurchase for a fixed amount of
the denominated highly liquid, publicly traded physical
commodity; and
``(ii) custody or cause to be custodied, for the benefit of
the holders of the payment stablecoin, an amount of the
physical commodity equal to or greater than the total amount
of outstanding payment stablecoins, for the purpose of
converting, redeeming, or repurchasing the digital asset; and
``(D) that is not--
``(i) a security issued by--
``(I) an investment company registered under section 8(a)
of the Investment Company Act of 1940 (15 U.S.C. 80a-8(a));
or
``(II) a person that would be an investment company under
the Investment Company Act of 1940 but for paragraphs (1) and
(7) of section 3(c) of that Act (15 U.S.C. 80a-3(c));
``(ii) a deposit (as defined under section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813)), regardless of the
technology used to record such deposit;
``(iii) an account (as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752)), regardless of the
technology used to record such account; or
``(iv) an interest or participation in a commodity pool (as
defined in section 1a(10) of the Commodity Exchange Act (7
U.S.C. 1a)).
``(2) Commodity-backed payment stablecoin issuer.--The term
`commodity-backed payment stablecoin issuer' means--
``(A) an entity that issues a commodity-backed payment
stablecoin; and
``(B) an entity that is approved to issue such commodity-
backed payment stablecoins by a State commodity-backed
payment stablecoin regulator.
``(3) Physical commodity.--The term `physical commodity'
means any exempt commodity (as defined in section 1a(21) of
the Commodity Exchange Act (7 U.S.C. 1a)) which can be
physically delivered.
``(4) State commodity-backed payment stablecoin
regulator.--The term `State commodity-backed payment
stablecoin regulator' means a State agency that has primary
regulatory and supervisory authority over entities that issue
commodity-backed payment stablecoins in such State.
``SEC. 22. PROTECTION OF SELF-CUSTODY.
``(a) In General.--A United States individual shall retain
the right to--
``(1) maintain a hardware wallet or software wallet for the
purpose of facilitating the individual's own lawful custody
of digital assets; and
``(2) engage in direct, peer-to-peer transactions in
digital assets with another individual or entity for the
individual's own lawful purposes using a hardware wallet or
software wallet, if--
``(A) such other individual or entity is not a financial
institution (as defined in section 5312 of title 31, United
States Code); and
``(B) the transactions do not involve any property or
interests in property that are blocked pursuant to, or are
otherwise prohibited by, United States sanctions.
``(b) Application.--This section--
``(1) applies solely to personal use by individuals; and
``(2) does not apply to individuals acting in a custodial
or fiduciary capacity for others.
``(c) Rule of Construction.--Nothing in this section shall
be construed to limit the authority of the Secretary of the
Treasury, the Securities and Exchange Commission, the
Commodity Futures Trading Commission, or the primary Federal
payment stablecoin regulators to carry out
[[Page H3397]]
any enforcement action or special measure authorized under
applicable law, including--
``(1) the Bank Secrecy Act, section 9714 of the Combating
Russian Money Laundering Act (31 U.S.C. 5318A note), and
section 7213A of the Fentanyl Sanctions Act (21 U.S.C.
2313a); or
``(2) any other law relating to illicit finance, money
laundering, terrorism financing, or United States
sanctions.''.
The SPEAKER pro tempore. The bill shall be debatable for 1 hour,
equally divided among and controlled by the chair and ranking minority
member of the Committee on Agriculture or their respective designees,
and the chair and ranking minority member of the Committee on Financial
Services or their respective designees.
After 1 hour of debate, it shall be in order to consider the further
amendment printed in part C of House Report 119-199, if offered by the
Member designated in the report, which shall be considered read, shall
be separately debatable for the time specified in the report equally
divided and controlled by the proponent and an opponent, and shall not
be subject to a demand for a division of the question.
The gentleman from Pennsylvania (Mr. Thompson), the gentlewoman from
Minnesota (Ms. Craig), the gentleman from Arkansas (Mr. Hill) and the
gentlewoman from California (Ms. Waters) each will control 15 minutes.
The Chair recognizes the gentleman from Arkansas.
General Leave
Mr. HILL of Arkansas. 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 this bill in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Arkansas?
There was no objection.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may
consume.
I rise in strong support this morning of the CLARITY Act. We have
been here before, Mr. Speaker. Just last year, we passed landmark
legislation, FIT21, with an overwhelming bipartisan majority to apply
strong Federal standards to digital asset markets.
For more than 5 years, our committee has heard from dozens and dozens
of experts, held numerous roundtables and hearings with market
participants of all sizes in all segments of the market to learn more
about the emerging digital asset ecosystem.
We learned about the value proposition and relevant risks associated
with digital assets and the use of blockchain technology. We have heard
time and time again from market participants and regulators about the
need for clear regulatory guardrails.
We have talked about the need to fill those regulatory gaps that have
left millions participating in crypto markets vulnerable. In fact, Mr.
Speaker, both President Biden in his Executive Order 14067, and
President Trump in his Executive Order 14178, identified those market
regulatory gaps, asking Congress to act to fill those gaps.
In 2022, we certainly witnessed consumer harm when the Financial
Services Committee heard unprecedented testimony from an expert called
in to clean up the failed digital asset crypto firm FTX and the mess it
left behind. In his words, never had he seen such an utter failure in
corporate controls.
In its wake, then-Chairwoman Waters wisely stated: ``We need
legislative action to ensure that digital assets entities cannot
operate in the shadows outside of robust Federal oversight and clear
rules of the road.''
If we needed actions then, we certainly need it now. We risk history
repeating itself, and that is why we gather today on the House floor.
After years of bipartisan work and numerous iterations, this bill
would apply rigorous rules to digital asset firms, prohibiting
commingling of customer funds, and requiring capital recordkeeping and
conflict of interest mitigation standards.
Importantly, the bill recognizes that decentralized finance, or DeFi,
developers do not take custody of user assets nor do they control user
assets. Therefore, we should not treat them in the same way that we
treat centralized actors who do have custody and who do have control
over assets.
It is important to note that in an Agriculture Committee hearing, the
former general counsel of FTX USA himself testified: Had we the
regulatory structure provided for in CLARITY applied to FTX, its
story--and he goes on to say--would almost certainly have had a much
different ending.
Let's ensure that we learn from the past, Mr. Speaker, the digital
asset ecosystem is evolving at a remarkable pace, enabling real-time
settlement of peer-to-peer transactions, initiating a renaissance in
applied cryptography and laying the groundwork for the next generation
of the internet.
The United States has long had the most innovative financial and
technology sectors and the deepest and most liquid capital markets, but
while other jurisdictions are building frameworks for the future of
finance to be on-chain and digitally native, our great country, with
those great characteristics, is lagging.
For too long our digital asset regime has been the worst of both
worlds: regulation by enforcement, which has pushed good actors to
leave the United States, and the regulatory gaps that I talked about
identified in both President Biden and President Trump's executive
orders that have left consumers unprotected from the bad actors.
Now, today, we have an opportunity to reverse course and reestablish
the United States as the global hub for digital innovation. To do so,
we must close the regulatory gaps with commonsense rules.
{time} 0930
Mr. Speaker, the CLARITY Act does just that by leveraging the
expertise of our two market regulators, the Securities and Exchange
Commission and the Commodity Futures Trading Commission, to ensure
wraparound oversight of digital asset markets, from initial sales,
raising capital, to daily trading, it provides clarity for banks
engaging in this ecosystem.
As we said in the last Congress, Mr. Speaker, these rules need to be
fit for purpose for the digital ecosystem. All of us on this House
floor know that the status quo is simply unacceptable. We all know
American consumers and innovators deserve this clarity. They deserve
better. They deserve rules of the road.
The choice before us is whether to lead in the financial markets of
the future or watch the next FTX fail while we are left saying once
again: Well, we have been here before.
Mr. Speaker, I urge all my colleagues to join me on both sides of the
aisle and support the CLARITY Act. Let's fill these regulatory gaps
with the proper Federal oversight. Let's create a competitive digital
ecosystem. I support this bill, and I urge my colleagues to.
Mr. Speaker, I reserve the balance of my time.
Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, crypto week has been going so well, hasn't it? Mr.
Speaker, that is because bailing out billionaires is hard work.
I look at how hard Republicans worked to strip healthcare from 17
million Americans, shutter rural hospitals, and take food assistance
from 12 million people just to hand the richest 1 percent of Americans
a tax break they don't need. No one should be surprised that the
Republicans' next order of business is a billion-dollar handout to the
President himself.
In just 6 months, President Trump has enriched himself and his family
to the tune of $1.2 billion, and that is just the beginning.
President Trump used to call crypto a scam. In 2021, Trump said:
``Bitcoin, it just seems like a scam . . . I don't like it because it
is another currency competing against the dollar.''
Melania was actually the first to get involved in the crypto
ecosystem. In January 2022, she announced an auction of her non-
fungible token, or NFT, collection. Trump then followed suit in
December 2022, launching his own NFT collection, ditching his concerns
about crypto because he saw it as a way to pad his pockets.
During the campaign trail, Trump ramped up his crypto involvement. In
September 2024, he and his family launched World Liberty Financial, a
crypto trading platform. Days before the Inauguration, Trump launched
his memecoin which he later used to offer access to the White House to
the highest bidder, foreign or domestic.
His family's crypto empire hasn't stopped there. World Liberty
Financial launched a stablecoin called USD1.
[[Page H3398]]
Shortly after that, the Abu Dhabi-backed investment firm, MGX, bought
$2 billion worth of Trump's coin to make an investment in Binance.
Trump's family has also launched a bitcoin mining operation and
multiple crypto exchange-traded funds, or ETFs.
All of this comes at the same time that the Trump administration has
taken away the independence of the financial regulators like the
Securities and Exchange Commission.
He issued Executive Order 14255 which now requires all rules written
by the financial regulators to be reviewed and approved by the White
House budget office. This means this bill would hand over to the
President the ability to write the rules he wants to advance his crypto
operations.
Not only that, under the Trump administration, the SEC has said that
memecoins, stablecoins, and bitcoin mining all do not fall under their
oversight. Can my colleagues imagine that?
Do these assets sound familiar? Oh, yes, they do because these are
all ventures that Trump and his family are pursuing now with no
oversight by Wall Street's cop on the beat--that is the SEC.
Surely, each of my colleagues can see how this is a blatant conflict
of interest. Democrats do. It is why I introduced the Stop Trump and
Crypto Act to ban the President, Vice President, and all the Members of
Congress from crypto corruption.
If we do not ban elected officials, including the President or Vice
President, from this crypto corruption in H.R. 3633, each of us will be
complicit. Yet, even if we included language to stop the crypto con,
this bill, which should be called the calamity act, is bad public
policy. That is plain and simple.
The bill would lead to increased investor harm, plant the seeds for
the next financial crisis, and endanger our national security.
Just last week, the former chairman of the Commodity Futures Trading
Commission warned that this bill would allow traditional companies,
like Apple or Google, to evade securities laws. They could walk away
from the disclosure, antifraud, liability, and corporate governance
protections that investors have relied on for 90 years. The bill blocks
our State regulators from protecting seniors against fraud in crypto.
Additionally, the calamity act does not address illicit finance and
other crimes commonly seen in the crypto space. It does not provide
nearly enough direction to agencies, which would be required to match
the level of financial crimes and noncompliance seen in the industry.
It also does not provide sufficient funds for Federal agencies to
examine and enforce these laws.
Mr. Speaker, for all of these reasons, I strongly, strongly oppose
this bill, and I reserve the balance of my time.
Mr. HILL of Arkansas. Mr. Speaker, I include in the Record the CBO
estimate for this bill.
ESTIMATED BUDGETARY EFFECTS OF H.R. 3633, THE CLARITY ACT OF 2025, AS POSTED ON THE WEBSITE OF THE HOUSE COMMITTEE ON RULES ON JULY 2, 2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
-------------------------------------------------------------------------------------------------------------
2025- 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2025-2030 2025-2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES IN DIRECT SPENDING
Estimated Budget Authority................ * 2 2 1 1 1 1 1 1 1 1 7 12
Estimated Outlays......................... * 1 2 1 1 1 1 1 1 1 1 6 11
INCREASES OR DECREASES (-) IN REVENUES
Estimated Revenues........................ * * * * 1 -4 * * * * 14 -3 11
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES
Effect on the Deficit..................... * 1 2 1 * 5 1 1 1 1 -13 9 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
AA*= between -$500,000 and $500,000.
CBO has not completed an estimate of the effects of the bill on spending subject to appropriation.
Basis of estimate: For this estimate, CBO assumes that the
legislation will be enacted in summer 2025.
Direct spending: The bill would require the Commodity
Futures Trading Commission (CFTC) to share information that
it collects from digital commodity exchanges with the Federal
Deposit Insurance Corporation (FDIC), the Financial Stability
Oversight Council (FSOC), the National Credit Union
Administration (NCUA), and the Office of the Comptroller of
the Currency (OCC), upon request. The bill also would require
those agencies to regulate additional entities that are
subject to federal anti-money-laundering rules and to issue
regulations that set capital requirements for agreements that
combine multiple financial transactions.
The expenditures of the FDIC, FSOC, NCUA, and OCC are
classified in the budget as direct spending. Both the NCUA
and the OCC collect fees from financial institutions to
offset their operating costs; those fees are recorded in the
budget as offsetting receipts (that is, as reductions in
direct spending). After accounting for fees collected by the
NCUA and OCC, CBO estimates that, on net, enacting H.R. 3633
would increase direct spending for those four agencies by $11
million over the 2025-2035 period.
Revenues: H.R. 3633 would require the CFTC to share
information with the Federal Reserve upon request. The bill
also would direct the Federal Reserve to regulate additional
entities that are subject to federal anti-money-laundering
regulations and to issue rules for the capital requirements
described above. CBO estimates that those activities would
cost the Federal Reserve $7 million over the 2025-2035
period. Costs incurred by the Federal Reserve reduce
remittances, which are recorded in the budget as revenues.
Changes in costs for the Federal Reserve banks have
historically resulted in changes to remittances during the
same year. However, since fiscal year 2023, the central bank
has recorded a deferred asset to account for accrued net
losses from expenses in excess of income. As a result,
remittances largely have been suspended. In CBO's
projections, remittances from the Federal Reserve will
generally be suspended until 2030, and until they resume,
most changes in costs incurred by the system will not be
recorded as changes in remittances.
The FSOC is authorized to assess fees on bank holding
companies and nonbank financial institutions; those fees are
recorded in the budget as revenues. CBO estimates that under
the bill the FSOC would collect $3 million in additional fees
over the 2025-2035 period to cover operating costs.
Finally, section 315 would reduce the size of the Federal
Reserve's surplus fund. CBO estimates that enacting that
provision would increase remittances to the Treasury by $15
million in 2035.
CBO estimates that enacting H.R. 3633 would increase
revenues by $11 million, on net, over the 2025-2035 period.
Spending subject to appropriation: In addition to effects
on direct spending and revenues as noted in the table, the
bill also contains provisions that would affect spending
subject to appropriation. CBO has not estimated those
effects.
Uncertainty: CBO did not estimate any budgetary effects
arising from changes to the banking system or financial
markets as a result of enacting H.R. 3633. Depending on their
individual design and extent of adoption, virtual currencies
could enhance the efficiency of the system, cause disruption,
or reduce bank deposits. Those effects are uncertain and,
given their potential range, CBO cannot currently estimate
their direction or magnitude.
Increase in long-term net direct spending and deficits: CBO
estimates that enacting H.R. 3633 would not increase net
direct spending by more than $2.5 billion in any of the four
consecutive 10-year periods beginning in 2036.
CBO estimates that enacting H.R. 3633 would not increase
on-budget deficits by more than $5 billion in any of the four
consecutive 10-year periods beginning in 2036.
Mandates: H.R. 3633 would impose private-sector and
intergovernmental mandates as defined in the Unfunded
Mandates Reform Act (UMRA). CBO estimates that the cost of
the mandates would exceed the private- sector threshold but
fall below the intergovernmental threshold established in
UMRA ($206 million and $103 million in 2025, respectively,
adjusted annually for inflation).
Private-Sector mandates: The bill would impose regulatory
requirements on some entities involved in digital commodities
and assets, such as large multinational businesses with
market capitalizations in the hundreds of billions of dollars
and with millions of U.S. consumers. Using publicly available
information and information from industry sources, CBO
estimates that the aggregate cost of the mandate would
greatly exceed the private-sector threshold established in
UMRA.
In addition, if federal financial regulators increase fees
to offset the costs associated
[[Page H3399]]
with implementing the bill, H.R. 3633 would increase the cost
of an existing mandate on private entities required to pay
those assessments. CBO estimates that the annual cost of the
mandate would be in the millions of dollars.
Intergovernmental mandates: The bill would expand existing
preemptions of state laws governing the registration of
digital assets as securities. Although it would limit the
application of state laws, H.R. 3633 would impose no duty on
states that would result in additional spending or loss of
revenue.
Phillip L. Swagel,
Director, Congressional Budget Office.
Mr. HILL of Arkansas. Mr. Speaker, I yield 2 minutes to the gentleman
from Wisconsin (Mr. Steil).
Mr. Speaker, the gentleman is an essential leader in our committee
and also the chairman of our Subcommittee on Digital Assets, Financial
Technology, and Artificial Intelligence.
Mr. STEIL. Mr. Speaker, I thank Chairman Hill for all of his hard
work on this.
Mr. Speaker, I rise in strong support of the CLARITY Act. I think two
things are clear. First, the digital asset and blockchain technology
are leading the next wave of financial innovation. We need to make sure
that innovation is occurring here in the United States of America.
Second, under the previous administration, the United States failed
to enact a regulatory framework that is aligned with the realities of
the technology and adequately protects consumers.
Today, the House has an opportunity to meaningfully improve the
status quo that for too long has been marred by uncertainty and
regulatory enforcement. The CLARITY Act establishes a workable,
forward-looking framework. The CLARITY Act provides and ensures that
markets operate with transparency, accountability, and strong consumer
protections.
Today, our laws leave digital asset developers guessing which
regulator has jurisdiction and what compliance even looks like.
{time} 0940
It is not only bad for business. It is bad for consumers and bad for
U.S. competitiveness.
Without action, we will continue to see innovation move overseas to
jurisdictions that are providing the legal clarity that we thus far in
the United States have failed to deliver.
Mr. Speaker, what we want is innovation in developing, not occurring
in boardrooms and law firms in the United States, but in basements and
dorm rooms.
Ensuring the United States leads the Web3 revolution isn't a partisan
issue. It is an American issue.
The CLARITY Act legislates in a thoughtful way in a rapidly evolving
space. The CLARITY Act protects consumers and fosters innovation.
Today, we can lead not by accident but by design. Let's send a
message that America intends to lead in the golden age of digital
assets.
Mr. Speaker, I support the CLARITY Act, and I encourage my colleagues
to vote ``yes.''
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentleman from
Massachusetts (Mr. Lynch), who is also the ranking member of the
Subcommittee on Digital Assets, Financial Technology, and Artificial
Intelligence.
Mr. LYNCH. Mr. Speaker, I thank the gentlewoman from California for
her leadership on this issue.
I rise in strong opposition to H.R. 3633, the so-called CLARITY Act.
I believe this misguided legislation will have devastating impacts on
our financial stability, national security, and investor protection.
While my Republican friends claim that this bill will regulate crypto
market structure, in reality, it eviscerates the longstanding history
of investor protections that have made our markets the envy of the
world.
Most importantly, this bill, this push for crypto, will not end well
for the U.S. taxpayer. This bill will lead to the next financial
crisis, and the largest crypto donors who wrote this bill will walk
away unharmed because the worst aspect of this bill is that Republicans
have repeatedly refused to include a single amendment preventing a
Federal taxpayer bailout of the crypto industry.
That is what this bill does.
Additionally, this bill includes zero provisions to prevent the
President, who has a $620-million conflict of interest, from continuing
his ability to accept emoluments from foreign governments like Abu
Dhabi.
Mr. Speaker, I urge my colleagues to vote ``no'' and protect the
American taxpayer.
Mr. HILL of Arkansas. Mr. Speaker, I yield 2 minutes to the gentleman
from Minnesota (Mr. Emmer), who is our majority whip and who has been
an absolute, essential early focus policymaker in the digital asset
space.
Mr. EMMER. Mr. Speaker, the United States stands at the forefront of
the next digital renaissance, a transformative shift toward a
decentralized peer-to-peer digital economy.
For many years, innovators and investors were forced to operate in a
legal gray zone while agencies jostled for regulatory superiority over
the digital asset ecosystem, leaving blockchain developers to pack up
and move abroad.
The CLARITY Act fixes this by creating regulatory guardrails tailored
to the unique attributes of blockchain technology while giving users
and developers the confidence to engage and innovate in this ecosystem.
Gone are the days of arbitrary enforcement actions and regulatory
turf wars that only hindered the development of this groundbreaking
technology and drove capital overseas.
This bill gives market participants the confidence to build, invest,
and grow right here in the United States of America.
We are proud to have the Securities Clarity Act included in this
legislation. This provision provides market certainty for innovators
and clear jurisdictional boundaries for regulators.
Subsequently, elements of the Blockchain Regulatory Certainty Act
were included, clarifying, once and for all, that digital asset
developers and service providers who do not custody consumer funds are
not considered money transmitters.
Importantly, the CLARITY Act will help further decentralize our
financial system so that Americans can forgo intermediaries and
transact directly with each other.
Having this choice will fundamentally transform the digital economy
and unlock new opportunities for innovators, investors, and consumers
around the globe.
Mr. Speaker, I thank Chairman Hill and Chairman Thompson for their
leadership and for working with us to include our two bills in the
CLARITY Act.
The United States has the opportunity to lead and deliver on
President Trump's promise to make America the crypto capital of the
world. We cannot and will not fail.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentleman from
Illinois (Mr. Casten), who is also the vice ranking member of the
Financial Services Committee.
Mr. CASTEN. Mr. Speaker, the only thing you need to know about the
CLARITY Act is that it is designed to destroy U.S. capital markets.
U.S. capital markets are the envy of the world because investors like
putting their money in them. They are the envy of the world because we
provide robust investor protections when people put their money in
them, because of the Securities and Exchange Commission. Yet, the
CLARITY Act would allow companies to raise up to $200 million over 4
years without any disclosure and without any transparency, just by
tokenizing their security.
Let's be clear. Putting a security on the blockchain doesn't make
investors safe. It might make money for the crypto industry. Mr.
Speaker, I know you all like that. It might make it possible for the
companies to temporarily raise more money from dumb investors because
they don't get that protection. If we stop protecting investors, then
why would investors put their money in the stock market? They will
abandon the U.S. to go to places with a better risk-reward.
I understand we have a lot of fraud and grift in the White House. I
understand Republicans are big fans of fraud and grift in the White
House, but we don't need any more.
Let's protect Americans' hard-earned savings. Let's protect markets
and not just make crypto bros richer. I urge a resounding hell no.
Mr. HILL of Arkansas. Mr. Speaker, I yield 1 minute to the gentleman
from Michigan (Mr. Huizenga), who is the
[[Page H3400]]
vice chairman of our full committee and who is a longtime advocate for
reform in the digital markets.
Mr. HUIZENGA. Mr. Speaker, I appreciate those remarks from the chair.
The digital asset ecosystem currently operates in a fragmented
regulatory environment that lends itself to significant challenges for
both businesses and, more importantly, investors.
The ambiguity in classifying a digital asset, either as a security or
a commodity, has led to confusion, legal uncertainty, and, ultimately,
consumer harm.
American innovation is a critical element in 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.
By passing a comprehensive market structure framework, responsible
actors will now have greater certainty and consumers greater protection
from bad actors.
This bill establishes a regulatory framework for digital assets that
aligns with our existing financial markets while accounting for the
unique characteristics of digital assets.
Mr. Speaker, our markets are the envy of the world. American
innovation is a critical element of job creation and economic
opportunity here in the United States. Congress must not cede its
responsibility.
Mr. Speaker, I urge all of my colleagues to support this important
legislation.
Ms. WATERS. Mr. Speaker, I yield 1\1/4\ minutes to the gentleman from
California (Mr. Sherman), who is also the ranking member of the
Subcommittee on Capital Markets.
Mr. SHERMAN. Mr. Speaker, I submitted many amendments to Rules, as
did other Democrats. They made only one in order. I will not be
offering it because in the absence of the other amendments, it is
really not useful.
This bill is an attack on working families, which is why the AFL-CIO
says no, and they are scoring it.
This bill prohibits Congress Members from sponsoring cryptocurrencies
because of the obvious corruption and conflict of interest, but it
allows the President to create electronic Monopoly money.
Who is buying? Abu Dhabi is buying $2 billion of Trump stablecoin
while the Chinese interests behind TikTok are buying $300 million worth
of Trump coin, and that is just what we know about. There is a lot we
don't know about because cryptocurrency literally means hidden money.
It allows for bailouts under section 13(3) of the Federal Reserve
Act. Jay Powell won't do it, but the next guy will.
Congress won't stop him because crypto spends more in super-PAC than
any other industry by far, five times more than the combination of Big
Oil and Big Pharma.
It allows for the purchase of bitcoin and Trump coin, and Trump has
announced that he is going to do just that with our tax dollars going
into his crypto.
The SPEAKER pro tempore. The time of the gentleman has expired.
Ms. WATERS. Mr. Speaker, I yield an additional 15 seconds to the
gentleman from California.
Mr. SHERMAN. Finally, this creates the perfect financial tool for
drug dealers and for tax evaders because every time a billionaire
cheats on his taxes, a member of the Freedom Caucus earns his wings.
Mr. HILL of Arkansas. Mr. Speaker, I yield 1 minute to the gentleman
from Ohio (Mr. Davidson), who is the chairman of our Subcommittee on
National Security, Illicit Finance, and International Financial
Institutions and a longtime policy advocate for reform in our digital
markets.
{time} 0950
Mr. DAVIDSON. Mr. Speaker, the ability to move payment or digital
tokens that represent other assets person to person, without a third
party or intermediary, across any space digitally at the speed of light
is part of the reason this industry was created.
What do those tokens represent? Either securities, commodities or
real world assets? We have needed a bright-line test since this market
began to decide who regulates them.
I introduced the first piece of legislation on this back in 2018
called the Token Taxonomy Act. Think of the harm that could have been
prevented if we had that bright-line test all this time.
The other essential component is self-custody, the ability to control
your own assets. You can't go person to person if you have to go
through an intermediary without a permission.
It does that. It does just what we need it to do, just like cash. We
finally have market structure in place with this bill. I hope the
Senate delivers the same structure soon, and we get the certainty the
markets need.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentlewoman from New
York (Ms. Velazquez), who is also the ranking member of the Small
Business Committee.
Ms. VELAZQUEZ. Mr. Speaker, I rise today in strong opposition to this
bill. It is ironic we are debating a bill called the CLARITY Act when
it offers no clarity on one of the biggest issues in crypto, the
blatant conflicts of interest inside our own government.
Since returning to office, President Trump has turned the Presidency
into a crypto cash machine. It is now estimated that crypto makes up
the majority of Donald Trump's net worth.
Foreign investors, some under Federal investigation, are pouring
millions into these ventures, buying access, influence, and favorable
treatment.
So I ask: What are we doing here?
With this bill, not only are we continuing to allow President Trump
to issue his cryptocurrency, but we are allowing him and his cronies to
be in charge of the regulators overseeing that venture and compromising
the stability of capital markets in our country.
Mr. Speaker, I urge my colleagues to vote ``no.''
Mr. HILL of Arkansas. Mr. Speaker, may I inquire as to the time
remaining.
The SPEAKER pro tempore. The gentleman from Arkansas has 2\1/2\
minutes remaining.
Mr. HILL of Arkansas. Mr. Speaker, I yield 1 minute to the gentleman
from Nebraska (Mr. Flood), the chair of our Subcommittee on Housing and
Insurance.
Mr. FLOOD. Mr. Speaker, I will be brief. It has been a longer wait
than expected, but I am excited that the CLARITY Act has finally made
it to the House floor for debate.
The CLARITY Act is not just about digital assets like bitcoin. This
bill will usher in a new age of blockchain innovation that will go well
beyond the tokens that we know well today.
Chris Dixon's book titled: ``Read Write Own'' talks about a future
where blockchain technology enables a new generation of the internet
which he terms ``Web 3.0.''
Technologies like NFTs can be used as tickets to events, identity
verification tools, and serve other real-world uses that will change
our digital economy.
I urge my colleagues to see the bigger picture. The vote today is not
just about cryptocurrency as we know it. It is about enabling the next
generation of innovation enabled by blockchain.
This is a good, bipartisan product that builds on years of work from
Chairman Hill, Subcommittee Chairman Steil, the Financial Services
Committee, and the Agriculture Committee.
Mr. Speaker, I urge my colleagues to support the bill.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentleman from
Illinois (Mr. Foster), who is also the ranking member of the
Subcommittee on Financial Institutions.
Mr. FOSTER. Mr. Speaker, I rise in opposition to the CLARITY Act,
which claims to bring digital assets under a regulatory umbrella but
fails in two major areas.
First, it fails because it has no KYC--know your customer--
requirements for self-hosted wallets. It allows anonymous trading on
DeFi exchanges and the dark web, which means there is no way to prevent
wash trading, front running, corruption, ransomware, extortion and
kidnapping payoffs, and all the parade of horribles that unregulated
crypto has unleashed upon the world.
This legislation simply applies a patina of regulation while
codifying loopholes that leave large parts of the industry, including
the President's own meme coin schemes, completely unregulated.
[[Page H3401]]
Secondly, the CLARITY Act also lacks the basic investor protections
present in the securities laws. For example, firms are not required to
serve the best interests of their investors or to separate critical
market functions and many other basic protections.
Now, I am not ideologically opposed to crypto, and both of these
flaws are fixable, but in CLARITY they have not been fixed.
Mr. Speaker, I oppose this bill, and I urge my colleagues to vote
``no.''
Mr. HILL of Arkansas. Mr. Speaker, I yield 1 minute to the gentleman
from Wisconsin (Mr. Fitzgerald).
Mr. FITZGERALD. Mr. Speaker, I rise today in support of the
bipartisan CLARITY Act, commonsense legislation that finally gives
digital asset markets the regulatory certainty they need to grow
responsibly right here in the United States.
For too long, innovators have been stuck in a regulatory gray zone
caught between agencies and overlapping authority and subject to
enforcement instead of clear rules.
The uncertainty has driven jobs, investment, and innovation offshore
while leaving American consumers exposed.
The CLARITY Act fixes this. It establishes clear, functional rules
for digital assets, drawing a bright line between the SEC and the CFTC
and creating strong, enforceable protections for consumers.
It ensures the digital assets developers and consumer-facing firms
play by the rules, disclosing who owns what, segregating customer
funds, and avoiding conflicts of interest.
It is long overdue, and I commend the chairmen for bringing this bill
to the floor today.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentlewoman from
Massachusetts (Ms. Pressley), an unapologetic leader for justice.
Ms. PRESSLEY. Mr. Speaker, I rise in vigorous opposition to the
CLARITY Act. This bill gives a green light to self-enriching crypto
schemes where officials at the highest levels of power, including in
the White House, have generated hundreds of billions of dollars in
personal profit.
We need legislation that stops financial abuse, not encourages it,
especially during a time when the SEC has dropped enforcement actions
against major crypto firms and undermined investor safety.
Across our country, millions of working families are battling rising
costs, our elders are targeted by financial scams, and investors are
trying to recover from volatile markets. Republicans are ignoring all
of that to prioritize the crypto industry's wish list.
To be clear, the people deserve crypto legislation that is fair,
transparent, and accountable, not a bill that opens the floodgates to
conflicts of interest and weakens investor protections.
The CLARITY Act fails that test. Republicans need some clarity all
right: moral and legislative. I agree with Ranking Member Waters that
this is really the calamity act.
Mr. Speaker, I urge my colleagues to oppose this bill.
Mr. HILL of Arkansas. Mr. Speaker, I yield myself the balance of my
time.
We are here today, Mr. Speaker, because of the exceptional work by
the House Financial Services Committee over a 5-year period, including
under the leadership of then-Chairwoman Maxine Waters and former
Chairman Patrick McHenry, gathering feedback from experts, looking at
market participants, analyzing the markets, and talking to regulators.
That is how we got the CLARITY Act on the floor today. It is built on
the backs of that hard work.
This Chamber passed a similar bill in the last Congress with
exceedingly strong, bipartisan support. Since then, the CLARITY Act has
only been further refined and strengthened in terms of legal certainty
and consumer protection.
This bill, Mr. Speaker, as we have demonstrated over that period of
time, would prevent consumer harm like FTX.
Mr. Speaker, I support the bill. I urge my colleagues to support the
bill, and I yield back the balance of my time.
Ms. WATERS. Mr. Speaker, may I inquire as to the time remaining.
The SPEAKER pro tempore. The gentlewoman from California has 2
minutes remaining.
Ms. WATERS. Mr. Speaker, I yield 1 minute to the gentlewoman from
California (Ms. Kamlager-Dove).
{time} 1000
Ms. KAMLAGER-DOVE. Mr. Speaker, I rise in opposition to the so-called
CLARITY Act.
Let me be clear: I support the growth of digital assets, blockchain
innovation, and the promise that crypto holds for expanding financial
access and economic justice, but this bill is not clarity. It is
confusion cloaked in legislation. It picks winners and losers, and the
biggest winner is the President of the United States.
Why is that office exempt from all of the rules? It undermines the
SEC's ability to protect consumers and fast-tracks deregulatory
loopholes without addressing core issues like transparency, fraud
prevention, or equity and access. The SEC doesn't even like this bill.
We need comprehensive, thoughtful regulation, not rushed frameworks
driven by the people who will gain the most who ignore the voices of
everyday investors, builders, and communities left behind.
Crypto deserves rules that are smart, fair, and future-facing. The
CLARITY Act is none of these things because, if it was, Republicans
would have had the votes much earlier.
Mr. Speaker, I urge my colleagues to vote ``no.''
Ms. WATERS. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, let me reiterate: A vote for H.R. 3633 is a vote to give
Trump the pen to write the rules that would put more money into his
family's pockets. A vote for H.R. 3633 is a vote for increased investor
harm. A vote for H.R. 3633 is a vote to plant the seeds for the next
financial crisis. A vote for H.R. 3633 is a vote to endanger our
national security.
That is why I am voting ``no'' on H.R. 3633, the calamity act, and I
urge all Members to not give a vote to Trump to own crypto and not to
give a vote to the Vice President. They are the only two elected
officials in this bill who can own crypto businesses.
I want to see all of the Cabinet, the President, the Vice President,
and all Members of Congress unable to own crypto businesses.
Mr. Speaker, I urge all Members to vote no, no, no, on this bill, and
I yield back the balance of my time.
The SPEAKER pro tempore. All time for Financial Services debate has
expired.
The gentleman from Pennsylvania (Mr. Thompson) and the gentlewoman
from Minnesota (Ms. Craig) each will control 15 minutes.
The Chair recognizes the gentleman from Pennsylvania.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I yield myself such time
as I may consume.
Mr. Speaker, I am incredibly proud today to stand before you to share
my support for the CLARITY Act. This is legislation that we have been
working on in the Agriculture Committee for 7 years. This is an
improvement over the legislation that fulfilled the very same purpose
of what we are addressing today that passed last Congress with over 300
votes, including 71 Democrats, and it was a great bipartisan bill. This
is an improvement on that bill.
The CLARITY Act is about three related ideas: certainty, protection,
and innovation. I will talk about why each of these ideas is important.
First, the CLARITY Act provides regulatory certainty for all corners
of the digital asset ecosystem, including issuers; exchanges;
intermediaries; builders; software developers; and, most importantly,
users of digital assets.
This regulatory certainty means that all parts of the ecosystem can
engage with digital assets with confidence. It promotes healthy markets
by establishing commonsense requirements to protect consumers. Those
are all built on the existing requirements in the financial services
markets.
Secondly, the CLARITY Act protects good actors from government
overreach. By establishing clear rules, we limit the government's
ability to subjectively enforce vague statutes. These protections are
important to those entities like exchanges, brokers, and dealers, who
we require to register. Yet, in many cases, they are more important to
entities which Congress is not seeking to register.
[[Page H3402]]
Third, and most importantly, the CLARITY Act supports innovation
across the economy, not just the crypto economy.
At the House Agriculture Committee, we heard testimony from numerous
stakeholders about innovative ways in which developers and
entrepreneurs are leveraging blockchain to build projects and services
using blockchains and digital assets.
The certainty and protections provided through the CLARITY Act will
lead to the development of a new generation of services, tools, and
systems. I am excited for that future to happen here in the United
States of America.
Mr. Speaker, Congress has a historic opportunity here today to act.
With the CLARITY Act, we can pass legislation that protects consumers
and ensures that the United States remains at the forefront of
technological innovation. These are not mutually exclusive goals. They
are mutually reinforcing goals.
By supporting the CLARITY Act, we can create a safer, more
transparent, and more accessible environment for digital assets.
Mr. Speaker, I urge all of my colleagues to support this bill, and I
reserve the balance of my time.
Ms. CRAIG. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today on behalf of nearly 44 million American
consumers who have invested in, traded, or used digital assets. That is
one in five Americans. The public interest in these markets is already
here, and it is not going away.
Under the status quo, there is a gap in regulation for the digital
commodity asset market. Our work here today could begin to provide the
protections that American investors are accustomed to in traditional
financial markets that are regulated by the CFTC.
Regardless of whether Congress acts, these markets will continue to
grow. The only question is whether we will begin the hard work of
developing regulation or refuse to begin.
The CLARITY Act would put consumer protections in place for the first
time for this industry. Consumers will finally be protected by the same
sort of guardrails that protect investors in other sectors of the
economy: segregation of customer deposits, consumer disclosures,
mandatory recordkeeping, and examination by regulators. We do not want
another FTX.
The 2022 collapse of the world's third largest cryptocurrency
exchange wiped out an estimated $8 billion to $10 billion in value,
leaving American consumers holding the bag. The CLARITY Act would have
largely mitigated or avoided this crisis entirely.
Former Biden administration CFTC Chairman Russ Behnam testified
yesterday before the Senate Agriculture Committee:
`` . . . inaction will only result in greater risk to our financial
markets and investors, through lack of market transparency, fraud,
market manipulation, corruption, and conflicts of interest.''
That is lack of action.
Mr. Speaker, let me address the elephant in the room: the First
Family's involvement with digital assets and personally profiting from
them.
It has rightfully raised questions of impropriety and alarmed
government ethics watchdogs. The First Family's personal financial
involvement in other sectors, such as telecoms, should ring alarm
bells, as well, loud and clear as it comes to ethics in our country.
There is a time and place for holding the powerful accountable, and
that must happen. We should address executive branch corruption
independently, and it should apply to all sectors.
Today, we must focus on regulation and protections for consumers
because, today, one in five Americans, and growing, lack those
protections and lack any guardrails. It is our job to start putting
them in place.
Is this bill perfect? No. Can it be improved upon? Absolutely, and I
encourage my Senate colleagues to keep working on those outstanding
issues.
This bill deserves our support, and I urge my colleagues to vote
``yes.''
Mr. Speaker, I reserve the balance of my time.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I was remiss with my
opening comments not to thank my Agriculture Committee partner, Ranking
Member Angie Craig, for her leadership and for working together with me
on this issue, but also our Financial Services Committee Chair French
Hill; my good friend, Don Davis; Whip Emmer; Bryan Steil, and so many
more. There was just such a strong bipartisan leadership partner team.
Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Iowa (Mr.
Feenstra), a member of the House Agriculture Committee.
Mr. FEENSTRA. Mr. Speaker, I thank Chairman Thompson for bringing
this bill forward. It is an amazing bill.
Mr. Speaker, I rise today in strong support of the CLARITY Act. The
increasing adoption of digital assets and the use of blockchain
technologies can grow our economy and provide American families with a
new opportunity to grow wealth.
{time} 1010
However, under President Biden, digital assets were attacked, which
crushed innovation and created uncertainty for businesses.
Fortunately, President Trump is working to make America the crypto
capital of the world. We want digital asset innovation to happen in
America and crypto jobs to be created in America without ceding ground
to foreign countries.
That is why we must pass the CLARITY Act, to spur innovation and
support economic growth by providing clear rules of the road for
digital assets in the United States.
This bill establishes clear roles for the SEC and CFTC, which
prevents agencies from overreach and confusion. It provides consumer
protections through greater transparency and accountability in the
marketplace. It fosters innovation by providing a pathway for digital
asset firms to operate legally and with confidence, encouraging digital
asset innovation to remain in the U.S. The CLARITY Act unlocks economic
growth, global competitiveness, and financial opportunity for all.
Mr. Speaker, I urge my colleagues to support this bill and put
America first in the race to lead the global digital asset marketplace
for our country.
Ms. CRAIG. Mr. Speaker, I yield 3 minutes to the gentleman from North
Carolina (Mr. Davis), my distinguished colleague and the ranking member
of the House Agriculture Subcommittee on Commodity Markets, Digital
Assets, and Rural Development.
Mr. DAVIS of North Carolina. Mr. Speaker, I rise in support of H.R.
3633, known as the CLARITY Act.
I am honored to serve as a co-lead on this legislation, alongside
Chairman Thompson, Chairman Hill, Ranking Member Craig, Subcommittee
Chair Johnson, and so many others who came to the table in good faith
to get this done.
Let me also take a moment to thank the staff, both the majority and
the minority staff. They put in so many hours working on this. I know I
was up late one night. It was probably midnight. I really commend the
team. They helped work on a very complex issue here that is before us
and to help shape a bipartisan product that reflects the seriousness of
the moment.
This bill reflects compromise, collaboration, and months of work to
craft the regulatory framework that meets the moment, because the truth
is, we can't afford to fall behind.
Right now we are at a crossroad. The digital asset industry is
growing, evolving, changing the way people around the world engage with
financial markets and emerging technologies. Without a clear regulatory
structure in place, we are seeing innovation move overseas not because
our talent isn't here, but because the rules aren't here.
The CLARITY Act provides us with an opportunity then to change that,
to lead, to establish thoughtful and balanced guardrails that support
innovation, protect consumers, and foster confidence in our markets.
You see disclosures and reports dealing with so many provisions,
antifraud, manipulation. You can't commingle funds.
But let me be clear: The bill isn't perfect. I have been vocal about
that, too.
I remain concerned about the absence of meaningful conflict-of-
interest provisions dealing with the executive branch. It doesn't
matter who occupies the White House. The bottom line is,
[[Page H3403]]
whoever is in the White House, we need clear standards that ensure
public trust is never compromised.
I also remain concerned about adequate resources for the CFTC. Yes, I
acknowledge this bill provides more flexibility to deal with hiring,
but we also need to see more resources because we are asking the CFTC
to take on a major role here.
The Speaker pro tempore. The time of the gentleman has expired.
Ms. CRAIG. Mr. Speaker, I yield an additional 30 seconds to the
gentleman from North Carolina.
Mr. DAVIS of North Carolina. In the 118th Congress, we passed FIT21
with overwhelming bipartisan support. The CLARITY Act builds on this
work. Let's pass the CLARITY Act and send a strong message to the
American people and the world that the United States will lead in
building a forward-looking digital economy.
Mr. Speaker, I urge my colleagues to support this legislation.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I yield 1 minute to the
gentleman from Iowa (Mr. Nunn), a member of the Commodity Markets,
Digital Assets, and Rural Development Subcommittee.
Mr. NUNN of Iowa. Mr. Speaker, I thank Chairman Thompson, as well as
Ranking Member Craig for leading a truly bipartisan opportunity to help
America deliver as a crypto capital for the entire planet.
As a member of both the Agriculture Committee and the Financial
Services Committee, I have been able to see this issue on both sides:
commodities versus securities, CFTC versus the SEC.
In my home State of rural Iowa, we know commodities: corn, soybeans,
hogs. The CFTC does this very well. In downtown Des Moines and on the
Main Streets of hometowns across Iowa, our banks handle stocks and
bonds, securities, those handled by the SEC.
That level of clarity works, but when it comes to digital assets, the
lines become blurred, confused, and overly burdensome. That regulatory
uncertainty doesn't just cost dollars. It costs jobs, innovation, and
America's global leadership.
The CLARITY Act is exactly what America needs now to drive toward the
future to ensure the next generation of financial internet technology
and blockchain success is built in America, that our innovators come
from the U.S., and that we have a future going forward. Mr. Speaker, I
endorse the CLARITY Act.
Ms. CRAIG. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Michigan (Ms. McDonald Rivet), my distinguished colleague who serves on
the House Agriculture Subcommittee on Commodity Markets,
Digital Assets, and Rural Development.
Ms. McDONALD RIVET. Mr. Speaker, I rise today to voice support for
the CLARITY Act. While there is still work to be done, it is an
important step in providing crucial and clear regulatory framework to
the crypto industry.
Let's break it down. Today, one in six U.S. adults, 17 percent of the
population, are invested in or use cryptocurrency. That is 55 million
Americans. There is more than $3 trillion invested in the industry. It
is dangerous and irresponsible that a market of this size and scope is
currently operating without a clear regulatory framework. For
consumers, innovators, and the stability of our Nation's economy, the
CLARITY Act is an important first step forward.
It protects consumers and equips assigned agencies with the
appropriate authority to provide efficient and thorough oversight over
digital asset markets. It also provides desperately needed certainty so
that businesses can grow and evolve.
I will be clear: If the CLARITY Act had been in place, the FTX market
crash that caused their customers to lose $8 billion would not have
happened.
This bill strengthens our national security by giving regulators the
tools they need to track cross-border transactions and stop digital
assets from being used to evade sanctions or fund our adversaries.
The bill is not perfect, and it does not resolve every issue. Like
many of my colleagues, I am deeply concerned about the Trump family's
potential conflicts of interest in using crypto to profit from the
Office of the Presidency. That is why I voted for amendments to impose
guardrails to stop elected officials from improperly profiting off
trades, and I will continue to push strongly for solutions to this
problem.
However, we cannot let the perfect be the enemy of the good. We stand
at a critical moment where market structure is critical for our
consumers, economy, and security, and the CLARITY Act moves us
meaningfully forward.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I will expand for a minute
on the important protections included in the CLARITY Act. The CLARITY
Act includes strong protections for the developers of software.
Sections 309 and 409 make it clear that neither the CFTC nor the SEC
have the authority to require a person to register just because that
person is developing, publishing, or distributing software. This is a
critical protection, rooted in our First Amendment, that should be read
expansively by the commissions.
{time} 1020
The creation of new decentralized finance protocols is also an
important development that the CLARITY Act seeks to protect. Both the
CFTC and the SEC must carefully examine and understand DeFi, which is
why we are requiring both Commissions to undertake a robust study on
the unique benefits and risks of DeFi.
Through the CLARITY Act, Congress is making an unambiguous statement
that DeFi is different, and it should be treated differently from the
centralized custodial intermediaries. Protecting this emerging
technology is an essential purpose of the CLARITY Act.
Now, Mr. Speaker, I yield 1 minute to the gentleman from Indiana (Mr.
Messmer), a member of the Committee on Agriculture and a member of the
Commodity Markets, Digital Assets, and Rural Development Subcommittee.
Mr. MESSMER. Mr. Speaker, I rise today in support of the CLARITY Act.
America's innovative ecosystem has made our Nation an investment
magnet and development hub, but thus far, our regulatory system has
failed the digital assets industry. Under the current framework,
fraudsters go unpunished, consumers remain unprotected, and the best
and brightest minds in the industry have picked up and left for other
countries.
The CLARITY Act finally establishes distinct jurisdictional
boundaries between the Securities and Exchange Commission and the
Commodity Futures Trading Commission, while also creating guardrails to
incentivize and safeguard investment.
The bill not only expands opportunities for Wall Street and Silicon
Valley, but it also provides great opportunities for Hoosier farmers by
opening a new frontier for rural innovators and expanding access to
capital in agricultural communities.
The digital asset markets are in dire need of regulation, and the
CLARITY Act is the solution. I look forward to witnessing a new era of
economic prosperity and technological advancement that this bill will
bring to America.
Ms. CRAIG. Mr. Speaker, I yield 2 minutes to the gentleman from
Alabama (Mr. Figures), my distinguished colleague.
Mr. FIGURES. Mr. Speaker, I have listened to many of my colleagues'
views on the issues before us today. I respect them all, and I respect
their views. I don't disagree with many of the points that my
colleagues who are in opposition are making, especially as it relates
to executive conflict of interest concerns.
Here is what I know. I know that the United States is lagging behind
the rest of the world in regulating this industry. I know that the
regulations in the CLARITY Act are better than none at all in this
industry. I know that consumers will be better protected the day after
this goes into effect than they were the day before.
Now, is there more work to be done? Absolutely. We should do that. We
cannot allow subjective ideas of perfection to override what are
objectively steps in the right direction.
The CLARITY Act is one act that I support, and this is an important
first step. As we move forward, however, we must continue to make the
necessary investments so that everyone can participate. Those are
investments in technical training and education so that people have the
knowledge and
[[Page H3404]]
skills to actually understand and participate in a digital economy.
This is also a time to commit ourselves to ensuring that we do not
leave underserved and rural communities behind. I represent a district
that is geographically predominantly rural. We still struggle with
issues like not having access to the internet in many counties that I
represent.
You cannot participate in or leverage the benefits of a digital
economy if you can't get on the internet. That is a fact. We must stand
up for these communities and bring broadband and internet expansion
resources to every community that we possibly can.
Let's keep moving forward. Let's keep making sure that we are
bringing everyone along with us.
Mr. Speaker, I urge my colleagues to support this bill.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I thank the gentleman who
just spoke for his remarks concerning the need for high-speed
broadband. My pledge, as the chairman of the Committee on Agriculture,
is that when we are back in September, we will have farm bill 2.0,
which includes rural economic development and rural broadband. We have
to get that done.
I yield to the gentleman from Georgia (Mr. Carter), a cosponsor of
the CLARITY Act, for 1 minute.
Mr. CARTER of Georgia. Mr. Speaker, I rise today to voice my support
for the CLARITY Act.
The CLARITY Act is a bill that will make clear laws to help better
regulate digital assets and blockchain technology. This bill will
ensure that future innovations in the financial world will happen here
in the United States and not in foreign countries.
We cannot allow our adversaries, such as China, to control the
digital economy. The CLARITY Act will help modernize financial laws to
make innovation possible and clear up many opaque and sometimes
contradictory laws.
This bill delivers on President Trump's commitment to make the United
States the crypto capital of the world, and I am proud that we are
paving the path toward American dominance in the digital future.
Today, I again would like to give my support for the CLARITY Act, as
it cements America as a hub for the world's financial innovation.
Ms. CRAIG. Mr. Speaker, I yield 2 minutes to the gentleman from New
Jersey (Mr. Gottheimer), my distinguished colleague who serves on the
House Financial Services Committee.
Mr. GOTTHEIMER. Mr. Speaker, I thank Chairwoman Craig for her
excellent leadership.
Mr. Speaker, I rise in support of the bipartisan CLARITY Act. This
bill was made possible through a bipartisan effort that I was very
proud to help lead with Chairman Hill and Congressman Steil. It is an
important one because one-fifth of Americans own crypto. My State, New
Jersey, proportionally ranks second nationwide in ownership of
cryptocurrency.
While cryptocurrency has tremendous economic potential, we
desperately need rules of the road to protect consumers, ensure the
success of American entrepreneurs, and ensure that America leads the
way, not other nations around the world, but that America leads the way
in this growing space.
The CLARITY Act takes commonsense steps to make crypto work for
everyday users, including measures to stop snake oil salesmen,
fraudsters, and hucksters, and puts the Trump family's coins under
regulation.
This legislation supports American-led innovation by encouraging
developers and entrepreneurs to build, invest, and create jobs in our
country.
Finally, this bill gives clarity to the SEC's and CFTC's roles in
crypto to work together efficiently and to crack down on scammers and
criminal activity. After years of uncertainty, it finally says who
should oversee what, so that people in this space understand the
direction it is going in and understand who is going to oversee what,
so that consumers can be protected. I can't say that enough.
Do we want this to continue to be the Wild West with uncertainty, or
do we want to have clear rules of the road to protect consumers? Do we
want to do something or nothing? Is it perfect? As you have heard
today, no, it is not perfect. Few pieces of legislation we bring here
are.
The questions are: Will it do good? Will it make sure that we look
after people who are involved in this space? Will it ensure that
America succeeds and grows? Those are the questions.
To do nothing means that we will ensure that Trump's coin has no
oversight. Why would we want that? We will ensure that no consumer is
protected if we do nothing. We want to protect American consumers. That
is our job. This legislation does that.
Mr. Speaker, I urge my colleagues to support this critical
commonsense, bipartisan legislation.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, may I ask how much time is
remaining.
The SPEAKER pro tempore (Mr. Murphy). The gentleman from Pennsylvania
has 5\1/2\ minutes remaining. The gentlewoman from Minnesota has 2\1/2\
minutes remaining.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I yield 1 minute to the
gentleman from Tennessee (Mr. Rose), the vice chair of the Commodity
Markets, Digital Assets, and Rural Development Subcommittee and also a
member of the House Financial Services Committee. He is a very busy
man.
Mr. ROSE. Mr. Speaker, I rise in support of the CLARITY Act, which
provides long-overdue updates aimed at protecting the future of digital
assets, encouraging growth, and protecting American consumers.
The days of stifling this emerging industry through litigation and
rogue rulemaking must end. The Securities and Exchange Commission under
former Chair Gary Gensler went far outside the agency's statutory
mandate in many ways, especially with cryptocurrencies.
The CLARITY Act will strengthen transparency and accountability for
consumers. It will require developers to provide accurate disclosures
with details about the asset project's operation, ownership, and
structure. It requires brokers and dealers to disclose important
information to investors, to hold their own funds separate from their
customers' funds, and to report any conflicts of interest.
This bill ensures Americans know where they are putting their money,
and it gets government out of the way of growth and innovation.
Let's pass the CLARITY Act for the good of this country.
{time} 1030
Ms. CRAIG. Mr. Speaker, I have no other speakers at the moment. I
continue to reserve the balance of my time.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I yield 3 minutes to the
gentleman from South Dakota (Mr. Johnson), the chairman of the
Commodity Markets, Digital Assets, and Rural Development Subcommittee.
Mr. JOHNSON of South Dakota. Mr. Speaker, it has been such an honor
to work with G.T., French, Angie, Don, Brian, and so many others on
something that is real.
It is sometimes hard to separate the real from the fake in this town.
That is certainly true for digital assets, NFTs, and memecoins. These
generate tremendous attention, and they can pull our gaze away from
what really matters.
Here is what matters: Blockchain technology, Web3, will transform
every single industry in the same way that the internet has transformed
every single industry over the last 30 years. That transformation will
happen much faster than people realize if we can keep government from
continuing to screw this up.
This is not about buying bubble gum with bitcoin. This is about
blockchain innovation happening here rather than overseas, about more
liquid capital markets, about small businesses creating new services
and products, about removing friction from transactions for every
single American, and about protecting consumers so the debacles like
the FTX meltdown never happen again.
We tend to overstate the impact of what we do in this town.
Everything is historic, even when it is not. However, this is
different. This is huge.
Before I came to Congress, I was in the broadband industry, and the
Telecommunications Act of 1996 provided the regulatory certainty needed
to launch the internet era. That was a watershed victory for this
country. Mr. Speaker, we are here again.
[[Page H3405]]
The regulatory certainty provided by this incredible bipartisan work
product will launch a golden age of innovation and the golden age of
digital assets. Today, now, this moment, this is a watershed victory
for this country. Today we do something real.
Ms. CRAIG. Mr. Speaker, I am prepared to close, and I reserve the
balance of my time.
Mr. THOMPSON of Pennsylvania. Mr. Speaker, I yield myself the balance
of my time for the purpose of closing.
Mr. Speaker, I thank the gentleman from South Dakota for his remarks
and, quite frankly, I couldn't agree more. I also thank, again, my
Agriculture partner, Ranking Member Angie Craig with the Agriculture
Committee, and Don Davis and our leadership and all those who have the
foresight to see that this is about the future. Well, it is about today
because, you know, companies are struggling with this, but more
importantly, it is about the future of both the financial sector and
the technological sector.
A vote for the CLARITY Act is a vote for America's future and
America's leadership. I urge all my colleagues to vote ``yes'' on the
CLARITY Act. I yield back the balance of my time.
Ms. CRAIG. Mr. Speaker, I yield myself the balance of my time to
close.
Mr. Speaker, I, too, would like to thank the gentleman from
Pennsylvania, Chairman G.T. Thompson, and his team for working on this
consumer protection legislation in a bipartisan manner.
I believe bipartisan legislation is always preferable to partisan
legislation. It is stronger. It is harder to undo when it has broad
support and leadership changes overnight.
I heard my chairman talk about the farm bill. I regret that it wasn't
a bipartisan path through reconciliation for farm bill provisions, but
I am optimistic that we can work together in many other areas.
While I wait to see what the gentleman has in store for us for farm
programs left behind, I, too, agree that rural development is
incredibly important, Mr. Speaker. I hope that the bipartisanship shown
through the CLARITY Act process can act as a reminder that we
accomplish more and we go further when we work together.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. All time for debate on the bill has expired.
The Chair understands that amendment No. 1 will not be offered.
The SPEAKER pro tempore. Pursuant to the rule, the previous question
is ordered on the bill, as amended.
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.
Ms. CRAIG. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
____________________